cato22qtr3q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

20549

FORM

10-Q

☑

QUARTERLY REPORT PURSUANT

TO SECTION

13 OR 15(d)

OF THE SECURITIES

EXCHANGE

ACT OF

1934

For the quarterly period ended

July 29, 2023

☐

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

(Exact name of registrant as specified in its

charter)

Delaware

56-0484485

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

8100 Denmark Road

Charlotte

North Carolina

28273-5975

(Address of principal executive offices)

(Zip Code)

(704)

554-8510

(Registrant's telephone number, including area code)

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

New York Stock Exchange

Indicate

by check

mark

whether

the

registrant

(1)

has

filed

all

reports

required

filed

by Section

15(d)

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.

Yes

Indicate

check

mark

whether

the

registrant

has

submitted

electronically

every

Interactive

Data

File

required

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).

Yes

Indicate by

check mark

whether the

registrant is

a large

accelerated filer,

an accelerated

filer, a

non-accelerated filer,

a smaller

reporting

company,

emerging

growth

company.

See

the

definitions

“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

☐

emerging

growth

company,

indicate

check

mark

the

registrant

has

elected

not

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 July

29, 2023, there

were

18,825,772

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 July 29, 2023

Table

of Contents

Page No.

PART

I – FINANCIAL INFORMATION

(UNAUDITED)

Item 1.

Financial Statements (Unaudited):

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

For the Three Months and Six Months Ended

July 29, 2023 and July 30, 2022

Condensed Consolidated Balance Sheets

At July 29, 2023 and January 28, 2023

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended July 29, 2023 and July

30, 2022

Condensed Consolidated Statements of Stockholders’ Equity

6 – 7

For the Six Months Ended July 29, 2023 and July

30, 2022

Notes to Condensed Consolidated Financial Statements

8 – 22

For the Three Months and Six Months Ended

July 29, 2023 and July 30, 2022

Item 2.

Management’s Discussion and Analysis

of Financial Condition and

Results of Operations

23 – 29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART

II – OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

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

July 29, 2023

July 30, 2022

July 29, 2023

July 30, 2022

(Dollars in thousands, except per share data)

REVENUES

Retail sales

181,181

195,006

371,492

399,939

Other revenue (principally finance charges, late fees and

layaway charges)

1,690

1,858

3,429

3,646

Total revenues

182,871

196,864

374,921

403,585

COSTS AND EXPENSES, NET

Cost of goods sold (exclusive of depreciation shown

below)

117,617

131,749

239,704

263,992

Selling, general and administrative (exclusive of

depreciation

shown below)

61,618

60,768

123,552

121,209

Depreciation

2,510

2,811

4,867

5,554

Interest and other income

(1,334)

(1,884)

(2,231)

(2,287)

Costs and expenses, net

180,411

193,444

365,892

388,468

Income before income taxes

2,460

3,420

9,029

15,117

Income tax expense

1,333

5,694

3,475

7,643

Net income (loss)

1,127

(2,274)

5,554

7,474

Basic earnings (loss) per share

0.06

(0.11)

0.27

0.35

Diluted earnings (loss) per share

0.06

(0.11)

0.27

0.35

Comprehensive income:

Net income (loss)

1,127

(2,274)

5,554

7,474

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

deferred income taxes of $

and $

156

for the three and

six months ended July 29, 2023 and $

and $(

343

) for

the three and six months ended July 30, 2022, respectively

167

522

(1,145)

Comprehensive income (loss)

1,294

(2,213)

6,076

6,329

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

July 29, 2023

January 28, 2023

ASSETS

(Dollars in thousands)

Current Assets:

Cash and cash equivalents

55,977

20,005

Short-term investments

77,222

108,652

Restricted cash

3,877

3,787

Accounts receivable, net of allowance for customer credit losses of

763

and $

761

at July 29, 2023 and January 28, 2023, respectively

26,915

26,497

Merchandise inventories

92,718

112,056

Prepaid expenses and other current assets

7,098

6,676

Total Current Assets

263,807

277,673

Property and equipment – net

73,871

70,382

Noncurrent deferred income taxes

9,888

9,213

Other assets

21,770

21,596

Right-of-Use assets – net

138,331

174,276

Total Assets

507,667

553,140

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

84,867

91,956

Accrued expenses

38,546

41,338

Accrued employee benefits and bonus

997

1,690

Accrued income taxes

3,561

613

Current lease liability

32,431

67,360

Total Current Liabilities

160,402

202,957

Other noncurrent liabilities

16,342

16,183

Lease liability

105,390

107,407

Stockholders' Equity:

Preferred stock, $

100

par value per share,

100,000

authorized, none issued

Class A common stock, $

0.033

par value per share,

50,000,000

shares authorized;

18,825,772

shares and

18,723,225

issued at July 29, 2023 and January 28, 2023, respectively

636

632

Convertible Class B common stock, $

0.033

par value per share,

15,000,000

shares authorized;

1,763,652

shares and

1,763,652

issued at July 29, 2023 and January 28, 2023, respectively

Additional paid-in capital

124,798

122,431

Retained earnings

100,756

104,709

Accumulated other comprehensive income (loss)

(716)

(1,238)

Total Stockholders' Equity

225,533

226,593

Total Liabilities and Stockholders' Equity

507,667

553,140

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(UNAUDITED)

Six Months Ended

July 29, 2023

July 30, 2022

(Dollars in thousands)

Operating Activities:

Net income

5,554

7,474

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation

4,867

5,554

Provision for customer credit losses

248

145

Purchase premium and premium amortization of investments

(97)

607

Share-based compensation

2,192

2,028

Deferred income taxes

(832)

Loss on disposal of property and equipment

Changes in operating assets and liabilities which provided

(used) cash:

Accounts receivable

(666)

30,837

Merchandise inventories

19,338

8,314

Prepaid and other assets

(667)

(24)

Operating lease right-of-use assets and liabilities

(1,001)

(1,207)

Accrued income taxes

2,948

5,168

Accounts payable, accrued expenses and other liabilities

(10,306)

(42,013)

Net cash provided by operating activities

21,579

16,976

Investing Activities:

Expenditures for property and equipment

(8,470)

(10,384)

Purchase of short-term investments

(14,497)

(28,385)

Sales of short-term investments

46,777

48,917

Net cash provided by investing activities

23,810

10,148

Financing Activities:

Dividends paid

(6,962)

(7,270)

Repurchase of common stock

(2,563)

(9,596)

Proceeds from employee stock purchase plan

198

147

Net cash used in financing activities

(9,327)

(16,719)

Net increase in cash, cash equivalents, and restricted cash

36,062

10,405

Cash, cash equivalents, and restricted cash at beginning of period

23,792

23,678

Cash, cash equivalents, and restricted cash at end of period

59,854

34,083

Non-cash activity:

Accrued other assets and property and equipment

572

751

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

Accumulated

Additional

Other

Total

Common

Paid-in

Retained

Comprehensive

Stockholders'

Stock

Capital

Earnings

Income

Equity

(Dollars in thousands)

Balance — January 28, 2023

691

122,431

104,709

(1,238)

226,593

Comprehensive income:

Net income

4,428

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

deferred income tax expense of $

107

355

Dividends paid ($

0.17

per share)

(3,455)

Class A common stock sold through employee stock purchase

plan

195

Share-based compensation issuances and exercises

Share-based compensation expense

929

Repurchase and retirement of treasury shares

(8)

(2,259)

(2,267)

Balance — April 29, 2023

683

123,555

103,426

(883)

226,781

Comprehensive income:

Net income

1,127

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

deferred income tax expense of $

167

Dividends paid ($

0.17

per share)

(3,507)

Class A common stock sold through employee stock purchase

plan

Share-based compensation issuances and exercises

Share-based compensation expense

1,212

1,227

Repurchase and retirement of treasury shares

(1)

(293)

(294)

Balance — July 29, 2023

695

124,798

100,756

(716)

225,533

See notes to condensed consolidated financial statements (unaudited).

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

Accumulated

Additional

Other

Total

Common

Paid-in

Retained

Comprehensive

Stockholders'

Stock

Capital

Earnings

Income

Equity

(Dollars in thousands)

Balance — January 29, 2022

728

119,540

134,208

(280)

254,196

Comprehensive income:

Net income

9,748

Unrealized net losses on available-for-sale securities, net of

deferred income tax benefit of $

362

(1,206)

Dividends paid ($

0.17

per share)

(3,638)

Class A common stock sold through employee stock purchase

plan

111

Share-based compensation issuances and exercises

Share-based compensation expense

598

Repurchase and retirement of treasury shares

(20)

(9,142)

(9,162)

Balance — April 30, 2022

708

120,249

131,181

(1,486)

250,652

Comprehensive income:

Net loss

(2,274)

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

deferred income tax expense of $

Dividends paid ($

0.17

per share)

(3,632)

Class A common stock sold through employee stock purchase

plan

Share-based compensation issuances and exercises

308

321

Share-based compensation expense

1,077

Repurchase and retirement of treasury shares

(1)

(433)

(434)

Balance — July 30, 2022

714

121,696

124,848

(1,425)

245,833

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 JULY 29, 2023 AND JULY

30, 2022

NOTE 1 - GENERAL

The condensed consolidated financial statements

as of July 29,

2023 and for the

twenty-six-week

periods

ended

July

29,

2023

and

July

30,

2022

have

been

prepared

from

the

accounting

records

The

Cato

Corporation and

its wholly-owned

subsidiaries (the

“Company”), and

all amounts

shown 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

the

Company’s

Annual

Report

Form

10-K

for

the

fiscal

year

ended

January 28, 2023.

Amounts as of January 28, 2023 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.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS AND

SIX MONTHS ENDED JULY 29, 2023 AND JULY

30, 2022

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 (Loss) and Comprehensive Income (Loss).

While

the

Company’s

certificate

incorporation

provides

the

right

for

the

Board

Directors

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

the

same

for

Class

and

Class

and

the

EPS

amounts

reported

herein

are

applicable to both Class A and Class

B shares.

Basic

EPS

computed

net

income

less

earnings

allocated

non-vested

equity

awards

divided

the

weighted average

number of

common shares

outstanding for

the period.

Diluted EPS

reflects the

potential

dilution

that

could

occur

from

common

issuable

through

stock

options

and

the

Employee

Stock

Purchase Plan.

Three Months Ended

Six Months Ended

July 29, 2023

July 30, 2022

July 29, 2023

July 30, 2022

(Dollars in thousands)

Numerator

Net earnings (loss)

1,127

(2,274)

5,554

7,474

(Earnings) loss allocated to non-vested equity awards

(54)

132

(292)

(405)

Net earnings (loss) available to common stockholders

1,073

(2,142)

5,262

7,069

Denominator

Basic weighted average common shares outstanding

19,395,484

20,005,315

19,349,266

20,077,258

Diluted weighted average common shares outstanding

19,395,484

20,005,315

19,349,266

20,077,258

Net income (loss) per common share

Basic earnings (loss) per share

0.06

(0.11)

0.27

0.35

Diluted earnings (loss) per share

0.06

(0.11)

0.27

0.35

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS AND

SIX MONTHS ENDED JULY 29, 2023 AND JULY

30, 2022

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME:

The

following

table

sets

forth

information

regarding

the

reclassification

out

Accumulated

other

comprehensive income (in thousands) for the

three months ended July 29, 2023:

Changes in Accumulated Other

Comprehensive Income (a)

Unrealized Gains

and (Losses) on

Available-for-Sale

Securities

Beginning Balance at April 29, 2023

(883)

Other comprehensive income before

reclassification

164

Amounts reclassified from accumulated

other comprehensive income (b)

Net current-period other comprehensive income

167

Ending Balance at July 29, 2023

(716)

(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $

impact of Accumulated other comprehensive income reclassifications into Interest and other

income for net gains on available-for-sale securities. The tax impact of this reclassification was $

The

following

table

sets

forth

information

regarding

the

reclassification

out

Accumulated

other

comprehensive income (in thousands) for the

six months ended July 29, 2023:

Changes in Accumulated Other

Comprehensive Income (a)

Unrealized Gains

and (Losses) on

Available-for-Sale

Securities

Beginning Balance at January 28, 2023

(1,238)

Other comprehensive income before

reclassification

519

Amounts reclassified from accumulated

other comprehensive income (b)

Net current-period other comprehensive income

522

Ending Balance at July 29, 2023

(716)

(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $

impact of Accumulated other comprehensive income reclassifications into Interest and other

income for net gains on available-for-sale securities. The tax impact of this reclassification was $

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS AND

SIX MONTHS ENDED JULY 29, 2023 AND JULY

30, 2022

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME

(CONTINUED):

The

following

table

sets

forth

information

regarding

the

reclassification

out

Accumulated

other

comprehensive income (in thousands) for the

three months ended July 30, 2022:

Changes in Accumulated Other

Comprehensive Income (a)

Unrealized Gains

and (Losses) on

Available-for-Sale

Securities

Beginning Balance at April 30, 2022

(1,486)

Other comprehensive income before

reclassifications

Amounts reclassified from accumulated

other comprehensive income (b)

(3)

Net current-period other comprehensive income

Ending Balance at July 30, 2022

(1,425)

(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $

impact of Accumulated other comprehensive income reclassifications into Interest and other

income for net gains on available-for-sale securities. The tax impact of this reclassification was $

The

following

table

sets

forth

information

regarding

the

reclassification

out

Accumulated

other

comprehensive income (in thousands) for the

six months ended July 30, 2022:

Changes in Accumulated Other

Comprehensive Income (a)

Unrealized Gains

and (Losses) on

Available-for-Sale

Securities

Beginning Balance at January 29, 2022

(280)

Other comprehensive income before

reclassifications

(1,139)

Amounts reclassified from accumulated

other comprehensive income (b)

(6)

Net current-period other comprehensive income

(1,145)

Ending Balance at July 30, 2022

(1,425)

(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income.

(b) Includes $

impact of Accumulated other comprehensive income reclassifications into Interest and other

income for net gains on available-for-sale securities. The tax impact of this reclassification was $

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS AND

SIX MONTHS ENDED JULY 29, 2023 AND JULY

30, 2022

NOTE 4 – FINANCING ARRANGEMENTS:

As of July

29, 2023, the

Company has an

unsecured revolving credit

line, which

provides for borrowings

up to $

35.0

million, less the balance of

any revocable letters of credit related

to purchase commitments, and is

committed

through

May

2027.

The

revolving

credit

agreement

contains

various

financial

covenants

and

limitations,

including

the

maintenance

specific

financial

ratios.

August

2023,

the

Company

amended the revolving credit

agreement to modify

a definition used in

calculating the Company’s

minimum

EBITDAR coverage ratio to add back certain income tax receivables for purposes of calculating

the ratio. For

the quarter ended July

29, 2023, after giving

effect to the amendment,

the Company was in

compliance with

the

credit

agreement.

There

were

borrowings

outstanding,

any

outstanding

letters

credit

that

reduced

borrowing

availability,

July

29,

2023.

The

weighted

average

interest

rate

under

the

credit

facility was

zero

at July 29, 2023 due to

borrowings outstanding.

NOTE 5 – REPORTABLE SEGMENT INFORMATION:

The Company

has determined

that it

has

four

operating segments,

as defined

under ASC

280-10 –

Segment

Reporting

, 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

more operating segments may be aggregated into a single reportable segment if aggregation is consistent with

the

objective

and

basic

principles

ASC

280-10,

which

require

the

segments

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.

The products

sold in each

retail operating

segment are

similar in

nature, as

they

all

offer

women’s

apparel,

shoes

and

accessories.

Merchandise

inventory

the

Company’s

retail

operating

segments

sourced

from

the

same

countries

and

some

the

same

vendors,

using

similar

production processes.

Merchandise for the Company’s retail operating segments is distributed to retail stores

in a similar manner through

the Company’s single distribution center and is

subsequently sold to customers in

a similar

manner.

The

Company

operates

its

women’s

fashion

specialty

retail

stores

states

July

29,

2023,

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

wholly-owned

subsidiary of the Company.

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS AND

SIX MONTHS ENDED JULY 29, 2023 AND JULY

30, 2022

NOTE 5 – REPORTABLE SEGMENT INFORMATION

(CONTINUED):

The following schedule summarizes certain segment

information (in thousands):

Three Months Ended

Six Months Ended

July 29, 2023

Retail

Credit

Total

July 29, 2023

Retail

Credit

Total

Revenues

$182,213

$658

$182,871

Revenues

$373,648

$1,273

$374,921

Depreciation

2,509

2,510

Depreciation

4,866

4,867

Interest and other income

(1,334)

Interest and other income

(2,231)

Income before

income taxes

2,207

253

2,460

Income before

income taxes

8,590

439

9,029

Capital expenditures

2,300

Capital expenditures

8,470

Three Months Ended

Six Months Ended

July 30, 2022

Retail

Credit

Total

July 30, 2022

Retail

Credit

Total

Revenues

$196,314

$550

$196,864

Revenues

$402,523

$1,062

$403,585

Depreciation

2,810

2,811

Depreciation

5,553

5,554

Interest and other income

(1,884)

Interest and other income

(2,287)

Income before

income taxes

3,289

131

3,420

Income before

income taxes

14,903

214

15,117

Capital expenditures

5,944

Capital expenditures

10,384

Retail

Credit

Total

Total assets as of July 29, 2023

$468,923

$38,744

$507,667

Total assets as of January 28, 2023

514,609

38,531

553,140

The

Company

evaluates

segment

performance

based

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

July 29, 2023

July 30, 2022

July 29, 2023

July 30, 2022

Payroll

142

132

276

269

Postage

109

210

192

Other expenses

154

187

348

386

Total expenses

405

418

834

847

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS AND

SIX MONTHS ENDED JULY 29, 2023 AND JULY

30, 2022

NOTE 6 – STOCK-BASED COMPENSATION:

July

29,

2023,

the

Company

had

two

long-term

compensation

plans

pursuant

which

stock-based

compensation

was

outstanding

could

granted.

The

2018

Incentive

Compensation

Plan

and

2013

Incentive

Compensation

Plan

are

for

the

granting

various

forms

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

options

and

restricted

stock

initially

authorized

and

available for grant under each of

the plans as of July 29,

2023:

SEC Form 10-Q filed by Cato Corporation