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 November 1, 2008
 Commission File Number 0-19517
 THE BON-TON STORES, INC.
 2801 East Market Street
 York, Pennsylvania 17402
  Incorporated in Pennsylvania
    
    IRS No. 23-2835229
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PART I: FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 THE BON-TON STORES, INC.
CONSOLIDATED BALANCE SHEETS
 (In thousands except share and per share data)
    
    November 1,
    
    
    February 2,(Unaudited)
    
    2008
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,795
    
    
    $
    21,238Merchandise inventories
    
    
    978,689
    
    
    
    754,802Prepaid expenses and other current assets
    
    
    122,856
    
    
    
    78,332Deferred income taxes
    
    
    17,317
    
    
    
    17,536Total current assets
    
    
    1,135,657
    
    
    
    871,908Property, fixtures and equipment at cost, net of accumulated depreciation and amortization
of $499,500 and $418,279 at November 1, 2008 and February 2, 2008, respectively
    
    
    870,429
    
    
    
    885,455Deferred income taxes
    
    
    88,759
    
    
    
    87,357Goodwill
    
    
    
    
    
    
    17,767Intangible assets, net of accumulated amortization of $28,730 and $21,917 at November 1,
2008 and February 2, 2008, respectively
    
    
    158,647
    
    
    
    165,872Other long-term assets
    
    
    35,153
    
    
    
    39,272Total assets
    
    $
    2,288,645
    
    
    $
    2,067,631Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    374,252
    
    
    $
    220,158Accrued payroll and benefits
    
    
    38,212
    
    
    
    49,902Accrued expenses
    
    
    159,748
    
    
    
    166,603Current maturities of long-term debt
    
    
    5,967
    
    
    
    5,656Current maturities of obligations under capital leases
    
    
    2,482
    
    
    
    2,239Income taxes payable
    
    
    
    
    
    
    899Total current liabilities
    
    
    580,661
    
    
    
    445,457Long-term debt, less current maturities
    
    
    1,248,981
    
    
    
    1,079,841Obligations under capital leases, less current maturities
    
    
    65,542
    
    
    
    67,217Other long-term liabilities
    
    
    109,161
    
    
    
    112,055Total liabilities
    
    
    2,004,345
    
    
    
    1,704,570Contingencies (Note 9)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
15,085,964 and 14,614,111 at November 1, 2008 and February 2, 2008, respectively
    
    
    151
    
    
    
    146Class A Common Stock  authorized 20,000,000 shares at $0.01 par value; issued
and outstanding shares of 2,951,490 at November 1, 2008 and February 2, 2008
    
    
    30
    
    
    
    30Treasury stock, at cost - 337,800 shares at November 1, 2008 and February 2, 2008
    
    
    (1,387
    )
    
    
    (1,387
    )Additional paid-in-capital
    
    
    143,404
    
    
    
    139,805Accumulated other comprehensive income
    
    
    3,257
    
    
    
    799Retained earnings
    
    
    138,845
    
    
    
    223,668Total shareholders equity
    
    
    284,300
    
    
    
    363,061Total liabilities and shareholders equity
    
    $
    2,288,645
    
    
    $
    2,067,631
   2




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##### 



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDED(In thousands except share and per share data)
    
    November 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,(Unaudited)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    724,927
    
    
    $
    780,839
    
    
    $
    2,098,559
    
    
    $
    2,227,020Other income
    
    
    22,742
    
    
    
    24,797
    
    
    
    67,030
    
    
    
    69,946747,669
    
    
    
    805,636
    
    
    
    2,165,589
    
    
    
    2,296,966Costs and expenses:Costs of merchandise sold
    
    
    466,791
    
    
    
    508,802
    
    
    
    1,361,253
    
    
    
    1,438,672Selling, general and administrative
    
    
    261,916
    
    
    
    265,430
    
    
    
    764,084
    
    
    
    781,428Depreciation and amortization
    
    
    29,770
    
    
    
    30,107
    
    
    
    88,680
    
    
    
    87,306Amortization of lease-related interests
    
    
    1,220
    
    
    
    1,280
    
    
    
    3,634
    
    
    
    3,841Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    17,767
    
    
    
    (Loss) income from operations
    
    
    (12,028
    )
    
    
    17
    
    
    
    (69,829
    )
    
    
    (14,281
    )Interest expense, net
    
    
    24,681
    
    
    
    27,383
    
    
    
    73,419
    
    
    
    82,281Loss before income taxes
    
    
    (36,709
    )
    
    
    (27,366
    )
    
    
    (143,248
    )
    
    
    (96,562
    )Income tax benefit
    
    
    (22,375
    )
    
    
    (8,004
    )
    
    
    (61,025
    )
    
    
    (32,926
    )Net loss
    
    $
    (14,334
    )
    
    $
    (19,362
    )
    
    $
    (82,223
    )
    
    $
    (63,636
    )Per share amounts Basic:Net loss
    
    $
    (0.85
    )
    
    $
    (1.17
    )
    
    $
    (4.90
    )
    
    $
    (3.86
    )Basic weighted average shares outstanding
    
    
    16,805,600
    
    
    
    16,533,957
    
    
    
    16,793,125
    
    
    
    16,504,678Diluted:Net loss
    
    $
    (0.85
    )
    
    $
    (1.17
    )
    
    $
    (4.90
    )
    
    $
    (3.86
    )Diluted weighted average shares outstanding
    
    
    16,805,600
    
    
    
    16,533,957
    
    
    
    16,793,125
    
    
    
    16,504,678
   3




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##### 



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 THIRTY-NINEWEEKS ENDED(In thousands)
    
    November 1,
    
    
    November 3,(Unaudited)
    
    2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (82,223
    )
    
    $
    (63,636
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    88,680
    
    
    
    87,306Amortization of lease-related interests
    
    
    3,634
    
    
    
    3,841Goodwill impairment
    
    
    17,767
    
    
    
    Share-based compensation expense
    
    
    4,021
    
    
    
    5,372Excess tax benefit from share-based compensation
    
    
    
    
    
    
    (548
    )Loss on sale of property, fixtures and equipment
    
    
    644
    
    
    
    409Amortization of deferred financing costs
    
    
    3,124
    
    
    
    2,987Amortization of deferred gain on sale of proprietary credit card portfolio
    
    
    (1,810
    )
    
    
    (1,810
    )Deferred income taxes
    
    
    (3,522
    )
    
    
    1,771Cancellation of restricted shares
    
    
    
    
    
    
    (4
    )Changes in operating assets and liabilities:Increase in merchandise inventories
    
    
    (223,887
    )
    
    
    (249,366
    )Increase in prepaid expenses and other current assets
    
    
    (52,074
    )
    
    
    (29,914
    )Decrease in other long-term assets
    
    
    1,263
    
    
    
    1,163Increase in accounts payable
    
    
    149,440
    
    
    
    192,982Decrease in accrued payroll and benefits and accrued expenses
    
    
    (14,668
    )
    
    
    (32,866
    )Decrease in income taxes payable
    
    
    (899
    )
    
    
    (34,013
    )Increase in other long-term liabilities
    
    
    12,367
    
    
    
    11,377Net cash used in operating activities
    
    
    (98,143
    )
    
    
    (104,949
    )Cash flows from investing activities:Capital expenditures
    
    
    (76,639
    )
    
    
    (89,052
    )Acquisition, net of cash acquired
    
    
    
    
    
    
    (62
    )Proceeds from sale of property, fixtures and equipment
    
    
    322
    
    
    
    2,715Net cash used in investing activities
    
    
    (76,317
    )
    
    
    (86,399
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (458,345
    )
    
    
    (503,519
    )Proceeds from issuance of long-term debt
    
    
    626,364
    
    
    
    674,971Cash dividends paid
    
    
    (1,882
    )
    
    
    (2,575
    )Proceeds from stock options exercised
    
    
    
    
    
    
    484Excess tax benefit from share-based compensation
    
    
    
    
    
    
    548Deferred financing costs paid
    
    
    (268
    )
    
    
    (284
    )Increase in bank overdraft balances
    
    
    4,148
    
    
    
    20,966Net cash provided by financing activities
    
    
    170,017
    
    
    
    190,591Net decrease in cash and cash equivalents
    
    
    (4,443
    )
    
    
    (757
    )Cash and cash equivalents at beginning of period
    
    
    21,238
    
    
    
    24,733Cash and cash equivalents at end of period
    
    $
    16,795
    
    
    $
    23,976Supplemental Cash Flow Information:Interest paid
    
    $
    82,134
    
    
    $
    92,746Income taxes paid (net of refunds)
    
    $
    5,516
    
    
    $
    39,677
   4




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##### 



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 2, 2008
    
    $
    146
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    139,805
    
    
    $
    799
    
    
    $
    223,668
    
    
    $
    363,061Comprehensive loss (Note 10):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (82,223
    )
    
    
    (82,223
    )Amortization
of pension plan amounts, net of $144 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    238
    
    
    
    
    
    
    
    238Change in fair value of cash flow hedges,
net of $1,591 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,220
    
    
    
    
    
    
    
    2,220Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,765
    )Dividends to shareholders, $0.15 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,600
    )
    
    
    (2,600
    )Share-based compensation expense
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    4,016
    
    
    
    
    
    
    
    
    
    
    
    4,021Excess tax shortfall from share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    
    
    
    
    
    
    
    
    (417
    )BALANCE AT NOVEMBER 1, 2008
    
    $
    151
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    143,404
    
    
    $
    3,257
    
    
    $
    138,845
    
    
    $
    284,300
   5




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##### 



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




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 2. PER-SHARE AMOUNTS
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic calculation
    
    
    16,805,600
    
    
    
    16,533,957
    
    
    
    16,793,125
    
    
    
    16,504,678Effect of dilutive shares 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted shares and restricted
stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted calculation
    
    
    16,805,600
    
    
    
    16,533,957
    
    
    
    16,793,125
    
    
    
    16,504,678
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,2008
    
    
    2007
    
    
    2008
    
    
    2007Antidilutive shares Restricted shares and restricted
stock units
    
    
    688,903
    
    
    
    766,668
    
    
    
    626,650
    
    
    
    732,283Stock options
    
    
    1,150,142
    
    
    
    706,822
    
    
    
    1,074,348
    
    
    
    692,134
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,2008
    
    
    2007
    
    
    2008
    
    
    2007Effect of dilutive securities Restricted shares and restricted
stock units
    
    
    165,835
    
    
    
    435,066
    
    
    
    201,672
    
    
    
    420,085Stock options
    
    
    1,195
    
    
    
    105,261
    
    
    
    3,541
    
    
    
    187,343
  7




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 3. GOODWILL IMPAIRMENT
    4. FAIR VALUE MEASUREMENTS
  non-financial
   8




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   Fair Value Measurements at November 1, 2008 Using:SignificantTotal Carrying
    
    
    Quoted Prices
    
    
    Other
    
    
    SignificantValue at
    
    
    in Active
    
    
    Observable
    
    
    UnobservableNovember 1,
    
    
    Markets
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Interest rate swap liabilities
    
    $
    3,914
    
    
    $
    
    
    
    $
    3,914
    
    
    $
    
   5. SUPPLEMENTAL BALANCE SHEET INFORMATION
  November 1,
    
    
    February 2,2008
    
    
    2008Prepaid expenses
    
    $
    40,860
    
    
    $
    35,384Other current assets
    
    
    81,996
    
    
    
    42,948Total
    
    $
    122,856
    
    
    $
    78,332
  9




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
  November 1,
    
    
    February 2,2008
    
    
    2008Deferred income
    
    $
    47,666
    
    
    $
    35,223Other long-term liabilities
    
    
    61,495
    
    
    
    76,832Total
    
    $
    109,161
    
    
    $
    112,055
 6. EXIT OR DISPOSAL ACTIVITIES
  Termination
    
    
    OtherBenefits
    
    
    Costs
    
    
    TotalBalance as of February 2, 2008
    
    $
    20
    
    
    $
    
    
    
    $
    20Provision:Thirteen weeks ended May 3, 2008
    
    
    (2
    )
    
    
    24
    
    
    
    22Payments:Thirteen weeks ended May 3, 2008
    
    
    (18
    )
    
    
    (24
    )
    
    
    (42
    )Balance as of November 1, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    10




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 7. EMPLOYEE DEFINED AND POSTRETIREMENT BENEFIT PLANS
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    38
    
    
    $
    33
    
    
    $
    116
    
    
    $
    98Interest cost
    
    
    2,935
    
    
    
    3,041
    
    
    
    8,805
    
    
    
    9,124Expected return on plan assets
    
    
    (3,076
    )
    
    
    (3,668
    )
    
    
    (9,227
    )
    
    
    (11,005
    )Recognition of prior service cost
    
    
    1
    
    
    
    1
    
    
    
    3
    
    
    
    3Recognition of net actuarial loss
    
    
    127
    
    
    
    79
    
    
    
    379
    
    
    
    237Net periodic benefit expense (income)
    
    $
    25
    
    
    $
    (514
    )
    
    $
    76
    
    
    $
    (1,543
    )
   8. INCOME TAXES
  9. CONTINGENCIES
   11




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   10. COMPREHENSIVE LOSS
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (14,334
    )
    
    $
    (19,362
    )
    
    $
    (82,223
    )
    
    $
    (63,636
    )Other comprehensive income (loss):Amortization of pension plan
amounts,
net of tax
    
    
    79
    
    
    
    51
    
    
    
    238
    
    
    
    152Cash flow hedge derivative
income (loss), net of tax
    
    
    679
    
    
    
    (1,121
    )
    
    
    2,220
    
    
    
    (1,296
    )Comprehensive loss
    
    $
    (13,576
    )
    
    $
    (20,432
    )
    
    $
    (79,765
    )
    
    $
    (64,780
    )
 11. SUBSEQUENT EVENT
  12. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
    12




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##### 



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
November 1, 2008
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    8,758
    
    
    $
    8,036
    
    
    $
    
    
    
    $
    
    
    
    $
    16,795Merchandise inventories
    
    
    
    
    
    
    479,100
    
    
    
    499,589
    
    
    
    
    
    
    
    
    
    
    
    978,689Prepaid expenses and other current assets
    
    
    
    
    
    
    101,062
    
    
    
    21,288
    
    
    
    506
    
    
    
    
    
    
    
    122,856Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    21,822
    
    
    
    
    
    
    
    (4,505
    )
    
    
    17,317Total current assets
    
    
    1
    
    
    
    588,920
    
    
    
    550,735
    
    
    
    506
    
    
    
    (4,505
    )
    
    
    1,135,657Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    288,497
    
    
    
    274,665
    
    
    
    307,267
    
    
    
    
    
    
    
    870,429Deferred income taxes
    
    
    
    
    
    
    24,475
    
    
    
    64,284
    
    
    
    
    
    
    
    
    
    
    
    88,759Intangible assets, net
    
    
    
    
    
    
    65,964
    
    
    
    92,683
    
    
    
    
    
    
    
    
    
    
    
    158,647Investment in and advances to (from) affiliates
    
    
    286,506
    
    
    
    830,397
    
    
    
    (148,932
    )
    
    
    489
    
    
    
    (968,460
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    23,779
    
    
    
    6,590
    
    
    
    4,784
    
    
    
    
    
    
    
    35,153Total assets
    
    $
    286,507
    
    
    $
    1,822,032
    
    
    $
    840,025
    
    
    $
    313,046
    
    
    $
    (972,965
    )
    
    $
    2,288,645Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    374,252
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    374,252Accrued payroll and benefits
    
    
    
    
    
    
    26,006
    
    
    
    12,206
    
    
    
    
    
    
    
    
    
    
    
    38,212Accrued expenses
    
    
    
    
    
    
    82,366
    
    
    
    75,914
    
    
    
    1,468
    
    
    
    
    
    
    
    159,748Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    288
    
    
    
    2,194
    
    
    
    5,967
    
    
    
    
    
    
    
    8,449Deferred income taxes
    
    
    
    
    
    
    4,505
    
    
    
    
    
    
    
    
    
    
    
    (4,505
    )
    
    
    Total current liabilities
    
    
    
    
    
    
    487,417
    
    
    
    90,314
    
    
    
    7,435
    
    
    
    (4,505
    )
    
    
    580,661Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    1,002,675
    
    
    
    57,933
    
    
    
    253,915
    
    
    
    
    
    
    
    1,314,523Other long-term liabilities
    
    
    2,207
    
    
    
    65,401
    
    
    
    40,385
    
    
    
    1,168
    
    
    
    
    
    
    
    109,161Total liabilities
    
    
    2,207
    
    
    
    1,555,493
    
    
    
    188,632
    
    
    
    262,518
    
    
    
    (4,505
    )
    
    
    2,004,345Shareholders equity
    
    
    284,300
    
    
    
    266,539
    
    
    
    651,393
    
    
    
    50,528
    
    
    
    (968,460
    )
    
    
    284,300Total liabilities and shareholders equity
    
    $
    286,507
    
    
    $
    1,822,032
    
    
    $
    840,025
    
    
    $
    313,046
    
    
    $
    (972,965
    )
    
    $
    2,288,645
  13




---



##### 



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 2, 2008
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    9,604
    
    
    $
    11,633
    
    
    $
    
    
    
    $
    
    
    
    $
    21,238Merchandise inventories
    
    
    
    
    
    
    375,162
    
    
    
    379,640
    
    
    
    
    
    
    
    
    
    
    
    754,802Prepaid expenses and other current assets
    
    
    
    
    
    
    75,188
    
    
    
    9,027
    
    
    
    578
    
    
    
    (6,461
    )
    
    
    78,332Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    21,566
    
    
    
    
    
    
    
    (4,030
    )
    
    
    17,536Total current assets
    
    
    1
    
    
    
    459,954
    
    
    
    421,866
    
    
    
    578
    
    
    
    (10,491
    )
    
    
    871,908Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    304,128
    
    
    
    265,250
    
    
    
    316,077
    
    
    
    
    
    
    
    885,455Deferred income taxes
    
    
    
    
    
    
    22,136
    
    
    
    65,221
    
    
    
    
    
    
    
    
    
    
    
    87,357Goodwill
    
    
    
    
    
    
    8,488
    
    
    
    9,279
    
    
    
    
    
    
    
    
    
    
    
    17,767Intangible assets, net
    
    
    
    
    
    
    69,772
    
    
    
    96,100
    
    
    
    
    
    
    
    
    
    
    
    165,872Investment in and advances to affiliates
    
    
    365,267
    
    
    
    700,704
    
    
    
    5,710
    
    
    
    318
    
    
    
    (1,071,999
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    28,518
    
    
    
    7,948
    
    
    
    2,806
    
    
    
    
    
    
    
    39,272Total assets
    
    $
    365,268
    
    
    $
    1,593,700
    
    
    $
    871,374
    
    
    $
    319,779
    
    
    $
    (1,082,490
    )
    
    $
    2,067,631Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    220,158
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    220,158Accrued payroll and benefits
    
    
    
    
    
    
    37,037
    
    
    
    12,865
    
    
    
    
    
    
    
    
    
    
    
    49,902Accrued expenses
    
    
    
    
    
    
    86,586
    
    
    
    79,930
    
    
    
    87
    
    
    
    
    
    
    
    166,603Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    260
    
    
    
    1,979
    
    
    
    5,656
    
    
    
    
    
    
    
    7,895Income taxes payable
    
    
    
    
    
    
    
    
    
    
    7,360
    
    
    
    
    
    
    
    (6,461
    )
    
    
    899Deferred income taxes
    
    
    
    
    
    
    4,030
    
    
    
    
    
    
    
    
    
    
    
    (4,030
    )
    
    
    Total current liabilities
    
    
    
    
    
    
    348,071
    
    
    
    102,134
    
    
    
    5,743
    
    
    
    (10,491
    )
    
    
    445,457Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    829,648
    
    
    
    59,413
    
    
    
    257,997
    
    
    
    
    
    
    
    1,147,058Other long-term liabilities
    
    
    2,207
    
    
    
    66,660
    
    
    
    42,082
    
    
    
    1,106
    
    
    
    
    
    
    
    112,055Total liabilities
    
    
    2,207
    
    
    
    1,244,379
    
    
    
    203,629
    
    
    
    264,846
    
    
    
    (10,491
    )
    
    
    1,704,570Shareholders equity
    
    
    363,061
    
    
    
    349,321
    
    
    
    667,745
    
    
    
    54,933
    
    
    
    (1,071,999
    )
    
    
    363,061Total liabilities and shareholders equity
    
    $
    365,268
    
    
    $
    1,593,700
    
    
    $
    871,374
    
    
    $
    319,779
    
    
    $
    (1,082,490
    )
    
    $
    2,067,631
  14




---



##### 



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 November 1, 2008
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    312,593
    
    
    $
    412,334
    
    
    $
    
    
    
    $
    
    
    
    $
    724,927Other income
    
    
    
    
    
    
    9,399
    
    
    
    13,343
    
    
    
    
    
    
    
    
    
    
    
    22,742
    
    
    
    321,992
    
    
    
    425,677
    
    
    
    
    
    
    
    
    
    
    
    747,669Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    203,747
    
    
    
    263,044
    
    
    
    
    
    
    
    
    
    
    
    466,791Selling, general and administrative
    
    
    
    
    
    
    120,760
    
    
    
    149,975
    
    
    
    21
    
    
    
    (8,840
    )
    
    
    261,916Depreciation and amortization
    
    
    
    
    
    
    14,270
    
    
    
    12,563
    
    
    
    2,937
    
    
    
    
    
    
    
    29,770Amortization of lease-related interests
    
    
    
    
    
    
    750
    
    
    
    470
    
    
    
    
    
    
    
    
    
    
    
    1,220Loss from operations
    
    
    
    
    
    
    (17,535
    )
    
    
    (375
    )
    
    
    (2,958
    )
    
    
    8,840
    
    
    
    (12,028
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    1,797
    
    
    
    7,043
    
    
    
    (8,840
    )
    
    
    Equity in losses of subsidiaries
    
    
    (36,709
    )
    
    
    (627
    )
    
    
    
    
    
    
    
    
    
    
    37,336
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (18,547
    )
    
    
    (1,863
    )
    
    
    (4,271
    )
    
    
    
    
    
    
    (24,681
    )Loss before income taxes
    
    
    (36,709
    )
    
    
    (36,709
    )
    
    
    (441
    )
    
    
    (186
    )
    
    
    37,336
    
    
    
    (36,709
    )Income tax benefit
    
    
    (22,375
    )
    
    
    (22,375
    )
    
    
    (5,799
    )
    
    
    
    
    
    
    28,174
    
    
    
    (22,375
    )Net (loss) income
    
    $
    (14,334
    )
    
    $
    (14,334
    )
    
    $
    5,358
    
    
    $
    (186
    )
    
    $
    9,162
    
    
    $
    (14,334
    )
  15




---



##### 



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 November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    148,237
    
    
    $
    632,602
    
    
    $
    
    
    
    $
    
    
    
    $
    780,839Other income
    
    
    
    
    
    
    4,714
    
    
    
    20,083
    
    
    
    
    
    
    
    
    
    
    
    24,797
    
    
    
    152,951
    
    
    
    652,685
    
    
    
    
    
    
    
    
    
    
    
    805,636Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    97,291
    
    
    
    411,511
    
    
    
    
    
    
    
    
    
    
    
    508,802Selling, general and administrative
    
    
    
    
    
    
    55,824
    
    
    
    218,685
    
    
    
    19
    
    
    
    (9,098
    )
    
    
    265,430Depreciation and amortization
    
    
    
    
    
    
    9,768
    
    
    
    17,383
    
    
    
    2,956
    
    
    
    
    
    
    
    30,107Amortization of lease-related interests
    
    
    
    
    
    
    112
    
    
    
    1,168
    
    
    
    
    
    
    
    
    
    
    
    1,280(Loss) income from operations
    
    
    
    
    
    
    (10,044
    )
    
    
    3,938
    
    
    
    (2,975
    )
    
    
    9,098
    
    
    
    17Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    2,055
    
    
    
    7,043
    
    
    
    (9,098
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (27,366
    )
    
    
    1,717
    
    
    
    
    
    
    
    
    
    
    
    25,649
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (19,039
    )
    
    
    (3,982
    )
    
    
    (4,362
    )
    
    
    
    
    
    
    (27,383
    )(Loss) income before income taxes
    
    
    (27,366
    )
    
    
    (27,366
    )
    
    
    2,011
    
    
    
    (294
    )
    
    
    25,649
    
    
    
    (27,366
    )Income tax (benefit) provision
    
    
    (8,004
    )
    
    
    (8,004
    )
    
    
    748
    
    
    
    
    
    
    
    7,256
    
    
    
    (8,004
    )Net (loss) income
    
    $
    (19,362
    )
    
    $
    (19,362
    )
    
    $
    1,263
    
    
    $
    (294
    )
    
    $
    18,393
    
    
    $
    (19,362
    )
  16




---



##### 



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
Thirty-Nine Weeks Ended November 1, 2008
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    897,209
    
    
    $
    1,201,350
    
    
    $
    
    
    
    $
    
    
    
    $
    2,098,559Other income
    
    
    
    
    
    
    28,478
    
    
    
    38,552
    
    
    
    
    
    
    
    
    
    
    
    67,030
    
    
    
    925,687
    
    
    
    1,239,902
    
    
    
    
    
    
    
    
    
    
    
    2,165,589Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    584,596
    
    
    
    776,657
    
    
    
    
    
    
    
    
    
    
    
    1,361,253Selling, general and administrative
    
    
    
    
    
    
    350,888
    
    
    
    439,690
    
    
    
    62
    
    
    
    (26,556
    )
    
    
    764,084Depreciation and amortization
    
    
    
    
    
    
    41,518
    
    
    
    38,351
    
    
    
    8,811
    
    
    
    
    
    
    
    88,680Amortization of lease-related interests
    
    
    
    
    
    
    2,255
    
    
    
    1,379
    
    
    
    
    
    
    
    
    
    
    
    3,634Goodwill impairment
    
    
    
    
    
    
    8,488
    
    
    
    9,279
    
    
    
    
    
    
    
    
    
    
    
    17,767Loss from operations
    
    
    
    
    
    
    (62,058
    )
    
    
    (25,454
    )
    
    
    (8,873
    )
    
    
    26,556
    
    
    
    (69,829
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    5,283
    
    
    
    21,273
    
    
    
    (26,556
    )
    
    
    Equity in losses of subsidiaries
    
    
    (143,248
    )
    
    
    (26,762
    )
    
    
    
    
    
    
    
    
    
    
    170,010
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (54,428
    )
    
    
    (6,104
    )
    
    
    (12,887
    )
    
    
    
    
    
    
    (73,419
    )Loss before income taxes
    
    
    (143,248
    )
    
    
    (143,248
    )
    
    
    (26,275
    )
    
    
    (487
    )
    
    
    170,010
    
    
    
    (143,248
    )Income tax benefit
    
    
    (61,025
    )
    
    
    (61,025
    )
    
    
    (16,773
    )
    
    
    
    
    
    
    77,798
    
    
    
    (61,025
    )Net loss
    
    $
    (82,223
    )
    
    $
    (82,223
    )
    
    $
    (9,502
    )
    
    $
    (487
    )
    
    $
    92,212
    
    
    $
    (82,223
    )
  17




---



##### 



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
Thirty-Nine Weeks Ended November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    428,857
    
    
    $
    1,798,163
    
    
    $
    
    
    
    $
    
    
    
    $
    2,227,020Other income
    
    
    
    
    
    
    13,657
    
    
    
    56,289
    
    
    
    
    
    
    
    
    
    
    
    69,946
    
    
    
    442,514
    
    
    
    1,854,452
    
    
    
    
    
    
    
    
    
    
    
    2,296,966Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    277,652
    
    
    
    1,161,020
    
    
    
    
    
    
    
    
    
    
    
    1,438,672Selling, general and administrative
    
    
    
    
    
    
    162,810
    
    
    
    646,578
    
    
    
    (616
    )
    
    
    (27,344
    )
    
    
    781,428Depreciation and amortization
    
    
    
    
    
    
    24,404
    
    
    
    54,019
    
    
    
    8,883
    
    
    
    
    
    
    
    87,306Amortization of lease-related interests
    
    
    
    
    
    
    338
    
    
    
    3,503
    
    
    
    
    
    
    
    
    
    
    
    3,841Loss from operations
    
    
    
    
    
    
    (22,690
    )
    
    
    (10,668
    )
    
    
    (8,267
    )
    
    
    27,344
    
    
    
    (14,281
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    5,950
    
    
    
    21,394
    
    
    
    (27,344
    )
    
    
    Equity in losses of subsidiaries
    
    
    (96,562
    )
    
    
    (17,394
    )
    
    
    
    
    
    
    
    
    
    
    113,956
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (56,478
    )
    
    
    (11,573
    )
    
    
    (14,230
    )
    
    
    
    
    
    
    (82,281
    )Loss before income taxes
    
    
    (96,562
    )
    
    
    (96,562
    )
    
    
    (16,291
    )
    
    
    (1,103
    )
    
    
    113,956
    
    
    
    (96,562
    )Income tax benefit
    
    
    (32,926
    )
    
    
    (32,926
    )
    
    
    (6,060
    )
    
    
    
    
    
    
    38,986
    
    
    
    (32,926
    )Net loss
    
    $
    (63,636
    )
    
    $
    (63,636
    )
    
    $
    (10,231
    )
    
    $
    (1,103
    )
    
    $
    74,970
    
    
    $
    (63,636
    )
  18




---



##### 



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
Thirty-Nine Weeks Ended November 1, 2008
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:
    
    $
    1,882
    
    
    $
    (131,173
    )
    
    $
    36,104
    
    
    $
    7,693
    
    
    $
    (12,649
    )
    
    $
    (98,143
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (44,982
    )
    
    
    (31,657
    )
    
    
    
    
    
    
    
    
    
    
    (76,639
    )Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    251
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    322Net cash used in investing activities
    
    
    
    
    
    
    (44,731
    )
    
    
    (31,586
    )
    
    
    
    
    
    
    
    
    
    
    (76,317
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (453,310
    )
    
    
    (1,265
    )
    
    
    (3,770
    )
    
    
    
    
    
    
    (458,345
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    626,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    626,364Intercompany financing activity
    
    
    
    
    
    
    (1,882
    )
    
    
    (6,850
    )
    
    
    (3,917
    )
    
    
    12,649
    
    
    
    Cash dividends paid
    
    
    (1,882
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,882
    )Deferred financing costs paid
    
    
    
    
    
    
    (262
    )
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    (268
    )Increase in bank overdraft balances
    
    
    
    
    
    
    4,148
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,148Net cash (used in) provided by financing activities
    
    
    (1,882
    )
    
    
    175,058
    
    
    
    (8,115
    )
    
    
    (7,693
    )
    
    
    12,649
    
    
    
    170,017Net decrease in cash and cash
equivalents
    
    
    
    
    
    
    (846
    )
    
    
    (3,597
    )
    
    
    
    
    
    
    
    
    
    
    (4,443
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    9,604
    
    
    
    11,633
    
    
    
    
    
    
    
    
    
    
    
    21,238Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    8,758
    
    
    $
    8,036
    
    
    $
    
    
    
    $
    
    
    
    $
    16,795
  19




---



##### 



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
Thirty-Nine Weeks Ended November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:
    
    $
    2,091
    
    
    $
    (147,891
    )
    
    $
    45,591
    
    
    $
    9,363
    
    
    $
    (14,103
    )
    
    $
    (104,949
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (51,268
    )
    
    
    (37,784
    )
    
    
    
    
    
    
    
    
    
    
    (89,052
    )Acquisition, net of cash acquired
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62
    )Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    52
    
    
    
    168
    
    
    
    2,495
    
    
    
    
    
    
    
    2,715Net cash (used in) provided by investing activities
    
    
    
    
    
    
    (51,278
    )
    
    
    (37,616
    )
    
    
    2,495
    
    
    
    
    
    
    
    (86,399
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (494,634
    )
    
    
    (1,445
    )
    
    
    (7,440
    )
    
    
    
    
    
    
    (503,519
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    674,971
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    674,971Intercompany financing activity
    
    
    
    
    
    
    (2,091
    )
    
    
    (7,602
    )
    
    
    (4,410
    )
    
    
    14,103
    
    
    
    Cash dividends paid
    
    
    (2,575
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,575
    )Proceeds from stock options exercised
    
    
    484
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    484Excess tax benefit from share-based compensation
    
    
    
    
    
    
    548
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548Deferred financing costs paid
    
    
    
    
    
    
    (276
    )
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (284
    )Increase in bank overdraft balances
    
    
    
    
    
    
    20,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,966Net cash (used in) provided by financing activities
    
    
    (2,091
    )
    
    
    199,484
    
    
    
    (9,047
    )
    
    
    (11,858
    )
    
    
    14,103
    
    
    
    190,591Net increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    315
    
    
    
    (1,072
    )
    
    
    
    
    
    
    
    
    
    
    (757
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    7,384
    
    
    
    17,348
    
    
    
    
    
    
    
    
    
    
    
    24,733Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    7,699
    
    
    $
    16,276
    
    
    $
    
    
    
    $
    
    
    
    $
    23,976
  20




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##### 



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
    21




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##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Results of Operations
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 1,
    
    
    November 3,
    
    
    November 1,
    
    
    November 3,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Other income
    
    
    3.1
    
    
    
    3.2
    
    
    
    3.2
    
    
    
    3.1103.1
    
    
    
    103.2
    
    
    
    103.2
    
    
    
    103.1Costs and expenses:Costs of merchandise sold
    
    
    64.4
    
    
    
    65.2
    
    
    
    64.9
    
    
    
    64.6Selling, general and administrative
    
    
    36.1
    
    
    
    34.0
    
    
    
    36.4
    
    
    
    35.1Depreciation and amortization
    
    
    4.1
    
    
    
    3.9
    
    
    
    4.2
    
    
    
    3.9Amortization of lease-related interests
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    (Loss) income from operations
    
    
    (1.7
    )
    
    
    
    
    
    
    (3.3
    )
    
    
    (0.6
    )Interest expense, net
    
    
    3.4
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    3.7Loss before income taxes
    
    
    (5.1
    )
    
    
    (3.5
    )
    
    
    (6.8
    )
    
    
    (4.3
    )Income tax benefit
    
    
    (3.1
    )
    
    
    (1.0
    )
    
    
    (2.9
    )
    
    
    (1.5
    )Net loss
    
    
    (2.0
    )%
    
    
    (2.5
    )%
    
    
    (3.9
    )%
    
    
    (2.9
    )%
 Third Quarter of 2008 Compared with Third Quarter of 2007
 Net sales
  Other income
 Costs and expenses
   22




---



##### 



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
 2008 Compared with 2007
 Net sales
  Other income
  23




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Costs and expenses
    Loss from operations
 Interest expense, net
 Income tax benefit
 Net loss
 Seasonality
    24




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Liquidity and Capital Resources
  November 1,
    
    
    November 3,(Dollars in millions)
    
    2008
    
    
    2007Working capital
    
    $
    555.0
    
    
    $
    550.1Current ratio
    
    
    1.96:1
    
    
    
    1.86:1Debt to total capitalization (1)
    
    
    0.82:1
    
    
    
    0.83:1Unused availability under lines of credit (2)
    
    $
    213.7
    
    
    $
    253.6
 (1)
    
    Debt includes obligations under capital leases. Total capitalization includes shareholders
equity, debt and obligations under capital leases.(2)
    
    Subject to a minimum borrowing availability covenant of $75 as of November 1, 2008 and November
3, 2007.          25




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    Critical Accounting Policies
   Inventory Valuation
    26




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 on-hand.
  Vendor Allowances
    27




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Income Taxes
     Long-lived Assets
   28




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 long-lived
 
    
    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
     29




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Insurance Reserve Estimates
  Pension and Supplementary Retirement Plans
     Future Accounting Changes
   30




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Forward-Looking Statements
   31




---



##### 



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
   32




---



##### 



THE BON-TON STORES, INC.
 PART II: OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS
   ITEM 6. EXHIBITS
  Exhibit
    
    Description
    
    Document Location31.1
    
    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.
  33




---



##### 



THE BON-TON STORES, INC.
 SIGNATURES
  THE BON-TON STORES, INC.DATE:      December 10, 2008
    BY:
    /s/  Byron L. BergrenByron L. BergrenPresident and
Chief Executive OfficerDATE:      December 10, 2008
    BY:
    /s/  Keith E. PlowmanKeith E. PlowmanExecutive Vice President,
Chief Financial Officer and
Principal Accounting Officer  34




---



##### 



THE BON-TON STORES, INC.
 EXHIBIT INDEX
 Exhibit
    
    Description
    
    Document Location31.1
    
    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.
  35