##### 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 1934For the quarterly period ended August 4, 2007ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition
period from ____________ to ____________
 1-31340
 THE CATO CORPORATION
 
  Delaware
    
    56-0484485(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
  
 
  
   
 
 
 x o
  x o o
  o x




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##### 



THE CATO CORPORATION
 FORM 10-Q
 Quarter Ended August 4, 2007
 Table of Contents
 PageNo.PART I  FINANCIAL INFORMATION (UNAUDITED)Item 1. Financial Statements:Condensed Consolidated Statements of Income and Comprehensive Income
    
    
    2For the Three Months and Six Months Ended August 4, 2007 and July 29, 2006Condensed Consolidated Balance Sheets
    
    
    3At August 4, 2007, July 29, 2006, and February 3, 2007Condensed Consolidated Statements of Cash Flows
    
    
    4For the Six Months Ended August 4, 2007 and July 29, 2006Notes to Condensed Consolidated Financial Statements
    
    
    5 - 11For the Three Months and Six Months Ended
August 4, 2007 and July 29, 2006Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    12 - 17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults upon Senior Securities
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    20Signatures
    
    
    21 - 25Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 THE CATO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
 Three Months Ended
    
    
    Six Months EndedAugust 4,
    
    
    July 29,
    
    
    August 4,
    
    
    July 29,2007
    
    
    2006
    
    
    2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)(Dollars in thousands, except per share data)REVENUESRetail sales
    
    $
    218,973
    
    
    $
    214,633
    
    
    $
    443,107
    
    
    $
    444,374Other income (principally finance charges, late fees and
layaway charges)
    
    
    2,961
    
    
    
    3,212
    
    
    
    6,056
    
    
    
    6,531Total revenues
    
    
    221,934
    
    
    
    217,845
    
    
    
    449,163
    
    
    
    450,905COSTS AND EXPENSES, NETCost of goods sold
    
    
    147,514
    
    
    
    143,746
    
    
    
    290,936
    
    
    
    285,858Selling, general and administrative
    
    
    52,463
    
    
    
    51,772
    
    
    
    103,599
    
    
    
    106,349Depreciation
    
    
    5,623
    
    
    
    5,223
    
    
    
    11,014
    
    
    
    10,391Interest and other income
    
    
    (2,316
    )
    
    
    (1,940
    )
    
    
    (4,209
    )
    
    
    (3,492
    )203,284
    
    
    
    198,801
    
    
    
    401,340
    
    
    
    399,106Income before income taxes
    
    
    18,650
    
    
    
    19,044
    
    
    
    47,823
    
    
    
    51,799Income tax expense
    
    
    6,140
    
    
    
    6,951
    
    
    
    16,642
    
    
    
    18,907Net Income
    
    $
    12,510
    
    
    $
    12,093
    
    
    $
    31,181
    
    
    $
    32,892Basic earnings per share
    
    $
    0.39
    
    
    $
    0.39
    
    
    $
    0.99
    
    
    $
    1.05Basic weighted average shares
    
    
    31,897,365
    
    
    
    31,267,637
    
    
    
    31,624,979
    
    
    
    31,250,921Diluted earnings per share
    
    $
    0.39
    
    
    $
    0.38
    
    
    $
    0.97
    
    
    $
    1.04Diluted weighted average shares
    
    
    32,189,903
    
    
    
    31,803,875
    
    
    
    32,040,169
    
    
    
    31,765,992Dividends per share
    
    $
    0.165
    
    
    $
    0.15
    
    
    $
    0.315
    
    
    $
    0.28Comprehensive income:Net income
    
    $
    12,510
    
    
    $
    12,093
    
    
    $
    31,181
    
    
    $
    32,892Unrealized gains (losses) on available-for-sale securities, net
of deferred income tax expense
    
    
    (49
    )
    
    
    56
    
    
    
    (21
    )
    
    
    34Net comprehensive income
    
    $
    12,461
    
    
    $
    12,149
    
    
    $
    31,160
    
    
    $
    32,926
  2




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##### Table of Contents



THE CATO CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 August 4,
    
    
    July 29,
    
    
    February 3,2007
    
    
    2006
    
    
    2007(Unaudited)
    
    
    (Unaudited)(Dollars in thousands)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    19,929
    
    
    $
    21,809
    
    
    $
    24,833Short-term investments
    
    
    150,387
    
    
    
    94,171
    
    
    
    98,709Accounts receivable, net of allowance for doubtful accounts of $3,226,
$3,589 and $3,554 at August 4, 2007, July 29, 2006 and February 3,
2007, respectively
    
    
    45,533
    
    
    
    46,436
    
    
    
    45,958Merchandise inventories
    
    
    99,236
    
    
    
    91,989
    
    
    
    115,918Deferred income taxes
    
    
    7,522
    
    
    
    8,506
    
    
    
    7,508Prepaid expenses
    
    
    7,197
    
    
    
    2,464
    
    
    
    6,587Total Current Assets
    
    
    329,804
    
    
    
    265,375
    
    
    
    299,513Property and equipment  net
    
    
    126,573
    
    
    
    130,422
    
    
    
    128,461Other assets
    
    
    4,279
    
    
    
    11,201
    
    
    
    4,348Total Assets
    
    $
    460,656
    
    
    $
    406,998
    
    
    $
    432,322LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    82,879
    
    
    $
    58,210
    
    
    $
    77,046Accrued expenses
    
    
    29,438
    
    
    
    32,433
    
    
    
    29,526Accrued bonus and benefits
    
    
    1,426
    
    
    
    10,342
    
    
    
    10,756Accrued income taxes
    
    
    6,437
    
    
    
    7,779
    
    
    
    5,721Total Current Liabilities
    
    
    120,180
    
    
    
    108,764
    
    
    
    123,049Deferred income taxes
    
    
    8,817
    
    
    
    9,261
    
    
    
    8,817Other noncurrent liabilities (primarily deferred rent)
    
    
    23,286
    
    
    
    23,230
    
    
    
    23,663Commitments and contingencies:Stockholders Equity:Preferred stock, $100 par value per share, 100,000 shares authorized,
none issued
    
    
    
    
    
    
    
    
    
    
    Class A common stock, $.033 par value per share, 50,000,000
shares authorized; issued 36,089,761 shares, 35,909,497 shares
and 35,955,815 shares at August 4, 2007, July 29, 2006 and
February 3, 2007, respectively
    
    
    1,203
    
    
    
    1,197
    
    
    
    1,199Convertible Class B common stock, $.033 par value per share,
15,000,000 shares authorized; issued 1,743,525 shares, 690,525
shares and 690,525 shares at August 4, 2007, July 29, 2006 and
February 3, 2007, respectively
    
    
    58
    
    
    
    23
    
    
    
    23Additional paid-in capital
    
    
    56,913
    
    
    
    40,668
    
    
    
    42,475Retained earnings
    
    
    349,276
    
    
    
    318,556
    
    
    
    327,684Accumulated other comprehensive income
    
    
    204
    
    
    
    112
    
    
    
    225407,654
    
    
    
    360,556
    
    
    
    371,606Less Class A common stock in treasury, at cost (5,299,500 shares
at August 4, 2007, 5,093,609 at July 29, 2006 and
5,093,609 at February 3, 2007)
    
    
    (99,281
    )
    
    
    (94,813
    )
    
    
    (94,813
    )Total Stockholders Equity
    
    
    308,373
    
    
    
    265,743
    
    
    
    276,793Total Liabilities and Stockholders Equity
    
    $
    460,656
    
    
    $
    406,998
    
    
    $
    432,322
  3




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THE CATO CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedAugust 4,
    
    
    July 29,2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)(Dollars in thousands)OPERATING ACTIVITIESNet income
    
    $
    31,181
    
    
    $
    32,892Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    11,014
    
    
    
    10,391Provision for doubtful accounts
    
    
    1,134
    
    
    
    1,627Share-based compensation
    
    
    812
    
    
    
    626Excess tax benefits from share-based compensation
    
    
    (5,450
    )
    
    
    (284
    )Deferred income taxes
    
    
    
    
    
    
    20Loss on disposal of property and equipment
    
    
    326
    
    
    
    569Changes in operating assets and liabilities which provided
(used) cash:Accounts receivable
    
    
    (709
    )
    
    
    1,581Merchandise inventories
    
    
    16,682
    
    
    
    11,381Prepaid and other assets
    
    
    (541
    )
    
    
    (493
    )Accrued income taxes
    
    
    6,528
    
    
    
    3,073Accounts payable, accrued expenses and other liabilities
    
    
    (3,346
    )
    
    
    (28,930
    )Net cash provided by operating activities
    
    
    57,631
    
    
    
    32,453INVESTING ACTIVITIESExpenditures for property and equipment
    
    
    (9,568
    )
    
    
    (17,370
    )Purchases of short-term investments
    
    
    (206,024
    )
    
    
    (95,287
    )Sales of short-term investments
    
    
    154,310
    
    
    
    87,235Net cash used in investing activities
    
    
    (61,282
    )
    
    
    (25,422
    )FINANCING ACTIVITIESChange in cash overdrafts included in accounts payable
    
    
    (500
    )
    
    
    805Dividends paid
    
    
    (9,961
    )
    
    
    (8,798
    )Purchase of treasury stock
    
    
    (4,468
    )
    
    
    Proceeds from employee stock purchase plan
    
    
    233
    
    
    
    206Excess tax benefits from share-based compensation
    
    
    5,450
    
    
    
    284Proceeds from stock options exercised
    
    
    7,993
    
    
    
    547Net cash used in financing activities
    
    
    (1,253
    )
    
    
    (6,956
    )Net increase in cash and cash equivalents
    
    
    (4,904
    )
    
    
    75Cash and cash equivalents at beginning of period
    
    
    24,833
    
    
    
    21,734Cash and cash equivalents at end of period
    
    $
    19,929
    
    
    $
    21,809
  4




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007
AND JULY 29, 2006
 
 NOTE 1  GENERAL:
       5




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007
AND JULY 29, 2006
 
 NOTE 2  EARNINGS PER SHARE:
   Three Months Ended
    
    
    Six Months EndedAugust 4,
    
    
    July 29,
    
    
    August 4,
    
    
    July 29,2007
    
    
    2006
    
    
    2007
    
    
    2006Weighted-average shares outstanding
    
    
    31,897,365
    
    
    
    31,267,637
    
    
    
    31,624,979
    
    
    
    31,250,921Dilutive effect of :Stock options
    
    
    234,982
    
    
    
    522,683
    
    
    
    365,822
    
    
    
    509,122Restricted stock
    
    
    57,035
    
    
    
    13,260
    
    
    
    48,674
    
    
    
    5,704Employee stock purchase plan
    
    
    521
    
    
    
    295
    
    
    
    694
    
    
    
    245Weighted-average shares and common
stock equivalents outstanding
    
    
    32,189,903
    
    
    
    31,803,875
    
    
    
    32,040,169
    
    
    
    31,765,992
 NOTE 3  SUPPLEMENTAL CASH FLOW INFORMATION:
 
 NOTE 4  FINANCING ARRANGEMENTS:
  6




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007 AND
JULY 29, 2006
 
 NOTE 4  FINANCING ARRANGEMENTS (CONTINUED):
   NOTE 5  REPORTABLE SEGMENT INFORMATION:
   Three Months Ended
    
    
    
    
    
    
    
    
    
    
    
    
    
    Six Months EndedAugust 4, 2007
    
    Retail
    
    Credit
    
    Total
    
    August 4, 2007
    
    Retail
    
    Credit
    
    TotalRevenues
    
    $
    219,374
    
    
    $
    2,560
    
    
    $
    221,934
    
    
    Revenues
    
    $
    444,005
    
    
    $
    5,158
    
    
    $
    449,163Depreciation
    
    
    5,597
    
    
    
    26
    
    
    
    5,623
    
    
    Depreciation
    
    
    10,964
    
    
    
    50
    
    
    
    11,014Interest and other
income
    
    
    (2,316
    )
    
    
    
    
    
    
    (2,316
    )
    
    Interest and other
income
    
    
    (4,209
    )
    
    
    
    
    
    
    (4,209
    )Income before taxes
    
    
    17,549
    
    
    
    1,101
    
    
    
    18,650
    
    
    Income before taxes
    
    
    45,567
    
    
    
    2,256
    
    
    
    47,823Total assets
    
    
    393,081
    
    
    
    67,575
    
    
    
    460,656
    
    
    Total assets
    
    
    393,081
    
    
    
    67,575
    
    
    
    460,656Capital expenditures
    
    
    5,532
    
    
    
    106
    
    
    
    5,638
    
    
    Capital expenditures
    
    
    9,449
    
    
    
    119
    
    
    
    9,568Three Months Ended
    
    
    
    
    
    
    
    
    
    
    
    
    
    Six Months EndedJuly 29, 2006
    
    Retail
    
    Credit
    
    Total
    

July
29, 2006
    
    Retail
    
    Credit
    
    TotalRevenues
    
    $
    215,177
    
    
    $
    2,668
    
    
    $
    217,845
    
    
    Revenues
    
    $
    445,547
    
    
    $
    5,358
    
    
    $
    450,905Depreciation
    
    
    5,203
    
    
    
    20
    
    
    
    5,223
    
    
    Depreciation
    
    
    10,352
    
    
    
    39
    
    
    
    10,391Interest and other
income
    
    
    (1,940
    )
    
    
    
    
    
    
    (1,940
    )
    
    Interest and other
income
    
    
    (3,492
    )
    
    
    
    
    
    
    (3,492
    )Income before taxes
    
    
    17,827
    
    
    
    1,217
    
    
    
    19,044
    
    
    Income before taxes
    
    
    49,805
    
    
    
    1,994
    
    
    
    51,799Total assets
    
    
    337,564
    
    
    
    69,434
    
    
    
    406,998
    
    
    Total assets
    
    
    337,564
    
    
    
    69,434
    
    
    
    406,998Capital expenditures
    
    
    4,601
    
    
    
    4
    
    
    
    4,605
    
    
    Capital expenditures
    
    
    17,348
    
    
    
    22
    
    
    
    17,370
  7




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007 AND
JULY 29, 2006
 
 NOTE 5  REPORTABLE SEGMENT INFORMATION (CONTINUED):
  Three Months Ended
    
    
    Six Months EndedAugust 4,
    
    
    July 29,
    
    
    August 4,
    
    
    July 29,2007
    
    
    2006
    
    
    2007
    
    
    2006Bad debt expense
    
    $
    676
    
    
    $
    600
    
    
    $
    1,134
    
    
    $
    1,581Payroll
    
    
    245
    
    
    
    262
    
    
    
    487
    
    
    
    514Postage
    
    
    235
    
    
    
    245
    
    
    
    513
    
    
    
    541Other expenses
    
    
    277
    
    
    
    324
    
    
    
    718
    
    
    
    689Total expenses
    
    $
    1,433
    
    
    $
    1,431
    
    
    $
    2,852
    
    
    $
    3,325
 NOTE 6  STOCK BASED COMPENSATION:
 Share-Based Payment, Accounting for Stock Issued to
Employees,
  8




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007 AND
JULY 29, 2006
 
 NOTE 6  STOCK BASED COMPENSATION (CONTINUED):
  1987
    
    
    1999
    
    
    2004Plan
    
    
    Plan
    
    
    Plan
    
    
    TotalOptions and/or restricted stock initially authorized
    
    
    5,850,000
    
    
    
    1,000,000
    
    
    
    1,350,000
    
    
    
    8,200,000Options and/or restricted stock available for grant:February 3, 2007
    
    
    9,277
    
    
    
    
    
    
    
    1,091,618
    
    
    
    1,100,895August 4, 2007
    
    
    9,277
    
    
    
    
    
    
    
    999,358
    
    
    
    1,008,635
   WeightedWeighted
    
    

AverageAverage
    
    

Remaining
    
    

AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    Value (a)Options outstanding at February 3, 2007
    
    
    1,236,675
    
    
    $
    8.01
    
    
    1.86 years
    
    $
    18,363,084Granted
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (2,400
    )Exercised
    
    
    (1,080,725
    )
    
    $
    7.40Outstanding at August 4, 2007
    
    
    153,550
    
    
    $
    12.26
    
    
    4.98 years
    
    $
    1,515,460Vested and exercisable at August 4, 2007
    
    
    94,800
    
    
    $
    10.65
    
    
    3.73 years
    
    $
    1,104,135
 
 (a)
    
    The intrinsic value of a stock option is the amount by which the market value of the
underlying stock exceeds the exercise price of the option.    9




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007 AND
JULY 29, 2006
 
 NOTE 6  STOCK BASED COMPENSATION (CONTINUED):
     10




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THE CATO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 4, 2007 AND
JULY 29, 2006
 
 NOTE 6  STOCK BASED COMPENSATION (CONTINUED):
  Weighted AverageNumber of
    
    
    Grant Date FairShares
    
    
    Value Per ShareRestricted stock awards at February 3, 2007
    
    
    214,882
    
    
    $
    22.92Granted
    
    
    100,226
    
    
    
    21.87Vested
    
    
    
    
    
    
    Forfeited
    
    
    (6,466
    )
    
    
    22.75Restricted stock awards at August 4, 2007
    
    
    308,642
    
    
    $
    22.59
 NOTE 7  INCOME TAXES:
   NOTE 8  RECENT ACCOUNTING PRONOUNCEMENTS:
  11




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##### Table of Contents



THE CATO CORPORATION  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 FORWARD LOOKING INFORMATION:
   12




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THE CATO CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
 CRITICAL ACCOUNTING POLICIES:
   13




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##### Table of Contents



THE CATO CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
 RESULTS OF OPERATIONS:
  Three Months Ended
    
    
    Six Months EndedAugust 4,
    
    
    July 29,
    
    
    August 4,
    
    
    July 29,2007
    
    
    2006
    
    
    2007
    
    
    2006Total retail sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Total revenues
    
    
    101.3
    
    
    
    101.5
    
    
    
    101.4
    
    
    
    101.5Cost of goods sold
    
    
    67.4
    
    
    
    67.0
    
    
    
    65.7
    
    
    
    64.3Selling, general and administrative
    
    
    23.9
    
    
    
    24.1
    
    
    
    23.4
    
    
    
    23.9Depreciation
    
    
    2.6
    
    
    
    2.4
    
    
    
    2.5
    
    
    
    2.4Interest and other income
    
    
    (1.1
    )
    
    
    (0.9
    )
    
    
    (1.0
    )
    
    
    (0.8
    )Income before income taxes
    
    
    8.5
    
    
    
    8.9
    
    
    
    10.8
    
    
    
    11.7Net income
    
    
    5.7
    
    
    
    5.6
    
    
    
    7.0
    
    
    
    7.4
 Comparison of Second Quarter and First Six Months of 2007 with 2006.
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THE CATO CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
 RESULTS OF OPERATIONS  (CONTINUED):
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##### Table of Contents



THE CATO CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 
 RESULTS OF OPERATIONS  (CONTINUED):
   LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK:
     16




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##### 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):
        17




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##### Table of Contents



THE CATO CORPORATION  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 
 ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:
  
 ITEM 4. CONTROLS AND PROCEDURES:
  CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:
  18




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##### Table of Contents



PART II  OTHER INFORMATION
 THE CATO CORPORATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   Total Number of
    
    
    Maximum NumberShares Purchased as
    
    
    (or Approximate DollarTotal Number
    
    
    
    
    
    
    Part of Publicly
    
    
    Value) of Shares that mayOf Shares
    
    
    Average Price
    
    
    Announced Plans or
    
    
    Yet be Purchased UnderPeriod
    
    Purchased (1)
    
    
    Paid per Share
    
    
    Programs (2)
    
    
    The Plans or Programs (2)May 2007
    
    
    0
    
    
    
    0.00
    
    
    
    0June 2007
    
    
    205,891
    
    
    
    21.70
    
    
    
    0July 2007
    
    
    0
    
    
    
    0.00
    
    
    
    0Total
    
    
    205,891
    
    
    
    21.70
    
    
    
    0
    
    
    1.557 million shares
 (1)
    
    Includes 205,891 shares tendered as partial payment of the exercise price of an
employee stock option and the related tax withholding.
 (2)
    
    On August 31, 2007, the Companys board of directors authorized an increase in the
share repurchase program of two million shares. At the second quarter ending August 4,
2007, the Company had 1,557 million shares remaining in open authorizations. There is no
expiration date for the Companys repurchase program. During the month of August 2007, the
Company repurchased 306,500 shares at a cost of $5,926,567
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  19




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##### Table of Contents



PART II  OTHER INFORMATION (CONTINUED)
 THE CATO CORPORATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 Following are the results of the matters voted upon at the Companys Annual Meeting
which was held on May 24, 2007.Election of Directors:
 Voting PowerFor
    
    
    Withheld
    
    
    For
    
    
    WithheldMr. George S. Currin
    
    
    16,680,839
    
    
    
    13,434,219
    
    
    
    22,895,564
    
    
    
    13,434,219Mr. A. F. Sloan
    
    
    28,485,173
    
    
    
    1,629,885
    
    
    
    34,699,898
    
    
    
    1,629,885Mr. D. Harding Stowe
    
    
    28,773,564
    
    
    
    1,341,494
    
    
    
    34,988,289
    
    
    
    1,341,494Ratification of
Independent
Auditor:Voting PowerFor
    
    
    Withheld
    
    
    For
    
    
    Withheld30,072,251
    
    
    
    42,805
    
    
    
    36,286,976
    
    
    
    42,805
 
 ITEM 5. OTHER INFORMATION
 Not Applicable
 
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Item3.1
    
    Registrants Restated Certificate of Incorporation of the
Registrant 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 4.2 to
Form S-8 of the Registrant filed February 7, 2000 (SEC File No.
33396283).31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.32.1
    
    Section 1350 Certification of Chief Executive Officer.32.2
    
    Section 1350 Certification of
Chief Financial Officer.
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##### Table of Contents



PART II  OTHER INFORMATION
 THE CATO CORPORATION
  THE CATO CORPORATIONSeptember 12, 2007
    
    /s/ John P. D. CatoDate
    
    John P. D. Cato
Chairman, President and
Chief Executive OfficerSeptember 12, 2007
    
    /s/ Thomas W. StoltzDate
    
    Thomas W. Stoltz
Executive Vice President
Chief Financial OfficerSeptember 12, 2007
    
    /s/ John R. HoweDate
    
    John R. Howe
Senior Vice President
Controller
 21