What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-19 compared with 2021-08-25 · 152 added, 123 removed, 474 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Nine Months Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

(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

7 unchanged sentences

deferred income taxes of ($ 150 ) and ($ 235 ) for the three and

six months ended July 31, 2021 and $ 146 and $ 56 for

the three and six months ended August 1, 2020, respectively

nine months ended October 30, 2021 and ($ 85 ) and ($ 29 ) for

the three and nine months ended October 31, 2020, respectively

Comprehensive income (loss)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

July 31, 2021

October 30, 2021

January 30, 2021

6 unchanged sentences

Accounts receivable, net of allowance for customer credit losses of

$ 742 and $ 605 at July 31, 2021 and January 30, 2021, respectively

$ 807 and $ 605 at October 30, 2021 and January 30, 2021, respectively

Merchandise inventories

20 unchanged sentences

20,261,248 shares and 20,839,795 shares

issued at July 31, 2021 and January 30, 2021, respectively

issued at October 30, 2021 and January 30, 2021, respectively

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

1 unchanged sentence

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

issued at July 31, 2021 and January 30, 2021, respectively

issued at October 30, 2021 and January 30, 2021, respectively

Additional paid-in capital

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

July 31, 2021

August 1, 2020

Nine Months Ended

October 30, 2021

October 31, 2020

(Dollars in thousands)

67 unchanged sentences

Balance — July 31, 2021

Comprehensive income:

Net income (loss)

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

deferred income tax benefit of ($ 150 )

Dividends paid ($ 0.17 per share)

Class A common stock sold through employee stock purchase

plan — 1,957 shares

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans —

( 9,028 ) shares

Repurchase and retirement of treasury shares – 508,266 shares

Balance — October 30, 2021

See notes to condensed consolidated financial statements (unaudited).

29 unchanged sentences

Balance — August 1, 2020

Comprehensive income:

Net income (loss)

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

deferred income tax benefit of ($ 85 )

Dividends paid ($0.00 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).

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

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 July 31, 2021 and August 1, 2020 are unaudited.

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

3 unchanged sentences

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 America.

Subsequent to July 31, 2021, the Company repurchased 168,390 shares for $2,802,850.

On November 18, 2021, the Board of Directors maintained the quarterly dividend at $0.17 per share.

COVID-19 Update

The COVID-19 pandemic adversely impacted the Company's business, financial condition and operating results through fiscal 2020.

The first and second quarters of 2021 saw significant improvements in sales compared to 2020.

Through the first three quarters of 2021, the Company saw significant improvements in sales compared to 2020.

This improvement was primarily attributable to government stimulus, increased customer traffic, states lifting capacity limits as more people were vaccinated, consumers’ increasing comfort level with venturing out to social events and customers’ preparing to return to work.

However, the Company’s sales were well below 2019 sales for the comparable period, and there is still a high level of uncertainty regarding the lingering effects of the pandemic, as well as renewed concerns over the impact of new, more transmissible variants of the virus, slowing vaccination rates and related factors that have in some cases slowed and may continue to slow progress toward the return to pre-pandemic activities and levels of consumer confidence.

However, the Company’s sales remain well below 2019 sales for the comparable period, and there is still significant uncertainty regarding the lingering effects of the pandemic, as well as concerns over the impact of new or potential variants of the virus that are more transmissible or severe, stagnant vaccination rates and related factors continue to impede progress toward the return to pre-pandemic activities and levels of consumer confidence.

The Company faces additional uncertainty from the continued effects of disruption in the global supply chain and available workers as it attempts to hire associates as its operating hours continue to expand.

The Company expects that these uncertainties and perhaps others related to the pandemic will continue to impact the Company in fiscal 2021 and possibly beyond.

The Company expects that these uncertainties and perhaps others related to the pandemic will continue to impact the Company throughout the upcoming holiday shopping season and remainder of fiscal 2021 and likely beyond.

The 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 actual or potential adverse changes in conditions relating to the pandemic, whether due to increases in case counts, state and local orders, reductions in store traffic and customer demand, labor shortages, or all of these factors, (ii) lower net sales caused by the delay of inventory production and fulfillment, (iii) and incremental costs associated with efforts to mitigate the effects of the outbreak, including increased freight and logistics costs and other expenses.

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 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 and possibly beyond, the duration and severity of these effects will depend on the course of future

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

developments, which are highly uncertain, including the relative speed and success of, as well as public confidence in, mitigation measures such as the current effort to vaccinate substantial portions of the U.S.

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

While the Company currently anticipates a continuation of the adverse impacts of COVID-19 during 2021 and likely beyond, the duration and severity of these effects will depend on the course of future developments, which are highly uncertain, including the relative speed and success of, as well as public confidence in, mitigation measures such as the current effort to vaccinate substantial portions of the U.S.

and global population, emerging information regarding variants of the virus or new viruses and their potential impact on current mitigation efforts, public attitudes toward continued compliance with containment and mitigation measures, and possible new information and understanding that could alter the course and duration of current measures to combat the spread of the virus.

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 2 - EARNINGS PER SHARE:

6 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Nine Months Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

(Dollars in thousands)

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

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 July 31, 2021:

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the three months ended October 30, 2021:

Changes in Accumulated Other

3 unchanged sentences

Available-for-Sale

Beginning Balance at May 1, 2021

Beginning Balance at July 31, 2021

Other comprehensive income before

3 unchanged sentences

Net current-period other comprehensive income

Ending Balance at July 31, 2021

Ending Balance at October 30, 2021

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

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

(b) Includes $ 34 impact of accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

(b) Includes $ 92 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 $ 21 .

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the six months ended July 31, 2021:

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the nine months ended October 30, 2021:

Changes in Accumulated Other

9 unchanged sentences

Net current-period other comprehensive income

Ending Balance at July 31, 2021

Ending Balance at October 30, 2021

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

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

(b) Includes $ 85 impact of accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

(b) Includes $ 177 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 $ 41 .

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

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 August 1, 2020:

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:

Changes in Accumulated Other

3 unchanged sentences

Available-for-Sale

Beginning Balance at May 2, 2020

Beginning Balance at August 1, 2020

Other comprehensive income before

3 unchanged sentences

Net current-period other comprehensive income

Ending Balance at August 1, 2020

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 $ 83 impact of Accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

(b) Includes $ 89 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 $ 21 .

The following table sets forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the six months ended August 1, 2020:

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:

Changes in Accumulated Other

9 unchanged sentences

Net current-period other comprehensive income

Ending Balance at August 1, 2020

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 $ 738 impact of Accumulated other comprehensive income reclassifications into Interest and other income for net gains on available-for-sale securities.

(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 .

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 4 – FINANCING ARRANGEMENTS:

As of July 31, 2021, the Company had an unsecured revolving credit agreement, which provides for borrowings of up to $ 35.0 million, less the balance of any revocable letters of credit related to purchase commitments.

As of October 30, 2021, the Company had an unsecured revolving credit agreement, which provides for borrowings of up to $ 35.0 million, less the balance of any revocable letters of credit related to purchase commitments.

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 July 31, 2021.

There were no borrowings outstanding under this credit facility, nor any outstanding letters of credit that reduced borrowing availability, as of July 31, 2021 or January 30, 2021.

The weighted average interest rate under the credit facility was zero at July 31, 2021 due to no borrowings outstanding.

At July 31, 2021 and January 30, 2021, the Company had no outstanding revocable letters of credit relating to purchase commitments.

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 30, 2021.

There were no borrowings outstanding under this credit facility, nor any outstanding letters of credit that reduced borrowing availability, as of October 30, 2021 or January 30, 2021.

The weighted average interest rate under the credit facility was zero at October 30, 2021 due to no borrowings outstanding.

NOTE 5 – REPORTABLE SEGMENT INFORMATION:

7 unchanged sentences

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 32 states as of July 31, 2021, principally in the southeastern United States .

The Company operates its women’s fashion specialty retail stores in 32 states as of October 30, 2021, 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 wholly-owned subsidiary of the Company.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 5 – REPORTABLE SEGMENT INFORMATION (CONTINUED):

1 unchanged sentence

Three Months Ended

Six Months Ended

July 31, 2021

Nine Months Ended

October 30, 2021

Interest and other income

5 unchanged sentences

Three Months Ended

Six Months Ended

August 1, 2020

Nine Months Ended

October 31, 2020

Interest and other income

4 unchanged sentences

Capital expenditures

Total assets as of July 31, 2021

Total assets as of October 30, 2021

Total assets as of January 30, 2021

3 unchanged sentences

Three Months Ended

Six Months Ended

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Nine Months Ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Other expenses

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 6 – STOCK-BASED COMPENSATION:

As of July 31, 2021, the Company had two long-term compensation plans pursuant to which stock-based compensation was outstanding or could be granted.

As of October 30, 2021, 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 July 31, 2021:

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 30, 2021:

Options and/or restricted stock initially authorized

Options and/or restricted stock available for grant:

July 31, 2021

October 30, 2021

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 July 31, 2021 and January 30, 2021, there was $ 13,551,000 and $ 10,550,000 , respectively, of total unrecognized compensation expense related to nonvested restricted stock awards, which had a remaining weighted-average vesting period of 2.8 years and 2.1 years, respectively.

The total compensation expense during the three and six months ended July 31, 2021 was $ 1,597,000 and $ 1,880,000 , respectively, compared to $ 1,253,000 and $ 1,859,000 , respectively, for the three and six months ended August 1, 2020.

As of October 30, 2021 and January 30, 2021, there was $ 12,323,000 and $ 10,550,000 , respectively, of total unrecognized compensation expense related to nonvested restricted stock awards, which had a remaining weighted-average vesting period of 2.5 years and 2.1 years, respectively.

The total compensation expense during the three and nine months ended October 30, 2021 was $ 1,088,000 and $ 2,968,000 , respectively, compared to $ 1,082,000 and $ 2,941,000 , respectively, for the three and nine months ended October 31, 2020.

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

The following summary shows the changes in the shares of unvested restricted stock outstanding during the six months ended July 31, 2021:

The following summary shows the changes in the shares of unvested restricted stock outstanding during the nine months ended October 30, 2021:

Weighted Average

3 unchanged sentences

Forfeited or expired

Restricted stock awards at July 31, 2021

Restricted stock awards at October 30, 2021

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 6 – STOCK BASED-COMPENSATION (CONTINUED):

The Company’s Amended and Restated 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 six months ended July 31, 2021 and August 1, 2020, the Company sold 20,584 and 26,957 shares to employees at an average discount of $ 1.26 and $ 1.64 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 $ 26,000 and $ 44,000 for the six months ended July 31, 2021 and August 1, 2020, respectively.

During the nine months ended October 30, 2021 and October 31, 2020, the Company sold 22,541 and 48,191 shares to employees at an average discount of $ 1.38 and $ 1.43 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 $ 31,000 and $ 69,000 for the nine months ended October 30, 2021 and October 31, 2020, 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 July 31, 2021 and January 30, 2021:

July 31, 2021

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 30, 2021 and January 30, 2021:

October 30, 2021

State/Municipal Bonds

9 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

January 30, 2021

8 unchanged sentences

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 July 31, 2021 and January 30, 2021.

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

Treasury Notes have contractual maturities which range from two months to two years .

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

Treasury Notes have contractual maturities which range from six months to two 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.

3 unchanged sentences

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 July 31, 2021, the Company had $ 0.8 million of corporate equities and deferred compensation plan assets of $ 11.7 million.

Additionally, at October 30, 2021, the Company had $ 0.8 million of corporate equities and deferred compensation plan assets of $ 11.8 million.

At January 30, 2021, the Company had $ 0.7 million of corporate equities and deferred compensation plan assets of $ 11.3 million.

5 unchanged sentences

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

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 CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

valuation hierarchy.

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

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 July 31, 2021 and January 30, 2021 (in thousands):

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 30, 2021 and January 30, 2021 (in thousands):

Measurements Using

6 unchanged sentences

Included in other comprehensive income

Ending Balance at July 31, 2021

Ending Balance at October 30, 2021

Measurements Using

6 unchanged sentences

Included in other comprehensive income

Ending Balance at July 31, 2021

Ending Balance at October 30, 2021

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

Measurements Using

18 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS:

6 unchanged sentences

NOTE 9 – INCOME TAXES:

The Company had an effective tax rate for the first six months of 2021 of 18.0 % (Expense) compared to 26.7 % (Benefit) for the first six months of 2020.

The change in the effective tax rate for the first six months was primarily due to higher pre-tax earnings and ability to realize foreign tax credits, offset by increases in state income taxes and an upward adjustment in reserves for uncertain tax positions specific to state income taxes in the first quarter of 2020.

The Company had an effective tax rate for the first nine months of 2021 of 4.3 % (Expense) compared to 36.7 % (Benefit) for the first nine months of 2020.

The change in the effective tax rate for the first nine months was primarily due to higher pre-tax earnings, ability to realize foreign tax credits, release of reserves for uncertain tax positions due to the expiration of the statute of limitations and a favorable adjustment to the federal net operating loss carryback, partially offset by increases in state income taxes.

Further, the Coronavirus Aid, Relief and Economic Security Act (“CARES”) allows the Company to carryback losses five years;

therefore, the Company has recorded $33.0 million of estimated refunds calculated through the first quarter of 2021 in Accounts receivable on the Condensed Consolidated Balance Sheets.

therefore, the Company has recorded $38.1 million of estimated refunds calculated through the third quarter of 2021 in Accounts receivable in the Condensed Consolidated Balance Sheets.

NOTE 10 – COMMITMENTS AND CONTINGENCIES:

9 unchanged sentences

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 of, or forfeits, the merchandise.

Gift cards do not have expiration dates.

A provision is made for estimated merchandise returns based on sales

Layaway sales

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

volumes and the Company’s experience;

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

are recorded as deferred revenue until the customer takes possession of, 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.

4 unchanged sentences

None of the credit card receivables are secured.

During the three and six months ended July 31, 2021, the Company estimated customer credit losses of $, 144000 and $ 275,000 , respectively, compared to $, 116000 and $ 185,000 for the three and six months ended August 1, 2020, respectively.

Sales purchased on the Company’s proprietary credit card for the three and six months ended July 31, 2021 were $ 4.8 million and $ 9.2 million, respectively, compared to $ 4.3 million and $ 6.9 million for the three and six months ended August 1, 2020, respectively.

During the three and nine months ended October 30, 2021, the Company estimated customer credit losses of $, 134000 and $, 409000 , respectively, compared to $ 125,000 and $ 311,000 for the three and nine months ended October 31, 2020, respectively.

Sales purchased on the Company’s proprietary credit card for the three and nine months ended October 30, 2021 were $ 4.4 million and $ 13.6 million, respectively, compared to $ 4.2 million and $ 11.1 million for the three and nine months ended October 31, 2020, respectively.

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

Balance as of

July 31, 2021

October 30, 2021

January 30, 2021

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

NOTE 12 – LEASES:

2 unchanged sentences

Its leases have remaining lease terms of up to 10 years based on the estimated likelihood of renewal.

Some 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.

Some include options to extend the lease term for up to five years, and some 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.

3 unchanged sentences

Three Months Ended

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

Operating lease cost (a)

Variable lease cost (b)

(a) Includes right-of-use asset amortization of ($0.5) million and ($1.0) million for the three months ended July 31, 2021 and August 1, 2020, respectively.

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

Six Months Ended

July 31, 2021

August 1, 2020

(a) Includes right-of-use asset amortization of ($0.4) million and ($0.8) million for the three months ended October 30, 2021 and October 31, 2020, respectively.

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

Nine Months Ended

October 30, 2021

October 31, 2020

Operating lease cost (a)

Variable lease cost (b)

(a) Includes right-of-use asset amortization of ($1.6) million and ($2.7) million for the six months ended July 31, 2021 and August 1, 2020, respectively.

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

(a) Includes right-of-use asset amortization of ($2.1) million and ($3.5) million for the nine months ended October 30, 2021 and October 31, 2020, respectively.

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

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JULY 31, 2021 AND AUGUST 1, 2020

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

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

1 unchanged sentence

Three Months Ended

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

Cash paid for amounts included in the measurement of lease liabilities

1 unchanged sentence

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

Six Months Ended

July 31, 2021

August 1, 2020

Nine Months Ended

October 30, 2021

October 31, 2020

Cash paid for amounts included in the measurement of lease liabilities

5 unchanged sentences

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

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

Weighted-average remaining lease term

1 unchanged sentence

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

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 30, 2021 AND OCTOBER 31, 2020

Total lease payments

1 unchanged sentence

Present value of lease liabilities

(a) Excluding the 6 months ended July 31, 2021.

(a) Excluding the 9 months ended October 30, 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