Form 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Annual Report Pursuant to Section 15(d) of
The Securities Exchange Act of 1934 (Fee Required)
X For the fiscal year ended September 30, 2001
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or
___ Transition report Pursuant to Section 15(d) of
The Securities Exchange Act of 1934 (No Fee Required)
Commission File No. 0-3747
A. Full title of plan and address of the Plan, if different from that of
the issuer named below:
THE CATO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
THE CATO CORPORATION
Human Resources Department
8100 Denmark Road
Charlotte, NC 28273
THE CATO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
FORM 11-K
September 30, 2001
Table of Contents
Page
No.
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Part I - Exhibit Index.......................................................2
Part II - Financial Information
Independent Auditors' Report.............................................3
Statements of Net Assets Available for Benefits..........................4
Statements of Changes in Net Assets Available for Benefits...............5
Notes to Financial Statements........................................6 - 7
Other Information........................................................8
Independent Auditors' Consent............................................9
Page 2
THE CATO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
EXHIBIT INDEX
Form 11-K for the Years Ended
September 30, 2001, 2000, and 1999
Exhibit Description Page
No of Exhibit No.
------- ----------- ----
1. Consent of Deloitte & Touche LLP, Independent Auditors.........9
Page 3
INDEPENDENT AUDITORS' REPORT
The Employee Benefit Plan Administrative Committee
The Cato Corporation Employee Stock Purchase Plan
We have audited the accompanying statements of net assets available for benefits
of The Cato Corporation Employee Stock Purchase Plan (the "Plan") as of
September 30, 2001 and 2000, and the related statements of changes in net assets
available for each of the three years in the period ended September 30, 2001.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of September 30,
2001 and 2000, and the changes in net assets available for benefits for each of
the three years in the period ended September 30, 2001 in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
December 7, 2001
Page 4
THE CATO CORPORATION EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
September 30,
----------------------
2001 2000
-------- -------
Assets - Cash $ 1,702 $ 4,617
- Participant Receivable 1,815
- Dividend Receivable 11,528
Liabilities - Employee Refunds (3,517) (4,617)
-------- -------
Net Assets Available for Benefits $ 11,528 $ 0
======== =======
See accompanying notes to financial statements.
Page 5
THE CATO CORPORATION EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended September 30,
--------------------------------
2001 2000 1999
-------- -------- --------
Increases:
Employee contributions $432,068 $427,054 $426,249
Dividends declared but not received 11,528
Dividends reinvested by participants 40,857 50,030 30,463
-------- -------- --------
484,453 477,084 456,712
-------- -------- --------
Decreases:
Purchases of The Cato Corporation
Common Stock subsequently
distributed to Plan participants
(38,143, 44,500 and 53,449 shares
for the years ended September 30,
2001, 2000 and 1999, respectively) 448,656 442,263 441,632
Cash withdrawals 24,269 34,821 15,080
-------- -------- --------
472,925 477,084 456,712
-------- -------- --------
Net Change 11,528 0 0
Net Assets Available for Benefits at
Beginning of Year 0 0 0
-------- -------- --------
Net Assets Available for Benefits at
End of Year $ 11,528 $ 0 $ 0
======== ======== ========
See accompanying notes to financial statements.
Page 6
THE CATO CORPORATION EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
Years Ended September 30, 2001, 2000, and 1999
NOTE 1 - BASIS OF PRESENTATION
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The accompanying financial statements of The Cato Corporation Employee Stock
Purchase Plan (the "Plan") have been prepared in accordance with accounting
principles generally accepted in the United States of America.
NOTE 2 - PLAN DESCRIPTION AND SUMMARY OF SIGNIFICANT PLAN PROVISIONS
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The Board of Directors of The Cato Corporation ("the Company") adopted the Plan
on September 23, 1993 and the Plan was approved by Shareholders of the Company
at the Annual Meeting of Shareholders on May 19, 1994. The Plan became effective
as of November 1, 1993 and will terminate on September 20, 2003, unless extended
by the Board of Directors or terminated sooner by the sale of all shares offered
under the Plan. There were 250,000 shares of The Cato Corporation Common Stock
originally reserved under the Plan. On May 21, 1998, the Plan was amended to
increase the maximum number of shares authorized to be issued from 250,000 to
500,000. At September 30, 2001, 118,271 shares remained available.
The purpose of the Plan is to provide eligible employees with an opportunity to
participate in the accumulation and potential appreciation in value of the
Common Stock of The Cato Corporation. Eligible employees are those who are
regularly scheduled to work at least 20 hours each week and more than 5 months
each calendar year and are actively employed on the first and last day of the
purchase period. There are two purchase periods in each plan year through
payroll deductions. The first period includes the six months ended March 31, and
the second period includes the six months ended September 30. Under the terms of
the Plan, all eligible employees of the Company, through payroll deductions, are
allowed to purchase, on the last day of each of the purchase periods in the plan
year specified in the Plan, shares of Common Stock at a 15% discount from the
lower of the fair market value of the first or last reported sale price of the
Common Stock on the NASDAQ National Market System. The purchase price at which
shares will be sold during each purchase period is 85% of the lower of the fair
market value at (1) the
Page 7
NOTE 2 - PLAN DESCRIPTION AND SUMMARY OF SIGNIFICANT PLAN PROVISIONS - CONTINUED
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beginning date of a purchase period or (2) ending date of a purchase period. In
addition to the Common Stock which may be purchased through payroll deductions,
Common Stock discounted 15% may also be purchased by each plan participant by a
one-time election on April 15 of each year in an amount not to exceed $10,000.
The purchase price for the one-time election is 85% of the last sale price at
the close of the market on April 15 as listed on the NASDAQ National Market
System.
Contributions are limited to 10% of compensation for the semiannual purchases
made through payroll deductions. The aggregate fair market value of shares of
Common Stock that may be purchased by any participant during any calendar year
may not exceed $25,000. Pending investment, funds are held by The Cato
Corporation. In addition to employee contributions, all dividends paid on Common
Shares purchased through the plan are automatically reinvested in additional
shares.
A participant may withdraw all or any portion of the full shares held in the
participant's account under the Plan by notifying The Cato Corporation in
writing. A participant may suspend payroll deductions at any time and applicable
payroll deductions will be returned to the participant. No suspended payroll
deductions are permitted within the last 15 days of each purchase period.
The Plan may be amended, restated, supplemented or terminated by The Cato
Corporation through the Board of Directors at any time by hand delivering or by
mailing the appropriate notice at least (30) days prior to the effective date
thereof to the Agent and to each plan participant at his last address of record.
The Plan is a stock plan as defined in Section 423 of the Internal Revenue Code
of 1986, as amended, and is not subject to federal income taxes. Substantial tax
benefits are allowed to participants with respect to the treatment of the stock
purchased within the plan, provided certain holding period requirements are met.
All costs to administer the Plan are paid by the Company.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, and changes therein, and disclosures of
contingent assets and liabilities. Actual results could differ from those
estimates.
Plan Termination - Although it has not expressed any intention to do so, the
Company has the right under the Plan to terminate the Plan through the Board of
Directors at any time, with the appropriate notice under the provisions of the
Plan.
Page 8
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 27, 2001
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The Cato Corporation
By: /s/ Robert M. Sandler
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Robert M. Sandler
Senior Vice President
Controller