##### 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 July 31, 2010
    
    Commission File Number0-19517
 THE BON-TON STORES, INC.
 2801 East Market Street
York, Pennsylvania 17402
 Incorporated in Pennsylvania
    
    IRS No. 23-2835229
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a
smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART I: FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF CASH FLOWSCONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITYITEM 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 6. EXHIBITSSIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32.1    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)
    
    July 31,
    
    
    January 30,(Unaudited)
    
    2010
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    15,282
    
    
    $
    18,922Merchandise inventories
    
    
    675,636
    
    
    
    659,399Prepaid expenses and other current assets
    
    
    69,100
    
    
    
    87,690Total current assets
    
    
    760,018
    
    
    
    766,011Property, fixtures and equipment at cost, net of accumulated depreciation and amortization
of $642,815 and $594,020 at July 31, 2010 and January 30, 2010, respectively
    
    
    724,634
    
    
    
    756,618Deferred income taxes
    
    
    12,274
    
    
    
    13,303Intangible assets, net of accumulated amortization of $42,570 and $38,477 at July 31, 2010
and January 30, 2010, respectively
    
    
    134,422
    
    
    
    138,794Other long-term assets
    
    
    39,805
    
    
    
    47,281Total assets
    
    $
    1,671,153
    
    
    $
    1,722,007Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    219,811
    
    
    $
    163,671Accrued payroll and benefits
    
    
    35,656
    
    
    
    48,297Accrued expenses
    
    
    149,900
    
    
    
    160,737Current maturities of long-term debt
    
    
    7,738
    
    
    
    7,509Current maturities of obligations under capital leases
    
    
    5,239
    
    
    
    5,044Deferred income taxes
    
    
    14,601
    
    
    
    14,820Income taxes payable
    
    
    193
    
    
    
    Total current liabilities
    
    
    433,138
    
    
    
    400,078Long-term debt, less current maturities
    
    
    928,259
    
    
    
    951,315Obligations under capital leases, less current maturities
    
    
    62,737
    
    
    
    65,405Other long-term liabilities
    
    
    159,305
    
    
    
    163,453Total liabilities
    
    
    1,583,439
    
    
    
    1,580,251Contingencies (Note 10)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
16,449,569 and 15,942,348 at July 31, 2010 and January 30, 2010, respectively
    
    
    164
    
    
    
    159Class A Common Stock  authorized 20,000,000 shares at $0.01 par value; issued
and outstanding shares of 2,951,490 at July 31, 2010 and January 30, 2010
    
    
    30
    
    
    
    30Treasury stock, at cost  337,800 shares at July 31, 2010 and January 30, 2010
    
    
    (1,387
    )
    
    
    (1,387
    )Additional paid-in-capital
    
    
    148,968
    
    
    
    149,649Accumulated other comprehensive loss
    
    
    (49,006
    )
    
    
    (52,912
    )(Accumulated deficit) retained earnings
    
    
    (11,055
    )
    
    
    46,217Total shareholders equity
    
    
    87,714
    
    
    
    141,756Total liabilities and shareholders equity
    
    $
    1,671,153
    
    
    $
    1,722,007
   2




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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 per share data)
    
    July 31,
    
    
    August 1,
    
    
    July 31,
    
    
    August 1,(Unaudited)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    608,596
    
    
    $
    609,228
    
    
    $
    1,269,969
    
    
    $
    1,253,759Other income
    
    
    14,024
    
    
    
    16,076
    
    
    
    27,862
    
    
    
    34,468622,620
    
    
    
    625,304
    
    
    
    1,297,831
    
    
    
    1,288,227Costs and expenses:Costs of merchandise sold
    
    
    377,151
    
    
    
    383,097
    
    
    
    791,491
    
    
    
    803,463Selling, general and administrative
    
    
    224,163
    
    
    
    222,923
    
    
    
    452,076
    
    
    
    459,750Depreciation and amortization
    
    
    26,516
    
    
    
    28,696
    
    
    
    52,740
    
    
    
    56,794Amortization of lease-related interests
    
    
    1,147
    
    
    
    1,217
    
    
    
    2,293
    
    
    
    2,444Loss from operations
    
    
    (6,357
    )
    
    
    (10,629
    )
    
    
    (769
    )
    
    
    (34,224
    )Interest expense, net
    
    
    28,177
    
    
    
    23,194
    
    
    
    56,690
    
    
    
    46,120Loss before income taxes
    
    
    (34,534
    )
    
    
    (33,823
    )
    
    
    (57,459
    )
    
    
    (80,344
    )Income tax (benefit) provision
    
    
    (804
    )
    
    
    939
    
    
    
    (187
    )
    
    
    (141
    )Net loss
    
    $
    (33,730
    )
    
    $
    (34,762
    )
    
    $
    (57,272
    )
    
    $
    (80,203
    )Per share amounts Basic:Net loss
    
    $
    (1.91
    )
    
    $
    (2.04
    )
    
    $
    (3.24
    )
    
    $
    (4.72
    )Diluted:Net loss
    
    $
    (1.91
    )
    
    $
    (2.04
    )
    
    $
    (3.24
    )
    
    $
    (4.72
    )
   3




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##### Table of Contents



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 TWENTY-SIXWEEKS ENDED(In thousands)
    
    July 31,
    
    
    August 1,(Unaudited)
    
    2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (57,272
    )
    
    $
    (80,203
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    52,740
    
    
    
    56,794Amortization of lease-related interests
    
    
    2,293
    
    
    
    2,444Share-based compensation expense
    
    
    3,406
    
    
    
    2,348Loss on sale of property, fixtures and equipment
    
    
    151
    
    
    
    115Reclassification of other comprehensive loss
    
    
    3,906
    
    
    
    4,619Amortization of deferred financing costs
    
    
    4,622
    
    
    
    2,021Amortization of deferred gain on sale of proprietary credit card portfolio
    
    
    (1,207
    )
    
    
    (1,207
    )Deferred income taxes
    
    
    810
    
    
    
    3,251Changes in operating assets and liabilities:Increase in merchandise inventories
    
    
    (16,237
    )
    
    
    (9,240
    )Decrease in prepaid expenses and other current assets
    
    
    18,588
    
    
    
    33,033Decrease in other long-term assets
    
    
    3,569
    
    
    
    1,435Increase in accounts payable
    
    
    54,141
    
    
    
    39,513Decrease in accrued payroll and benefits and accrued expenses
    
    
    (22,552
    )
    
    
    (18,637
    )Increase in income taxes payable
    
    
    193
    
    
    
    322Decrease in other long-term liabilities
    
    
    (1,969
    )
    
    
    (1,798
    )Net cash provided by operating activities
    
    
    45,182
    
    
    
    34,810Cash flows from investing activities:Capital expenditures
    
    
    (20,105
    )
    
    
    (12,976
    )Proceeds from sale of property, fixtures and equipment
    
    
    23
    
    
    
    67Net cash used in investing activities
    
    
    (20,082
    )
    
    
    (12,909
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (305,395
    )
    
    
    (336,157
    )Proceeds from issuance of long-term debt
    
    
    280,094
    
    
    
    316,406Cash dividends paid
    
    
    
    
    
    
    (866
    )Restricted shares forfeited in lieu of payroll taxes
    
    
    (4,082
    )
    
    
    Deferred financing costs paid
    
    
    (714
    )
    
    
    Increase (decrease) in bank overdraft balances
    
    
    1,357
    
    
    
    (5,412
    )Net cash used in financing activities
    
    
    (28,740
    )
    
    
    (26,029
    )Net decrease in cash and cash equivalents
    
    
    (3,640
    )
    
    
    (4,128
    )Cash and cash equivalents at beginning of period
    
    
    18,922
    
    
    
    19,719Cash and cash equivalents at end of period
    
    $
    15,282
    
    
    $
    15,591
   4




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##### Table of Contents



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 AccumulatedOther
    
    
    (AccumulatedClass A
    
    
    
    
    
    
    Additional
    
    
    Compre-
    
    
    Deficit)(In thousands)
    
    Common
    
    
    Common
    
    
    Treasury
    
    
    Paid-in
    
    
    hensive
    
    
    Retained(Unaudited)
    
    Stock
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    TotalBALANCE AT JANUARY 30, 2010
    
    $
    159
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    149,649
    
    
    $
    (52,912
    )
    
    $
    46,217
    
    
    $
    141,756Comprehensive loss (Note 11):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57,272
    )
    
    
    (57,272
    )Pension and postretirement benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,940
    
    
    
    
    
    
    
    1,940Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,966
    
    
    
    
    
    
    
    1,966Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,366
    )Restricted shares forfeited in lieu of payroll taxes
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4,078
    )
    
    
    
    
    
    
    
    
    
    
    (4,082
    )Share-based compensation expense
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    3,397
    
    
    
    
    
    
    
    
    
    
    
    3,406BALANCE AT JULY 31, 2010
    
    $
    164
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    148,968
    
    
    $
    (49,006
    )
    
    $
    (11,055
    )
    
    $
    87,714
   5




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 1. BASIS OF PRESENTATION
       Recently Issued Accounting Standards
 Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair
Value Measurements
  6




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THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
  2. PER-SHARE AMOUNTS
  THIRTEEN
    
    
    TWENTY-SIXWEEKS ENDED
    
    
    WEEKS ENDEDJuly 31,
    
    
    August 1,
    
    
    July 31,
    
    
    August 1,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic Loss Per Common ShareNet loss
    
    $
    (33,730
    )
    
    $
    (34,762
    )
    
    $
    (57,272
    )
    
    $
    (80,203
    )Less: Income allocated to participating securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss available to common shareholders
    
    $
    (33,730
    )
    
    $
    (34,762
    )
    
    $
    (57,272
    )
    
    $
    (80,203
    )Weighted average common shares outstanding
    
    
    17,627,530
    
    
    
    17,006,401
    
    
    
    17,655,268
    
    
    
    16,997,170Basic loss per common share
    
    $
    (1.91
    )
    
    $
    (2.04
    )
    
    $
    (3.24
    )
    
    $
    (4.72
    )Diluted Loss Per Common ShareNet loss
    
    $
    (33,730
    )
    
    $
    (34,762
    )
    
    $
    (57,272
    )
    
    $
    (80,203
    )Less: Income allocated to participating securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss available to common shareholders
    
    $
    (33,730
    )
    
    $
    (34,762
    )
    
    $
    (57,272
    )
    
    $
    (80,203
    )Weighted average common shares outstanding
    
    
    17,627,530
    
    
    
    17,006,401
    
    
    
    17,655,268
    
    
    
    16,997,170Common shares issuable  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average common shares outstanding
assuming dilution
    
    
    17,627,530
    
    
    
    17,006,401
    
    
    
    17,655,268
    
    
    
    16,997,170Diluted loss per common share
    
    $
    (1.91
    )
    
    $
    (2.04
    )
    
    $
    (3.24
    )
    
    $
    (4.72
    )
    7




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 3. FAIR VALUE MEASUREMENTS
 Fair Value Measurements and Disclosures
   SignificantQuoted Prices
    
    
    Other
    
    
    Significantin Active
    
    
    Observable
    
    
    UnobservableTotal Carrying
    
    
    Markets
    
    
    Inputs
    
    
    InputsValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)July 31, 2010
    
    $
    4,543
    
    
    $
    
    
    
    $
    4,543
    
    
    $
    January 30, 2010
    
    $
    6,319
    
    
    $
    
    
    
    $
    6,319
    
    
    $
    
  4. INTEREST RATE DERIVATIVES
 . Derivatives and Hedging
   8




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
   July 31,
    
    
    August 1,2010
    
    
    2009Fixed swaps (notional amount)
    
    $
    100,000
    
    
    $
    100,000Range of pay rate
    
    
    5.48%-5.49
    %
    
    
    5.48%-5.49
    %
   Balance Sheet Location
    
    Derivative Assets
    
    
    Derivative LiabilitiesJuly 31, 2010
    
    Other Long-Term Liabilities
    
    $
    
    
    
    $
    4,543January 30, 2010
    
    Other Long-Term Liabilities
    
    $
    
    
    
    $
    6,319
  9




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
  Amount of
    
    
    Location of
    
    
    Amount ofLoss
    
    
    Loss
    
    
    LossAmount of
    
    
    Location of Loss
    
    
    Reclassified
    
    
    Recognized
    
    
    RecognizedLoss
    
    
    Reclassified from
    
    
    from AOCI to
    
    
    in the
    
    
    in theRecognized
    
    
    AOCI to the
    
    
    the Statement
    
    
    Statement of
    
    
    Statement ofin OCI
    
    
    Statement of
    
    
    of Operations
    
    
    Operations
    
    
    Operations(effective
    
    
    Operations
    
    
    (effective
    
    
    (ineffective
    
    
    (ineffectiveportion)
    
    
    (effective portion)
    
    
    portion)
    
    
    portion)
    
    
    portion)13 Weeks
Ended
August 1, 2009
    
    $
    1,201
    
    
    InterestExpense, Net
    
    $
    1,132
    
    
    InterestExpense, Net
    
    $
    26 Weeks
Ended
August 1, 2009
    
    $
    3,126
    
    
    InterestExpense, Net
    
    $
    2,226
    
    
    InterestExpense, Net
    
    $
    
  Amount of
    
    
    
    
    
    
    Amount ofLocation of Loss
    
    
    Loss
    
    
    Location of
    
    
    LossReclassified from
    
    
    Reclassified
    
    
    Loss
    
    
    RecognizedAOCI to the
    
    
    from AOCI to
    
    
    Recognized in
    
    
    in theStatement of
    
    
    the Statement
    
    
    the Statement
    
    
    Statement ofOperations
    
    
    of Operations
    
    
    of Operations
    
    
    Operations13 Weeks Ended
July 31, 2010
    
    Interest Expense, Net
    
    $
    995
    
    
    Interest Expense, Net
    
    $
    43726 Weeks Ended
July 31, 2010
    
    Interest Expense, Net
    
    $
    1,966
    
    
    Interest Expense, Net
    
    $
    843
  5. SUPPLEMENTAL BALANCE SHEET INFORMATION
  July 31,
    
    
    January 30,2010
    
    
    2010Prepaid expenses
    
    $
    37,138
    
    
    $
    30,778Other receivables
    
    
    30,759
    
    
    
    48,624Income tax receivables
    
    
    1,203
    
    
    
    8,288Total
    
    $
    69,100
    
    
    $
    87,690
  10




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 6. SUPPLEMENTAL CASH FLOW INFORMATION
  TWENTY-SIXWEEKS ENDEDJuly 31,
    
    
    August 1,2010
    
    
    2009Cash paid for:Interest, net of amounts capitalized
    
    $
    52,014
    
    
    $
    44,340Income taxes, net of refunds received
    
    
    (6,861
    )
    
    
    (32,538
    )Non-cash investing activities:Decrease in accrued property, fixtures and equipment included in accounts payable and accrued expenses
    
    $
    (283
    )
    
    $
    (982
    )Assets acquired under capital leases
    
    
    
    
    
    
    4,602
 7. EXIT OR DISPOSAL ACTIVITIES
  Termination
    
    
    OtherBenefits
    
    
    Costs
    
    
    TotalBalance as of January 30, 2010
    
    $
    1,688
    
    
    $
    
    
    
    $
    1,688Provisions:Thirteen weeks ended May 1, 2010
    
    
    473
    
    
    
    
    
    
    
    473Thirteen weeks ended July 31, 2010
    
    
    11
    
    
    
    279
    
    
    
    290Payments:Thirteen weeks ended May 1, 2010
    
    
    (1,980
    )
    
    
    
    
    
    
    (1,980
    )Thirteen weeks ended July 31, 2010
    
    
    (160
    )
    
    
    
    
    
    
    (160
    )Balance as of July 31, 2010
    
    $
    32
    
    
    $
    279
    
    
    $
    311
  8. EMPLOYEE DEFINED AND POSTRETIREMENT BENEFIT PLANS
  THIRTEEN
    
    
    TWENTY-SIXWEEKS ENDED
    
    
    WEEKS ENDEDJuly 31,
    
    
    August 1,
    
    
    July 31,
    
    
    August 1,2010
    
    
    2009
    
    
    2010
    
    
    2009Interest cost
    
    $
    2,543
    
    
    $
    2,820
    
    
    $
    5,086
    
    
    $
    5,642Expected return on plan assets
    
    
    (1,977
    )
    
    
    (1,765
    )
    
    
    (3,954
    )
    
    
    (3,530
    )Recognition of net actuarial loss
    
    
    970
    
    
    
    1,219
    
    
    
    1,940
    
    
    
    2,438Net periodic benefit expense
    
    $
    1,536
    
    
    $
    2,274
    
    
    $
    3,072
    
    
    $
    4,550
  11




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
   9. INCOME TAXES
 Income Taxes
   10. CONTINGENCIES
   12




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 11. COMPREHENSIVE LOSS
  THIRTEEN
    
    
    TWENTY-SIXWEEKS ENDED
    
    
    WEEKS ENDEDJuly 31,
    
    
    August 1,
    
    
    July 31,
    
    
    August 1,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss
    
    $
    (33,730
    )
    
    $
    (34,762
    )
    
    $
    (57,272
    )
    
    $
    (80,203
    )Other comprehensive income (loss):Amortization of pension and
postretirement benefit plans
    
    
    970
    
    
    
    1,197
    
    
    
    1,940
    
    
    
    2,393Cash flow hedge derivative income (loss)
    
    
    995
    
    
    
    (69
    )
    
    
    1,966
    
    
    
    (900
    )Comprehensive loss
    
    $
    (31,765
    )
    
    $
    (33,634
    )
    
    $
    (53,366
    )
    
    $
    (78,710
    )
  12. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
    13




---



##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
July 31, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    7,043
    
    
    $
    8,238
    
    
    $
    
    
    
    $
    
    
    
    $
    15,282Merchandise inventories
    
    
    
    
    
    
    357,286
    
    
    
    318,350
    
    
    
    
    
    
    
    
    
    
    
    675,636Prepaid expenses and other current assets
    
    
    
    
    
    
    57,273
    
    
    
    11,443
    
    
    
    990
    
    
    
    (606
    )
    
    
    69,100Total current assets
    
    
    1
    
    
    
    421,602
    
    
    
    338,031
    
    
    
    990
    
    
    
    (606
    )
    
    
    760,018Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    207,084
    
    
    
    233,540
    
    
    
    284,010
    
    
    
    
    
    
    
    724,634Deferred income taxes
    
    
    
    
    
    
    4,310
    
    
    
    7,964
    
    
    
    
    
    
    
    
    
    
    
    12,274Intangible assets, net
    
    
    
    
    
    
    57,128
    
    
    
    77,294
    
    
    
    
    
    
    
    
    
    
    
    134,422Investment in and advances to affiliates
    
    
    87,713
    
    
    
    477,847
    
    
    
    148,553
    
    
    
    316
    
    
    
    (714,429
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    34,622
    
    
    
    896
    
    
    
    4,287
    
    
    
    
    
    
    
    39,805Total assets
    
    $
    87,714
    
    
    $
    1,202,593
    
    
    $
    806,278
    
    
    $
    289,603
    
    
    $
    (715,035
    )
    
    $
    1,671,153Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    219,811
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    219,811Accrued payroll and benefits
    
    
    
    
    
    
    27,956
    
    
    
    7,700
    
    
    
    
    
    
    
    
    
    
    
    35,656Accrued expenses
    
    
    
    
    
    
    70,192
    
    
    
    78,953
    
    
    
    1,361
    
    
    
    (606
    )
    
    
    149,900Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    3,738
    
    
    
    2,501
    
    
    
    6,738
    
    
    
    
    
    
    
    12,977Deferred income taxes
    
    
    
    
    
    
    6,032
    
    
    
    8,569
    
    
    
    
    
    
    
    
    
    
    
    14,601Income taxes payable
    
    
    
    
    
    
    119
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    193Total current liabilities
    
    
    
    
    
    
    327,848
    
    
    
    97,797
    
    
    
    8,099
    
    
    
    (606
    )
    
    
    433,138Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    694,930
    
    
    
    53,675
    
    
    
    242,391
    
    
    
    
    
    
    
    990,996Other long-term liabilities
    
    
    
    
    
    
    115,520
    
    
    
    42,459
    
    
    
    1,326
    
    
    
    
    
    
    
    159,305Total liabilities
    
    
    
    
    
    
    1,138,298
    
    
    
    193,931
    
    
    
    251,816
    
    
    
    (606
    )
    
    
    1,583,439Shareholders equity
    
    
    87,714
    
    
    
    64,295
    
    
    
    612,347
    
    
    
    37,787
    
    
    
    (714,429
    )
    
    
    87,714Total liabilities and shareholders equity
    
    $
    87,714
    
    
    $
    1,202,593
    
    
    $
    806,278
    
    
    $
    289,603
    
    
    $
    (715,035
    )
    
    $
    1,671,153
  14




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
January 30, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    9,962
    
    
    $
    8,959
    
    
    $
    
    
    
    $
    
    
    
    $
    18,922Merchandise inventories
    
    
    
    
    
    
    339,616
    
    
    
    319,783
    
    
    
    
    
    
    
    
    
    
    
    659,399Prepaid expenses and other current assets
    
    
    
    
    
    
    73,640
    
    
    
    11,549
    
    
    
    3,035
    
    
    
    (534
    )
    
    
    87,690Total current assets
    
    
    1
    
    
    
    423,218
    
    
    
    340,291
    
    
    
    3,035
    
    
    
    (534
    )
    
    
    766,011Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    226,915
    
    
    
    239,850
    
    
    
    289,853
    
    
    
    
    
    
    
    756,618Deferred income taxes
    
    
    
    
    
    
    4,277
    
    
    
    9,026
    
    
    
    
    
    
    
    
    
    
    
    13,303Intangible assets, net
    
    
    
    
    
    
    59,332
    
    
    
    79,462
    
    
    
    
    
    
    
    
    
    
    
    138,794Investment in and advances to (from) affiliates
    
    
    141,755
    
    
    
    489,259
    
    
    
    153,717
    
    
    
    316
    
    
    
    (785,047
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    38,561
    
    
    
    4,263
    
    
    
    4,457
    
    
    
    
    
    
    
    47,281Total assets
    
    $
    141,756
    
    
    $
    1,241,562
    
    
    $
    826,609
    
    
    $
    297,661
    
    
    $
    (785,581
    )
    
    $
    1,722,007Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    163,671
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    163,671Accrued payroll and benefits
    
    
    
    
    
    
    40,632
    
    
    
    7,665
    
    
    
    
    
    
    
    
    
    
    
    48,297Accrued expenses
    
    
    
    
    
    
    73,953
    
    
    
    85,979
    
    
    
    1,339
    
    
    
    (534
    )
    
    
    160,737Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    3,635
    
    
    
    2,409
    
    
    
    6,509
    
    
    
    
    
    
    
    12,553Deferred income taxes
    
    
    
    
    
    
    5,650
    
    
    
    9,170
    
    
    
    
    
    
    
    
    
    
    
    14,820Total current liabilities
    
    
    
    
    
    
    287,541
    
    
    
    105,223
    
    
    
    7,848
    
    
    
    (534
    )
    
    
    400,078Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    715,891
    
    
    
    54,948
    
    
    
    245,881
    
    
    
    
    
    
    
    1,016,720Other long-term liabilities
    
    
    
    
    
    
    120,469
    
    
    
    41,706
    
    
    
    1,278
    
    
    
    
    
    
    
    163,453Total liabilities
    
    
    
    
    
    
    1,123,901
    
    
    
    201,877
    
    
    
    255,007
    
    
    
    (534
    )
    
    
    1,580,251Shareholders equity
    
    
    141,756
    
    
    
    117,661
    
    
    
    624,732
    
    
    
    42,654
    
    
    
    (785,047
    )
    
    
    141,756Total liabilities and shareholders equity
    
    $
    141,756
    
    
    $
    1,241,562
    
    
    $
    826,609
    
    
    $
    297,661
    
    
    $
    (785,581
    )
    
    $
    1,722,007
  15




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended July 31, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    264,055
    
    
    $
    344,541
    
    
    $
    
    
    
    $
    
    
    
    $
    608,596Other income
    
    
    
    
    
    
    5,732
    
    
    
    8,292
    
    
    
    
    
    
    
    
    
    
    
    14,024
    
    
    
    269,787
    
    
    
    352,833
    
    
    
    
    
    
    
    
    
    
    
    622,620Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    163,335
    
    
    
    213,816
    
    
    
    
    
    
    
    
    
    
    
    377,151Selling, general and administrative
    
    
    
    
    
    
    102,465
    
    
    
    130,370
    
    
    
    25
    
    
    
    (8,697
    )
    
    
    224,163Depreciation and amortization
    
    
    
    
    
    
    10,425
    
    
    
    13,168
    
    
    
    2,923
    
    
    
    
    
    
    
    26,516Amortization of lease-related interests
    
    
    
    
    
    
    661
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    1,147Loss from operations
    
    
    
    
    
    
    (7,099
    )
    
    
    (5,007
    )
    
    
    (2,948
    )
    
    
    8,697
    
    
    
    (6,357
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    1,581
    
    
    
    7,116
    
    
    
    (8,697
    )
    
    
    Equity in losses of subsidiaries
    
    
    (34,534
    )
    
    
    (6,978
    )
    
    
    
    
    
    
    
    
    
    
    41,512
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (20,457
    )
    
    
    (3,626
    )
    
    
    (4,094
    )
    
    
    
    
    
    
    (28,177
    )(Loss) income before income taxes
    
    
    (34,534
    )
    
    
    (34,534
    )
    
    
    (7,052
    )
    
    
    74
    
    
    
    41,512
    
    
    
    (34,534
    )Income tax (benefit) provision
    
    
    (804
    )
    
    
    (804
    )
    
    
    340
    
    
    
    
    
    
    
    464
    
    
    
    (804
    )Net (loss) income
    
    $
    (33,730
    )
    
    $
    (33,730
    )
    
    $
    (7,392
    )
    
    $
    74
    
    
    $
    41,048
    
    
    $
    (33,730
    )
  16




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended August 1, 2009
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    262,320
    
    
    $
    346,908
    
    
    $
    
    
    
    $
    
    
    
    $
    609,228Other income
    
    
    
    
    
    
    10,018
    
    
    
    6,058
    
    
    
    
    
    
    
    
    
    
    
    16,076
    
    
    
    272,338
    
    
    
    352,966
    
    
    
    
    
    
    
    
    
    
    
    625,304Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    165,536
    
    
    
    217,561
    
    
    
    
    
    
    
    
    
    
    
    383,097Selling, general and administrative
    
    
    
    
    
    
    101,167
    
    
    
    130,435
    
    
    
    23
    
    
    
    (8,702
    )
    
    
    222,923Depreciation and amortization
    
    
    
    
    
    
    11,528
    
    
    
    14,241
    
    
    
    2,927
    
    
    
    
    
    
    
    28,696Amortization of lease-related interests
    
    
    
    
    
    
    699
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    1,217Loss from operations
    
    
    
    
    
    
    (6,592
    )
    
    
    (9,789
    )
    
    
    (2,950
    )
    
    
    8,702
    
    
    
    (10,629
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    1,586
    
    
    
    7,116
    
    
    
    (8,702
    )
    
    
    Equity in losses of subsidiaries
    
    
    (33,823
    )
    
    
    (9,351
    )
    
    
    
    
    
    
    
    
    
    
    43,174
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (17,880
    )
    
    
    (1,117
    )
    
    
    (4,197
    )
    
    
    
    
    
    
    (23,194
    )Loss before income taxes
    
    
    (33,823
    )
    
    
    (33,823
    )
    
    
    (9,320
    )
    
    
    (31
    )
    
    
    43,174
    
    
    
    (33,823
    )Income tax provision
    
    
    939
    
    
    
    939
    
    
    
    643
    
    
    
    
    
    
    
    (1,582
    )
    
    
    939Net loss
    
    $
    (34,762
    )
    
    $
    (34,762
    )
    
    $
    (9,963
    )
    
    $
    (31
    )
    
    $
    44,756
    
    
    $
    (34,762
    )
  17




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
 Condensed Consolidating Statement of Operations
 Twenty-Six Weeks Ended July 31, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    551,166
    
    
    $
    718,803
    
    
    $
    
    
    
    $
    
    
    
    $
    1,269,969Other income
    
    
    
    
    
    
    11,323
    
    
    
    16,539
    
    
    
    
    
    
    
    
    
    
    
    27,862
    
    
    
    562,489
    
    
    
    735,342
    
    
    
    
    
    
    
    
    
    
    
    1,297,831Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    342,405
    
    
    
    449,086
    
    
    
    
    
    
    
    
    
    
    
    791,491Selling, general and administrative
    
    
    
    
    
    
    207,062
    
    
    
    262,501
    
    
    
    49
    
    
    
    (17,536
    )
    
    
    452,076Depreciation and amortization
    
    
    
    
    
    
    20,847
    
    
    
    26,049
    
    
    
    5,844
    
    
    
    
    
    
    
    52,740Amortization of lease-related interests
    
    
    
    
    
    
    1,323
    
    
    
    970
    
    
    
    
    
    
    
    
    
    
    
    2,293Loss from operations
    
    
    
    
    
    
    (9,148
    )
    
    
    (3,264
    )
    
    
    (5,893
    )
    
    
    17,536
    
    
    
    (769
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    3,233
    
    
    
    14,303
    
    
    
    (17,536
    )
    
    
    Equity in losses of subsidiaries
    
    
    (57,459
    )
    
    
    (7,090
    )
    
    
    
    
    
    
    
    
    
    
    64,549
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (41,221
    )
    
    
    (7,251
    )
    
    
    (8,218
    )
    
    
    
    
    
    
    (56,690
    )(Loss) income before income taxes
    
    
    (57,459
    )
    
    
    (57,459
    )
    
    
    (7,282
    )
    
    
    192
    
    
    
    64,549
    
    
    
    (57,459
    )Income tax (benefit) provision
    
    
    (187
    )
    
    
    (187
    )
    
    
    654
    
    
    
    
    
    
    
    (467
    )
    
    
    (187
    )Net (loss) income
    
    $
    (57,272
    )
    
    $
    (57,272
    )
    
    $
    (7,936
    )
    
    $
    192
    
    
    $
    65,016
    
    
    $
    (57,272
    )
  18




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
 Condensed Consolidating Statement of Operations
 Twenty-Six Weeks Ended August 1, 2009
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    540,735
    
    
    $
    713,024
    
    
    $
    
    
    
    $
    
    
    
    $
    1,253,759Other income
    
    
    
    
    
    
    17,477
    
    
    
    16,991
    
    
    
    
    
    
    
    
    
    
    
    34,468
    
    
    
    558,212
    
    
    
    730,015
    
    
    
    
    
    
    
    
    
    
    
    1,288,227Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    347,195
    
    
    
    456,268
    
    
    
    
    
    
    
    
    
    
    
    803,463Selling, general and administrative
    
    
    
    
    
    
    209,099
    
    
    
    268,060
    
    
    
    45
    
    
    
    (17,454
    )
    
    
    459,750Depreciation and amortization
    
    
    
    
    
    
    22,789
    
    
    
    28,085
    
    
    
    5,920
    
    
    
    
    
    
    
    56,794Amortization of lease-related interests
    
    
    
    
    
    
    1,408
    
    
    
    1,036
    
    
    
    
    
    
    
    
    
    
    
    2,444Loss from operations
    
    
    
    
    
    
    (22,279
    )
    
    
    (23,434
    )
    
    
    (5,965
    )
    
    
    17,454
    
    
    
    (34,224
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    3,151
    
    
    
    14,303
    
    
    
    (17,454
    )
    
    
    Equity in losses of subsidiaries
    
    
    (80,344
    )
    
    
    (22,599
    )
    
    
    
    
    
    
    
    
    
    
    102,943
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (35,466
    )
    
    
    (2,235
    )
    
    
    (8,419
    )
    
    
    
    
    
    
    (46,120
    )Loss before income taxes
    
    
    (80,344
    )
    
    
    (80,344
    )
    
    
    (22,518
    )
    
    
    (81
    )
    
    
    102,943
    
    
    
    (80,344
    )Income tax (benefit) provision
    
    
    (141
    )
    
    
    (141
    )
    
    
    812
    
    
    
    
    
    
    
    (671
    )
    
    
    (141
    )Net loss
    
    $
    (80,203
    )
    
    $
    (80,203
    )
    
    $
    (23,330
    )
    
    $
    (81
    )
    
    $
    103,614
    
    
    $
    (80,203
    )
  19




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
 Condensed Consolidating Statement of Cash Flows
 Twenty-Six Weeks Ended July 31, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:
    
    $
    4,082
    
    
    $
    26,969
    
    
    $
    15,349
    
    
    $
    8,320
    
    
    $
    (9,538
    )
    
    $
    45,182Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (9,652
    )
    
    
    (10,453
    )
    
    
    
    
    
    
    
    
    
    
    (20,105
    )Intercompany Investing activity
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    9
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    23Net cash used in investing activities
    
    
    
    
    
    
    (9,672
    )
    
    
    (10,439
    )
    
    
    
    
    
    
    29
    
    
    
    (20,082
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (300,953
    )
    
    
    (1,182
    )
    
    
    (3,260
    )
    
    
    
    
    
    
    (305,395
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    280,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    280,094Intercompany financing activity
    
    
    
    
    
    
    
    
    
    
    (4,449
    )
    
    
    (5,060
    )
    
    
    9,509
    
    
    
    Restricted shares forfeited in lieu of payroll taxes
    
    
    (4,082
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,082
    )Deferred financing costs paid
    
    
    
    
    
    
    (714
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (714
    )Increase in bank overdraft balances
    
    
    
    
    
    
    1,357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,357Net cash used in financing activities
    
    
    (4,082
    )
    
    
    (20,216
    )
    
    
    (5,631
    )
    
    
    (8,320
    )
    
    
    9,509
    
    
    
    (28,740
    )Net decrease in cash and cash
equivalents
    
    
    
    
    
    
    (2,919
    )
    
    
    (721
    )
    
    
    
    
    
    
    
    
    
    
    (3,640
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    9,962
    
    
    
    8,959
    
    
    
    
    
    
    
    
    
    
    
    18,922Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    7,043
    
    
    $
    8,238
    
    
    $
    
    
    
    $
    
    
    
    $
    15,282
  20




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##### Table of Contents



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
 The Bon-Ton Stores, Inc.
 Condensed Consolidating Statement of Cash Flows
 Twenty-Six Weeks Ended August 1, 2009
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:
    
    $
    866
    
    
    $
    30,755
    
    
    $
    6,349
    
    
    $
    4,685
    
    
    $
    (7,845
    )
    
    $
    34,810Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (10,952
    )
    
    
    (2,024
    )
    
    
    
    
    
    
    
    
    
    
    (12,976
    )Intercompany Investing activity
    
    
    
    
    
    
    (896
    )
    
    
    
    
    
    
    
    
    
    
    896
    
    
    
    Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    23
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    67Net cash used in investing activities
    
    
    
    
    
    
    (11,825
    )
    
    
    (1,980
    )
    
    
    
    
    
    
    896
    
    
    
    (12,909
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (332,013
    )
    
    
    (1,097
    )
    
    
    (3,047
    )
    
    
    
    
    
    
    (336,157
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    316,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,406Intercompany financing activity
    
    
    
    
    
    
    (866
    )
    
    
    (4,445
    )
    
    
    (1,638
    )
    
    
    6,949
    
    
    
    Cash dividends paid
    
    
    (866
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (866
    )Decrease in bank overdraft balances
    
    
    
    
    
    
    (5,412
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,412
    )Net cash used in financing activities
    
    
    (866
    )
    
    
    (21,885
    )
    
    
    (5,542
    )
    
    
    (4,685
    )
    
    
    6,949
    
    
    
    (26,029
    )Net decrease in cash and cash
equivalents
    
    
    
    
    
    
    (2,955
    )
    
    
    (1,173
    )
    
    
    
    
    
    
    
    
    
    
    (4,128
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    10,769
    
    
    
    8,949
    
    
    
    
    
    
    
    
    
    
    
    19,719Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    7,814
    
    
    $
    7,776
    
    
    $
    
    
    
    $
    
    
    
    $
    15,591
 13. AMENDMENTS TO CREDIT CARD PROGRAM AGREEMENT
    21




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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
      
    
    a comparable store sales increase in the range of 1.0% to 2.0%;
    
    a gross margin rate in the range of 37.6% to 37.7%, an improvement over the fiscal 2009
rate of 37.1%;
    
    a reduction of $15.0 million to $20.0 million in our selling, general and administrative
(SG&A) expenses; and
    
    an effective tax rate of 0%.
  Patient Protection and Affordable Care Act Health Care and
Education Reconciliation Act of 2010
  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
 Results of Operations
  THIRTEEN
    
    
    TWENTY-SIXWEEKS ENDED
    
    
    WEEKS ENDEDJuly 31,
    
    
    August 1,
    
    
    July 31,
    
    
    August 1,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Other income
    
    
    2.3
    
    
    
    2.6
    
    
    
    2.2
    
    
    
    2.7102.3
    
    
    
    102.6
    
    
    
    102.2
    
    
    
    102.7Costs and expenses:Costs of merchandise sold
    
    
    62.0
    
    
    
    62.9
    
    
    
    62.3
    
    
    
    64.1Selling, general and administrative
    
    
    36.8
    
    
    
    36.6
    
    
    
    35.6
    
    
    
    36.7Depreciation and amortization
    
    
    4.4
    
    
    
    4.7
    
    
    
    4.2
    
    
    
    4.5Amortization of lease-related interests
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.2Loss from operations
    
    
    (1.0
    )
    
    
    (1.7
    )
    
    
    (0.1
    )
    
    
    (2.7
    )Interest expense, net
    
    
    4.6
    
    
    
    3.8
    
    
    
    4.5
    
    
    
    3.7Loss before income taxes
    
    
    (5.7
    )
    
    
    (5.6
    )
    
    
    (4.5
    )
    
    
    (6.4
    )Income tax (benefit) provision
    
    
    (0.1
    )
    
    
    0.2
    
    
    
    
    
    
    
    Net loss
    
    
    (5.5
    )%
    
    
    (5.7
    )%
    
    
    (4.5
    )%
    
    
    (6.4
    )%
 Second Quarter of 2010 Compared with Second Quarter of 2009
 Net sales
    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
 Other income
 Costs and expenses
   Loss from operations
 Interest expense, net
 Income tax (benefit) provision
 Net loss
 2010 Compared with 2009
 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 .
   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
 Seasonality
   Liquidity and Capital Resources
    July 31,
    
    
    August 1,(Dollars in millions)
    
    2010
    
    
    2009Working capital
    
    $
    326.9
    
    
    $
    377.9Current ratio
    
    
    1.75:1
    
    
    
    1.96:1Debt to total capitalization (1)
    
    
    0.92:1
    
    
    
    0.95:1Unused availability under lines of credit (2)
    
    $
    390.5
    
    
    $
    173.7
 (1)
    
    Debt includes obligations under capital leases. Total capitalization includes shareholders equity and debt.(2)
    
    Subject to a minimum borrowing availability covenant of $75.0 million.   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
   TWENTY-SIXWEEKS ENDEDJuly 31,
    
    
    August 1,(Dollars in millions)
    
    2010
    
    
    2009Operating activities
    
    $
    45.2
    
    
    $
    34.8Investing activities
    
    
    (20.1
    )
    
    
    (12.9
    )Financing activities
    
    
    (28.7
    )
    
    
    (26.0
    )
    Critical Accounting Policies
    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
 Inventory Valuation
      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
 Vendor Allowances
   Income Taxes
     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
   Long-lived Assets
   
    
    Significant underperformance 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.
    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
 Intangible Assets
    Insurance Reserve Estimates
  Pension and Supplementary Retirement Plans
      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
 Forward-Looking Statements
   32




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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
   33




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##### Table of Contents



THE BON-TON STORES, INC.
 
 PART II: OTHER INFORMATION
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  
 ITEM 6. EXHIBITS
  Exhibit
    
    Description
    
    Document Location10.1
    
    Fourth Amendment to the Credit Card
Program Agreement
    
    Exhibit 10.1 to the
Current Report on Form
8-K filed on August 4,
201010.2
    
    Fifth Amendment to the Credit Card
Program Agreement
    
    Exhibit 10.1 to the
Current Report on Form
8-K filed on September
7, 201031.1
    
    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.
  34




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##### Table of Contents



THE BON-TON STORES, INC.
 
 SIGNATURES
  THE BON-TON STORES, INC.DATE:      September 9, 2010
    BY:
    /s/  Byron L. BergrenByron L. BergrenPresident and
Chief Executive OfficerDATE:      September 9, 2010
    BY:
    /s/  Keith E. PlowmanKeith E. PlowmanExecutive Vice President,
Chief Financial Officer and
Principal Accounting Officer  35