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iso4217:USD xbrli:pure xbrli:shares iso4217:USD xbrli:shares
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
|
☒
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|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
|
|
For the quarterly period ended
August 1, 2020
|
|
OR
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|
☐
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
For the transition period from
________________to__________________
|
|
Commission file number
1-31340
|
|
THE CATO CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware
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56-0484485
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(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.)
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|
|
|
8100 Denmark Road,
Charlotte,
North Carolina28273-5975
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(Address of principal executive offices)
(Zip Code)
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|
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(704)554-8510
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|
(Registrant's telephone number, including area code)
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|
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|
Not Applicable
|
|
(Former name, former address and former fiscal year, if changed
since last report)
Securities
registered pursuant to Section 12(b) of the Act:
|
|
Title
of each class
|
Trading
Symbol(s)
|
Name
of each exchange on which registered
|
|
Class
A - Common Stock, par value $.033 per share
|
CATO
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New
York Stock Exchange
|
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer
☐Accelerated
filer ☑
Non-accelerated filer
☐Smaller
reporting company
☐
Emerging growth company
☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
As of August 1, 2020, there were
22,194,233 shares of Class A common stock and
1,763,652 shares of Class B common stock outstanding.
THE CATO CORPORATION
FORM 10-Q
Quarter Ended August 1, 2020
Table of Contents
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Page
No.
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PART
I – FINANCIAL INFORMATION (UNAUDITED)
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Item
1.
|
Financial
Statements (Unaudited):
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Condensed Consolidated Statements of Income (Loss) and
Comprehensive Income (Loss)
|
3
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|
|
|
For the Three Months and Six Months Ended August 1, 2020 and August
3, 2019
|
|
|
|
|
|
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|
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Condensed Consolidated Balance Sheets
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4
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At August 1, 2020 and February 1, 2020
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|
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Condensed Consolidated Statements of Cash Flows
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5
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|
For the Six Months Ended August 1, 2020 and August 3,
2019
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Stockholders’
Equity
|
6
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|
|
|
For the Six Months Ended August 1, 2020 and August 3,
2019
|
|
|
|
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements
|
7 –
22
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For the Three Months and Six Months Ended August 1, 2020 and August
3, 2019
|
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|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
23 –
30
|
|
|
|
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
31
|
|
|
|
|
|
|
Item
4.
|
Controls
and Procedures
|
31
|
|
|
|
|
|
|
PART
II – OTHER INFORMATION
|
|
|
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
32
|
|
|
|
|
|
|
|
Item
1A.
|
Risk
Factors
|
32
|
|
|
|
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
33
|
|
|
|
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
33
|
|
|
|
|
|
|
|
Item
4.
|
Mine
Safety Disclosures
|
34
|
|
|
|
|
|
|
|
Item
5.
|
Other
Information
|
34
|
|
|
|
|
|
|
|
Item
6.
|
Exhibits
|
34
|
|
|
|
|
|
|
|
Signatures
|
35
|
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
August 1, 2020
|
|
August 3, 2019
|
|
August 1, 2020
|
|
August 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail sales
|
$
|
166,265
|
|
$
|
210,357
|
|
$
|
265,078
|
|
$
|
438,423
|
|
Other revenue (principally finance charges, late fees
and
|
|
|
|
|
|
|
|
|
|
|
|
|
layaway charges)
|
|
1,905
|
|
|
2,224
|
|
|
3,824
|
|
|
4,510
|
|
Total revenues
|
|
168,170
|
|
|
212,581
|
|
|
268,902
|
|
|
442,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation shown
below)
|
|
132,736
|
|
|
130,372
|
|
|
216,333
|
|
|
266,455
|
|
Selling, general and administrative (exclusive of
depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
shown below)
|
|
43,957
|
|
|
66,066
|
|
|
96,468
|
|
|
132,056
|
|
Depreciation
|
|
3,488
|
|
|
3,836
|
|
|
7,494
|
|
|
7,679
|
|
Interest and other income
|
|
(961)
|
|
|
(1,693)
|
|
|
(2,812)
|
|
|
(2,829)
|
|
Cost and expenses, net
|
|
179,220
|
|
|
198,581
|
|
|
317,483
|
|
|
403,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
(11,050)
|
|
|
14,000
|
|
|
(48,581)
|
|
|
39,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
(3,880)
|
|
|
2,134
|
|
|
(12,994)
|
|
|
6,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(7,170)
|
|
$
|
11,866
|
|
$
|
(35,587)
|
|
$
|
33,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
$
|
(0.30)
|
|
$
|
0.48
|
|
$
|
(1.48)
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
$
|
(0.30)
|
|
$
|
0.48
|
|
$
|
(1.48)
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(7,170)
|
|
$
|
11,866
|
|
$
|
(35,587)
|
|
$
|
33,122
|
|
Unrealized gain (loss) on available-for-sale securities, net
of
|
|
|
|
|
|
|
|
|
|
|
|
|
deferred income taxes of $146
and $56
for the three and
|
|
|
|
|
|
|
|
|
|
|
|
|
six months ended August 1, 2020 and $262
and $388
for
|
|
|
|
|
|
|
|
|
|
|
|
|
the three and six months ended August 3, 2019,
respectively
|
|
484
|
|
|
859
|
|
|
186
|
|
|
1,271
|
|
Comprehensive income (loss)
|
$
|
(6,686)
|
|
$
|
12,725
|
|
$
|
(35,401)
|
|
$
|
34,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
notes to condensed consolidated financial statements
(unaudited).
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 1, 2020
|
|
February 1, 2020
|
|
|
|
|
|
|
|
|
ASSETS
|
(Dollars in thousands)
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
36,565
|
|
$
|
11,824
|
|
Short-term investments
|
|
100,391
|
|
|
200,387
|
|
Restricted cash
|
|
3,001
|
|
|
2,577
|
|
Restricted short-term investments
|
|
916
|
|
|
1,319
|
|
Accounts receivable, net of allowance for doubtful accounts
of
|
|
|
|
|
|
|
$590
and $726
at August 1, 2020 and February 1, 2020, respectively
|
|
39,037
|
|
|
26,088
|
|
Merchandise inventories
|
|
88,280
|
|
|
115,365
|
|
Prepaid expenses and other current assets
|
|
12,460
|
|
|
5,237
|
|
Total Current Assets
|
|
280,650
|
|
|
362,797
|
|
Property and equipment – net
|
|
84,938
|
|
|
88,667
|
|
Noncurrent deferred income taxes
|
|
5,911
|
|
|
8,636
|
|
Other assets
|
|
23,142
|
|
|
24,073
|
|
Right-of-Use assets – net
|
|
201,776
|
|
|
200,803
|
|
Total Assets
|
$
|
596,417
|
|
$
|
684,976
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
|
53,963
|
|
$
|
68,438
|
|
Accrued expenses
|
|
40,686
|
|
|
47,099
|
|
Accrued bonus and benefits
|
|
264
|
|
|
18,913
|
|
Accrued income taxes
|
|
1,236
|
|
|
1,703
|
|
Current lease liability
|
|
57,878
|
|
|
63,149
|
|
Total Current Liabilities
|
|
154,027
|
|
|
199,302
|
|
Other noncurrent liabilities
|
|
23,663
|
|
|
21,976
|
|
Lease liability
|
|
152,508
|
|
|
147,184
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
Preferred stock, $100
par value per share,
100,000 shares
|
|
|
|
|
|
|
authorized, none issued
|
|
-
|
|
|
-
|
|
Class A common stock, $0.033
par value per share,
50,000,000
|
|
|
|
|
|
|
shares authorized;
22,194,233 shares and
22,535,779 shares
|
|
|
|
|
|
|
issued at August 1, 2020 and February 1, 2020,
respectively
|
|
748
|
|
|
761
|
|
Convertible Class B common stock, $0.033
par value per share,
|
|
|
|
|
|
|
15,000,000 shares authorized;
1,763,652 shares and
1,763,652 shares
|
|
|
|
|
|
|
issued at August 1, 2020 and February 1, 2020,
respectively
|
|
59
|
|
|
59
|
|
Additional paid-in capital
|
|
112,949
|
|
|
110,813
|
|
Retained earnings
|
|
150,854
|
|
|
203,458
|
|
Accumulated other comprehensive income/(loss)
|
|
1,609
|
|
|
1,423
|
|
Total Stockholders' Equity
|
|
266,219
|
|
|
316,514
|
|
Total Liabilities and Stockholders' Equity
|
$
|
596,417
|
|
$
|
684,976
|
See
notes to condensed consolidated financial statements
(unaudited).
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
Six Months Ended
|
|
|
|
August 1, 2020
|
|
August 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(35,587)
|
|
$
|
33,122
|
|
|
Adjustments to reconcile net income (loss) to net cash provided
(used)
|
|
|
|
|
|
|
|
by operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
7,494
|
|
|
7,679
|
|
|
Provision for doubtful accounts
|
|
109
|
|
|
366
|
|
|
Purchase premium and premium amortization of investments
|
|
161
|
|
|
(168)
|
|
|
Share-based compensation
|
|
1,903
|
|
|
2,196
|
|
|
Deferred income taxes
|
|
2,669
|
|
|
-
|
|
|
Loss on disposal of property and equipment
|
|
162
|
|
|
344
|
|
|
Impairment of store assets
|
|
5,270
|
|
|
-
|
|
|
Changes in operating assets and liabilities which
provided
|
|
|
|
|
|
|
|
(used) cash:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(13,058)
|
|
|
292
|
|
|
Merchandise inventories
|
|
27,085
|
|
|
19,633
|
|
|
Prepaid and other assets
|
|
(7,291)
|
|
|
22,909
|
|
|
Operating lease right-of-use assets and liabilities
|
|
(920)
|
|
|
-
|
|
|
Accrued income taxes
|
|
(467)
|
|
|
1,332
|
|
|
Accounts payable, accrued expenses and other liabilities
|
|
(35,759)
|
|
|
(42,524)
|
|
|
Net cash provided (used) by operating activities
|
|
(48,229)
|
|
|
45,181
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
Expenditures for property and equipment
|
|
(9,801)
|
|
|
(2,217)
|
|
|
Purchase of short-term investments
|
|
(8,275)
|
|
|
(106,518)
|
|
|
Sales of short-term investments
|
|
108,886
|
|
|
85,364
|
|
|
Purchase of other assets
|
|
-
|
|
|
(74)
|
|
|
Sales of other assets
|
|
199
|
|
|
9
|
|
|
Net cash provided (used) in investing activities
|
|
91,009
|
|
|
(23,436)
|
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
Dividends paid
|
|
(7,990)
|
|
|
(16,291)
|
|
|
Repurchase of common stock
|
|
(9,875)
|
|
|
(2,834)
|
|
|
Proceeds from line of credit
|
|
34,000
|
|
|
-
|
|
|
Payments on line of credit
|
|
(34,000)
|
|
|
-
|
|
|
Proceeds from employee stock purchase plan
|
|
250
|
|
|
319
|
|
|
Net cash provided (used) in financing activities
|
|
(17,615)
|
|
|
(18,806)
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted
cash
|
|
25,165
|
|
|
2,939
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of
period
|
|
14,401
|
|
|
25,209
|
|
|
Cash, cash equivalents, and restricted cash at end of
period
|
$
|
39,566
|
|
$
|
28,148
|
|
|
|
|
|
|
|
|
|
|
Non-cash activity:
|
|
|
|
|
|
|
|
Accrued other assets and property and equipment
|
$
|
1,556
|
|
$
|
1,395
|
|
See
notes to condensed consolidated financial statements
(unaudited).
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
(UNAUDITED)
|
|
|
|
Convertible
|
|
|
|
|
Accumulated
|
|
|
|
|
Class A
|
Class B
|
Additional
|
|
|
Other
|
Total
|
|
|
Common
|
Common
|
Paid-in
|
Retained
|
Comprehensive
|
Stockholders'
|
|
|
Stock
|
Stock
|
Capital
|
Earnings
|
Income
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — February 1, 2020
|
$
|
761
|
$
|
59
|
$
|
110,813
|
$
|
203,458
|
$
|
1,423
|
$
|
316,514
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
-
|
|
-
|
|
-
|
|
(28,417)
|
|
-
|
|
(28,417)
|
|
Unrealized gains on available-for-sale securities, net of
deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax benefit of ($90)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(298)
|
|
(298)
|
|
Dividends paid ($0.33
per share)
|
|
-
|
|
-
|
|
-
|
|
(7,990)
|
|
-
|
|
(7,990)
|
|
Class A common stock sold through employee stock
purchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan —
26,957 shares
|
|
1
|
|
-
|
|
293
|
|
-
|
|
-
|
|
294
|
|
Class B common stock sold through stock option plans —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Class A common stock issued through restricted stock grant plans
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307,354 shares
|
|
10
|
|
-
|
|
587
|
|
8
|
|
-
|
|
605
|
|
Repurchase and retirement of treasury shares –
618,056 shares
|
|
(22)
|
|
-
|
|
-
|
|
(9,034)
|
|
-
|
|
(9,056)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — May 2, 2020
|
$
|
750
|
$
|
59
|
$
|
111,693
|
$
|
158,025
|
$
|
1,125
|
$
|
271,652
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
-
|
|
-
|
|
-
|
|
(7,170)
|
|
-
|
|
(7,170)
|
|
Unrealized gains on available-for-sale securities, net of
deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax liability of $146
|
|
-
|
|
-
|
|
-
|
|
-
|
|
484
|
|
484
|
|
Dividends paid ($
-per share)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Class A common stock sold through employee stock
purchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan —
-shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Class B common stock sold through stock option plans —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Class A common stock issued through restricted stock grant plans
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57,805)
shares
|
|
(2)
|
|
-
|
|
1,256
|
|
(1)
|
|
-
|
|
1,253
|
|
Repurchase and retirement of treasury shares –
-shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — August 1, 2020
|
$
|
748
|
$
|
59
|
$
|
112,949
|
$
|
150,854
|
$
|
1,609
|
$
|
266,219
|
|
|
|
|
Convertible
|
|
|
|
|
Accumulated
|
|
|
|
|
Class A
|
Class B
|
Additional
|
|
|
Other
|
Total
|
|
|
Common
|
Common
|
Paid-in
|
Retained
|
Comprehensive
|
Stockholders'
|
|
|
Stock
|
Stock
|
Capital
|
Earnings
|
Income
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — February 2, 2019
|
$
|
767
|
$
|
59
|
$
|
105,580
|
$
|
210,507
|
$
|
(77)
|
$
|
316,836
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
-
|
|
-
|
|
-
|
|
21,256
|
|
-
|
|
21,256
|
|
Unrealized gains on available-for-sale securities, net of
deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax liability of $126
|
|
-
|
|
-
|
|
-
|
|
-
|
|
412
|
|
412
|
|
Dividends paid ($0.33
per share)
|
|
-
|
|
-
|
|
-
|
|
(8,118)
|
|
-
|
|
(8,118)
|
|
Class A common stock sold through employee stock
purchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan —
20,676 shares
|
|
1
|
|
-
|
|
307
|
|
-
|
|
-
|
|
308
|
|
Class B common stock sold through stock option plans —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Class A common stock issued through restricted stock grant plans
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
355,609 shares
|
|
11
|
|
-
|
|
624
|
|
10
|
|
-
|
|
645
|
|
Repurchase and retirement of treasury shares –
208,041 shares
|
|
(7)
|
|
-
|
|
-
|
|
(2,827)
|
|
-
|
|
(2,834)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — May 4, 2019
|
$
|
772
|
$
|
59
|
$
|
106,511
|
$
|
220,828
|
$
|
335
|
$
|
328,505
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
-
|
|
-
|
|
-
|
|
11,866
|
|
-
|
|
11,866
|
|
Unrealized gains on available-for-sale securities, net of
deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax liability of $262
|
|
-
|
|
-
|
|
-
|
|
-
|
|
859
|
|
859
|
|
Dividends paid ($0.33
per share)
|
|
-
|
|
-
|
|
-
|
|
(8,173)
|
|
-
|
|
(8,173)
|
|
Class A common stock sold through employee stock
purchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plan —
5,402 shares
|
|
-
|
|
-
|
|
67
|
|
-
|
|
-
|
|
67
|
|
Class B common stock sold through stock option plans —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Class A common stock issued through restricted stock grant plans
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,170)
shares
|
|
-
|
|
-
|
|
1,479
|
|
15
|
|
-
|
|
1,494
|
|
Repurchase and retirement of treasury shares –
-shares
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance — August 3, 2019
|
$
|
772
|
$
|
59
|
$
|
108,057
|
$
|
224,536
|
$
|
1,194
|
$
|
334,618
|
See
notes to condensed consolidated financial statements
(unaudited).
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 1 - GENERAL:
The
condensed consolidated financial statements have been prepared from
the accounting records of The Cato Corporation and its wholly-owned
subsidiaries (the “Company”), and all amounts shown as of and for
the periods ended August 1, 2020 and August 3, 2019 are unaudited.
In the opinion of management, all adjustments considered necessary
for a fair presentation of the financial statements have been
included. All such adjustments are of a normal, recurring nature
unless otherwise noted. The results of the interim period may not
be indicative of the results expected for the entire
year.
The
interim financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, included in
the Company’s Annual Report on Form 10-K for the fiscal year ended
February 1, 2020. Amounts as of February 1, 2020 have been derived
from the audited balance sheet, but do not include all disclosures
required by accounting principles generally accepted in the United
States of America.
Subsequent
to August 1, 2020, the Company repurchased 72,400
shares for $509,141.
On
August 27, 2020, the Board of Directors authorized an increase in
the Company’s share repurchase program of 1 million shares. Prior
to this authorization, the Company had approximately 656,000 shares
remaining in open authorizations inclusive of the activity
subsequent to August 1, 2020.
COVID-19 Update
The spread of COVID-19 has resulted in state and local orders
mandating store closures and other measures to mitigate the spread
of the virus. Responses by customers, government and the private
sector have and will likely continue to adversely impact our
business operations for the remainder of fiscal 2020 and possibly
beyond. The extent to which the COVID-19 pandemic ultimately
impacts the Company’s business, financial condition, results of
operations, cash flows, and liquidity may differ from management’s
current estimates due to inherent uncertainties regarding the
duration and further spread of the outbreak, its severity, actions
taken to contain the virus or treat its impact, and how quickly and
to what extent normal economic and operating conditions can
resume.
Beginning March 19, 2020, the Company temporarily closed all Cato,
Its Fashion, Its Fashion Metro and Versona stores. In addition, the
Company suspended its quarterly dividend, significantly reduced
capital expenditures and reduced its SG&A expense through the
reduction of non-payroll expenses, as well as furloughed associates
and in certain instances eliminated positions primarily at its
corporate office. Beginning on May 1, 2020, the Company began to
re-open stores based on the pertinent state and local orders. As of
June 15, 2020, all stores have re-opened. There is significant
uncertainty around the duration, breadth and severity of continued
business disruptions related to COVID-19, as well as its impact on
the U.S. economy, consumer willingness to visit malls and shopping
centers, and associate staffing for our stores. At this time, the
possible effects of national, state or local action, legislation,
guidelines or programs that attempt to mitigate the spread of
COVID-19 or address its economic effects on our customers,
suppliers or the Company are also uncertain.
While the Company currently anticipates that our results for the
remainder of fiscal 2020 will be adversely impacted, the extent to
which COVID-19 impacts the Company’s results will depend on future
developments, which are highly uncertain, including possible new
information and understanding about the
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
severity of COVID-19, related potential economic impacts to
customers and suppliers, and the effect of actions taken to contain
it or mitigate its impact.
Accounting Policies - Impairment of Long-Lived Assets:
The Company invests in leaseholds, right-of use assets and
equipment primarily in connection with the opening and remodeling
of stores and in computer software and hardware. The Company
periodically reviews its store locations and estimates the
recoverability of its long-lived assets, which primarily relate to
Fixtures and equipment, Leasehold improvements, Right-of-use assets
net of Lease liabilities and Information technology equipment and
software. An impairment charge is recorded for the amount by which
the carrying value exceeds the estimated fair value when the
Company determines that projected cash flows associated with those
long-lived assets will not be sufficient to recover the carrying
value. This determination is based on a number of factors,
including the store’s projected cash flows, which include future
sales growth projections. The Company assesses the fair value of
each lease by considering market rents and any lease terms that may
adjust market rents under certain conditions, such as the loss of
an anchor tenant or a leased space in a shopping center not meeting
certain criteria. Further, in determining when to close a store,
the Company considers real estate development in the area and
perceived local market conditions, which can be difficult to
predict and may be subject to change. As a result of store closures
during the first quarter of 2020, the Company determined a
triggering event occurred, which resulted in an impairment analysis
being performed. An asset impairment charge of $5.3
million was recorded in the first quarter of 2020. No additional
impairment was required in the second quarter of 2020.
Recently Adopted Accounting Policies
In
June 2016, the Financial Accounting Standards Board (“FASB”) issued
ASU 2016-13,
Financial Instruments - Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments,
which requires companies to measure and recognize expected credit
losses for financial assets held at amortized costs based on
expected losses rather than incurred losses. The new accounting
rules were effective for the Company in the first quarter of 2020
and had a minimal impact on the financial statements.
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 2 - EARNINGS PER SHARE:
Accounting Standard Codification (“ASC”) 260 –
Earnings Per Share
requires dual presentation of basic and diluted Earnings Per Share
(“EPS”) on the face of all income statements for all entities with
complex capital structures. The Company has presented one basic EPS
and one diluted EPS amount for all common shares in the
accompanying Condensed Consolidated Statements of Income and
Comprehensive Income. While the Company’s certificate of
incorporation provides the right for the Board of Directors to
declare dividends on Class A shares without declaration of
commensurate dividends on Class B shares, the Company has
historically paid the same dividends to both Class A and Class B
shareholders and the Board of Directors has resolved to continue
this practice. Accordingly, the Company’s allocation of income for
purposes of the EPS computation is the same for Class A and Class B
shares and the EPS amounts reported herein are applicable to both
Class A and Class B shares.
Basic EPS is computed as net income less earnings allocated to
non-vested equity awards divided by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur from common shares issuable
through stock options and the Employee Stock Purchase
Plan.
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
|
August 1, 2020
|
|
|
August 3, 2019
|
|
|
August 1, 2020
|
|
|
August 3, 2019
|
|
|
|
(Dollars in thousands)
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
(7,170)
|
|
$
|
11,866
|
|
$
|
(35,587)
|
|
$
|
33,122
|
|
|
(Earnings)/loss allocated to non-vested equity awards
|
|
|
320
|
|
|
(451)
|
|
|
1,531
|
|
|
(1,148)
|
|
|
Net earnings (loss) available to common stockholders
|
|
$
|
(6,850)
|
|
$
|
11,415
|
|
$
|
(34,056)
|
|
$
|
31,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
22,908,942
|
|
|
23,789,070
|
|
|
22,934,410
|
|
|
23,772,883
|
|
|
Diluted weighted average common shares outstanding
|
|
|
22,908,942
|
|
|
23,789,070
|
|
|
22,934,410
|
|
|
23,772,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
(0.30)
|
|
$
|
0.48
|
|
$
|
(1.48)
|
|
$
|
1.34
|
|
|
Diluted earnings (loss) per share
|
|
$
|
(0.30)
|
|
$
|
0.48
|
|
$
|
(1.48)
|
|
$
|
1.34
|
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME:
The following table sets forth information regarding the
reclassification out of Accumulated other comprehensive income (in
thousands) for the three months ended August 1, 2020:
|
|
|
Changes in Accumulated Other
|
|
|
|
|
Comprehensive Income (a)
|
|
|
|
|
|
|
Unrealized Gains
|
|
|
|
|
|
|
|
|
and (Losses) on
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
Beginning Balance at May 2, 2020
|
|
$
|
1,125
|
|
|
|
|
|
Other comprehensive income before
|
|
|
|
|
|
|
|
|
reclassification
|
|
|
420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated
|
|
|
|
|
|
|
|
|
other comprehensive income (b)
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current-period other comprehensive income
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance at August 1, 2020
|
|
$
|
1,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. The tax impact of this reclassification was
$19.
|
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:
|
|
|
Changes in Accumulated Other
|
|
|
|
|
Comprehensive Income (a)
|
|
|
|
|
|
|
Unrealized Gains
|
|
|
|
|
|
|
|
|
and (Losses) on
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
Beginning Balance at February 1, 2020
|
|
$
|
1,423
|
|
|
|
|
|
Other comprehensive income before
|
|
|
|
|
|
|
|
|
reclassification
|
|
|
(381)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated
|
|
|
|
|
|
|
|
|
other comprehensive income (b)
|
|
|
567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current-period other comprehensive income
|
|
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance at August 1, 2020
|
|
$
|
1,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. The tax impact of this reclassification was
$171.
|
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME
(CONTINUED):
The following table sets forth information regarding the
reclassification out of Accumulated other comprehensive income (in
thousands) for the three months ended August 3, 2019:
|
|
|
Changes in Accumulated Other
|
|
|
|
|
Comprehensive Income (a)
|
|
|
|
|
|
|
Unrealized Gains
|
|
|
|
|
|
|
|
|
and (Losses) on
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
Beginning Balance at May 4, 2019
|
|
$
|
335
|
|
|
|
|
|
Other comprehensive income before
|
|
|
|
|
|
|
|
|
reclassifications
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated
|
|
|
|
|
|
|
|
|
other comprehensive income (b)
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current-period other comprehensive income
|
|
|
859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance at August 3, 2019
|
|
$
|
1,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) All amounts are net-of-tax. Amounts in parentheses indicate a
debit/reduction to other comprehensive income.
|
|
|
(b) Includes $39
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
$9.
|
The following table sets forth information regarding the
reclassification out of Accumulated other comprehensive income (in
thousands) for the six months ended August 3, 2019:
|
|
|
Changes in Accumulated Other
|
|
|
|
|
Comprehensive Income (a)
|
|
|
|
|
|
|
Unrealized Gains
|
|
|
|
|
|
|
|
|
and (Losses) on
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
Beginning Balance at February 2, 2019
|
|
$
|
(77)
|
|
|
|
|
|
Other comprehensive income before
|
|
|
|
|
|
|
|
|
reclassifications
|
|
|
1,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated
|
|
|
|
|
|
|
|
|
other comprehensive income (b)
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current-period other comprehensive income
|
|
|
1,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance at August 3, 2019
|
|
$
|
1,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) All amounts are net-of-tax. Amounts in parentheses indicate a
debit/reduction to other comprehensive income.
|
|
|
(b) Includes $51
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
$12.
|
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 4 – FINANCING ARRANGEMENTS:
As of August 1, 2020, the Company had an unsecured revolving credit
agreement to borrow $35.0
million less the balance of any revocable letters of credit as
discussed below. On June 2, 2020, the Company signed an amendment
extending the revolving credit agreement through May 2023. The
credit agreement contains various financial covenants and
limitations, including the maintenance of specific financial ratios
with which the Company was in compliance as of August 1, 2020.
There were no borrowings outstanding under this credit facility as
of August 1, 2020 or February 1, 2020. The weighted average
interest rate under the credit facility was zero at August 1, 2020
due to no borrowings outstanding.
At August 1, 2020 and February 1, 2020, the Company had no
outstanding revocable letters of credit relating to purchase
commitments.
NOTE 5 – REPORTABLE SEGMENT INFORMATION:
The Company has determined that it has four operating segments, as
defined under ASC 280-10, including Cato, It’s Fashion, Versona and
Credit. As outlined in ASC 280-10, the Company has two reportable
segments: Retail and Credit. The Company has aggregated its three
retail operating segments, including e-commerce, based on the
aggregation criteria outlined in ASC 280-10, which states that two
or more operating segments may be aggregated into a single
reportable segment if aggregation is consistent with the objective
and basic principles of ASC 280-10, which require the segments to
have similar economic characteristics, products, production
processes, clients and methods of distribution.
The Company’s retail operating segments have similar economic
characteristics and similar operating, financial and competitive
risks. They are similar in nature of product, as they all offer
women’s apparel, shoes and accessories. Merchandise inventory for
the Company’s retail operating segments is sourced from the same
countries and some of the same vendors, using similar production
processes. Merchandise for the Company’s operating segments is
distributed to retail stores in a similar manner through the
Company’s single distribution center and is subsequently
distributed to clients in a similar manner.
The
Company operates its women’s fashion specialty retail stores in 31
states as of August 1, 2020, principally in the southeastern United
States.
The Company offers its own credit card to its customers and all
credit authorizations, payment processing and collection efforts
are performed by a separate subsidiary of the Company.
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 5 – REPORTABLE SEGMENT INFORMATION (CONTINUED):
The following schedule summarizes certain segment information (in
thousands):
|
Three Months Ended
|
|
|
|
|
Six Months Ended
|
|
|
|
|
August 1, 2020
|
Retail
|
Credit
|
Total
|
|
August 1, 2020
|
Retail
|
Credit
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$167,523
|
$647
|
$168,170
|
|
Revenues
|
$267,413
|
$1,489
|
$268,902
|
|
Depreciation
|
3,488
|
-
|
3,488
|
|
Depreciation
|
7,494
|
-
|
7,494
|
|
Interest and other income
|
(961)
|
-
|
(961)
|
|
Interest and other income
|
(2,812)
|
-
|
(2,812)
|
|
Income/(Loss) before
income taxes
|
(11,368)
|
318
|
(11,050)
|
|
Income/(Loss) before
income taxes
|
(49,291)
|
710
|
(48,581)
|
|
Capital expenditures
|
4,490
|
-
|
4,490
|
|
Capital expenditures
|
9,801
|
-
|
9,801
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Six Months Ended
|
|
|
|
|
August 3, 2019
|
Retail
|
Credit
|
Total
|
|
August 3, 2019
|
Retail
|
Credit
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$211,672
|
$909
|
$212,581
|
|
Revenues
|
$441,114
|
$1,819
|
$442,933
|
|
Depreciation
|
3,836
|
-
|
3,836
|
|
Depreciation
|
7,679
|
-
|
7,679
|
|
Interest and other income
|
(1,693)
|
-
|
(1,693)
|
|
Interest and other income
|
(2,829)
|
-
|
(2,829)
|
|
Income/(Loss) before
income taxes
|
13,501
|
499
|
14,000
|
|
Income/(Loss) before
income taxes
|
38,680
|
892
|
39,572
|
|
Capital expenditures
|
1,222
|
-
|
1,222
|
|
Capital expenditures
|
2,217
|
-
|
2,217
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
Credit
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as of August 1, 2020
|
$549,817
|
$46,600
|
$596,417
|
|
|
|
|
|
|
Total assets as of February 1, 2020
|
636,503
|
48,473
|
684,976
|
|
|
|
|
|
The Company evaluates segment performance based on income before
taxes. The Company does not allocate certain corporate expenses or
income taxes to the credit segment.
The following schedule summarizes the direct expenses of the credit
segment, which are reflected in Selling, general and administrative
expenses (in thousands):
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
August 1, 2020
|
|
|
August 3, 2019
|
|
|
August 1, 2020
|
|
|
August 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll
|
$
|
130
|
|
$
|
164
|
|
$
|
282
|
|
$
|
314
|
|
Postage
|
|
82
|
|
|
117
|
|
|
193
|
|
|
241
|
|
Other expenses
|
|
118
|
|
|
129
|
|
|
305
|
|
|
372
|
|
Total expenses
|
$
|
330
|
|
$
|
410
|
|
$
|
780
|
|
$
|
927
|
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 6 – STOCK-BASED COMPENSATION:
As of August 1, 2020, the Company had two long-term compensation
plans pursuant to which stock-based compensation was outstanding or
could be granted. The 2018 Incentive Compensation Plan and 2013
Incentive Compensation Plan are for the granting of various forms
of equity-based awards, including restricted stock and stock
options for grant, to officers, directors and key employees.
Effective May 24, 2018, shares for grant were no longer available
under the 2013 Incentive Compensation Plan.
The following table presents the number of options and shares of
restricted stock initially authorized and available for grant under
each of the plans as of August 1, 2020:
|
|
|
2013
|
|
2018
|
|
|
|
|
|
Plan
|
|
Plan
|
|
Total
|
|
Options and/or restricted stock initially authorized
|
|
1,500,000
|
|
4,725,000
|
|
6,225,000
|
|
Options and/or restricted stock available for grant:
|
|
|
|
|
|
|
|
August 1, 2020
|
|
-
|
|
3,943,118
|
|
3,943,118
|
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
August 1, 2020 and February 1, 2020, there was $13,007,000
and $11,900,000,
respectively, of total unrecognized compensation expense related to
nonvested restricted stock awards, which had a remaining
weighted-average vesting period of 2.6years
and 2.2years,
respectively. The total compensation expense during the three and
six months ended August 1, 2020 was $1,253,000
and $1,859,000,
respectively, compared to $1,495,000
and $2,140,000,
respectively, for the three and six months ended August 3, 2019.
These expenses are classified as a component of Selling, general
and administrative expenses in the Condensed Consolidated
Statements of Income and Comprehensive Income.
The following summary shows the changes in the shares of unvested
restricted stock outstanding during the six
months ended
August 1, 2020:
|
|
|
|
|
Weighted Average
|
|
|
Number of
|
|
|
Grant Date Fair
|
|
|
Shares
|
|
|
Value Per Share
|
|
Restricted stock awards at February 1, 2020
|
942,562
|
|
$
|
19.55
|
|
Granted
|
335,317
|
|
|
11.11
|
|
Vested
|
(129,682)
|
|
|
34.01
|
|
Forfeited or expired
|
(105,886)
|
|
|
16.63
|
|
Restricted stock awards at August 1, 2020
|
1,042,311
|
|
$
|
15.33
|
|
|
|
|
|
THE CATO CORPORATION
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 1, 2020 AND AUGUST
3, 2019
|
|
|
|
|
NOTE 6 – STOCK BASED-COMPENSATION (CONTINUED):
The Company’s Employee Stock Purchase Plan allows eligible
full-time employees to purchase a limited number of shares of the
Company’s Class A Common Stock during each semi-annual offering
period at a 15% discount through payroll deductions. During the six
months ended August 1, 2020 and August 3, 2019, the Company
sold
26,957 and
26,078 shares to employees at an average discount of
$1.64
and $2.16
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
$44,000
and $56,000
for the six months ended August 1, 2020 and August 3, 2019,
respectively. These expenses are classified as a component of
Selling, general and administrative expenses.
NOTE 7 – FAIR VALUE MEASUREMENTS:
The following tables set forth information regarding the Company’s
financial assets and liabilities that are measured at fair value
(in thousands) as of August 1, 2020 and February 1,
2020:
|
|
|
|
|
|
Quoted
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices in
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
Other
|
|
Significant
|
|
|
|
|
|
|
Identical
|
|
Observable
|
|
Unobservable
|