##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 For the Quarter ended November 3, 2007
 Commission File Number 0-19517
 THE BON-TON STORES, INC.
 2801 East Market Street
 York, Pennsylvania 17402
  Incorporated in Pennsylvania
    
    IRS No. 23-2835229
 
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##### 



PART I: FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 THE BON-TON STORES, INC.
CONSOLIDATED BALANCE SHEETS
 (In thousands except share and per share data)
    
    November 3,
    
    
    February 3,(Unaudited)
    
    2007
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    23,976
    
    
    $
    24,733Merchandise inventories
    
    
    1,036,853
    
    
    
    787,487Prepaid expenses and other current assets
    
    
    115,193
    
    
    
    84,731Deferred income taxes
    
    
    12,832
    
    
    
    17,858Total current assets
    
    
    1,188,854
    
    
    
    914,809Property, fixtures and equipment at cost, net of accumulated depreciation and amortization
of $389,623 and $311,160 at November 3, 2007 and February 3, 2007, respectively
    
    
    892,254
    
    
    
    897,886Deferred income taxes
    
    
    87,058
    
    
    
    76,586Goodwill
    
    
    22,233
    
    
    
    27,377Intangible assets, net of accumulated amortization of $19,444 and $12,087 at November 3, 2007
and February 3, 2007, respectively
    
    
    169,668
    
    
    
    176,700Other long-term assets
    
    
    37,574
    
    
    
    41,441Total assets
    
    $
    2,397,641
    
    
    $
    2,134,799Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    428,040
    
    
    $
    209,742Accrued payroll and benefits
    
    
    50,206
    
    
    
    68,434Accrued expenses
    
    
    152,800
    
    
    
    178,642Current maturities of long-term debt
    
    
    5,559
    
    
    
    5,555Current maturities of obligations under capital leases
    
    
    2,123
    
    
    
    1,936Income taxes payable
    
    
    
    
    
    
    48,086Total current liabilities
    
    
    638,728
    
    
    
    512,395Long-term debt, less current maturities
    
    
    1,293,064
    
    
    
    1,120,169Obligations under capital leases, less current maturities
    
    
    67,824
    
    
    
    69,456Other long-term liabilities
    
    
    112,584
    
    
    
    86,383Total liabilities
    
    
    2,112,200
    
    
    
    1,788,403Contingencies (Note 8)Shareholders equity:Preferred Stock  authorized 5,000,000 shares at $0.01 par value; no shares issued
    
    
    
    
    
    
    Common Stock  authorized 40,000,000 shares at $0.01 par value; issued shares of
14,594,111 and 14,469,196 shares at November 3, 2007 and February 3, 2007, respectively
    
    
    146
    
    
    
    145Class A Common Stock  authorized 20,000,000 shares at $0.01 par value; issued
and outstanding shares of 2,951,490 at November 3, 2007 and February 3, 2007
    
    
    30
    
    
    
    30Treasury stock, at cost - 337,800 shares at November 3, 2007 and February 3, 2007
    
    
    (1,387
    )
    
    
    (1,387
    )Additional paid-in-capital
    
    
    137,274
    
    
    
    130,875Accumulated other comprehensive income
    
    
    45
    
    
    
    1,189Retained earnings
    
    
    149,333
    
    
    
    215,544Total shareholders equity
    
    
    285,441
    
    
    
    346,396Total liabilities and shareholders equity
    
    $
    2,397,641
    
    
    $
    2,134,799
   2




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##### 



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDED(In thousands except share and per share data)
    
    November 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,(Unaudited)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    780,839
    
    
    $
    804,100
    
    
    $
    2,227,020
    
    
    $
    2,112,646Other income
    
    
    24,646
    
    
    
    22,859
    
    
    
    69,409
    
    
    
    57,646805,485
    
    
    
    826,959
    
    
    
    2,296,429
    
    
    
    2,170,292Costs and expenses:Costs of merchandise sold
    
    
    508,802
    
    
    
    509,829
    
    
    
    1,438,672
    
    
    
    1,347,342Selling, general and administrative
    
    
    265,279
    
    
    
    273,581
    
    
    
    780,891
    
    
    
    731,722Depreciation and amortization
    
    
    30,107
    
    
    
    28,756
    
    
    
    87,306
    
    
    
    74,093Amortization of lease-related interests
    
    
    1,280
    
    
    
    831
    
    
    
    3,841
    
    
    
    2,579Income (loss) from operations
    
    
    17
    
    
    
    13,962
    
    
    
    (14,281
    )
    
    
    14,556Interest expense, net
    
    
    27,383
    
    
    
    27,929
    
    
    
    82,281
    
    
    
    79,082Loss before income taxes
    
    
    (27,366
    )
    
    
    (13,967
    )
    
    
    (96,562
    )
    
    
    (64,526
    )Income tax benefit
    
    
    (8,004
    )
    
    
    (3,066
    )
    
    
    (32,926
    )
    
    
    (23,015
    )Net loss
    
    $
    (19,362
    )
    
    $
    (10,901
    )
    
    $
    (63,636
    )
    
    $
    (41,511
    )Per share amounts Basic:Net loss
    
    $
    (1.17
    )
    
    $
    (0.66
    )
    
    $
    (3.86
    )
    
    $
    (2.53
    )Basic weighted average shares outstanding
    
    
    16,533,957
    
    
    
    16,439,314
    
    
    
    16,504,678
    
    
    
    16,420,082Diluted:Net loss
    
    $
    (1.17
    )
    
    $
    (0.66
    )
    
    $
    (3.86
    )
    
    $
    (2.53
    )Diluted weighted average shares outstanding
    
    
    16,533,957
    
    
    
    16,439,314
    
    
    
    16,504,678
    
    
    
    16,420,082
   3




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##### 



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 THIRTY-NINEWEEKS ENDED(In thousands)
    
    November 3,
    
    
    October 28,(Unaudited)
    
    2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (63,636
    )
    
    $
    (41,511
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    87,306
    
    
    
    74,093Amortization of lease-related interests
    
    
    3,841
    
    
    
    2,579Share-based compensation expense
    
    
    5,372
    
    
    
    3,834Excess tax benefit from share-based compensation
    
    
    (548
    )
    
    
    (868
    )Loss (gain) on sale of property, fixtures and equipment
    
    
    409
    
    
    
    (687
    )Amortization of deferred financing costs
    
    
    2,987
    
    
    
    5,469Amortization of deferred gain on sale of proprietary credit card portfolio
    
    
    (1,810
    )
    
    
    (1,810
    )Deferred income tax provision (benefit)
    
    
    1,771
    
    
    
    (2,919
    )Cancellation of restricted shares
    
    
    (4
    )
    
    
    Changes in operating assets and liabilities, net of effect of acquisition:Increase in merchandise inventories
    
    
    (249,366
    )
    
    
    (204,649
    )Increase in prepaid expenses and other current assets
    
    
    (29,914
    )
    
    
    (39,487
    )Decrease (increase) in other long-term assets
    
    
    1,163
    
    
    
    (6,633
    )Increase in accounts payable
    
    
    192,810
    
    
    
    111,677(Decrease) increase in accrued payroll and benefits and accrued expenses
    
    
    (39,583
    )
    
    
    13,758Decrease in income taxes payable
    
    
    (48,086
    )
    
    
    (13,335
    )Increase in other long-term liabilities
    
    
    25,450
    
    
    
    1,513Net cash used in operating activities
    
    
    (111,838
    )
    
    
    (98,976
    )Cash flows from investing activities:Capital expenditures
    
    
    (82,163
    )
    
    
    (72,954
    )Acquisition, net of cash acquired
    
    
    (62
    )
    
    
    (1,047,120
    )Proceeds from sale of property, fixtures and equipment
    
    
    2,715
    
    
    
    1,557Net cash used in investing activities
    
    
    (79,510
    )
    
    
    (1,118,517
    )Cash flows from financing activities:Payments on long-term debt and capital lease obligations
    
    
    (503,519
    )
    
    
    (590,246
    )Proceeds from issuance of long-term debt
    
    
    674,971
    
    
    
    1,807,739Cash dividends paid
    
    
    (2,575
    )
    
    
    (1,274
    )Proceeds from stock options exercised
    
    
    484
    
    
    
    936Excess tax benefit from share-based compensation
    
    
    548
    
    
    
    868Deferred financing costs paid
    
    
    (284
    )
    
    
    (27,798
    )Increase in bank overdraft balances
    
    
    20,966
    
    
    
    40,344Net cash provided by financing activities
    
    
    190,591
    
    
    
    1,230,569Net (decrease) increase in cash and cash equivalents
    
    
    (757
    )
    
    
    13,076Cash and cash equivalents at beginning of period
    
    
    24,733
    
    
    
    9,771Cash and cash equivalents at end of period
    
    $
    23,976
    
    
    $
    22,847Supplemental Cash Flow Information:Interest paid
    
    $
    92,746
    
    
    $
    64,330Net income taxes paid
    
    $
    39,677
    
    
    $
    16,585
   4




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##### 



THE BON-TON STORES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 AccumulatedOtherClass A
    
    
    
    
    
    
    Additional
    
    
    Compre-(In thousands except per share data)
    
    Common
    
    
    Common
    
    
    Treasury
    
    
    Paid-in
    
    
    hensive
    
    
    Retained(Unaudited)
    
    Stock
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Income
    
    
    Earnings
    
    
    TotalBALANCE AT FEBRUARY 3, 2007
    
    $
    145
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    130,875
    
    
    $
    1,189
    
    
    $
    215,544
    
    
    $
    346,396Comprehensive loss (Note 9):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,636
    )
    
    
    (63,636
    )Pension plan, net of $88 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    152Change in fair value of cash flow hedges,
net of $923 tax effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,296
    )
    
    
    
    
    
    
    (1,296
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64,780
    )Dividends to shareholders, $0.15 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,575
    )
    
    
    (2,575
    )Proceeds from stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    484
    
    
    
    
    
    
    
    
    
    
    
    484Share-based compensation expense
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    5,371
    
    
    
    
    
    
    
    
    
    
    
    5,372Cancellation of restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Excess tax benefit from share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548
    
    
    
    
    
    
    
    
    
    
    
    548BALANCE AT NOVEMBER 3, 2007
    
    $
    146
    
    
    $
    30
    
    
    $
    (1,387
    )
    
    $
    137,274
    
    
    $
    45
    
    
    $
    149,333
    
    
    $
    285,441
   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
       Adoption of New Accounting Pronouncement
    6




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   Future Accounting Changes
   2.     PER-SHARE AMOUNTS
   7




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Basic calculation
    
    
    16,533,957
    
    
    
    16,439,314
    
    
    
    16,504,678
    
    
    
    16,420,082Effect of dilutive shares -Restricted shares and restricted
stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted calculation
    
    
    16,533,957
    
    
    
    16,439,314
    
    
    
    16,504,678
    
    
    
    16,420,082
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Antidilutive shares -Restricted shares and restricted
stock units
    
    
    766,668
    
    
    
    661,878
    
    
    
    732,283
    
    
    
    603,619Options
    
    
    706,822
    
    
    
    620,092
    
    
    
    692,134
    
    
    
    569,562
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Effect of dilutive securities -Restricted shares and restricted
stock units
    
    
    435,066
    
    
    
    282,650
    
    
    
    420,085
    
    
    
    246,240Options
    
    
    105,261
    
    
    
    95,891
    
    
    
    187,343
    
    
    
    90,792
 3.     CARSONS ACQUISITION
   8




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
  Final Purchase Price
 Cash purchase
    
    $
    1,040,188Carsons severance
    
    
    514Professional fees incurred
    
    
    11,863Total
    
    $
    1,052,565
 Final Purchase Price Allocation
 Cash and cash equivalents
    
    $
    3,110Merchandise inventories
    
    
    455,207Prepaid expenses
    
    
    33,687Property, fixtures and equipment
    
    
    724,447Deferred income taxes
    
    
    21,951Goodwill
    
    
    24,860Intangible assets
    
    
    178,180Other assets
    
    
    9,040Total assets acquired
    
    
    1,450,482Accounts payable
    
    
    (158,860
    )Accrued payroll and benefits
    
    
    (34,560
    )Other accrued expenses
    
    
    (79,088
    )Obligations under capital leases
    
    
    (73,000
    )Other liabilities
    
    
    (52,409
    )Total liabilities assumed
    
    
    (397,917
    )Net assets acquired
    
    $
    1,052,565
  4.     SUPPLEMENTAL BALANCE SHEET INFORMATION
  November 3,
    
    
    February 3,2007
    
    
    2007Landlord receivables
    
    $
    1,050
    
    
    $
    15,000Prepaid expenses
    
    
    41,129
    
    
    
    29,527Other
    
    
    73,014
    
    
    
    40,204Total
    
    $
    115,193
    
    
    $
    84,731
  9




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##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 5.     INTEGRATION ACTIVITIES
    Termination
    
    
    LeaseBenefits
    
    
    Termination
    
    
    TotalBalance as of February 3, 2007
    
    $
    333
    
    
    $
    987
    
    
    $
    1,320Provision:Thirteen weeks ended May 5, 2007
    
    
    24
    
    
    
    
    
    
    
    24Thirteen weeks ended November 3, 2007
    
    
    (41
    )
    
    
    
    
    
    
    (41
    )Payments:Thirteen weeks ended May 5, 2007
    
    
    (205
    )
    
    
    (20
    )
    
    
    (225
    )Thirteen weeks ended August 4, 2007
    
    
    (94
    )
    
    
    (33
    )
    
    
    (127
    )Thirteen weeks ended November 3, 2007
    
    
    (17
    )
    
    
    (20
    )
    
    
    (37
    )Balance as of November 3, 2007
    
    $
    
    
    
    $
    914
    
    
    $
    914
  6.     EXIT OR DISPOSAL ACTIVITIES
   10




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 Termination
    
    
    OtherBenefits
    
    
    Costs
    
    
    TotalBalance as of February 3, 2007
    
    $
    2,436
    
    
    $
    
    
    
    $
    2,436Provision:Thirteen weeks ended May 5, 2007
    
    
    498
    
    
    
    1,159
    
    
    
    1,657Thirteen weeks ended August 4, 2007
    
    
    
    
    
    
    (77
    )
    
    
    (77
    )Thirteen weeks ended November 3, 2007
    
    
    (20
    )
    
    
    28
    
    
    
    8Payments:Thirteen weeks ended May 5, 2007
    
    
    (2,914
    )
    
    
    (831
    )
    
    
    (3,745
    )Thirteen weeks ended August 4, 2007
    
    
    
    
    
    
    (251
    )
    
    
    (251
    )Thirteen weeks ended November 3, 2007
    
    
    
    
    
    
    (28
    )
    
    
    (28
    )Balance as of November 3, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
   Termination
    
    
    Lease
    
    
    Contract
    
    
    OtherBenefits
    
    
    Termination
    
    
    Termination
    
    
    Costs
    
    
    TotalBalance as of February 3, 2007
    
    $
    341
    
    
    $
    344
    
    
    $
    32
    
    
    $
    231
    
    
    $
    948Provision:Thirteen weeks ended
May 5, 2007
    
    
    664
    
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    853Thirteen weeks ended
August 4, 2007
    
    
    (55
    )
    
    
    
    
    
    
    (11
    )
    
    
    186
    
    
    
    120Payments:Thirteen weeks ended
May 5, 2007
    
    
    (639
    )
    
    
    (90
    )
    
    
    (21
    )
    
    
    (420
    )
    
    
    (1,170
    )Thirteen weeks ended
August 4, 2007
    
    
    (311
    )
    
    
    (90
    )
    
    
    
    
    
    
    (186
    )
    
    
    (587
    )Thirteen weeks ended
November 3, 2007
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    (90
    )Balance as of November 3, 2007
    
    $
    
    
    
    $
    74
    
    
    $
    
    
    
    $
    
    
    
    $
    74
   11




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 7.     EMPLOYEE BENEFIT PLANS
   THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    33
    
    
    $
    49
    
    
    $
    98
    
    
    $
    133Interest cost
    
    
    3,041
    
    
    
    3,223
    
    
    
    9,124
    
    
    
    8,121Expected return on plan assets
    
    
    (3,668
    )
    
    
    (3,723
    )
    
    
    (11,005
    )
    
    
    (9,352
    )Recognition of prior service cost
    
    
    1
    
    
    
    
    
    
    
    3
    
    
    
    Recognition of net actuarial loss
    
    
    79
    
    
    
    
    
    
    
    237
    
    
    
    Net periodic benefit income
    
    $
    (514
    )
    
    $
    (451
    )
    
    $
    (1,543
    )
    
    $
    (1,098
    )
   8.     CONTINGENCIES
     12




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
   9.     COMPREHENSIVE LOSS
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Net loss
    
    $
    (19,362
    )
    
    $
    (10,901
    )
    
    $
    (63,636
    )
    
    $
    (41,511
    )Other comprehensive income (loss):Amortization of pension plan
amounts, net of tax
    
    
    51
    
    
    
    
    
    
    
    152
    
    
    
    Cash flow hedge derivative
loss, net of tax
    
    
    (1,121
    )
    
    
    (885
    )
    
    
    (1,296
    )
    
    
    (1,322
    )Comprehensive loss
    
    $
    (20,432
    )
    
    $
    (11,786
    )
    
    $
    (64,780
    )
    
    $
    (42,833
    )
 10.   SUBSEQUENT EVENT
  11.   GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
    13




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    7,699
    
    
    $
    16,276
    
    
    $
    
    
    
    $
    
    
    
    $
    23,976Merchandise inventories
    
    
    
    
    
    
    325,313
    
    
    
    711,540
    
    
    
    
    
    
    
    
    
    
    
    1,036,853Prepaid expenses and other current assets
    
    
    
    
    
    
    67,474
    
    
    
    47,068
    
    
    
    651
    
    
    
    
    
    
    
    115,193Deferred income taxes
    
    
    
    
    
    
    (4,573
    )
    
    
    17,405
    
    
    
    
    
    
    
    
    
    
    
    12,832Total current assets
    
    
    1
    
    
    
    395,913
    
    
    
    792,289
    
    
    
    651
    
    
    
    
    
    
    
    1,188,854Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    189,779
    
    
    
    383,417
    
    
    
    319,058
    
    
    
    
    
    
    
    892,254Deferred income taxes
    
    
    
    
    
    
    17,174
    
    
    
    69,884
    
    
    
    
    
    
    
    
    
    
    
    87,058Goodwill
    
    
    
    
    
    
    2,965
    
    
    
    19,268
    
    
    
    
    
    
    
    
    
    
    
    22,233Intangible assets, net
    
    
    
    
    
    
    2,586
    
    
    
    167,082
    
    
    
    
    
    
    
    
    
    
    
    169,668Investment in and advances to affiliates
    
    
    287,647
    
    
    
    1,198,254
    
    
    
    78,612
    
    
    
    558
    
    
    
    (1,565,071
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    25,062
    
    
    
    9,629
    
    
    
    2,883
    
    
    
    
    
    
    
    37,574Total assets
    
    $
    287,648
    
    
    $
    1,831,733
    
    
    $
    1,520,181
    
    
    $
    323,150
    
    
    $
    (1,565,071
    )
    
    $
    2,397,641Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    428,040
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    428,040Accrued payroll and benefits
    
    
    
    
    
    
    9,754
    
    
    
    40,452
    
    
    
    
    
    
    
    
    
    
    
    50,206Accrued expenses
    
    
    
    
    
    
    45,063
    
    
    
    107,606
    
    
    
    131
    
    
    
    
    
    
    
    152,800Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    
    
    
    
    2,123
    
    
    
    5,559
    
    
    
    
    
    
    
    7,682Total current liabilities
    
    
    
    
    
    
    482,857
    
    
    
    150,181
    
    
    
    5,690
    
    
    
    
    
    
    
    638,728Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    1,033,638
    
    
    
    67,824
    
    
    
    259,426
    
    
    
    
    
    
    
    1,360,888Other long-term liabilities
    
    
    2,207
    
    
    
    40,944
    
    
    
    68,346
    
    
    
    1,087
    
    
    
    
    
    
    
    112,584Total liabilities
    
    
    2,207
    
    
    
    1,557,439
    
    
    
    286,351
    
    
    
    266,203
    
    
    
    
    
    
    
    2,112,200Shareholders equity
    
    
    285,441
    
    
    
    274,294
    
    
    
    1,233,830
    
    
    
    56,947
    
    
    
    (1,565,071
    )
    
    
    285,441Total liabilities and shareholders equity
    
    $
    287,648
    
    
    $
    1,831,733
    
    
    $
    1,520,181
    
    
    $
    323,150
    
    
    $
    (1,565,071
    )
    
    $
    2,397,641
  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
February 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    1
    
    
    $
    7,384
    
    
    $
    17,348
    
    
    $
    
    
    
    $
    
    
    
    $
    24,733Merchandise inventories
    
    
    
    
    
    
    264,832
    
    
    
    522,655
    
    
    
    
    
    
    
    
    
    
    
    787,487Prepaid expenses and other current assets
    
    
    
    
    
    
    37,746
    
    
    
    46,334
    
    
    
    651
    
    
    
    
    
    
    
    84,731Deferred income taxes
    
    
    
    
    
    
    2,038
    
    
    
    15,820
    
    
    
    
    
    
    
    
    
    
    
    17,858Total current assets
    
    
    1
    
    
    
    312,000
    
    
    
    602,157
    
    
    
    651
    
    
    
    
    
    
    
    914,809Property, fixtures and equipment at cost, net
    
    
    
    
    
    
    168,419
    
    
    
    397,655
    
    
    
    331,812
    
    
    
    
    
    
    
    897,886Deferred income taxes
    
    
    
    
    
    
    13,526
    
    
    
    63,060
    
    
    
    
    
    
    
    
    
    
    
    76,586Goodwill
    
    
    
    
    
    
    2,965
    
    
    
    24,412
    
    
    
    
    
    
    
    
    
    
    
    27,377Intangible assets, net
    
    
    
    
    
    
    2,599
    
    
    
    174,101
    
    
    
    
    
    
    
    
    
    
    
    176,700Investment in and advances to affiliates
    
    
    348,426
    
    
    
    984,789
    
    
    
    320,982
    
    
    
    345
    
    
    
    (1,654,542
    )
    
    
    Other long-term assets
    
    
    
    
    
    
    26,875
    
    
    
    11,324
    
    
    
    3,242
    
    
    
    
    
    
    
    41,441Total assets
    
    $
    348,427
    
    
    $
    1,511,173
    
    
    $
    1,593,691
    
    
    $
    336,050
    
    
    $
    (1,654,542
    )
    
    $
    2,134,799Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    209,742
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    209,742Accrued payroll and benefits
    
    
    
    
    
    
    14,112
    
    
    
    54,322
    
    
    
    
    
    
    
    
    
    
    
    68,434Accrued expenses
    
    
    
    
    
    
    68,486
    
    
    
    110,023
    
    
    
    133
    
    
    
    
    
    
    
    178,642Current maturities of long-term debt and obligations
under capital leases
    
    
    
    
    
    
    
    
    
    
    1,936
    
    
    
    5,555
    
    
    
    
    
    
    
    7,491Income taxes payable
    
    
    2,031
    
    
    
    (6,520
    )
    
    
    52,575
    
    
    
    
    
    
    
    
    
    
    
    48,086Total current liabilities
    
    
    2,031
    
    
    
    285,820
    
    
    
    218,856
    
    
    
    5,688
    
    
    
    
    
    
    
    512,395Long-term debt and obligations under capital leases,
less current maturities
    
    
    
    
    
    
    853,300
    
    
    
    69,456
    
    
    
    266,869
    
    
    
    
    
    
    
    1,189,625Other long-term liabilities
    
    
    
    
    
    
    31,436
    
    
    
    53,918
    
    
    
    1,029
    
    
    
    
    
    
    
    86,383Total liabilities
    
    
    2,031
    
    
    
    1,170,556
    
    
    
    342,230
    
    
    
    273,586
    
    
    
    
    
    
    
    1,788,403Shareholders equity
    
    
    346,396
    
    
    
    340,617
    
    
    
    1,251,461
    
    
    
    62,464
    
    
    
    (1,654,542
    )
    
    
    346,396Total liabilities and shareholders equity
    
    $
    348,427
    
    
    $
    1,511,173
    
    
    $
    1,593,691
    
    
    $
    336,050
    
    
    $
    (1,654,542
    )
    
    $
    2,134,799
  15




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    148,237
    
    
    $
    632,602
    
    
    $
    
    
    
    $
    
    
    
    $
    780,839Other income
    
    
    
    
    
    
    4,563
    
    
    
    20,083
    
    
    
    
    
    
    
    
    
    
    
    24,646
    
    
    
    152,800
    
    
    
    652,685
    
    
    
    
    
    
    
    
    
    
    
    805,485Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    97,291
    
    
    
    411,511
    
    
    
    
    
    
    
    
    
    
    
    508,802Selling, general and administrative
    
    
    
    
    
    
    55,673
    
    
    
    218,685
    
    
    
    19
    
    
    
    (9,098
    )
    
    
    265,279Depreciation and amortization
    
    
    
    
    
    
    9,768
    
    
    
    17,383
    
    
    
    2,956
    
    
    
    
    
    
    
    30,107Amortization of lease-related interests
    
    
    
    
    
    
    112
    
    
    
    1,168
    
    
    
    
    
    
    
    
    
    
    
    1,280(Loss) income from operations
    
    
    
    
    
    
    (10,044
    )
    
    
    3,938
    
    
    
    (2,975
    )
    
    
    9,098
    
    
    
    17Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    2,055
    
    
    
    7,043
    
    
    
    (9,098
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (27,366
    )
    
    
    1,717
    
    
    
    
    
    
    
    
    
    
    
    25,649
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (19,039
    )
    
    
    (3,982
    )
    
    
    (4,362
    )
    
    
    
    
    
    
    (27,383
    )(Loss) income before income taxes
    
    
    (27,366
    )
    
    
    (27,366
    )
    
    
    2,011
    
    
    
    (294
    )
    
    
    25,649
    
    
    
    (27,366
    )Income tax (benefit) provision
    
    
    (8,004
    )
    
    
    (8,004
    )
    
    
    748
    
    
    
    
    
    
    
    7,256
    
    
    
    (8,004
    )Net (loss) income
    
    $
    (19,362
    )
    
    $
    (19,362
    )
    
    $
    1,263
    
    
    $
    (294
    )
    
    $
    18,393
    
    
    $
    (19,362
    )
  16




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended October 28, 2006
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    138,192
    
    
    $
    665,908
    
    
    $
    
    
    
    $
    
    
    
    $
    804,100Other income
    
    
    
    
    
    
    4,468
    
    
    
    18,391
    
    
    
    
    
    
    
    
    
    
    
    22,859
    
    
    
    142,660
    
    
    
    684,299
    
    
    
    
    
    
    
    
    
    
    
    826,959Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    91,687
    
    
    
    418,142
    
    
    
    
    
    
    
    
    
    
    
    509,829Selling, general and administrative
    
    
    
    
    
    
    61,965
    
    
    
    221,052
    
    
    
    
    
    
    
    (9,436
    )
    
    
    273,581Depreciation and amortization
    
    
    
    
    
    
    6,289
    
    
    
    19,340
    
    
    
    3,127
    
    
    
    
    
    
    
    28,756Amortization of lease-related interests
    
    
    
    
    
    
    118
    
    
    
    713
    
    
    
    
    
    
    
    
    
    
    
    831(Loss) income from operations
    
    
    
    
    
    
    (17,399
    )
    
    
    25,052
    
    
    
    (3,127
    )
    
    
    9,436
    
    
    
    13,962Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    2,177
    
    
    
    7,259
    
    
    
    (9,436
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (13,967
    )
    
    
    21,480
    
    
    
    
    
    
    
    
    
    
    
    (7,513
    )
    
    
    Interest expense, net
    
    
    
    
    
    
    (18,048
    )
    
    
    (5,209
    )
    
    
    (4,672
    )
    
    
    
    
    
    
    (27,929
    )(Loss) income before income taxes
    
    
    (13,967
    )
    
    
    (13,967
    )
    
    
    22,020
    
    
    
    (540
    )
    
    
    (7,513
    )
    
    
    (13,967
    )Income tax (benefit) provision
    
    
    (3,066
    )
    
    
    (3,002
    )
    
    
    6,981
    
    
    
    
    
    
    
    (3,979
    )
    
    
    (3,066
    )Net (loss) income
    
    $
    (10,901
    )
    
    $
    (10,965
    )
    
    $
    15,039
    
    
    $
    (540
    )
    
    $
    (3,534
    )
    
    $
    (10,901
    )
  17




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirty-Nine Weeks Ended November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    428,857
    
    
    $
    1,798,163
    
    
    $
    
    
    
    $
    
    
    
    $
    2,227,020Other income
    
    
    
    
    
    
    13,120
    
    
    
    56,289
    
    
    
    
    
    
    
    
    
    
    
    69,409
    
    
    
    441,977
    
    
    
    1,854,452
    
    
    
    
    
    
    
    
    
    
    
    2,296,429Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    277,652
    
    
    
    1,161,020
    
    
    
    
    
    
    
    
    
    
    
    1,438,672Selling, general and administrative
    
    
    
    
    
    
    162,273
    
    
    
    646,578
    
    
    
    (616
    )
    
    
    (27,344
    )
    
    
    780,891Depreciation and amortization
    
    
    
    
    
    
    24,404
    
    
    
    54,019
    
    
    
    8,883
    
    
    
    
    
    
    
    87,306Amortization of lease-related interests
    
    
    
    
    
    
    338
    
    
    
    3,503
    
    
    
    
    
    
    
    
    
    
    
    3,841Loss from operations
    
    
    
    
    
    
    (22,690
    )
    
    
    (10,668
    )
    
    
    (8,267
    )
    
    
    27,344
    
    
    
    (14,281
    )Other income (expense):Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    5,950
    
    
    
    21,394
    
    
    
    (27,344
    )
    
    
    Equity in losses of subsidiaries
    
    
    (96,562
    )
    
    
    (17,394
    )
    
    
    
    
    
    
    
    
    
    
    113,956
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (56,478
    )
    
    
    (11,573
    )
    
    
    (14,230
    )
    
    
    
    
    
    
    (82,281
    )Loss before income taxes
    
    
    (96,562
    )
    
    
    (96,562
    )
    
    
    (16,291
    )
    
    
    (1,103
    )
    
    
    113,956
    
    
    
    (96,562
    )Income tax benefit
    
    
    (32,926
    )
    
    
    (32,926
    )
    
    
    (6,060
    )
    
    
    
    
    
    
    38,986
    
    
    
    (32,926
    )Net loss
    
    $
    (63,636
    )
    
    $
    (63,636
    )
    
    $
    (10,231
    )
    
    $
    (1,103
    )
    
    $
    74,970
    
    
    $
    (63,636
    )
  18




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirty-Nine Weeks Ended October 28, 2006
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    414,618
    
    
    $
    1,698,028
    
    
    $
    
    
    
    $
    
    
    
    $
    2,112,646Other income
    
    
    
    
    
    
    14,049
    
    
    
    43,597
    
    
    
    
    
    
    
    
    
    
    
    57,646
    
    
    
    428,667
    
    
    
    1,741,625
    
    
    
    
    
    
    
    
    
    
    
    2,170,292Costs and expenses:Costs of merchandise sold
    
    
    
    
    
    
    283,873
    
    
    
    1,063,469
    
    
    
    
    
    
    
    
    
    
    
    1,347,342Selling, general and administrative
    
    
    2
    
    
    
    177,897
    
    
    
    579,677
    
    
    
    6
    
    
    
    (25,860
    )
    
    
    731,722Depreciation and amortization
    
    
    
    
    
    
    17,403
    
    
    
    47,063
    
    
    
    9,627
    
    
    
    
    
    
    
    74,093Amortization of lease-related interests
    
    
    
    
    
    
    353
    
    
    
    2,226
    
    
    
    
    
    
    
    
    
    
    
    2,579(Loss) income from operations
    
    
    (2
    )
    
    
    (50,859
    )
    
    
    49,190
    
    
    
    (9,633
    )
    
    
    25,860
    
    
    
    14,556Other income (expense):Intercompany interest income
    
    
    1,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,700
    )
    
    
    Intercompany rental and royalty income
    
    
    
    
    
    
    
    
    
    
    7,005
    
    
    
    18,855
    
    
    
    (25,860
    )
    
    
    Equity in (losses) earnings of subsidiaries
    
    
    (66,224
    )
    
    
    42,159
    
    
    
    
    
    
    
    
    
    
    
    24,065
    
    
    
    Interest expense, net
    
    
    
    
    
    
    (57,524
    )
    
    
    (11,122
    )
    
    
    (12,136
    )
    
    
    1,700
    
    
    
    (79,082
    )(Loss) income before income taxes
    
    
    (64,526
    )
    
    
    (66,224
    )
    
    
    45,073
    
    
    
    (2,914
    )
    
    
    24,065
    
    
    
    (64,526
    )Income tax (benefit) provision
    
    
    (23,015
    )
    
    
    (23,621
    )
    
    
    16,077
    
    
    
    
    
    
    
    7,544
    
    
    
    (23,015
    )Net (loss) income
    
    $
    (41,511
    )
    
    $
    (42,603
    )
    
    $
    28,996
    
    
    $
    (2,914
    )
    
    $
    16,521
    
    
    $
    (41,511
    )
  19




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
Thirty-Nine Weeks Ended November 3, 2007
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:
    
    $
    2,091
    
    
    $
    (155,909
    )
    
    $
    46,720
    
    
    $
    9,363
    
    
    $
    (14,103
    )
    
    $
    (111,838
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (43,250
    )
    
    
    (38,913
    )
    
    
    
    
    
    
    
    
    
    
    (82,163
    )Acquisition, net of cash acquired
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62
    )Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    52
    
    
    
    168
    
    
    
    2,495
    
    
    
    
    
    
    
    2,715Net cash (used in) provided by investing activities
    
    
    
    
    
    
    (43,260
    )
    
    
    (38,745
    )
    
    
    2,495
    
    
    
    
    
    
    
    (79,510
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (494,634
    )
    
    
    (1,445
    )
    
    
    (7,440
    )
    
    
    
    
    
    
    (503,519
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    674,971
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    674,971Intercompany financing activity
    
    
    
    
    
    
    (2,091
    )
    
    
    (7,602
    )
    
    
    (4,410
    )
    
    
    14,103
    
    
    
    Cash dividends paid
    
    
    (2,575
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,575
    )Proceeds from stock options exercised
    
    
    484
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    484Excess tax benefit from share-based compensation
    
    
    
    
    
    
    548
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548Deferred financing costs paid
    
    
    
    
    
    
    (276
    )
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (284
    )Increase in bank overdraft balances
    
    
    
    
    
    
    20,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,966Net cash (used in) provided by financing activities
    
    
    (2,091
    )
    
    
    199,484
    
    
    
    (9,047
    )
    
    
    (11,858
    )
    
    
    14,103
    
    
    
    190,591Net increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    315
    
    
    
    (1,072
    )
    
    
    
    
    
    
    
    
    
    
    (757
    )Cash and cash equivalents at beginning
of period
    
    
    1
    
    
    
    7,384
    
    
    
    17,348
    
    
    
    
    
    
    
    
    
    
    
    24,733Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    7,699
    
    
    $
    16,276
    
    
    $
    
    
    
    $
    
    
    
    $
    23,976
  20




---



##### 



THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
 The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
Thirty-Nine Weeks Ended October 28, 2006
 Bon-Ton(Parent
    
    
    
    
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    CompanyCompany)
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:
    
    $
    329
    
    
    $
    112,190
    
    
    $
    50,966
    
    
    $
    6,124
    
    
    $
    (268,585
    )
    
    $
    (98,976
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (44,670
    )
    
    
    (28,284
    )
    
    
    
    
    
    
    
    
    
    
    (72,954
    )Acquisition, net of cash acquired
    
    
    
    
    
    
    (1,047,120
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,047,120
    )Proceeds from sale of property, fixtures
and equipment
    
    
    
    
    
    
    1,039
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    1,557Net cash used in investing activities
    
    
    
    
    
    
    (1,090,751
    )
    
    
    (27,766
    )
    
    
    
    
    
    
    
    
    
    
    (1,118,517
    )Cash flows from financing activities:Payments on long-term debt and capital
lease obligations
    
    
    
    
    
    
    (586,361
    )
    
    
    (1,081
    )
    
    
    (2,804
    )
    
    
    
    
    
    
    (590,246
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    1,547,739
    
    
    
    
    
    
    
    260,000
    
    
    
    
    
    
    
    1,807,739Intercompany financing activity
    
    
    
    
    
    
    (338
    )
    
    
    (7,735
    )
    
    
    (260,512
    )
    
    
    268,585
    
    
    
    Cash dividends paid
    
    
    (1,274
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,274
    )Proceeds from stock options exercised
    
    
    936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    936Excess tax benefit from share-based compensation
    
    
    
    
    
    
    868
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    868Deferred financing costs paid
    
    
    
    
    
    
    (24,990
    )
    
    
    
    
    
    
    (2,808
    )
    
    
    
    
    
    
    (27,798
    )Increase in bank overdraft balances
    
    
    
    
    
    
    40,180
    
    
    
    164
    
    
    
    
    
    
    
    
    
    
    
    40,344Net cash (used in) provided by financing activities
    
    
    (338
    )
    
    
    977,098
    
    
    
    (8,652
    )
    
    
    (6,124
    )
    
    
    268,585
    
    
    
    1,230,569Net (decrease) increase in cash and cash
equivalents
    
    
    (9
    )
    
    
    (1,463
    )
    
    
    14,548
    
    
    
    
    
    
    
    
    
    
    
    13,076Cash and cash equivalents at beginning
of period
    
    
    10
    
    
    
    7,453
    
    
    
    2,308
    
    
    
    
    
    
    
    
    
    
    
    9,771Cash and cash equivalents at end of period
    
    $
    1
    
    
    $
    5,990
    
    
    $
    16,856
    
    
    $
    
    
    
    $
    
    
    
    $
    22,847
  21




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##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 ITEM 2.     MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
                OPERATIONS
  Overview
      22




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##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Results of Operations
  THIRTEEN
    
    
    THIRTY-NINEWEEKS ENDED
    
    
    WEEKS ENDEDNovember 3,
    
    
    October 28,
    
    
    November 3,
    
    
    October 28,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Other income
    
    
    3.2
    
    
    
    2.8
    
    
    
    3.1
    
    
    
    2.7103.2
    
    
    
    102.8
    
    
    
    103.1
    
    
    
    102.7Costs and expenses:Costs of merchandise sold
    
    
    65.2
    
    
    
    63.4
    
    
    
    64.6
    
    
    
    63.8Selling, general and administrative
    
    
    34.0
    
    
    
    34.0
    
    
    
    35.1
    
    
    
    34.6Depreciation and amortization
    
    
    3.9
    
    
    
    3.6
    
    
    
    3.9
    
    
    
    3.5Amortization of lease-related interests
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Income (loss) from operations
    
    
    
    
    
    
    1.7
    
    
    
    (0.6
    )
    
    
    0.7Interest expense, net
    
    
    3.5
    
    
    
    3.5
    
    
    
    3.7
    
    
    
    3.7Loss before income taxes
    
    
    (3.5
    )
    
    
    (1.8
    )
    
    
    (4.3
    )
    
    
    (3.1
    )Income tax benefit
    
    
    (1.0
    )
    
    
    (0.4
    )
    
    
    (1.5
    )
    
    
    (1.1
    )Net loss
    
    
    (2.5
    )%
    
    
    (1.4
    )%
    
    
    (2.9
    )%
    
    
    (2.0
    )%
 Thirteen Weeks Ended November 3, 2007 Compared to Thirteen Weeks Ended October 28, 2006
 Net sales
     23




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Other income
 Costs and expenses
   Income from operations
 Interest expense, net
 Income tax benefit
 Net loss
 Thirty-Nine Weeks Ended November 3, 2007 Compared to Thirty-Nine Weeks Ended October 28, 2006
 Net sales
   24




---



##### 



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




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##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Income tax benefit
 Net loss
 Seasonality and Inflation
    Liquidity and Capital Resources
  November 3,
    
    
    October 28,(Dollars in millions)
    
    2007
    
    
    2006Working capital
    
    $
    550.1
    
    
    $
    442.2Current ratio
    
    
    1.86:1
    
    
    
    1.72:1Debt to total capitalization (1)
    
    
    0.83:1
    
    
    
    0.84:1Unused availability under lines of credit (2)
    
    $
    253.6
    
    
    $
    247.8
 (1)
    
    Debt includes obligations under capital leases. Total capitalization includes
shareholders equity, debt and obligations under capital leases.(2)
    
    Subject to a minimum borrowing availability covenant of $75 as of November 3, 2007 and October
28, 2006.
  rd
  26




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
          Critical Accounting Policies
   27




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Inventory Valuation
      28




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Vendor Allowances
   Income Taxes
     29




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Long-lived Assets
   
    
    Significant under-performance of stores relative to historical or projected
future operating results,
    
    Significant changes in the manner of our use of assets or overall business
strategy, and
    
    Significant negative industry or economic trends for a sustained period.
   Goodwill and Intangible Assets
    30




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Insurance Reserve Estimates
  Future Accounting Changes
    31




---



##### 



THE BON-TON STORES, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Forward-Looking Statements
   32




---



##### 



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




---



##### 



THE BON-TON STORES, INC.
 PART II:   OTHER INFORMATION
 ITEM 6.   EXHIBITS
  Exhibit
    
    Description
    
    Document Location31.1
    
    Certification of Byron L. Bergren
    
    Filed herewith.31.2
    
    Certification of Keith E. Plowman
    
    Filed herewith.32.1
    
    Certification Pursuant to Rules 13a-14(b)
and 15d-14(b) of the Securities Exchange
Act of 1934
    
    Furnished herewith.
 SIGNATURES
  THE BON-TON STORES, INC.DATE: December 12, 2007
    BY:
    /s/  Byron L. BergrenByron L. BergrenPresident and
Chief Executive OfficerDATE: December 12, 2007
    BY:
    /s/  Keith E. PlowmanKeith E. PlowmanExecutive Vice President,
Chief Financial Officer and
Principal Accounting Officer  34