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
May 1, 2010
    
    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
 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)
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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)
    
    May 1,
    
    
    January 30,(Unaudited)
    
    2010
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,466
    
    
    $
    18,922Merchandise inventories
    
    
    676,085
    
    
    
    659,399Prepaid expenses and other current assets
    
    
    73,970
    
    
    
    87,690Total current assets
    
    
    766,521
    
    
    
    766,011Property, fixtures and equipment at cost, net of accumulated depreciation and amortization
of $618,200 and $594,020 at May 1, 2010 and January 30, 2010, respectively
    
    
    736,762
    
    
    
    756,618Deferred income taxes
    
    
    13,423
    
    
    
    13,303Intangible assets, net of accumulated amortization of $40,663 and $38,477 at
May 1, 2010 and January 30, 2010, respectively
    
    
    136,608
    
    
    
    138,794Other long-term assets
    
    
    42,013
    
    
    
    47,281Total assets
    
    $
    1,695,327
    
    
    $
    1,722,007Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    189,736
    
    
    $
    163,671Accrued payroll and benefits
    
    
    34,917
    
    
    
    48,297Accrued expenses
    
    
    140,189
    
    
    
    160,737Current maturities of long-term debt
    
    
    7,621
    
    
    
    7,509Current maturities of obligations under capital leases
    
    
    5,140
    
    
    
    5,044Deferred income taxes
    
    
    15,346
    
    
    
    14,820Income taxes payable
    
    
    128
    
    
    
    Total current liabilities
    
    
    393,077
    
    
    
    400,078Long-term debt, less current maturities
    
    
    957,604
    
    
    
    951,315Obligations under capital leases, less current maturities
    
    
    64,084
    
    
    
    65,405Other long-term liabilities
    
    
    163,143
    
    
    
    163,453Total liabilities
    
    
    1,577,908
    
    
    
    1,580,251Contingencies (Note 10)Shareholders equityPreferred 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 16,403,023 and 15,942,348 at May 1, 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 May 1, 2010 and January 30, 2010
    
    
    30
    
    
    
    30Treasury stock, at cost  337,800 shares at May 1, 2010 and January 30, 2010
    
    
    (1,387
    )
    
    
    (1,387
    )Additional paid-in capital
    
    
    146,908
    
    
    
    149,649Accumulated other comprehensive loss
    
    
    (50,971
    )
    
    
    (52,912
    )Retained earnings
    
    
    22,675
    
    
    
    46,217Total shareholders equity
    
    
    117,419
    
    
    
    141,756Total liabilities and shareholders equity
    
    $
    1,695,327
    
    
    $
    1,722,007
   2




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##### 



THE
BON-TON STORES, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 THIRTEENWEEKS ENDED(In thousands except per share data)
    
    May 1,
    
    
    May 2,(Unaudited)
    
    2010
    
    
    2009Net sales
    
    $
    661,373
    
    
    $
    644,531Other income
    
    
    13,838
    
    
    
    18,392675,211
    
    
    
    662,923Costs and expenses:Costs of merchandise sold
    
    
    414,340
    
    
    
    420,366Selling, general and administrative
    
    
    227,913
    
    
    
    236,827Depreciation and amortization
    
    
    26,224
    
    
    
    28,098Amortization of lease-related interests
    
    
    1,146
    
    
    
    1,227Income (loss) from operations
    
    
    5,588
    
    
    
    (23,595
    )Interest expense, net
    
    
    28,513
    
    
    
    22,926Loss before income taxes
    
    
    (22,925
    )
    
    
    (46,521
    )Income tax provision (benefit)
    
    
    617
    
    
    
    (1,080
    )Net loss
    
    $
    (23,542
    )
    
    $
    (45,441
    )Per share amounts Basic:Net loss
    
    $
    (1.33
    )
    
    $
    (2.67
    )Diluted:Net loss
    
    $
    (1.33
    )
    
    $
    (2.67
    )
   3




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##### 



THE
BON-TON STORES, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 THIRTEENWEEKS ENDED(In thousands)
    
    May 1,
    
    
    May 2,(Unaudited)
    
    2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (23,542
    )
    
    $
    (45,441
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    26,224
    
    
    
    28,098Amortization of lease-related interests
    
    
    1,146
    
    
    
    1,227Share-based compensation expense
    
    
    1,347
    
    
    
    1,117(Gain) loss on sale of property, fixtures and equipment
    
    
    (11
    )
    
    
    65Reclassifications of other comprehensive loss
    
    
    1,941
    
    
    
    2,290Amortization of deferred financing costs
    
    
    2,287
    
    
    
    1,022Amortization of deferred gain on sale of proprietary credit card portfolio
    
    
    (603
    )
    
    
    (603
    )Deferred income taxes
    
    
    405
    
    
    
    3,035Changes in operating assets and liabilitiesIncrease in merchandise inventories
    
    
    (16,687
    )
    
    
    (25,322
    )Decrease in prepaid expenses and other current assets
    
    
    13,720
    
    
    
    5,401Decrease in other long-term assets
    
    
    3,495
    
    
    
    4,311Increase in accounts payable
    
    
    28,802
    
    
    
    32,122Decrease in accrued payroll and benefits and accrued expenses
    
    
    (30,270
    )
    
    
    (24,340
    )Increase in income taxes payable
    
    
    128
    
    
    
    104Increase (decrease) in other long-term liabilities
    
    
    779
    
    
    
    (1,745
    )Net cash provided by (used in) operating activities
    
    
    9,161
    
    
    
    (18,659
    )Cash flows from investing activities:Capital expenditures
    
    
    (6,592
    )
    
    
    (6,146
    )Proceeds from sale of property, fixtures and equipment
    
    
    15
    
    
    
    56Net cash used in investing activities
    
    
    (6,577
    )
    
    
    (6,090
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (144,889
    )
    
    
    (154,662
    )Proceeds from issuance of long-term debt
    
    
    150,065
    
    
    
    184,308Cash dividends paid
    
    
    
    
    
    
    (866
    )Restricted shares forfeited in lieu of payroll taxes
    
    
    (4,083
    )
    
    
    Deferred financing costs paid
    
    
    (515
    )
    
    
    Decrease in bank overdraft balances
    
    
    (5,618
    )
    
    
    (5,371
    )Net cash (used in) provided by financing activities
    
    
    (5,040
    )
    
    
    23,409Net decrease in cash and cash equivalents
    
    
    (2,456
    )
    
    
    (1,340
    )Cash and cash equivalents at beginning of period
    
    
    18,922
    
    
    
    19,719Cash and cash equivalents at end of period
    
    $
    16,466
    
    
    $
    18,379
   4




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##### 



THE
BON-TON STORES, INC.
 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 AccumulatedOtherClass A
    
    
    
    
    
    
    Additional
    
    
    Compre-(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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,542
    )
    
    
    (23,542
    )Pension and postretirement benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    970
    
    
    
    
    
    
    
    970Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    971
    
    
    
    
    
    
    
    971Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,601
    )Resticted shares forfeited in lieu of payroll taxes
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4,079
    )
    
    
    
    
    
    
    
    
    
    
    (4,083
    )Share-based compensation expense
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    1,338
    
    
    
    
    
    
    
    
    
    
    
    1,347BALANCE AT MAY 1, 2010
    
    $
    164
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    146,908
    
    
    $
    (50,971
    )
    
    $
    22,675
    
    
    $
    117,419
   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
       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 and per share data)
 2. PER-SHARE AMOUNTS
  THIRTEENWEEKS ENDEDMay 1,
    
    
    May 2,2010
    
    
    2009Basic Loss Per Common ShareNet loss
    
    $
    (23,542
    )
    
    $
    (45,441
    )Less: Income allocated to participating securities
    
    
    
    
    
    
    Net loss available to common shareholders
    
    $
    (23,542
    )
    
    $
    (45,441
    )Weighted average common shares outstanding
    
    
    17,683,005
    
    
    
    16,987,939Basic loss per common share
    
    $
    (1.33
    )
    
    $
    (2.67
    )Diluted Loss Per Common ShareNet loss
    
    $
    (23,542
    )
    
    $
    (45,441
    )Less: Income allocated to participating securities
    
    
    
    
    
    
    Net loss available to common shareholders
    
    $
    (23,542
    )
    
    $
    (45,441
    )Average common shares outstanding
    
    
    17,683,005
    
    
    
    16,987,939Common shares issuable  stock options
    
    
    
    
    
    
    Weighted average common shares outstanding assuming dilution
    
    
    17,683,005
    
    
    
    16,987,939Diluted loss per common share
    
    $
    (1.33
    )
    
    $
    (2.67
    )
    7




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per 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)May 1, 2010
    
    $
    5,404
    
    
    $
    
    
    
    $
    5,404
    
    
    $
    January 30, 2010
    
    $
    6,319
    
    
    $
    
    
    
    $
    6,319
    
    
    $
    
   4. INTEREST RATE DERIVATIVES
 . Derivatives and Hedging
   8




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   May 1,
    
    
    May 2,2010
    
    
    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 LiabilitiesMay 1, 2010
    
    Other Long-Term Liabilities
    
    $
    
    
    
    $
    5,404January 30, 2010
    
    Other Long-Term Liabilities
    
    $
    
    
    
    $
    6,319
  9




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per 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 May 2, 2009
    
    $
    1,925
    
    
    Interest 
Expense, Net
    
    
    $
    1,094
    
    
    Interest 
Expense, 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 May 1, 2010
    
    Interest 
Expense, Net
    
    
    $
    971
    
    
    Interest 
Expense, Net
    
    
    $
    406
  5. SUPPLEMENTAL BALANCE SHEET INFORMATION
  May 1,
    
    
    January 30,2010
    
    
    2010Prepaid expenses
    
    $
    37,807
    
    
    $
    30,778Other receivables
    
    
    27,994
    
    
    
    48,624Income tax receivables
    
    
    8,169
    
    
    
    8,288Total
    
    $
    73,970
    
    
    $
    87,690
  10




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 6. SUPPLEMENTAL CASH FLOW INFORMATION
  THIRTEENWEEKS ENDEDMay 1,
    
    
    May 2,2010
    
    
    2009Cash paid for:Interest, net of amounts capitalized
    
    $
    39,661
    
    
    $
    36,629Income taxes, net of refunds received
    
    
    (75
    )
    
    
    176Non-cash investing activities:Decrease in accrued property, fixtures and equipment
included in accounts payable and accrued expenses
    
    $
    (774
    )
    
    $
    (1,241
    )Assets acquired under capital leases
    
    
    
    
    
    
    4,602
 7. EXIT OR DISPOSAL ACTIVITIES
  TerminationBenefitsBalance as of January 30, 2010
    
    $
    1,688Provision
    
    
    473Payments
    
    
    (1,980
    )Balance as of May 1, 2010
    
    $
    181
  8. EMPLOYEE DEFINED AND POSTRETIREMENT BENEFIT PLANS
  THIRTEENWEEKS ENDEDMay 1,
    
    
    May 2,2010
    
    
    2009Interest cost
    
    $
    2,543
    
    
    $
    2,822Expected return on plan assets
    
    
    (1,977
    )
    
    
    (1,765
    )Recognition of net actuarial loss
    
    
    970
    
    
    
    1,219Net periodic benefit expense
    
    $
    1,536
    
    
    $
    2,276
   11




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
  9. INCOME TAXES
 Income Taxes
   10. CONTINGENCIES
  11. COMPREHENSIVE LOSS
  THIRTEENWEEKS ENDEDMay 1,
    
    
    May 2,2010
    
    
    2009Net loss
    
    $
    (23,542
    )
    
    $
    (45,441
    )Other comprehensive income (loss):Amortization of pension and postretirement benefit plans
    
    
    970
    
    
    
    1,196Cash flow hedge derivative income (loss)
    
    
    971
    
    
    
    (831
    )Comprehensive loss
    
    $
    (21,601
    )
    
    $
    (45,076
    )
  12




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
  12. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
    13




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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
May 1, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    8,336
    
    
    $
    8,129
    
    
    $
    
    
    
    $
    
    
    
    $
    16,466Merchandise inventories
    
    
    
    
    
    
    328,980
    
    
    
    347,105
    
    
    
    
    
    
    
    
    
    
    
    676,085Prepaid expenses and other current assets
    
    
    
    
    
    
    60,468
    
    
    
    12,032
    
    
    
    2,076
    
    
    
    (606
    )
    
    
    73,970Total current assets
    
    
    1
    
    
    
    397,784
    
    
    
    367,266
    
    
    
    2,076
    
    
    
    (606
    )
    
    
    766,521Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    216,533
    
    
    
    233,297
    
    
    
    286,932
    
    
    
    
    
    
    
    736,762Deferred income taxes
    
    
    
    
    
    
    4,303
    
    
    
    9,120
    
    
    
    
    
    
    
    
    
    
    
    13,423Intangible assets, net
    
    
    
    
    
    
    58,230
    
    
    
    78,378
    
    
    
    
    
    
    
    
    
    
    
    136,608Investment in and advances to (from) affiliates
    
    
    117,418
    
    
    
    508,314
    
    
    
    131,667
    
    
    
    316
    
    
    
    (757,715
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    36,806
    
    
    
    838
    
    
    
    4,369
    
    
    
    
    
    
    
    42,013Total assets
    
    $
    117,419
    
    
    $
    1,221,970
    
    
    $
    820,566
    
    
    $
    293,693
    
    
    $
    (758,321
    )
    
    $
    1,695,327Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    189,736
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    189,736Accrued payroll and benefits
    
    
    
    
    
    
    25,057
    
    
    
    9,860
    
    
    
    
    
    
    
    
    
    
    
    34,917Accrued expenses
    
    
    
    
    
    
    59,481
    
    
    
    79,943
    
    
    
    1,371
    
    
    
    (606
    )
    
    
    140,189Current maturities of long-term debt and obligations under capital leases
    
    
    
    
    
    
    3,686
    
    
    
    2,454
    
    
    
    6,621
    
    
    
    
    
    
    
    12,761Deferred income taxes
    
    
    
    
    
    
    5,851
    
    
    
    9,495
    
    
    
    
    
    
    
    
    
    
    
    15,346Income taxes payable
    
    
    
    
    
    
    80
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    128Total current liabilities
    
    
    
    
    
    
    283,891
    
    
    
    101,800
    
    
    
    7,992
    
    
    
    (606
    )
    
    
    393,077Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    723,239
    
    
    
    54,318
    
    
    
    244,131
    
    
    
    
    
    
    
    1,021,688Other long-term liabilities
    
    
    
    
    
    
    118,780
    
    
    
    43,061
    
    
    
    1,302
    
    
    
    
    
    
    
    163,143Total liabilities
    
    
    
    
    
    
    1,125,910
    
    
    
    199,179
    
    
    
    253,425
    
    
    
    (606
    )
    
    
    1,577,908Shareholders equity
    
    
    117,419
    
    
    
    96,060
    
    
    
    621,387
    
    
    
    40,268
    
    
    
    (757,715
    )
    
    
    117,419Total liabilities and shareholders equity
    
    $
    117,419
    
    
    $
    1,221,970
    
    
    $
    820,566
    
    
    $
    293,693
    
    
    $
    (758,321
    )
    
    $
    1,695,327
  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 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




---



##### 



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 May 1, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    287,111
    
    
    $
    374,262
    
    
    $
    
    
    
    $
    
    
    
    $
    661,373Other income
    
    
    
    
    
    
    5,591
    
    
    
    8,247
    
    
    
    
    
    
    
    
    
    
    
    13,838
    
    
    
    292,702
    
    
    
    382,509
    
    
    
    
    
    
    
    
    
    
    
    675,211Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    179,070
    
    
    
    235,270
    
    
    
    
    
    
    
    
    
    
    
    414,340Selling, general and administrative
    
    
    
    
    
    
    104,597
    
    
    
    132,131
    
    
    
    24
    
    
    
    (8,839
    )
    
    
    227,913Depreciation and amortization
    
    
    
    
    
    
    10,422
    
    
    
    12,881
    
    
    
    2,921
    
    
    
    
    
    
    
    26,224Amortization of lease-related interests
    
    
    
    
    
    
    662
    
    
    
    484
    
    
    
    
    
    
    
    
    
    
    
    1,146(Loss) income from operations
    
    
    
    
    
    
    (2,049
    )
    
    
    1,743
    
    
    
    (2,945
    )
    
    
    8,839
    
    
    
    5,588Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    1,652
    
    
    
    7,187
    
    
    
    (8,839
    )
    
    
    Equity in losses of subsidiaries
    
    
    (22,925
    )
    
    
    (112
    )
    
    
    
    
    
    
    
    
    
    
    23,037
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (20,764
    )
    
    
    (3,625
    )
    
    
    (4,124
    )
    
    
    
    
    
    
    (28,513
    )(Loss) income before income taxes
    
    
    (22,925
    )
    
    
    (22,925
    )
    
    
    (230
    )
    
    
    118
    
    
    
    23,037
    
    
    
    (22,925
    )Income tax provision
    
    
    617
    
    
    
    617
    
    
    
    314
    
    
    
    
    
    
    
    (931
    )
    
    
    617Net (loss) income
    
    $
    (23,542
    )
    
    $
    (23,542
    )
    
    $
    (544
    )
    
    $
    118
    
    
    $
    23,968
    
    
    $
    (23,542
    )
  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
Thirteen Weeks Ended May 2, 2009
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    278,415
    
    
    $
    366,116
    
    
    $
    
    
    
    $
    
    
    
    $
    644,531Other income
    
    
    
    
    
    
    7,459
    
    
    
    10,933
    
    
    
    
    
    
    
    
    
    
    
    18,392
    
    
    
    285,874
    
    
    
    377,049
    
    
    
    
    
    
    
    
    
    
    
    662,923Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    181,659
    
    
    
    238,707
    
    
    
    
    
    
    
    
    
    
    
    420,366Selling, general and administrative
    
    
    
    
    
    
    107,932
    
    
    
    137,625
    
    
    
    22
    
    
    
    (8,752
    )
    
    
    236,827Depreciation and amortization
    
    
    
    
    
    
    11,261
    
    
    
    13,844
    
    
    
    2,993
    
    
    
    
    
    
    
    28,098Amortization of lease-related interests
    
    
    
    
    
    
    709
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    1,227Loss from operations
    
    
    
    
    
    
    (15,687
    )
    
    
    (13,645
    )
    
    
    (3,015
    )
    
    
    8,752
    
    
    
    (23,595
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    1,565
    
    
    
    7,187
    
    
    
    (8,752
    )
    
    
    Equity in losses of subsidiaries
    
    
    (46,521
    )
    
    
    (13,248
    )
    
    
    
    
    
    
    
    
    
    
    59,769
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (17,586
    )
    
    
    (1,118
    )
    
    
    (4,222
    )
    
    
    
    
    
    
    (22,926
    )Loss before income taxes
    
    
    (46,521
    )
    
    
    (46,521
    )
    
    
    (13,198
    )
    
    
    (50
    )
    
    
    59,769
    
    
    
    (46,521
    )Income tax (benefit) provision
    
    
    (1,080
    )
    
    
    (1,080
    )
    
    
    169
    
    
    
    
    
    
    
    911
    
    
    
    (1,080
    )Net loss
    
    $
    (45,441
    )
    
    $
    (45,441
    )
    
    $
    (13,367
    )
    
    $
    (50
    )
    
    $
    58,858
    
    
    $
    (45,441
    )
  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 Cash Flows
Thirteen Weeks Ended May 1, 2010
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities
    
    $
    4,083
    
    
    $
    1,488
    
    
    $
    4,783
    
    
    $
    4,141
    
    
    $
    (5,334
    )
    
    $
    9,161Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,355
    )
    
    
    (2,237
    )
    
    
    
    
    
    
    
    
    
    
    (6,592
    )Intercompany investing activity
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    4
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    15Net cash used in investing activities
    
    
    
    
    
    
    (4,380
    )
    
    
    (2,226
    )
    
    
    
    
    
    
    29
    
    
    
    (6,577
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (142,666
    )
    
    
    (586
    )
    
    
    (1,637
    )
    
    
    
    
    
    
    (144,889
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    150,065
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,065Intercompany financing activity
    
    
    
    
    
    
    
    
    
    
    (2,801
    )
    
    
    (2,504
    )
    
    
    5,305
    
    
    
    Restricted shares forfeited in lieu of payroll taxes
    
    
    (4,083
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,083
    )Deferred financing costs paid
    
    
    
    
    
    
    (515
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (515
    )Decrease in bank overdraft balances
    
    
    
    
    
    
    (5,618
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,618
    )Net cash (used in) provided by financing activities
    
    
    (4,083
    )
    
    
    1,266
    
    
    
    (3,387
    )
    
    
    (4,141
    )
    
    
    5,305
    
    
    
    (5,040
    )Net decrease in cash and cash equivalents
    
    
    
    
    
    
    (1,626
    )
    
    
    (830
    )
    
    
    
    
    
    
    
    
    
    
    (2,456
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    9,962
    
    
    
    8,959
    
    
    
    
    
    
    
    
    
    
    
    18,922Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    8,336
    
    
    $
    8,129
    
    
    $
    
    
    
    $
    
    
    
    $
    16,466
  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
Thirteen Weeks Ended May 2, 2009
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities
    
    $
    866
    
    
    $
    (22,892
    )
    
    $
    5,884
    
    
    $
    2,672
    
    
    $
    (5,189
    )
    
    $
    (18,659
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (5,253
    )
    
    
    (893
    )
    
    
    
    
    
    
    
    
    
    
    (6,146
    )Intercompany investing activity
    
    
    
    
    
    
    (814
    )
    
    
    
    
    
    
    
    
    
    
    814
    
    
    
    Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    21
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    56Net cash used in investing activities
    
    
    
    
    
    
    (6,046
    )
    
    
    (858
    )
    
    
    
    
    
    
    814
    
    
    
    (6,090
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (152,071
    )
    
    
    (543
    )
    
    
    (2,048
    )
    
    
    
    
    
    
    (154,662
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    184,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184,308Intercompany financing activity
    
    
    
    
    
    
    (866
    )
    
    
    (2,885
    )
    
    
    (624
    )
    
    
    4,375
    
    
    
    Cash dividends paid
    
    
    (866
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (866
    )Decrease in bank overdraft balances
    
    
    
    
    
    
    (5,371
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,371
    )Net cash (used in) provided by financing activities
    
    
    (866
    )
    
    
    26,000
    
    
    
    (3,428
    )
    
    
    (2,672
    )
    
    
    4,375
    
    
    
    23,409Net (decrease) increase in cash and cash equivalents
    
    
    
    
    
    
    (2,938
    )
    
    
    1,598
    
    
    
    
    
    
    
    
    
    
    
    (1,340
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    10,769
    
    
    
    8,949
    
    
    
    
    
    
    
    
    
    
    
    19,719Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    7,831
    
    
    $
    10,547
    
    
    $
    
    
    
    $
    
    
    
    $
    18,379
  19




---



##### 



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 3.0%;
    
    a gross margin rate in the range of 37.2% to 37.3%, an improvement over the 2009 rate of
37.1%;
    
    a reduction of $20.0 million to $25.0 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
  20




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Results of Operations
  THIRTEENWEEKS ENDEDMay 1,
    
    
    May 2,2010
    
    
    2009Net sales
    
    
    100.0
    %
    
    
    100.0
    %Other income
    
    
    2.1
    
    
    
    2.9102.1
    
    
    
    102.9Costs and expenses:Costs of merchandise sold
    
    
    62.6
    
    
    
    65.2Selling, general and administrative
    
    
    34.5
    
    
    
    36.7Depreciation and amortization
    
    
    4.0
    
    
    
    4.4Amortization of lease-related interests
    
    
    0.2
    
    
    
    0.2Income (loss) from operations
    
    
    0.8
    
    
    
    (3.7
    )Interest expense, net
    
    
    4.3
    
    
    
    3.6Loss before income taxes
    
    
    (3.5
    )
    
    
    (7.2
    )Income tax provision (benefit)
    
    
    0.1
    
    
    
    (0.2
    )Net loss
    
    
    (3.6)
    %
    
    
    (7.1
    )%
 First Quarter of 2010 Compared with First Quarter of 2009
 Net sales
  Other income
  21




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Costs and expenses
   Income (loss) from operations
 Interest expense, net
 Income tax provision (benefit)
 Net loss
 Seasonality
   Liquidity and Capital Resources
   22




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THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
   May 1,
    
    
    May 2,(Dollars in millions)
    
    2010
    
    
    2009Working capital
    
    $
    373.4
    
    
    $
    441.1Current ratio
    
    
    1.95:1
    
    
    
    2.17:1Debt to total capitalization (1)
    
    
    0.90:1
    
    
    
    0.93:1Unused availability under lines of credit (2)
    
    $
    407.3
    
    
    $
    164.6
 (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.    23




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THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  THIRTEENWEEKS ENDEDMay 1,
    
    
    May 2,(Dollars in millions)
    
    2010
    
    
    2009Operating activities
    
    $
    9.2
    
    
    $
    (18.7
    )Investing activities
    
    
    (6.6
    )
    
    
    (6.1
    )Financing activities
    
    
    (5.0
    )
    
    
    23.4
    Critical Accounting Policies
   Inventory Valuation
   24




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THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    Vendor Allowances
   25




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THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Income Taxes
      Long-lived Assets
   26




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THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  
    
    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.
   Intangible Assets
     27




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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
     Forward-Looking Statements
   28




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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
   29




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THE BON-TON STORES, INC.
 PART II: OTHER INFORMATION
 ITEM 6.
    
    EXHIBITS
  Exhibit
    
    Description
    
    Document Location10.1
    
    
    Amendment No. 2 to Executive Transition
Agreement with M. Thomas Grumbacher
    
    Incorporated by
reference to Exhibit
10.1 to the Current
Report on 
Form 8-K
filed on February 1,
201010.2
    
    
    Form of Restricted Stock Agreement
    
    Incorporated by
reference to Exhibit
10.1 to the Current
Report on 
Form 8-K
filed on April 16,
2010 (4/16/10 Form
8-K)10.3
    
    
    Form of Restricted Stock Agreement 
Performance Shares
    
    Incorporated by
reference to Exhibit
10.2 to the 4/16/10
Form 8-K10.4
    
    
    Form of Restricted Stock Unit Agreement
    
    Incorporated by
reference to Exhibit
10.3 to the 4/16/10
Form 8-K10.5
    
    
    Form of Non-Qualified Stock Option
Agreement
    
    Incorporated by
reference to Exhibit
10.4 to the 4/16/10
Form 8-K31.1
    
    
    Certification of Byron L. Bergren
    
    Filed herewith31.2
    
    
    Certification of Keith E. Plowman
    
    Filed herewith32.1
    
    
    Certification pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002
    
    Furnished herewith
  30




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##### 



THE BON-TON STORES, INC.
 SIGNATURES
  THE BON-TON STORES, INC.DATE:      June 10, 2010
    BY:
    
    /s/  Byron L. BergrenByron L. BergrenPresident and
       Chief Executive OfficerDATE:      June 10, 2010
    BY:
    
    /s/  Keith E. PlowmanKeith E. PlowmanExecutive Vice President,
       Chief Financial Officer and
       Principal Accounting Officer  31