<PAGE>
Page 1 of 14
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended August 1, 1998 Commission File Number
0-19517
THE BON-TON STORES, INC.
2801 EAST MARKET STREET
YORK, PENNSYLVANIA 17402
(717) 757-7660
INCORPORATED IN PENNSYLVANIA IRS NO. 23-2835229
___________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ______
------
As of August 28, 1998 there were 12,282,313 shares of Common Stock, $0.01
par value, and 2,989,853 shares of Class A Common Stock, $0.01 par value,
outstanding.
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
AUGUST 1, JANUARY 31,
1998 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 10,104 $ 9,109
Trade and other accounts receivable, net of allowance for doubtful
accounts of $2,835 and $1,977 at August 1, 1998 and January 31, 1998, respectively 25,845 28,485
Merchandise inventories 180,605 177,783
Prepaid expenses and other current assets 7,354 8,835
- ----------------------------------------------------------------------------------------------------------------
Total current assets 223,908 224,212
- ----------------------------------------------------------------------------------------------------------------
PROPERTY, FIXTURES AND EQUIPMENT at cost, less accumulated
depreciation and amortization 109,978 108,568
OTHER ASSETS 19,114 19,906
- ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $353,000 $352,686
================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 60,480 $ 55,478
Accrued payroll and benefits 6,933 9,457
Accrued expenses 20,029 25,649
Current portion of long-term debt 585 556
Current portion of obligations under capital leases 394 379
Deferred income taxes 653 1,227
Income taxes payable 2,178 8,388
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 91,252 101,134
- ----------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT, LESS CURRENT MATURITIES 86,227 121,121
OBLIGATIONS UNDER CAPITAL LEASES, less current maturities 2,073 2,263
OTHER LONG-TERM LIABILITIES 3,476 3,409
DEFERRED INCOME TAXES 815 365
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 183,843 228,292
- ----------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES --- ---
SHAREHOLDERS' EQUITY:
Common Stock-authorized 40,000,000 shares at $0.01 par value; issued and outstanding
shares of 12,282,313 and 8,847,333 at August 1, 1998 and January 31, 1998, respectively 123 88
Class A Common Stock-authorized 20,000,000 shares at $0.01 par value; issued
and outstanding shares of 2,989,853 at August 1, 1998 and January 31, 1998 30 30
Additional paid-in capital 111,631 62,585
Deferred compensation (5,369) (2,010)
Retained earnings 62,742 63,701
- ----------------------------------------------------------------------------------------------------------------
Total shareholders' equity 169,157 124,394
- ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $353,000 $352,686
================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
2
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
--------------------- ----------------------
AUGUST 1, AUGUST 2, AUGUST 1, AUGUST 2,
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $145,731 $137,994 $288,998 $272,245
OTHER INCOME, NET 475 472 974 963
- -------------------------------------------------------------------------------------------------------------
146,206 138,466 289,972 273,208
- -------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Costs of merchandise sold 91,460 86,152 182,895 171,088
Selling, general and administrative 50,713 47,457 97,742 93,459
Depreciation and amortization 3,090 3,196 6,180 6,362
- -------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 943 1,661 3,155 2,299
INTEREST EXPENSE, NET 2,089 3,223 4,722 6,772
- -------------------------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (1,146) (1,562) (1,567) (4,473)
INCOME TAX BENEFIT (435) (594) (610) (1,702)
- -------------------------------------------------------------------------------------------------------------
LOSS BEFORE EXTRAORDINARY ITEM (711) (968) (957) (2,771)
EXTRAORDINARY ITEM -- loss on early extinguishment of debt,
net of income tax benefit of $251 --- --- --- (446)
- -------------------------------------------------------------------------------------------------------------
NET LOSS $ (711) $ (968) $ (957) $ (3,217)
=============================================================================================================
PER SHARE AMOUNTS:
BASIC:
Loss before extraordinary item $ (0.05) $ (0.09) $ (0.07) $ (0.25)
Effect of extraordinary item --- --- --- (0.04)
- -------------------------------------------------------------------------------------------------------------
Net loss per share $ (0.05) $ (0.09) $ (0.07) $ (0.29)
=============================================================================================================
BASIC SHARES OUTSTANDING 14,592 11,075 13,049 11,074
DILUTED:
Loss before extraordinary item $ (0.05) $ (0.09) $ (0.07) $ (0.25)
Effect of extraordinary item --- --- --- (0.04)
- -------------------------------------------------------------------------------------------------------------
Net loss per share $ (0.05) $ (0.09) $ (0.07) $ (0.29)
=============================================================================================================
DILUTED SHARES OUTSTANDING 14,592 11,075 13,049 11,074
=============================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
3
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
TWENTY-SIX
WEEKS ENDED
------------------------
AUGUST 1, AUGUST 2,
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (957) $ (3,217)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 6,180 6,362
Changes in operating assets and liabilities, net 606 2,302
- ------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,829 5,447
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (7,379) (2,972)
Proceeds from sale of property, fixtures and equipment 1,455 15
Proceeds from sale of accounts receivable, net (8,000) (5,000)
Proceeds from sale and leaseback arrangement, net --- 11,034
- ------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (13,924) 3,077
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and capital lease obligations (158,540) (181,397)
Proceeds from issuance of long-term debt 123,500 176,002
Proceeds from equity offering 43,424 ---
Exercised stock options 706 ---
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 9,090 (5,395)
Net increase in cash and cash equivalents 995 3,129
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,109 6,516
- ------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,104 $ 9,645
============================================================================================================
SUPPLEMENTAL CASH FLOWS INFORMATION:
Interest paid $ 5,209 $ 5,686
Income taxes paid $ 5,525 $ 2,183
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Bon-Ton Stores, Inc., a Pennsylvania corporation, was incorporated on
January 31, 1996 as the successor of a company established on January 31, 1929
and currently operates, through its subsidiaries, 64 retail department stores
located in Pennsylvania, New York, Maryland, West Virginia and New Jersey.
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements include accounts of
The Bon-Ton Stores, Inc. and its wholly owned subsidiaries (the "Company"). All
intercompany transactions and balances have been eliminated in consolidation.
The unaudited consolidated financial statements have been prepared in accordance
with the instructions for Form 10-Q and do not include all the information and
footnotes required by generally accepted accounting principles. In the opinion
of management, all adjustments (primarily consisting of normal recurring
accruals) considered necessary for a fair presentation for interim periods have
been included. The Company's business is seasonal in nature and the results of
operations for the interim periods presented are not necessarily indicative of
the results for the full fiscal year. It is suggested these consolidated
financial statements be read in conjunction with the financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K for the
year ended January 31, 1998 (the "1997 Annual Report").
2. PER SHARE AMOUNTS:
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS No. 128") in fiscal 1997. SFAS No. 128 requires
dual presentation of Basic and Diluted earnings per share ("EPS") on the face of
the statement of operations. Basic EPS is computed by dividing reported
earnings available to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted EPS is computed assuming the
conversion of all dilutive securities, such as options and restricted stock.
The statement requires a reconciliation of the numerators and denominators used
in the Basic and Diluted EPS calculations. The numerator, net loss, is
identical in both calculations. The following table presents a reconciliation
of the shares outstanding for the respective calculations for each period
presented on the accompanying Consolidated Statements of Operations.
<TABLE>
<CAPTION>
Thirteen Twenty-six
Weeks Ended Weeks Ended
--------------------- ---------------------
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
------------------------------------------------------------------------
Shares Shares Shares Shares
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Calculation 14,592,000 11,075,000 13,049,000 11,074,000
Dilutive Securities--
Restricted Shares --- --- --- ---
Options --- --- --- ---
------------------------------------------------------------------------
Diluted Calculation 14,592,000 11,075,000 13,049,000 11,074,000
------------------------------------------------------------------------
</TABLE>
5
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
3. SALE OF PROPERTY:
On February 17, 1998, the Company sold its vacant property in Downtown
Lancaster, Pennsylvania. The property, which was acquired during the 1992
acquisition of Watt and Shand, Inc., was closed in March 1995. The Company
recognized a gain during the first quarter of 1998 of $1.4 million on the
disposal of this property, which included the remaining store closing reserve
established in 1994. The net proceeds of $1.2 million received from the sale
were used to fund additional working capital requirements.
4. ISSUANCE OF ADDITIONAL SHARES OF STOCK:
On May 1, 1998, the Company completed the sale of 3.1 million shares of its
Common Stock pursuant to a public offering. The net proceeds received of $43.4
million will be used to expand and upgrade existing stores, open new stores,
provide working capital and for general corporate purposes. Pending such uses,
the Company used the proceeds to reduce indebtedness under the Company's
revolving credit facility. Common Stock outstanding after the completion of this
transaction was 12,003,713 shares.
6
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table summarizes the changes in selected operating indicators,
illustrating the relationship of various income and expense items expressed as a
percentage of net sales for each period presented:
<TABLE>
<CAPTION>
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
--------------------- ---------------------
AUGUST 1, AUGUST 2, AUGUST 1, AUGUST 2,
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Other income, net 0.3 0.3 0.3 0.4
- -----------------------------------------------------------------------------------------------------------------------
100.3 100.3 100.3 100.4
- -----------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Costs of merchandise sold 62.8 62.4 63.3 62.8
Selling, general and administrative 34.8 34.4 33.8 34.4
Depreciation and amortization 2.1 2.3 2.1 2.3
- -----------------------------------------------------------------------------------------------------------------------
Income from operations 0.6 1.2 1.1 0.9
Interest expense, net 1.4 2.3 1.6 2.5
- -----------------------------------------------------------------------------------------------------------------------
Loss before income taxes (0.8) (1.1) (0.5) (1.6)
Income tax benefit (0.3) (0.4) (0.2) (0.6)
- -----------------------------------------------------------------------------------------------------------------------
Loss before extraordinary item (0.5) (0.7) (0.3) (1.0)
Extraordinary item loss on early extinguishment of debt, net of tax --- --- --- (0.2)
- -----------------------------------------------------------------------------------------------------------------------
Net loss (0.5)% (0.7)% (0.3)% (1.2)%
=======================================================================================================================
</TABLE>
THIRTEEN WEEKS ENDED AUGUST 1, 1998 COMPARED TO THIRTEEN WEEKS ENDED AUGUST 2,
1997
For the purpose of the following discussions, all references to "second quarter
of 1998" and "second quarter of 1997" are to the Company's thirteen-week period
ended August 1, 1998 and August 2, 1997, respectively.
NET SALES. Net sales were $145.7 million for the thirteen weeks ended August 1,
1998, an increase of 5.6% over the same period last year. Comparable store sales
increased 4.8% for the period, with men's, shoes, petite, intimate and women's
categories achieving sales increases greater than Company average.
OTHER INCOME, NET. Net other income, which consisted mainly of income from
leased departments, remained constant at 0.3% of net sales in the second quarter
of 1998 compared to the second quarter of 1997.
COSTS AND EXPENSES. Gross profit dollars in the second quarter of 1998
increased $2.4 million over the second quarter of 1997 due primarily to the
increased sales base. Gross profit as a percentage of net sales decreased by 0.4
percentage points to 37.2% for the thirteen weeks ended August 1, 1998 from
37.6% for the comparable period last year. The decline in the margin rate was
attributable to a reduction in the cumulative markup and an increased level of
markdowns in the second quarter of 1998.
Selling, general and administrative expenses for the second quarter of 1998
increased $3.3 million to 34.8% of net sales from 34.4% of net sales in the
prior year. The rate increase was due primarily to higher payroll expenses. Bad
debt expense increased as a result of higher receivable balances and increased
personal bankruptcies.
Depreciation and amortization decreased to 2.1% of net sales for the thirteen
weeks ended August 1, 1998 from 2.3% over the same period last year. The
decrease as a percent of net sales primarily reflects the increased sales base
in 1998.
7
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
INCOME FROM OPERATIONS. Income from operations for the second quarter of 1998
was $0.9 million, or 0.6% of net sales, compared to income from operations of
$1.7 million, or 1.2% of net sales, in the comparable period last year. The
decline for the period primarily reflects increased selling, general and
administrative expenses and increased markdowns in the second quarter, partially
offset by the increase in gross margin associated with higher sales in the
second quarter of 1998.
The Company sells receivables through its accounts receivable facility to
provide additional working capital. Pro-forma effects, as if the Company had
on-balance sheet financing, would have reduced selling, general and
administrative expenses by $2.0 million in the second quarter of 1998 and $1.7
million in the second quarter of 1997. The lower selling, general and
administrative expenses would have been offset by a corresponding increase in
interest expense for both periods. The net result of the pro-forma
reclassification would reflect income from operations of $2.9 million in the
second quarter of 1998 and $3.4 million for the corresponding period last year.
INTEREST EXPENSE, NET. Net interest expense decreased to 1.4% of net sales for
the thirteen weeks ended August 1, 1998 compared to 2.3% of net sales for the
thirteen weeks ended August 2, 1997. The decrease is primarily attributed to the
lower borrowing levels as a result of the sale of additional shares (see Note
4).
NET LOSS. The net loss for the second quarter of 1998 amounted to $0.7 million
compared to a net loss of $1.0 million in the second quarter of 1997.
Due to the seasonal nature of the Company's business, the results for the
current year second quarter are not necessarily indicative of the results that
may be achieved for the full fiscal year of 1998.
TWENTY-SIX WEEKS ENDED AUGUST 1, 1998 COMPARED TO TWENTY-SIX WEEKS ENDED AUGUST
2, 1997
For the purpose of the following discussions, all references to "1998" and
"1997" are to the Company's twenty-six week period ended August 1, 1998 and
August 2, 1997, respectively.
NET SALES. Net sales were $289.0 million for 1998, an increase of 6.2% over the
same period last year. Comparable store sales increased 5.3% for the period,
with men's, intimate, petite, shoes, and women's categories achieving sales
increases greater than Company average.
OTHER INCOME, NET. Net other income, which consisted mainly of income from
leased departments, decreased to 0.3% of net sales in 1998 compared to 0.4% in
1997 primarily as a result of the increase in 1998 sales volume.
COSTS AND EXPENSES. Gross profit dollars in 1998 increased $4.9 million over
1997 due primarily to the increased sales base, partially offset by the decrease
in gross profit as a percentage of net sales to 36.7% for the twenty-six week
period ended August 1, 1998 from 37.2% for the comparable period last year. The
decline in the margin rate was largely attributable to a decline in the
cumulative markup and an increased level of markdowns in the twenty-six weeks
ended August 1, 1998.
Selling, general and administrative expenses for 1998 increased $4.3 million to
33.8% of net sales from 34.4% of net sales in the prior year. The increase in
expense reflects an increase in payroll expense and an increase in bad debt
expense as a result of higher receivables, offset by the gain on the sale of
property (see Note 3) and an increase in finance charge revenues. The decrease
in rate is primarily attributable to the increase in 1998 sales volume.
Depreciation and amortization decreased to 2.1% of net sales for the twenty-six
weeks ended August 1, 1998 from 2.3% of net sales over the comparable period
last year primarily due to the increase in 1998 sales volume.
8
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
INCOME FROM OPERATIONS. Income from operations for 1998 was $3.2 million, or
1.1% of net sales, compared to income from operations of $2.3 million, or 0.9%
of net sales, in the comparable period last year. The improvement for the period
reflects the increase in sales and resultant gross margin, and the gain on the
sale of the property offset by an increase in payroll expense and an increase in
bad debt expense.
The Company sells receivables through its accounts receivable facility to
provide additional working capital. Pro-forma effects, as if the Company had on-
balance sheet financing, would have reduced selling, general and administrative
expenses by $3.9 million in 1998 and $3.3 million in 1997. The lower selling,
general and administrative expenses would have been offset by a corresponding
increase in interest expense for both periods. The net result of the pro-forma
reclassification would reflect income from operations of $7.1 million in 1998
and $5.6 million for the corresponding period last year.
INTEREST EXPENSE, NET. Net interest expense decreased to 1.6% of net sales in
1998 compared to 2.5% of net sales in 1997. The decrease was a result of lower
borrowing levels incurred by the Company as compared to the same period last
year primarily as a result of the sale of additional shares (see Note 4).
EXTRAORDINARY ITEM. The Company entered into a new asset based borrowing
agreement on April 10, 1997. As a result of this transaction, the Company
incurred an extraordinary charge of $0.4 million (net of $0.3 million income tax
benefit) in the first quarter of 1997 relating to the early extinguishment of
its existing debt.
NET LOSS. The net loss for 1998 amounted to $1.0 million compared to a net loss
of $3.2 million in 1997.
Due to the seasonal nature of the Company's business, the results for the
current period are not necessarily indicative of the results that may be
achieved for the full fiscal year of 1998.
YEAR 2000 COMPLIANCE
The Company's estimate regarding the cost to complete the Year 2000 conversion,
including internal personnel costs, remains at $1.1 million as stated in the
Company's 1997 Annual Report. All internally developed systems, which represent
approximately 69% of installed applications, have been modified to process year
2000 dates. The remaining systems, comprised of commercially supplied software
packages maintained by third party vendors, are scheduled to be upgraded to a
year 2000 version or replaced over the next 12 months. All installed systems
require further testing. The Company continues to communicate with major
suppliers, financial institutions and service providers with which it does
business to coordinate the conversion effort. The Company's operations may be
adversely affected if the Company or other organizations with which the Company
does business are unsuccessful in completing the conversion in a timely manner.
9
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital requirements are currently met through a
combination of cash, borrowings under its revolving credit facility and proceeds
from its accounts receivable facility.
The following table summarizes material measures of the Company's liquidity and
capital resources:
<TABLE>
<CAPTION>
(dollars in millions)
August 1, August 2,
1998 1997
--------- ----------
<S> <C> <C>
Working Capital $ 132.7 $ 116.4
Current Ratio 2.45:1 2.31:1
Funded Debt to Total Capitalization 0.34:1 0.55:1
Available Lines of Credit $ 72.5 $ 24.0
</TABLE>
For the twenty-six weeks ended August 1, 1998, net cash provided by operating
activities amounted to $5.8 million, as compared to net cash provided by
operating activities of $5.4 million for the comparable period last year. The
increase in net cash provided by operating activities for 1998 is primarily
attributable to an improvement in the Company's earnings, along with a reduction
in accounts receivable partially offset by payment of $5.5 million in income
taxes. Net cash provided during the comparable period last year was supplemented
by a $5.8 million pension asset reversion, of which $1.2 million was paid in
excise tax to the Internal Revenue Service.
Net cash used in investing activities amounted to $13.9 million for the twenty-
six weeks ended August 1, 1998, as compared to net cash provided by investing
activities of $3.1 million for the comparable period last year. The net cash
used for the twenty-six week period ended August 1, 1998 was primarily the
result of capital expenditures and payments made on the accounts receivable
facility, offset by the proceeds received from the sale of property. The net
cash provided during the twenty-six week period ended August 2, 1997 was
primarily due to proceeds received from the sale and leaseback arrangement (see
Note 17 of the 1997 Annual Report), which were partially offset by payments made
pursuant to the Company's accounts receivable facility.
Net cash provided by financing activities amounted to $9.1 million for the
twenty-six week period ended August 1, 1998, as compared to net cash used in
financing activities of $5.4 million for the comparable period last year. The
Company received net proceeds of $43.4 million from the sale of additional
shares of Common Stock in 1998. Pending intended uses, the proceeds were used to
reduce indebtedness under the Company's revolving credit facility (see Note 4).
The Company anticipates that its cash flow from operations, supplemented by
borrowings under its revolving credit facility and proceeds from its accounts
receivable facility, will be sufficient to satisfy its operating cash
requirements.
10
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
"SAFE HARBOR" STATEMENT:
- ------------------------
Certain information included in this Form 10-Q contains statements that are
forward looking. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future,
including, but not limited to, uncertainties affecting retail in general, such
as consumer confidence and demand for soft goods, risks relating to leverage and
debt service, competition within primary markets in which the Company's stores
are located, and the need for, and costs associated with, store renovations and
other capital expenditures.
11
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 15, 1998, the Company held its Annual Meeting of Shareholders. The
following matters were submitted for vote:
1. The following individuals were nominated and elected to serve as the
directors of the Company:
M. Thomas Grumbacher For: 39,193,246
Withhold Authority: 139,902
Heywood Wilansky For: 39,193,214
Withhold Authority: 139,934
Samuel J. Gerson For: 39,223,446
Withhold Authority: 109,702
Michael L. Gleim For: 39,193,246
Withhold Authority: 139,902
Lawrence J. Ring For: 39,226,946
Withhold Authority: 106,202
Leon D. Starr For: 39,195,046
Withhold Authority: 138,102
Leon F. Winbigler For: 39,222,846
Withhold Authority: 110,302
2. The holders of 37,537,851 shares voted in favor of, the holders of
133,585 shares voted against and the holders of 38,015 shares abstained
with respect to the approval of The Bon-Ton Stores, Inc. Five-Year Cash
Bonus Plan for Heywood Wilansky.
3. The holders of 38,606,141 shares voted in favor of, the holders of
688,552 shares voted against and the holders of 38,455 shares abstained
with respect to the approval of The Bon-Ton Stores, Inc. Performance
Based Stock Incentive Plan for Heywood Wilansky.
4. The holders of 39,326,867 shares voted in favor of, the holders of 2,779
shares voted against and the holders of 3,502 shares abstained with
respect to the ratification of the selection of Arthur Andersen LLP to
serve as independent accountants for the Company.
12
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
ITEM 5. OTHER INFORMATION
A shareholder of the Company may wish to have a proposal presented at the 1999
Annual Meeting of Stockholders, but not to have such proposal included in the
Company's proxy statement and form of proxy relating to that meeting. If notice
of any such proposal is not received by the Company at 2801 East Market Street,
York, PA 17402, Attention: President, by January 15, 1999, then such proposal
shall be deemed "untimely" for the purposes of Rule 14a-4(c) promulgated under
the Securities Exchange Act of 1934, as amended, and therefore, the Board of
Directors of the Company will have the right to exercise discretionary voting
authority with respect to such proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed pursuant to the requirements of Item 601
of Regulation S-K:
Exhibit No. Description
10 The Bon-Ton Stores, Inc. Performance Based Stock Incentive Plan
for Heywood Wilansky (incorporated by reference to Exhibit 4 to
the Company's Registration Statement on Form S-8, File No. 333-
58591).
27 Financial Data Schedule
(b) The Company did not file any Current Reports on Form 8-K during the
thirteen-week period ended August 1, 1998.
13
<PAGE>
THE BON-TON STORES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BON-TON STORES, INC.
Date: September 11, 1998 By: /s/ Michael L. Gleim
-------------------- ----------------------------------
Michael L. Gleim
Vice Chairman and
Chief Operating Officer
Date: September 11, 1998 By: /s/ James H. Baireuther
-------------------- ----------------------------------
James H. Baireuther
Senior Vice President and
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED AUGUST 1, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 10,104
<SECURITIES> 0
<RECEIVABLES> 28,680
<ALLOWANCES> 2,835
<INVENTORY> 180,605
<CURRENT-ASSETS> 223,908
<PP&E> 197,133
<DEPRECIATION> 87,155
<TOTAL-ASSETS> 353,000
<CURRENT-LIABILITIES> 91,252
<BONDS> 88,300
0
0
<COMMON> 153
<OTHER-SE> 169,004
<TOTAL-LIABILITY-AND-EQUITY> 353,000
<SALES> 288,998
<TOTAL-REVENUES> 289,972
<CGS> 182,895
<TOTAL-COSTS> 286,817
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,722
<INCOME-PRETAX> (1,567)
<INCOME-TAX> (610)
<INCOME-CONTINUING> (957)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (957)
<EPS-PRIMARY> (0.07)<F1>
<EPS-DILUTED> (0.07)<F1>
<FN>
<F1>EPS has been prepared in accordance with SFAS No. 128, and that basic and
diluted EPS have been entered in place of primary and fully diluted,
respectively.
</FN>
</TABLE>
