What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-27 compared with 2020-11-24 · 710 added, 399 removed, 236 unchanged (82% of the section changed)

1 unchanged sentence

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME (LOSS) AND

COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Nine Months Ended

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

(Dollars in thousands, except per share data)

6 unchanged sentences

Interest and other income

Cost and expenses, net

Costs and expenses, net

Income (loss) before income taxes

5 unchanged sentences

Net income (loss)

Unrealized gain (loss) on available-for-sale securities, net of

deferred income taxes of ($ 85 ) and ($ 29 ) for the three and

nine months ended October 31, 2020 and ($ 8 ) and $ 380 for

the three and nine months ended November 2, 2019, respectively

Unrealized gain (loss) on available-for-sale securities, net

of deferred income taxes of ($

) for May 1, 2021

and May 2, 2020, respectively

Comprehensive income (loss)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

October 31, 2020

February 1, 2020

January 30, 2021

(Dollars in thousands)

4 unchanged sentences

Restricted short-term investments

Accounts receivable, net of allowance for doubtful accounts of

$ 574 and $ 726 at October 31, 2020 and February 1, 2020, respectively

Accounts receivable, net of allowance for customer credit losses of

at May 1, 2021 and January 30, 2021, respectively

Merchandise inventories

15 unchanged sentences

Stockholders' Equity:

Preferred stock, $ 100 par value per share, 100,000 shares

Preferred stock, $

par value per share,

authorized, none issued

Class A common stock, $ 0.033 par value per share, 50,000,000

Class A common stock, $

par value per share,

shares authorized;

21,170,417 shares and 22,535,779 shares

issued at October 31, 2020 and February 1, 2020, respectively

Convertible Class B common stock, $ 0.033 par value per share,

shares issued

at May 1, 2021 and January 30, 2021, respectively

Convertible Class B common stock, $

par value per share,

shares authorized;

1,763,652 shares and 1,763,652 shares

issued at October 31, 2020 and February 1, 2020, respectively

shares issued at May 1, 2021 and January 30, 2021, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total Stockholders' Equity

2 unchanged sentences

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

October 31, 2020

November 2, 2019

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

Three Months Ended

(Dollars in thousands)

1 unchanged sentence

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided (used)

by operating activities:

Provision for doubtful accounts

Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:

Provision for customer credit losses

Purchase premium and premium amortization of investments

3 unchanged sentences

Impairment of store assets

Changes in operating assets and liabilities which provided

Changes in operating assets and liabilities which provided (used) cash:

Accounts receivable

9 unchanged sentences

Sales of short-term investments

Purchase of other assets

Sales of other assets

Net cash provided (used) in investing activities

Net cash provided (used) by investing activities

Financing Activities:

4 unchanged sentences

Proceeds from employee stock purchase plan

Net cash provided (used) in financing activities

Net cash provided (used) by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

3 unchanged sentences

Accrued other assets and property and equipment

Accrued treasury stock

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY

Comprehensive

1 unchanged sentence

(Dollars in thousands)

Balance — February 1, 2020

Balance — January 30, 2021

Comprehensive income:

Unrealized gain (loss) on available-for-sale securities, net of

deferred income tax benefit of ($ 90 )

Net income (loss)

Unrealized gains on available-for-sale securities, net of deferred

income tax benefit of ($

Dividends paid ($0.00 per share)

Class A common stock sold through employee stock purchase

plan — 26,957 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

307,354 shares

Repurchase and retirement of treasury shares – 618,056 shares

Repurchase and retirement of treasury shares –

Balance — May 1, 2021

Comprehensive income:

Unrealized gain (loss) on available-for-sale securities, net of

deferred income tax liability of $ 146

Dividends paid ($0 per share)

Class A common stock sold through employee stock purchase

plan — 0 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

( 57,805 ) shares

Repurchase and retirement of treasury shares – 0 shares

Balance — August 1, 2020

Comprehensive income:

Unrealized gain (loss) on available-for-sale securities, net of

deferred income tax benefit of ($ 85 )

Dividends paid ($0 per share)

Class A common stock sold through employee stock purchase

plan — 21,234 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

( 8,440 ) shares

Repurchase and retirement of treasury shares – 1,036,610 shares

Balance — October 31, 2020

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Comprehensive

3 unchanged sentences

Comprehensive income:

Unrealized gain (loss) on available-for-sale securities, net of

deferred income tax liability of $ 126

Dividends paid ($ 0.33 per share)

Net income (loss)

Unrealized gains on available-for-sale securities, net of deferred

income tax benefit of ($

Dividends paid ($

Class A common stock sold through employee stock purchase

plan — 20,676 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

355,609 shares

Repurchase and retirement of treasury shares – 208,041 shares

Repurchase and retirement of treasury shares –

Balance — May 2, 2020

Comprehensive income:

Unrealized gain (loss) on available-for-sale securities, net of

deferred income tax liability of $ 262

Dividends paid ($ 0.33 per share)

Class A common stock sold through employee stock purchase

plan — 5,402 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

System.Object[] shares

Repurchase and retirement of treasury shares – 0 shares

Balance — August 3, 2019

Comprehensive income:

Unrealized gain (loss) on available-for-sale securities, net of

deferred income tax benifit of ($ 8 )

Dividends paid ($ 0.33 per share)

Class A common stock sold through employee stock purchase

plan — 18,252 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

System.Object[] shares

Repurchase and retirement of treasury shares – 129,339 shares

Balance — November 2, 2019

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 1 - GENERAL :

The condensed consolidated financial statements have been prepared from the accounting records of The Cato Corporation and its wholly-owned subsidiaries (the “Company”), and all amounts shown as of and for the periods ended October 31, 2020 and November 2, 2019 are unaudited.

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements have been included.

All such adjustments are of a normal, recurring nature unless otherwise noted.

The results of the interim period may not be indicative of the results expected for the entire year.

The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020.

Amounts as of February 1, 2020 have been derived from the audited balance sheet, but do not include all disclosures required by accounting principles generally accepted in the United States of America.

On August 27, 2020, the Board of Directors authorized an increase in the Company’s share repurchase program of 1 million shares.

Subsequent to October 31, 2020, the Company repurchased 320,707 shares for $2,274,610.

Additionally, on November 19, 2020, the Board of Directors authorized an increase in the Company’s share repurchase program of 1.5 million shares.

COVID-19 Update

The COVID-19 pandemic has created, and may continue to create, challenges and uncertainties for our business.

In the first quarter of fiscal 2020, the pandemic resulted in state and local orders mandating store closures and other measures to mitigate the spread of the virus.

Recently reported increases in infection rates in many areas and the onset of cooler weather raise the possibility of increased or renewed governmental measures or public health guidance to reduce public activity and gatherings in order to mitigate the spread of the virus, as well as continued adverse effect on consumer confidence.

Responses by customers, government and the private sector have and will likely continue to adversely impact our business operations for the remainder of fiscal 2020 and possibly beyond.

The extent to which the COVID-19 pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

Beginning March 19, 2020, the Company temporarily closed all Cato, It’s Fashion, It’s Fashion Metro and Versona stores.

In addition, the Company suspended its quarterly dividend, significantly reduced capital expenditures and reduced its SG&A expense through the reduction of non-payroll expenses, as well as furloughed associates and in certain instances eliminated positions primarily at its corporate office.

Beginning on May 1, 2020, the Company began to re-open stores based on the pertinent state and local orders.

As of June 15, 2020, all stores have re-opened.

Although all stores have re-opened, stores are operating at reduced hours and stores may be temporarily closed or subject to further operating restrictions in compliance with local regulations or in response to public health guidance due to COIVD-19.

There is significant uncertainty around the duration, breadth and severity of continued business disruptions related to

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

The condensed

consolidated financial

statements as

the thirteen-

prepared from

the accounting

Corporation and its

wholly-owned subsidiaries (the

“Company”), and all

amounts shown are

In the opinion of management, all adjustments considered necessary for a fair presentation of the financial

statements have been

All such adjustments

normal, recurring nature

unless otherwise

The results of the interim period may not be indicative of the results expected for

the entire year.

The interim financial statements should

be read in conjunction with

the consolidated financial statements

thereto, included

Company’s Annual

January 30, 2021.

Amounts as of January 30, 2021 have been derived from the audited balance sheet, but

do not include all disclosures required by accounting principles generally

accepted in the United States of

On May 20, 2021, the Board of Directors declared the quarterly dividend at $0.11 per share.

The COVID-19 pandemic adversely

impacted the Company's business,

financial condition and operating

results through fiscal 2020.

The first quarter of

2021 saw significant improvements in

sales compared to

This improvement was

primarily attributable to

government stimulus, increased

customer traffic,

states continuing

capacity limits

vaccinated, consumers’

increasing comfort

venturing out

customers’ preparing

Company’s sales

were well below 2019

sales for the

comparable period, and there

high level of

uncertainty regarding the

lingering effects of

the COVID-19 pandemic

continued impact on

Company’s customers’

buying habits.

additional uncertainty

effects of disruption in the global supply chain and available workers as it attempts

to hire associates as its

operating hours

Company expects

uncertainties and

perhaps others

related to the

pandemic will continue

to impact the

Company in fiscal

2021 and possibly

adverse financial impacts associated with the continued

effects of, and uncertainties related to, the

COVID-19 pandemic include, but

are not limited

to, (i) lower net

sales in markets affected

by the actual

outbreak, whether

local orders,

reductions in

store traffic

demand, labor

shortages, or

these factors,

production and fulfillment,

incremental costs associated

to mitigate the

the outbreak, including increased freight and logistics costs and other

ultimately impacts

the Company’s

business, financial

condition, results of operations, cash flows, and liquidity may

differ from management’s current estimates

due to inherent

uncertainties regarding the

duration and further

spread of the

outbreak or its

variants, its

severity, actions taken

to contain the virus or

treat its impact, and how

quickly and to what extent normal

economic and operating conditions can resume.

While the Company currently anticipates a continuation of the adverse impacts

of COVID-19 during 2021

these effects

developments, which are

highly uncertain, including

the relative speed

and success of,

confidence in, mitigation measures

such as the current

effort to vaccinate substantial

portions of the U.S.

population, emerging

information regarding

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

COVID-19, as well as its impact on the U.S.

economy, consumer willingness to visit malls and shopping centers, and associate staffing for our stores.

At this time, the possible effects of national, state or local action, legislation, guidelines or programs that attempt to mitigate the spread of COVID-19 or address its economic effects on our customers, suppliers or the Company are also uncertain.

While the Company currently anticipates that our results for the remainder of fiscal 2020 will be adversely impacted, the extent to which COVID-19 impacts the Company’s results will depend on future developments, which are highly uncertain, including possible new information and understanding about the severity of COVID-19, related potential economic impacts to customers and suppliers, and the effect of actions taken to contain it or mitigate its impact.

Accounting Policies - Impairment of Long-Lived Assets:

The Company invests in leaseholds, right-of use assets and equipment primarily in connection with the opening and remodeling of stores and in computer software and hardware.

The Company periodically reviews its store locations and estimates the recoverability of its long-lived assets, which primarily relate to Fixtures and equipment, Leasehold improvements, Right-of-use assets net of Lease liabilities and Information technology equipment and software.

An impairment charge is recorded for the amount by which the carrying value exceeds the estimated fair value when the Company determines that projected cash flows associated with those long-lived assets will not be sufficient to recover the carrying value.

This determination is based on a number of factors, including the store’s historical operating results and projected cash flows, which include future sales growth rates, margin rates and expense projections.

The Company assesses the fair value of each lease by considering market rents and any lease terms that may adjust market rents under certain conditions, such as the loss of an anchor tenant or a leased space in a shopping center not meeting certain criteria.

Further, in determining when to close a store, the Company considers real estate development in the area and perceived local market conditions, which can be difficult to predict and may be subject to change.

As a result of store closures during the first quarter of 2020, the Company determined a triggering event occurred, which resulted in an impairment analysis being performed.

An asset impairment charge of $ 5.3 million was recorded in the first quarter of 2020, and no additional impairment was required in the second and third quarters of 2020.

During the third quarter of 2020, the Company determined no new stores would be opened during the remainder of 2020, as well as 2021.

As a result, during the third quarter of 2020, the Company impaired $ 2.3 million worth of fixtures planned for new stores.

Recently Adopted Accounting Policies

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires companies to measure and recognize expected credit losses for financial assets held at amortized costs based on expected losses rather than incurred losses.

The new accounting rules were effective for the Company in the first quarter of 2020 and had a minimal impact on the financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

potential impact on

current mitigation efforts,

public attitudes toward

continued compliance with

containment and

mitigation measures, and

possible new information

and understanding that

the course and duration of current measures to combat the spread of the virus.

In December 2019,

issued ASU 2019-

Simplifying the

Accounting for Income Taxes

The new accounting

rules reduce complexity by

removing specific

exceptions to

general principles

intraperiod tax

allocations, ownership

investments, and

interim period

accounting for

year-to-date losses

rules also simplify

accounting for franchise

taxes that are

partially based on

income, transactions

government that

goodwill, separate

financial statements of legal entities that are not subject

to tax, and enacted changes in tax laws

Company adopted this

accounting standards update

first quarter

2021 with no material impact on its Condensed Consolidated Financial

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 2 - EARNINGS PER SHARE:

Accounting Standard Codification (“ASC”) 260 – Earnings Per Share requires dual presentation of basic and diluted Earnings Per Share (“EPS”) on the face of all income statements for all entities with complex capital structures.

The Company has presented one basic EPS and one diluted EPS amount for all common shares in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

While the Company’s certificate of incorporation provides the right for the Board of Directors to declare dividends on Class A shares without declaration of commensurate dividends on Class B shares, the Company has historically paid the same dividends to both Class A and Class B shareholders and the Board of Directors has resolved to continue this practice.

Accordingly, the Company’s allocation of income for purposes of the EPS computation is the same for Class A and Class B shares and the EPS amounts reported herein are applicable to both Class A and Class B shares.

Basic EPS is computed as net income less earnings allocated to non-vested equity awards divided by the weighted average number of common shares outstanding for the period.

Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and the Employee Stock Purchase Plan.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

dual presentation

on the face of all

income statements

for all entities

has presented

for all common

the accompanying

Comprehensive

While the Company’s certificate of

incorporation

the right for

of commensurate

has historically

same dividends

to both Class

B shareholders

and the Board

this practice.

the Company’s

EPS computation is the

same for Class

the EPS amounts

as net income less

to non-vested equity awards divided by

number of common shares outstanding

for the period.

EPS reflects the potential

that could occur

from common shares

stock options and

the Employee Stock

Three Months Ended

Nine Months Ended

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

(Dollars in thousands)

8 unchanged sentences

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME:

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the three months ended October 31, 2020:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

OTHER COMPREHENSIVE

The following table sets

forth information

the reclassification

comprehensive

(in thousands)

Changes in Accumulated Other

3 unchanged sentences

Available-for-Sale

Beginning Balance at August 1, 2020

Other comprehensive income before

Beginning Balance at January 30, 2021

Other comprehensive income (loss) before

reclassification

1 unchanged sentence

other comprehensive income (b)

Net current-period other comprehensive income

Ending Balance at October 31, 2020

Net current-period other comprehensive income (loss)

Ending Balance at May 1, 2021

(a) All amounts are net-of-tax.

Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $ 89 impact of accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").

(b) Includes $

impact of accumulated other comprehensive income reclassifications into Interest and other

net gains on available-for-sale securities.

The tax impact of this reclassification was $

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the nine months ended October 31, 2020:

The following table sets

forth information

the reclassification

comprehensive

(in thousands)

Changes in Accumulated Other

4 unchanged sentences

Beginning Balance at February 1, 2020

Other comprehensive income before

Other comprehensive income (loss) before

reclassification

1 unchanged sentence

other comprehensive income (b)

Net current-period other comprehensive income

Ending Balance at October 31, 2020

(a) All amounts are net-of-tax.

Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $ 827 impact of accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

The tax impact of this reclassification was $ 191 .

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME (CONTINUED):

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the three months ended November 2, 2019:

Changes in Accumulated Other

Comprehensive Income (a)

Unrealized Gains

and (Losses) on

Available-for-Sale

Beginning Balance at August 3, 2019

Other comprehensive income before

reclassifications

Amounts reclassified from accumulated

other comprehensive income (b)

Net current-period other comprehensive income

Ending Balance at November 2, 2019

(a) All amounts are net-of-tax.

Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $ 183 impact of Accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

The tax impact of this reclassification was $ 43 .

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the nine months ended November 2, 2019:

Changes in Accumulated Other

Comprehensive Income (a)

Unrealized Gains

and (Losses) on

Available-for-Sale

Beginning Balance at February 2, 2019

Other comprehensive income before

reclassifications

Amounts reclassified from accumulated

other comprehensive income (b)

Net current-period other comprehensive income

Ending Balance at November 2, 2019

Net current-period other comprehensive income (loss)

Ending Balance at May 2, 2020

(a) All amounts are net-of-tax.

Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $ 234 impact of Accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").

(b) Includes $

impact of accumulated other comprehensive income reclassifications into Interest and other

income for net gains on available-for-

sale securities.

The tax impact of this reclassification was $

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

NOTE 4 – FINANCING ARRANGEMENTS:

As of October 31, 2020, the Company had an unsecured revolving credit agreement to borrow $ 35.0 million less the balance of any revocable letters of credit as discussed below.

On June 2, 2020, the Company signed an amendment extending the revolving credit agreement through May 2023.

The credit agreement contains various financial covenants and limitations, including the maintenance of specific financial ratios with which the Company was in compliance as of October 31, 2020.

There were no borrowings outstanding under this credit facility as of October 31, 2020 or February 1, 2020.

The weighted average interest rate under the credit facility was zero at October 31, 2020 due to no borrowings outstanding.

At October 31, 2020 and February 1, 2020, the Company had no outstanding revocable letters of credit relating to purchase commitments.

1, 2021, the Company had

an unsecured revolving credit agreement

the Company to

less the balance

of any letters

June 2, 2020,

signed an amendment extending the revolving credit agreement through May 2023.

and limitations,

the maintenance

was in compliance

as of May 1, 2021.

There were no borrowings

under this credit

as of May 1, 2021 or January 30, 2021.

to no borrowings

At May 1, 2021

had no outstanding

NOTE 5 – REPORTABLE SEGMENT INFORMATION:

The Company has determined that it has four operating segments, as defined under ASC 280-10, including Cato, It’s Fashion, Versona and Credit.

As outlined in ASC 280-10, the Company has two reportable segments:

The Company has determined

that it has four operating segments,

as defined under ASC 280-10,

As outlined in

ASC 280-10, the

Retail and Credit.

The Company has aggregated its three retail operating segments, including e-commerce, based on the aggregation criteria outlined in ASC 280-10, which states that two or more operating segments may be aggregated into a single reportable segment if aggregation is consistent with the objective and basic principles of ASC 280-10, which require the segments to have similar economic characteristics, products, production processes, clients and methods of distribution.

The Company’s retail operating segments have similar economic characteristics and similar operating, financial and competitive risks.

They are similar in nature of product, as they all offer women’s apparel, shoes and accessories.

Merchandise inventory for the Company’s retail operating segments is sourced from the same countries and some of the same vendors, using similar production processes.

Merchandise for the Company’s operating segments is distributed to retail stores in a similar manner through the Company’s single distribution center and is subsequently distributed to clients in a similar manner.

The Company operates its women’s fashion specialty retail stores in 33 states as of October 31, 2020, principally in the southeastern United States .

The Company offers its own credit card to its customers and all credit authorizations, payment processing and collection efforts are performed by a separate subsidiary of the Company.

The Company has aggregated

its three retail operating

the aggregation

in ASC 280-10,

may be aggregated

into a single reportable

if aggregation

is consistent

with the objective

and basic principles of ASC 280

-10, which require the segments to have

characteristics,

of distribution.

The Company’s

retail operating

characteristics

and competitive

They are similar in

nature of product, as they

all offer women’s apparel,

shoes and accessories.

for the Company’s retail

is sourced from

the same countries

and some of the same vendors,

Company’s operating segments is distributed to

retail stores in a

the Company’s

single distribution

is subsequently

women’s fashion

specialty retail

principally in the

southeastern United States.

The Company offers its own credit card to its customers

authorizations,

and collection

by a separate

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 5 – REPORTABLE SEGMENT INFORMATION (CONTINUED):

The following schedule summarizes certain segment information (in thousands):

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

NOTE 5 – REPORTABLE

SEGMENT INFORMATION (CONTINUED):

The following

segment information

(in thousands):

Three Months Ended

Nine Months Ended

October 31, 2020

Interest and other income

Income/(Loss) before

Capital expenditures

Income (loss) before taxes

Capital expenditures

Three Months Ended

Nine Months Ended

November 2, 2019

Interest and other income

Income/(Loss) before

Capital expenditures

Income (loss) before taxes

Capital expenditures

Total assets as of October 31, 2020

Total assets as of February 1, 2020

The Company evaluates segment performance based on income before taxes.

The Company does not allocate certain corporate expenses or income taxes to the credit segment.

The following schedule summarizes the direct expenses of the credit segment, which are reflected in Selling, general and administrative expenses (in thousands):

Total assets as of May 1, 2021

Total assets as of January 30, 2021

The Company evaluates

before taxes.

The Company does

The following

of the credit segment

which are reflected

and administrative

(in thousands):

Three Months Ended

Nine Months Ended

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019

Other expenses

1 unchanged sentence

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

NOTE 6 – STOCK BASED COMPENSATION:

As of October 31, 2020, the Company had two long-term compensation plans pursuant to which stock-based compensation was outstanding or could be granted.

The 2018 Incentive Compensation Plan and 2013 Incentive Compensation Plan are for the granting of various forms of equity-based awards, including restricted stock and stock options for grant, to officers, directors and key employees.

Effective May 24, 2018, shares for grant were no longer available under the 2013 Incentive Compensation Plan.

The following table presents the number of options and shares of restricted stock initially authorized and available for grant under each of the plans as of October 31, 2020:

the Company had two

plans pursuant to which

was outstanding or

for the granting

of equity-based

stock options

2013 Incentive

The following table presents the

of options and shares

of restricted stock initially authorized and

Options and/or restricted stock initially authorized

Options and/or restricted stock available for grant:

October 31, 2020

In accordance with ASC 718, the fair value of current restricted stock awards is estimated on the date of grant based on the market price of the Company’s stock and is amortized to compensation expense on a straight-line basis over the related vesting periods.

As of October 31, 2020 and February 1, 2020, there was $ 11,778,000 and $ 11,900,000 , respectively, of total unrecognized compensation expense related to nonvested restricted stock awards, which had a remaining weighted-average vesting period of 2.4 years and 2.2 years, respectively.

The total compensation expense during the three and nine months ended October 31, 2020 was $ 1,082,000 and $ 2,941,000 , respectively, compared to $ 1,211,000 and $ 3,351,000 , respectively, for the three and nine months ended November 2, 2019.

These expenses are classified as a component of Selling, general and administrative expenses in the Condensed Consolidated Statements of Income and Comprehensive Income.

The following summary shows the changes in the shares of unvested restricted stock outstanding during the nine months ended October 31, 2020:

Weighted Average

In accordance with ASC

718, the fair value

of current restricted stock

awards is estimated on

grant based on

the market price

of the Company’s

amortized to compensation

straight-line basis over

vesting periods.

2021 and January

30, 2021, there

, respectively,

of total unrecognized compensation

expense related to

nonvested restricted stock

awards, which had

a remaining weighted-average

vesting period of

years, respectively.

total compensation expense during

the three months

ended May 1, 2021

These expenses

classified as a component of

Selling, general and administrative expenses in

the Condensed Consolidated

Statements of Income (Loss).

The following

shows the changes

in the shares of unvested

stock outstanding

three months ended May 1,

Grant Date Fair

Value Per Share

Restricted stock awards at February 1, 2020

Restricted stock awards at January 30, 2021

Forfeited or expired

Restricted stock awards at October 31, 2020

Restricted stock awards at May 1, 2021

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 6 – STOCK BASED-COMPENSATION (CONTINUED):

The Company’s Employee Stock Purchase Plan allows eligible full-time employees to purchase a limited number of shares of the Company’s Class A Common Stock during each semi-annual offering period at a 15% discount through payroll deductions.

During the nine months ended October 31, 2020 and November 2, 2019, the Company sold 48,191 and 44,330 shares to employees at an average discount of $ 1.43 and $ 2.24 per share, respectively, under the Employee Stock Purchase Plan.

The compensation expense recognized for the 15% discount given under the Employee Stock Purchase Plan was approximately $ 69,000 and $ 99,000 for the nine months ended October 31, 2020 and November 2, 2019, respectively.

These expenses are classified as a component of Selling, general and administrative expenses.

NOTE 7 – FAIR VALUE MEASUREMENTS:

The following tables set forth information regarding the Company’s financial assets and liabilities that are measured at fair value (in thousands) as of October 31, 2020 and February 1, 2020:

October 31, 2020

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

The Company’s Employee Stock Purchase Plan

to purchase a limited

number of shares of the Company’s Class

A Common Stock during each semi-annual offering period at a

shares to employees

at an average discount

respectively,

under the Employee Stock Purchase

The compensation

expense recognized

given under the Employee Stock Purchase

Plan was approximately $

three months ended

2020, respectively.

These expenses ar

and administrative

in the Condensed Consolidated Statements o

FAIR VALUE MEASUREMENTS:

The following tables

set forth information regarding

the Company’s financial assets and liabilities that are

State/Municipal Bonds

4 unchanged sentences

Corporate Equities

Certificates of Deposit

Commercial Paper

Deferred Compensation

1 unchanged sentence

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

February 1, 2020

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

State/Municipal Bonds

4 unchanged sentences

Corporate Equities

Certificates of Deposit

Commercial Paper

Deferred Compensation

Total Liabilities

The Company’s investment portfolio was primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at October 31, 2020 and February 1, 2020.

The state, municipal and corporate bonds have contractual maturities which range from two weeks to five years .

Treasury Notes and Certificates of Deposit have contractual maturities which range from two weeks to three years .

These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted cash and Restricted short-term investments on the accompanying Condensed Consolidated Balance Sheets.

These assets are carried at fair value with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

The asset-backed securities are bonds comprised of auto loans and bank credit cards that carry AAA ratings.

The auto loan asset-backed securities are backed by static pools of auto loans that were originated and serviced by captive auto finance units, banks or finance companies.

The bank credit card asset-backed securities are backed by revolving pools of credit card receivables generated by account holders of cards from American Express, Citibank, JPMorgan Chase, Capital One and Discover.

Additionally, at October 31, 2020, the Company had $ 1.5 million of corporate equities and deferred compensation plan assets of $ 10.5 million.

At February 1, 2020, the Company had $ 0.7 million of corporate equities and deferred compensation plan assets of $ 10.5 million.

All of these assets are recorded within Other assets in the Condensed Consolidated Balance Sheets.

Level 1 category securities are measured at fair value using quoted active market prices.

Level 2 investment securities include corporate bonds, municipal bonds and asset-backed securities for which quoted prices may not be available on active exchanges for identical instruments.

Their fair value is principally based on market values determined by management with assistance of a third-party pricing service.

Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors.

Deferred compensation plan assets consist of life insurance policies.

These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the

The Company’s investment

was primarily

bonds and tax-exempt

debt securities

held in managed

with underlying

of A or better

at May 1, 2021

and January 30, 2021.

The state, municipal and corporate bonds have con

are classified

as available-for-sale

and are recorded

as Short-term

cash, Restricted

and Other assets

on the accompanying

at fair value with

losses reported

net of taxes in Accumulated

other comprehensive

The asset-backed

are bonds comprised

of auto loans

and bank credit

The auto loan

pools of auto

were originated

credit card asset

are backed by

by account holders

from American Express,

JPMorgan Chase,

Additionally,

plan assets of $

At January 30, 2021, the Company

Level 1 category

at fair value

active market

Level 2 investment

and municipal bonds for

which quoted prices may

not be available on

for identical instruments.

Their fair value is principally based on market

with assistance of

Since quoted prices

in active markets

are not available,

are determined

by the pricing

using observable

such as quotes from less active markets

and/or quoted

of securities

characteristics,

of life insurance

cash surrender

of the underlying

and are therefore

with the life

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

fair value of the underlying assets and discounted cash flow and are therefore classified within Level 3 of the valuation hierarchy.

The Level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds’ net asset values, as recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

These funds are designed to mirror mutual funds and money market funds that are observable and actively traded.

The following tables summarize the change in fair value of the Company’s financial assets and liabilities measured using Level 3 inputs as of October 31, 2020 and February 1, 2020 (in thousands):

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

the value of which is tracked via underlying insurance funds’

net asset values, as

These funds are

are observable

The following tables summarize the change in

fair value of the

Company’s financial

assets and liabilities

in thousands):

Measurements Using

2 unchanged sentences

Cash Surrender Value

Beginning Balance at February 1, 2020

Beginning Balance at January 30, 2021

Total gains or (losses)

1 unchanged sentence

Included in other comprehensive income

Ending Balance at October 31, 2020

Ending Balance at May 1, 2021

Measurements Using

2 unchanged sentences

Deferred Compensation

Beginning Balance at February 1, 2020

Beginning Balance at January 30, 2021

Total (gains) or losses

1 unchanged sentence

Included in other comprehensive income

Ending Balance at October 31, 2020

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

Ending Balance at May 1, 2021

Measurements Using

6 unchanged sentences

Included in other comprehensive income

Ending Balance at February 1, 2020

Ending Balance at January 30, 2021

Measurements Using

Significant Unobservable

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

Liability Inputs (Level 3)

4 unchanged sentences

Included in other comprehensive income

Ending Balance at February 1, 2020

Ending Balance at January 30, 2021

The presentation in the table above has been revised to reflect current year presentation.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS:

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses.

The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods.

The new accounting rules will be effective for the Company in the first quarter of 2021.

The Company is currently in the process of evaluating the impact of adoption of the new accounting rules on the Company’s financial position, results of operations, cash flows and disclosures.

In March 2020

issued ASU 2020-

Reference Rate

Reform (Topic

Facilitation of

Effects of Referenc

Rate Reform on Financial Reporting

In January 2021,

the FASB clarified

of that guidance

with the issuance of

ASU 2021-01, “Reference Rate

Scope.” The new

accounting rules provide

optional expedients and

exceptions for

applying GAAP to

contracts and

transactions affected by reference

The amendments

in this standard can

be adopted any time

fourth quarter of

is currently in

the process of

evaluating the

the Company’s

financial condition,

operations, cash

NOTE 9 – INCOME TAXES:

The Company had an effective tax rate for the first nine months of 2020 of 36.7 % (Benefit) compared to 14.3 % (Expense) for the first nine months of 2019.

The increase in the effective tax rate for the first nine months was primarily due to the federal net operating loss carryback provisions of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) and release of reserves for uncertain tax positions due to expiration of statute of limitations, offset by valuation allowances against state income net operating losses, less income tax credits, and an upward adjustment in the reserves for uncertain tax positions specific to state income taxes recorded in the first quarter of 2020.

The Company assessed the likelihood that deferred tax assets related to state net operating loss carryforwards will be realized in light of the adverse impact on the Company's financial statements and operations due to COVID-19.

Based on this assessment, the Company concluded that it is more likely than not that the Company will not be able to realize the state net operating losses and, accordingly, has recorded a valuation allowance against the existing deferred tax assets.

The annual effective tax rate for the current fiscal year is impacted by the ability to carryback federal net operating losses due to the CARES Act, partially offset by changes in management’s judgment regarding the ability to realize deferred tax assets, primarily state income net operating losses generated in the current fiscal year.

The Company has factored the realizability of these deferred tax assets generated as a result of projected current year losses into its estimated annual effective rate for the current year.

To the extent that actual results and/or events differ from the predicted results, the Company may continue to see effects on the annual effective tax rate.

Further, the CARES Act allows the Company to carryback losses to 2015;

therefore, the Company has recorded $27.0 million of estimated refunds calculated through the third quarter of 2020 in Accounts receivable in the Condensed Consolidated Balance Sheets.

The Company had

an effective tax

first quarter of

% (Expense) compared

effective tax

% (Benefit) for

the first quarter

decrease in the

2021 first quarter

was primarily due

pre-tax earnings and

ability to realize

foreign tax credits,

adjustment in

for uncertain

tax positions

the Coronavirus

Economic Security

CARES”) allows

Company has recorded $33.0

million of estimated refunds

calculated through the first

quarter of 2021 in

Accounts receivable in the Condensed Consolidated Balance Sheets.

NOTE 10 – COMMITMENTS AND CONTINGENCIES:

The Company is, from time to time, involved in routine litigation incidental to the conduct of its business, including litigation regarding the merchandise that it sells, litigation regarding intellectual property, litigation instituted by persons injured upon premises under its control, litigation with respect to various

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

employment matters, including alleged discrimination and wage and hour litigation, and litigation with present or former employees.

Although such litigation is routine and incidental to the conduct of the Company’s business, as with any business of its size with a significant number of employees and significant merchandise sales, such litigation could result in large monetary awards.

Based on information currently available, management does not believe that any reasonably possible losses arising from current pending litigation will have a material adverse effect on the Company’s condensed consolidated financial statements.

However, given the inherent uncertainties involved in such matters, an adverse outcome in one or more such matters could materially and adversely affect the Company’s financial condition, results of operations and cash flows in any particular reporting period.

The Company accrues for these matters when the liability is deemed probable and reasonably estimable.

The Company is, from time to time, involved in routine litigation incidental to the conduct of its business,

including litigation

regarding the

merchandise that

litigation regarding

intellectual property,

litigation instituted by

persons injured upon

premises under its

control, litigation with

respect to various

employment matters, including

alleged discrimination and

hour litigation, and

litigation with

present or former employees.

Although such litigation

is routine and

incidental to the conduct

of the Company’s

business, as with

significant number

and significant

merchandise sales,

litigation could result

monetary awards.

on information currently

available, management

any reasonably possible

losses arising

pending litigation

material adverse effect

on its condensed

consolidated financial statements.

However, given

uncertainties involved in such

matters, an adverse outcome

more such matters could

and adversely

Company’s financial

condition, results

particular reporting period.

The Company accrues for

these matters when the liability is deemed probable

and reasonably estimable.

NOTE 11 – REVENUE RECOGNITION:

The Company recognizes sales at the point of purchase when the customer takes possession of the merchandise and pays for the purchase, generally with cash or credit.

Sales from purchases made with Cato credit, gift cards and layaway sales from stores are also recorded when the customer takes possession of the merchandise.

E-commerce sales are recorded when the risk of loss is transferred to the customer.

Gift cards are recorded as deferred revenue until they are redeemed or forfeited.

Layaway sales are recorded as deferred revenue until the customer takes possession or forfeits the merchandise.

Gift cards do not have expiration dates.

A provision is made for estimated merchandise returns based on sales volumes and the Company’s experience;

actual returns have not varied materially from historical amounts.

A provision is made for estimated write-offs associated with sales made with the Company’s proprietary credit card.

Amounts related to shipping and handling billed to customers in a sales transaction are classified as Other revenue and the costs related to shipping product to customers (billed and accrued) are classified as Cost of goods sold.

The Company offers its own proprietary credit card to customers.

All credit activity is performed by the Company’s wholly-owned subsidiaries.

None of the credit card receivables are secured.

The Company estimated uncollectible amounts of $, 311000 and $, 670000 for the nine months ended October 31, 2020 and November 2, 2019, respectively, on sales purchased on the Company’s proprietary credit card of $ 11.1 million and $ 20.3 million for the nine months ended October 31, 2020 and November 2, 2019, respectively.

The following table provides information about receivables and contract liabilities from contracts with customers (in thousands):

recognizes sales

purchase when

takes possession

merchandise and

the purchase,

generally with cash

Sales from purchases

Cato credit, gift cards

and layaway sales from stores

are also recorded when

the customer takes

possession of the merchandise.

E-commerce sales are recorded

when the risk of

loss is transferred to

Gift cards are recorded

as deferred revenue until they are redeemed or

Layaway sales

revenue until

takes possession

the merchandise.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

cards do not have expiration

A provision is made

for estimated merchandise returns based on

volumes and the

Company’s experience;

actual returns have

not varied materially from

estimated write-offs

associated with

sales made with

the Company’s

proprietary credit card.

Amounts related to

shipping and handling

billed to customers

transaction are classified

as Other revenue

and the costs

related to shipping

product to customers

and accrued) are classified as Cost of goods sold.

The Company offers

its own proprietary credit

card to customers.

All credit activity is

performed by the

Company’s wholly-

owned subsidiaries.

credit card receivables

estimated customer credit losses of $

for the periods ended May 1,

2021 and May 2,

2020, respectively, on

sales purchased by the Company’s

proprietary credit card of $

million and $

million for the periods ended May 1, 2021 and May 2, 2020, respectively.

The following

table provides

information about

receivables and

contract liabilities

from contracts

customers (in thousands):

Balance as of

October 31, 2020

February 1, 2020

January 30, 2021

Proprietary Credit Card Receivables, net

Gift Card Liability

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

NOTE 12 – LEASES:

The Company determines whether an arrangement is a lease at inception.

The Company has operating leases for stores, offices and equipment.

Its leases have remaining lease terms of one year to 10 years, some of which include options to extend the lease term for up to five years, and some of which include options to terminate the lease within one year.

The Company considers these options in determining the lease term used to establish its right-of-use assets and lease liabilities.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date of the lease in determining the present value of lease payments.

determines whether

an arrangement

stores, offices

and equipment.

leases have remaining

lease terms of

some of which

include options to

extend the lease

to five years,

options to terminate

the lease within

The Company considers

these options in

determining the

lease term used

to establish its

right-of-use assets and

lease liabilities.

Company’s lease

do not contain any material residual value guarantees or material restrictive

Company’s leases

implicit rate,

its estimated

borrowing rate based on

the information available at

commencement date of the

lease in determining the

present value of lease payments.

The components of lease cost are shown below (in thousands):

Three Months Ended

October 31, 2020

November 2, 2019

Operating lease cost (a)

Variable lease cost (b)

ASC 840 prepaid rent expense (c)

(a) Includes right-of-use asset amortization of ($0.8) million and ($1.0) million for the three months ended October 31, 2020 and November 2, 2019, respectively.

(b) Primarily related to monthly percentage rent for stores not presented on the balance sheet.

Nine Months Ended

October 31, 2020

November 2, 2019

Operating lease cost (a)

Variable lease cost (b)

ASC 840 prepaid rent expense (c)

(a) Includes right-of-use asset amortization of ($3.5) million and ($3.9) million for the nine months ended October 31, 2020 and November 2, 2019, respectively.

lease cost (b)

(a) Includes right-of-use asset amortization of ($1.2) million and

($1.7) million for the three months ended

May 1, 2021 and May 2, 2020, respectively.

(b) Primarily related to monthly percentage rent for stores not presented on the balance sheet.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2020 AND NOVEMBER 2, 2019

Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows (in thousands):

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MAY 1, 2021 AND MAY

Supplemental cash flow information

and non-cash activity related

to the Company’s

operating leases are

as follows (in thousands):

Operating cash flow information:

Three Months Ended

October 31, 2020

November 2, 2019

Cash paid for amounts included in the measurement of lease liabilities

1 unchanged sentence

Right-of-use assets obtained in exchange for lease obligations

Nine Months Ended

October 31, 2020

November 2, 2019

Cash paid for amounts included in the measurement of lease liabilities

Non-cash activity:

Right-of-use assets obtained in exchange for lease obligations

Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:

October 31, 2020

November 2, 2019

Weighted-average remaining

the Company’s

operating leases

Weighted-average remaining lease term

Weighted-average discount rate

Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows (in thousands):

As of May 1, 2021,

the maturities of lease liabilities by fiscal year for the Company’s operating leases

as follows (in thousands):

Total lease payments

1 unchanged sentence

Present value of lease liabilities

(a) Excluding the 9 months ended October 31, 2020.

(a) Excluding the 3 months ended May 1, 2021.

THE CATO CORPORATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements