Item 9A. Controls and Procedures
Item 9A.
Controls and Procedures:
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
We
carried out
an evaluation,
with the
participation of
our Principal
Executive Officer
and Principal
Financial Officer,
of the
effectiveness of
our disclosure
controls and
procedures as
of February
3, 2024.
Based on this
evaluation, our Principal
Executive Officer
and Principal Financial
Officer concluded that,
as
of
February 3,
2024, our
disclosure controls
and procedures,
as
defined in
Rule 13a-15(e),
under the
Securities Exchange Act
of 1934
(the “Exchange
Act”), were effective
to ensure that
information we are
required to
disclose in
the reports
that we
file or
submit under
the Exchange
Act is
recorded, processed,
summarized
and
reported
within
the
time
periods
specified
in
the
SEC’s
rules and
forms
and
that
such
information
is
accumulated
and
communicated
to
our
management,
including
our
Principal
Executive
Officer
and
Principal
Financial
Officer,
as
appropriate
to
allow
timely
decisions
regarding
required
disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management is
responsible
for
establishing
and
maintaining adequate
internal
control
over
financial
reporting, as defined in Exchange Act Rule 13a-15(f).
Under the supervision and with the participation of
our
management, including
our
Principal
Executive Officer
and
Principal
Financial
Officer,
we
carried
out
an
evaluation
of
the
effectiveness
of
our
internal
control
over
financial
reporting
as
of
February
3,
2024
based
on
the
Internal
Control
–
Integrated
Framework
(2013)
issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
(“COSO”).
Based
on
this
evaluation,
management concluded
that our
internal control
over financial
reporting was
effective as
of February
3,
2024.
PricewaterhouseCoopers
LLP,
an
independent
registered
public
accounting
firm,
has
audited
the
effectiveness of our internal
control over financial reporting as
of February 3, 2024, as
stated in its report
which is included herein.
Changes in Internal Control Over Financial Reporting
No
change
in
the
Company’s
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rule
13a-15(f))
has
occurred
during
the
Company’s
fiscal
quarter
ended
February
3,
2024
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
the
Company’s
internal
control
over
financial reporting.
Inherent Limitations on Effectiveness of Controls
The
Company’s
management,
including
its
Principal
Executive
Officer
and
Principal
Financial
Officer,
does not
expect our
disclosure controls
and procedures
or internal
controls to
prevent all
errors
and all
fraud. A
control system, no
matter how
well conceived or
operated, can provide
only reasonable,
not absolute,
assurance that
the objectives
of the
control system are
met. Further,
the design
of a
control
system
must
reflect
the
fact
that
there
are
resource
constraints,
and
the
benefits
of
controls
must
be
considered relative to their costs.
Because of the inherent limitations
in all control systems,
no evaluation
of
controls
can
provide
absolute
assurance
all
control
issues
and
instances
of
fraud,
if
any,
within
the
company have
been detected.
These inherent
limitations include
the realities
that judgments
in decision-
making can be faulty and that breakdowns can occur because of simple
error or mistake. Controls can also
be
circumvented
by
the
individual
acts
of
some
persons,
by
collusion
of
two
or
more
people,
or
by
management
override
of
the
controls.
The
design
of
any
system
of
controls
is
based
in
part
on
certain
assumptions about the likelihood
of future events,
and there can
be no assurance any
design will succeed
68
in
achieving
its
stated
goals
under
all
potential
future
conditions.
Over
time,
controls
may
become
inadequate because of changes
in conditions or
deterioration in the degree
of compliance with policies
or
procedures.
Because
of
the inherent
limitations in
a
cost-effective
control
system, misstatements
due to
error or fraud may occur and not be detected.
Item 9B.
Other Information:
During
the
three
months
ended
February
3,
2024,
none
of
the
Company’s
directors
or
officers
(as
defined
in
Rule 16a-1(f)
of
the
Securities Exchange
Act
of
1934,
as
amended)
adopted
or
terminated
a
“Rule10b5-1 trading arrangement” or a “
non
-
Rule10b5-1
trading arrangement” (as such terms are defined
in Item 408 of Regulation S-K).
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
:
None
69
PART
III
Item 10.
Directors, Executive Officers and Corporate Governance:
Information
contained
under
the
captions
“Election
of
Directors,”
“Meetings
and
Committees,”
“Corporate
Governance
Matters”
and
“Delinquent
Section
16(a)
Reports”
in
the
Registrant’s
Proxy
Statement
for
its
2024
annual
stockholders’
meeting
(the
“2024
Proxy
Statement”)
is
incorporated
by
reference
in
response
to
this
Item 10.
The
information
in
response
to
this
Item 10
regarding
executive
officers
of the
Company is
contained in
Item 3A, Part I
hereof under
the caption
“Executive Officers
of
the Registrant.”
Item 11.
Executive Compensation:
Information contained under the captions
“2023 Executive Compensation” (except for
the information
under
the
heading
“Pay
Versus
Performance”),
“Fiscal
Year
2023
Director
Compensation,”
and
“Corporate
Governance
Matters-Compensation
Committee
Interlocks
and
Insider
Participation”
in
the
Company’s 2024 Proxy Statement is incorporated by reference in response to this Item.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder
Matters:
Equity Compensation Plan Information
The
following
table
provides
information
about
stock
options
outstanding
and
shares
available
for
future awards under all of the Company’s equity compensation plans. The information is as of February
3,
2024.
(a)
Number of Securities to
be Issued upon
Exercise of
Outstanding Options,
Warrants and Rights
(1)
(b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(1)
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a)) (2)
Plan Category
Equity compensation plans approved
by security holders
-
-
3,305,360
Equity compensation plans not
approved by security holders
-
-
-
Total
-
-
3,305,360
(1)
There are no outstanding stock options, warrants or stock appreciation
rights.
(2)
Includes the following:
Under
the
Company’s
stock
incentive
plan,
referred
to
as
the
2018
Incentive
Compensation
Plan,
3,147,393
shares
are
available
for
grant.
Under
this
plan,
non-
qualified stock options may be granted to key associates.
Under
the
2021
Employee Stock
Purchase
Plan,
157,967 shares
are
available. Eligible
associates
may
participate
in
the
purchase
of
designated
shares
of
the
Company’s
common
stock.
The
purchase price of this stock is equal to 85% of the lower of the
closing price at the beginning or the
end of each semi-annual stock purchase period.
Information contained under “Security Ownership of Certain Owners
and Management” in the
2024 Proxy Statement is incorporated by reference in response to this Item.
70
Item 13.
Certain Relationships and Related Transactions, and Director Independence:
Information
contained
under
the
caption
“Certain
Relationships
and
Related
Person
Transactions,”
“Corporate
Governance
Matters-Director
Independence”
and
“Meetings
and
Committees”
in
the
2024
Proxy Statement is incorporated by reference in response to this Item.
Item 14.
Principal Accountant Fees and Services:
Information contained
under the
captions “Ratification
of
Independent Registered
Public Accounting
Firm-Audit Fees”
and
“-Policy on
Audit
Committee Pre-Approval
of
Audit
and Permissible
Non-Audit
Services
by
the
Independent
Registered
Public
Accounting
Firm”
in
the
2024
Proxy
Statement
is
incorporated by reference in response to this Item.
71
PART
IV
Item 15.
Exhibits and Financial Statement Schedules:
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Page
Report of Independent Registered Public Accounting Firm
....................................................................
37
Consolidated Statements of Income (Loss) and Comprehensive Income
(Loss) for the fiscal
years ended February 3, 2024, January 28, 2023 and January 29, 2022
................................................
40
Consolidated Balance Sheets at February 3, 2024 and January 28, 2023
.................................................
41
Consolidated Statements of Cash Flows for the fiscal years ended
February 3, 2024, January 28, 2023
and January 29, 2022 ................................................................................................................................
42
Consolidated Statements of Stockholders’ Equity for the fiscal years ended
February 3, 2024,
January 28, 2023 and January 29, 2022
....................................................................................................
43
Notes to Consolidated Financial Statements
.............................................................................................
44
(2) Financial Statement Schedule: The following report and
financial statement schedule is filed
herewith:
Schedule II — Valuation and Qualifying Accounts .................................................................................
75
All
other
schedules
are
omitted
as
the
required
information
is
inapplicable
or
the
information
is
presented in the Consolidated Financial Statements or related Notes thereto.
(3) Index to Exhibits: The
following exhibits listed in
the Index below are
filed with this report
or, as
noted, incorporated by reference herein.
The Company will supply copies of the following exhibits to any
shareholder upon receipt of a written request addressed to the Corporate Secretary,
The Cato Corporation,
8100 Denmark
Road, Charlotte,
NC 28273
and the
payment of
$.50 per
page to
help defray
the costs
of
handling,
copying
and
postage.
In
most
cases,
documents
incorporated
by
reference
to
exhibits
to
our
registration
statements,
reports
or
proxy
statements
filed
by
the
Company
with
the
Securities
and
Exchange
Commission
are
available
to
the
public
over
the
Internet
from
the
SEC’s
web
site
at
http://www.sec.gov.
72
Exhibit
Number
Description of Exhibit
3.1
Registrant's Amended and Restated Certificate of Incorporation, incorporated by reference
to Exhibit 3.1 to Form 10-Q of the Registrant for the quarter ended May 2, 2020.
3.2
Registrant’s Amended and Restated By Laws, incorporated by reference to Exhibit 3.2 to
Form 10-Q of the Registrant for the quarter ended May 2, 2020.
4.1
Description of the Registrant's Securities Registered Pursuant to Section 12 of the
Securities Exchange Act of 1934, incorporated by reference to Exhibit 4.1 to Form 10-K of
the Registrant for the year ended February 1, 2020.
10.1*
The Cato Corporation 2013 Employee Stock Purchase Plan (Amended and Restated as of
April 1, 2021) incorporated by reference to Appendix A to 8-K of the Company filed on
April 8, 2021(SEC file No. 333-25638).
10.2*
2013 Incentive Compensation Plan, incorporated by reference to Exhibit 4.1 to Form S-8
of the Registrant filed May 31, 2013 (SEC file No. 333-188993).
10.3*
2018 Incentive Compensation Plan, incorporated by reference to Exhibit 99.1 to Form S-8
of the Registrant filed June 1, 2018 (SEC file No. 333-225350).
10.4*
Form of Agreement, dated as of August 29, 2003, between the Registrant and Wayland H.
Cato, Jr., incorporated by reference to Exhibit 99(c) to Form 8-K of the Registrant filed on
July 22, 2003.
10.5*
Form of Agreement, dated as of August 29, 2003, between the Registrant and Edgar T.
Cato, incorporated by reference to Exhibit 99(d) to Form 8-K of the Registrant filed on
July 22, 2003.
10.6*
Retirement Agreement between Registrant and Wayland H. Cato, Jr. dated August 29,
2003 incorporated by reference to Exhibit 10.1 to Form 10-Q of the Registrant for quarter
ended August 2, 2003.
10.7*
Retirement Agreement between Registrant and Edgar T. Cato dated August 29, 2003,
incorporated by reference to Exhibit 10.2 to Form 10-Q of the Registrant for the quarter
ended August 2, 2003.
10.8*
Deferred Compensation Plan effective July 28, 2011, incorporated by reference to Exhibit
10.1 to Form 8-K of the Registrant filed on July 19, 2011.
10.9*
Letter Agreement between the Registrant and Charles Knight dated as of January 4, 2022,
incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed on January 6,
2022.
10.10
Credit Agreement, dated as of May 19, 2022, among the Registrant, the guarantors party
thereto, the banks party thereto and Wells Fargo Bank, National Association, as Agent,
incorporated by reference to Exhibit 10.1 to Form 8-K of the Registrant filed May 20,
2022.
10.11
First Amendment, dated as of June 6, 2022, to Credit Agreement, dated as of May 19,
2022, among the Registrant, the guarantors party hereto, the banks party thereto and Wells
Fargo Bank, National Association, as Agent, incorporated by reference to Exhibit 10.1 to
Form 10-Q of the Registrant for the quarter ended July 30, 2022.
10.12
Second Amendment, dated as of August 9, 2023, to Credit Agreement, dated as of May 19
2022, among the Registrant, the banks party thereto and Wells Fargo Bank, National
Association.
10.13
Third Amendment, dated as of October 24, 2023, to Credit Agreement, dated as of May 19
2022, among the Registrant, the banks party thereto and Wells Fargo Bank, National
Association.
21.1**
Subsidiaries of Registrant.
23.1**
Consent of Independent Registered Public Accounting Firm.
31.1**
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2**
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32.1**
Section 1350 Certification of Chief Executive Officer.
73
32.2**
Section 1350 Certification of Chief Financial Officer.
97.1**
Registrant’s Dodd-Frank Clawback Policy.
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.1
Cover Page Interactive Data File (Formatted in Inline XBRL and
contained in the Interactive
Data Files submitted as Exhibit 101.1**).
___________
* Management contract or compensatory plan required to be filed under Item 15 of this report and Item
601
of Regulation S-K.
** Filed or submitted electronically herewith.
Item 16.
Form 10-K Summary:
None.
74
SIGNATURES
Pursuant
to
the
requirements
of
Section 13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
Cato
has
duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The Cato Corporation
By
/s/ JOHN P.
D. CATO
By
/s/ CHARLES D. KNIGHT
John P.
D. Cato
Chairman, President and
Chief Executive Officer
Charles D. Knight
Executive Vice President
Chief Financial Officer
By
/s/ JEFFREY R. SHOCK
Jeffrey R. Shock
Senior Vice President
Controller
Date: March 27, 2024
Pursuant to the
requirements of the
Securities Exchange
Act of 1934,
this report has
been signed below
on March 27,
2024
by the following persons on behalf of the Registrant and in the capacities indicated:
/s/ JOHN P.
D. CATO
John P.
D. Cato
(President and Chief Executive Officer
(Principal Executive Officer) and Director)
/s/ BAILEY W.
PATRICK
Bailey W.
Patrick
(Director)
/s/ CHARLES D. KNIGHT
Charles D. Knight
(Executive Vice President
Chief Financial Officer (Principal Financial Officer))
/s/ THOMAS B. HENSON
Thomas B. Henson
(Director)
/s/ JEFFREY R. SHOCK
Jeffrey R. Shock
(Senior Vice President
Controller (Principal Accounting Officer))
/s/ BRYAN
F. KENNEDY
III
Bryan F. Kennedy III
(Director)
/s/ THOMAS E. MECKLEY
Thomas E. Meckley
(Director)
/s/ D. HARDING STOWE
D. Harding Stowe
(Director)
/s/ THERESA J. DREW
Theresa J. Drew
(Director)
/s/ PAMELA
L. DAVIES
Pamela L. Davies
(Director)
75
Schedule II
VALUATION
AND QUALIFYING ACCOUNTS
(in thousands)
Allowance
for
Customer
Self Insurance
Credit Losses(a)
Reserves(b)
Balance at January 30, 2021
$
605
$
10,975
Additions charged to costs and expenses
485
13,464
Additions (reductions) charged to other accounts
98
(c)
( 1,447 )
Deductions
( 385 )
(d)
( 14,721 )
Balance at January 29, 2022
$
803
$
8,271
Additions charged to costs and expenses
349
13,287
Additions (reductions) charged to other accounts
84
(c)
638
Deductions
( 475 )
(d)
( 14,523 )
Balance at January 28, 2023
$
761
$
7,673
Additions charged to costs and expenses
578
16,063
Additions (reductions) charged to other accounts
72
(c)
467
Deductions
( 706 )
(d)
( 15,075 )
Balance at February 3, 2024
$
705
$
9,128
(a)
Deducted from trade accounts receivable.
(b)
Reserve for Workers' Compensation,
General Liability and Healthcare.
(c)
Recoveries of amounts previously written off.
(d)
Uncollectible accounts written off.