##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 Quarterly
Report Pursuant to Section 13 or 15(d)  of the Securities Exchange Act of 1934
 For the Quarter ended
August 4, 2007
    
    Commission File Number0-19517
 THE BON-TON STORES, INC.
 2801 East Market Street
York, Pennsylvania 17402
 Incorporated in Pennsylvania
    
    IRS No. 23-2835229
 
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TABLE OF CONTENTS  PART I: FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II: OTHER INFORMATIONITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESRestricted Stock AgreementRestricted Stock AgreementCertification of Byron L. BergrenCertification of Keith E. PlowmanCertification Pursuant to Rules 13a-14(b) and 15d-14(b)    Table of Contents  
 PART I: FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 THE BON-TON STORES, INC.
CONSOLIDATED BALANCE SHEETS
 (In thousands except share and per share data)
    
    August 4,
    
    February 3,(Unaudited)
    
    2007
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    21,901
    
    
    $
    24,733Merchandise inventories
    
    
    757,294
    
    
    
    787,487Prepaid expenses and other current assets
    
    
    108,685
    
    
    
    84,731Deferred income taxes
    
    
    17,858
    
    
    
    17,858Total current assets
    
    
    905,738
    
    
    
    914,809Property, fixtures and equipment at cost, net of accumulated depreciation and amortization
of $360,263 and $311,160 at August 4, 2007 and February 3, 2007, respectively
    
    
    877,457
    
    
    
    897,886Deferred income taxes
    
    
    79,338
    
    
    
    76,586Goodwill
    
    
    27,824
    
    
    
    27,377Intangible assets, net of accumulated amortization of $16,991 and $12,087 at August 4, 2007
and February 3, 2007, respectively
    
    
    171,796
    
    
    
    176,700Other long-term assets
    
    
    38,304
    
    
    
    41,441Total assets
    
    $
    2,100,457
    
    
    $
    2,134,799Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    235,608
    
    
    $
    209,742Accrued payroll and benefits
    
    
    46,322
    
    
    
    68,434Accrued expenses
    
    
    141,705
    
    
    
    178,642Current maturities of long-term debt
    
    
    5,463
    
    
    
    5,555Current maturities of obligations under capital leases
    
    
    2,010
    
    
    
    1,936Income taxes payable
    
    
    
    
    
    
    48,086Total current liabilities
    
    
    431,108
    
    
    
    512,395Long-term debt, less current maturities
    
    
    1,194,500
    
    
    
    1,120,169Obligations under capital leases, less current maturities
    
    
    68,420
    
    
    
    69,456Other long-term liabilities
    
    
    102,100
    
    
    
    86,383Total liabilities
    
    
    1,796,128
    
    
    
    1,788,403Contingencies (Note 8)Shareholders equity:Preferred Stock  authorized 5,000,000 shares at $0.01 par value; no shares issued
    
    
    
    
    
    
    Common Stock  authorized 40,000,000 shares at $0.01 par value; issued shares of
14,564,744 and 14,469,196 shares at August 4, 2007 and February 3, 2007, respectively
    
    
    146
    
    
    
    145Class A Common Stock  authorized 20,000,000 shares at $0.01 par value; issued
and outstanding shares of 2,951,490 at August 4, 2007 and February 3, 2007
    
    
    30
    
    
    
    30Treasury stock, at cost - 337,800 shares at August 4, 2007 and February 3, 2007
    
    
    (1,387
    )
    
    
    (1,387
    )Additional paid-in-capital
    
    
    134,869
    
    
    
    130,875Accumulated other comprehensive income
    
    
    1,115
    
    
    
    1,189Retained earnings
    
    
    169,556
    
    
    
    215,544Total shareholders equity
    
    
    304,329
    
    
    
    346,396Total liabilities and shareholders equity
    
    $
    2,100,457
    
    
    $
    2,134,799
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##### Table of Contents



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDED(In thousands except share and per share data)
    
    August 4,
    
    July 29,
    
    August 4,
    
    July 29,(Unaudited)
    
    2007
    
    2006
    
    2007
    
    2006Net sales
    
    $
    708,620
    
    
    $
    746,772
    
    
    $
    1,446,181
    
    
    $
    1,308,546Other income
    
    
    22,117
    
    
    
    19,974
    
    
    
    44,763
    
    
    
    34,787730,737
    
    
    
    766,746
    
    
    
    1,490,944
    
    
    
    1,343,333Costs and expenses:Costs of merchandise sold
    
    
    439,198
    
    
    
    485,933
    
    
    
    929,870
    
    
    
    837,513Selling, general and administrative
    
    
    255,480
    
    
    
    258,361
    
    
    
    515,612
    
    
    
    458,141Depreciation and amortization
    
    
    30,239
    
    
    
    26,823
    
    
    
    57,199
    
    
    
    45,337Amortization of lease-related interests
    
    
    1,332
    
    
    
    1,046
    
    
    
    2,561
    
    
    
    1,748Income (loss) from operations
    
    
    4,488
    
    
    
    (5,417
    )
    
    
    (14,298
    )
    
    
    594Interest expense, net
    
    
    27,429
    
    
    
    27,285
    
    
    
    54,898
    
    
    
    51,153Loss before income taxes
    
    
    (22,941
    )
    
    
    (32,702
    )
    
    
    (69,196
    )
    
    
    (50,559
    )Income tax benefit
    
    
    (7,966
    )
    
    
    (12,927
    )
    
    
    (24,922
    )
    
    
    (19,949
    )Net loss
    
    $
    (14,975
    )
    
    $
    (19,775
    )
    
    $
    (44,274
    )
    
    $
    (30,610
    )Per share amounts Basic:Net loss
    
    $
    (0.91
    )
    
    $
    (1.20
    )
    
    $
    (2.68
    )
    
    $
    (1.87
    )Basic weighted average shares outstanding
    
    
    16,498,320
    
    
    
    16,430,971
    
    
    
    16,490,038
    
    
    
    16,410,467Diluted:Net loss
    
    $
    (0.91
    )
    
    $
    (1.20
    )
    
    $
    (2.68
    )
    
    $
    (1.87
    )Diluted weighted average shares outstanding
    
    
    16,498,320
    
    
    
    16,430,971
    
    
    
    16,490,038
    
    
    
    16,410,467
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##### Table of Contents



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 TWENTY-SIXWEEKS ENDED(In thousands)
    
    August 4,
    
    July 29,(Unaudited)
    
    2007
    
    2006Cash flows from operating activities:Net loss
    
    $
    (44,274
    )
    
    $
    (30,610
    )Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    57,199
    
    
    
    45,337Amortization of lease-related interests
    
    
    2,561
    
    
    
    1,748Share-based compensation expense
    
    
    3,320
    
    
    
    2,078Excess tax benefit from share-based compensation
    
    
    (289
    )
    
    
    (840
    )Loss (gain) on sale of property, fixtures and equipment
    
    
    552
    
    
    
    (700
    )Amortization of deferred financing costs
    
    
    1,958
    
    
    
    4,325Amortization of deferred gain on sale of proprietary credit card portfolio
    
    
    (1,207
    )
    
    
    (1,207
    )Changes in operating assets and liabilities, net of effect of acquisition:Decrease in merchandise inventories
    
    
    30,194
    
    
    
    64,861Increase in prepaid expenses and other current assets
    
    
    (23,666
    )
    
    
    (41,044
    )Decrease (increase) in other long-term assets
    
    
    1,444
    
    
    
    (6,072
    )Increase (decrease) in accounts payable
    
    
    29,125
    
    
    
    (35,323
    )(Decrease) increase in accrued payroll and benefits and accrued expenses
    
    
    (58,346
    )
    
    
    39,104Decrease in income taxes payable
    
    
    (48,086
    )
    
    
    (15,200
    )Increase in other long-term liabilities
    
    
    14,974
    
    
    
    522Net cash (used in) provided by operating activities
    
    
    (34,541
    )
    
    
    26,979Cash flows from investing activities:Capital expenditures
    
    
    (38,913
    )
    
    
    (48,124
    )Acquisition, net of cash acquired
    
    
    (61
    )
    
    
    (1,047,054
    )Proceeds from sale of property, fixtures and equipment
    
    
    2,708
    
    
    
    1,544Net cash used in investing activities
    
    
    (36,266
    )
    
    
    (1,093,634
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (368,012
    )
    
    
    (424,298
    )Proceeds from issuance of long-term debt
    
    
    441,287
    
    
    
    1,530,500Cash dividends paid
    
    
    (1,714
    )
    
    
    (497
    )Proceeds from stock options exercised
    
    
    386
    
    
    
    550Excess tax benefit from share-based compensation
    
    
    289
    
    
    
    840Deferred financing costs paid
    
    
    (266
    )
    
    
    (27,622
    )Decrease in bank overdraft balances
    
    
    (3,995
    )
    
    
    (2,977
    )Net cash provided by financing activities
    
    
    67,975
    
    
    
    1,076,496Net (decrease) increase in cash and cash equivalents
    
    
    (2,832
    )
    
    
    9,841Cash and cash equivalents at beginning of period
    
    
    24,733
    
    
    
    9,771Cash and cash equivalents at end of period
    
    $
    21,901
    
    
    $
    19,612Supplemental Cash Flow Information:Interest paid
    
    $
    53,132
    
    
    $
    23,113Net income taxes paid
    
    $
    39,642
    
    
    $
    15,998
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##### Table of Contents



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 AccumulatedOtherClass A
    
    
    
    
    
    Additional
    
    Compre-(In thousands except per share data)
    
    Common
    
    Common
    
    Treasury
    
    Paid-in
    
    hensive
    
    Retained(Unaudited)
    
    Stock
    
    Stock
    
    Stock
    
    Capital
    
    Income
    
    Earnings
    
    TotalBALANCE AT FEBRUARY 3, 2007
    
    $
    145
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    130,875
    
    
    $
    1,189
    
    
    $
    215,544
    
    
    $
    346,396Comprehensive loss (Note 9):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44,274
    )
    
    
    (44,274
    )Pension plan, net of $59 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    
    
    
    
    101Change in fair value of cash flow hedges,
net of $125 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (175
    )
    
    
    
    
    
    
    (175
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44,348
    )Dividends to shareholders, $0.10 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,714
    )
    
    
    (1,714
    )Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    386
    
    
    
    
    
    
    
    
    
    
    
    386Share-based compensation expense
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    3,319
    
    
    
    
    
    
    
    
    
    
    
    3,320Excess tax benefit from share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    
    
    
    
    289BALANCE AT AUGUST 4, 2007
    
    $
    146
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    134,869
    
    
    $
    1,115
    
    
    $
    169,556
    
    
    $
    304,329
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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 1. BASIS OF PRESENTATION
      Adoption of New Accounting Pronouncement
   6




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THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   Future Accounting Changes
   2. PER-SHARE AMOUNTS
  THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDEDAugust 4,
    
    July 29,
    
    August 4,
    
    July 29,2007
    
    2006
    
    2007
    
    2006Basic calculation
    
    
    16,498,320
    
    
    
    16,430,971
    
    
    
    16,490,038
    
    
    
    16,410,467Effect of dilutive shares Restricted shares and restricted
stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted calculation
    
    
    16,498,320
    
    
    
    16,430,971
    
    
    
    16,490,038
    
    
    
    16,410,467
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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDEDAugust 4,
    
    July 29,
    
    August 4,
    
    July 29,2007
    
    2006
    
    2007
    
    2006Antidilutive shares Restricted shares and restricted
stock units
    
    
    728,289
    
    
    
    631,496
    
    
    
    715,091
    
    
    
    578,831Options
    
    
    731,953
    
    
    
    577,674
    
    
    
    684,790
    
    
    
    544,297
  THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDEDAugust 4,
    
    July 29,
    
    August 4,
    
    July 29,2007
    
    2006
    
    2007
    
    2006Effect of dilutive securities Restricted shares and restricted
stock units
    
    
    412,470
    
    
    
    236,494
    
    
    
    408,311
    
    
    
    219,027Options
    
    
    212,911
    
    
    
    34,649
    
    
    
    226,197
    
    
    
    49,724
 3. CARSONS ACQUISITION
   8




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THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 Final Purchase Price
 Cash purchase
    
    $
    1,040,188Carsons severance
    
    
    514Professional fees incurred
    
    
    11,863Total
    
    $
    1,052,565
 Final Purchase Price Allocation
 Cash and cash equivalents
    
    $
    3,110Merchandise inventories
    
    
    455,207Prepaid expenses
    
    
    33,687Property, fixtures and equipment
    
    
    724,447Deferred income taxes
    
    
    21,951Goodwill
    
    
    24,860Intangible assets
    
    
    178,180Other assets
    
    
    9,040Total assets acquired
    
    
    1,450,482Accounts payable
    
    
    (158,860
    )Accrued payroll and benefits
    
    
    (34,560
    )Other accrued expenses
    
    
    (79,088
    )Obligations under capital leases
    
    
    (73,000
    )Other liabilities
    
    
    (52,409
    )Total liabilities assumed
    
    
    (397,917
    )Net assets acquired
    
    $
    1,052,565
 4. SUPPLEMENTAL BALANCE SHEET INFORMATION
  August 4,
    
    February 3,2007
    
    2007Landlord receivables
    
    $
    1,050
    
    
    $
    15,000Prepaid expenses
    
    
    39,097
    
    
    
    29,527Other
    
    
    68,538
    
    
    
    40,204Total
    
    $
    108,685
    
    
    $
    84,731
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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 5. INTEGRATION ACTIVITIES
    Termination
    
    LeaseBenefits
    
    Termination
    
    TotalBalance as of February 3, 2007
    
    $
    333
    
    
    $
    987
    
    
    $
    1,320Provision:Thirteen weeks ended May 5, 2007
    
    
    24
    
    
    
    
    
    
    
    24Payments:Thirteen weeks ended May 5, 2007
    
    
    (205
    )
    
    
    (20
    )
    
    
    (225
    )Thirteen weeks ended August 4, 2007
    
    
    (94
    )
    
    
    (33
    )
    
    
    (127
    )Balance as of August 4, 2007
    
    $
    58
    
    
    $
    934
    
    
    $
    992
  6. EXIT OR DISPOSAL ACTIVITIES
  10




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THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 Termination
    
    OtherBenefits
    
    Costs
    
    TotalBalance as of February 3, 2007
    
    $
    2,436
    
    
    $
    
    
    
    $
    2,436Provision:Thirteen weeks ended May 5, 2007
    
    
    498
    
    
    
    1,159
    
    
    
    1,657Thirteen weeks ended August 4, 2007
    
    
    
    
    
    
    (77
    )
    
    
    (77
    )Payments:Thirteen weeks ended May 5, 2007
    
    
    (2,914
    )
    
    
    (831
    )
    
    
    (3,745
    )Thirteen weeks ended August 4, 2007
    
    
    
    
    
    
    (251
    )
    
    
    (251
    )Balance as of August 4, 2007
    
    $
    20
    
    
    $
    
    
    
    $
    20
   Termination
    
    Lease
    
    Contract
    
    OtherBenefits
    
    Termination
    
    Termination
    
    Costs
    
    TotalBalance as of February 3, 2007
    
    $
    341
    
    
    $
    344
    
    
    $
    32
    
    
    $
    231
    
    
    $
    948Provision:Thirteen weeks ended
May 5, 2007
    
    
    664
    
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    853Thirteen weeks ended
August 4, 2007
    
    
    (55
    )
    
    
    
    
    
    
    (11
    )
    
    
    186
    
    
    
    120Payments:Thirteen weeks ended
May 5, 2007
    
    
    (639
    )
    
    
    (90
    )
    
    
    (21
    )
    
    
    (420
    )
    
    
    (1,170
    )Thirteen weeks ended
August 4, 2007
    
    
    (311
    )
    
    
    (90
    )
    
    
    
    
    
    
    (186
    )
    
    
    (587
    )Balance as of August 4, 2007
    
    $
    
    
    
    $
    164
    
    
    $
    
    
    
    $
    
    
    
    $
    164
  7. EMPLOYEE BENEFIT PLANS
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THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDEDAugust 4,
    
    July 29,
    
    August 4,
    
    July 29,2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    33
    
    
    $
    50
    
    
    $
    65
    
    
    $
    84Interest cost
    
    
    3,041
    
    
    
    4,781
    
    
    
    6,083
    
    
    
    4,898Expected return on plan assets
    
    
    (3,669
    )
    
    
    (5,629
    )
    
    
    (7,337
    )
    
    
    (5,629
    )Recognition of prior service cost
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    Recognition of net actuarial loss
    
    
    79
    
    
    
    
    
    
    
    158
    
    
    
    Net periodic benefit income
    
    $
    (515
    )
    
    $
    (798
    )
    
    $
    (1,029
    )
    
    $
    (647
    )
   8. CONTINGENCIES
  12




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
     9. COMPREHENSIVE LOSS
  THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDEDAugust 4,
    
    July 29,
    
    August 4,
    
    July 29,2007
    
    2006
    
    2007
    
    2006Net loss
    
    $
    (14,975
    )
    
    $
    (19,775
    )
    
    $
    (44,274
    )
    
    $
    (30,610
    )Other comprehensive income (loss):Amortization of pension plan
amounts,
net of tax
    
    
    50
    
    
    
    
    
    
    
    101
    
    
    
    Cash flow hedge derivative
income (loss), net of tax
    
    
    267
    
    
    
    (442
    )
    
    
    (175
    )
    
    
    (437
    )Comprehensive loss
    
    $
    (14,658
    )
    
    $
    (20,217
    )
    
    $
    (44,348
    )
    
    $
    (31,047
    )
 13




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 10. SUBSEQUENT EVENT
  11. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
   14




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
August 4, 2007
 Bon-Ton(Parent
    
    
    
    
    
    Guarantor
    
    Non-Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    6,465
    
    
    $
    15,435
    
    
    $
    
    
    
    $
    
    
    
    $
    21,901Merchandise inventories
    
    
    
    
    
    
    260,137
    
    
    
    497,157
    
    
    
    
    
    
    
    
    
    
    
    757,294Prepaid expenses and other current assets
    
    
    
    
    
    
    66,549
    
    
    
    41,413
    
    
    
    723
    
    
    
    
    
    
    
    108,685Deferred income taxes
    
    
    
    
    
    
    2,038
    
    
    
    15,820
    
    
    
    
    
    
    
    
    
    
    
    17,858Total current assets
    
    
    1
    
    
    
    335,189
    
    
    
    569,825
    
    
    
    723
    
    
    
    
    
    
    
    905,738Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    177,802
    
    
    
    377,641
    
    
    
    322,014
    
    
    
    
    
    
    
    877,457Deferred income taxes
    
    
    
    
    
    
    15,393
    
    
    
    63,945
    
    
    
    
    
    
    
    
    
    
    
    79,338Goodwill
    
    
    
    
    
    
    2,965
    
    
    
    24,859
    
    
    
    
    
    
    
    
    
    
    
    27,824Intangible assets, net
    
    
    
    
    
    
    2,373
    
    
    
    169,423
    
    
    
    
    
    
    
    
    
    
    
    171,796Investment in and advances to affiliates
    
    
    305,764
    
    
    
    1,001,041
    
    
    
    281,042
    
    
    
    558
    
    
    
    (1,588,405
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    25,926
    
    
    
    9,425
    
    
    
    2,953
    
    
    
    
    
    
    
    38,304Total assets
    
    $
    305,765
    
    
    $
    1,560,689
    
    
    $
    1,496,160
    
    
    $
    326,248
    
    
    $
    (1,588,405
    )
    
    $
    2,100,457Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    235,608
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    235,608Accrued payroll and benefits
    
    
    
    
    
    
    7,846
    
    
    
    38,476
    
    
    
    
    
    
    
    
    
    
    
    46,322Accrued expenses
    
    
    
    
    
    
    54,050
    
    
    
    87,480
    
    
    
    175
    
    
    
    
    
    
    
    141,705Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    
    
    
    
    2,010
    
    
    
    5,463
    
    
    
    
    
    
    
    7,473Total current liabilities
    
    
    
    
    
    
    297,504
    
    
    
    127,966
    
    
    
    5,638
    
    
    
    
    
    
    
    431,108Long-term debt and obligations under capital leases,less current maturities
    
    
    
    
    
    
    933,669
    
    
    
    68,421
    
    
    
    260,830
    
    
    
    
    
    
    
    1,262,920Other long-term liabilities
    
    
    1,436
    
    
    
    34,286
    
    
    
    65,311
    
    
    
    1,067
    
    
    
    
    
    
    
    102,100Total liabilities
    
    
    1,436
    
    
    
    1,265,459
    
    
    
    261,698
    
    
    
    267,535
    
    
    
    
    
    
    
    1,796,128Shareholders equity
    
    
    304,329
    
    
    
    295,230
    
    
    
    1,234,462
    
    
    
    58,713
    
    
    
    (1,588,405
    )
    
    
    304,329Total liabilities and shareholders equity
    
    $
    305,765
    
    
    $
    1,560,689
    
    
    $
    1,496,160
    
    
    $
    326,248
    
    
    $
    (1,588,405
    )
    
    $
    2,100,457
 15




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
February 3, 2007
 Bon-Ton
(Parent
    
    
    
    
    
    Guarantor
    
    Non-
Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    7,384
    
    
    $
    17,348
    
    
    $
    
    
    
    $
    
    
    
    $
    24,733Merchandise inventories
    
    
    
    
    
    
    264,832
    
    
    
    522,655
    
    
    
    
    
    
    
    
    
    
    
    787,487Prepaid expenses and other current assets
    
    
    
    
    
    
    37,746
    
    
    
    46,334
    
    
    
    651
    
    
    
    
    
    
    
    84,731Deferred income taxes
    
    
    
    
    
    
    2,038
    
    
    
    15,820
    
    
    
    
    
    
    
    
    
    
    
    17,858Total current assets
    
    
    1
    
    
    
    312,000
    
    
    
    602,157
    
    
    
    651
    
    
    
    
    
    
    
    914,809Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    168,419
    
    
    
    397,655
    
    
    
    331,812
    
    
    
    
    
    
    
    897,886Deferred income taxes
    
    
    
    
    
    
    13,526
    
    
    
    63,060
    
    
    
    
    
    
    
    
    
    
    
    76,586Goodwill
    
    
    
    
    
    
    2,965
    
    
    
    24,412
    
    
    
    
    
    
    
    
    
    
    
    27,377Intangible assets, net
    
    
    
    
    
    
    2,599
    
    
    
    174,101
    
    
    
    
    
    
    
    
    
    
    
    176,700Investment in and advances to affiliates
    
    
    348,426
    
    
    
    984,789
    
    
    
    320,982
    
    
    
    345
    
    
    
    (1,654,542
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    26,875
    
    
    
    11,324
    
    
    
    3,242
    
    
    
    
    
    
    
    41,441Total assets
    
    $
    348,427
    
    
    $
    1,511,173
    
    
    $
    1,593,691
    
    
    $
    336,050
    
    
    $
    (1,654,542
    )
    
    $
    2,134,799Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    209,742
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    209,742Accrued payroll and benefits
    
    
    
    
    
    
    14,112
    
    
    
    54,322
    
    
    
    
    
    
    
    
    
    
    
    68,434Accrued expenses
    
    
    
    
    
    
    68,486
    
    
    
    110,023
    
    
    
    133
    
    
    
    
    
    
    
    178,642Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    
    
    
    
    1,936
    
    
    
    5,555
    
    
    
    
    
    
    
    7,491Income taxes payable
    
    
    2,031
    
    
    
    (6,520
    )
    
    
    52,575
    
    
    
    
    
    
    
    
    
    
    
    48,086Total current liabilities
    
    
    2,031
    
    
    
    285,820
    
    
    
    218,856
    
    
    
    5,688
    
    
    
    
    
    
    
    512,395Long-term debt and obligations under capital leases,less current maturities
    
    
    
    
    
    
    853,300
    
    
    
    69,456
    
    
    
    266,869
    
    
    
    
    
    
    
    1,189,625Other long-term liabilities
    
    
    
    
    
    
    31,436
    
    
    
    53,918
    
    
    
    1,029
    
    
    
    
    
    
    
    86,383Total liabilities
    
    
    2,031
    
    
    
    1,170,556
    
    
    
    342,230
    
    
    
    273,586
    
    
    
    
    
    
    
    1,788,403Shareholders equity
    
    
    346,396
    
    
    
    340,617
    
    
    
    1,251,461
    
    
    
    62,464
    
    
    
    (1,654,542
    )
    
    
    346,396Total liabilities and shareholders equity
    
    $
    348,427
    
    
    $
    1,511,173
    
    
    $
    1,593,691
    
    
    $
    336,050
    
    
    $
    (1,654,542
    )
    
    $
    2,134,799
 16




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended August 4, 2007
 Bon-Ton(Parent
    
    
    
    
    
    Guarantor
    
    Non-Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    140,069
    
    
    $
    568,551
    
    
    $
    
    
    
    $
    
    
    
    $
    708,620Other income
    
    
    
    
    
    
    4,260
    
    
    
    17,857
    
    
    
    
    
    
    
    
    
    
    
    22,117
    
    
    
    144,329
    
    
    
    586,408
    
    
    
    
    
    
    
    
    
    
    
    730,737Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    84,688
    
    
    
    354,510
    
    
    
    
    
    
    
    
    
    
    
    439,198Selling, general and administrative
    
    
    
    
    
    
    56,219
    
    
    
    208,287
    
    
    
    19
    
    
    
    (9,045
    )
    
    
    255,480Depreciation and amortization
    
    
    
    
    
    
    8,977
    
    
    
    18,316
    
    
    
    2,946
    
    
    
    
    
    
    
    30,239Amortization of lease-related interests
    
    
    
    
    
    
    168
    
    
    
    1,164
    
    
    
    
    
    
    
    
    
    
    
    1,332(Loss) income from operations
    
    
    
    
    
    
    (5,723
    )
    
    
    4,131
    
    
    
    (2,965
    )
    
    
    9,045
    
    
    
    4,488Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    1,929
    
    
    
    7,116
    
    
    
    (9,045
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (22,941
    )
    
    
    1,514
    
    
    
    
    
    
    
    
    
    
    
    21,427
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (18,732
    )
    
    
    (4,312
    )
    
    
    (4,385
    )
    
    
    
    
    
    
    (27,429
    )(Loss) income before income taxes
    
    
    (22,941
    )
    
    
    (22,941
    )
    
    
    1,748
    
    
    
    (234
    )
    
    
    21,427
    
    
    
    (22,941
    )Income tax (benefit) provision
    
    
    (7,966
    )
    
    
    (7,966
    )
    
    
    651
    
    
    
    
    
    
    
    7,315
    
    
    
    (7,966
    )Net (loss) income
    
    $
    (14,975
    )
    
    $
    (14,975
    )
    
    $
    1,097
    
    
    $
    (234
    )
    
    $
    14,112
    
    
    $
    (14,975
    )
 17




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended July 29, 2006
 Bon-Ton(Parent
    
    
    
    
    
    Guarantor
    
    Non-Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    147,841
    
    
    $
    598,931
    
    
    $
    
    
    
    $
    
    
    
    $
    746,772Other income
    
    
    
    
    
    
    5,137
    
    
    
    14,837
    
    
    
    
    
    
    
    
    
    
    
    19,974
    
    
    
    152,978
    
    
    
    613,768
    
    
    
    
    
    
    
    
    
    
    
    766,746Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    104,162
    
    
    
    381,771
    
    
    
    
    
    
    
    
    
    
    
    485,933Selling, general and administrative
    
    
    
    
    
    
    59,683
    
    
    
    208,250
    
    
    
    1
    
    
    
    (9,573
    )
    
    
    258,361Depreciation and amortization
    
    
    
    
    
    
    5,916
    
    
    
    17,067
    
    
    
    3,840
    
    
    
    
    
    
    
    26,823Amortization of lease-related interests
    
    
    
    
    
    
    117
    
    
    
    929
    
    
    
    
    
    
    
    
    
    
    
    1,046(Loss) income from operations
    
    
    
    
    
    
    (16,900
    )
    
    
    5,751
    
    
    
    (3,841
    )
    
    
    9,573
    
    
    
    (5,417
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    2,313
    
    
    
    7,260
    
    
    
    (9,573
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (32,702
    )
    
    
    3,200
    
    
    
    
    
    
    
    
    
    
    
    29,502
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (19,002
    )
    
    
    (3,747
    )
    
    
    (4,536
    )
    
    
    
    
    
    
    (27,285
    )(Loss) income before income taxes
    
    
    (32,702
    )
    
    
    (32,702
    )
    
    
    4,317
    
    
    
    (1,117
    )
    
    
    29,502
    
    
    
    (32,702
    )Income tax (benefit) provision
    
    
    (12,927
    )
    
    
    (12,927
    )
    
    
    1,706
    
    
    
    
    
    
    
    11,221
    
    
    
    (12,927
    )Net (loss) income
    
    $
    (19,775
    )
    
    $
    (19,775
    )
    
    $
    2,611
    
    
    $
    (1,117
    )
    
    $
    18,281
    
    
    $
    (19,775
    )
 18




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Twenty-Six Weeks Ended August 4, 2007
 Bon-Ton (Parent
    
    
    
    
    
    Guarantor
    
    Non-
Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    280,620
    
    
    $
    1,165,561
    
    
    $
    
    
    
    $
    
    
    
    $
    1,446,181Other income
    
    
    
    
    
    
    8,557
    
    
    
    36,206
    
    
    
    
    
    
    
    
    
    
    
    44,763
    
    
    
    289,177
    
    
    
    1,201,767
    
    
    
    
    
    
    
    
    
    
    
    1,490,944Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    180,361
    
    
    
    749,509
    
    
    
    
    
    
    
    
    
    
    
    929,870Selling, general and administrative
    
    
    
    
    
    
    106,600
    
    
    
    427,893
    
    
    
    (635
    )
    
    
    (18,246
    )
    
    
    515,612Depreciation and amortization
    
    
    
    
    
    
    14,636
    
    
    
    36,636
    
    
    
    5,927
    
    
    
    
    
    
    
    57,199Amortization of lease-related interests
    
    
    
    
    
    
    226
    
    
    
    2,335
    
    
    
    
    
    
    
    
    
    
    
    2,561Loss from operations
    
    
    
    
    
    
    (12,646
    )
    
    
    (14,606
    )
    
    
    (5,292
    )
    
    
    18,246
    
    
    
    (14,298
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    3,895
    
    
    
    14,351
    
    
    
    (18,246
    )
    
    
    Equity in losses of subsidiaries
    
    
    (69,196
    )
    
    
    (19,111
    )
    
    
    
    
    
    
    
    
    
    
    88,307
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (37,439
    )
    
    
    (7,591
    )
    
    
    (9,868
    )
    
    
    
    
    
    
    (54,898
    )Loss before income taxes
    
    
    (69,196
    )
    
    
    (69,196
    )
    
    
    (18,302
    )
    
    
    (809
    )
    
    
    88,307
    
    
    
    (69,196
    )Income tax benefit
    
    
    (24,922
    )
    
    
    (24,922
    )
    
    
    (6,808
    )
    
    
    
    
    
    
    31,730
    
    
    
    (24,922
    )Net loss
    
    $
    (44,274
    )
    
    $
    (44,274
    )
    
    $
    (11,494
    )
    
    $
    (809
    )
    
    $
    56,577
    
    
    $
    (44,274
    )
 19




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Twenty-Six Weeks Ended July 29, 2006
 Bon-Ton(Parent
    
    
    
    
    
    Guarantor
    
    Non-
Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    276,426
    
    
    $
    1,032,120
    
    
    $
    
    
    
    $
    
    
    
    $
    1,308,546Other income
    
    
    
    
    
    
    9,581
    
    
    
    25,206
    
    
    
    
    
    
    
    
    
    
    
    34,787
    
    
    
    286,007
    
    
    
    1,057,326
    
    
    
    
    
    
    
    
    
    
    
    1,343,333Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    192,186
    
    
    
    645,327
    
    
    
    
    
    
    
    
    
    
    
    837,513Selling, general and administrative
    
    
    2
    
    
    
    115,932
    
    
    
    358,625
    
    
    
    6
    
    
    
    (16,424
    )
    
    
    458,141Depreciation and amortization
    
    
    
    
    
    
    11,114
    
    
    
    27,723
    
    
    
    6,500
    
    
    
    
    
    
    
    45,337Amortization of lease-related interests
    
    
    
    
    
    
    235
    
    
    
    1,513
    
    
    
    
    
    
    
    
    
    
    
    1,748(Loss) income from operations
    
    
    (2
    )
    
    
    (33,460
    )
    
    
    24,138
    
    
    
    (6,506
    )
    
    
    16,424
    
    
    
    594Other income (expense):Intercompany interest income
    
    
    1,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,700
    )
    
    
    Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    4,828
    
    
    
    11,596
    
    
    
    (16,424
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (52,257
    )
    
    
    20,679
    
    
    
    
    
    
    
    
    
    
    
    31,578
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (39,476
    )
    
    
    (5,913
    )
    
    
    (7,464
    )
    
    
    1,700
    
    
    
    (51,153
    )(Loss) income before income taxes
    
    
    (50,559
    )
    
    
    (52,257
    )
    
    
    23,053
    
    
    
    (2,374
    )
    
    
    31,578
    
    
    
    (50,559
    )Income tax (benefit) provision
    
    
    (19,949
    )
    
    
    (20,617
    )
    
    
    9,096
    
    
    
    
    
    
    
    11,521
    
    
    
    (19,949
    )Net (loss) income
    
    $
    (30,610
    )
    
    $
    (31,640
    )
    
    $
    13,957
    
    
    $
    (2,374
    )
    
    $
    20,057
    
    
    $
    (30,610
    )
 20




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
Twenty-Six Weeks Ended August 4, 2007
 Bon-Ton(Parent
    
    
    
    
    
    Guarantor
    
    Non-Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedCash flows from operating activities:
    
    $
    1,328
    
    
    $
    (53,593
    )
    
    $
    21,069
    
    
    $
    6,582
    
    
    $
    (9,927
    )
    
    $
    (34,541
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (22,390
    )
    
    
    (16,523
    )
    
    
    
    
    
    
    
    
    
    
    (38,913
    )Acquisition, net of cash acquired
    
    
    
    
    
    
    (61
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61
    )Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    53
    
    
    
    160
    
    
    
    2,495
    
    
    
    
    
    
    
    2,708Net cash (used in) provided by investing activities
    
    
    
    
    
    
    (22,398
    )
    
    
    (16,363
    )
    
    
    2,495
    
    
    
    
    
    
    
    (36,266
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (360,918
    )
    
    
    (962
    )
    
    
    (6,132
    )
    
    
    
    
    
    
    (368,012
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    441,287
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    441,287Intercompany financing activity
    
    
    
    
    
    
    (1,328
    )
    
    
    (5,657
    )
    
    
    (2,942
    )
    
    
    9,927
    
    
    
    Cash dividends paid
    
    
    (1,714
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,714
    )Proceeds from stock options exercised
    
    
    386
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    386Excess tax benefit from share-based compensation
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289Deferred financing costs paid
    
    
    
    
    
    
    (263
    )
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (266
    )Decrease in bank overdraft balances
    
    
    
    
    
    
    (3,995
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,995
    )Net cash (used in) provided by financing activities
    
    
    (1,328
    )
    
    
    75,072
    
    
    
    (6,619
    )
    
    
    (9,077
    )
    
    
    9,927
    
    
    
    67,975Net decrease in cash and cash
equivalents
    
    
    
    
    
    
    (919
    )
    
    
    (1,913
    )
    
    
    
    
    
    
    
    
    
    
    (2,832
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    7,384
    
    
    
    17,348
    
    
    
    
    
    
    
    
    
    
    
    24,733Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    6,465
    
    
    $
    15,435
    
    
    $
    
    
    
    $
    
    
    
    $
    21,901
 21




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
Twenty-Six Weeks Ended July 29, 2006
 Bon-Ton(Parent
    
    
    
    
    
    Guarantor
    
    Non-Guarantor
    
    Consolidating
    
    CompanyCompany)
    
    Issuer
    
    Subsidiaries
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedCash flows from operating activities:
    
    $
    (62
    )
    
    $
    255,119
    
    
    $
    32,918
    
    
    $
    3,393
    
    
    $
    (264,389
    )
    
    $
    26,979Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (31,486
    )
    
    
    (16,638
    )
    
    
    
    
    
    
    
    
    
    
    (48,124
    )Acquisition, net of cash acquired
    
    
    
    
    
    
    (1,047,054
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,047,054
    )Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    1,026
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    1,544Net cash used in investing activities
    
    
    
    
    
    
    (1,077,514
    )
    
    
    (16,120
    )
    
    
    
    
    
    
    
    
    
    
    (1,093,634
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (422,131
    )
    
    
    (619
    )
    
    
    (1,548
    )
    
    
    
    
    
    
    (424,298
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    1,270,500
    
    
    
    
    
    
    
    260,000
    
    
    
    
    
    
    
    1,530,500Intercompany financing activity
    
    
    
    
    
    
    53
    
    
    
    (5,405
    )
    
    
    (259,037
    )
    
    
    264,389
    
    
    
    Cash dividends paid
    
    
    (497
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (497
    )Proceeds from stock options exercised
    
    
    550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    550Excess tax benefit from share-based compensation
    
    
    
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    840Deferred financing costs paid
    
    
    
    
    
    
    (24,814
    )
    
    
    
    
    
    
    (2,808
    )
    
    
    
    
    
    
    (27,622
    )(Decrease) increase in bank overdraft balances
    
    
    
    
    
    
    (4,617
    )
    
    
    1,640
    
    
    
    
    
    
    
    
    
    
    
    (2,977
    )Net cash provided by (used in) financing activities
    
    
    53
    
    
    
    819,831
    
    
    
    (4,384
    )
    
    
    (3,393
    )
    
    
    264,389
    
    
    
    1,076,496Net (decrease) increase in cash and cash
equivalents
    
    
    (9
    )
    
    
    (2,564
    )
    
    
    12,414
    
    
    
    
    
    
    
    
    
    
    
    9,841Cash and cash equivalents at beginning
of period
    
    
    10
    
    
    
    7,453
    
    
    
    2,308
    
    
    
    
    
    
    
    
    
    
    
    9,771Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    4,889
    
    
    $
    14,722
    
    
    $
    
    
    
    $
    
    
    
    $
    19,612
 22




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
     23




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Results of Operations
  THIRTEEN
    
    TWENTY-SIXWEEKS ENDED
    
    WEEKS ENDEDAugust 4,
    
    July 29,
    
    August 4,
    
    July 29,2007
    
    2006
    
    2007
    
    2006Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Other income
    
    
    3.1
    
    
    
    2.7
    
    
    
    3.1
    
    
    
    2.7103.1
    
    
    
    102.7
    
    
    
    103.1
    
    
    
    102.7Costs and expenses:Costs of merchandise sold
    
    
    62.0
    
    
    
    65.1
    
    
    
    64.3
    
    
    
    64.0Selling, general and administrative
    
    
    36.1
    
    
    
    34.6
    
    
    
    35.7
    
    
    
    35.0Depreciation and amortization
    
    
    4.3
    
    
    
    3.6
    
    
    
    4.0
    
    
    
    3.5Amortization of lease-related interests
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Income (loss) from operations
    
    
    0.6
    
    
    
    (0.7
    )
    
    
    (1.0
    )
    
    
    Interest expense, net
    
    
    3.9
    
    
    
    3.7
    
    
    
    3.8
    
    
    
    3.9Loss before income taxes
    
    
    (3.2
    )
    
    
    (4.4
    )
    
    
    (4.8
    )
    
    
    (3.9
    )Income tax benefit
    
    
    (1.1
    )
    
    
    (1.7
    )
    
    
    (1.7
    )
    
    
    (1.5
    )Net loss
    
    
    (2.1
    )%
    
    
    (2.6
    )%
    
    
    (3.1
    )%
    
    
    (2.3
    )%
 Thirteen Weeks Ended August 4, 2007 Compared to Thirteen Weeks Ended July 29, 2006
 Net sales
   24




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Other income
 Costs and expenses
   Income (loss) from operations
 Interest expense, net
 Income tax benefit
 Net loss
 25




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Twenty-Six Weeks Ended August 4, 2007 Compared to Twenty-Six Weeks Ended July 29, 2006
 Net sales
   Other income
 Costs and expenses
   26




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  (Loss) income from operations
 Interest expense, net
 Income tax benefit
 Net loss
 Seasonality and Inflation
    Liquidity and Capital Resources
  27




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 August 4,
    
    July 29,(Dollars in millions)
    
    2007
    
    2006Working capital
    
    $
    474.6
    
    
    $
    347.4Current ratio
    
    
    2.10:1
    
    
    
    1.79:1Debt to total capitalization (1)
    
    
    0.81:1
    
    
    
    0.82:1Unused availability under lines of credit (2)
    
    $
    229.0
    
    
    $
    247.6
 
 (1)
    
    Debt includes obligations under capital leases. Total capitalization includes
shareholders equity, debt and obligations under capital leases.(2)
    
    Subject to a minimum borrowing covenant of $75 as of August 4, 2007 and July 29, 2006.         28




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    Critical Accounting Policies
   Inventory Valuation
   29




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    Vendor Allowances
   30




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Income Taxes
    Long-lived Assets
  31




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  
    
    Significant under-performance of stores relative to historical or projected future operating results,
    
    Significant changes in the manner of our use of assets or overall business strategy, and
    
    Significant negative industry or economic trends for a sustained period.
   Goodwill and Intangible Assets
    32




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##### Table of Contents



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Insurance Reserve Estimates
  Future Accounting Changes
   Forward-Looking Statements
  33




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##### Table of Contents



THE BON-TON STORES, INC.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk and Financial Instruments
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  34




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##### Table of Contents



THE BON-TON STORES, INC.
 
 PART II: OTHER INFORMATION
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    The following individuals were nominated and elected by the votes set forth opposite his or
her name to serve as the directors of the Company:
 Robert B. Bank
    
    For:
    
    
    41,995,885Withhold Authority:
    
    
    107,637Byron L. Bergren
    
    For:
    
    
    41,917,597Withhold Authority:
    
    
    185,925Philip M. Browne
    
    For:
    
    
    41,995,892Withhold Authority:
    
    
    107,629Shirley A. Dawe
    
    For:
    
    
    41,995,892Withhold Authority:
    
    
    107,629Marsha M. Everton
    
    For:
    
    
    41,956,062Withhold Authority:
    
    
    147,459Michael L. Gleim
    
    For:
    
    
    40,600,441Withhold Authority:
    
    
    1,503,081M. Thomas Grumbacher
    
    For:
    
    
    41,917,101Withhold Authority:
    
    
    186,420Robert E. Salerno
    
    For:
    
    
    41,995,783Withhold Authority:
    
    
    107,739
 2.
    
    With respect to the proposal to approve the amendment of The Bon-Ton Stores, Inc. Cash Bonus
Plan, 39,974,383 votes were cast in favor, 241,365 votes were cast against and 17,339 votes
abstained.
 3.
    
    With respect to the proposal to ratify the appointment of KPMG LLP as the Companys
independent registered accounting firm, 42,066,705 votes were cast in favor, 35,581 votes
were cast against and 1,235 votes abstained.
 35




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##### Table of Contents



THE BON-TON STORES, INC.
 
 ITEM 6. EXHIBITS
  Exhibit
    
    Description
    
    Document Location10.1
    
    Third Amendment to Employment
Agreement with Byron L. Bergren
    
    Incorporated by
reference to Exhibit
10.1 to Current Report
on Form 8-K filed on
July 19, 200710.2
    
    Restricted Stock Agreement with
Byron L. Bergren dated July 19, 2007
    
    Filed herewith.10.3
    
    Restricted Stock Agreement with
Byron L. Bergren dated July 19, 2007
    
    Filed herewith.31.1
    
    Certification of Byron L. Bergren
    
    Filed herewith.31.2
    
    Certification of Keith E. Plowman
    
    Filed herewith.32.1
    
    Certification Pursuant to Rules
13a-14(b) and 15d-14(b) of the
Securities Exchange Act of 1934
    
    Furnished herewith.
 
 SIGNATURES
  THE BON-TON STORES, INC.DATE:
    
    September 12, 2007
    
    
    
    BY:
    
    /s/ Byron L. BergrenByron L. BergrenPresident andChief Executive OfficerDATE:
    
    September 12, 2007
    
    
    
    BY:
    
    /s/ Keith E. PlowmanKeith E. PlowmanExecutive Vice President,Chief Financial Officer andPrincipal Accounting Officer
 36