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

 

 

THE BON-TON STORES, INC.

2801 East Market Street

York, Pennsylvania 17402

(717) 757-7660

 

 

 

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 twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o No x

 

As of May 30, 2014, there were 17,528,700 shares of Common Stock, $.01 par value, and 2,951,490 shares of Class A Common Stock, $.01 par value, outstanding.

 

 

 

PART I:  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

 

THE BON-TON STORES, INC.

CONSOLIDATED BALANCE SHEETS

 

		(Unaudited)
		May 3,			May 4,			February 1,
(In thousands, except share and per share data)		2014			2013			2014
Assets
Current assets:
Cash and cash equivalents		$	8,221		$	9,017		$	7,058
Merchandise inventories		711,780			731,461			709,733
Prepaid expenses and other current assets		73,138			71,613			76,285
Total current assets		793,139			812,091			793,076
Property, fixtures and equipment at cost, net of accumulated depreciation and amortization of $878,222, $825,089 and $865,111 at May 3, 2014, May 4, 2013 and February 1, 2014, respectively		629,453			642,190			640,004
Deferred income taxes		18,261			16,328			15,765
Intangible assets, net of accumulated amortization of $63,823, $59,479 and $62,068 at May 3, 2014, May 4, 2013 and February 1, 2014, respectively		101,045			108,680			102,800
Other long-term assets		24,684			17,904			25,584
Total assets		$	1,566,582		$	1,597,193		$	1,577,229
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	188,169		$	184,343		$	200,465
Accrued payroll and benefits		21,575			29,162			28,343
Accrued expenses		152,328			149,648			150,595
Current maturities of long-term debt		7,058			7,014			7,363
Current maturities of obligations under capital leases		3,785			3,975			3,797
Deferred income taxes		25,686			22,020			22,744
Income taxes payable		—			32			—
Total current liabilities		398,601			396,194			413,307
Long-term debt, less current maturities		844,080			855,600			804,372
Obligations under capital leases, less current maturities		47,690			51,475			48,977
Other long-term liabilities		180,153			209,131			182,617
Total liabilities		1,470,524			1,512,400			1,449,273
Contingencies (Note 9)
Shareholders’ equity
Preferred Stock — authorized 5,000,000 shares at $0.01 par value; no shares issued		—			—			—
Common Stock — authorized 40,000,000 shares at $0.01 par value; issued shares of 17,831,500, 17,787,882 and 17,846,457 at May 3, 2014, May 4, 2013 and February 1, 2014, respectively		178			178			178
Class A Common Stock — authorized 20,000,000 shares at $0.01 par value; issued and outstanding shares of 2,951,490 at May 3, 2014, May 4, 2013 and February 1, 2014		30			30			30
Treasury stock, at cost — 337,800 shares at May 3, 2014, May 4, 2013 and February 1, 2014		(1,387		)	(1,387		)	(1,387		)
Additional paid-in capital		160,564			158,977			160,772
Accumulated other comprehensive loss		(49,634		)	(71,691		)	(50,448		)
(Accumulated deficit) retained earnings		(13,693		)	(1,314		)	18,811
Total shareholders’ equity		96,058			84,793			127,956
Total liabilities and shareholders’ equity		$	1,566,582		$	1,597,193		$	1,577,229

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

 

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

		THIRTEEN
		WEEKS ENDED
(In thousands, except per share data)		May 3,			May 4,
(Unaudited)		2014			2013
Net sales		$	607,460		$	646,904
Other income		15,073			14,979
		622,533			661,883
Costs and expenses:
Costs of merchandise sold		393,110			421,588
Selling, general and administrative		222,319			225,096
Depreciation and amortization		21,562			21,180
Amortization of lease-related interests		1,182			1,136
Loss from operations		(15,640		)	(7,117		)
Interest expense, net		15,271			18,708
Loss on extinguishment of debt		153			360
Loss before income taxes		(31,064		)	(26,185		)
Income tax provision		448			450
Net loss		$	(31,512	)	$	(26,635	)
Per share amounts —
Basic:
Net loss		$	(1.63	)	$	(1.41	)
Diluted:
Net loss		$	(1.63	)	$	(1.41	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

		THIRTEEN
		WEEKS ENDED
(In thousands)		May 3,			May 4,
(Unaudited)		2014			2013
Net loss		$	(31,512	)	$	(26,635	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans		814			1,551
Comprehensive loss		$	(30,698	)	$	(25,084	)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		THIRTEEN
		WEEKS ENDED
(In thousands)		May 3,			May 4,
(Unaudited)		2014			2013
Cash flows from operating activities:
Net loss		$	(31,512	)	$	(26,635	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		21,562			21,180
Amortization of lease-related interests		1,182			1,136
Share-based compensation expense		1,253			1,810
Gain on sale of property, fixtures and equipment		(2,303		)	(2		)
Reclassifications of accumulated other comprehensive loss		814			1,551
Loss on extinguishment of debt		153			360
Amortization of deferred financing costs		724			1,007
Deferred income tax provision		445			447
Changes in operating assets and liabilities:
(Increase) decrease in merchandise inventories		(2,047		)	26,939
Decrease (increase) in prepaid expenses and other current assets		3,147			(1,012		)
Decrease (increase) in other long-term assets		212			(378		)
(Decrease) increase in accounts payable		(4,134		)	2,768
Decrease in accrued payroll and benefits and accrued expenses		(3,010		)	(18,346		)
Decrease in income taxes payable		—			(707		)
Decrease in other long-term liabilities		(2,289		)	(171		)
Net cash (used in) provided by operating activities		(15,803		)	9,947
Cash flows from investing activities:
Capital expenditures		(15,433		)	(13,256		)
Proceeds from sale of property, fixtures and equipment		5,000			2
Net cash used in investing activities		(10,433		)	(13,254		)
Cash flows from financing activities:
Payments on long-term debt and capital lease obligations		(139,750		)	(226,721		)
Proceeds from issuance of long-term debt		177,728			243,632
Cash dividends paid		(985		)	—
Restricted shares forfeited in lieu of payroll taxes		(1,461		)	(2,076		)
Proceeds from stock options exercised		—			518
Deferred financing costs paid		(35		)	—
Decrease in book overdraft balances		(8,098		)	(10,955		)
Net cash provided by financing activities		27,399			4,398
Net increase in cash and cash equivalents		1,163			1,091
Cash and cash equivalents at beginning of period		7,058			7,926
Cash and cash equivalents at end of period		$	8,221		$	9,017

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5

 

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

 

														Accumulated			(Accumulated
					Class A						Additional			Other			Deficit)
(In thousands, except per share data)		Common			Common			Treasury			Paid-in			Comprehensive			Retained
(Unaudited)		Stock			Stock			Stock			Capital			Loss			Earnings			Total
BALANCE AT FEBRUARY 2, 2013		$	175		$	30		$	(1,387	)	$	158,728		$	(73,242	)	$	26,302		$	110,606
Net loss		—			—			—			—			—			(26,635		)	(26,635		)
Other comprehensive income		—			—			—			—			1,551			—			1,551
Dividends to shareholders, $0.05 per share		—			—			—			—			—			(981		)	(981		)
Restricted shares forfeited in lieu of payroll taxes		(2		)	—			—			(2,074		)	—			—			(2,076		)
Proceeds from stock options exercised		1			—			—			517			—			—			518
Share-based compensation expense		4			—			—			1,806			—			—			1,810
BALANCE AT MAY 4, 2013		$	178		$	30		$	(1,387	)	$	158,977		$	(71,691	)	$	(1,314	)	$	84,793
BALANCE AT FEBRUARY 1, 2014		$	178		$	30		$	(1,387	)	$	160,772		$	(50,448	)	$	18,811		$	127,956
Net loss		—			—			—			—			—			(31,512		)	(31,512		)
Other comprehensive income		—			—			—			—			814			—			814
Dividends to shareholders, $0.05 per share		—			—			—			—			—			(992		)	(992		)
Restricted shares forfeited in lieu of payroll taxes		—			—			—			(1,461		)	—			—			(1,461		)
Share-based compensation expense		—			—			—			1,253			—			—			1,253
BALANCE AT MAY 3, 2014		$	178		$	30		$	(1,387	)	$	160,564		$	(49,634	)	$	(13,693	)	$	96,058

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6

 

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

1.                                      BASIS OF PRESENTATION

 

The Bon-Ton Stores, Inc., a Pennsylvania corporation, was incorporated on January 31, 1996 as the successor of a company incorporated on January 31, 1929.  As of May 3, 2014, The Bon-Ton Stores, Inc. operated, through its subsidiaries, 271 stores in 25 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates.

 

The accompanying unaudited consolidated financial statements include the accounts of The Bon-Ton Stores, Inc. (the “Parent”) and its subsidiaries (collectively, the “Company”).  Variable interest entities are consolidated where it has been determined the Company is the primary beneficiary of those entities’ operations.  All intercompany transactions 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 information and footnotes required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States.  In the opinion of management, all adjustments considered necessary for a fair presentation of interim periods have been included.  The Company’s business is seasonal in nature and results of operations for the interim periods presented are not necessarily indicative of results for the full fiscal year.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2014.

 

All references to the “first quarter of 2014” and the “first quarter of 2013” are to the 13 weeks ended May 3, 2014 and May 4, 2013, respectively.   All references to “2014” are to the 52 weeks ending January 31, 2015; references to “2013” are to the 52 weeks ended February 1, 2014.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions about future events.  These estimates and assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and the reported amounts of revenues and expenses.  Such estimates include those related to merchandise returns, the valuation of inventories, long-lived assets, intangible assets, insurance reserves, contingencies, litigation and assumptions used in the calculation of income taxes and retirement and other post-employment benefits, among others.  These estimates and assumptions are based on management’s best estimates and judgments.  Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.  Management adjusts such estimates and assumptions when facts and circumstances dictate.  As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.  Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

 

2.                                      PER-SHARE AMOUNTS

 

The following table presents a reconciliation of net loss and weighted average shares outstanding used in basic and diluted earnings (loss) per share (“EPS”) calculations in the first quarter in each of 2014 and 2013:

 

7

 

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

		THIRTEEN
		WEEKS ENDED
		May 3,			May 4,
		2014			2013
Basic Loss Per Common Share
Net loss		$	(31,512	)	$	(26,635	)
Less: Income allocated to participating securities		—			—
Net loss available to common shareholders		$	(31,512	)	$	(26,635	)
Weighted average common shares outstanding		19,281,718			18,843,072
Basic loss per common share		$	(1.63	)	$	(1.41	)
Diluted Loss Per Common Share
Net loss		$	(31,512	)	$	(26,635	)
Less: Income allocated to participating securities		—			—
Net loss available to common shareholders		$	(31,512	)	$	(26,635	)
Weighted average common shares outstanding		19,281,718			18,843,072
Common shares issuable - stock options		—			—
Weighted average common shares outstanding assuming dilution		19,281,718			18,843,072
Diluted loss per common share		$	(1.63	)	$	(1.41	)

 

Due to the Company’s net loss position, weighted average unvested restricted shares (participating securities) of 729,534 and 1,051,861 for the first quarter in each of 2014 and 2013, respectively, were not considered in the computation of net loss available to common shareholders used for both basic and diluted EPS.

 

In addition, weighted average stock option shares (non-participating securities) of 256,008 and 534,684 for the first quarter in each of 2014 and 2013, respectively, were excluded from the computation of diluted weighted average common shares outstanding, as their effect would have been antidilutive.  Certain of these stock option shares were excluded solely due to the Company’s net loss position.   Had the Company reported net income for the first quarter in each of 2014 and 2013, these shares would have increased diluted weighted average common shares outstanding by 103,150 and 170,577, respectively.

 

3.                                      FAIR VALUE MEASUREMENTS

 

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value and establishes a framework for measuring fair value.  ASC 820 establishes fair value hierarchy levels that prioritize the inputs used in valuations determining fair value.  Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.  Level 2 inputs are primarily quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly.  Level 3 inputs are unobservable inputs based on the Company’s own assumptions.

 

The carrying values of the Company’s cash and cash equivalents, accounts payable and financial instruments reported within prepaid expenses and other current assets and other long-term assets approximate fair value.

 

8

 

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

The carrying value and estimated fair value of the Company’s long-term debt, including current maturities but excluding capital leases, as of May 3, 2014 are as follows:

 

								Fair Value Measurements Using
		Carrying Value			Total Estimated Fair Value			Quoted Prices in Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Second lien senior secured notes		$	407,292		$	392,234		$	392,234		$	—		$	—
Mortgage facilities		216,710			218,315			—			—			218,315
Senior secured credit facility		227,136			227,136			—			—			227,136
Total		$	851,138		$	837,685		$	392,234		$	—		$	445,451

 

The carrying value and estimated fair value of the Company’s long-term debt, including current maturities but excluding capital leases, as of May 4, 2013 are as follows:

 

								Fair Value Measurements Using
		Carrying Value			Total Estimated Fair Value			Quoted Prices in Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Senior notes		$	68,983		$	69,242		$	69,242		$	—		$	—
Second lien senior secured notes		329,998			334,123			334,123			—			—
Mortgage facilities		224,663			229,202			—			—			229,202
Senior secured credit facility		238,970			238,970			—			—			238,970
Total		$	862,614		$	871,537		$	403,365		$	—		$	468,172

 

The carrying value and estimated fair value of the Company’s long-term debt, including current maturities but excluding capital leases, as of February 1, 2014 are as follows:

 

								Fair Value Measurements Using
		Carrying Value			Total Estimated Fair Value			Quoted Prices in Active Markets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Second lien senior secured notes		$	407,292		$	398,972		$	398,972		$	—		$	—
Mortgage facilities		219,564			222,168			—			—			222,168
Senior secured credit facility		184,879			184,879			—			—			184,879
Total		$	811,735		$	806,019		$	398,972		$	—		$	407,047

 

The Level 3 fair value estimates are determined by a discounted cash flow analysis utilizing a discount rate the Company believes is appropriate and would be used by market participants.  There was no change in the valuation technique used to determine the Level 3 fair value estimates.

 

9

 

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

4.                                      SUPPLEMENTAL BALANCE SHEET INFORMATION

 

Prepaid expenses and other current assets were comprised of the following:

 

		May 3,			May 4,			February 1,
		2014			2013			2014
Other receivables		$	32,040		$	38,435		$	39,569
Prepaid expenses		41,098			33,178			36,716
Total		$	73,138		$	71,613		$	76,285

 

5.                                      SUPPLEMENTAL CASH FLOW INFORMATION

 

The following supplemental cash flow information is provided for the periods reported:

 

		THIRTEEN
		WEEKS ENDED
		May 3,			May 4,
		2014			2013
Cash paid for:
Interest, net of amounts capitalized		$	9,512		$	30,598
Income taxes, net of refunds received		(3		)	775
Non-cash investing and financing activities:
Property, fixtures and equipment included in accrued expenses		$	4,216		$	2,689
Declared dividends to shareholders included in accrued expenses		992			981

 

6.                                      EXIT OR DISPOSAL ACTIVITIES

 

The following table summarizes exit or disposal activities during the first quarter of 2014 related to store closings in 2013 and the consolidation of eCommerce fulfillment activities in advance of the Company’s new eCommerce fulfillment center:

 

		Termination Benefits			Other Costs			Total
Accrued balance as of February 1, 2014		$	232		$	188		$	420
Provision		319			125			444
Payments		(217		)	(313		)	(530		)
Accrued balance as of May 3, 2014		$	334		$	—		$	334

 

The above provision was included within selling, general and administrative expense.

 

10

 

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

7.                                      EMPLOYEE DEFINED AND POSTRETIREMENT BENEFIT PLANS

 

The Company provides benefits to certain current and former associates who are eligible under a qualified defined benefit pension plan and various non-qualified supplemental pension plans (collectively, the “Pension Plans”).  Net periodic benefit expense for the Pension Plans includes the following (income) and expense components:

 

		THIRTEEN
		WEEKS ENDED
		May 3,			May 4,
		2014			2013
Interest cost		$	1,997		$	1,998
Expected return on plan assets		(2,490		)	(2,235		)
Recognition of net actuarial loss		944			1,642
Net periodic benefit expense		$	451		$	1,405

 

During the first quarter of 2014, contributions of $3,518 were made to the Pension Plans.  The Company anticipates contributing an additional $11,561 to fund the Pension Plans in 2014 for an annual total of $15,079.

 

The Company also provides medical and life insurance benefits to certain former associates under a postretirement benefit plan (“Postretirement Benefit Plan”).  Net periodic benefit income for the Postretirement Benefit Plan includes the following (income) and expense components:

 

		THIRTEEN
		WEEKS ENDED
		May 3,			May 4,
		2014			2013
Interest cost		$	22		$	30
Recognition of net actuarial gain		(130		)	(91		)
Net periodic benefit income		$	(108	)	$	(61	)

 

During the first quarter of 2014, the Company contributed $27 to fund the Postretirement Benefit Plan, and anticipates contributing an additional $384 in 2014 for a net annual total of $411.

 

8.                                      INCOME TAXES

 

The provisions codified within ASC Topic 740, Income Taxes (“ASC 740”), require companies to assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence using a “more likely than not” standard.  In accordance with ASC 740, the Company maintained a full valuation allowance throughout 2013 and the first quarter of 2014 on all of the Company’s net deferred tax assets.  The Company’s deferred tax asset valuation allowance totaled $156,846, $163,866 and $144,908 at May 3, 2014, May 4, 2013 and February 1, 2014, respectively.

 

11

 

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

Given the Company’s valuation allowance position, no tax benefit was recognized on the Company’s loss before income taxes in the first quarter in each of 2014 and 2013.  The income tax provision of $448 and $450 recorded in the first quarter in each of 2014 and 2013, respectively, primarily reflects the recognition of deferred tax liabilities associated with indefinite-lived assets.

 

As of May 3, 2014, it is reasonably possible that gross unrecognized tax benefits could decrease by $78 within the next 12 months due to the expiration of certain statutes of limitations.

 

9.                                      CONTINGENCIES

 

The Company is party to legal proceedings and claims that arise during the ordinary course of business.  In the opinion of management, the ultimate outcome of any such litigation and claims will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

 

10.                               COMPREHENSIVE LOSS

 

Accumulated other comprehensive loss is comprised of the net actuarial loss associated with the Pension Plans and Postretirement Benefit Plan.  Other comprehensive income is comprised entirely of the amortization of the net actuarial loss (gain) associated with the Pension Plans and Postretirement Benefit Plan.

 

As a result of the deferred tax asset valuation allowance maintained throughout 2013 and the first quarter of 2014 (see Note 8), no tax effect was recorded on the changes recognized within other comprehensive income for all periods presented.

 

The before-tax amount of amortization of net actuarial loss (gain) (see Note 7) was recorded within selling, general and administrative expense.

 

11.                             GUARANTOR AND NON-GUARANTOR SUBSIDIARIES

 

Certain debt obligations of the Company, which constitute debt obligations of The Bon-Ton Department Stores, Inc. (the “Issuer”), are guaranteed by the Parent and by each of its subsidiaries, other than the Issuer, that is an obligor under the Company’s senior secured credit facility.  Separate financial statements of the Parent, the Issuer and such subsidiary guarantors are not presented because the guarantees by the Parent and each 100% owned subsidiary guarantor are joint and several, full and unconditional, except for certain customary limitations which are applicable only to a subsidiary guarantor.  These customary limitations include releases of a guarantee (1) if the subsidiary guarantor no longer guarantees other indebtedness of the Issuer; (2) if there is a sale or other disposition of the capital stock of a subsidiary guarantor and if such sale complies with the covenant regarding asset sales; and (3) if the subsidiary guarantor is properly designated as an “unrestricted subsidiary.”

 

The condensed consolidating financial information for the Parent, the Issuer and the guarantor and non-guarantor subsidiaries as of May 3, 2014, May 4, 2013 and February 1, 2014 and for the first quarter in each of 2014 and 2013 as presented below has been prepared from the books and records maintained by the Parent, the Issuer and the guarantor and non-guarantor subsidiaries. The condensed financial information may not necessarily be indicative of the results of operations or financial position had the guarantor and non-guarantor subsidiaries operated as independent entities. Certain intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time.

 

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THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(Unaudited)

 

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

May 3, 2014

 

								Guarantor			Non-Guarantor			Consolidating			Company
		Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents		$	1		$	3,042		$	5,178		$	—		$	—		$	8,221
Merchandise inventories		—			447,439			264,341			—			—			711,780
Prepaid expenses and other current assets		—			66,035			4,504			3,177			(578		)	73,138
Total current assets		1			516,516			274,023			3,177			(578		)	793,139
Property, fixtures and equipment at cost, net		—			241,984			152,326			235,143			—			629,453
Deferred income taxes		—			1,062			17,199			—			—			18,261
Intangible assets, net		—			32,734			68,311			—			—			101,045
Investment in and advances to affiliates		96,057			343,552			377,779			—			(817,388		)	—
Other long-term assets		—			23,552			491			641			—			24,684
Total assets		$	96,058		$	1,159,400		$	890,129		$	238,961		$	(817,966	)	$	1,566,582
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	—		$	188,169		$	—		$	—		$	—		$	188,169
Accrued payroll and benefits		—			17,529			4,046			—			—			21,575
Accrued expenses		—			79,855			72,939			112			(578		)	152,328
Current maturities of long-term debt and obligations under capital leases		—			454			3,330			7,059			—			10,843
Deferred income taxes		—			5,882			19,804			—			—			25,686
Total current liabilities		—			291,889			100,119			7,171			(578		)	398,601
Long-term debt and obligations under capital leases, less current maturities		—			639,964			42,154			209,652			—			891,770
Other long-term liabilities		—			132,091			46,323			1,739			—			180,153
Total liabilities		—			1,063,944			188,596			218,562			(578		)	1,470,524
Shareholders’ equity		96,058			95,456			701,533			20,399			(817,388		)	96,058
Total liabilities and shareholders’ equity		$	96,058		$	1,159,400		$	890,129		$	238,961		$	(817,966	)	$	1,566,582

 

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