Item 1. Business.
General
As of April 4, 1997, The Bon-Ton Stores, Inc., together with its subsidiaries (collectively, the "Company"), operated 64 Bon-Ton department stores which are located primarily in middle and secondary markets in Pennsylvania, New York and Maryland, with one store in each of West Virginia, New Jersey and Georgia. The Company's stores, which are typically anchor tenants of shopping malls, carry moderate to better brand name fashions and accessories for women, men and children, as well as cosmetics, jewelry, shoes, china, linens, housewares, gifts and other products. The Company strives to be the leading fashion retailer in each of its markets by providing a timely, deep and broad selection of prominent brands. In addition, the Company maintains a strong focus on serving its target customers: women and men between the ages of 25 and 55 with family incomes between $30,000 and $75,000. The Company's executive offices are located at 2801 East Market Street, York, Pennsylvania.
Merchandising and Marketing
All of the Company's stores carry apparel for the whole family, cosmetics and accessories; 55 stores carry home furnishings, such as china, linens, housewares and gifts, and 17 stores offer furniture and bedding. In addition, 39 stores have leased fine jewelry departments and 34 stores contain leased beauty salons.
During the fiscal years ended February 1, 1997 ("fiscal 1996"), February 3, 1996 ("fiscal 1995") and January 28, 1995 ("fiscal 1994"), the percentage of net sales accounted for by each of the Company's major merchandise categories was as follows:
The Company's merchandising and marketing strategy is based on an approach which balances fashion leadership, customer service, everyday value prices on a limited number of key items and the selective use of promotions. The Company emphasizes high-margin, high-turnover product lines, such as apparel and accessories, in a balanced mix of moderate and better.
The Company strives to be among the first in its markets to identify fashion trends, to advertise and stock new merchandise and to carry a full complement of sizes and colors of the items it sells. The Company carries a line of highly recognized quality vendors such as Liz Claiborne, Calvin Klein, Tommy Hilfiger, Ralph Lauren, Alfred Dunner, Levi's, Bandolino and Nine West. Complementing that product is a commitment to private brand merchandise that provides fashion and quality at value prices. The Company has developed private brands including Andrea Viccaro, Susquehanna Trail Outfitters, Jenny Buchanan and Susquehanna Blues. The combination of merchandise further differentiates the Company from its competitors.
The Company provides a variety of customer services including free gift wrapping and special order capability. The Company also provides bridal registries at selected stores.
Through its "Certified Value" program, the Company maintains everyday value prices on a limited number of key items such as turtlenecks, fleece, t-shirts, shorts and denims within certain major product groups. This provides the customer with the confidence that these items are already value priced and will not be placed on sale during their normal selling cycles.
The Company conducts its general advertising and promotion programs through newspaper advertisements and circulars and, to a lesser extent, through local television and radio. The Company maintains an in-house advertising group that produces substantially all of its print advertising. In addition, the Company advertises through direct mail, primarily to
holders of its Bon-Ton credit card. By using a database management system to obtain information regarding past purchases of Bon-Ton credit card holders, the Company is able to target previous purchasers of specific types of merchandise.
Store Facilities
The Company's stores vary in size from approximately 35,000 to 160,000 total square feet. Most Bon-Ton stores are one of several anchor tenants in shopping malls, with the balance of the Company's stores generally located in or adjacent to strip shopping centers.
The Company emphasizes strong visual presentations in key traffic areas in its stores. Displays are changed on a frequent basis and are designed for the market served. Each store has at least one associate responsible for visual presentations in addition to the Company's central visual planning staff.
The Company utilizes prototype store layouts based primarily on the Company's estimate of the size of the potential market for a particular store. Store layouts are customized based on the actual size and configuration of the individual stores. Although Bon-Ton stores typically utilize a "race track" configuration (an oval aisle encircling a central core), the Company plans the aisle layouts to provide a more pleasing visual experience. The Company generally maintains relatively shallow racking of merchandise from the main aisle to the store walls to facilitate customer access. The Company attempts to arrange its products to provide a logical flow from department to department and continually monitors its product layouts in an attempt to make shopping easier and to maximize sales per square foot.
Expansion
The Company plans to maintain its growth by increasing sales in its existing stores, by opening new stores and, in future years, by acquiring suitable department store companies or their real estate assets. The Company's market positioning strategy has been to locate its new stores or acquire existing companies or their stores in middle and secondary markets generally within or contiguous to its existing areas of operations.
In August 1996, the Company opened its fourth store in the greater Rochester, New York market, completing its positioning strategy in entering that market.
In January 1997, the Company closed stores in Frackville, PA, Washington, PA, Johnstown, PA (Richland Mall) and Fairmont, WV. These four stores were part of the 19 stores acquired from Hess's Department Stores, Inc. in 1994, and were not acquired for long-term operation. In January 1997, the Company also closed an unprofitable store in Cortland, NY which had been acquired from C.E. Chappell & Sons, Inc. in 1994.
Purchasing and Distribution
The Company purchased merchandise from over 1,300 domestic and foreign manufacturers and suppliers during fiscal 1996. During that period, the top 25 vendors by dollar volume accounted for approximately 40% of net purchases. No vendor accounted for more than 7% of the Company's purchases. The Company believes that alternative sources of supply are available for each category of merchandise it purchases. In addition, the Company's buying staff purchases private label and other merchandise through Frederick Atkins, Inc. ("Atkins"), a national association of major retailers that provides its members with group purchasing opportunities. In fiscal 1996, the Company purchased approximately 7% of its merchandise from Atkins.
The Company has two primary distribution facilities: a 173,000 square foot automated facility in York, Pennsylvania and a 396,000 square foot automated facility in Allentown, Pennsylvania. In fiscal 1996, approximately 49% of the Company's merchandise was processed in the York facility and 51% in Allentown.
Merchandise is generally shipped directly from vendors to the Company's distribution centers, except that deliveries from vendors in the New York and Los Angeles areas are generally routed through a consolidator. Deliveries are made from the distribution center to each store typically twice a week in the spring season and three times weekly during the fall. Merchandise is usually shipped ready for immediate placement on the selling floor.
Management Information and Control Systems
The Company has placed substantial emphasis on upgrading its management information and control systems. Control of the Company's merchandising activities is maintained by a set of on-line systems, including a point-of-sale and sales reporting system, a purchase order management system, a receiving system and a merchandise planning system. These closely linked systems track merchandise from order through sale, comparing actual to planned results and highlighting areas requiring management attention.
The Company's enhancement of its management information and control systems is an ongoing process. During fiscal 1996, the Company expanded the use of vendor bar codes to eliminate ticketing and to facilitate cross docking of merchandise, implemented a new on-line system to handle furniture and expanded the bridal registry system to all 55 stores which carry home furnishings. It also introduced radio frequency scanning at the Company's distribution centers and bar code scanning at its control vendor return site. These technologies greatly enhance the movement of merchandise through the distribution process. During fiscal 1997, the Company plans to expand the utilization of scanning at its stores.
Customer Credit
Bon-Ton customers may pay for their purchases with The Bon-Ton proprietary credit card, Visa, Mastercard, American Express, cash or check.
During fiscal 1996, the Company issued 256,000 Bon-Ton credit cards for newly opened accounts. The Company has made a significant investment in its credit card program since it believes that The Bon-Ton credit card holders generally constitute its most loyal and active customers; during fiscal 1996, the average dollar amount for proprietary credit card purchases substantially exceeded the average dollar amount for cash purchases. The Company believes that its credit card is a particularly productive tool for customer segmentation and target marketing.
The following table summarizes the percentage of total sales generated by type of payment for fiscal 1996, 1995 and 1994:
All phases of the credit card operation are handled by the Company except statement mailing and the processing of customer mail payments, which is performed pursuant to a retail lockbox agreement with a bank. Decisions whether to issue a credit card to an applicant are made on the basis of a credit scoring system. The Company believes that its bad debt expense (as a percentage of total proprietary credit card sales) is consistent with the department store industry average.
Competition
The retail department store business is highly competitive. The Company competes for customers and suitable store locations with national department store chains such as JCPenney, The May Department Stores Company and Sears, as well as with regional department stores such as Boscov's. The Company also competes with catalogue retailers and specialty stores. Many of the stores that compete with the Company's stores are owned by corporations that are considerably larger than the Company and have substantially greater financial and other resources. In addition to its current competitors, the Company faces potential competition from other national chains that to date generally have not entered the markets served by the Company. The Company's stores compete on the basis of quality, depth and breadth of merchandise, prices for comparable quality merchandise, customer service and store environment.
Associates
As of April 4, 1997, the Company had approximately 3,500 full-time and 4,100 part-time associates. The Company also employs additional part-time clerks and cashiers during peak periods. None of the Company's associates is represented by a labor union. The Company believes that its relationship with its associates is good.
Item 2.
Item 2. Properties.
The following table provides certain information regarding the Company's properties as of April 10, 1997. The Company believes that the rents at its leased locations are generally at or below market rates.
Footnotes: - --------- /(1)/ Ownership of building is subject to an underlying long-term ground lease. /(2)/ Includes leases for two separate premises in the same mall: a 71,900 sq. ft. main store and a 6,000 sq. ft. home store annex. /(3)/ Store closed in January 1996. The Company is attempting to dispose of this property. /(4)/ Store closed in March 1995. The Company is attempting to dispose of this property. /(5)/ Store closed in January 1997. The Company is trying to negotiate an early termination of the lease or assign or sublet the premises. /(6)/ This facility's distribution operation has been consolidated into other Bon-Ton facilities. The Company has sublet a substantial part of these premises and is attempting to sublet the balance.
Item 3.
Item 3. Legal Proceedings.
The Company is not party to any material pending litigation.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item A. Executive Officers of the Company.
Certain information with respect to the executive officers of the Company is provided below:
Mr. Wilansky joined the Company in August 1995 as President, Chief Executive Officer and a director. Prior to joining the Company, Mr. Wilansky was employed by The May Department Stores Company for more than 19 years. From 1992 to August 1995, he was President and Chief Executive Officer of the Foley's division of May, and from 1991 to 1992, he was President and Chief Executive Officer of the Filene's division. Prior to that, he was with the Hecht's and Lord & Taylor divisions of May.
Mr. Grumbacher joined the Company in 1961 and has been Chairman of the Board since August 1991. From 1989 to 1991, Mr. Grumbacher served as Vice Chairman, from 1977 to 1989, he was President and from 1985 to 1995 he was Chief Executive Officer of the Company.
Mr. Gleim joined the Company in 1989 as Executive Vice President and Chief Administrative Officer. He became Senior Executive Vice President and a director in 1991, and Vice Chairman and Chief Operating Officer in December 1995. Prior to joining the Company, Mr. Gleim was employed by Federated Department Stores, Inc. for more than 25 years. He was Senior Vice President of Administration and Chief Financial Officer of the Lazarus division of Federated from 1988 to 1989, President of the Block's division of Federated from 1987 to 1988 and Senior Vice President of Administration of the Lazarus division from 1986 to 1988.
Mr. Baireuther joined the Company as Senior Vice President and Chief Financial Officer in June 1996. Prior to joining the Company, Mr. Baireuther was Senior Vice President and Chief Financial Officer at DAC Vision, a manufacturer of optical supplies, from 1994 to 1996. Prior to joining DAC, he was Executive Vice President and Chief Financial Officer for Eye Care Centers of America, a subsidiary of Sears, Roebuck and Co. from 1989 to 1994. From 1969 to 1989, Mr. Baireuther held a variety of positions with Sears including Director of Mergers and Acquisitions, Manager of Corporate Financial Analysis and Controller.
Mr. Breuers joined the Company as Senior Vice President, General Merchandise Manager in April 1996. Mr. Breuers was previously at Marshall's from 1991 to 1996, where he held the position of Senior Vice President-General Merchandise Manager. Prior to that, he was associated with Women's Specialty Retailing, a subsidiary of U.S. Shoe Company, from 1987 to 1991, and with the Hecht's division of The May Department Stores Company from 1972 to 1987.
Mr. Daniels joined the Company in June 1994 as Senior Vice President, Stores. Mr. Daniels was previously employed by the Kaufmann's division of The May Department Stores Company from 1993 until June 1994 as Regional Vice President of Stores supervising all Cleveland-based stores. Prior to the merger of May Company's Kaufmann's and Cleveland Divisions, he served as Senior Vice President and Director of Stores for May Company-Cleveland from 1988 to 1993. Mr. Daniels' association with The May Department Stores Company began in 1974.
Mr. Evans joined the Company as Senior Vice President, Real Estate in 1991 and was named Senior Vice President, Real Estate, Legal and Governmental Affairs in 1993. Mr. Evans was previously employed by J.C. Penney Company, Inc. from 1978 to 1991 where he served most recently as a Senior Regional Real Estate Representative from 1986 to 1991.
Mr. Johnson has been Senior Vice President, Human Resources of the Company since 1988. Mr. Johnson was previously associated with the Higbee Company, a department store company based in Cleveland, Ohio, where he served most recently as Senior Vice President-Human Resources for more than five years.
Mr. Karlin joined the Company as Senior Vice President, Information Services in 1989. Mr. Karlin was previously associated with Federated Department Stores, Inc., where he served as Divisional Vice President at the Southeast Region Data Center in Atlanta, Georgia from 1987 to 1989 and as Director of Data Processing at Foley's Department Store in Houston, Texas from 1979 to 1987.
Ms. Ladnier joined the Company as Senior Vice President, Sales Promotion and Marketing in December 1993, and was named Senior Vice President, Marketing and Corporate Communications in 1996. From January 1993 until October 1993, Ms. Ladnier served as Corporate Vice President, Public Relations at Neiman-Marcus in Dallas, Texas. Prior to that she was associated with The May Department Stores Company for 14 years where she served as Senior Vice President, Sales Promotion and Marketing for three divisions, most recently the May D and F division in Denver, Colorado.
Mr. Lamm joined the Company as Senior Vice President, General Merchandise Manager in October 1995. Prior to joining the Company, Mr. Lamm owned a chain of women's large size apparel specialty stores from 1988 to 1995, and from 1984 to 1988 was Senior Vice President and General Merchandise Manager at Venture Stores, Inc. in St. Louis.
Mr. Lindblom joined the Company as Senior Vice President, General Merchandise Manager in 1992. Mr. Lindblom was previously employed by The May Department Stores Company from 1988 to 1992 where he served as Senior Vice President, General Merchandise Manager in its G. Fox division in Hartford, Connecticut. Prior to that, Mr. Lindblom was associated with Macy's Department Stores from 1980 to 1988 where he most recently served as Divisional Merchandise Manager in Atlanta, Georgia.
Mr. Sattler joined the Company as Vice President, Distribution and Operations in 1986 and was promoted to Senior Vice President, Operations in 1990. Mr. Sattler previously served as Vice President-Director of Gimbels Midwest Department Stores in Milwaukee, Wisconsin from 1983 to 1986.
Mr. Sloane joined the Company as Senior Vice President, General Merchandise Manager in February 1997. From December 1995 until February 1997, Mr. Sloane was Vice President-General Merchandise Manager at Dick's Clothing & Sporting Goods, Pittsburgh, Pennsylvania, and from July 1995 until December 1995 he was Vice President-General Merchandise Manager at McRae's Department Stores, Jackson, Mississippi. Prior to that, Mr. Sloane was associated with The May Department Stores Company for over 17 years, having most recently served as Vice President- Merchandising at Foley's in Houston, Texas.
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.
The Company's Common Stock is traded on the Nasdaq National Market (symbol: BONT). There is no established public trading market for the Company's Class A Common Stock. The Class A Common Stock is convertible on a share for share basis into Common Stock. The following table sets forth for the periods indicated the high and low sales prices per share of the Common Stock as furnished by Nasdaq:
On April 4, 1997, there were 289 shareholders of record of the Company's Common Stock and 5 shareholders of record of the Company's Class A Common Stock.
No dividends have been paid on the Common Stock since the beginning of fiscal 1992. The Company's Board of Directors intends to reinvest earnings in the Company's business to support its operations and expansion. The Board of Directors has no present intention to pay cash dividends in the foreseeable future, and will determine whether to declare cash dividends in the future in light of the Company's earnings, financial condition and capital requirements. In addition, the Company has certain credit agreements that limit the payment of dividends.
Item 6.
Item 6. Selected Financial Data.
The following selected financial data, except pro forma amounts, have been derived from the Company's consolidated financial statements which have been audited by Arthur Andersen LLP, independent auditors. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of the Company and notes thereto. See Items 7 and 8.
(1) The Company adopted SFAS No. 109, "Accounting for Income Taxes", at the beginning of fiscal 1993. (2) When the effect is dilutive, weighted average shares outstanding include common stock equivalents, which represent stock options and restricted stock grants, and is computed using the treasury stock method.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 7 is hereby incorporated by reference to the material under "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 18 through 22 of the Company's Annual Report to Shareholders for the fiscal year ended February 1, 1997, attached hereto as exhibit 13.1.
Item 8.
Item 8. Consolidated Financial Statements and Supplementary Data.
Item 8 is hereby incorporated by reference to the Report of Independent Public Accountants, Consolidated Financial Statements and Notes thereto on pages 23 through 39 of the Company's Annual Report to Shareholders for the fiscal year ended February 1, 1997, attached hereto as exhibit 13.2.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
The information regarding executive officers called for by Item 401 of Regulation S-K is included in Part I as Item A, in accordance with General Instruction G(3) to Form 10-K. The remainder of the information called for by this Item will be contained in the Company's definitive Proxy Statement with respect to the Company's Annual Meeting of Shareholders to be held in 1997, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year, and is hereby incorporated by reference thereto.
Item 11.
Item 11. Executive Compensation.
The information called for by this Item will be contained in the Company's definitive Proxy Statement with respect to the Company's Annual Meeting of Shareholders to be held in 1997, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year, and is hereby incorporated by reference thereto (other than the information called for by Item 402(i), (k) and (l) of Regulation S-K, which is not incorporated herein by reference).
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information called for by this Item will be contained in the Company's definitive Proxy Statement with respect to the Company's Annual Meeting of Shareholders to be held in 1997, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year, and is hereby incorporated by reference thereto.
Item 13.
Item 13. Certain Relationships and Related Transactions.
The information called for by this Item will be contained in the Company's definitive Proxy Statement with respect to the Company's Annual Meeting of Shareholders to be held in 1997, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year, and is hereby incorporated by reference thereto.
PART IV
Item 14.
Item 14. Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Consolidated Financial Statements -- See Item 8 above.
2. Consolidated Financial Statement Schedules -- See the Index to Consolidated Financial Statement Schedules on page.
3. Exhibits:
3.1 The Company's Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-B, File 0-19517).
3.2 The Company's Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-B, File 0-19517).
10.1 Shareholder's Agreement by and among the Company and the shareholders named therein (incorporated by reference to Exhibit 10.3 to Amendment No. 2 to the Company's Registration Statement on Form S-1, File 33-42142).
*10.2 (a) Employment Agreement between the Company and Heywood L. Wilansky (incorporated by reference to Exhibit 10.3 to the Company's Report on Form 8-B, File 0-19517).
*10.2 (b) Amending Agreement between the Company and Heywood L. Wilansky.
*10.3 Employment Agreement between the Company and Michael L. Gleim (incorporated by reference to Exhibit 10.4 to the Company's Report on Form 8-B, File 0-19517).
*10.4 Form of severance agreement between the Company and its executive officers (incorporated by reference to Exhibit 10.14 to the Company's Report on Form 8-B, File 0-19517).
*10.5 Amended and Restated 1991 Stock Option and Restricted Stock Plan (incorporated by reference to Exhibit 10.5 to the Company's Report on Form 8-B, File 0-19517).
10.6 Ground Leases for distribution center located in York, Pennsylvania, by and between The Bon-Ton Department Stores, Inc. and M. Thomas Grumbacher, as amended (incorporated by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1, File 33-42142).
10.7 Ground Lease for York Galleria, York, Pennsylvania by and between The Bon-Ton Department Stores, Inc. and MBM Land Associates (incorporated by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-1, File 33-42142).
10.8 (a) Sublease of Butler, Pennsylvania store by and between The Bon-Ton Department Stores, Inc. and M. Thomas Grumbacher (incorporated by reference to Exhibit 10.15 to the Company's Registration Statement on Form S-1, File 33-42142).
(b) First Amendment to Butler, Pennsylvania sublease (incorporated by reference to Exhibit 10.21 to Amendment No. 1 to the Company's Registration Statement on Form S-1, File 33-42142).
(c) Corporate Guarantee with respect to Butler, Pennsylvania lease (incorporated by reference to Exhibit 10.24 to Amendment No. 1 to the Company's Registration Statement on Form S-1, File 33-42142).
10.9 (a) Sublease of Oil City, Pennsylvania store by and between The Bon-Ton Department Stores, Inc. and M. Thomas Grumbacher (incorporated by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1, File 33-42142).
(b) First Amendment to Oil City, Pennsylvania sublease (incorporated by reference to Exhibit 10.22 to Amendment No. 1 to the Company's Registration Statement on Form S-1, File 33-42142).
(c) Corporate Guarantee with respect to Oil City, Pennsylvania lease (incorporated by reference to Exhibit 10.26 to Amendment No. 1 to the Company's Registration Statement on Form S-1, File 33-42142).
*10.10 The Company's Profit Sharing/Retirement Savings Plan, amended and restated as of July 1, 1994 (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 1995).
10.11 Receivables Purchase Agreement dated as of January 27, 1995 among The Bon-Ton Receivables Corp., Falcon Asset Securitization Corporation, The First National Bank of Chicago, and the other financial institutions party hereto (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 1995).
10.12 Tax Indemnification Agreement (incorporated by reference to Exhibit 10.17 to Amendment No. 2 to the Company's Registration Statement on Form S-1, File 33-42142).
*10.13 Management Incentive Plan and Addendum to Management Incentive Plan.
*10.14 The Bon-Ton Stores, Inc. Long-Term Incentive Plan For Principals.
13.1 Pages 18 through 22 of the Company's Annual Report to Shareholders for the fiscal year ended February 1, 1997.
13.2 Pages 23 through 39 of the Company's Annual Report to Shareholders for the fiscal year ended February 1, 1997.
21. Subsidiaries of the Registrant.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedules.
(b) Reports on Form 8-K filed during the fourth quarter.
None.
______________________________________________ * Constitutes a management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: April 28, 1997 By: /s/ Heywood L. Wilansky ---------------------------- Heywood L. Wilansky President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS.........................F-2
Schedule II: VALUATION AND QUALIFYING ACCOUNTS
THE BON-TON STORES, INC. AND SUBSIDIARIES
- ------------------- NOTES: (1) Provision for loss on credit sales. (2) Uncollectible accounts, written off, net of recoveries. (3) Provision for expenses and the write off of assets associated with the store closings. (4) Cash payments for store closing expenses, net of monies received from asset liquidation. (5) Represents the allowance for losses on accounts receivable recorded in purchase accounting. (6) Represents reserves recorded in purchase accounting for the costs associated with closing certain acquired stores. (7) Represents reserves associated with the purchase of the Hess's Department Store's Inc. accounts receivable. (8) Represents reserves relating to stores that the Company has committed to close due to poor performance.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Shareholders of The Bon-Ton Stores, Inc.:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in The Bon-Ton Stores, Inc.'s annual report to shareholders, incorporated by reference in this Form 10-K, and have issued our report thereon dated March 5, 1997 (except with respect to the matter discussed in Note 17 to the consolidated financial statements, as to which the date is April 10, 1997). Our audits were made for the purpose of forming an opinion on these statements taken as a whole. The schedule listed in Item 14(a)(2) is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP Philadelphia, PA March 5, 1997
EXHIBIT INDEX
Exhibit Description - ------- -----------
10.2(b) Amending Agreement between the Company and Heywood L. Wilansky
10.13 Management Incentive Plan and Addendum to Management Incentive Plan
10.14 The Bon-Ton Stores, Inc. Long-Term Incentive Plan For Principals
13.1 Pages 18 through 22 of the Company's Annual Report to Shareholders for the year ended February 1, 1997
13.2 Pages 23 through 39 of the Company's Annual Report to Shareholders for the fiscal year ended February 1, 1997
21. Subsidiaries of the Registrant
23. Consent of Arthur Andersen LLP
27. Financial Data Schedules