SHOE CARNIVAL INC - Quarter Report: 2009 August (Form 10-Q)

Our marketing effort targets moderate income, value-conscious consumers seeking name brand footwear for all age groups. We believe that by offering a wide selection of popular styles of name brand merchandise at competitive prices, we generate broad customer appeal. Our cost-efficient store operations and real estate strategy enable us to price products competitively. Low labor costs are achieved by housing merchandise directly on the selling floor in an open-stock format, enabling customers to serve themselves, if they choose. This reduces the staffing required to assist customers and reduces store level labor costs as a percentage of sales. We locate stores predominantly in strip shopping centers in order to take advantage of lower occupancy costs and maximize our exposure to value-oriented shoppers.

Critical Accounting Policies

It is necessary for us to include certain judgments in our reported financial results. These judgments involve estimates that are inherently uncertain and actual results could differ materially from these estimates. The accounting policies that require the more significant judgments are:

Merchandise Inventories - Merchandise inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) method. In determining market value, we estimate the future sales price of items of merchandise contained in the inventory as of the balance sheet date. Factors considered in this determination include, among others, current and recently recorded sales prices, the length of time product has been held in inventory and quantities of various product styles contained in inventory. The ultimate amount realized from the sale of certain product could differ materially from our estimates. We also estimate a shrinkage reserve for the period between the last physical count and the balance sheet date. The estimate for the shrinkage reserve can be affected by changes in merchandise mix and changes in actual shrinkage trends.

Valuation of Long-Lived Assets - We review long-lived assets whenever events or circumstances indicate the carrying value of an asset may not be recoverable and annually when no such event has occurred. We evaluate the ongoing value of assets associated with retail stores that have been open longer than one year. When events such as these occur, the assets subject to impairment are adjusted to estimated fair value and, if applicable, an impairment loss is recorded in selling, general and administrative expenses. Our assumptions and estimates used in the evaluation of impairment, including current and future economic trends for stores, are subject to a high degree of judgment and if actual results or market conditions differ from those anticipated, additional losses may be recorded.

Income Taxes - We calculate income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes" ("SFAS No. 109") and account for uncertain tax positions in accordance with Interpretation No. 48, "Accounting for Uncertainty in Income Taxes – an interpretation of Financial Accounting Standards Board ("FASB") Statement No. 109" ("FIN 48"). Under SFAS No. 109, deferred tax assets and liabilities are recognized based on the difference between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the estimated tax rates in effect in the years when those temporary differences are expected to reverse. Under FIN 48, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations are often complex, ambiguous and change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated financial statements.

Insurance Reserves - We use a combination of self-insurance and third-party insurance for workers' compensation, employee medical and general liability insurance. These plans have stop-loss provisions that protect us from individual and aggregate losses over specified dollar values. When estimating our self-insured liabilities, we consider a number of factors, including historical claims experience, severity factors, statistical trends and, in certain instances, valuation assistance provided by independent third-parties. We will continue to evaluate our self-insured liabilities and the underlying assumptions on a quarterly basis and make adjustments as needed. The ultimate cost of these claims may be greater than or less than the established accruals. While we believe that the recorded amounts are adequate, there can be no assurance that changes to management's estimates will not occur due to limitations inherent in the estimating process. In the event we determine an accrual should be increased or reduced, we will record such adjustments in the period in which such determination is made.

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Results of Operations Summary Information

		Number of Stores								Store Square Footage
		Beginning						End of		Net		End		Comparable
Quarter Ended		Of Period		Opened		Closed		Period		Change		of Period		Store Sales
May 2, 2009		304		10		1		313		78,000		3,413,000		(0.3	)%
August 1, 2009		313		2		1		314		6,000		3,419,000		(6.4	)%
Year-to-date 2009		304		12		2		314		84,000		3,419,000		(3.3	)%
May 3, 2008		291		2		0		293		16,000		3,254,000		(4.9	)%
August 2, 2008		293		12		2		303		87,000		3,341,000		(1.0	)%
Year-to-date 2008		291		14		2		303		103,000		3,341,000		(3.0	)%

Comparable store sales for the periods indicated include stores that have been open for 13 full months prior to the beginning of the period, including those stores that have been relocated or remodeled. Therefore, stores opened or closed during the periods indicated are not included in comparable store sales.

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated:

	Thirteen			Thirteen			Twenty-six			Twenty-six
	Weeks Ended			Weeks Ended			Weeks Ended			Weeks Ended
	August 1, 2009			August 2, 2008			August 1, 2009			August 2, 2008
Net sales	100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales (including buying,
distribution and occupancy costs)	73.2			73.4			72.6			72.2
Gross profit	26.8			26.6			27.4			27.8
Selling, general and
administrative expenses	25.6			25.7			24.7			24.9
Operating income	1.2			0.9			2.7			2.9
Interest income	0.0			0.0			0.0			0.0
Interest expense	0.0			0.0			0.1			0.0
Income before income taxes	1.2			0.9			2.6			2.9
Income tax expense	0.6			0.3			1.0			1.1
Net income	0.6	%		0.6	%		1.6	%		1.8	%

Operational Summary

While consumer spending and the overall economic environment remained challenging in the second quarter of fiscal 2009, we were able to improve our year-over-year gross and operating margins for the second quarter and, therefore, record earnings per share equal to last year. We believe these results demonstrate the strength of our business model and our ability to effectively manage the controllable aspects of our business, particularly operating expenses, inventory, and our marketing and merchandising strategies.

Our net sales declined in the second quarter of fiscal 2009, compared to the prior year, primarily due to a decline in customer traffic. Comparable store sales fell 6.4%. We believe the absence of government stimulus checks, which were provided to consumers during the second quarter last year, was one of the contributing factors for the decline in traffic. In addition, sales-tax-free holidays in nine of our states shifted from the second quarter, where they were reported in fiscal 2008, into the third quarter this year. The shift in these sales-tax-free holidays, which have historically created a significant incentive for the consumer to shop, accounted for approximately 2% of our comparable store sales decline for the second quarter of fiscal 2009.

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During the first quarter of fiscal 2009, we undertook an aggressive liquidation within our non-athletic categories which positioned us with a fresher product assortment for the second quarter. As a result, we were able to achieve an increase in the average net price and gross margin of our footwear during the second quarter of fiscal 2009 as compared to the prior year. Our per-store inventories at the end of the second quarter were approximately flat as compared to the end of the second quarter of fiscal 2008.

We tightly controlled selling, general and administrative expenses during the second quarter of fiscal 2009. This resulted in year-over-year savings of $1.7 million, despite opening two new stores during the quarter and operating 11 more stores than the same period last year. Approximately 30% of this savings was due to shifting a portion of our advertising into the third quarter to coincide with the shift in sales-tax-free holidays.

We experienced a favorable start to the third quarter of fiscal 2009, as the consumer responded well to both our athletic and non-athletic product assortments to satisfy their back-to-school needs. While considerable uncertainty remains regarding discretionary spending by consumers after the back-to-school period, we remain optimistic about our sales trend for the third quarter of fiscal 2009. Our management team has been through many economic cycles and we will continue to conservatively manage the controllable aspects of our business until we have better clarity with respect to a sustained economic recovery.

Results of Operations for the Second Quarter Ended August 1, 2009

Net Sales

Net sales decreased $5.7 million to $152.8 million during the second quarter ended August 1, 2009, a 3.6% decrease from the prior year's second quarter net sales of $158.5 million. The decrease in net sales was due to a comparable store sales decline of 6.4% in addition to the loss of sales from the 13 stores closed since the beginning of the second quarter of last year. Approximately 2% of the comparable store sales decline was attributable to the sales-tax-free holiday shift that occurred in nine of our states. These sales-tax-free holidays shifted from the second quarter, where they were reported in fiscal 2008, into the third quarter this year. This combined decrease was partially offset by an $8.1 million increase in sales generated by the new stores opened since the beginning of the second quarter of fiscal 2008.

Gross Profit

Gross profit decreased $1.2 million to $40.9 million in the second quarter of fiscal 2009 from gross profit of $42.1 million in the comparable prior year period. The gross margin in the second quarter of fiscal 2009 increased 0.2% from the same period last year to 26.8%. The merchandise margin increased 0.4%, largely as a result of efforts during the first quarter to liquidate seasonal product and enter the second quarter of fiscal 2009 with a fresher product assortment requiring less promotional pricing. While occupancy costs increased as a result of operating an additional 11 stores at the end of the second quarter of fiscal 2009 compared to the prior year, we were able to more than offset this increase through cost savings initiatives within our buying and distribution functions. However, as a percentage of sales, these costs increased 0.2% relative to the second quarter of fiscal 2008 due to the decrease in net sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $1.7 million in the second quarter of fiscal 2009 to $39.0 million, or 25.6% of sales, from $40.7 million, or 25.7% of sales, in the comparable prior year period. Even though we operated an additional 11 stores at the end of the second quarter of fiscal 2009 compared to the prior year period, we were able to achieve expense savings in a number of store-level categories including supplies, depreciation and advertising. Advertising decreased $468,000, primarily due to the shift in the sales-tax-free holidays.

Pre-opening costs included in selling, general and administrative expenses were $153,000, or 0.1% of sales, for the second quarter of fiscal 2009 as compared to $406,000, or 0.3% of sales, for the second quarter of fiscal 2008. We opened two stores in the second quarter of fiscal 2009 as compared to 12 stores in the second quarter of fiscal 2008.

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Pre-opening costs, such as advertising, payroll and supplies, incurred prior to the opening of a new store are charged to expense in the period they are incurred. The total amount of pre-opening expense incurred will vary by store depending on the specific market and the promotional activities involved.

Interest (Income) Expense, Net

We recorded net interest expense of $41,000 in the second quarter of fiscal 2009 as compared to net interest income of $3,000 in the second quarter of the prior year. As returns available on short-term investments fell to record lows, we held our excess funds in non-interest bearing deposit accounts to offset bank service fees.

Income Taxes

The effective income tax rate for the second quarter of fiscal 2009 increased to 47.3% from 34.3% for the second quarter of fiscal 2008. During the second quarter of both fiscal years, our rate was primarily impacted by the true up of the prior year estimated annual income tax rate.

Results of Operations for the Six Months Ended August 1, 2009

Net Sales

Net sales decreased $490,000 to $320.1 million during the six months ended August 1, 2009, from net sales of $320.6 million in the comparable prior year period. The decrease in net sales was due to a comparable store sales decline of 3.3% in addition to the loss of sales from the 13 stores closed since the beginning of fiscal 2008. Approximately 1% of the comparable store sales decline was attributable to the sales-tax-free holiday shift that occurred in nine of our states. These sales-tax-free holidays shifted from the second quarter, where they were reported in fiscal 2008, into the third quarter this year. This decrease was offset by a $17.3 million increase in sales generated by the new stores opened since the beginning of fiscal 2008.

Gross Profit

Gross profit decreased $1.6 million to $87.6 million in the first six months of fiscal 2009 from gross profit of $89.2 million in the comparable prior year period. The gross margin in the first half of fiscal 2009 decreased 0.4% from the same period last year to 27.4%. The merchandise margin decreased 0.4%, largely as a result of aggressive liquidation of non-athletic footwear in the first quarter of fiscal 2009. Both as a percentage of sales and in dollars, buying, distribution and occupancy costs remained flat with prior year. While occupancy costs increased on a year-over-year basis as a result of operating additional stores, we were able to offset this increase through cost savings initiatives within our buying and distribution functions.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $908,000 to $79.1 million, or 24.7% of sales, in the first half of fiscal 2009 from $80.0 million, or 24.9% of sales, in the comparable prior year period. Even though we operated additional stores during the first half of fiscal 2009 compared to the prior year period, we were able to achieve expense savings in a number of store-level categories, including depreciation and advertising. These savings were partially offset by an increase of $583,000 in employee health care, incentives and benefits.

Pre-opening costs included in selling, general and administrative expenses were $634,000, or 0.2% of sales, for the first half of fiscal 2009 as compared to $440,000, or 0.1% of sales, for the first half of fiscal 2008. We opened 12 stores in the first six months of fiscal 2009 as compared to 14 stores in the first six months of fiscal 2008. Pre-opening costs, such as advertising, payroll and supplies, incurred prior to the opening of a new store are charged to expense in the period they are incurred. The total amount of pre-opening expense incurred will vary by store depending on the specific market and the promotional activities involved.

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Interest (Income) Expense, Net

We recorded net interest expense of $80,000 in the first half of fiscal 2009 as compared to net interest income of $7,000 in the first half of the prior year. As returns available on short-term investments fell to record lows, we held our excess funds for the majority of the first half of fiscal 2009 in non-interest bearing deposit accounts to offset bank service fees.

Income Taxes

The effective income tax rate for the first six months of fiscal 2009 increased to 39.2% from 37.7% compared to the same time period in 2008. The annual effective income tax rate is expected to be approximately 39.0%.

Liquidity and Capital Resources

Our primary sources of funds are cash flows from operations and borrowings under our revolving credit facility. Our net cash used in operations was $2.0 million in the first six months of fiscal 2009 as compared to net cash provided by operations of $13.8 million in the first six months of 2008. The change in operating cash flow, when comparing the two periods of each year, was primarily due to an increase in merchandise inventories, partially offset by related accounts payable. During the second quarter of fiscal 2008, given the adverse economic conditions, we lessened our historical back-to-school build up of inventory levels and as a result reduced our per-store inventories compared to the prior year period thus generating cash flow. We continued to reduce our per-store inventories in the second half of fiscal 2008. For the fiscal 2009 back-to-school season, we followed a more normalized inventory build cycle and did not reduce per-store inventories further on a year-over-year basis. Together with operating an additional 11 stores as compared to the second quarter of fiscal 2008, this increase in per-store inventories resulted in a use of cash in fiscal 2009.

Working capital increased to $159.1 million at August 1, 2009 from $147.9 million at August 2, 2008. Approximately $7.6 million of this increase was attributable to the merchandise inventories required to operate the additional 11 stores open on August 1, 2009 as compared to August 2, 2008. The current ratio at August 1, 2009 was 2.8 as compared to 2.7 at August 2, 2008. We had no interest bearing long-term debt as of the end of either period.

During the first half of fiscal 2009, we expended $5.5 million in cash for the purchase of property and equipment. Of this expenditure, $4.3 million was used for new stores, store remodeling and store relocation projects. An additional $685,000 was used to begin the remediation of our distribution center's material handling system. The remaining capital expenditures were used primarily for information technology and miscellaneous equipment purchases.

We opened 12 new stores during the first half of fiscal 2009 and we anticipate opening an additional four stores during the second half of the year. Capital expenditures of approximately $4.4 million to $6.2 million will be made during the second half of fiscal 2009. Our projected capital expenditures include a range of $300,000 to $2.3 million for further remediation of our distribution center's material handling system. The actual amount expended at the distribution center will be dictated by the level of remediation effort that can reasonably be undertaken during the second half of fiscal 2009. The remaining capital expenditures will be incurred for the opening of new stores, store remodels and various other store improvements, along with continued investments in technology and normal asset replacement activities. We currently anticipate receiving an additional $1.1 million in landlord incentives through the end of fiscal 2009. The actual amount of cash required for capital expenditures for store operations depends in part on the number of new stores opened, the amount of lease incentives, if any, received from landlords and the number of stores remodeled. The opening of new stores will be dependent upon, among other things, the availability of desirable locations, the negotiation of acceptable lease terms and general economic and business conditions affecting consumer spending in areas we target for expansion.

Our current store prototype uses between 8,000 and 12,000 square feet depending upon, among other factors, the location of the store and the population base the store is expected to service. For fiscal 2009, our new stores will average proximately 9,700 square feet. Capital expenditures for a new store in fiscal 2009 are expected to average approximately $341,000 and tenant improvement allowances are expected to average $94,000. The average inventory investment in a new store is expected to range from $350,000 to $500,000 depending on the size and sales expectation of the store and the timing of the new store opening. Pre-opening expenses, such as advertising, salaries and supplies, are expected to average approximately $68,000 per store in fiscal 2009.

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We closed two stores during the first half of both fiscal years. We expect to close six stores during the second half of fiscal 2009 as compared to closing nine stores in the second half of fiscal 2008. We will continue to evaluate underperforming stores for possible closing on a routine basis, which may result in the identification of additional store closings for the current or future fiscal years. The timing and actual amount of expense recorded in closing a store can vary significantly depending, in part, on the period in which management commits to a closing plan, the remaining basis in the fixed assets to be disposed of at closing and the amount of any lease buyout.

As of August 1, 2009, our unsecured credit agreement provided for up to $95.0 million in cash advances and commercial and standby letters of credit. Borrowings under the revolving credit line are based on eligible inventory. The credit agreement contains the following covenants: (1) Total Shareholders' Equity, adjusted for the effect of any share repurchases, will not fall below that of the prior fiscal year-end; (2) the ratio of funded debt plus rent to EBITDA plus rent will not exceed 2.5 to 1.0; (3) total distributions for stock repurchases will not exceed $50.0 million; and (4) cash dividends will not reduce our Total Shareholders' Equity, adjusted for the effect of any share repurchases, below that of the prior fiscal year-end. We were in compliance with these covenants as of August 1, 2009. Should a default condition be reported, the lenders may preclude additional borrowings and call all loans and accrued interest at their discretion. As of August 1, 2009, there were no cash advances outstanding and letters of credit outstanding were $12.0 million. The amount available to us for additional borrowings was $83.0 million as of August 1, 2009.

Our $50.0 million share repurchase program will terminate on December 31, 2009, unless extended by our Board of Directors. Share repurchases under this authorization may be made in the open market or in privately negotiated transactions. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. As of August 1, 2009, approximately 1.2 million shares had been repurchased at an aggregate cost of $28.1 million. The amount that remained available under the existing repurchase authorization at August 1, 2009 was $21.9 million. No shares have been repurchased since the fourth quarter of fiscal 2007.

On or about April 22, 2008, an arbitration claim was filed by SDI Industries, Inc. ("SDI") against us with the American Arbitration Association Western Case Management Center in Los Angeles, California, captioned SDI Industries, Inc. (Claimant and Counter-Respondent) v. Shoe Carnival, Inc. (Respondent and Counterclaimant), in which SDI sought payment of $1.2 million of unpaid retainage, $700,000 for services not yet billed, plus additional interest and legal fees. The retainage was withheld from progress billings for work performed on our distribution center and was recorded in accrued and other liabilities and fixed assets in our consolidated financial statements. We filed a Counterclaim and Response in this matter, denying SDI's claim, and seeking monetary damages of more than $3.0 million. We asserted that SDI breached our contract with SDI ("Contract") due to its failure to deliver our distribution center's material handling system pursuant to the specifications of the Contract.

On May 30, 2009, the parties entered into a settlement of the above matter. Under the terms of the settlement, SDI agreed to forego collection of the $1.2 million in unpaid retainage and to pay us $1.2 million towards the remediation of the distribution center's material handling system. The $1.2 million will be paid in installments over seven years and is evidenced by a promissory note secured by a standby letter of credit, renewable annually, in an amount not less than $200,000 and by a security interest in SDI's accounts receivable. In addition, both parties agreed to the dismissal of all pending claims currently under arbitration. The installment due on the promissory note within the next 12 months has been recorded in Accounts receivable in our consolidated financial statements. The remaining balance of the promissory note is recorded in Other as a non-current asset. SDI remitted the first scheduled payment prior to the due date of July 1, 2009.

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Although the investment we made in the distribution center will satisfy our distribution needs throughout fiscal 2009, we have not achieved the productivity that we expect will be required based on our plan for long-term store growth. We have contracted with another distribution logistics company to provide recommendations as to system upgrades to improve throughput and will implement certain of these recommendations in the second half of fiscal 2009 and also possibly in fiscal 2010.

We anticipate that our existing cash and cash flow from operations, supplemented by borrowings under our revolving credit line, will be sufficient to fund our planned store expansion along with other capital expenditures, any future repurchase of our common stock under our current repurchase plan and working capital requirements for at least the next 12 months.

Seasonality

Our quarterly results of operations have fluctuated and are expected to continue to fluctuate in the future primarily as a result of seasonal variances and the timing of sales and costs associated with opening new stores. Non-capital expenditures, such as advertising and payroll, incurred prior to opening a new store are charged to expense as incurred. Therefore, our results of operations may be adversely affected in any quarter in which we incur pre-opening expenses related to the opening of new stores.

We have three distinct peak selling periods: Easter, back-to-school and Christmas.

New Accounting Pronouncements

Recent accounting pronouncements applicable to our operations are contained in Note 3 – "Recently Issued Accounting Pronouncements" contained in the Notes to Condensed Consolidated Financial Statements included in PART I, ITEM 1. FINANCIAL STATEMENTS of this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in that the interest payable under our credit facility is based on variable interest rates and therefore is affected by changes in market rates. We do not use interest rate derivative instruments to manage exposure to changes in market interest rates. We had no borrowings during the first half of fiscal 2009.

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of August 1, 2009, that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management is continuously seeking to improve the efficiency and effectiveness of our operations and internal controls. This results in refinements to processes throughout the company. As part of our continued strategy to grow our store base and increase capacity, we are in the process of redesigning certain elements of the material handling system in our distribution center. The internal controls impacted by this project are mainly automated and operational in nature. See our Notes to Condensed Consolidated Financial Statements, Note 5 – "Litigation Matters" included in PART I, ITEM 1. FINANCIAL STATEMENTS of this Quarterly Report on Form 10-Q for further details on this matter. There have been no other changes in our internal control over financial reporting that occurred during the quarter ended August 1, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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SHOE CARNIVAL, INC.
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 5 – "Litigation Matters" contained in the Notes to Condensed Consolidated Financial Statement included in PART I, ITEM 1. FINANCIAL STATEMENTS of this Quarterly Report on Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

You should carefully consider the risks and uncertainties we describe both in this Quarterly Report on Form 10-Q and in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended January 31, 2009 before deciding to invest in, or retain, shares of our common stock. These are not the only risks and uncertainties that we face. Additional risks and uncertainties that we do not currently know about, we currently believe are immaterial or we have not predicted may also harm our business operations or adversely affect us. If any of these risks or uncertainties actually occur, our business, financial condition, results of operations or cash flows could be materially adversely affected. There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended January 31, 2009.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of our common shareholders was held June 9, 2009.

Election of Directors

William E. Bindley and Kent A. Kleeberger were elected at the annual meeting to serve as our Directors for three-year terms. Mr. Bindley received 10,164,556 votes in favor of his election and 2,226,489 votes were withheld. Mr. Kleeberger received 10,174,047 votes in favor of his election and 2,216,998 votes were withheld.

In addition, the following Directors continue in office until the annual meeting of shareholders in the year indicated:

Mark L. Lemond	2010
J. Wayne Weaver	2011
Gerald W. Schoor	2011

Other Matters Voted Upon at the Meeting

The appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2009 was ratified. Votes of 12,371,091 were cast in favor, 18,919 votes were cast against, 1,035 abstentions were recorded, and no broker non-votes were recorded with respect to such ratification.

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ITEM 6. EXHIBITS

Incorporated by Reference To

Exhibit

Filing

Filed

No.

Description

Form

Exhibit

Date

Herewith

3-A

Restated Articles of Incorporation of Registrant

10-K

3-A

4/25/2002

3-B

By-laws of Registrant, as amended to date

8-K

3-B

6/12/2009

4

(i) Amended and Restated Credit Agreement and Promissory Notes dated April 16, 1999, between Registrant and Mercantile Bank National Association, First Union National Bank and Old National Bank

10-K

4(I)

4/29/1999

(ii) Amendment to Amended and Restated Credit Agreement and Promissory Notes dated March 24, 2000, between Registrant and Mercantile Bank National Association, First Union National Bank and Old National Bank

10-K

4(II)

4/28/2000

(iii) Second Amendment to Amended and Restated Credit Agreement and Promissory Notes dated November 8, 2000, between Registrant and Firstar Bank N.A., First Union National Bank, Old National Bank and LaSalle Bank National Association

10-Q

4(III)

12/12/2000

(iv) Third Amendment to Amended and Restated Credit Agreement and Promissory Notes dated March 18, 2002, between Registrant and U.S. Bank National Association, First Union National Bank, Old National Bank and LaSalle Bank National Association

10-K

4(IV)

4/25/2002

(v) Fourth Amendment to Amended and Restated Credit Agreement and Promissory Notes dated March 12, 2003, between Registrant and U.S. Bank National Association, Wachovia Bank National Association, Old National Bank and LaSalle Bank National Association

10-K

4(V)

5/1/2003

(vi) Fifth Amendment to Amended and Restated Credit Agreement and Promissory Notes dated April 5, 2004, between Registrant and U.S. Bank National Association, Wachovia Bank National Association, Old National Bank and LaSalle Bank National Association

10-K

4(VI)

4/14/2004

(vii) Assignment Agreement dated June 1, 2004 among LaSalle Bank National Association as Assignor, Fifth Third Bank (Southern Indiana) as Assignee, Registrant as Borrower and U.S. Bank National Association as Agent relating to the Amended and Restated Credit Agreement as further amended

10-Q

4(VII)

6/8/2004

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EXHIBITS - Continued

				Incorporated by Reference To
Exhibit								Filing		Filed
No.		Description		Form		Exhibit		Date		Herewith
		(viii) Sixth Amendment to Amended and Restated Credit Agreement and Notes dated April 5, 2005, between Registrant and U.S. Bank National Association, Wachovia Bank National Association, Fifth Third Bank (Southern Indiana) and Old National Bank		8-K		4(VIII)		4/11/2005
		(ix) Seventh Amendment to Amended and Restated Credit Agreement and Notes dated March 31, 2006, between Registrant and U.S. Bank National Association, Wachovia Bank, National Association and Fifth Third Bank		8-K		4(IX)		4/4/2006
		(x) Eighth Amendment to Amended and Restated Credit Agreement and Notes dated December 15, 2006, between Registrant and U.S. Bank National Association, Wachovia Bank, National Association and Fifth Third Bank		8-K		4(X)		12/15/2006
		(xi) Ninth Amendment to Amended and Restated Credit Agreement and Notes dated June 10, 2008, between Registrant and U.S. Bank National Association, Wachovia Bank, National Association and Fifth Third Bank		10-Q		4(XI)		6/11/2008
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								X
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								X
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002								X
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002								X

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SHOE CARNIVAL, INC.
SIGNATURE

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.

Date: September 10, 2009		SHOE CARNIVAL, INC.
		(Registrant)
	By: /s/ W. Kerry Jackson
	W. Kerry Jackson
	Executive Vice President and
	Chief Financial Officer

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