10-Q

Table of Contents

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 3, 2014
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 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)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer  þ    Accelerated filer  ¨     Non-accelerated filer  ¨     Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

As of May 3, 2014, there were 26,282,502 shares of Class A common stock and 1,743,525 shares of Class B common stock outstanding.

THE CATO CORPORATION

FORM 10-Q

Quarter Ended May 3, 2014

Table of Contents

				Page No.
PART I – FINANCIAL INFORMATION (UNAUDITED)
	Item 1.		Financial Statements (Unaudited):
	Condensed Consolidated Statements of Income and Comprehensive Income			2
		For the Three Months Ended May 3, 2014 and May 4, 2013
	Condensed Consolidated Balance Sheets			3
		At May 3, 2014, February 1, 2014 and May 4, 2013
	Condensed Consolidated Statements of Cash Flows			4
		For the Three Months Ended May 3, 2014 and May 4, 2013
	Notes to Condensed Consolidated Financial Statements			5 – 16
		For the Three Months Ended May 3, 2014 and May 4, 2013
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	18 – 24
	Item 3.		Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4.		Controls and Procedures	26
PART II – OTHER INFORMATION
	Item 1.		Legal Proceedings	27
	Item 1A.		Risk Factors	27
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	27
	Item 3.		Defaults Upon Senior Securities	27
	Item 4.		Mine Safety Disclosures	28
	Item 5.		Other Information	28
	Item 6.		Exhibits	28
	Signatures			29 - 33

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME

(UNAUDITED)

		Three Months Ended
		May 3, 2014		May 4, 2013
		(Dollars in thousands, except per share data)
REVENUES
Retail sales	$	282,462	$	267,181
Other revenue (principally finance charges, late fees and
layaway charges)		2,270		2,517
Total revenues		284,732		269,698
COSTS AND EXPENSES, NET
Cost of goods sold (exclusive of depreciation shown below)		164,363		156,901
Selling, general and administrative (exclusive of depreciation
shown below)		67,487		59,389
Depreciation		5,452		5,449
Interest and other income		(742)		(875)
Cost and expenses, net		236,560		220,864
Income before income taxes		48,172		48,834
Income tax expense		18,166		17,995
Net income	$	30,006	$	30,839
Basic earnings per share	$	1.04	$	1.05
Diluted earnings per share	$	1.04	$	1.05
Dividends per share	$	0.30	$	0.05
Comprehensive income:
Net income	$	30,006	$	30,839
Unrealized gain (loss) on available-for-sale securities, net
of deferred income taxes of ($32) and $67 for May 3, 2014		(51)		111
and May 4, 2013, respectively
Comprehensive income	$	29,955	$	30,950

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

THE CATO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	May 3, 2014		February 1, 2014		May 4, 2013
	(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	79,468	$	79,427	$	65,355
Short-term investments		159,286		161,128		161,095
Restricted cash and investments		4,699		4,701		4,816
Accounts receivable, net of allowance for doubtful accounts of
$1,732, $1,743 and $2,039 at May 3, 2014, February 1, 2014
and May 4, 2013 respectively		41,036		39,224		40,059
Merchandise inventories		129,652		150,861		126,268
Deferred income taxes		4,752		4,720		4,564
Prepaid expenses		10,522		6,687		10,526
Total Current Assets		429,415		446,748		412,683
Property and equipment – net		142,989		141,129		137,018
Noncurrent deferred income taxes		1,375		1,373		-
Other assets		9,458		7,668		10,506
Total Assets	$	583,237	$	596,918	$	560,207
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	96,816	$	111,514	$	85,264
Accrued expenses		44,258		45,763		44,605
Accrued bonus and benefits		6,009		4,999		1,104
Accrued income taxes		32,479		14,855		31,312
Total Current Liabilities		179,562		177,131		162,285
Deferred income taxes		-		-		3,330
Other noncurrent liabilities (primarily deferred rent)		30,170		28,678		24,938
Commitments and contingencies:		-		-		-
Stockholders' Equity:
Preferred stock, $100 par value per share, 1,000,000 shares
authorized, none issued		-		-		-
Class A common stock, $0.033 par value per share, 50,000,000
shares authorized; issued 26,282,502 shares, 27,498,216 shares
and 27,518,498 shares at May 3, 2014, February 1, 2014 and
May 4, 2013 respectively		876		917		917
Convertible Class B common stock, $0.033 par value per share,
15,000,000 shares authorized; issued 1,743,525 shares at
May 3, 2014, February 1, 2014 and May 4, 2013		58		58		58
Additional paid-in capital		81,324		80,463		77,296
Retained earnings		290,520		308,893		290,451
Accumulated other comprehensive income		727		778		932
Total Stockholders' Equity		373,505		391,109		369,654
Total Liabilities and Stockholders’ Equity	$	583,237	$	596,918	$	560,207

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

THE CATO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Three Months Ended
	May 3, 2014		May 4, 2013
		(Dollars in thousands)
Operating Activities:
Net income	$	30,006	$	30,839
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation		5,452		5,449
Provision for doubtful accounts		307		382
Purchase premium and premium amortization of investments		296		(1,394)
Share-based compensation		555		467
Excess tax benefits from share-based compensation		(55)		(12)
Deferred income taxes		(2)		-
Loss on disposal of property and equipment		118		249
Changes in operating assets and liabilities which provided
(used) cash:
Accounts receivable		(2,119)		(425)
Merchandise inventories		21,209		14,470
Prepaid and other assets		(5,615)		(2,598)
Accrued income taxes		17,679		17,032
Accounts payable, accrued expenses and other liabilities		(13,704)		(16,764)
Net cash provided by operating activities		54,127		47,695
Investing Activities:
Expenditures for property and equipment		(7,423)		(5,605)
Purchase of short-term investments		(8,905)		(21,639)
Sales of short-term investments		10,354		19,648
Change in restricted cash and investments		2		1,183
Net cash used in investing activities		(5,972)		(6,413)
Financing Activities:
Dividends paid		(8,748)		(1,464)
Repurchase of common stock		(39,681)		(5,774)
Proceeds from employee stock purchase plan		260		206
Excess tax benefits from share-based compensation		55		12
Proceeds from stock options exercised		-		24
Net cash used in financing activities		(48,114)		(6,996)
Net increase in cash and cash equivalents		41		34,286
Cash and cash equivalents at beginning of period		79,427		31,069
Cash and cash equivalents at end of period	$	79,468	$	65,355
Non-cash investing activity
Accrued property and equipment	$	(3,314)	$	(2,884)

See notes to condensed consolidated financial statements (unaudited).

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

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 May 3, 2014 and May 4, 2013 are unaudited.  In the opinion of management, all adjustments considered necessary for a fair statement 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/A for the fiscal year ended February 1, 2014.  Amounts as of February 1, 2014 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.

During the fourth quarter of 2013, the Company discovered that it had improperly netted purchases and sales activity for investments within cash flows related to investing activities in prior periods. In addition, the Company had also improperly classified the premiums and amortization of premiums on those investments in cash flows related to investing activities when it should have been in cash flows related to operating activities.  The Condensed Consolidated Statement of Cash Flows for the three months ended May 3, 2014 has been revised to correct the presentation of the amounts, which resulted in a decrease to Net cash provided by operating activities and a corresponding decrease to Net cash provided (used) in investing activities of $1.4 million dollars. The revision is not deemed material to the prior period consolidated financial statements.

On May 20, 2014, the Board of Directors maintained the quarterly dividend at $0.30 per share.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 2 - EARNINGS PER SHARE:

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
			May 3, 2014		May 4, 2013
		(Dollars in thousands)
Numerator
	Net earnings	$	30,006	$	30,839
	Earnings allocated to non-vested equity awards		(509)		(468)
	Net earnings available to common stockholders	$	29,497	$	30,371
Denominator
	Basic weighted average common shares outstanding		28,335,395		28,832,579
	Dilutive effect of stock options		713		2,881
	Diluted weighted average common shares outstanding		28,336,108		28,835,460
Net income per common share
	Basic earnings per share	$	1.04	$	1.05
	Diluted earnings per share	$	1.04	$	1.05

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME:

The following tables set forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the three months ended May 3, 2014:

	Changes in Accumulated Other
	Comprehensive Income (a)
			Unrealized Gains
			and Losses on
			Available-for-Sale
			Securities
Beginning Balance at February 1, 2014		$	778
Other comprehensive income before
reclassification			(33)
Amounts reclassified from accumulated
other comprehensive income (b)			(18)
Net current-period other comprehensive income			(51)
Ending Balance at May 3, 2014		$	727
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $29 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 $11.

The following tables set forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the three months ended May 4, 2013:

	Changes in Accumulated Other
	Comprehensive Income (a)
			Unrealized Gains
			and Losses on
			Available-for-Sale
			Securities
Beginning Balance at February 2, 2013		$	821
Other comprehensive income before
reclassification			153
Amounts reclassified from accumulated
other comprehensive income (b)			(42)
Net current-period other comprehensive income			111
Ending Balance at May 4, 2013		$	932
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $66 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 $24.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 4 – FINANCING ARRANGEMENTS:

As of May 3, 2014, the Company had an unsecured revolving credit agreement to borrow $35.0 million less the balance of revocable credits discussed below.  The revolving credit agreement is committed until August 2015.  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 May 3, 2014.  There were no borrowings outstanding under this credit facility during the periods ended May 3, 2014, February 1, 2014 or May 4, 2013.  The weighted average interest rate under the credit facility was zero at May 3, 2014 due to no borrowings during the year.

At May 3, 2014, February 1, 2014 and May 4, 2013, the Company had approximately $0.6 million, $0.4 million and $2.3 million, respectively, of outstanding revocable letters of credit related 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 Accessories and Credit.  As outlined in ASC 280-10, the Company has two reportable segments: Retail and Credit.  The Company has aggregated its retail operating segments 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 if the segments have similar economic characteristics, similar product, similar production processes, similar clients and similar 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 of the Company’s operating segments is sourced from the same countries and some of the same vendors, using similar production processes.  Clients of the Company’s operating segments have similar characteristics.  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 32 states as of May 3, 2014, 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.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 5 – REPORTABLE SEGMENT INFORMATION (CONTINUED):

The following schedule summarizes certain segment information (in thousands):

Three Months Ended
May 3, 2014	Retail	Credit	Total
Revenues	$ 283,257	$ 1,475	$ 284,732
Depreciation	5,439	13	5,452
Interest and other income	(742)	-	(742)
Income before taxes	47,690	482	48,172
Total assets	516,613	66,624	583,237
Capital expenditures	4,116	-	4,116
Three Months Ended
May 4, 2013	Retail	Credit	Total
Revenues	$ 268,079	$ 1,619	$ 269,698
Depreciation	5,436	13	5,449
Interest and other income	(875)	-	(875)
Income before taxes	48,334	500	48,834
Total assets	494,752	65,455	560,207
Capital expenditures	5,605	-	5,605

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
		May 3, 2014		May 4, 2013
Bad debt expense	$	307	$	382
Payroll		206		231
Postage		191		199
Other expenses		276		294
Total expenses	$	980	$	1,106

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 6 – STOCK BASED COMPENSATION:

As of May 3, 2014, the Company had three long-term compensation plans pursuant to which stock-based compensation was outstanding or could be granted. The Company’s 1987 Non-Qualified Stock Option Plan is for the granting of options to officers and key employees.  As of May 1, 2013, there were no available stock options for grant. The 2013 Incentive Compensation Plan and 2004 Amended and Restated 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 23, 2013, shares for grant were no longer available under the 2004 Amended and Restated 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 May 3, 2014:

	1987	2004	2013
	Plan	Plan	Plan	Total
Options and/or restricted stock initially authorized	5,850,000	1,350,000	1,500,000	8,700,000
Options and/or restricted stock available for grant:
February 1, 2014	-	-	1,488,902	1,488,902
May 3, 2014	-	-	1,282,189	1,282,189

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 May 3, 2014, February 1, 2014 and May 4, 2013, there was $13,318,000, $8,298,000  and $10,706,000 of total unrecognized compensation expense related to nonvested restricted stock awards, which had a remaining weighted-average vesting period of 3.4 years, 2.6 years and 3.9 years, respectively. The total fair value of the shares recognized as compensation expense during the three months ended May 3, 2014 was $506,000 compared to $430,000 for the three months ended May 4, 2013.  These expenses are classified as a component of Selling, general and administrative expenses (exclusive of depreciation) in the Condensed Consolidated Statements of Income.

The following summary shows the changes in the shares of restricted stock outstanding during the three months ended May 3, 2014:

			Weighted Average
	Number of		Grant Date Fair
	Shares		Value Per Share
Restricted stock awards at February 1, 2014	505,623	$	24.52
Granted	206,713		28.25
Vested	(108,155)		22.41
Forfeited or expired	(7,623)		24.96
Restricted stock awards at May 3, 2014	596,558	$	26.19

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 three months ended May 3, 2014 and May 4, 2013, the Company sold 11,286 and 10,058 shares to employees at an average discount of $4.06 and $3.62 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 $46,000 and $37,000 for the three months ended May 3, 2014 and May 4, 2013, respectively.  These expenses are classified as a component of selling, general and administrative expenses.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 7 – FAIR VALUE MEASUREMENTS:

The following tables set forth information regarding the Company’s financial assets that are measured at fair value (in thousands) as of May 3, 2014, February 1, 2014 and May 4, 2013.

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 3, 2014	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	155,428	$	-	$	155,428	$	-
Corporate Bonds		4,598		-		4,598		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		1,503		1,503		-		-
Cash Surrender Value of Life Insurance		3,568		-		-		3,568
Privately Managed Funds		358		-		-		358
Corporate Equities		595		595		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	169,290	$	2,198	$	160,026	$	7,066
Liabilities:
Deferred Compensation		(3,852)		-		-		(3,852)
Total Liabilities	$	(3,852)	$	-	$	-	$	(3,852)

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		February 1, 2014	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	159,074	$	-	$	159,074	$	-
Corporate Bonds		2,799		-		2,799		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		3,405		3,405		-		-
Cash Surrender Value of Life Insurance		2,957		-		-		2,957
Privately Managed Funds		392		-		-		392
Corporate Equities		585		585		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	172,452	$	4,090	$	161,873	$	6,489
Liabilities:
Deferred Compensation		(3,298)		-		-		(3,298)
Total Liabilities	$	(3,298)	$	-	$	-	$	(3,298)

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 4, 2013	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	158,996	$	-	$	158,996	$	-
Corporate Bonds		1,915		-		1,915		-
Auction Rate Securities (ARS)		3,450		-		-		3,450
U.S. Treasury Notes		3,554		3,554		-		-
Cash Surrender Value of Life Insurance		2,411		-		-		2,411
Privately Managed Funds		523		-		-		523
Corporate Equities		520		520		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	171,469	$	4,174	$	160,911	$	6,384
Liabilities:
Deferred Compensation		(2,493)		-		-		(2,493)
Total Liabilities	$	(2,493)	$	-	$	-	$	(2,493)

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

The Company’s investment portfolio was primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at May 3, 2014, February 1, 2014 and May 4, 2013.  The state, municipal and corporate bonds have contractual maturities which range from 12 days to 12.6 years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities which range from 4 months to 1.4 years. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted investments and Other assets on the accompanying Condensed Consolidated Balance Sheets. These assets are carried at fair value with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

Additionally, at May 3, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities and a single auction rate security (“ARS”) of $3.1 million which continues to fail its auction, and deferred compensation plan assets of $3.6 million.  At February 1, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities, a single ARS of $3.1 million and deferred compensation plan assets of $3.0 million.  At May 4, 2013, the Company had $0.5 million of privately managed funds, $0.5 million of corporate equities, a single ARS of $3.5 million and deferred compensation plan assets of $2.4 million.  All of these assets are recorded within Other assets in the Condensed Consolidated Balance Sheets.

Level 1 category securities are measured at fair value using quoted active market prices.  Level 2 investment securities include corporate and municipal bonds for which quoted prices may not be available on active exchanges for identical instruments.  Their fair value is principally based on market values determined by management with assistance of a third party pricing service.  Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors.

The ARS of $3,450,000 par value was issued by the Wake County, NC Industrial Facilities & Pollution Control Financing Authority. The security is an obligation of Duke Energy Progress and has a credit rating of A. The Company has collected all interest payments when due since the security was purchased and continues to expect that it will receive all interest due on the security in full and on a timely basis in the future.

The Company’s failed ARS is recorded at $3,139,500 which approximates fair value using Level 3 inputs.  Because there is no active market for this particular ARS, its fair value was analyzed through the use of a discounted cash flow analysis and observations from previous trades. The terms used in the analysis were based on management’s estimate of the timing of future liquidity, which assumes that the security will be called or refinanced by the issuer or settled with a broker dealer prior to maturity. The discount rates used in the discounted cash flow analysis were based on market rates for similar liquid tax exempt securities with comparable ratings and maturities. Due to the uncertainty surrounding the timing of future liquidity, the Company also considered a liquidity/risk value reduction. In estimating the fair value of this ARS, the Company also considered recent trading activity, the financial condition and near-term prospects of the issuer, the probability that the Company will be unable to collect all amounts due according to the contractual terms of the security and whether the security has been downgraded by a rating agency. The Company’s valuation is sensitive to market conditions and management’s judgment and can change significantly based on the assumptions used. 

The Company’s privately managed funds consist of two types of funds.  The privately managed funds cannot be redeemed at net asset value at a specific date without advance notice.  As a result, the Company has classified the investments as Level 3.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

Deferred compensation plan assets consist of life insurance policies. These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flow and are therefore classified within level 3 of the valuation hierarchy. The level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds. These funds are designed to mirror existing mutual funds and money market funds that are observable and actively traded. Cash surrender values are provided by third parties and reviewed for reasonableness by the Company.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

The following tables summarize the change in fair value of the Company’s financial assets measured using Level 3 inputs as of May 3, 2014 and May 4, 2013 (dollars in thousands):

		Fair Value Measurements Using Significant
		Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value	Total
Beginning Balance at February 1, 2014	$	3,140	$	392	$	2,957	$	6,489
Redemptions		-		(42)		-		(42)
Additions		-		-		519		519
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		1		92		93
Included in other comprehensive income		-		7		-		7
Ending Balance at May 3, 2014	$	3,140	$	358	$	3,568	$	7,066
	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 1, 2014	$	(3,298)	$	(3,298)
Additions		(345)		(345)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(209)		(209)
Included in other comprehensive income		-		-
Ending Balance at May 3, 2014	$	(3,852)	$	(3,852)
	Fair Value Measurements Using Significant
	Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value		Total
Beginning Balance at February 2, 2013	$	3,450	$	561	$	2,051	$	6,062
Redemptions		-		(45)		-		(45)
Additions						292		292
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		7		68		75
Included in other comprehensive income		-		-		-		-
Ending Balance at May 4, 2013	$	3,450	$	523	$	2,411	$	6,384
	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 2, 2013	$	(2,178)	$	(2,178)
Additions		(223)		(223)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(92)		(92)
Ending Balance at May 4, 2013	$	(2,493)	$	(2,493)

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

Quantitative information regarding the significant unobservable inputs related to the ARS as of May 3, 2014 and May 4, 2013 were as follows:
May 3, 2014
Fair Value	Valuation Technique	Unobservable Inputs
$3,140	Net present value	Total Term	8.4 Years
	of cash flows	Yield	0.18%
		Comparative bond discount rate	0.14%
May 4, 2013
Fair Value	Valuation Technique	Unobservable Inputs
$3,450	Net present value	Total Term	9.4 Years
	of cash flows	Yield	0.28%
		Comparative bond discount rate	0.14%
Significant increases or decreases in certain of the inputs could result in a lower fair value measurement. For example, a decrease in the yield or an increase to the comparative bond discount rate could result in a lower fair value.

Table of Contents

THE CATO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MAY 3, 2014 AND MAY 4, 2013

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS:

In the first quarter of fiscal 2014, the Company adopted new accounting guidance which eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or tax credit carry forward exists at the reporting date. The new guidance had no impact on the Company’s consolidated results of operations or cash flows.

Table of Contents

THE CATO CORPORATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION:

The following information should be read along with the unaudited Condensed Consolidated Financial Statements, including the accompanying Notes appearing in this report. Any of the following are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended: (1) statements in this Form 10-Q that reflect projections or expectations of our future financial or economic performance; (2) statements that are not historical information; (3) statements of our beliefs, intentions, plans and objectives for future operations, including those contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; (4) statements relating to our operations or activities for fiscal 2014 and beyond, including, but not limited to, statements regarding expected amounts of capital expenditures and store openings, relocations, remodels and closures; and (5) statements relating to our future contingencies. When possible, we have attempted to identify forward-looking statements by using words such as “will,” “expects,” “anticipates,” “approximates,” “believes,” “estimates,” “hopes,” “intends,” “may,” “plans,” “should” and any variations or negative formations of such words and similar expressions. We can give no assurance that actual results or events will not differ materially from those expressed or implied in any such forward-looking statements. Forward-looking statements included in this report are based on information available to us as of the filing date of this report, but subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements.  Such factors include, but are not limited to, the following:  any actual or perceived deterioration in, or uncertainties regarding, prevailing U.S. and global economic, political or financial market conditions; changes in other factors that drive consumer or corporate confidence and spending, including, but not limited to, levels of unemployment, fuel, energy and food costs, wage rates, tax rates, home values, consumer net worth and the availability of credit; uncertainties regarding the impact of any governmental responses to the foregoing conditions; competitive factors and pricing pressures; our ability to predict fashion trends; consumer apparel and accessory buying patterns; adverse weather or similar conditions that may affect our sales or operations; inventory risks due to shifts in market demand; and other factors discussed under “Risk Factors” in Part I, Item 1A of our annual report on Form 10-K/A for the fiscal year ended February 1, 2014 (“fiscal 2013”), as amended or supplemented, and in other reports we file with or furnish to the Securities and Exchange Commission (“SEC”) from time to time.  We do not undertake, and expressly decline, any obligation to update any such forward-looking information contained in this report, whether as a result of new information, future events, or otherwise.

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

CRITICAL ACCOUNTING POLICIES:

The Company’s accounting policies are more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K/A for the fiscal year ended February 1, 2014. As disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include the allowance for doubtful accounts, inventory shrinkage, the calculation of potential asset impairment, workers’ compensation, general and auto insurance liabilities, reserves relating to self-insured health insurance, and uncertain tax positions.

The Company’s critical accounting policies and estimates are discussed with the Audit Committee.

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS:

The following table sets forth, for the periods indicated, certain items in the Company's unaudited Condensed Consolidated Statements of Income as a percentage of total retail sales:

	Three Months Ended
	May 3, 2014		May 4, 2013
Total retail sales	100.0	%	100.0	%
Other revenue	0.8		0.9
Total revenues	100.8		100.9
Cost of goods sold (exclusive of depreciation)	58.2		58.7
Selling, general and administrative (exclusive of depreciation)	23.9		22.2
Depreciation	1.9		2.0
Interest and other income	(0.3)		(0.3)
Income before income taxes	17.1		18.3
Net income	10.6		11.5

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED):

Comparison of First Quarter of 2014 with 2013

Total retail sales for the first quarter were $282.5 million compared to last year’s first quarter sales of $267.2 million, a 5.7% increase.  Same-store sales increased 3.0% in the first quarter of fiscal 2014 due to a better Easter season and warmer weather in April. Same store sales includes stores that have been open more than 15 months.  Stores that have been relocated or expanded are also included in the same store sales calculation after they have been open more than 15 months.  The method of calculating same store sales varies across the retail industry.  As a result, our same store sales calculation may not be comparable to similarly titled measures reported by other companies. E-commerce sales were less than 1% of sales for the first quarter of fiscal 2014 and are not included in the same-store sales calculation.  There were no e-commerce sales for the first quarter of fiscal 2013.  Total revenues, comprised of retail sales and other revenue (principally finance charges and late fees on customer accounts receivable and layaway fees), were $284.7 million for the first quarter ended May 3, 2014, compared to $269.7 million for the first quarter ended May 4, 2013. The Company operated 1,324 stores at May 3, 2014 compared to 1,307 stores at the end of last year’s first quarter.  For the first three months of fiscal  2014 the Company opened six new stores and closed two stores.  The Company currently expects to open approximately 64 stores, relocate 13 stores and close approximately 17 stores in fiscal 2014.

Credit revenue of $1.5 million represented 0.5% of total revenues in the first quarter of fiscal 2014, compared to 2013 credit revenue of $1.6 million or 0.6% of total revenues.  Credit revenue decreased for the most recent comparable period due to lower finance charge income and lower late fee income from sales under the Company’s proprietary credit card. Credit revenue is comprised of interest earned on the Company’s private label credit card portfolio and related fee income.  Related expenses include principally bad debt expense, payroll, postage and other administrative expenses, and totaled $1.0 million in the first quarter of 2014, compared to last year’s first quarter expenses of $1.1 million.  The decrease was primarily due to lower bad debt expense, administrative expenses and payroll expense.

Other revenue, a component of total revenues, was $2.3 million for the first quarter of fiscal 2014, compared to $2.5 million for the prior year’s comparable first quarter. Other revenue consists primarily of credit revenue and layaway charges. The overall decrease resulted primarily from lower finance charges, late fees and layaway charges.

Cost of goods sold was $164.4 million, or 58.2% of retail sales for the first quarter of fiscal 2014, compared to $156.9 million, or 58.7% of retail sales in the first quarter of fiscal 2013.  The overall decrease in cost of goods sold as a percent of retail sales for the first quarter of 2014 resulted primarily from the leveraging of merchandise costs due to decreased markdowns, partially offset by higher distribution and freight costs.  Cost of goods sold includes merchandise costs (net of discounts and allowances), buying costs, distribution costs, occupancy costs, freight and inventory shrinkage.  Net merchandise costs and in-bound freight are capitalized as inventory costs.  Buying and distribution costs include payroll, payroll-related costs and operating expenses for the buying departments and distribution center.  Occupancy expenses include rent, real estate taxes, insurance, common area maintenance, utilities and maintenance for stores and distribution facilities.  Total gross margin dollars (retail sales less cost of goods sold exclusive of depreciation) increased by 7.1% to $118.1 million for the first quarter of fiscal 2014 compared to $110.3 million in the first quarter of fiscal 2013.  Gross margin as presented may not be comparable to those of other entities.

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS (CONTINUED):

Selling, general and administrative expenses (“SG&A”) primarily include corporate and store payroll, related payroll taxes and benefits, insurance, supplies, advertising, bank and credit card processing fees and bad debts.  SG&A expenses increased 13.6% to $67.5 million, or 23.9% of retail sales for the first quarter of fiscal 2014, compared to $59.4 million, or 22.2% of retail sales in the first quarter of fiscal 2013. The increase was primarily attributable to higher incentive-based compensation expenses due to a better performance over the incentive based compensation threshold. 

Depreciation expense was $5.5 million, or 1.9% of retail sales for the first quarter of fiscal 2014, compared to $5.4 million, or 2.0% of retail sales for the first quarter of fiscal 2013. 

Interest and other income was $0.7 million, or 0.3% of retail sales for the first quarter of fiscal 2014, compared to $0.9 million, or 0.3% of retail sales for the first quarter of fiscal 2013. 

Income tax expense was $18.2 million or 6.4% of retail sales for the first quarter of fiscal 2014, compared to $18.0 million, or 6.7% of retail sales for the first quarter of fiscal 2013. The 2014 quarter increase resulted from a slightly higher effective tax rate, partially offset by lower pre-tax income.  The effective income tax rate for the first quarter of fiscal 2014 was 37.7% compared to 36.8% for the first quarter of 2013. The increase in the 2014 first quarter tax rate is due primarily to less benefit from Work Opportunity Tax Credit.

LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK:

The Company has consistently maintained a strong liquidity position. Cash provided by operating activities during the first three months of fiscal 2014 was $54.1 million as compared to $47.7 million in the first three months of fiscal 2013. These amounts enable the Company to fund its regular operating needs, capital expenditure program, cash dividend payments and share repurchases.  In addition, the Company maintains a $35.0 million unsecured revolving credit facility for short-term financing of seasonal cash needs. There were no outstanding borrowings on this facility at May 3, 2014, February 1, 2014 and May 4, 2013.

Cash provided by operating activities for the first three months of fiscal 2014 was primarily generated by earnings adjusted for depreciation and changes in working capital. The increase of $6.4 million for the first three months of fiscal 2014 as compared to the first three months of fiscal 2013 was primarily due to a decrease in inventory.

The Company believes that its cash, cash equivalents and short-term investments, together with cash flows from operations and borrowings available under its revolving credit agreement, will be adequate to fund the Company’s regular operating requirements, expected capital expenditures, dividends and share repurchases for fiscal 2014 and the next 12 months.

At May 3, 2014, the Company had working capital of $249.9 million compared to $269.6 million at February 1, 2014 and $250.4 million at May 4, 2013. Additionally, the Company had $1.0 million invested in privately managed investment funds and other miscellaneous equities at May 3, 2014, February 1, 2014 and May 4, 2013 which are included in Other assets on the Condensed Consolidated Balance Sheets.

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK (CONTINUED):

At May 3, 2014, February 1, 2014 and May 4, 2013, the Company had an unsecured revolving credit agreement, which provides for borrowings of up to $35.0 million less the balance of revocable credits discussed below.  The revolving credit agreement is committed until August 2015. 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 May 3, 2014.  There were no borrowings outstanding under the credit facility as of May 3, 2014, February 1, 2014 and May 4, 2013.

At May 3, 2014, February 1, 2014 and May 4, 2013, the Company had approximately $0.6 million, $0.4 million and $2.3 million, respectively, of outstanding revocable letters of credit relating to purchase commitments.

Expenditures for property and equipment totaled $7.4 million in the first three months of fiscal 2014, compared to $5.6 million in last year’s first three months.  The expenditures for the first three months of 2014 were primarily for the development of six new stores, additional investments in new technology and home office renovations.  For the full fiscal 2014 year, the Company expects to invest approximately $44.5 million for capital expenditures to open approximately 64 new stores, relocate approximately 13 stores, upgrade merchandise systems and complete home office renovations.

Net cash used in investing activities totaled $6.0 million in the first three months of fiscal 2014 compared to $6.4 million used in the comparable period of 2013.  The decrease was due primarily to a decrease in purchases of short-term investments, partially offset by lower sales of short-term investments and an increase in capital expenditures.

Net cash used in financing activities totaled $48.1 million in the first three months of fiscal 2014 compared to $7.0 million used in the comparable period of 2013.  The increase was primarily due to an increase in share repurchases and dividends paid.

On May 20, 2014, the Board of Directors maintained the quarterly dividend at $0.30 per share.

As of May 3, 2014, the Company had 278,913 shares remaining in open authorizations under its share repurchase program.  On May 20, 2014, the Board of Directors increased, by 2 million, the authorization to purchase shares.

The Company does not use derivative financial instruments.

The Company’s investment portfolio was primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at May 3, 2014, February 1, 2014 and May 4, 2013.  The state, municipal and corporate bonds have contractual maturities which range from 12 days to 12.6 years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities which range from 4 months to 1.4 years. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted investments and Other assets on the accompanying Condensed Consolidated Balance Sheets. These assets are carried at fair value with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Additionally, at May 3, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities and a single auction rate security (“ARS”) of $3.1 million which continues to fail its auction, and deferred compensation plan assets of $3.6 million.  At February 1, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities, a single ARS of $3.1 million and deferred compensation plan assets of $3.0 million.  At May 4, 2013, the Company had $0.5 million of privately managed funds, $0.5 million of corporate equities, a single ARS of $3.5 million and deferred compensation plan assets of $2.4 million.  All of these assets are recorded within Other assets in the Condensed Consolidated Balance Sheets.

Level 1 category securities are measured at fair value using quoted active market prices.  Level 2 investment securities include corporate and municipal bonds for which quoted prices may not be available on active exchanges for identical instruments.  Their fair value is principally based on market values determined by management with assistance of a third party pricing service.  Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors.

The ARS of $3,450,000 par value was issued by the Wake County, NC Industrial Facilities & Pollution Control Financing Authority. The security is an obligation of Duke Energy Progress and has a credit rating of A. The Company has collected all interest payments when due since the security was purchased and continues to expect that it will receive all interest due on the security in full and on a timely basis in the future.

The Company’s failed ARS is recorded at $3,139,500 which approximates fair value using Level 3 inputs.  Because there is no active market for this particular ARS, its fair value was analyzed through the use of a discounted cash flow analysis and observations from previous trades. The terms used in the analysis were based on management’s estimate of the timing of future liquidity, which assumes that the security will be called or refinanced by the issuer or settled with a broker dealer prior to maturity. The discount rates used in the discounted cash flow analysis were based on market rates for similar liquid tax exempt securities with comparable ratings and maturities. Due to the uncertainty surrounding the timing of future liquidity, the Company also considered a liquidity/risk value reduction. In estimating the fair value of this ARS, the Company also considered recent trading activity, the financial condition and near-term prospects of the issuer, the probability that the Company will be unable to collect all amounts due according to the contractual terms of the security and whether the security has been downgraded by a rating agency. The Company’s valuation is sensitive to market conditions and management’s judgment and can change significantly based on the assumptions used. 

The Company’s privately managed funds consist of two types of funds.  The privately managed funds cannot be redeemed at net asset value at a specific date without advance notice.  As a result, the Company has classified the investments as Level 3.

Deferred compensation plan assets consist of life insurance policies. These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flow and are therefore classified within level 3 of the valuation hierarchy. The level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds. These funds are designed to mirror existing mutual funds and money market funds that are observable and actively traded. Cash surrender values are provided by third parties and reviewed for reasonableness by the Company.

Table of Contents

THE CATO CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS:

In the first quarter of fiscal 2014, the Company adopted new accounting guidance which eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or tax credit carry forward exists at the reporting date. The new guidance had no impact on the Company’s consolidated results of operations or cash flows.

Table of Contents

THE CATO CORPORATION

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

The Company is subject to market rate risk from exposure to changes in interest rates based on its financing, investing and cash management activities, but the Company does not believe such exposure is material.

ITEM 4. 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 May 3, 2014.  Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of May 3, 2014, 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.

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 May 3, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART IIOTHER INFORMATION

THE CATO CORPORATION

ITEM 1.  LEGAL PROCEEDINGS

            Not Applicable

ITEM 1A.  RISK FACTORS

            In addition to the other information in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K/A for our fiscal year ended February 1, 2014.  These risks could materially affect our business, financial condition or future results; however, they are not the only risks we face.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

      The following table summarizes the Company’s purchases of its common stock for the three months ended May 3, 2014:

ISSUER PURCHASES OF EQUITY SECURITIES

				Total Number of	Maximum Number
				Shares Purchased as	(or Approximate Dollar
	Total Number		Average	Part of Publicly	Value) of Shares that may
	of Shares		Price Paid	Announced Plans or	Yet be Purchased Under
Period	Purchased		per Share (1)	Programs (2)	The Plans or Programs (2)
February 2014	78,297	$	27.40	78,297
March 2014	538,804		27.94	538,804
April 2014	808,990		27.79	808,990
Total	1,426,091	$	$27.82	1,426,091	278,913

(1)Prices include trading costs.

(2)As of February 1, 2014, the Company’s share repurchase program had 1,705,004 shares remaining in open authorizations.  During the first quarter ending May 3, 2014, the Company repurchased and retired 1,426,091 shares under this program for approximately $39,680,667 or an average market price of $27.82 per share.  As of the first quarter ending May 3, 2014, the Company had 278,913 shares remaining in open authorizations.  There is no specified expiration date for the Company’s repurchase program. On May 20, 2014, the Board of Directors increased, by 2 million shares, the authorization to purchase shares.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

      Not Applicable

Table of Contents

PART IIOTHER INFORMATION

THE CATO CORPORATION

ITEM 4.  MINE SAFETY DISCLOSURES

      Not Applicable

ITEM 5.  OTHER INFORMATION

      Not Applicable

ITEM 6.  EXHIBITS

Exhibit No.	Item
3.1	Registrant’s Restated Certificate of Incorporation dated March 6, 1987, incorporated by reference to Exhibit 4.1 to Form S-8 of the Registrant filed February 7, 2000 (SEC File No. 333-96283).
3.2	Registrant’s By Laws incorporated by reference to Exhibit 99.2 to Form 8-K of the Registrant Filed December 10, 2007.
4.1	Rights Agreement dated December 18, 2003, incorporated by reference to Exhibit 4.1 to Form 8-A12G of the Registrant filed December 22, 2003 and as amended in Form 8-A12B/A filed January 6, 2004.
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 Principal Executive Officer.
32.2*	Section 1350 Certification of Principal Financial Officer.
101.1*	The following materials from Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2014, formatted in XBRL: (i) Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months ended May 3, 2014 and May 4, 2013; (ii) Condensed Consolidated Balance Sheets at May 3, 2014, February 1, 2014 and May 4, 2013; (iii) Condensed Consolidated Statements of Cash Flows for the Three Months Ended May 3, 2014 and May 4, 2013; and (iv) Notes to Condensed Consolidated Financial Statements.

                      * Submitted electronically herewith.       

Table of Contents

PART IIOTHER INFORMATION

THE CATO CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                                                                                    THE CATO CORPORATION

June 3, 2014	/s/ John P. D. Cato
Date	John P. D. Cato Chairman, President and Chief Executive Officer
June 3, 2014	/s/ John R. Howe
Date	John R. Howe Executive Vice President Chief Financial Officer

EX-31

EXHIBIT 31.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION PURSUANT TO

SECURITIES EXCHANGE ACT OF 1934 RULE 13a-14(a)/15d-14(a), AS ADOPTED

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John P. D. Cato, certify that:

1.	I have reviewed this report on Form 10-Q of The Cato Corporation (the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 3, 2014

/s/ John P. D. Cato

John P. D. Cato

Chairman, President and

Chief Executive Officer

EX-31

EXHIBIT 31.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION PURSUANT TO

SECURITIES EXCHANGE ACT OF 1934 RULE 13a-14(a)/15d-14(a), AS ADOPTED

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John R. Howe, certify that:

1.	I have reviewed this report on Form 10-Q of The Cato Corporation (the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 3, 2014

/s/ John R. Howe

John R. Howe

Executive Vice President

Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION OF PERIODIC REPORT

I, John P. D. Cato, Chairman, President and Chief Executive Officer of The Cato Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that on the date of this Certification:

1.the Form 10-Q of the Company for the quarter ended May 3, 2014 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 3, 2014

/s/ John P. D. Cato

John P. D. Cato

Chairman, President and

Chief Executive Officer

EX-32

EXHIBIT 32.2

CERTIFICATION OF PERIODIC REPORT

I, John R. Howe, Executive Vice President, Chief Financial Officer of The Cato Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that on the date of this Certification:

1.the Form 10-Q of the Company for the quarter ended May 3, 2014 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.  the information contained in the Report fairly presents, in all material respects, the financial condition and
     results of operations of the Company.

Dated: June 3, 2014

/s/ John R. Howe

John R. Howe

Executive Vice President

Chief Financial Officer

XML

Weighted Average Option Rollforward - (Details) (Stock Options, Class A Common Stock)	3 Months Ended
	May 03, 2014
Stock Options | Class A Common Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Granted	0

XML

Changes in Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance Accumulated other comprehensive income, net of tax	$ 778
Other Comprehensive Income Loss Before Reclassifications Net Of Tax		153
Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax		(42)
Unrealized gain on available-for-sale securities, net of deferred income taxes	(51)	111
Ending Balance Accumulated other comprehensive income, net of tax	727	932
ChangeInUnrealizedGainsOnAvailableForSaleSecuritiesMember [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning Balance Accumulated other comprehensive income, net of tax		821
Other Comprehensive Income Loss Before Reclassifications Net Of Tax	(33)
Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax	(18)
Unrealized gain on available-for-sale securities, net of deferred income taxes	(51)	111
Ending Balance Accumulated other comprehensive income, net of tax		$ 932

XML

Accumulated Other Comprehensive Income

3 Months Ended

May 03, 2014

May 04, 2013

AccumulatedOtherComprehensiveIncomeLossDisclosure[Abstract]

Accumulated Other Comprehensive Income (Loss)

NOTE 3 – ACCUMULATED OTHER COMPREHENSIVE INCOME:

The following tables set forth information regarding the reclassification out of Accumulated other comprehensive income (in thousands) for the three months ended May 3, 2014:

	Changes in Accumulated Other
	Comprehensive Income (a)
			Unrealized Gains
			and Losses on
			Available-for-Sale
			Securities
Beginning Balance at February 1, 2014		$	778
Other comprehensive income before
reclassification			(33)
Amounts reclassified from accumulated
other comprehensive income (b)			(18)
Net current-period other comprehensive income			(51)
Ending Balance at May 3, 2014		$	727
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $29 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 $11.

	Changes in Accumulated Other
	Comprehensive Income (a)
			Unrealized Gains
			and Losses on
			Available-for-Sale
			Securities
Beginning Balance at February 2, 2013		$	821
Other comprehensive income before
reclassification			153
Amounts reclassified from accumulated
other comprehensive income (b)			(42)
Net current-period other comprehensive income			111
Ending Balance at May 4, 2013		$	932
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $66 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 $24.

XML

Direct Expenses of Credit Segment in SGA - (Details) (USD $) In Thousands, unless otherwise specified				3 Months Ended
	May 03, 2014	Feb. 01, 2014	May 04, 2013	May 03, 2014 ReportableSegmentsMemberCredit [Member]	May 04, 2013 ReportableSegmentsMemberCredit [Member]
Direct Expenses Reflected in Selling, General and Administrative Expenses
Allowance For Doubtful Accounts Receivable Current	$ 1,732	$ 1,743	$ 2,039	$ 307	$ 382
Labor and Related Expense				206	231
Postage Expense				191	199
Other Expenses				$ 276	$ 294

XML

Reportable Segment Information - (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013	Feb. 01, 2014
Segment Reporting Information [Line Items]
Total revenues	$ 284,732	$ 269,698
Depreciation	5,452	5,449
Interest and other income	742	875
Total Assets	583,237	560,207	596,918
Capital expenditures	7,423	5,605
Income Before Taxes	48,172	48,834
ReportableSegmentsMemberRetail [Member]
Segment Reporting Information [Line Items]
Total revenues	283,257	268,079
Depreciation	5,439	5,436
Interest and other income	(742)	(875)
Total Assets	516,613	494,752
Capital expenditures	4,116	5,605
Income Before Taxes	47,690	48,334
ReportableSegmentsMemberCredit [Member]
Segment Reporting Information [Line Items]
Total revenues	1,475	1,619
Depreciation	13	13
Interest and other income	0	0
Total Assets	66,624	65,455
Capital expenditures	0	0
Income Before Taxes	$ 482	$ 500

XML

Stock Based Compensation - Plans - (Details)	May 03, 2014	Feb. 01, 2014
1987 Plan
Restricted Shares Authorized And Available For Grant
Options And/Or Restrcited Stock Initially Authorized	5,850,000
Options And Or Restricted Stock Available For Grant	0	0
2004 Plan
Restricted Shares Authorized And Available For Grant
Options And/Or Restrcited Stock Initially Authorized	1,350,000
Options And Or Restricted Stock Available For Grant	0	0
2013 Plan
Restricted Shares Authorized And Available For Grant
Options And/Or Restrcited Stock Initially Authorized	1,500,000
Options And Or Restricted Stock Available For Grant	1,282,189	1,488,902

XML

Sechedule Of Restricted Stock Outstanding - (Details) (2004 Plan, Restricted Stock, Class A Common Stock, USD $)	3 Months Ended
	May 03, 2014
2004 Plan | Restricted Stock | Class A Common Stock
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested [Roll Forward]
Restricted Stock Awards Beginning Balance	505,623
Restricted Stock Awards Granted	206,713
Restricted Stock Awards Vested	(108,155)
Restricted Stock Awards Foreited	(7,623)
Restricted Stock Awards Ending Balance	596,558
Share Based Compensation Arrangement By Share Based Payment Award Equity InstrumentsOtherThan Options Nonvested Weighted Average Grant Date Fair Value
Restricted Stock Awards Weighted Average Grant Date Fair Value Per Share - Beginning Balance	$ 24.52
Granted Restricted Stock Awards Weighted Average Grant Date Fair Value Per Share	$ 28.25
Vested Restricted Stock Awards Weighted Average Grant Date Fair Value Per Share	$ 22.41
Forfeited Restricted Stock Awards Weighted Average Grant Date Fair Value Per Share	$ 24.96
Restricted Stock Awards Weighted Average Grant Date Fair Value Per Share - Ending Balance	$ 26.19

XML

Earnings Per Share - Notes to Financial Statements

3 Months Ended

May 03, 2014

Earnings Per Share Disclosure [Abstract]

Earnings Per Share

NOTE 2 - EARNINGS PER SHARE:

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
			May 3, 2014		May 4, 2013
		(Dollars in thousands)
Numerator
	Net earnings	$	30,006	$	30,839
	Earnings allocated to non-vested equity awards		(509)		(468)
	Net earnings available to common stockholders	$	29,497	$	30,371
Denominator
	Basic weighted average common shares outstanding		28,335,395		28,832,579
	Dilutive effect of stock options		713		2,881
	Diluted weighted average common shares outstanding		28,336,108		28,835,460
Net income per common share
	Basic earnings per share	$	1.04	$	1.05
	Diluted earnings per share	$	1.04	$	1.05

XML

Stock Based Compensation Additional - (Details) (Class A Common Stock, USD $)	3 Months Ended		12 Months Ended
	May 03, 2014	May 04, 2013	Feb. 01, 2014
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized Compensation Expense	$ 13,318,000,000	$ 10,706,000,000	$ 8,298,000,000,000
Remaining Weighted-Average Vesting Period	3 years 4 months 24 days	3 years 10 months 24 days	2 years 7 months 6 days
Compensation Expense	506,000	430,000
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation Expense	4,000
Intrinsic Value	0
Options Granted	0
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares Sold	11,286	10,058
Compensation Expense	$ 46,000	$ 37,000
Employee Stock Purchase Plan Share Purchase Discount	$ 4.06	$ 3.62

XML

Condensed Consolidated Income Statements Of Income and Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
Revenues
Retail sales	$ 282,462	$ 267,181
Other Revenue (principally finance charges, late fees and layaway charges)	2,270	2,517
Total revenues	284,732	269,698
COSTS AND EXPENSES, NET
Cost of goods sold (exclusive of depreciation shown below)	164,363	156,901
Selling, general and administrative (exclusive of depreciation shown below)	67,487	59,389
Depreciation	5,452	5,449
Interest and other income	742	875
Cost and expenses, net	236,560	220,864
Income before income taxes	48,172	48,834
Income tax expense	18,166	17,995
Net income	30,006	30,839
Basic earnings per share	$ 1.04	$ 1.05
Diluted earnings per share	$ 1.04	$ 1.05
Dividends per share	$ 0.30	$ 0.05
Comprehensive income
Net income	30,006	30,839
Unrealized gain on available-for-sale securities, net of deferred income taxes	(51)	111
Comprehensive Income	$ 29,955	$ 30,950

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
OPERATING ACTIVITIES
Net income	$ 30,006	$ 30,839
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	5,452	5,449
Provision For Doubtful Accounts	307	382
Purchase premium and premium amortization	296	(1,394)
Share Based Compensation	555	467
Excess tax benefits from share-based compensation	(55)	(12)
Deferred income taxes	(2)	0
Loss on disposal of property and equipment	118	249
Changes in operating assets and liabilities which provided (used) cash:
Accounts receivable	(2,119)	(425)
Merchandise inventories	21,209	14,470
Prepaid and other assets	(5,615)	(2,598)
Accrued income taxes	17,679	17,032
Accounts payable, accrued expenses and other liabilities	(13,704)	(16,764)
Net cash provided by operating activities	54,127	47,695
INVESTING ACTIVITIES
Capital expenditures	(7,423)	(5,605)
Purchase of short-term investments	(8,905)	(21,639)
Sales of short-term investments	10,354	19,648
Change in restricted cash and investments	2	1,183
Net cash used in investing activities	(5,972)	(6,413)
FINANCING ACTIVITIES
Dividends paid	(8,748)	(1,464)
Repurchase of common stock	(39,681)	(5,774)
Proceeds from employee stock purchase plan	260	206
Excess tax benefits from share-based compensation financing activities	55	12
Proceeds From Stock Options Exercised	0	24
Net cash provided used in financing activities	(48,114)	(6,996)
Net increase in cash and cash equivalents	41	34,286
Cash and cash equivalents at beginning of period	79,427	31,069
Cash and cash equivalents at end of period	79,468	65,355
Change in Accrued PPE	$ (3,314)	$ (2,884)

XML

Fair Value Measurements - Level 3 Roll - (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
FairValueLiabilitiesMeasuredOnRecurringBasisUnobservableInputReconciliationLineItems
Begining Balance	$ (3,298)	$ (2,178)
Additons	(345)	(223)
Losses (Gains) Included In Earnings	(209)	(92)
Ending Balance	(3,852)	(2,493)
Auction Rate Securities (ARS)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	3,140	3,450
Redemptions	0	0
Additions	0
Gains (Losses) Included in Earnings	0	0
Gains (Losses) Included in Other Comprehensive Income	0	0
Ending Balance	3,140	3,450
Privately Managed Funds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	392	561
Redemptions	(42)	45
Additions	0
Gains (Losses) Included in Earnings	(1)	(7)
Gains (Losses) Included in Other Comprehensive Income	7	0
Ending Balance	358	523
Cash Surrender Value - Life Insurance
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	2,957	2,051
Redemptions	0	0
Additions	519	292
Gains (Losses) Included in Earnings	(92)	(68)
Gains (Losses) Included in Other Comprehensive Income	0	0
Ending Balance	$ 3,568	$ 2,411

XML

Fair Value Level 3 Inputs (Tables)

3 Months Ended

May 03, 2014

Fair Value Inputs Quantitative Information [Abstract]

Fair Value Level 3 Inputs

Quantitative information regarding the significant unobservable inputs related to the ARS as of May 3, 2014 and May 4, 2013 were as follows:
May 3, 2014
Fair Value	Valuation Technique	Unobservable Inputs
$3,140	Net present value	Total Term	8.4 Years
	of cash flows	Yield	0.18%
		Comparative bond discount rate	0.14%
May 4, 2013
Fair Value	Valuation Technique	Unobservable Inputs
$3,450	Net present value	Total Term	9.4 Years
	of cash flows	Yield	0.28%
		Comparative bond discount rate	0.14%
Significant increases or decreases in certain of the inputs could result in a lower fair value measurement. For example, a decrease in the yield or an increase to the comparative bond discount rate could result in a lower fair value.

XML

Fair Value Level 3 Inputs - (Details) (Discounted Cash Flow Analysis, Level 3)	3 Months Ended
	May 03, 2014	May 04, 2013
Fair Value Inputs Assets Quantitative Information [Line Items]
Total Term		9 years 4 months 24 days
Auction Rate Securities (ARS)
Fair Value Inputs Assets Quantitative Information [Line Items]
Total Term	9 years 4 months 24 days	10 years 4 months 24 days
Comparitive Bond Discount Rate	0.14%	0.14%
ARS Yield	0.18%	0.28%

XML

Earnings Per Share - (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
Earnings Per Share Disclosure [Abstract]
Net income	$ 30,006	$ 30,839
Earnings Alloacted to Non-Vesting Equity Awards	(509)	(468)
Net Income (Loss) Available to Common Stockholders	$ 29,497	$ 30,371
Basic Weighted-Average common shares outstanding	28,335,395	28,832,579
Dilutive Effect of Stock Options	713	2,881
Dilluted Weighted Average Common Shares Outstanding	28,336,108	28,835,460
Basic earnings per share	$ 1.04	$ 1.05
Diluted earnings per share	$ 1.04	$ 1.05

XML

General - Notes to Financial Statements

3 Months Ended

May 03, 2014

General Dsiclosure [Abstract]

Summary of Significant Account Policies

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 theperiods ended May 3, 2014 and May 4, 2013 are unaudited. In the opinion of management, all adjustments considered necessary for a fair statement 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/A for the fiscal year ended February 1, 2014. Amounts as of February 1, 2014 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.

During the fourth quarter of 2013, the Company discovered that it had improperly netted purchases and sales activity for investments within cash flows related to investing activities in prior periods. In addition, the Company had also improperly classified the premiums and amortization of premiums on those investments in cash flows related to investing activities when it should have been in cash flows related to operating activities. The Condensed Consolidated Statement of Cash Flows for the three months ended May 3, 2014 has been revised to correct the presentation of the amounts, which resulted in a decrease to Net cash provided by operating activities and a corresponding decrease to Net cash provided (used) in investing activities of $1.4 million dollars. The revision is not deemed material to the prior period consolidated financial statements.

On May 20, 2014, the Board of Directors maintained the quarterly dividend at $0.30 per share.

XML

Condensed Consolidated Income Statements Of Income and Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
OtherComprehensiveIncomeLossTaxParentheticalDisclosuresAbstract
Tax Effect of Unrealized Gains (Losses) On Available-For-Sale Securities	$ (32)	$ 67

XML

Reportable Segment Information - (Tables)

3 Months Ended

May 03, 2014

Reportable Segment Information [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Three Months Ended
May 3, 2014	Retail	Credit	Total
Revenues	$ 283,257	$ 1,475	$ 284,732
Depreciation	5,439	13	5,452
Interest and other income	(742)	-	(742)
Income before taxes	47,690	482	48,172
Total assets	516,613	66,624	583,237
Capital expenditures	4,116	0	4,116
Three Months Ended
May 4, 2013	Retail	Credit	Total
Revenues	$ 268,079	$ 1,619	$ 269,698
Depreciation	5,436	13	5,449
Interest and other income	(875)	-	(875)
Income before taxes	48,334	500	48,834
Total assets	494,752	65,455	560,207
Capital expenditures	5,605	-	5,605

	Three Months Ended
		May 3, 2014		May 4, 2013
Bad debt expense	$	307	$	382
Payroll		206		231
Postage		191		199
Other expenses		276		294
Total expenses	$	980	$	1,106

XML

Document and Entity Information	3 Months Ended
	May 03, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Cato Corp
Entity Central Index Key	0000018255
Document Type	10-Q
Document Period End Date	May 03, 2014
Amendment Flag	false
Current Fiscal Year End Date	--05-03
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Class of Stock [Line Items]
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Common Class A [Member]
Class of Stock [Line Items]
Entity Common Stock, Shares Outstanding (actual number)	26,282,502
Common Class B [Member]
Class of Stock [Line Items]
Entity Common Stock, Shares Outstanding (actual number)	1,743,525

XML

Stock Based Compensation - Plans (Tables)

3 Months Ended

May 03, 2014

[DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract]

Stock Based Compensation Plans

	1987	2004	2013
	Plan	Plan	Plan	Total
Options and/or restricted stock initially authorized	5,850,000	1,350,000	1,500,000	8,700,000
Options and/or restricted stock available for grant:
February 1, 2014	0	0	1,488,902	1,488,902
May 3, 2014	0	0	1,282,189	1,282,189

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	May 03, 2014	Feb. 01, 2014	May 04, 2013
Current Assets:
Cash and cash equivalents	$ 79,468	$ 79,427	$ 65,355
Short-term investments	159,286	161,128	161,095
Restricted cash and investments	4,699	4,701	4,816
Accounts receivable, net of allowance for doubtful accounts	41,036	39,224	40,059
Merchandise inventories	129,652	150,861	126,268
Deferred income taxes	4,752	4,720	4,564
Prepaid expenses	10,522	6,687	10,526
Total Current Assets	429,415	446,748	412,683
Property and equipment - net	142,989	141,129	137,018
Noncurrent deferred tax asset	1,375	1,373	0
Other assets	9,458	7,668	10,506
Total Assets	583,237	596,918	560,207
Current Liabilities:
Accounts payable	96,816	111,514	85,264
Accrued expenses	44,258	45,763	44,605
Accrued bonus and benefits	6,009	4,999	1,104
Accrued income taxes	32,479	14,855	31,312
Total Current Liabilities	179,562	177,131	162,285
Deferred tax liabilities noncurrent	0	0	3,330
Other noncurrent liabilities (primarily deferred rent)	30,170	28,678	24,938
Commitments And Contingenciess	0	0	0
Stockholders' Equity:
Preferred stock, $100 par value per share, 100,000 shares authorized, none issued	0	0	0
Class of Stock [Line Items]
Common stock	934	975	975
Additional paid-in capital	81,324	80,463	77,296
Retained earnings	290,520	308,893	290,451
Accumulated other comprehensive income	727	778	932
Total Stockholders' Equity	373,505	391,109	369,654
Liabilities And Stockholders Equity	583,237	596,918	560,207
Common Class A [Member]
Class of Stock [Line Items]
Common stock	876	917	917
Common Class B [Member]
Class of Stock [Line Items]
Common stock	$ 58	$ 58	$ 58

XML

Stock Based Compensation - Notes to Financial Statements

3 Months Ended

May 03, 2014

[DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract]

Stock Based Compensation

NOTE 6 – STOCK BASED COMPENSATION:

As of May 3, 2014, the Company had three long-term compensation plans pursuant to which stock-based compensation was outstanding or could be granted. The Company's 1987 Non-Qualified Stock Option Plan is for the granting of options to officers and key employees. As of May 1, 2013, there were no available stock options for grant. The 2013 Incentive Compensation Plan and 2004 Amended and Restated 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 23, 2013, shares for grant were no longer available under the 2004 Amended and Restated 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 May 3, 2014:

	1987	2004	2013
	Plan	Plan	Plan	Total
Options and/or restricted stock initially authorized	5,850,000	1,350,000	1,500,000	8,700,000
Options and/or restricted stock available for grant:
February 1, 2014	0	0	1,488,902	1,488,902
May 3, 2014	0	0	1,282,189	1,282,189

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 May 3, 2014,February 1, 2014 and May 4, 2013, there was $13,318,000, $8,298,000and $10,706,000of total unrecognized compensation expense related to nonvested restricted stock awards, which had a remaining weighted-average vesting period of 3.4 years,2.6 years and 3.9 years, respectively. The total fair value of the shares recognized as compensation expense during the three months endedMay 3, 2014 was $506,000compared to $430,000 for the three months ended May 4, 2013. These expenses are classified as a component of Selling, general and administrative expenses (exclusive of depreciation) in the Condensed Consolidated Statements of Income.

The following summary shows the changes in the shares of restricted stock outstanding during the three months ended May 3, 2014:

			Weighted Average
	Number of		Grant Date Fair
	Shares		Value Per Share
Restricted stock awards at February 1, 2014	505,623	$	24.52
Granted	206,713		28.25
Vested	(108,155)		22.41
Forfeited or expired	(7,623)		24.96
Restricted stock awards at May 3, 2014	596,558	$	26.19

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 three months ended May 3, 2014 and May 4, 2013, the Company sold 11,286 and 10,058 shares to employees at an average discount of $4.06 and $3.62per 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 $46,000 and $37,000 for the three months ended May 3, 2014 and May 4, 2013, respectively. These expenses are classified as a component of selling, general and administrative expenses.

XML

Reportable Segment Information - Notes to Financial Statements

3 Months Ended

May 03, 2014

Reportable Segment Information [Abstract]

Reportable Segment Information

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 Accessories and Credit.  As outlined in ASC 280-10, the Company has two reportable segments: Retail and Credit.  The Company has aggregated its retail operating segments 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 if the segments have similar economic characteristics, similar product, similar production processes, similar clients and similar 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 of the Company's operating segments is sourced from the same countries and some of the same vendors, using similar production processes.  Clients of the Company's operating segments have similar characteristics.  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 32 states as of May 3, 2014, 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.

NOTE 5 – REPORTABLE SEGMENT INFORMATION (CONTINUED):

The following schedule summarizes certain segment information (in thousands):

Three Months Ended
May 3, 2014	Retail	Credit	Total
Revenues	$ 283,257	$ 1,475	$ 284,732
Depreciation	5,439	13	5,452
Interest and other income	(742)	-	(742)
Income before taxes	47,690	482	48,172
Total assets	516,613	66,624	583,237
Capital expenditures	4,116	0	4,116
Three Months Ended
May 4, 2013	Retail	Credit	Total
Revenues	$ 268,079	$ 1,619	$ 269,698
Depreciation	5,436	13	5,449
Interest and other income	(875)	-	(875)
Income before taxes	48,334	500	48,834
Total assets	494,752	65,455	560,207
Capital expenditures	5,605	-	5,605

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
		May 3, 2014		May 4, 2013
Bad debt expense	$	307	$	382
Payroll		206		231
Postage		191		199
Other expenses		276		294
Total expenses	$	980	$	1,106

XML

General - Notes to Financial Statements - (Details) (USD $)	3 Months Ended
	May 03, 2014	May 04, 2013
General Dsiclosure [Abstract]
Quarterly Declared Dividend	$ 0.30	$ 0.05

XML

Sechedule Of Restricted Stock Outstanding - (Tables)

3 Months Ended

May 03, 2014

[DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract]

Schedule Of Changes In Restricted Stock Outstanding

			Weighted Average
	Number of		Grant Date Fair
	Shares		Value Per Share
Restricted stock awards at February 1, 2014	505,623	$	24.52
Granted	206,713		28.25
Vested	(108,155)		22.41
Forfeited or expired	(7,623)		24.96
Restricted stock awards at May 3, 2014	596,558	$	26.19

XML

Earnings Per Share - (Tables)

3 Months Ended

May 03, 2014

Earnings Per Share Disclosure [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

			Three Months Ended
			May 3, 2014		May 4, 2013
		(Dollars in thousands)
Numerator
	Net earnings	$	30,006	$	30,839
	Earnings allocated to non-vested equity awards		(509)		(468)
	Net earnings available to common stockholders	$	29,497	$	30,371
Denominator
	Basic weighted average common shares outstanding		28,335,395		28,832,579
	Dilutive effect of stock options		713		2,881
	Diluted weighted average common shares outstanding		28,336,108		28,835,460
Net income per common share
	Basic earnings per share	$	1.04	$	1.05
	Diluted earnings per share	$	1.04	$	1.05

XML

Fair Value Measurements - Notes to Financial Statements

3 Months Ended

12 Months Ended

May 03, 2014

May 04, 2013

Feb. 01, 2014

Fair Value Measurements [Abstract]

Fair Value Disclosures Text Block

NOTE 7 – FAIR VALUE MEASUREMENTS:

The following tables set forth information regarding the Company's financial assets that are measured at fair value (in thousands) as of May 3, 2014, February 1, 2014 and May 4, 2013.

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 3, 2014	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	155,428	$	-	$	155,428	$	-
Corporate Bonds		4,598		-		4,598		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		1,503		1,503		-		-
Cash Surrender Value of Life Insurance		3,568		-		-		3,568
Privately Managed Funds		358		-		-		358
Corporate Equities		595		595		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	169,290	$	2,198	$	160,026	$	7,066
Liabilities:
Deferred Compensation		(3,852)		-		-		(3,852)
Total Liabilities	$	(3,852)	$	-	$	-	$	(3,852)

The Company's investment portfolio was primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at May 3, 2014, February 1, 2014 and May 4, 2013. The state, municipal and corporate bonds have contractual maturities which range from 12 days to 12.6 years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities which range from 4 months to 1.4 years. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted investments and Other assets on the accompanying Condensed Consolidated Balance Sheets. These assets are carried at fair value with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

Additionally, at May 3, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities and a single auction rate security (“ARS”) of $3.1 million which continues to fail its auction, and deferred compensation plan assets of $3.6 million. At February 1, 2014, the Company had $0.4million of privately managed funds, $0.6million of corporate equities, a single ARS of $3.1 millionand deferred compensation plan assets of $3.0 million. At May 4, 2013, the Company had $0.5 million of privately managed funds, $0.5 million of corporate equities,a single ARS of $3.5 million and deferred compensation plan assets of $2.4 million. All of these assets are recorded within Other assets in the Condensed Consolidated Balance Sheets.

Level 1 category securities are measured at fair value using quoted active market prices. Level 2 investment securities include corporate and municipal bonds for which quoted prices may not be available on active exchanges for identical instruments. Their fair value is principally based on market values determined by management with assistance of a third party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors.

The ARS of $3,450,000 par value was issued by the Wake County, NC Industrial Facilities & Pollution Control Financing Authority. The security is an obligation of Duke Energy Progress and has a credit rating of A. The Company has collected all interest payments when due since the security was purchased and continues to expect that it will receive all interest due on the security in full and on a timely basis in the future.

The Company's failed ARS is recorded at $3,139,500 which approximates fair value using Level 3 inputs. Because there is no active market for this particular ARS, its fair value was analyzed through the use of a discounted cash flow analysis and observations from previous trades. The terms used in the analysis were based on management's estimate of the timing of future liquidity, which assumes that the security will be called or refinanced by the issuer or settled with a broker dealer prior to maturity. The discount rates used in the discounted cash flow analysis were based on market rates for similar liquid tax exempt securities with comparable ratings and maturities. Due to the uncertainty surrounding the timing of future liquidity, the Company also considered a liquidity/risk value reduction. In estimating the fair value of this ARS, the Company also considered recent trading activity, the financial condition and near-term prospects of the issuer, the probability that the Company will be unable to collect all amounts due according to the contractual terms of the security and whether the security has been downgraded by a rating agency. The Company's valuation is sensitive to market conditions and management's judgment and can change significantly based on the assumptions used.

The Company's privately managed funds consist of two types of funds. The privately managed funds cannot be redeemed at net asset value at a specific date without advance notice. As a result, the Company has classified the investments as Level 3.

Deferred compensation plan assets consist of life insurance policies. These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flow and are therefore classified within level 3 of the valuation hierarchy. The level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds. These funds are designed to mirror existing mutual funds and money market funds that are observable and actively traded. Cash surrender values are provided by third parties and reviewed for reasonableness by the Company.

The following tables summarize the change in fair value of the Company's financial assets measured using Level 3 inputs as of May 3, 2014 and May 4, 2013 (dollars in thousands):

		Fair Value Measurements Using Significant
		Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value	Total
Beginning Balance at February 1, 2014	$	3,140	$	392	$	2,957	$	6,489
Redemptions		-		(42)		-		(42)
Additions		-		-		519		519
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		1		92		93
Included in other comprehensive income		-		7		-		7
Ending Balance at May 3, 2014	$	3,140	$	358	$	3,568	$	7,066
	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 1, 2014	$	(3,298)	$	(3,298)
Additions		(345)		(345)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(209)		(209)
Included in other comprehensive income		-		-
Ending Balance at May 3, 2014	$	(3,852)	$	(3,852)
	Fair Value Measurements Using Significant
	Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value		Total
Beginning Balance at February 2, 2013	$	3,450	$	561	$	2,051	$	6,062
Redemptions		-		(45)		-		(45)
Additions						292		292
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		7		68		75
Included in other comprehensive income		-		-		-		-
Ending Balance at May 4, 2013	$	3,450	$	523	$	2,411	$	6,384
	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 2, 2013	$	(2,178)	$	(2,178)
Additions		(223)		(223)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(92)		(92)
Ending Balance at May 4, 2013	$	(2,493)	$	(2,493)

Quantitative information regarding the significant unobservable inputs related to the ARS as of May 3, 2014 and May 4, 2013 were as follows:
May 3, 2014
Fair Value	Valuation Technique	Unobservable Inputs
$3,140	Net present value	Total Term	8.4 Years
	of cash flows	Yield	0.18%
		Comparative bond discount rate	0.14%
May 4, 2013
Fair Value	Valuation Technique	Unobservable Inputs
$3,450	Net present value	Total Term	9.4 Years
	of cash flows	Yield	0.28%
		Comparative bond discount rate	0.14%
Significant increases or decreases in certain of the inputs could result in a lower fair value measurement. For example, a decrease in the yield or an increase to the comparative bond discount rate could result in a lower fair value.

The Company's investment portfolio was primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at May 3, 2014, February 1, 2014 and May 4, 2013. The state, municipal and corporate bonds have contractual maturities which range from 12 days to 12.6 years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities which range from 4 months to 1.4 years. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted investments and Other assets on the accompanying Condensed Consolidated Balance Sheets. These assets are carried at fair value with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

Additionally, at May 3, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities and a single auction rate security (“ARS”) of $3.1 million which continues to fail its auction, and deferred compensation plan assets of $3.6 million. At February 1, 2014, the Company had $0.4million of privately managed funds, $0.6million of corporate equities, a single ARS of $3.1 millionand deferred compensation plan assets of $3.0 million. At May 4, 2013, the Company had $0.5 million of privately managed funds, $0.5 million of corporate equities,a single ARS of $3.5 million and deferred compensation plan assets of $2.4 million. All of these assets are recorded within Other assets in the Condensed Consolidated Balance Sheets.

Level 1 category securities are measured at fair value using quoted active market prices. Level 2 investment securities include corporate and municipal bonds for which quoted prices may not be available on active exchanges for identical instruments. Their fair value is principally based on market values determined by management with assistance of a third party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors.

The ARS of $3,450,000 par value was issued by the Wake County, NC Industrial Facilities & Pollution Control Financing Authority. The security is an obligation of Duke Energy Progress and has a credit rating of A. The Company has collected all interest payments when due since the security was purchased and continues to expect that it will receive all interest due on the security in full and on a timely basis in the future.

The Company's failed ARS is recorded at $3,139,500 which approximates fair value using Level 3 inputs. Because there is no active market for this particular ARS, its fair value was analyzed through the use of a discounted cash flow analysis and observations from previous trades. The terms used in the analysis were based on management's estimate of the timing of future liquidity, which assumes that the security will be called or refinanced by the issuer or settled with a broker dealer prior to maturity. The discount rates used in the discounted cash flow analysis were based on market rates for similar liquid tax exempt securities with comparable ratings and maturities. Due to the uncertainty surrounding the timing of future liquidity, the Company also considered a liquidity/risk value reduction. In estimating the fair value of this ARS, the Company also considered recent trading activity, the financial condition and near-term prospects of the issuer, the probability that the Company will be unable to collect all amounts due according to the contractual terms of the security and whether the security has been downgraded by a rating agency. The Company's valuation is sensitive to market conditions and management's judgment and can change significantly based on the assumptions used.

The Company's privately managed funds consist of two types of funds. The privately managed funds cannot be redeemed at net asset value at a specific date without advance notice. As a result, the Company has classified the investments as Level 3.

Deferred compensation plan assets consist of life insurance policies. These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flow and are therefore classified within level 3 of the valuation hierarchy. The level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds. These funds are designed to mirror existing mutual funds and money market funds that are observable and actively traded. Cash surrender values are provided by third parties and reviewed for reasonableness by the Company.

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 4, 2013	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	158,996	$	-	$	158,996	$	-
Corporate Bonds		1,915		-		1,915		-
Auction Rate Securities (ARS)		3,450		-		-		3,450
U.S. Treasury Notes		3,554		3,554		-		-
Cash Surrender Value of Life Insurance		2,411		-		-		2,411
Privately Managed Funds		523		-		-		523
Corporate Equities		520		520		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	171,469	$	4,174	$	160,911	$	6,384
Liabilities:
Deferred Compensation		(2,493)		-		-		(2,493)
Total Liabilities	$	(2,493)	$	-	$	-	$	(2,493)

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		February 1, 2014	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	159,074	$	-	$	159,074	$	-
Corporate Bonds		2,799		-		2,799		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		3,405		3,405		-		-
Cash Surrender Value of Life Insurance		2,957		-		-		2,957
Privately Managed Funds		392		-		-		392
Corporate Equities		585		585		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	172,452	$	4,090	$	161,873	$	6,489
Liabilities:
Deferred Compensation		(3,298)		-		-		(3,298)
Total Liabilities	$	(3,298)	$	-	$	-	$	(3,298)

XML

Recent Accounting Pronouncements - Notes to Financial Statements

3 Months Ended

May 03, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

In the first quarter of fiscal 2014, the Company adopted new accounting guidance which eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or tax credit carry forward exists at the reporting date. The new guidance had no impact on the Company's consolidated results of operations or cash flows.

In the first quarter of fiscal 2014, the Company adopted new accounting guidance which eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss, a similar tax loss, or tax credit carry forward exists at the reporting date. The new guidance had no impact on the Company's consolidated results of operations or cash flows.

XML

Changes in Accumulated Other Comprehensive Income (Tables)

3 Months Ended

May 03, 2014

May 04, 2013

AccumulatedOtherComprehensiveIncomeLossDisclosure[Abstract]

Schedule Of Accumulated Other Comprehensive Income Loss Table Text Block

	Changes in Accumulated Other
	Comprehensive Income (a)
			Unrealized Gains
			and Losses on
			Available-for-Sale
			Securities
Beginning Balance at February 1, 2014		$	778
Other comprehensive income before
reclassification			(33)
Amounts reclassified from accumulated
other comprehensive income (b)			(18)
Net current-period other comprehensive income			(51)
Ending Balance at May 3, 2014		$	727
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $29 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 $11.

	Changes in Accumulated Other
	Comprehensive Income (a)
			Unrealized Gains
			and Losses on
			Available-for-Sale
			Securities
Beginning Balance at February 2, 2013		$	821
Other comprehensive income before
reclassification			153
Amounts reclassified from accumulated
other comprehensive income (b)			(42)
Net current-period other comprehensive income			111
Ending Balance at May 4, 2013		$	932
(a) All amounts are net-of-tax. Amounts in parentheses indicate a debit/reduction to other comprehensive income ("OCI").
(b) Includes $66 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 $24.

XML

Fair Value Measurements - Assets at Fairvalue - (Details) (USD $) In Thousands, unless otherwise specified	May 03, 2014	Feb. 01, 2014	May 04, 2013
Level 1 | Deferred Compensation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Liabilities, Fair Value Disclosure	$ 0	$ 0	$ 0
Level 2 | Deferred Compensation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Liabilities, Fair Value Disclosure	0	0	0
Level 3 | Deferred Compensation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Liabilities, Fair Value Disclosure	(3,852)	(3,298)	(2,493)
State/Municipal Bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
State/Municipal Bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	155,428	159,074	158,996
State/Municipal Bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Corporate Bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Corporate Bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	4,598	2,799	1,915
Corporate Bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Auction Rate Securities (ARS) | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Auction Rate Securities (ARS) | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Auction Rate Securities (ARS) | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	3,140	3,140	3,450
US Treasury Notes | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	1,503	3,405	3,554
US Treasury Notes | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
US Treasury Notes | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Corporate Equities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	595	585	520
Corporate Equities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Corporate Equities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Certificates of Deposit | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	100	100	100
Certificates of Deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Certificates of Deposit | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale Securities	0	0	0
Privately Managed Funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Alternative Investments, Fair Value Disclosure	0	0	0
Privately Managed Funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Alternative Investments, Fair Value Disclosure	0	0	0
Privately Managed Funds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Alternative Investments, Fair Value Disclosure	358	392	523
Cash Surrender Value - Life Insurance | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Surrender Value, Fair Value Disclosure	0	0	0
Cash Surrender Value - Life Insurance | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Surrender Value, Fair Value Disclosure	0	0	0
Cash Surrender Value - Life Insurance | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash Surrender Value, Fair Value Disclosure	$ 3,568	$ 2,957	$ 2,411

XML

Fair Value Measurments - Level 3 Roll (Tables)

3 Months Ended

May 03, 2014

Fair Value Measurements [Abstract]

Level 3 Reconciliation

		Fair Value Measurements Using Significant
		Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value	Total
Beginning Balance at February 1, 2014	$	3,140	$	392	$	2,957	$	6,489
Redemptions		-		(42)		-		(42)
Additions		-		-		519		519
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		1		92		93
Included in other comprehensive income		-		7		-		7
Ending Balance at May 3, 2014	$	3,140	$	358	$	3,568	$	7,066
	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 1, 2014	$	(3,298)	$	(3,298)
Additions		(345)		(345)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(209)		(209)
Included in other comprehensive income		-		-
Ending Balance at May 3, 2014	$	(3,852)	$	(3,852)
	Fair Value Measurements Using Significant
	Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value		Total
Beginning Balance at February 2, 2013	$	3,450	$	561	$	2,051	$	6,062
Redemptions		-		(45)		-		(45)
Additions						292		292
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		7		68		75
Included in other comprehensive income		-		-		-		-
Ending Balance at May 4, 2013	$	3,450	$	523	$	2,411	$	6,384
	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 2, 2013	$	(2,178)	$	(2,178)
Additions		(223)		(223)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(92)		(92)
Ending Balance at May 4, 2013	$	(2,493)	$	(2,493)

XML

Changes in Accumulated Other Comprehensive Income Components - (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 03, 2014	May 04, 2013
ReclassificationAdjustmentOutOfAccumulatedOtherComprehensiveIncomeLineItems
Income Tax Benefit (Expense)	$ 18,166	$ 17,995
Reclassified Accumulated Unrealized Gains and Losses
ReclassificationAdjustmentOutOfAccumulatedOtherComprehensiveIncomeLineItems
Interest and Other Income	29	66
Income Tax Benefit (Expense)	$ 11	$ 24

XML

Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	May 03, 2014	Feb. 01, 2014	May 04, 2013
Class of Stock [Line Items]
Allowance For Doubtful Accounts Receivable Current	$ 1,732	$ 1,743	$ 2,039
Preferred Stock Par Or Stated Value Per Share	$ 100	$ 100	$ 100
Preferred Stock Shares Authorized	1,000,000	100,000	1,000,000
Preferred Stock Shares Issued	0	0	0
Common Class B [Member]
Class of Stock [Line Items]
Common Stock Shares Authorized	15,000,000	15,000,000	15,000,000
Common Stock Shares Issued	1,743,525	1,743,525	1,743,525
Common Stock Par Or Stated Value Per Share	$ 0.033	$ 0.033	$ 0.033
Common Class A [Member]
Class of Stock [Line Items]
Common Stock Shares Authorized	50,000,000	50,000,000	50,000,000
Common Stock Shares Issued	26,282,502	27,498,216	27,518,498
Common Stock Par Or Stated Value Per Share	$ 0.033	$ 0.033	$ 0.033

XML

Financing Arrangements - Notes to Financial Statements

3 Months Ended

May 03, 2014

Financing Arrangements [Abstract]

Financing Arrangements

NOTE 4 – FINANCING ARRANGEMENTS:

As of May 3, 2014, the Company had an unsecured revolving credit agreement to borrow $35.0 million less the balance of revocable credits discussed below. The revolving credit agreement is committed until August 2015. 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 May 3, 2014. There were no borrowings outstanding under this credit facility during the periods ended May 3, 2014, February 1, 2014 or May 4, 2013. The weighted average interest rate under the credit facility was zero at May 3, 2014 due to no borrowings during the year.

At May 3, 2014, February 1, 2014 and May 4, 2013, the Company had approximately $0.6 million, $0.4 millionand $2.3 million, respectively, of outstanding revocable letters of credit related to purchase commitments.

XML

Financing Arrangements - (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	May 03, 2014	May 04, 2013	Feb. 01, 2014
Letter of Credit [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility Outstanding Borrowings	$ 625	$ 2,300	$ 400
RevolvingCreditFacilityMember [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	35,000
Line of Credit Facility Outstanding Borrowings	$ 0
Line of Credit Facility, Expiration Date	Aug. 22, 2015

XML

Fair Value Measurements - Assets at Fairvalue - (Tables)

3 Months Ended

12 Months Ended

May 03, 2014

May 04, 2013

Feb. 01, 2014

Fair Value Measurements [Abstract]

Fair Value Disclosures

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 3, 2014	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	155,428	$	-	$	155,428	$	-
Corporate Bonds		4,598		-		4,598		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		1,503		1,503		-		-
Cash Surrender Value of Life Insurance		3,568		-		-		3,568
Privately Managed Funds		358		-		-		358
Corporate Equities		595		595		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	169,290	$	2,198	$	160,026	$	7,066
Liabilities:
Deferred Compensation		(3,852)		-		-		(3,852)
Total Liabilities	$	(3,852)	$	-	$	-	$	(3,852)

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 4, 2013	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	158,996	$	-	$	158,996	$	-
Corporate Bonds		1,915		-		1,915		-
Auction Rate Securities (ARS)		3,450		-		-		3,450
U.S. Treasury Notes		3,554		3,554		-		-
Cash Surrender Value of Life Insurance		2,411		-		-		2,411
Privately Managed Funds		523		-		-		523
Corporate Equities		520		520		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	171,469	$	4,174	$	160,911	$	6,384
Liabilities:
Deferred Compensation		(2,493)		-		-		(2,493)
Total Liabilities	$	(2,493)	$	-	$	-	$	(2,493)

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		February 1, 2014	Assets		Inputs		Inputs
Description			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	159,074	$	-	$	159,074	$	-
Corporate Bonds		2,799		-		2,799		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		3,405		3,405		-		-
Cash Surrender Value of Life Insurance		2,957		-		-		2,957
Privately Managed Funds		392		-		-		392
Corporate Equities		585		585		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	172,452	$	4,090	$	161,873	$	6,489
Liabilities:
Deferred Compensation		(3,298)		-		-		(3,298)
Total Liabilities	$	(3,298)	$	-	$	-	$	(3,298)