What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-23 compared with 2021-03-29 · 805 added, 1430 removed, 689 unchanged (76% of the section changed)

1 unchanged sentence

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

Report of Independent Registered Public Accounting Firm

................................................................

Consolidated Statements of Income (Loss) and Comprehensive

Income (Loss) for the fiscal

years ended January 30, 2021, February 1, 2020 and February 2,

Report of Independent Registered Public Accounting Firm (PCAOB ID

) .....................................

Consolidated Balance Sheets at January 30, 2021 and

February 1, 2020

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

for the fiscal

years ended January 29, 2022, January 30, 2021 and February 1, 2020 ................................

Consolidated Balance Sheets at January 29, 2022 and January 30, 2021

.............................................

Consolidated Statements of Cash Flows for the fiscal years ended

January 30, 2021, February 1, 2020

Consolidated Statements of Cash Flows for the fiscal years ended January 29, 2022,

January 30, 2021

and February 1, 2020................................

1 unchanged sentence

.........................

Consolidated Statements of Stockholders’ Equity for the fiscal years

ended January 30, 2021,

February 1, 2020 and February 2, 2019 ................................

Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 29,

January 30, 2021 and February 1, 2020 ................................................................

............................

Notes to Consolidated Financial Statements ..........................................................................................

..........................

Schedule II — Valuation

and Qualifying Accounts for the fiscal years ended January 29, 2022,

February 1, 2020 and February 2, 2019 ................................

January 30, 2021 and February 1, 2020 ................................................................

............................

Report of Independent Registered Public Accounting

of Directors and Stockholders of The Cato Corporation

Opinions on the Financial Statements and Internal Control over

Financial Reporting

We have audited

the accompanying consolidated balance sheets of

The Cato Corporation and its subsidiaries (the

“Company”) as

of January 30,

February 1, 2020

and the related

consolidated statements of

income (loss) and

comprehensive income

stockholders’ equity and

the three years

January 30, 2021,

including the related

notes and financial

statement schedule listed

in the accompanying index

(collectively referred to

as the “consolidated

financial statements”).

also have audited

the Company’s internal

over financial reporting

as of January

30, 2021, based

on criteria established

in Internal Control

– Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway

Commission (COSO).

In our opinion, the

consolidated financial statements

referred to above present

fairly, in all

material respects, the financial

position of the

Company as of January

February 1, 2020,

and the results of

its operations and its

conformity with

accounting principles

accepted in the United

States of America.

our opinion, the Company maintained,

in all material respects,

internal control

over financial

criteria established

Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

the consolidated

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of The Cato Corporation

Opinions on the Financial Statements and Internal

Control over Financial Reporting

We have audited the accompanying consolidated balance

sheets of The Cato Corporation and its

subsidiaries (the “Company”) as of January 29, 2022 and

January 30, 2021, and the related consolidated

statements of income (loss) and comprehensive income (loss),

of stockholders’ equity and of cash flows

for each of the three years in the period ended January 29, 2022,

including the related notes and financial

statement schedule listed in the accompanying index (collectively

referred to as the “consolidated

financial statements”).

accounts for leases as of February 3, 2019.

We also have audited the Company's

internal control over financial reporting as of

January 29,2022, based on criteria established in

Internal Control - Integrated Framework

(2013) issued

by the Committee of Sponsoring Organizations of the

Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred

to above present fairly, in all material

respects, the financial position of the Company as of January

29, 2022 and January 30, 2021, and the

results of its operations and its cash flows for each of the

three years in the period ended January 29,

2022 in conformity with accounting principles generally

accepted in the United States of America.

our opinion, the Company maintained, in all material

respects, effective internal control over financial

reporting as of January 29, 2022, based on criteria established

Internal Control - Integrated

(2013) issued by the COSO.

Basis for Opinions

The Company's management

is responsible for

these consolidated financial

statements, for maintaining

effective internal

financial reporting,

its assessment

effectiveness of

internal control

over financial

Management’s Report

on Internal Control

Over Financial Reporting

appearing under

responsibility is to

express opinions

Company’s consolidated

financial statements

Company's internal

control over financial reporting

based on our audits.

a public accounting

firm registered with the

Public Company

Accounting Oversight Board (United States)

(PCAOB) and are required to be

independent with respect to the Company

accordance with the

federal securities

applicable rules and

regulations of

the Securities and

Commission and the PCAOB.

in accordance

Those standards

perform the audits

to obtain reasonable

assurance about whether the

consolidated financial statements

are free of material

misstatement, whether due to error or fraud,

and whether effective internal control over financial

reporting was maintained

The Company's management is responsible for these consolidated

financial statements, for maintaining

effective internal control over financial reporting, and for

its assessment of the effectiveness of internal

control over financial reporting, included in Management’s

Report on Internal Control Over Financial

Reporting appearing under Item 9A.

Our responsibility

is to express opinions on the Company’s

consolidated financial statements and on the Company's

internal control over financial reporting based on

We are a public accounting firm registered with the

Public Company Accounting Oversight

Board (United States) (PCAOB) and are required to be independent

with respect to the Company in

accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that

we plan and perform the audits to obtain reasonable assurance

about whether the consolidated financial

statements are free of material misstatement, whether due

to error or fraud, and whether effective

internal control over financial reporting was maintained

in all material respects.

Our audits of the consolidated financial

statements included performing procedures to assess

the risks of material

misstatement of

the consolidated

financial statements,

and performing

procedures that

respond to those risks.

Our audits of the consolidated financial statements included

performing procedures to assess the risks of

material misstatement of the consolidated financial statements,

whether due to error or fraud, and

performing procedures that respond to those risks.

Such procedures

included examining, on a test basis,

evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included

evaluating the accounting principles used and

significant estimates

management, as

evaluating the

overall presentation

consolidated financial

of internal control

over financial reporting

included obtaining an

understanding of internal

over financial

reporting, assessing

material weakness

evaluating the

operating effectiveness

control based

evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also

included evaluating the accounting principles used and significant

estimates made by management, as

well as evaluating the overall presentation of the consolidated

financial statements.

Our audit of internal

control over financial reporting included obtaining an

understanding of internal control over financial

reporting, assessing the risk that a material weakness exists, and testing

and evaluating the design and

operating effectiveness of internal control based on the

assessed risk.

also included

performing such

procedures as we considered

necessary in the circumstances.

believe that our audits

provide a reasonable basis

Definition and Limitations of Internal Control over Financial

Our audits also included performing

such other procedures as we considered necessary in the circumstances.

We believe that our audits

provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control

over Financial Reporting

A company’s internal control over financial reporting is a process

designed to provide reasonable

assurance regarding the reliability of financial reporting and

the preparation of financial statements for

external purposes in accordance with generally accepted

accounting principles.

A company’s internal

control over financial reporting

is a process designed

to provide reasonable assurance

regarding the

reliability of

financial reporting

preparation of

financial statements

accordance with

control over financial reporting includes those policies

and procedures that (i) pertain to the maintenance

of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of the

assets of the company;

(ii) provide reasonable assurance

that transactions are recorded as necessary to

permit preparation of financial statements in accordance with

generally accepted accounting principles,

internal control over financial reporting includes those policies and

procedures that

maintenance of

records that,

in reasonable

detail, accurately

transactions and dispositions of

the assets of the

(ii) provide reasonable

assurance that transactions are

as necessary to permit preparation of financial statements in accordance with generally accepted accounting

principles, and

that receipts and expenditures

of the company are

being made only in

accordance with authorizations of

management and

directors of the

and (iii) provide reasonable

assurance regarding prevention

or timely detection of

acquisition, use, or disposition of the company’s assets that

could have a material effect on the financial statements.

Because of its inherent limitations, internal

control over financial reporting may not

prevent or detect misstatements.

projections of any evaluation of effectiveness

to future periods are subject to

the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

and that receipts and expenditures of the company are

being made only in accordance with authorizations

of management and directors of the company;

provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition,

use, or disposition of the company’s assets

that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial

reporting may not prevent or detect

misstatements.

Also, projections of any evaluation of effectiveness

to future periods are subject to the risk

that controls may become inadequate because of changes in conditions,

or that the degree of compliance

with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated

statements that was

communicated or required

to be communicated to

the audit committee and

that (i) relates

or disclosures

the consolidated

financial statements

especially challenging,

subjective, or complex

The communication

of critical audit

matters does not

way our opinion

the consolidated financial statements,

taken as a whole,

and we are not,

by communicating the critical

audit matter below,

providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of Long-Lived Assets - Store

Location Asset Groupings

The critical audit matter communicated below is a matter arising

from the current period audit of the

consolidated financial statements that was communicated

or required to be communicated to the audit

committee and that (i) relates to accounts or disclosures

that are material to the consolidated financial

statements and (ii) involved our especially challenging, subjective,

or complex judgments.

communication of critical audit matters does not alter in any

way our opinion on the consolidated

statements, taken as a whole, and we are not, by communicating the

critical audit matter below, providing a

separate opinion on the critical audit matter or on the accounts

or disclosures to which it relates.

Impairment of Long-Lived Assets - Store Location Asset Groupings

As described in Notes 1 and 6 to the consolidated financial

statements, the Company’s consolidated

equipment, net

balance was $72.6

million, of which

the store locations

were a portion,

and consolidated operating

right-of-use assets, net

balance was $199.8

million as of

January 30, 2021.

The Company invests

in leaseholds, right-of-

and equipment, primarily

in connection

with the opening

and remodeling of

stores, and in

computer software

property and equipment, net balance was $63.1 million, of which

the store locations were a portion, and

consolidated operating lease right-of-use assets, net balance

was $181.3 million as of January 29, 2022.

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.

periodically reviews

locations and

estimates the

recoverability of

its long-lived

assets, which primarily relate

to fixtures and

equipment, leasehold improvements,

right-of-use assets net

liabilities, and

information technology

equipment and

impairment charge

which the carrying value exceeds the estimated fair

management 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

factors, including the

store’s historical

operating results

and projected cash

flows, which include

growth rates,

margin rates,

Company assesses

by considering

market rents and any lease terms that

may adjust market rents under certain conditions

such as the loss of an anchor

or a leased space

in a shopping center

not meeting certain criteria.

An impairment charge for

store assets of $11.4

was recorded during the year ended January 30, 2021.

The principal

considerations for

our determination

that performing

procedures relating

impairment of

store location

asset groupings

critical audit

significant judgment

by management

determining the

measurement of

the store location

asset groupings,

judgment, subjectivity, and effort

in performing procedures and evaluating management’s

projected cash flow assumptions

related to future sales growth rates, margin rates, and expense projections.

Addressing the

matter involved

performing procedures

and evaluating

audit evidence

in connection

overall opinion

on the consolidated

financial statements.

These procedures included

testing the effectiveness

management’s long-

– store location

recoverability test and

determination of

the fair value

These procedures also

included, among

others (i) testing

the completeness

and accuracy of

underlying data

the projected

cash flows and

store location

asset groupings,

(ii) evaluating the

reasonableness of

assumptions related to future sales

growth rates, margin rates, and expense projections

by considering current and

historical performance

store location

asset groupings

the assumptions were

consistent with

evaluating the

appropriateness of

the projected

evaluating management’s assessment of

the fair value of the leased assets included in the store location asset groupings.

/s/ PricewaterhouseCoopers LLP

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 management determines that projected

cash flows associated with those long-lived assets will not

be sufficient to recover the carrying value.

determination is based on a number of factors, including

the store’s historical operating results and future

projected cash flows, which include contribution margin 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

An impairment charge for store assets of $0.9

million was recorded during the year ended

January 29, 2022.

The principal considerations for our determination that

performing procedures relating to the

impairment of long-lived assets – store location asset groupings

is a critical audit matter are (i) the

significant judgment by management when determining the fair

value measurement of the store location

asset groupings, which led to (ii) a high degree of auditor

judgment, subjectivity, and effort in performing

procedures and evaluating management’s projected cash flow

assumptions related to contribution margin

Addressing the matter involved performing procedures

and evaluating audit evidence in connection with

forming our overall opinion on the consolidated financial statements.

These procedures included testing

the effectiveness of controls relating to management’s long

-lived assets – store location recoverability test

and determination of the fair value of the asset group.

These procedures also included, among others (i)

testing the completeness and accuracy of underlying data

used in the projected cash flows and store

location asset groupings, (ii) evaluating the reasonableness

of management’s assumptions related to

contribution margin projections by considering current

and historical performance of the store location

asset groupings and whether the assumptions were consistent

with evidence obtained in other areas of the

audit, (iii) evaluating the appropriateness of the projected

cash flow model, and (iv) evaluating

management’s assessment of the fair value of the leased assets

included in the store location asset

PricewaterhouseCoopers LLP

Charlotte, North Carolina

March 23, 2022

We have served as the

Company’s auditor since

We have served as the Company’s auditor since 2003.

THE CATO CORPORATION

4 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

February 1, 2020

28 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

(Dollars in thousands)

6 unchanged sentences

January 29, 2022 and $

at February 1, 2020

at January 30, 2021

Merchandise inventories

23 unchanged sentences

shares issued at

January 30, 2021 and February 1, 2020, respectively

January 29, 2022 and January 30, 2021, respectively

Convertible Class B common stock, $

2 unchanged sentences

shares issued at

January 30, 2021 and February 1, 2020, respectively

January 29, 2022 and January 30, 2021, respectively

Additional paid-in capital

9 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

February 1, 2020

32 unchanged sentences

Proceeds from employee stock purchase plan

Proceeds from stock options exercised

Net cash used in financing activities

19 unchanged sentences

Class A common stock sold through employee stock purchase

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans

4 unchanged sentences

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

deferred income tax liability of $

deferred income tax benefit of ($

Dividends paid ($

Class A common stock sold through employee stock purchase

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans

Repurchase and retirement of treasury shares –

Balance — February 1, 2020

Balance — January 30, 2021

Comprehensive income:

4 unchanged sentences

Class A common stock sold through employee stock purchase

Class B common stock sold through stock option plans —

Class A common stock issued through restricted stock grant plans

7 unchanged sentences

The Consolidated Financial Statements include the accounts of The Cato

Corporation and its

wholly-owned subsidiaries (the

All significant

intercompany accounts

Corporation and

wholly-owned subsidiaries

(the “Company”).

significant intercompany

and transactions have been eliminated.

Description of Business and Fiscal

The Company has two

reportable segments — the

specialty stores

segment (“Retail

Segment”) and

specialty stores operate

under the names

“Cato,” “Cato Fashions,”

“It’s Fashion,”

“It’s Fashion

“Versona,” including

e-commerce websites.

apparel specialty

stores operate

names “Cato,”

“Cato Fashions,”

located primarily in

strip shopping centers

principally in the

southeastern United States.

fiscal year ends on the Saturday nearest January 31 of the subsequent year.

Use of Estimates:

The preparation of

the Company’s

financial statements in

conformity with

accounting principles

generally accepted in

the United States

(“GAAP”) requires management

estimates and

assumptions that

reported amounts

and liabilities

and disclosure

contingent assets

and liabilities

the financial

statements and

expenses during

the reporting

results could

those estimates.

Significant accounting estimates

strip shopping

centers principally in

the southeastern

United States.

The Company’s

financial statements

credit losses,

inventory shrinkage,

the calculation

asset impairment,

compensation, general and auto insurance liabilities, reserves relating to self-insured health insurance,

fiscal year ends on the Saturday nearest January 31 of the subsequent year.

generally accepted

management to

compensation, general and auto insurance liabilities, reserves relating to self-insured health

insurance, and

uncertain tax positions.

Cash Equivalents:

cash equivalents

highly liquid investments

original maturities of three months or less.

Short-Term Investments:

Investments with original

maturities beyond three

months are classified

as short-term investments.

for the Company’s

estimated fair value

of, and other

regarding, its short-

term investments.

The Company’s

short-term investments are

all classified as

Investments with

original maturities

as short-term

estimated fair

available-for-sale.

available for

current operations,

classified on

the Consolidated

Balance Sheets as

Balance Sheets

Current Assets.

-for-sale securities are

carried at fair

gains and temporary losses,

net of income taxes,

reported as a component

of Accumulated other

comprehensive income.

than temporary declines in

the fair value

of investments are

recorded as a

reduction in the cost

of the investments in the

accompanying Consolidated Balance Sheets and a

accompanying Consolidated

Statements of

Available-for-sale

securities are

comprehensive income.

debt securities is adjusted for

amortization of premiums and

amortization of

premiums, accretion

temporary declines

of investments

Comprehensive

gains and losses are included in Interest and other income.

Restricted Cash and Restricted Short-term Investments:

Restricted Cash and Restricted Short-term

The Company had $

million and $

million in escrow

at January 30,

2021 and February

2021, respectively,

as security and

collateral for

administration of

the Company’s

self-insured workers’

compensation and

general liability

which is reported

as Restricted cash

and Restricted short-

term investments on

the Consolidated Balance

administration

Restricted cash

and Restricted

short-term investments

Consolidated Balance

Supplemental Cash Flow

Income tax payments, net

of refunds received, for

payments, net

received, for

years ended January

30, 2021, February

February 2, 2019

were a payment

29, 2022, January 30,

2021 and February 1,

and a refund of $

, respectively.

Merchandise inventories

net realizable

determined by

weighted-average cost method.

3 unchanged sentences

Property and Equipment:

Property and equipment are recorded at

cost, including land.

Property and equipment are

recorded at cost, including

and repairs are expensed to operations as incurred;

renewals and betterments

are capitalized.

is determined on

the straight-line method

over the estimated

useful lives of

assets excluding

renewals and betterments are capitalized.

determined on

straight-line method

estimated useful

related assets

leasehold improvements.

Leasehold improvements are amortized over the shorter

of the estimated useful

Leasehold improvements are amortized over the

shorter of the estimated

life or lease term.

For leases with renewal periods at the

Company’s option, the Company generally

plus reasonably

assured renewal

option periods

(generally one

five-year option

For leases with renewal periods at

the Company’s

option, the Company generally uses

period) to determine estimated useful lives.

5 unchanged sentences

Information technology equipment and software

Impairment of

equipment primarily

in connection

remodeling of

Company periodically

store locations

and estimates

the recoverability

lived assets,

which primarily relate

and equipment,

Leasehold improvements,

Right-of-use assets

determines that

projected cash

flows associated

long-lived assets

leaseholds, right-

of-use assets

equipment primarily in

connection with the

opening and remodeling

of stores and

in computer software

periodically reviews its

store locations and

estimates the recoverability

lived assets, which

primarily relate to

Fixtures and equipment,

Leasehold improvements, Right-of

net of Lease liabilities and Information

technology equipment and software.

An impairment charge

value exceeds

the estimated

determines that projected

cash flows associated

with those long-

lived assets will

not be sufficient

determination is

including the

store’s historical

operating results and

future projected cash

flows, which include

future sales growth

rates, margin

expense projections.

assesses the fair

value of each lease

by considering market rents

lease terms that

may adjust market

rents under certain

conditions, such as

leased space in

a shopping center

not meeting certain

in determining when

the Company considers real

estate development in the area

and perceived local market conditions,

be difficult to predict

and may be subject to

Asset impairment charges of

be sufficient

determination

considers real estate development in

perceived local market conditions, which

can be difficult

were incurred in fiscal 2021, fiscal 2020 and fiscal 2019, respectively.

The 2020 asset impairment

charges included $11.4

million of store asset impairments and

$2.3 million worth of fixtures planned

Other Assets:

Other assets are comprised of

long-term assets, primarily insurance contracts related

Other assets are comprised

of long-term assets, primarily

insurance contracts related to

deferred compensation assets and land held for investment purposes.

4 unchanged sentences

Land Held for Investment

Codification (“ASC”)

amendments issued

requires lessees

THE CATO CORPORATION

1 unchanged sentence

— (Continued)

the Financial

Accounting Standards

Board (“FASB”)

issued Accounting

Codification (“ASC”) 842

amendments issued in

requires lessees to

recognize most

which expenses

guidance modifies

the classification

classification

accounting for sales-type and direct financing leases.

The Company utilized a comprehensive approach to

assess the impact of this guidance

on its financial

statements and related

disclosures, including the increase

in the assets

and liabilities on

its balance sheet

lease portfolio

lessee perspective.

completed its

comprehensive review

lease portfolio,

which includes

leases impacted

The Company utilized a comprehensive

approach to assess the impact

of this guidance on its

statements and

related disclosures, including

liabilities on

comprehensive

The Company reviewed its internal controls over leases and, as a result, the Company enhanced

these controls;

however, these

not considered

addition, the

implemented a new software

platform, and corresponding controls, for

administering its leases and

corresponding

administering

facilitating compliance with the new guidance.

The Company elected the

transition package of

practical expedients that is

permitted by the

The package of practical expedients allows the

Company to not reassess previous accounting conclusions

The Company elected

the transition

practical expedients that

The package of practical expedients

allows the Company to not

reassess previous accounting conclusions

regarding whether existing arrangements are or contain leases, the classification

of existing leases, and the

initial direct

the hindsight

transition practical

allowed for by the

new standard, which allows entities

to use hindsight when determini

ng lease term and

allowed for by

the new standard,

which allows entities to

use hindsight when

determining lease term and

impairment of right-of-use assets.

The Company adopted ASC 842 utilizing

the modified retrospective approach as of

February 3, 2019.

retrospective approach

selected provides

of transition

recognition of existing

the beginning of

the period of

adoption (i.e., February

3, 2019), and

The Company adopted ASC 842

utilizing the modified retrospective approach

as of February 3,

retrospective

recognition of

existing leases

the beginning

adoption (i.e.,

which does not require the adjustment of comparative periods.

11 for further information.

The Company determined the classification of leases consistent

with ASC 840 –

for fiscal year

The Company leases all of its retail stores.

Most lease agreements contain construction allowances

Company leases

contain construction

and rent escalations.

For purposes of recognizing incentives

and minimum rental expenses on

including renewal

periods considered

reasonably assured,

Company begins

amortization as

initial possession

For purposes of recognizing

incentives and minimum rental

expenses on a

space and begins to make improvements in preparation for intended use.

Revenue Recognition:

recognizes sales

purchase when

takes possession of

the merchandise and

purchase, generally with

cash or credit.

purchases made

layaway sales

takes possession

merchandise and

the purchase,

generally with cash

E-commerce sales

recorded when

deferred revenue

customer takes

possession of

the merchandise.

E-commerce sales are

recorded when the

transferred to

the customer.

revenue until

Layaway sales

are recorded as

deferred revenue until

the customer takes

possession or forfeits

possession or

the merchandise.

do not have expiration

have expiration dates.

A provision is

made for estimated merchandise

returns based on

sales volumes and

made for estimated

returns based

the Company’s

actual returns

have not varied

from historical amounts.

A provision is made for estimated write-offs associated with sales made with

Company’s proprietary

Amounts related to

A provision is made for estimated write-offs associated with sales

made with the

Amounts related

handling billed

sales transaction

are classified

shipping product to

shipping product

(billed and accrued) are classified as Cost of goods sold.

2 unchanged sentences

(“Topic 606”),

in fiscal 2020, 2019

and 2018, the Company

respectively,

on unredeemed

breakage”) as

Consolidated Statements

Income (Loss)

Comprehensive Income

Company recognizes

breakage using

breakage percentage

redeemed gift cards.

See Note 2 for further information on miscellaneous

THE CATO CORPORATION

1 unchanged sentence

— (Continued)

Company recognizes gift

card breakage using

breakage percentage based

on redeemed gift

See Note 2 for further information on miscellaneous income.

The Company offers

its own proprietary

credit card to

activity is performed

proprietary credit

credit activity

subsidiaries.

2021, respectively,

the Company’s

wholly-owned subsidiaries.

the credit card receivables

Company estimated

customer credit

twelve months

January 30, 2021

and February 1,

credit card of $

million and $

million for the twelve months

ended January 29, 2022 and January

30, 2021, respectively.

on sales purchased

on the Company’s

February 1, 2020, respectively.

The following table provides information about receivables and

contract liabilities from contracts with

The following table provides information about receivables

and contract liabilities from contracts with

customers (in thousands):

1 unchanged sentence

January 29, 2022

February 1, 2020

January 30, 2021

Proprietary Credit Card Receivables, net

1 unchanged sentence

Cost of Goods Sold:

Cost of goods sold includes

merchandise costs, net of discounts and

buying costs, distribution costs, occupancy costs, freight, and

inventory shrinkage.

Cost of goods sold

includes merchandise costs, net of

discounts and allowances,

buying costs, distribution costs, occupancy costs, freight,

and inventory shrinkage.

Net merchandise costs

bound freight

are capitalized

and distribution

costs include

payroll-related costs

and operating

departments and

distribution center.

Occupancy expenses

include rent,

taxes, insurance,

maintenance, utilities

maintenance for

distribution facilities.

Buying, distribution,

occupancy and

internal transfer

costs are treated

as period costs

capitalized as part

of inventory.

The direct costs

with shipping goods to customers are recorded as a component of Cost of

Advertising costs

are incurred.

payroll-related

distribution,

not capitalized

costs associated

with shipping goods to customers are recorded as a component of Cost

of goods sold.

expense was approximately $

for the fiscal years ended January 29,

2021, February 1, 2020 and February 2, 2019, respectively.

2022, January 30, 2021 and February 1, 2020, respectively.

Stock Repurchase Program:

For the fiscal year

ended January 30, 2021, the

shares remaining in

open authorizations.

is no specified

expiration date for

Company’s repurchase

Share repurchases

are recorded in

Retained earnings, net

Through March 29,

2021, the Company

repurchased 83,256 shares

for $971,866, to

offset dilution from

its equity compensation plan.

requires dual

presentation of

statements for

capital structures.

presented one

accompanying Consolidated Statements of Income (Loss)

and Comprehensive Income (Loss).

Company’s certificate of

incorporation provides the right

for the Board

of Directors to declare

shares without declaration

of commensurate dividends

shares, the Company

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

EPS computation is

Class B shares

amounts reported herein

For the fiscal year ended January

29, 2022, the Company had

authorizations.

earnings, net

Company repurchased

authorization

February 24, 2022 Board of Directors meeting.

accompanying Consolidated Statements of

Income (Loss) and Comprehensive

Income (Loss).

Company’s certificate

of incorporation provides

the right for

of Directors to

declare dividends

without declaration

of commensurate

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

computation is

amounts reported

applicable to both Class A and Class B shares.

computed as net

income less earnings

allocated to non-

vested equity awards

average number

shares outstanding

earnings allocated

to non-vested

equity awards

potential dilution that could

occur from common shares issuable

through stock options and

Stock Purchase Plan.

THE CATO CORPORATION

1 unchanged sentence

— (Continued)

potential dilution that could occur

from common shares issuable through stock options

and the Employee

Stock Purchase Plan.

The following table

reflects the basic

and diluted EPS

calculations for the

fiscal years ended

30, 2021, February 1, 2020 and February 2, 2019:

The following

table reflects

EPS calculations

ended January

29, 2022, January 30, 2021 and February 1, 2020:

Fiscal Year Ended

January 29, 2022

February 1, 2020

January 30, 2021

February 1, 2020

8 unchanged sentences

Diluted earnings (loss) per share

Vendor Allowances:

receives certain

allowances from

vendors primarily

purchase discounts and markdown and

damage allowances.

All allowances are reflected

in Cost of goods

sold as earned when the related products are sold.

Cash consideration received from a vendor is

merchandise and

All allowances are

reflected in Cost of

consideration

The Company does not receive cooperative advertising allowances.

Income Taxes:

consolidated federal

provided based

liability method

of accounting,

whereby deferred

provided for temporary differences

between the financial reporting basis

and the tax basis

Company’s assets and liabilities.

Unrecognized tax benefits

for uncertain

tax positions are

Unrecognized tax

uncertain tax

positions are

established in

accordance with ASC

when, despite the

fact that the

tax return positions

are supportable, the

when, despite

positions are

supportable, the

Company believes

these positions may be

challenged and the results

are uncertain.

The Company adjusts these

liabilities in

changing facts

and circumstances.

Potential accrued

penalties related

unrecognized tax

benefits within

operations are

recognized as

before income

The Company assesses the likelihood

that deferred tax assets will

be able to be

realized, and based on

challenged and the

results are uncertain.

The Company adjusts

these liabilities in

circumstances.

The Company assesses the

likelihood that deferred tax

assets will be

realized, and based

that assessment, the Company will determine if a valuation allowance should

In addition, the

Act implemented a

new minimum tax

on global intangible

taxed income (“GILTI”).

The Company has elected

to account for

in the period

Act implemented

global intangible

The Company has

incurred, which is included as a component of its current year provision for

income taxes.

Store Opening

Costs relating to

the opening of new stores

or the relocating or

existing stores

of construction,

construction,

selection costs are capitalized to new, relocated and remodeled stores.

The Company is self-insured with respect to employee health care, workers’ compensation

self-insurance

claims filed and estimates of

claims incurred but not reported, less

amounts paid against such claims,

THE CATO CORPORATION

1 unchanged sentence

— (Continued)

The Company is self-insured with respect to employee health care, workers’ compensation

Company’s self

-insurance liabilities

total estimated

claims filed and estimates of claims

incurred but not reported, less amounts paid

against such claims, and

are not discounted.

Management reviews current

and historical claims

data in developing

its estimates.

The Company has stop-loss insurance coverage

for individual claims in excess of

not discounted.

Management reviews

historical claims

developing its

The Company has stop-loss

insurance coverage for individual claims in

healthcare, $

2 unchanged sentences

of Financial Instruments:

The Company’s carrying

values of financial instruments, such

and cash equivalents,

short-term investments, restricted

short-term investments,

approximate their fair values due to their short terms to maturity and/or their

variable interest rates.

Stock Based Compensation:

The Company records

compensation expense associated with

compensation in

accordance with

The Company’s

carrying values of

financial instruments, such

approximate their fair values due to their short terms to maturity and/or

their variable interest rates.

Compensation:

The Company records

compensation expense associated

with restricted

Compensation.

Compensation cost associated with stock awards recognized in all years presented

1) amortization related to the

remaining unvested portion of all

stock awards based on the

date fair value and 2) adjustments for the effects of actual forfeitures versus initial estimated forfeitures.

1) amortization related to

the remaining unvested portion of

all stock awards based

date fair value and 2) adjustments for the effects of actual forfeitures versus initial estimated

Recently Adopted Accounting Policies:

Financial Instruments

Losses (Topic

Measurement of

Credit Losses

requires companies

recognize expected

credit losses

for financial

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.

Recently Issued Accounting Pronouncements

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

accounting rules also

simplify accounting for

franchise taxes that

are partially based

income, transactions

government that

In December 2019, the FASB

issued ASU 2019-12,

taxes that are

partially based on income,

transactions with a

government that result in

goodwill, separate

financial statements of legal entities that are not subject

to tax, and enacted changes in tax laws

new accounting

Company is currently in

the process of evaluating

the impact of adop

tion of the new

accounting rules on

the Company’s financial position, results of operations, cash flows and disclosures.

Company adopted

Reform on Financial Reporting

The ASU, and subsequent

clarifications, provide practical expedients for

contract modification

accounting related

transition away

London Interbank

(LIBOR) and other interbank offering rates to alternative reference rates.

The expedients are applicable to

contract modifications made and hedging relationships entered into

on or before December 31, 2022.

Company adopted

impact on its Condensed Consolidated Financial Statements.

THE CATO CORPORATION

4 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

February 1, 2020

4 unchanged sentences

Interest and other income

During 2020, the Company recorded a gain on the sale of land held

for investment of $2.3 million

within Interest and other income on the Consolidated Statements of Income

(Loss) and Comprehensive

Income (Loss).

During 2020, the Company recorded a gain on

the sale of land held for investment

million within

Statements of

Income (Loss) and Comprehensive Income (Loss).

Short-Term Investments:

the Company’s

investment portfolio

was primarily

corporate and

governmental debt securities

held in managed

These securities are

classified as available-

governmental debt

securities held

These securities

are classified

as available-for-

sale as they are highly liquid and are recorded on the Consolidated Balance Sheets at estimated fair value,

with unrealized

temporary losses

in Accumulated

other comprehensive

below reflects

gross accumulated

unrealized gains

short-term investments

January 30, 2021 and February 1, 2020 (in thousands):

comprehensive

January 29, 2022 and January 30, 2021 (in thousands):

January 29, 2022

February 1, 2020

January 30, 2021

Debt securities

9 unchanged sentences

Estimated fair value

Accumulated other

comprehensive income

Consolidated Balance

Sheets reflects

accumulated unrealized net

short-term investments in

unrealized gains

investments and restricted cash investments.

The table below reflects gross accumulated unrealized gains

in these investments at January 30, 2021 and February 1, 2020 (in thousands):

comprehensive

short-term investments

January 29, 2022

February 1, 2020

January 30, 2021

Security Type

5 unchanged sentences

Fair Value Measurements:

The following tables set forth information regarding the Company’s financial

assets that are measured

at fair value as of January 30, 2021 and February 1, 2020 (in thousands):

The following tables set forth information regarding the Company’s

financial assets that are measured

at fair value as of January 29, 2022 and January 30, 2021 (in thousands):

January 29, 2022

8 unchanged sentences

Total Liabilities

February 1, 2020

January 30, 2021

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

bonds and tax-

taxable governmental debt

securities held in

managed accounts with

underlying ratings of

January 30, 2021.

The state, municipal

and corporate bonds and

asset-backed securities have contractual

maturities which range

Treasury Notes

and Certificates of

have contractual maturities

which range from

three months to

These securities are classified

primarily invested

taxable governmental

debt securities

managed accounts

with underlying

state, municipal

and corporate bonds

and asset-backed securities

have contractual

maturities which range from three

days to 4.9 years.

Notes and Certificates of

These securities are classified as

available-for-sale

and are recorded as Short

-term investments,

cash, Restricted

and Other assets

on the accompanying

fair value with

other comprehensive

and Other assets on the accompanying

Balance Sheets.

These assets are carried

unrealized gains

Accumulated other

comprehensive

The asset-backed

of auto loans

and bank credit

loan asset-backed

2 unchanged sentences

— (Continued)

by captive auto

units, banks or

The bank credit

card asset-backed

finance units,

finance companies.

card receivables

JPMorgan Chase,

Additionally, at

equities, which

recorded within Other assets in the Consolidated Balance

At February 1, 2020, the Company had

equities, which are

recorded within

Consolidated Balance

are measured at

fair value using

market prices.

Additionally,

recorded within Other assets in the

Consolidated Balance Sheets.

At January 30, 2021, the Company had

category securities

and municipal

not be available

active exchanges

for identical

value is principally

market values

by management with assistance of a third-party pricing service.

Since quoted prices in active markets for

by management with assistance of a

third-party pricing service.

Since quoted prices in

active markets for

identical assets

are not available,

are determined

by the pricing

these prices are determined

by the pricing service

using observable

such as quotes from less active markets

and/or quoted

of securities

characteristics,

Deferred compensation

consist primarily

insurance policies.

other factors.

policies are valued based on the cash surrender value of the insurance contract, which is determined based

the underlying

discounted cash

are therefore

classified within Level 3 of the valuation hierarchy.

The Level 3 liability associated with the life

insurance policies

deferred compensation

obligation, the

underlying insurance

asset values,

noncurrent liabilities

Consolidated Balance Sheets.

funds are designed to

mirror the return of

existing mutual funds and

funds are designed

to mirror the

return of existing

mutual funds and

money market funds that are observable and actively traded.

3 unchanged sentences

The following

in fair value

of the Company’s

and liabilities

tables summarize

the change in fair

value of the Company’s

assets and liabilities

as of January

February 1, 2020

January 30, 2021

(in thousands):

3 unchanged sentences

Surrender Value

Beginning Balance at February 1, 2020

Beginning Balance at January 30, 2021

Total gains or (losses)

5 unchanged sentences

Liability Inputs (Level 3)

Beginning Balance at February 1, 2020

Beginning Balance at January 30, 2021

Total (gains) or losses

10 unchanged sentences

changes in net assets)

Ending Balance at February 1, 2020

Ending Balance at January 30, 2021

Measurements Using

5 unchanged sentences

changes in net assets)

Ending Balance at February 1, 2020

Ending Balance at January 30, 2021

THE CATO CORPORATION

4 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

Customer accounts — principally deferred payment accounts

4 unchanged sentences

Accounts receivable — net

Finance charge and

late charge revenue

on customer deferred

payment accounts totaled

Finance charge

customer deferred

payment accounts

for the fiscal

years ended January 30, 2021, February 1, 2020

years ended January 29, 2022, January 30, 2021

and February 1,

respectively,

allowance for

customer credit

approximately

ended January

February 2, 2019,

respectively.

relating to the

allowance for customer credit

classified as

administrative expense

administrative

Consolidated Statements of Income (Loss) and Comprehensive Income

2 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

Land and improvements

5 unchanged sentences

Property and equipment — net

Construction in progress primarily represents costs related to new store

development and

Construction in progress primarily represents costs related to new

store development and

investments in new technology.

8 unchanged sentences

Financing Arrangements:

As of January

30, 2021, the

had an unsecured revolving credit

The revolving credit

until May 2023.

The credit agreement

and limitations,

the maintenance of specific

ratios with which

the Company was

in compliance as

There were no borrowings outstanding

under this credit facility

unsecured revolving credit

The Company is in the process of

obtaining a new revolving credit agreement

agreement contains

covenants and limitations, including the maintenance of specific financial ratios with

was in compliance

as of January

1, 2020 or February 2,

At January 30, 2021, the

rate under the

credit facility

no borrowings

2022, January 30,

weighted average

no borrowings

29, 2022, January

30, 2021 and February

1, 2020, the Company

had no outstanding

Stockholders’ Equity:

Class B Common Stock are entitled to

ten votes per share.

share of Class B Common Stock may

Class B Common Stock are entitled

to ten votes per

Each share of

Class B Common Stock may be

converted at any time into one share of Class A Common Stock.

Subject to the rights of the holders

shares of Preferred

Stock that may

be outstanding at

liquidation, dissolution or

Company, holders

distribution of $1.00 per share of

the net assets of the

Cash dividends

on the Class B Common

Stock cannot be paid

unless cash dividends of

at least an equal

amount are paid on

the Class A Common

The Company’s

Subject to the rights of

the holders of any

Preferred Stock

be outstanding

of liquidation,

dissolution or

distribution of $1.00 per share

of the net assets

of the Company.

Cash dividends on the

Class B Common

Stock cannot be

paid unless cash

dividends of at

least an equal

amount are paid

on the Class A

certificate of

incorporation provides that

Class B Common Stock

transferred only

“Permitted Transferees”

consisting generally

lineal descendants

incorporation

provides that

Class B Common

Stock, trusts

benefit, corporations

and partnerships

controlled by

them and the Company’s

employee benefit plans.

of Class B Common Stock in

these restrictions, including a transfer to

the Company, results

in the automatic conversion of the

transferred shares

transferee into

Company’s employee benefit

of Class B Common Stock

in violation of

restrictions,

Class A Common Stock.

Employee Benefit Plans:

defined contribution

retirement savings

plan (“401(k)

associates who

service requirements.

participants to

contribute up to

compensation up to

the maximum elective

deferral, designated by

The Company is obligated to

make a minimum contribution to cover plan administrative

Further Company contributions are

at the discretion of the

Board of Directors.

requirements.

contribute up

annual compensation

maximum elective

deferral, designated

administrative

Further Company contributions

are at the discretion

of the Board of

The Company’s

contributions for the years ended January 30, 2021, February 1, 2020 and February 2, 2019 were

contributions

approximately $

, respectively.

trusteed, non

-contributory Employee

Stock Ownership

Plan (“ESOP”),

covers substantially all associates

who meet minimum age

and service requirements.

The amount of

non-contributory

covers substantially all

associates who meet

minimum age and

service requirements.

Company’s discretionary

contribution to

is determined

annually by the

During fiscal 2020,

the Company contributed

plan purchased stock

the ESOP award earned for fiscal 2019.

operating loss in fiscal 2020,

the Committee did not

contribution to

year ended January

The Company’s

for the years ended February 1, 2020 and February 2, 2019, respectively.

contribution to the ESOP

is determined by the

Compensation Committee of the

$15,000,000 was contributed in the third

quarter of fiscal 2021.

The Company’s contribution

for the years ended January 30, 2021 and February 1, 2020,

respectively.

THE CATO CORPORATION

3 unchanged sentences

These costs are significant primarily due to the

large number of

the Company’s

retail locations and

retail locations

and associates.

The Company’s

self-insurance liabilities

the total estimated

claims filed and

estimates of claims

incurred but not

paid against such claims.

Management reviews current and historical claims data in

developing its estimates.

If the underlying

facts and circumstances

of the claims

change or the

trend is not indicative of future trends, then the Company may be required to record additional

a reduction to expense which could

be material to the Company’s

reported financial condition and results

estimated costs

and estimates

claims incurred

developing its

the underlying

circumstances of

the historical

trend is not indicative of future trends, then the Company may be required to

record additional expense or

a reduction to expense which

could be material to the

Company’s reported

financial condition and results

of operations.

The Company funds healthcare contributions to a third-party

The Company determines whether an arrangement is

The Company determines

whether an arrangement is

a lease at inception.

Company has operating

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

The Company has operating

have remaining

which include

terminate the

considers these

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,

incremental borrowing

information available

at commencement

establish its

right-of-use assets

lease agreements

do not contain any material residual value guarantees or material

restrictive covenants.

determining the present value of lease payments.

2 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

Operating lease cost (a)

lease cost (b)

ASC 840 prepaid rent expense (c)

(a) Includes right-of-use asset amortization of ($

1 unchanged sentence

) million for the twelve months

ended January 30, 2021 and February 1, 2020, respectively.

ended January 29, 2022 and January 30, 2021, respectively.

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

Supplemental cash flow

information and non-cash

activity related to

the Company’s

Supplemental cash

flow information

activity related

operating leases

3 unchanged sentences

January 29, 2022

February 1, 2020

January 30, 2021

Cash paid for amounts included in the measurement of lease liabilities

4 unchanged sentences

— (Continued)

Weighted-average remaining

lease term and

discount rate for

the Company’s

operating leases are

Weighted-average

discount rate

operating leases

January 29, 2022

February 1, 2020

January 30, 2021

Weighted-average remaining lease term

Weighted-average discount rate

Maturities of

lease liabilities

the Company’s

operating leases

Total lease payments

2 unchanged sentences

Income Taxes:

Unrecognized tax

uncertain tax

positions, primarily recorded

liabilities, are established in accordance with

ASC 740 when, despite the fact

that the tax return positions

are supportable,

the Company believes

these positions may

be challenged

and the results

are uncertain.

The Company adjusts

these liabilities

of changing facts

and circumstances.

gross unrecognized

totaling approximately $5.9

liabilities, are established in accordance

with ASC 740 when, despite

the fact that the

tax return positions

supportable, the

Company believes

positions may

Company adjusts

circumstances.

approximately

million (inclusive of

interest) would

effective tax

approximately

million (inclusive

Company had approximately $

million and $

million of interest and penalties accrued

uncertain tax

million of interest and

penalties accrued

respectively.

recognizes interest

Company recognizes

and penalties

the resolution

of interest and penalties in the Consolidated Statements of Income (Loss)

and Comprehensive

Income (Loss) for the years ended January 30, 2021, February 1, 2020 and

February 2, 2019, respectively.

longer subject

federal income tax

examinations for y

jurisdictions, the

limited exposure

months, various

authorities’ statutes

of limitations

examinations may

potential reduction

of unrecognized

Consolidated Statements

Comprehensive

Income (Loss) for the years ended January 29, 2022, January 30, 2021

and February 1, 2020, respectively.

jurisdictions,

which a range cannot be determined.

A reconciliation of

the beginning and

ending amount of

gross unrecognized tax benefits

is as follows

A reconciliation

beginning and

ending amount

unrecognized tax

(in thousands):

4 unchanged sentences

Additions for tax positions of the current year

Additions for tax positions prior years

Reduction for tax positions of prior years for:

4 unchanged sentences

taxes consists

of the following

(in thousands):

1 unchanged sentence

Deferred income taxes:

Total income tax expense

Total income tax expense (benefit)

THE CATO CORPORATION

1 unchanged sentence

— (Continued)

of the Company’s deferred tax assets and

as of January 30, 2021

are as follows

Significant components

Company’s deferred tax assets and liabilities as of

January 29, 2022 and

(in thousands):

January 29, 2022

January 30, 2021

Deferred tax assets:

19 unchanged sentences

Net deferred tax assets

The changes in the valuation allowance are presented below:

January 29, 2022

January 30, 2021

Allowance Beginning Balance

Net Valuation

Allowance (Additions) / Reductions

Allowance Ending Balance

As of January

set to expire

the available

As of January 30,

by fiscal 2023.

January 29, 2022,

the Company had

of state net operating loss

carryforwards.

$4.2 million of

operating loss carryforwards.

the likelihood

1 unchanged sentence

loss carryforwards

be realized in

impact on the

Company’s financial statements and

adverse impact

Company’s financial

statements and

operations due

Based on this assessment,

that it is more likely

than not the Company

will not be able to realize net operating

a valuation allowance

As of February 1, 2020, the Company’s position

is that its overseas subsidiaries

will not invest

undistributed

indefinitely.

Future unremitted

when distributed

are expected to be

distributions

of GILTI-previously

taxed income or eligible for a

100% dividends

income taxes on

such earnings are

the Company has not

income taxes on

the Company concluded

that it is more likely than not the Company

will not be able to realize net operating losses and, accordingly,

has recorded a valuation allowance

change in the

valuation allowance for January 29,

THE CATO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

— (Continued)

undistributed earnings indefinitely.

Future unremitted earnings when distributed are expected

distributions of GILTI-previously taxed income or eligible for a

100% dividends received deduction.

withholding tax

approximately

7 unchanged sentences

Company’s effective

the statutory

Federal income tax rate

5 unchanged sentences

Offshore claim

Limitation on officer compensation

Work opportunity credit

5 unchanged sentences

Effective income tax rate

(1) The income tax rate for year ended January 30, 2021

represents an income tax benefit, while the

rate for the years ended February 1, 2020 and February 2, 2019

represent income tax expenses.

The annual effective

the current fiscal year

is impacted by the

ability to carryback federal

net operating losses due to the

Coronavirus Aid, Relief and Economic Security

Act (“CARES Act”)

offset by changes in management’s

judgment regarding the ability to realize deferred tax assets, primarily

net operating

losses generated

current fiscal

realizability of

these deferred

estimated annual effective

current year.

extent that actual

results and/or events

from the predicted results, the Company may continue

to see effects on the estimated

annual effective tax

rate in future periods.

Further, the CARES Act allows the Company to

carryback losses to 2015;

therefore, the Company has

recorded $32.6

estimated refunds

calculated through the

fourth quarter

receivable in the Consolidated Balance Sheets.

THE CATO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

— (Continued)

Quarterly Financial Data (Unaudited):

Summarized quarterly financial results are as follows (in thousands, except

per share data):

Total revenues

Gross profit (exclusive of depreciation)

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

Total revenues

Gross profit (exclusive of depreciation)

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

Reportable Segment Information:

The Company has

As outlined in

The Company has aggregated its

three retail operating segments,

based on the aggregation criteria outlined

in ASC 280-10, which states that two

determined that

reportable segments:

aggregated its three

retail operating segments,

including e-commerce,

aggregation criteria

outlined in ASC 280-10, which

states that two or

more operating

may be aggregated

into a single

1 unchanged sentence

is consistent

the objective and

basic principles of

the segments have

principles of

characteristics,

of distribution.

The Company’s retail operating segments have similar economic characteristics

The Company’s retail

operating segments have similar economic characteristics

and similar operating,

and competitive risks.

They are similar

offer women’s

Company’s retail operating segments

same countries

same vendors,

using similar

for the Company’s retail operating segments

is distributed

to retail stores in a similar manner

the Company’s

single distribution center and

is subsequently distributed to

offers its own credit

card to its customers

and all credit authorizations,

financial and

competitive risks.

product offered,

Merchandise inventory

Merchandise for the Company’s retail operating segments

is distributed to retail stores in a

similar manner

distribution center

subsequently distributed to

authorizations, payment

and collection

are performed

by a separate

of the Company.

THE CATO CORPORATION

13 unchanged sentences

Total assets as of January 29,

Total assets as of February 1,

The accounting

Total assets as of January 30,

The accounting policies

of the segments are the same as those described

1 unchanged sentence

based on profit

before income

to the credit

The following schedule summarizes the

of the credit

which are reflected in

or loss from operations

following schedule summarizes the

direct expenses of

credit segment

and administrative

1 unchanged sentence

January 29, 2022

February 1, 2020

January 30, 2021

February 1, 2020

2 unchanged sentences

Stock Based Compensation:

As of January 30,

2022, the Company had two long-term

1 unchanged sentence

to which stock-

based compensation was outstanding.

2018 Incentive Compensation Plan and

2013 Incentive

Plan are for the granting of various forms of equity-based awards,

longer available

2013 Incentive

Plan are for the

granting of various forms of equity-based awards,

including restricted

THE CATO CORPORATION

1 unchanged sentence

— (Continued)

The following table presents the number of options and shares of restricted stock

initially authorized

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 January 29, 2022:

1 unchanged sentence

Options and/or restricted stock available for grant:

February 1, 2020

January 30, 2021

In accordance with ASC 718, the fair

value of current restricted stock awards is

estimated on the date

January 29, 2022

In accordance with ASC 718, the

fair value of current restricted

stock awards is estimated on

of grant based on the market price of the Company’s stock and is amortized to compensation expense on a

straight-line basis over a five-year vesting period.

As of January 30, 2021, there

unrecognized compensation expense related

to unvested restricted stock

awards, which is

expected to be

straight-line basis over a five-year

vesting period.

As of January

29, 2022, there was

unrecognized compensation

expense related

restricted stock

awards, which

recognized over a remaining weighted-average vesting period of

The total grant date fair value

shares recognized

as compensation

expense during

February 1, 2020

and February 2,

, respectively.

classified as

administrative expenses

administrative

Consolidated Statements of Income (Loss) and Comprehensive Income

1 unchanged sentence

shows the changes

in the shares

in the shares of unvested

stock outstanding

ended January

Weighted Average

4 unchanged sentences

Forfeited or expired

Restricted stock awards at February 1, 2020

Restricted stock awards at January 30, 2021

Forfeited or expired

Restricted stock awards at January 29, 2022

The Company’s

Employee Stock

Purchase Plan

allows eligible

full-time employees

limited number

Company’s Class

annual offering

discount through payroll

During the twelve

month period ended January

2021, the Company sold

shares to employees at

an average discount of

per share under the

twelve month period

ended January 29,

employees at an

average discount of

Employee Stock Purchase Plan.

compensation expense recognized for the

The compensation expense

recognized for the 15%

discount given under

the Employee Stock

Purchase Plan was

approximately

for fiscal years

2020, 2019 and 2018, respectively.

These expenses are classified as a

component of Selling, general and

2021, 2020 and 2019,

respectively.

These expenses are classified

as a component of

Selling, general and

administrative expenses.

3 unchanged sentences

Commitments and Contingencies:

time, involved

litigation incidental to

business, including

litigation regarding

the merchandise

sell, litigation

regarding intellectual

property, litigation

instituted by persons

injured upon premises

under our control,

litigation with respect

to various employment matters, including alleged discrimination and wage and hour litigation, and

litigation instituted

premises under

litigation with

discrimination

litigation with present or former employees.

Although such litigation is routine and

incidental to the conduct of

our business, as with any

a significant

employees and

significant merchandise

could result in

large monetary

information currently available,

management does not

any reasonably possible

losses arising

pending litigation

adverse effect

on our Consolidated Financial Statements.

However, given the inherent uncertainties

involved in such matters, an adverse outcome in

one or more such matters could materially and

affect the Company’s

financial condition, results of

operations and cash flows

in any particular reporting

Company accrues

the liability

Although such litigation is routine

and incidental to the

conduct of our business,

as with any business

monetary awards.

information currently

available, management

uncertainties

involved in such matters, an adverse

outcome in one or more such

matters could materially and adversely

Company’s financial

condition, results of

operations and cash

particular reporting

Accumulated Other Comprehensive Income:

The following table

forth information regarding

the reclassification out of

information regarding

reclassification out

Accumulated other

comprehensive

(in thousands)

as of January

Changes in Accumulated Other

2 unchanged sentences

and (Losses) on

Available-for

Beginning Balance at February 1, 2020

Available-for-Sale

Beginning Balance at January 30, 2021

Other comprehensive income (loss) before

5 unchanged sentences

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

Amounts in parentheses indicate

a debit/reduction to other comprehensive

Amounts in parentheses indicate a debit/reduction to

other comprehensive

income (“OCI”).

impact of accumulated other comprehensive income reclassifications into Interest

(b) Includes $

impact of accumulated other comprehensive income reclassifications into Interest and

other income for net gains on available-for-sale securities.

4 unchanged sentences

— (Continued)

The following table sets forth information regarding the reclassification out

of Accumulated other

comprehensive income (in thousands) as of February 1, 2020:

The following table sets forth information regarding the reclassification

out of Accumulated other

comprehensive income (in thousands) as of January 30, 2021:

Changes in Accumulated Other

2 unchanged sentences

and (Losses) on

Available-for

Available-for-Sale

Beginning Balance at February 1, 2020

4 unchanged sentences

Net current-period other comprehensive income (loss)

Ending Balance at February 1, 2020

Ending Balance at January 30, 2021

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

Amounts in parentheses indicate

a debit/reduction to OCI.

(b) Includes $

impact of accumulated other comprehensive income reclassifications into

Interest and other

Amounts in parentheses indicate a debit/reduction to

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 $

parentheses indicate a debit/reduction to OCI.

tax impact of this reclassification was $

in parentheses indicate a debit/reduction to OCI.

Changes in and Disagreements with Accountants on Accounting and Financial

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-K

Item 8. Financial Statements and Supplementary Data