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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 1996
OR
[ ] 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 0-3747
THE CATO CORPORATION AND SUBSIDIARIES
(Exact name of registrant as specified in its charter)
Delaware 56-0484485
(State or other jurisdiction (I.R.S. Employer
of incorporation 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)
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.
Yes X No
As of May 17, 1996, there were 23,261,275 shares of Class A
Common Stock and 5,264,317 shares of Class B Common Stock
outstanding.
THE CATO CORPORATION
FORM 10-Q
May 4, 1996
Table of Contents
Page
No.
PART I - FINANCIAL INFORMATION (UNAUDITED)
Consolidated statements of income 2
Consolidated balance sheets 3
Consolidated statements of cash flows 4
Notes to consolidated financial statements 5-7
Management's discussion and analysis of
financial condition and results of operations 8-9
PART II - OTHER INFORMATION 10-11
PART I FINANCIAL INFORMATION
THE CATO CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF
INCOME
Three Months Ended
---------- ----------
May 4, April 29,
1996 1995
---------- ----------
(In thousands, except per share data)
REVENUES
Retail sales $ 120,028 $ 114,461
Other income
(principally finance
and layaway charges) 3,511 3,294
--------- -----------
Total revenues 123,539 117,755
COSTS AND EXPENSES
Cost of goods sold, including
occupancy, distribution
and buying 79,774 75,276
Selling, general and
administrative 29,655 29,188
Depreciation 2,074 1,939
Interest 65 78
--------- ----------
Total expenses 111,568 106,481
--------- ----------
INCOME BEFORE INCOME TAXES 11,971 11,274
Income taxes 4,250 3,776
--------- ----------
NET INCOME $ 7,721 $ 7,498
========= ==========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $ 0.27 $ 0.26
========= ==========
DIVIDENDS PER SHARE $ 0.04 $ 0.04
========= ==========
See notes to unaudited consolidated financial statements.
THE CATO CORPORATION
UNAUDITED CONSOLIDATED BALANCE
SHEETS
May 4, April 29, February 3,
1996 1995 1996
-------- --------- -----------
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 21,756 $ 26,378 $ 26,183
Short-term investments 34,816 25,423 21,711
Accounts receivable - net 39,538 37,455 39,792
Merchandise inventories 69,547 70,101 58,440
Deferred income taxes 1,825 1,914 1,825
Prepaid expenses 4,652 2,686 2,486
-------- ---------- ---------
Total Current Assets 172,134 163,957 150,437
Property and Equipment 55,118 52,857 54,364
Other Assets 5,186 4,780 5,094
-------- --------- ---------
Total $ 232,438 $ 221,594 $ 209,895
======== ========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 48,824 $ 48,467 $ 36,482
Accrued expense 10,591 9,372 10,458
Income taxes 4,352 4,365 1,328
-------- --------- ---------
Total Current Liabilities 63,767 62,204 48,268
Deferred Income Taxes 4,491 4,192 4,491
Other Noncurrent Liabilities 7,551 7,061 7,454
Stockholders' Equity:
Class A Common Stock, issued
23,301,275 shares, 23,172,796
shares and 23,204,647 shares at
May 4, 1996, April 29, 1995
and February 3, 1996,
respectively 776 771 773
Convertible Class B Common
Stock, issued and outstanding
5,264,317 shares 176 176 176
Preferred Stock, none
Additional paid-in capital 63,026 62,343 62,665
Retained earnings 92,874 84,847 86,291
-------- -------- --------
Less Class A Common Stock in 156,852 148,137 149,905
treasury,
at cost (40,000 shares at May 4,
1996 and
February 3, 1996) 223 - 223
-------- -------- --------
Total Stockholders' Equity 156,629 148,137 149,682
-------- -------- --------
Total $ 232,438 $ 221,594 $ 209,895
========= ========= =========
See notes to unaudited consolidated financial statements.
THE CATO CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
---------------------------------
May 4, April 29,
1996 1995
----------------------------------
(In thousands)
OPERATING ACTIVITIES
Net income $ 7,721 $ 7,498
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 2,074 1,939
Amortization of
investment premiums 35 50
Changes in operating
assets and liabilities:
Decrease in accounts
receivable 254 471
Increase in merchandise
inventories (11,107) (15,427)
Increase in other assets (2,258) (169)
Increase in accrued income
taxes 3,024 3,456
Increase in accounts
payable and other
liabilities 12,580 10,256
-------- --------
Net cash provided by
operating activities 12,323 8,074
-------- --------
INVESTING ACTIVITIES
Expenditures for property
and equipment (2,836) (1,719)
Purchases of short-term
investments (14,140) (3,419)
Sales of short-term investments 1,000 550
-------- --------
Net cash used in investing
activities (15,976) (4,588)
-------- --------
FINANCING ACTIVITIES
Dividends paid (1,138) (1,137)
Proceeds from employee stock
purchase plan 154 66
Proceeds from stock options
exercised 210 -
-------- --------
Net cash used in financing
activities (774) (1,071)
-------- --------
Net Increase (Decrease)
in Cash and Cash Equivalents (4,427) 2,415
Cash and Cash Equivalents at
Beginning of Year 26,183 23,963
--------- --------
Cash and Cash Equivalents at End
of Period $ 21,756 $ 26,378
========= =========
See notes to unaudited consolidated financial statements.
THE CATO CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THREE MONTHS ENDED MAY 4, 1996 AND APRIL 29, 1995
NOTE 1 - GENERAL:
The consolidated financial statements have been prepared from the
accounting records of the Company and all amounts shown at May 4,
1996 and April 29, 1995 are unaudited. In the opinion of
management, all adjustments (consisting solely of normal
recurring adjustments) considered necessary for a fair
presentation have been included.
The Company's short-term investments are classified as available
for sale securities, and therefore, are carried at fair value,
with unrealized gains and losses, net of income taxes, reported
as an adjustment to retained earnings.
Inventories are stated at the lower of cost (first-in, first-out)
or market, determined by the retail inventory method.
The provisions for income taxes are based on the Company's
estimated annual effective tax rate.
NOTE 2 - EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Earnings per share is calculated by dividing net income by the
weighted average number of Class A and Class B common shares and
common stock equivalents outstanding during the respective
periods. Common stock equivalents represent the dilutive effect
of the assumed exercise of outstanding stock options. The number
of shares used in the earnings per common and common equivalent
share computations were 28,918,042 shares for the three months
ended May 4, 1996 and 28,535,326 shares for the three months
ended April 29, 1995.
THE CATO CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THREE MONTHS ENDED MAY 4, 1996 AND APRIL 29, 1995