ELDER BEERMAN STORES CORP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED FEBRUARY 01, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 0-02788

THE ELDER-BEERMAN STORES CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

OHIO 31-0271980
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

3155 EL-BEE ROAD, DAYTON, OHIO 45439
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (937) 296-2700

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS)

SHARE PURCHASE RIGHTS
(TITLE OF CLASS)

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 (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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES [ ] NO [X]

The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the closing sale price of such stock on NASDAQ on the
last business day of the registrant's most recently completed second fiscal
quarter (i.e. August 3, 2002) ($2.80 per share ): $31,604,835.*

The number of shares of Common Stock outstanding on April 7, 2003, was
11,581,064.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES [X] NO [ ]

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates by reference certain information from
the Registrant's proxy statement relating to its Annual Meeting of Shareholders
to be held on June 5, 2003 (the "2003 Proxy Statement").
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* Calculated by excluding all shares that may be deemed to be beneficially owned
by executive officers and directors of the registrant, without conceding that
all such persons are "affiliates" of the registrant for purposes of the
federal securities laws.
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TABLE OF CONTENTS

ii

PART I

This Annual Report on Form 10-K contains "forward-looking statements,"
including predictions of future operating performance, events or developments
such as our future sales, gross margins, profits, expenses, income and earnings
per share. In addition, words such as "expects," "anticipates," "intends,"
"plans," "believes," "hopes," and "estimates," and variations of such words and
similar expressions, are intended to identify forward-looking statements.
Because forward-looking statements are based on a number of beliefs, estimates
and assumptions by management that could ultimately prove inaccurate, there is
no assurance that forward-looking statements will prove to be accurate. Many
factors could materially affect our actual future operations and results.
Factors that could materially affect performance include the following:
increasing price and product competition; fluctuations in consumer demand and
confidence, especially in light of current uncertain general economic
conditions; the availability and mix of inventory; fluctuations in costs and
expenses; consumer response to the Company's merchandising strategies,
advertising, marketing and promotional programs; the effectiveness of
management; the timing and effectiveness of new store openings, particularly its
new stores opened in the last two years; weather conditions that affect consumer
traffic in stores; the continued availability and terms of bank and lease
financing and trade credit; the outcome of pending and future litigation;
consumer debt levels; the impact of any new consumer bankruptcy laws; inflation
and interest rates and the condition of the capital markets. National security
threats and war with Iraq could magnify some of these factors. Elder-Beerman
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.

ITEM 1. BUSINESS

The Elder-Beerman Stores Corp. ("Elder-Beerman" or the "Company," except
where the context otherwise requires, references to the "Company" refer to
Elder-Beerman and its subsidiaries, as described below) has been operating
department stores since 1847. Elder-Beerman operates department stores that sell
a wide range of moderate to better branded merchandise, including women's, men's
and children's apparel and accessories, cosmetics, home furnishings, and other
consumer goods. In addition, the Company operates a credit card program through
its wholly-owned subsidiary, The El-Bee Chargit Corp. ("Chargit"). See Note O to
the Consolidated Financial Statements for financial information about the
business segments. As of fiscal year end 2002, Elder-Beerman operated 66
department stores and two furniture stores, principally in smaller to midsize
Midwestern markets in Ohio, West Virginia, Indiana, Illinois, Michigan,
Wisconsin, Kentucky and Pennsylvania. See "Properties."

The Company's historical competitive advantage is its niche in smaller
cities. In many of these cities, there is only one shopping mall or major
shopping center, and the Company is a main department store anchor along with
J.C. Penney, Sears, or a discount retailer such as Kohl's, Target or Wal-Mart.
The Company seeks to differentiate itself from its competitors through customer
service and convenience by offering fashion-oriented merchandise with name brand
vendors (e.g., cosmetics lines such as Estee Lauder, Clinique, Lancome and
Elizabeth Arden; and clothing lines such as Liz Claiborne, Tommy Hilfiger, Sag
Harbor, Alfred Dunner, Leslie Fay, Chaps by Ralph Lauren and Izod; and home
store lines such as T-Fal, Wamsutta, Pfaltzgraf and Atlantic). The larger
metropolitan department stores have tended to bypass smaller midwestern cities,
leaving Elder-Beerman as the dominant department store in many of its smaller
markets.

The Company's long-term business plan is designed to accomplish its
strategy by (a) focusing on its strengths as the major retailer in its smaller
markets; (b) competing with traditional department store competitors through
emphasis on timely product assortments offering fashion and value, competitive
pricing and promotions, and customer service; (c) competing with moderate priced
department stores and discounters through merchandise advantages in branded
areas and competitive pricing and promotions in appropriate markets and product
areas; and (d) focusing price/product competition in key basic merchandising
areas.

Merchandising

The Company carries a broad assortment of goods to provide the fashion,
selection and value found in leading department stores that feature branded
merchandise. Although all stores stock similar core assortments, specific types
of goods are distributed to stores based on the particular characteristics of
the local market. In addition, through continued efforts to develop better
processes and stronger partnerships with its most significant vendors, the
Company uses technology and focused merchandising and distribution processes to
reduce logistics costs and increase the speed in moving merchandise from the
vendor to the selling floor.

During the past fiscal year, the top 25 vendors by dollar volume accounted
for approximately 31% of net purchases. Management believes it has good
relationships with its suppliers. No vendor accounted for more than 5% of the
Company's purchases. The Company believes that alternative sources of supply are
available for each category of merchandise it purchases, including private label
products.

Certain departments in Elder-Beerman's department stores are leased to
independent third parties. These leased departments, which include the fine
jewelry, beauty salon, and maternity departments, provide high quality service
and merchandise where specialization and expertise are critical and the
Company's direct participation in the business is not economically justifiable.
Management regularly evaluates the performance of the leased departments and
requires compliance with established customer service guidelines.

For the 52 weeks ended February 1, 2003 ("Fiscal 2002"), the 52 weeks ended
February 2, 2002 ("Fiscal 2001"), and the 53 weeks ended February 3, 2001
("Fiscal 2000"), the Company's percentages of net sales by major merchandise
category were as follows:

THE ELDER-BEERMAN STORES CORP.
RETAIL SALES BY DEPARTMENT

Pricing

All pricing decisions are made at the Company's corporate headquarters. The
Company's pricing strategy is designed to provide superior quality and value by
offering competitive prices in all of its businesses. The Company's management
information systems provide timely sales and gross margin reports that identify
sales and gross margins by item and by store and provide management with the
information and flexibility to adjust prices and inventory levels as necessary.

Purchasing and Distribution

Merchandise is generally shipped from vendors, through three consolidation
points, to the Company's 300,000 square foot Distribution Center in Fairborn,
Ohio. More than 90% of all receipts that flow through the Distribution Center
are loaded into trailers for store distribution by the Distribution Center
staff. In addition, nearly 100% of the merchandise is shipped prepackaged and
ticketed for immediate placement on the selling floor. Merchandise for
individual stores is typically processed through the Distribution Center within
48 hours of its receipt at the Distribution Center.

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Deliveries are made from the Distribution Center to each store one to seven
times per week depending on the store size and the time of year.

Incoming merchandise received at the Distribution Center is inspected for
quality control. The Company has a fully automated, state-of-the-art vendor
compliance system to track vendor compliance with the Company's logistics
guidelines. Vendors that do not comply with guidelines are charged specified
fees depending upon the degree of non-compliance. These fees are intended to be
a deterrent to non-compliance as well as to offset higher costs associated with
the processing of, and payment for, such merchandise.

The Company continues to improve its logistics systems, focusing on the
adoption of new technology and operational best practices, with the goals of
receiving, processing and distributing merchandise to stores at a faster rate
and at a lower cost per unit.

Information Systems

The Company's merchandising activities are controlled by a series 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 integrated systems track merchandise from the order stage through
the selling stage and provide valuable supply chain information to drive sales
performance and improve inventory management. The Company's core merchandising
systems assist in ordering, allocating and replenishing merchandise assortments
for each store based on specific characteristics and recent sales trends. The
Company's point of sale systems include bar code scanning and electronic credit
and check authorization, all of which allow the Company to capture customer
specific sales data for use in its merchandising system. Other systems allow the
Company to identify and mark down slow moving merchandise and to maintain
planned levels of in-stock positions in basic items, such as jeans and basic
women's tops. These systems have enabled the Company to more efficiently manage
its inventory and reduce costs. The Company has also developed an automated
store personnel scheduling system to efficiently schedule sales staff. This
system is designed to optimize labor scheduling to improve customer service,
particularly during peak selling periods.

Marketing

The Company's primary target customers are women between the ages of 35 and
55 with annual household incomes of more than $50,000. Advertising messages are
focused on communicating the Company's merchandise offering and the strong
quality/value relationship in that offering. The Company employs advertising
programs that include print and broadcast as well as creative in-store signage,
displays and special promotions. Newspaper inserts are used on a regular
cadence. The Company also uses television and radio in markets where it is
productive and cost efficient. The Company uses a database targeting system that
allows focused direct mail to our preferred charge customers, those most likely
to respond to a merchandise offering.

Credit Card Program

The Company operates a credit card program through its wholly-owned
subsidiary, Chargit. The Company considers its credit card program to be a
critical component of its retailing concept because it (i) allows the Company to
identify and regularly contact its best customers, (ii) creates a comprehensive
database that enables the Company to implement detailed, segmented marketing and
merchandising programs, and (iii) enhances customer loyalty. The Company's most
active charge customers are awarded a Preferred, Chairman's Preferred or
Chairman's Select card based on their level of annual purchases. Depending on
their level, holders of these cards receive such benefits as discounted or free
gift-wrapping, special promotional discounts, and invitations to private,
"Preferred Only" sales. In addition, new holders of the Company's credit card
receive a 10% discount the first time they use their new card.

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The Company administers its credit card program through a dedicated
in-house staff located in the Company's corporate office. All phases of the
credit card operation are handled by Chargit except the processing of customer
mail payments, which is performed pursuant to a retail lockbox agreement with a
bank. The Company's fully computerized credit systems analyze customer payment
histories, automatically approve or reject new sales at point of sale and enable
account representatives to manage delinquent account collections. Decisions
whether to issue a credit card to an applicant are made on the basis of a credit
scoring system.

Customer Service

Elder-Beerman has a strong tradition of providing friendly customer
service. The Company has enhanced its customer service image and is creating a
customer-oriented store environment by (a) centralizing customer service at
highly visible points in the store and assuring that they are always staffed;
(b) deploying a POS system to expedite the sales completion process and provide
additional marketing and sales support functions at point of service, such as a
stock locator system that helps sell merchandise to customers currently not in
stock in that particular store; (c) using training and recruiting practices to
instill a culture of customer friendly, helpful, and responsive sales
associates; and (d) reducing nonselling activities in the stores.

Seasonality

The department store business is seasonal, with a high proportion of sales
and operating income generated in November and December. Working capital
requirements fluctuate during the year, increasing somewhat in mid-summer in
anticipation of the fall merchandising season and increasing substantially prior
to the holiday season when the Company carries significantly higher inventory
levels. Consumer spending in the peak retail season may be affected by many
factors outside the Company's control, including competition, consumer demand
and confidence, weather that affects consumer traffic and general economic
conditions. A failure to generate substantial holiday season sales could have a
material adverse effect on the Company.

Competition

The retail industry in general and the department store business in
particular is intensely competitive. Generally, the Elder-Beerman department
stores compete not only with other department stores in the same geographic
markets, but also with numerous other types of retail outlets, including
specialty stores; general merchandise stores; off-price and discount stores; and
direct to consumer retailers such as catalog and internet retailers. Some of the
retailers with which the Company competes have substantially greater financial
resources than the Company and may have other competitive advantages over the
Company. The Elder-Beerman department stores compete on the basis of quality,
value, depth and breadth of merchandise, prices for comparable quality
merchandise, customer service and store environment.

Associates

On February 1, 2003, the Company had approximately 6,053 regular and
part-time associates. The number of associates rises to a peak in the holiday
season due to the seasonal nature of the retail business. None of the Company's
associates are represented by a labor union. The Company's management considers
its relationships with its associates to be satisfactory.

Available Information

The Company makes available free of charge on or through its Internet
website, the Company's annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and all amendments to those reports as soon as
reasonably practicable after such information is electronically filed with the
Securities an Exchange Commission. The Corporate Web site address is
www.elder-beerman.com.

4

ITEM 2. PROPERTIES

As of February 1, 2003, Elder-Beerman operated 66 department stores and two
furniture stores, principally in smaller midwestern markets in Ohio, West
Virginia, Indiana, Illinois, Michigan, Wisconsin, Kentucky and Pennsylvania.
Substantially all of the Company's stores are leased properties. The Company
owns, subject to a mortgage, a 302,570 square foot office/warehouse facility
located in Dayton, Ohio, which serves as its principal executive offices. The
Company also leases an approximately 300,000 square foot distribution center in
Fairborn, Ohio.

The following table sets forth certain information with respect to
Elder-Beerman's department store locations operating as of February 1, 2003, the
end of Elder-Beerman's most recently completed fiscal year:

THE ELDER-BEERMAN STORES CORP.
STORE SUMMARY BY REGION

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in several legal proceedings arising from its
normal business activities and has established reserves where appropriate.
Management believes that none of these legal proceedings will have a material
adverse effect on the financial condition, results of operations or cash flows
of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

EXECUTIVE OFFICERS OF THE REGISTRANT

Byron L. Bergren, age 56, has served as President and Chief Executive
Officer of the Company since February 2002. Prior to this time, Mr. Bergren
served as Chairman of the Southern Division of Belk Stores, Inc. ("Belk") from
1999 to February 2002. Prior to that he served as Managing Partner of the Belk
Lindsey division of Belk from 1992 to 1999; Senior Vice President of Corporate
Sales Promotion and Marketing of Belk from 1991 to 1992; and Senior Vice
President of Merchandising and Marketing of the Belk Charlotte division from
1988 to 1991.

Edward A. Tomechko, age 54, has served as Executive Vice President, Chief
Financial Officer, Treasurer and Secretary of Elder-Beerman since June 2002.
Prior to this time he was a Managing Partner of M.E. Thomas & Associates, LLC, a
business advisory firm, from October 2000 to May 2002. Prior to that, he served
as Chief Executive Officer of Net Radio Corp., a media distribution company,
from January 1999 to October 2000. He served as that company's Senior Vice
President and Chief Financial Officer from August 1998 to December of 1998.
Prior to that, he served as Senior Vice President, Chief Financial Officer of
David's Bridal, a specialty retailer, from April 1997 to May 1998.

James M. Zamberlan, age 56, has served as Executive Vice President, Stores
of Elder-Beerman since July 1997. Prior to this time, Mr. Zamberlan served as
Executive Vice President of Stores for Bradlee's, Inc. from September 1995 to
January 1997 and also served as Senior Vice President of Stores for the Lazarus
Division of Federated from November 1989 to August 1995.

Steven D. Lipton, age 51, has served as Senior Vice President, Controller
of Elder-Beerman since March 1996. Prior to this time, Mr. Lipton served as
Operating Vice President of Payroll for Federated Financial & Credit Services
from September 1994 to January 1996 and served as Vice President and Controller
of the Lazarus Division of Federated from February 1990 to August 1994.

7

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Company's common stock, without par value, (the "Common Stock") is
listed on the Nasdaq Stock Market ("NASDAQ") and is designated a NASDAQ/National
Market System Security trading under the symbol EBSC.

The number of shareholders of record as of April 7, 2003 was 2,008.

No dividends have been paid on the Common Stock. The Company intends to
reinvest earnings in the Company's business to support its operations and
expansion. The Company has no present intention to pay cash dividends in the
foreseeable future, and will determine whether to declare 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.

Pursuant to the Third Amended Joint Plan of Reorganization, as amended (the
"Plan of Reorganization") of the Company, confirmed by an order entered by the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court") on December 16, 1997, the Company issued
Common Stock and a Series A Warrant and a Series B Warrant, each convertible
into Common Stock, in satisfaction of certain allowed claims against, or
interests in, the Company or its subsidiaries. Based upon the exemptions
provided by section 1145 under chapter 11 of the United States Bankruptcy Code,
as amended, the Company believes that none of these securities are required to
be registered under the Securities Act of 1933 (the "Securities Act") in
connection with their issuance and distribution pursuant to the Plan of
Reorganization. The Company has no recent sales of unregistered securities other
than such issuances pursuant to the Plan of Reorganization.

The Company's high and low stock prices by quarter for Fiscal 2002 and
Fiscal 2001 are set forth below:

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth various selected financial information for
the Company as of and for the fiscal years ended February 1, 2003, February 2,
2002, February 3, 2001, January 29, 2000, and January 30, 1999. Such selected
consolidated financial information should be read in conjunction with the
consolidated financial statements of the Company, including the notes thereto,
set forth in Item 8 of

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this Form 10-K and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" set forth in Item 7 of this Form 10-K.

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Notes to Selected Historical Financial Data:

(a) Fiscal Year ended February 3, 2001 includes 53 weeks as compared to 52 weeks
for each of the other fiscal years shown.

(b) The financial information for The Bee-Gee Shoe Corp. ("Bee-Gee") is included
as discontinued operations for all periods.

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

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Note to Selected Financial Data:

Effective February 3, 2002 the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Intangible
Assets, and reduced earnings by $14,060 for the cumulative effect of a change in
accounting principle. Also, effective February 3, 2002 the Company changed its
method of accounting for unrecognized actuarial gains and losses related to
pension benefits and reduced earnings by $1,058 for the cumulative effect of a
change in accounting principle.

ITEM 7. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of
operations of the Company for Fiscal 2002, Fiscal 2001 and Fiscal 2000. The
Company's fiscal year ends on the Saturday closest to January 31. The discussion
and analysis that follows is based upon and should be read in conjunction with
the Company's Consolidated Financial Statements and the notes thereto included
in Item 8.

RESULTS OF OPERATIONS

Fiscal 2002 Compared to Fiscal 2001

Net sales for Fiscal 2002 decreased by 0.5% to $639.8 million from $643.1
million for Fiscal 2001. Comparable store sales, sales for stores opened for 13
months, decreased 2.4%. Women's accessories and outerwear, domestics, and
furniture had the strongest sales increases. Sales for the Fourth Quarter 2002
were impacted by a shorter "holiday selling period." There were 26 shopping days
between Thanksgiving and Christmas 2002, whereas the 2001 holiday selling period
had 32 selling days.

Finance revenues increased to $27.6 million in Fiscal 2002, an increase of
1.1% over Fiscal 2001 revenues of $27.3 million. This increase was primarily due
to increased credit sales of $297.4 million in Fiscal 2002, an increase of 7.2%
over Fiscal 2001 credit sales of $277.4 million. This increase was

10

partially offset by a reduction in average days sales outstanding of accounts
receivable to 152 days in Fiscal 2002 compared to 167 days in Fiscal 2001.
Additionally, credit card penetration increased to 46.5% of net sales in Fiscal
2002 from 43.1% of net sales in Fiscal 2001.

Other revenue, which is primarily from leased departments, for both Fiscal
2002 and Fiscal 2001 was $3.2 million.

Cost of merchandise sold, occupancy, and buying expenses increased to 72.2%
of net sales for Fiscal 2002 from 71.5% of net sales for Fiscal 2001. During
Fiscal 2002 merchandise gross margins decreased 0.3% as a result of markdowns to
clear merchandise as a result of initiatives to change the merchandise mix
assortment, and additional markdowns of $0.8 million related to the closing of
the Company's downtown Dayton, Ohio store. Annual buying and occupancy costs
increased 0.3% as the Company opened five new stores during Fiscal 2001 and
2002. For Fourth Quarter 2002, the largest volume quarter, merchandise gross
margin improved by 1.1%. Additionally, Fourth Quarter 2002 margins were impacted
by $0.4 million due to a favorable annual physical inventory result. Fourth
Quarter 2002 gross margins reflect the favorable results of the initiatives to
improve the quality of inventory as we reduced the overall amount of inventory
(improved turnover and inventory freshness) which resulted in lower markdowns.

Selling, general, administrative, and other expenses decreased to 27.4% of
net sales for Fiscal 2002 from 28.2% for Fiscal 2001. The net reduction in costs
is primarily due to expense initiatives that have already been implemented in
fiscal 2002 and $0.8 million in miscellaneous income from a sale of noncore
assets and life insurance proceeds. Fiscal 2002 expenses include: (1) $0.3
million in costs related to the closing of the downtown Dayton, Ohio store; (2)
$1.2 million for severance costs to implement expense reductions; (3) $0.4
million for relocation and search fees for a new chief executive officer and
chief financial officer; (4) $1.0 million in charges to write-down long-term
assets to their fair value; this was comprised of $0.6 million related to the
building located in Charleston that the Company has a letter of intent to
purchase and $0.4 million related to the write-down of the asset value for the
Erie location; and (5) $3.6 million in charges related to the immediate
recognition of actuarial losses arising in 2002 associated with the Stone &
Thomas defined benefit pension plan. Fiscal 2001 costs include charges of $3.3
million related to the retirement of the Company's previous chairman, president,
and chief executive officer, and expenses related to the search for a new chief
executive, and $4.3 million in charges to write-off the receivable from
Shoebilee Inc., which was offset by expense initiatives that have been
implemented as part of the Company's strategic plan, and $0.6 million in income
related to recovery of an investment in a cooperative buying group.

Depreciation and amortization expense for Fiscal 2002 increased $0.5
million to $20.1 million from $19.6 million for Fiscal 2001. The increase is
primarily due to capital expenditures related to the opening of new stores.

Interest expense decreased to $11.3 million for Fiscal 2002 from $13.6
million for Fiscal 2001. The decrease is primarily due to lower borrowing needs
throughout the year.

The Company's effective income tax rate is 46.5% in Fiscal 2002 compared
with an income tax rate of 8.2% in Fiscal 2001. The effective income tax rate
for both years was affected by state tax expense

11

based on gross receipts versus net income and non-deductible items.
Non-deductible items consist primarily of officers' life insurance and meals and
entertainment expense and also included goodwill in Fiscal 2001.

A cumulative effect of a change in accounting principle was recorded during
the First Quarter 2002 in the amount of $14.1 million, net of tax, relating to
goodwill impairment as required under SFAS No. 142, Goodwill and Other
Intangible Assets. Also in the First Quarter 2002 a cumulative effect of a
change in accounting principle was recorded in the amount of $1.1 million, net
of tax, relating to the change in method for recording actuarial losses for the
Stone & Thomas defined benefit pension plan.

Fiscal 2001 Compared to Fiscal 2000

Net sales for Fiscal 2001 decreased by 2.0% to $643.1 million from $656.2
million for Fiscal 2000. Comparable store sales, sales for stores opened for 13
months and excluding the 53(rd) week of sales in Fiscal 2000, decreased 3.6%.
Women's special size sportswear, junior sportswear, and furniture had the
strongest sales increases.

Financing revenue from the Company's private label credit card for Fiscal
2001 decreased by 3.2% to $27.3 million from $28.2 million for Fiscal 2000,
primarily due to a decrease in the average outstanding accounts receivable
during the year.

Other revenue, which is primarily from leased departments, for Fiscal 2001
decreased by $0.1 million to $3.2 million from $3.3 million for Fiscal 2000.

Cost of merchandise sold, occupancy, and buying expenses decreased to 71.5%
of net sales for Fiscal 2001 from 72.6% of net sales for Fiscal 2000. During
Fiscal 2001 merchandise gross margins were reduced 1.0% versus Fiscal 2000 due
to additional markdowns to clear excess inventory as a result of the comparable
sales decrease. During Fiscal 2000 the Company incurred a charge of $12.1
million related to inventory costs to implement the Company's strategic plan and
$2.8 million in charges to record excess markdowns related to the closing of
three stores.

Selling, general, administrative, and other expenses decreased to 28.2% of
net sales for Fiscal 2001 from 29.3% for Fiscal 2000. Fiscal 2001 costs include
charges of $3.3 million related to the retirement of the Company's former
chairman, president, and chief executive officer, and expenses related to the
search for a new chief executive, and $4.3 million in charges to write off the
receivable from the Shoebilee divestiture, which was offset by expense
initiatives that have been implemented as part of the Company's strategic plan,
and $0.6 million in income related to recovery of an investment in a cooperative
buying group. Fiscal 2000 costs include charges of $3.8 million, primarily
severance, to implement the Company's strategic plan, $3.3 million related to
the closing of three stores, and income of $0.7 million related to a recovery of
an investment in a cooperative buying group.

Depreciation and amortization expense for Fiscal 2001 increased $3.4
million to $19.6 million from $16.2 million for Fiscal 2000. The increase is
primarily due to increased capital expenditures related to the opening of four
new concept stores, and capitalized leases relating to our new point-of-sale
cash registers.

Interest expense increased to $13.6 million for Fiscal 2001 from $13.0
million for Fiscal 2000. The increase is due to interest recorded from capital
leases primarily related to our new point-of-sale cash registers.

The Company's effective income tax benefit rate is 8.2% in Fiscal 2001
compared to an income tax benefit rate of 31.6% in Fiscal 2000. The effective
income tax benefit rate for both years was affected by state tax expense based
on gross receipts versus net income and non-deductible amortization of goodwill.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of funds are cash flow from operations and
borrowings under its Revolving Credit Facility and Receivable Securitization
Facility (collectively, the "Credit Facilities").
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The Company's primary ongoing cash requirements are to fund debt service,
finance working capital, and make capital expenditures.

Factors that could affect operating cash flows include, but are not limited
to, increasing price and product competition, fluctuations in consumer demand
and confidence, the availability and quality of inventory, the availability and
terms of bank financing and trade credit, consumer debt levels, and changes in
the finance charges imposed by the Company on its charge card holders.

The Company believes that it will generate sufficient cash flow from
operations, as supplemented seasonally by its available borrowings under the
Credit Facilities, to service debt requirements, meet anticipated working
capital needs and to make capital expenditures.

Net cash provided by operating activities was $46.6 million for Fiscal
2002, compared to $41.5 million in Fiscal 2001. A net loss was recorded in
Fiscal 2002 of $14.2 million. During Fiscal 2002 non-cash after-tax charges of
$14.1 million relating to the goodwill impairment and $1.1 million relating to
the change in method for recording actuarial losses for the Stone & Thomas
defined benefit pension plan were recorded. Additionally, 2002 included non-cash
pre-tax charges of $1.0 million to write-down long-term assets to their fair
value and $3.3 million for the immediate recognition of losses arising in 2002
associated with the change in method for recording actuarial losses for the
Stone & Thomas defined benefit pension plan. A net loss was recorded in Fiscal
2001 of $0.9 million, including pre-tax charges of $3.3 million related to the
retirement of the Company's former chairman, president, and chief executive
officer, and expenses recorded for the search for a new chief executive, and
$4.3 million to write-down the receivable from Shoebilee. Increased productivity
of our merchandise inventories, through lower overall levels and improved
merchandise presentations and assortments, reduced inventory by $13.0 million in
Fiscal 2002 compared to a $2.4 million decrease in Fiscal 2001.

Net cash used in investing activities was $8.0 million for Fiscal 2002,
compared to $18.9 million for Fiscal 2001. Capital expenditures for new stores,
store maintenance, remodeling, and data processing totaled $8.3 million for
Fiscal 2002 compared to $19.1 million for Fiscal 2001.

For Fiscal 2002, net cash used in financing activities was $36.0 million
compared to $23.4 million used in financing activities for Fiscal 2001. In
Fiscal 2002 and Fiscal 2001 the Company utilized cash provided by operating
activities to reduce borrowings. In fiscal 2002 long-term debt was reduced by
$33.4 million, and in Fiscal 2001 long-term debt was reduced $17.1 million.

On July 9, 2002, the Company amended and extended its existing Credit
Facilities, which were due to expire in May 2003. The early refinancing provides
the Company with continued operating flexibility for working capital
requirements and capital expenditures. The amended Credit Facilities will expire
in July 2005. The terms and borrowing rates are substantially similar to the
predecessor Credit Facilities. The amended Revolving Credit Facility provides
for borrowings and letters of credit in an aggregate amount up to $135,000,000,
reduced from $150,000,000, subject to a borrowing base formula based on
merchandise inventories. There is a $40,000,000 sublimit for letters of credit.
The amended Receivable Securitization Facility provides for borrowings up to
$135,000,000, reduced from $150,000,000, based on qualified, pledged accounts
receivable balances.

13

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following data is provided to facilitate an understanding of the
Company's contractual obligations and commercial commitments:

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's discussion and analysis of financial condition and results of
operations are based upon the Company's consolidated financial statements, which
are prepared in conformity with accounting principles generally accepted in the
United States of America. The preparation of the consolidated financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Management bases its estimates and judgements on
historical experience and other various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgements about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The Company's accounting policies are more fully described in Note A to the
Consolidated Financial Statements. Management believes the following critical
accounting policies affect its more significant judgements and estimates used in
the preparation of the consolidated financial statements.

Inventory Valuation. Merchandise inventories are valued by the retail
inventory method ("RIM") applied on a last-in, first-out ("LIFO") basis and are
stated at the lower of cost or market. Under the RIM, the valuation of
inventories at cost and the resulting gross margins are calculated by applying a
calculated cost-to-retail ratio to the retail value of inventories. Inherent in
the RIM calculation are certain management judgements and estimates including,
but not limited to, merchandise markon, markups, markdowns and shrinkage, which
significantly impact the ending inventory valuation and resulting gross margins.
These estimates, coupled with the fact that the RIM is an averaging process, can
produce distorted cost figures under certain circumstances. Distortions could
occur primarily by applying the RIM to a group of products that is not fairly
uniform in terms of its cost and selling price relationship and turnover, and
applying RIM to transactions over a period of time that

14

include different rates of gross profit, such as seasonal merchandise. To reduce
the potential for such distortion in the inventory valuation, the Company's RIM
utilizes over 250 departments within 18 LIFO inventory pools in which fairly
homogenous classes of merchandise are grouped. Management believes that the
Company's RIM provides an inventory valuation which reasonably approximates cost
and results in carrying inventory at the lower of cost or market.

Long-lived Assets. In evaluating the carrying value and future benefits of
long-lived assets, management performs a comparison of the anticipated
undiscounted future net cash flows of the related long-lived asset to their
carrying amount in accordance with SFAS No. 144. SFAS No. 144 became effective
for fiscal years beginning after December 15, 2001. The Company adopted SFAS No.
144 effective February 3, 2002. Management believes at this time that the
long-lived assets carrying values and useful lives to be appropriate.

Customer Accounts Receivable. Customer accounts receivable is shown net of
an allowance for uncollectible accounts. The Company calculates the allowance
for uncollectible accounts using a model that analyzes factors such as
bankruptcy filings, delinquency rates, historical charge-off patterns, recovery
rates, and other portfolio data. The Company's calculation is reviewed by
management to assess whether, based on recent economic events, the allowance for
uncollectible accounts is appropriate to estimate losses inherent in the
portfolio.

Income Taxes. The Company has generated net operating loss carryforwards
("NOL's") from previous years. Generally accepted accounting principles require
that we record a valuation allowance against the deferred tax asset associated
with the NOL's if it is more likely than not that the Company will not be able
to fully utilize it to offset future taxes. It is possible that we could be
profitable in the future at levels which cause management to conclude that it is
more likely than not that the Company will be able to fully realize the deferred
tax assets associated with the NOL's. Subsequent revisions to the estimated net
realizable value of the deferred tax asset could cause our provision for income
taxes to vary significantly from period to period, although our cash tax
payments would remain unaffected until the benefit of the NOL's are realized.

Pension Liability. The Company annually evaluates pension benefits for its
defined benefit plan, including all relevant assumptions required by accounting
principles generally accepted in the United States of America. Due to the
technical nature of pension accounting, the Company uses an outside actuary to
provide assistance in calculating the estimated future obligation associated
with this plan. Since there are many estimates and assumptions involved in
calculating pension benefits, differences between actual future events and prior
year estimates and assumptions could result in adjustments to pension expense
and the related obligation. Such assumptions include the discount rate and the
expected long-term rate of return on the related plan assets. As previously
discussed, the Company changed its method of accounting for net unrecognized
actuarial gains and losses associated with this plan to immediate recognition
into income or expense. As a result of this change, the Company recorded a
cumulative effect of accounting change in fiscal 2002. In anticipation of the
termination of this plan in 2003, the Company also adjusted the discount rate
used to calculate pension benefits and the expected long-term rate of return on
plan assets.

RECENT ACCOUNTING PRONOUNCEMENTS

In April 2002, SFAS No. 145, Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections, was issued.
SFAS No. 145 primarily rescinds SFAS No. 4 which allowed gains or losses from
the extinguishment of debt to be classified as an extraordinary item. As a
result, the criteria set forth by Accounting Principals Board ("APB") Opinion
No. 30 will now be used to classify those gains or losses. SFAS No. 145 becomes
effective for fiscal years beginning after May 15, 2002, with early application
encouraged. Management does not believe the adoption of SFAS No. 145 will have a
material impact on the financial statements.

In June 2002, SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities, was issued. SFAS No. 146 changes the timing of when
companies recognize costs associated with exit or
15

disposal activities, so that the costs would generally be recognized when they
are incurred rather than at the date of a commitment to an exit or disposal
plan. SFAS No. 146 is effective for exit or disposal activities initiated after
December 31, 2002, and could result in the Company recognizing the costs of
future exit or disposal activities over a period of time as opposed to as a
single event.

In November 2002, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. This interpretation elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under a guarantees issued. The interpretation also clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken. The initial recognition and measurement
provisions of the Interpretation are applicable to guarantees issued or modified
after December 31, 2002. There was no material impact on the financial
statements under this provision.

The Emerging Issues Task Force ("EITF") released Issue No. 02-16,
Accounting by a Customer (including a Reseller) for Cash Consideration Received
from a Vendor, in November 2002, applicable for new arrangements entered into
after December 31, 2002. Effective January 31, 2003, the Company adopted EITF
Issue No. 02-16. The adoption did not have an impact on the Company's financial
statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 requires
expanded and more prominent disclosure in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method on reported results. The Company continues to
measure compensation cost for stock options issued for employees and directors
using the intrinsic value based method of accounting in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees. The Company complied
with the annual disclosure requirements under SFAS No. 148 for Fiscal 2002.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to the risk of fluctuating interest rates in the
normal course of business, primarily as a result of its variable rate borrowing.
The Company has entered into variable to fixed rate interest-rate swap
agreements to effectively reduce its exposure to interest rate fluctuations. A
hypothetical 100 basis point change in interest rates would not materially
affect the Company's financial position, liquidity or results of operations.

The Company does not maintain a trading account for any class of financial
instrument and is not directly subject to any foreign currency exchange or
commodity price risk. As a result, the Company believes that its market risk
exposure is not material to the Company's financial position, liquidity or
results of operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

16

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
The Elder-Beerman Stores Corp.:

We have audited the accompanying consolidated balance sheets of The
Elder-Beerman Stores Corp. and subsidiaries (the "Company") as of February 1,
2003 and February 2, 2002, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three fiscal
years in the period ended February 1, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the consolidated financial position of the Company and its
subsidiaries as of February 1, 2003 and February 2, 2002 and the consolidated
results of their operations and their cash flows for each of the three fiscal
years in the period ended February 1, 2003, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Note B to the financial statements, the Company changed its
method of accounting for goodwill and other intangible assets to conform to
Statement of Financial Accounting Standards No. 142 in the fiscal year ended
February 1, 2003. In addition, as discussed in Note H to the financial
statements, the Company changed its method of accounting for unrecognized
actuarial gains and losses related to pension benefits in the fiscal year ended
February 1, 2003.

DELOITTE & TOUCHE LLP

March 20, 2003
Dayton, Ohio

17

THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to the consolidated financial statements.
18

THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See notes to the consolidated financial statements.
19

THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

See notes to the consolidated financial statements.
20

THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to the consolidated financial statements.
21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of The Elder-Beerman Stores Corp. and subsidiaries,
including The El-Bee Chargit Corp., a finance subsidiary (collectively the
"Company"). All significant intercompany balances and transactions have been
eliminated in consolidation.

FISCAL YEAR -- The Company's fiscal year ends on the Saturday nearest
January 31. Fiscal years 2002 and 2001 consist of 52 weeks, and fiscal year 2000
consists of 53 weeks ended February 1, 2003, February 2, 2002 and February 3,
2001, respectively.

ESTIMATES -- The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

CASH AND EQUIVALENTS -- The Company considers all highly liquid investments
with original maturities of three months or less at the date of purchase to be
cash equivalents.

CUSTOMER ACCOUNTS RECEIVABLE are classified as current assets because the
average collection period is generally less than one year.

MERCHANDISE INVENTORIES are valued by the retail method applied on a
last-in, first-out ("LIFO") basis and are stated at the lower of cost or market.
At February 1, 2003 and February 2, 2002, merchandise inventories on a FIFO
(first-in, first-out) cost basis approximate LIFO when stated at the lower of
cost or market.

VENDOR ALLOWANCES -- The Company receives allowances from its vendors
through a variety of programs and arrangements, including co-operative
advertising and markdown reimbursement programs. Given the promotional nature of
the Company's business, the allowances are generally intended to offset the
Company's cost of promoting, advertising and selling the vendors' products in
its stores. Co-operative advertising allowances are reported as a reduction of
advertising expense in the period in which the advertising occurred. Markdown
reimbursements are credited to cost of goods sold during the period in which
vendor approval is received.

PROPERTY is stated at cost less accumulated depreciation determined by the
straight-line method over the expected useful lives of the assets. Assets held
under capital leases and related obligations are recorded initially at the lower
of fair market value or the present value of the minimum lease payments. The
straight-line method is used to amortize such capitalized costs over the lesser
of the expected useful life of the asset or the life of the lease. The estimated
useful lives by class of asset are:

Buildings................................................... 25 to 50 years
Leasehold improvements...................................... 10 to 20 years
Furniture, fixtures and equipment........................... 3 to 10 years

GOODWILL -- The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 142, Goodwill and Other Intangible Assets, effective February 3,
2002. SFAS No. 142 requires that goodwill no longer be amortized, but instead
tested for impairment at least annually. See Note B for additional information.

Prior to 2002, the excess of cost over net assets of companies acquired was
recorded as goodwill and was amortized on a straight-line basis over 20 to 25
years. Amortization expense was $0.9 million in 2001 and $0.9 million in 2000.
At February 2, 2002, accumulated amortization was $6.0 million.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS -- Long-lived assets are reviewed for
impairment annually or whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable from undiscounted future cash
flows. If the carrying value of an asset is considered impaired, an impairment
charge is recorded for the amount by which the carrying value of the asset
exceeds its fair value.

In August 2001, SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, was issued, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. While SFAS No.
144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, it retains many of the fundamental
provisions of that statement. SFAS No. 144 becomes effective for fiscal years
beginning after December 15, 2001. The Company adopted SFAS No. 144 effective
February 3, 2002. The adoption did not have a material impact on the Company's
financial statements.

REVENUE RECOGNITION -- Sales revenues are recognized on merchandise
inventory sold upon receipt by the customer. Finance revenue is generated by
outstanding customer accounts receivable and recognized as interest is accrued
on these outstanding balances. Other revenue consists primarily of leased
department revenue. Leased department revenue is recognized as the Company earns
commission from the sale of merchandise within leased departments.

PRE-OPENING COSTS associated with opening new stores are expensed as
incurred.

ADVERTISING EXPENSE -- The cost of advertising is expensed the first time
the advertising takes place. Advertising costs were $21.0 million, $23.3 million
and $26.8 million in fiscal 2002, 2001 and 2000, respectively. The amounts of
prepaid advertising at the end of fiscal 2002, 2001 and 2000 were $0.6 million,
$0.7 million and $0.6 million, respectively.

DEFERRED ITEMS include liabilities associated with the Company's lease
incentives, executive retirement plan and interest rate swap agreements.

STOCK OPTIONS -- In December 2002, the Financial Accounting Standards Board
("FASB") issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 requires
expanded and more prominent disclosure in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method on reported results. The Company continues to
measure compensation cost for stock options issued to employees and directors
using the intrinsic value based method of accounting in accordance with
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees.

Total compensation costs charged to earnings from continuing operations
before income taxes for all stock-based compensation awards was approximately a
$0.4 million benefit in 2002 and a $0.4 million and $0.7 million expense in
fiscal 2001 and 2000, respectively. The following table illustrates the effect

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

on net loss and loss per share if the Company had applied the fair value
recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation,
to stock-based employee compensation.

FINANCIAL INSTRUMENTS -- The Company utilizes interest rate swap agreements
to manage its interest rate risks when receivables are sold under asset
securitization programs or other borrowings. The Company does not hold or issue
derivative financial instruments for trading purposes. The Company does not have
derivative financial instruments that are held or issued and accounted for as
hedges of anticipated transactions. Amounts currently due to or from interest
swap counter parties are recorded in interest expense in the period in which
they accrue. Gains or losses on terminated interest rate swap agreements are
included in long-term liabilities or assets and amortized to interest expense
over the shorter of the original term of the agreements or the life of the
financial instruments to which they are matched. Gains or losses on the
mark-to-market for interest rate swap agreements that do not qualify for hedge
accounting are recorded as income or expense each period.

COMPREHENSIVE INCOME is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners. The
difference between net loss and comprehensive loss for fiscal year 2002 related
to the recognition of the accumulated minimum pension liability previously
recorded in comprehensive loss in the income statement during the current year
due to the change in accounting principle (Note H) and the net unrealized gain
on derivative financial instruments. The difference between net loss and
comprehensive loss for fiscal year 2001 related to the change in minimum pension
liability and the net unrealized loss on derivative financial instruments
associated with the adoption of SFAS No. 133. The difference between net loss
and comprehensive loss for fiscal year 2000 relates to the change in minimum
pension liability.

ACCOUNTING PRONOUNCEMENTS -- In April 2002, SFAS No. 145, Rescission of
FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections, was issued. SFAS No. 145 rescinds SFAS No. 4, Reporting
Gains and Losses from Extinguishment of Debt -- an Amendment of APB Opinion No.
30, which required all gains or losses from extinguishment of debt, if material,
to be classified as an extraordinary item, net of related tax effect. Under SFAS
No. 145, debt extinguishments used as part of an entity's risk management
strategy do not meet the criteria for classification as extraordinary items.
SFAS No. 64 amended SFAS No. 4, and is no longer necessary because SFAS No. 4
was rescinded. SFAS No. 145 also amends SFAS No. 13, Accounting for Leases, to
eliminate an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. SFAS No.
145 becomes effective for fiscal years beginning after May 15, 2002, with early
adoption encouraged. Management does not believe the adoption of SFAS No. 145
will have a material impact on the financial statements.

In June 2002, SFAS No. 146, Accounting for Cost Associated with Exit or
Disposal Activities, was issued. SFAS No. 146 changes the timing of when
companies recognize the costs associated with exit or

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

disposal activities, so that costs would generally be recognized when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 is effective for exit or disposal activities initiated after
December 31, 2002, and could result in the Company recognizing the costs of
future exit or disposal activities over a period of time as opposed to as a
single event. During fourth quarter of fiscal 2002, the Company adopted SFAS No.
146. Currently this statement does not have an impact on the Company's financial
statements.

In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. This interpretation elaborates on
the disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. The interpretation
also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002. There was
no material impact on the financial statements under this provision.

The Emerging Issues Task Force ("EITF") released Issue No. 02-16,
Accounting by a Customer (Including a Reseller) for Cash Consideration Received
from a Vendor, in November 2002, applicable for new arrangements entered into
after December 31, 2002. The Company adopted EITF Issue 02-16, prospectively,
effective January 1, 2003. The adoption did not have an impact on the Company's
financial statements.

RECLASSIFICATIONS -- Certain reclassifications have been made to the 2001
and 2000 financial statements to conform to the 2002 financial statement
presentation.

B. GOODWILL

Effective February 3, 2002, the beginning of fiscal year 2002, the Company
adopted SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142
provides that goodwill and intangible assets with indefinite lives will not be
amortized, but instead will be tested for impairment at least on an annual
basis. Intangible assets with finite lives will continue to be amortized over
their useful lives. In addition SFAS No. 142 requires a transitional impairment
test on the adoption date.

The Company had approximately $16.0 million in goodwill recorded in its
balance sheet as of February 2, 2002. The Company completed the goodwill
transitional impairment test during first quarter of 2002, and determined that
all of the goodwill recorded was impaired under the fair value impairment test
approach as required by SFAS No. 142. The fair values of the reporting units
were estimated using the expected present value of associated future cash flows
and market values of comparable business where available. Upon adoption of SFAS
No. 142, a $14.1 million charge, net of tax, was recognized in the first quarter
of 2002 to record the impairment of goodwill and was classified as a cumulative
effect of the change in accounting principle.

SFAS No. 142 requires the presentation of net earnings (loss) and related
earnings (loss) per share data adjusted for the effect of goodwill amortization.
The following table provides the proforma effect on

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

net earnings (loss) and per share data for the year ended February 1, 2003,
February 2, 2002 and February 3, 2001, adjusted for the impact of goodwill
amortization on the results of the prior year period.

The changes in the carrying amount of goodwill for the year ended February
1, 2003 are as follows:

C. CUSTOMER ACCOUNTS RECEIVABLE

Customer accounts receivable represent finance subsidiary receivables.
Interest is charged at an annual rate of 21% to 22%, depending on state law. A
rollforward of the Company's allowance for doubtful accounts is as follows:

Customer accounts receivable result from the Company's proprietary credit
card sales to customers residing principally in the midwestern states. As such,
the Company believes it is not dependent on a given industry or business for its
customer base and therefore has no significant concentration of credit risk.

D. DEBT

Through a commercial bank lending group, the Company has a three-year
Revolving Credit Facility ("Credit Facility"), and through its financing
subsidiary, a three-year variable rate securitization loan agreement
("Securitization Facility"), both of which expire July 9, 2005. These

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

three-year agreements were amended in July 2002. Outstanding borrowings of
$108.2 million on the Credit and Securitization Facilities due July 2005 are
classified as long-term liabilities.

The Credit Facility provides for borrowing and letters of credit in an
aggregate amount up to $135 million subject to a borrowing base formula based
primarily on merchandise inventories. There is a $40 million sublimit for
letters of credit. The Company is currently financing borrowings at either
prime, plus 75 basis points or LIBOR, plus 225 basis points.

The Securitization Facility is a revolving agreement whereby the Company
can borrow up to $135 million. The Company's customer accounts receivables are
pledged as collateral under the Securitization Facility. The borrowings under
this facility are subject to a borrowing-based formula based primarily on
outstanding customer accounts receivable. Borrowings bear interest at commercial
paper rates, plus 5 basis points.

Certain financial covenants related to debt are included in the Credit and
Securitization Facility agreements. Additionally, there are certain other
restrictive covenants, including limitations on the incurrence of additional
liens, indebtedness, payment of dividends, distributions or other payments on
and repurchase of outstanding capital stock, investments, mergers, stock
transfer and sale of assets. Certain ratios related to the performance of the
accounts receivable portfolio are also included.

Long-term obligations consists of the following:

Maturities of borrowings are $5,456 in 2003, $1,747 in 2004, $111,182 in
2005, $274 in 2006, $224 in 2007 and $1,700 thereafter.

Collateral for the industrial development revenue bond, the installment
note, and the mortgage note payable, is land, buildings, furniture, fixtures and
equipment with a net book value of $4.7 million at February 1, 2003.

E. FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

CASH AND EQUIVALENTS -- The carrying amount approximates fair value because
of the short maturity of those instruments.

CUSTOMER ACCOUNTS RECEIVABLE -- The net carrying amount approximates fair
value because of the relatively short average maturity of the instruments and no
significant change in interest rates.

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LONG-TERM DEBT -- The carrying amount approximates fair value as a result
of the variable rate-based borrowings.

INTEREST RATE SWAP AGREEMENTS -- The fair value of interest rate swaps is
based on the quoted market prices that the Company would pay to terminate the
swap agreements at the reporting date.

The Company uses derivative financial instruments as part of an overall
strategy to manage exposure to market risks associated with interest rate
fluctuations. The Company does not hold or issue derivative financial
instruments for trading purposes. The risk of loss to the Company in the event
of nonperformance by any counterparty under derivative financial instrument
agreements is not considered significant by management. All counterparties are
rated A or higher by Moody's and Standard and Poor's, and the Company does not
anticipate nonperformance by any of its counterparties.

Effective February 4, 2001, the Company adopted SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities, as amended. Under SFAS No.
133, all derivative instruments are required to be recorded on the balance sheet
as assets or liabilities, measured at fair value. If the derivative is
designated as a fair value hedge, the changes in the fair value of the
derivative and of the hedged item attributable to the hedged risk are recognized
in earnings. If the derivative is designated as a cash flow hedge, the effective
portion of the change in the fair value of the derivative is recorded in other
comprehensive income (loss) and is recognized in the income statement when the
hedge item affects earnings. Ineffective portions of changes in the fair value
of cash flow hedges and financial instruments not designated as hedges are
recognized in earnings.

The Company utilizes interest rate swap agreements to effectively establish
long-term fixed rates on borrowings under the Securitization Facility, thus
reducing the impact of interest rate changes on future income. These swap
agreements, which are designated as cash flow hedges, involve the receipt of
variable rate amounts in exchange for fixed rate interest payments over the life
of the agreements. The fair value of the Company's interest rate swap agreements
in the Company's consolidated balance sheet is a $3.8 million liability at
February 1, 2003 and a $6.0 million liability at February 2, 2002. The estimated
fair value of the interest rate swap agreements is a $2.8 million liability at
February 3, 2001. The Company had outstanding swap agreements with notional
amounts totaling $92 million for the fiscal years ended 2002 and 2001 and $100
million for 2000. The Company's current swap agreements expire April 2004. These
agreements have been matched to the Securitization Facility to reduce the impact
of interest rate changes on cash flows. In fiscal 2003, the Company expects the
amounts to be reclassified out of other comprehensive income to earnings to be
immaterial to the financial statements.

F. LEASES

The Company leases retail store properties and certain equipment.
Generally, leases are net leases that require the payment of executory expenses
such as real estate taxes, insurance, maintenance and other operating costs, in
addition to minimum rentals. Leases for retail stores generally contain renewal
or purchase options, or both, and generally provide for contingent rentals based
on a percentage of sales.

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Minimum annual rentals, for leases having initial or remaining
noncancellable lease terms in excess of one year at February 1, 2003, are as
follows:

Assets acquired under capital leases are included in the consolidated
balance sheets as property, while the related obligations are included in
long-term obligations.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

G. INCOME TAX PROVISION (BENEFIT)

Income tax provision (benefit) consists of the following:

Income statement classifications:

The following table summarizes the major differences between the actual
income tax provision attributable to continuing operations and taxes computed at
the federal statutory rates:

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes consist of the following:

Permanent items consist primarily of officers' life insurance and meals and
entertainment expense and also included goodwill in Fiscal 2001 and 2000. The
net operating loss carryforwards, tax credit carryforwards, and other deferred
tax assets will result in future benefits only if the Company has taxable income
in future periods. In accordance with SFAS No. 109, Accounting for Income Taxes,
a valuation allowance has been recorded for the tax effect of a portion of the
future tax deductions and tax credit carryforwards.

The federal net operating loss carryforward is approximately $56.0 million
and is available to reduce federal taxable income through 2020. The tax credit
carryforward is approximately $2.9 million, of which $632,000 will expire in
2009 and 2010, and the balance of which is an indefinite carryforward.

H. EMPLOYEE BENEFIT PLANS AND CHANGE IN ACCOUNTING METHOD

A defined-contribution employee benefit plan (the "Benefit Plan") covers
substantially all employees. Eligible employees can make contributions to the
Benefit Plan through payroll withholdings of one to fifteen percent of their
annual compensation. The Company may contribute to the Benefit Plan based on a
percentage of compensation and on a percentage of earnings before income taxes.
Contributions of $1.0 million, $1.4 million, and $1.1 million were recorded in
fiscal 2002, 2001 and 2000, respectively, for the Company's match to the Benefit
Plan.

Effective February 2, 2002, the Company terminated its Stock Purchase Plan,
which provided for its employees to purchase Elder-Beerman common stock at a 15%
discount. Employees could make contributions to the Stock Purchase Plan through
payroll withholdings of one percent to ten percent of their annual compensation,
up to a maximum of $25,000 per year. A total of 625,000 shares of common stock
are registered and unissued under the Stock Purchase Plan.

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the acquisition of Stone & Thomas in 1998, the Company
assumed the liability for a supplementary pension plan that covers key
executives of Stone & Thomas. The benefits are paid upon retirement, providing
the employee is age 65 and has completed ten years of participation in the plan.
The total liability for this plan recorded in the Company's consolidated balance
sheet is $3.1 million and $2.8 million at February 1, 2003 and February 2, 2002,
respectively. This unfunded liability was determined using an assumed discount
rate of 5% and 6.5% for 2002 and 2001, respectively.

The Company also has a defined-benefit pension plan, which covered all
full-time employees of Stone & Thomas upon completion of one year of service and
the attainment of age 21. The defined benefit formula was based upon employees'
years of service and earnings. Accrued benefits were frozen as of September 30,
1998, as part of the Company's plan of acquisition. During the fourth quarter of
the fiscal year ended February 1, 2003, the Company approved the termination of
the Stone & Thomas Plan. Subsequent to this decision, the Company changed its
method of accounting for net unrecognized actuarial gains and losses associated
with its defined benefit plans accounted for in accordance with SFAS No. 87,
Employers' Accounting for Pensions to accelerate recognition of such gains and
losses. The Company previously amortized cumulative net unrecognized gains and
losses in excess of 10% of the greater of the projected benefit obligation or
the market-related value of pension plan assets over the average remaining
service period of the plan participants. The Company changed its method to
immediate recognition into income or expense of such net unrecognized actuarial
gains and losses. The Company believes that this accelerated recognition method
is a preferable method. As a result of this accounting change, during the fourth
quarter of 2002, the Company recorded a pretax charge of $3.6 million related to
the immediate recognition of losses arising in 2002 associated with this plan.
Additionally, the cumulative effect of this change as of February 3, 2002 of
$1.1 million net of tax has been recorded in the 2002 results of operations,
retroactively to the first quarter, as a cumulative effect of change in
accounting principle. The Company's funding policy is to contribute an amount
annually that satisfies the minimum funding requirements of ERISA and that is
tax deductible under the Internal Revenue Code.

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Summary information for the Company's defined-benefit plan is as follows:

The components of net pension loss (income) are as follows:

In connection with the decision to terminate the plan, plan assets of
approximately $3.1 million were transferred to money market funds on January 3,
2003. These assets were previously held in a trust and were invested primarily
in equities and fixed income obligations. The expected long-term rate of

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

return on plan assets used in determining net pension loss (income) was 2.0% in
2002 and 8% in 2001 and 2000.

I. EARNINGS PER SHARE

Net earnings (loss) per common share is computed by dividing net earnings
(loss) by the weighted-average number of common shares outstanding during the
year. Stock options, restricted shares, deferred shares and warrants outstanding
represent potential common shares and are included in computing diluted earnings
per share when the effect is dilutive. Dilutive potential common shares for
fiscal 2001 and 2000 were 133,457 and 120,790, respectively. There was no
dilutive effect of potential common shares in fiscal 2001 and 2000. A
reconciliation of the weighted average shares used in the basic and diluted
earnings per share calculation is as follows:

J. SHAREHOLDERS' EQUITY

The Company has authorized 25 million no par common shares. In August 2000,
the Company's Board of Directors authorized the repurchase of a targeted 3.3
million common shares at an aggregate repurchase price of $20 million through a
self-tender. During fiscal 2000, a total of 3.5 million common shares were
repurchased for $17.7 million. There were 0.9 million shares held in treasury at
February 1, 2003 and February 2, 2002.

The Board of Directors has the authority to issue five million shares of
preferred stock. At February 1, 2003, these shares are unissued.

Warrants of 624,522 are attached to shares outstanding of 624,522.

Under a Rights Agreement, each outstanding common share presently has one
right attached that trades with the common share. Generally, the rights become
exercisable and trade separately after a third party acquires 20% or more of the
common shares or commences a tender offer for a specified percentage of the
common shares. Upon the occurrence of certain additional triggering events
specified in the Rights Agreement, each right would entitle its holder (other
than, in certain instances, the holder of 20% or more of the common shares) to
purchase common shares of the Company at an exercise price of 50% of the
then-current common share market value. The rights expire on December 30, 2007,
unless the Board of Directors takes action prior to that date to extend the
rights, and are presently redeemable at $.01 per right.

K. STOCK-BASED COMPENSATION

The Equity and Performance Incentive Plan (the "Incentive Plan") authorizes
the Company's Board of Directors to grant restricted shares, stock options,
appreciation rights, deferred shares, performance shares and performance units.
Awards relating to 2,750,000 shares are authorized for issuance under this plan
and awards related to 1,808,886 shares have been issued as of February 1, 2003.

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Officers and key employees have been granted stock options under the
Incentive Plan. The options granted have a maximum term of ten years and vest
over a period ranging from three to five years. In fiscal 2002, 2001 and 2000,
the Company has granted certain discounted stock options, in lieu of directors'
fees, to outside directors with an exercise price less than the market price of
the stock on the grant date.

The following table summarizes the Company's stock option activity:

The following table shows various information about stock options
outstanding at February 1, 2003:

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Incentive Plan provides for the issuance of restricted common shares to
certain employees and nonemployee directors of the Company. These shares have a
vesting period of three years. As of February 1, 2003, 143,625 restricted common
shares are issued and outstanding under the plan. There were 33,966 and 88,538
shares awarded under this plan in fiscal 2002 and 2001, respectively. The fair
value of the restricted shares awarded was $0.1 million and $0.3 million in
fiscal 2002 and 2001, respectively, which is recorded as compensation expense
over the three-year vesting period.

The Incentive Plan also provides for certain employees to elect to defer a
portion of their compensation through the purchase of deferred shares. Each
deferred share represents an employee's right to a share of the Company's common
stock. As of February 1, 2003, 10,250 deferred shares are outstanding.

L. DISCONTINUED OPERATIONS

In fiscal 1999, the Company sold its wholly-owned subsidiary, The Bee-Gee
Shoe Corp. ("Bee-Gee") to Shoebilee, Inc. The company recorded a benefit of $0.1
million, net of tax, in 2000 relating to the finalization of the sale.

M. ASSET IMPAIRMENT AND OTHER EXPENSES

On May 28, 2002 the Company announced that its executive vice president,
chief financial officer, secretary and treasurer, left the Company to pursue
other opportunities. He is entitled to his current base salary through the end
of his employment agreement. The Company recorded a pre-tax expense of
approximately $0.3 million in selling, general, administrative and other
expenses during the second quarter of 2002 for his remaining salary and benefits
payable. The liability of $0.1 million remaining at February 1, 2003 is payable
in fiscal 2003.

The Company must periodically evaluate the carrying amount of its
long-lived assets, when events and circumstances warrant such a review, to
ascertain if any assets have been impaired. The carrying amount of long-lived
assets is considered impaired when the anticipated undiscounted cash flows
generated by the asset is less than its carrying amount. Because of the
immaterial cash flow generation during fiscal year 2001 of the Department
Store's Erie, PA location coupled with a sales decline during first quarter
2002, the Company performed a cash flow projection for that store location.
Based on the cash flow projection, the Company determined that as of May 4,
2002, the carrying amount of the long-lived assets for that location were not
recoverable and exceeded their fair value. Accordingly in the first quarter of
2002 the Company recorded a pre-tax impairment loss of $0.4 million in selling,
general, administrative and other expenses to write-down that location's
long-lived assets to their fair value.

On May 2, 2002 the Company announced its plan to close its Dayton, OH
department store. During the year ended February 1, 2003 the Company recorded
pre-tax costs of $0.8 million for excess inventory markdowns and $0.3 for
severance and other costs in cost of merchandise sold, occupancy and buying
expenses and selling, general, administrative and other expenses. The closing
was completed on July 25, 2002.

On April 22, 2002 the Company announced the implementation of additional
expense reduction initiatives. These initiatives eliminated 105 associate
positions and resulted in recording a pre-tax loss of $0.7 million for severance
in selling, general, administrative and other expenses. The liability of $0.1
million remaining at February 1, 2003 is payable in fiscal 2003.

The Company has for sale a building located in downtown Charleston, WV,
which was recorded at its estimated fair market value. The Company has received
a letter of intent from the state of West Virginia to purchase the building for
less than the estimated fair market value, which the Company has accepted.
Accordingly in the first quarter 2002, the Company recorded a pre-tax impairment
of

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$0.6 million in selling, general, administrative and other expenses to
write-down the building to its revised fair value.

Effective December 31, 2001 (the "Retirement Date"), the Company's previous
Chairman, President, and Chief Executive Officer retired and resigned from the
Board of Directors. The Company entered into a Separation and Retirement
Agreement (the "Separation Agreement") with him. The Separation Agreement
superceded his Employment Agreement. Pursuant to the terms of the Separation
Agreement, until the Retirement Date, he was entitled to his current base salary
and benefits that would have been payable pursuant to the terms of his
Employment Agreement. After the Retirement Date, the Company is required to pay
(i) his current base salary of $660,000 per year for the period beginning with
the Retirement Date and ending on December 31, 2004 (the "Retirement Period").
During the Retirement Period, he is entitled to medical benefits equivalent to
those provided to him prior to the Retirement Date and the automobile benefit
that he received prior to the Retirement Date. His options to purchase shares of
common stock and restricted shares that are unvested as of the Retirement Date
were forfeited. During fiscal 2001, the Company recorded pre-tax expense of $3.3
million for severance costs and expenses recorded for the search of a new chief
executive in selling, general, administrative and other expenses. The liability
of $1.4 million remaining at February 1, 2003 for severance and benefits is
payable in 2003 and 2004.

On October 29, 2001, the Company was informed that Shoebilee, Inc.
("Shoebilee"), the company that purchased the assets of Bee-Gee, in January
2000, was in default under its lending agreement with its working capital lender
(the "Working Capital Loan"). Shoebilee was also in default under the loan
documents governing the amount Shoebilee owes the Company for the purchase of
the Bee-Gee assets, as well as under an agreement pursuant to which the Company
provides back office support services to Shoebilee (collectively, the "Company
Agreements"). On December 21, 2001, Shoebilee filed for Chapter 11 bankruptcy
protection. As a result of Shoebilee's default on the Company's agreements and
bankruptcy filing, the Company recorded a pre-tax charge of $4.3 million in
selling, general, administrative and other expenses in fiscal 2001. In addition,
the Company has recorded a liability of $0.1 million at February 1, 2003, for
guaranteed lease obligations of two Shoebilee, Inc. stores.

During fiscal 2000, the Company recorded a pretax charge of $15.9 million
associated with the Company's new strategic plan announced in August 2000. The
charges included $12.1 million for inventory costs included in cost of goods
sold, occupancy and buying expenses and $3.8 million for severance costs and
outside professional fees and expenses included in selling, general,
administrative and other expenses. The severance costs related to the
termination of 137 salaried and hourly employees, all of who left the Company
before February 3, 2001. All severance costs have been paid as of February 1,
2003. Also in fiscal 2000, the Company recorded an asset impairment of $0.3
million in selling, general, administrative and other expenses for the value of
the closed Wheeling store building. The Company determined the fair value of the
building based on a real estate assessment.

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a summary related to the asset impairments and other
expenses:

N. COMMITMENTS AND CONTINGENCIES

LITIGATION -- The Company is a party to various legal actions and
administrative proceedings and subject to various claims arising in the ordinary
course of business. Management believes the outcome of any of the litigation
matters will not have a material effect on the Company's results of operations,
cash flows or financial position.

INSURANCE -- The Company is self-insured for employee medical and workers'
compensation, subject to limitations for which insurance has been purchased.
Management believes that those claims reported and not paid and claims incurred,
but not yet reported, are appropriately accrued.

O. SEGMENT REPORTING

Management assesses performance and makes operating decisions based on two
reportable segments, Department Store and Finance Operations.

The Department Store segment is identified by the merchandise sold and
customer base served. The Department Store segment sells a wide range of
moderate to better brand merchandise, including women's ready to wear,
accessories, cosmetics, men's, children's and home. The Company's retail stores
are principally engaged in smaller Midwestern markets in Ohio, Indiana,
Illinois, Michigan,

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pennsylvania, Wisconsin, Kentucky, and West Virginia. Net sales by major
merchandising category in the Department Store segment are as follows:

The Finance Operations segment is a private label credit card program
operated by the Company through its wholly owned subsidiary, Chargit. Finance
Operations segment revenues consist primarily of finance charges earned through
issuance of Elder-Beerman proprietary credit cards. All phases of the credit
card operation are handled by Chargit, except the processing of customer mail
payments.

The following table sets forth information for each of the Company's
segments. Reclassifications were made to the prior year's segment information to
conform to the presentation used in fiscal year 2002. Segment revenues and
operating profit were adjusted to reflect the elimination of transactions
between the operating segments. This presentation reflects the current measure
of segment profit or loss reviewed by management of the Company.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

- ---------------

(1) Total segment operating profit is reconciled to earnings (loss) before
income tax provision (benefit), discontinued operations and cumulative
effect of changes in accounting principles as follows:

* * * * * *

40

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) Directors

The information set forth under the caption "Election of Directors" in
the Company's definitive proxy statement for its annual meeting of
shareholders to be held June 5, 2003 is hereby incorporated by
reference.

(b) Executive Officers

See Part I of the Form 10-K.

(c) Compliance with Section 16(a) of the Exchange Act

The information set forth under the caption "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's definitive proxy
statement for its annual meeting of shareholders to be held June 5, 2003
is hereby incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information set forth under the caption "Compensation of Executive
Officers" in the Company's definitive proxy statement for its annual meeting of
shareholders to be held June 5, 2003 is hereby incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information set forth under the caption "Security Ownership of
Management and Certain Beneficial Owners" in the Company's definitive proxy
statement for its annual meeting of shareholders to be held June 5, 2003 is
hereby incorporated by reference.

41

EQUITY COMPENSATION PLAN INFORMATION

The following table gives information about Elder-Beerman's Common Stock
that may be issued upon the exercise of options, warrants and rights under all
of Elder-Beerman's existing equity compensation plan as of February 1, 2003.

- ---------------

(1) The Elder-Beerman Stores Corp. Equity and Performance Incentive Plan was
approved in December 1997 pursuant to the Third Amended Joint Plan of
Reorganization, as amended of the Company, confirmed by an order entered by
the United States Bankruptcy Court for the Southern District of Ohio,
Western Division on December 16, 1997. On September 21, 2000, the Company's
shareholders approved an amendment to the Plan which increased the number of
shares of Common Stock to be issued under the Plan from 2,225,000 to
2,750,000 shares.

(2) The Company does not have any compensation plans that have not been approved
by the Company's shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the caption "Certain Relationships and
Related Transactions" in the Company's definitive proxy statement for its annual
meeting of shareholders to be held June 5, 2003 is hereby incorporated by
reference.

ITEM 14. DISCLOSURE CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the president, chief executive officer and
chief financial officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rules 13a-14 and
15-d-14 of the Securities Exchange Act of 1934, as amended). Based upon that
evaluation, the president, chief executive officer and chief financial officer
have concluded that the Company's disclosure controls and procedures are
effective. There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date the controls were evaluated.

42

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Financial Statements

The following consolidated financial statements of The Elder-Beerman Stores
Corp. and its subsidiaries are at Item 8 hereof.

Consolidated Balance Sheets --
February 1, 2003 and February 2, 2002.

Consolidated Statements of Operations --
Years ended February 1, 2003, February 2, 2002, and February 3,
2001.

Consolidated Statements of Shareholders' Equity --
Years ended February 1, 2003, February 2, 2002, and February 3,
2001.

Consolidated Statements of Cash Flows --
Years ended February 1, 2003, February 2, 2002, and February 3,
2001.

Notes to Consolidated Financial Statements.

(a)(2) Financial Statement Schedules

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are included in the
consolidated financial statements, are not required under the related
instructions, or are inapplicable, and therefore have been omitted.

(a)(3) Exhibits.

See Index to Exhibits.

(b)Reports on Form 8-K.

During the quarter ended February 1, 2003, the Company filed one report on
Form 8-K, dated December 11, 2002, reporting under Item 9 that the
Company's chief executive officer and chief financial officer had executed
certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002
relating to the Company's Form 10-Q for the quarter ended November 2, 2002.

43

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 ELDER-BEERMAN STORES CORP.,
an Ohio corporation

Dated: April 18, 2003

By: /s/ EDWARD A. TOMECHKO
------------------------------------
Edward A. Tomechko
Executive Vice President Chief
Financial Officer, Treasurer and
Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Company and in the capacities indicated and on April 18, 2003.

* Chief Executive Officer, Director (Principal
------------------------------------------------ Executive Officer)
Byron L. Bergren

* Executive Vice President, Chief Financial
------------------------------------------------ Officer, Treasurer and Secretary (Principal
Edward A. Tomechko Financial Officer)

* Senior Vice President, Controller (Principal
------------------------------------------------ Accounting Officer)
Steven D. Lipton

* Director
------------------------------------------------
Mark F.C. Berner

* Director
------------------------------------------------
Dennis S. Bookshester

* Director
------------------------------------------------
Eugene I. Davis

* Director
------------------------------------------------
Charles Macaluso

* Director
------------------------------------------------
Steven C. Mason

* Director
------------------------------------------------
Thomas J. Noonan, Jr.

* Director
------------------------------------------------
Laura H. Pomerantz

44

* Director
------------------------------------------------
Jack A. Staph

* Director
------------------------------------------------
Charles H. Turner

* The undersigned, pursuant to certain Powers of Attorney executed by each of
the directors and officers noted above and previously filed or filed herewith
contemporaneously with the Securities and Exchange Commission, by signing his
name hereto, does hereby sign and execute this report on behalf of each of the
persons noted above, in the capacities indicated.

Dated: April 18, 2003

By: /s/ EDWARD A. TOMECHKO
------------------------------------
Edward A. Tomechko
Chief Financial Officer, Treasurer
and Secretary

45

CERTIFICATIONS

I, Byron L. Bergren, President and Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of The Elder-Beerman Stores
Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: April 18, 2003
/s/ BYRON L. BERGREN
---------------------------------------
Byron L. Bergren
President and Chief Executive Officer

46

I, Edward A. Tomechko, Executive Vice President -- Chief Financial Officer,
Treasurer and Secretary, certify that:

1. I have reviewed this annual report on Form 10-K of The Elder-Beerman Stores
Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: April 18, 2003
/s/ EDWARD A TOMECHKO
---------------------------------------
Edward A Tomechko
Executive Vice President -- Chief
Financial Officer, Treasurer and
Secretary

47

INDEX TO EXHIBITS

(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT,
LIQUIDATION OR SUCCESSION
2.1 Third Amendment Joint Plan of Reorganization of The
Elder-Beerman Stores Corp. and its Subsidiaries dated
November 17, 1997. [Incorporated - Form 10, filed 11/26/97]
(3) AMENDED ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Amended Articles of Incorporation of The Elder-Beerman
Stores Corp.[FILED HEREWITH]
3.2 Amended Code of Regulations of The Elder-Beerman Stores
Corp. [Incorporated - Form 10-Q, filed 9/11/00]
(4) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 Amended and Restated Credit Agreement, dated as of July 9,
2002, among The Elder-Beerman Stores Corp., as Borrower, the
Lenders named therein, Citibank, N.A., as Issuer and
Citicorp USA, Inc., as Agent and Swing Loan Bank.
[Incorporated - Form 10-Q, filed 9/12/02]
4.2 Form of Registration Rights Agreement [Incorporated - Form
10, filed 11/26/97]
4.3 Rights Agreement, By and Between The Elder-Beerman Stores
Corp. and Norwest Bank Minnesota, N.A., as Rights Agent
dated as of December 30, 1997 [Incorporated - Form 8-A,
filed 11/17/98]
4.4 Warrant Agreement By and Between Beerman-Pearl Holdings,
Inc. and The Elder-Beerman Stores Corp. for 249,809 of the
outstanding shares of common stock at an exercise price of
$12.80 per share dated December 30, 1997 [Incorporated -
Form 10-K, filed 4/30/98]
4.5 Warrant Agreement By and Between Beerman-Pearl Holdings,
Inc. and The Elder-Beerman Stores Corp. for 374,713 of the
outstanding shares of common stock at an exercise price of
$14.80 per share dated December 30, 1997 [Incorporated -
Form 10-K, filed 4/30/98]
4.6 Amendment No. 1 to the Rights Agreement, dated as of
November 11, 1998 [Incorporated - Form 8-A, filed 11/17/98]
4.7 Elder-Beerman Master Trust Pooling and Servicing Agreement,
dated December 30, 1997, Among The El-Bee Receivables
Corporation, The El-Bee Chargit Corp. and Bankers Trust
Company [Incorporated - Form 10/A-1, filed 1/23/98]
4.8 Elder-Beerman Master Trust Series 1997-1 Supplement, dated
December 30, 1997, Among The El-Bee Receivables Corporation,
The El-Bee Chargit Corp. and Bankers Trust Company
[Incorporated - Form 10/A-1, filed 1/23/98]
4.9 Series 1997-1 Certificate Purchase Agreement, dated December
30, 1997, Among The El-Bee Receivables Corporation,
Corporate Receivables Corporation, The Liquidity Providers
Named Herein, CitiCorp North American, Inc. and Bankers
Trust Company, as Trustee [Incorporated - Form 10/A-1, filed
1/23/98]
4.10 Elder-Beerman Master Trust Series 1997-1 Loan Agreement,
dated as of December 30, 1997, Among The El-Bee Receivables
Corporation, The El-Bee Chargit Corp., Bankers Trust
Company, The Collateral Investors Parties Hereto and
CitiCorp North America, Inc. [Incorporated - Form 10/A-1,
filed 1/23/98]
4.11 Intercreditor Agreement dated as of December 30, 1997, By
and Among Citicorp North America, Inc., The El-Bee
Receivables Corporation, The El-Bee Chargit Corporation, The
Elder-Beerman Stores Corp., Bankers Trust Company and
Citicorp USA, Inc. [Incorporated - Form 10/A-1, filed
1/23/98]
4.12 Parent Undertaking Agreement dated as of December 30, 1997,
Among The Elder-Beerman Stores Corp. and Bankers Trust
Company [Incorporated - Form 10/A-1, filed 1/23/98]
4.13 Purchase Agreement, dated as of December 30, 1997, Among The
El-Bee Chargit Corp., and The El-Bee Receivables
Corporation, [Incorporated - Form 10/A-1, filed 1/23/98]
4.14 Purchase Agreement, dated as of the December 30, 1997, Among
The Elder-Beerman Stores Corp., as Seller, and The El-Bee
Chargit Corp., [Incorporated - Form 10/A-1, filed 1/23/98]

48

4.15 The El-Bee Receivables Corporation Subordinated Note Between
The El-Bee Receivables Corporation and The El-Bee Chargit
Corp., dated December 30, 1997 [Incorporated - Form 10/A-1,
filed 1/23/98]
4.16 Borrower Pledge Agreement, dated December 30, 1997, Made by
The Elder-Beerman Stores Corp. to Citibank, N.A.
[Incorporated - Form 10/A-1, filed 1/23/98]
4.17 Chargit Pledge Agreement, dated December 30, 1997, Made By
The El-Bee Chargit Corp. to Citibank, N.A. [Incorporated -
Form 10/A-1, filed 1/23/98]
4.18 Subsidiary Guaranty, dated December 30, 1997. Made by The
El-Bee Chargit Corp., [Incorporated - Form 10/A-1, filed
1/23/98]
4.19 Subsidiary Guaranty, dated December 30, 1997, Made by The
Bee-Gee Shoe Corp. [Incorporated - Form 10/A-1, filed
1/23/98]
4.20 Letter Agreement, dated December 30, 1997, Re: Assignment of
Account By and Among The Elder-Beerman Stores Corp, CitiCorp
USA, Inc., and Bankers Trust Company [Incorporated - Form
10/A-1, filed 1/23/98]
4.21 Amended and Restated Security Agreement, dated July 27,
1998, Made By The Elder-Beerman Stores Corp., Elder-Beerman
West Virginia, Inc., The El-Bee Chargit Corp., and The
Bee-Gee Shoe Corp. in favor of CitiCorp USA, Inc.
[Incorporated - Form S-1, filed 6/22/98]
4.22 Elder-Beerman West Virginia, Inc. Guaranty, dated July 27,
1998, Made by Elder-Beerman West Virginia, Inc. in favor of
the Guaranteed Parties [Incorporated - Form S-1, filed
6/22/98]
4.23 Amendment No. 1 to The Elder-Beerman Master Trust Series
1997-1 Supplement, dated as of November 25, 1998, Among The
El-Bee Receivables Corporation, The El-Bee Chargit Corp. and
Bankers Trust Company [Incorporated - Form 10-K, filed
4/27/00]
4.24 Amendment No. 2 to The Elder-Beerman Master Trust Series
1997-1 Supplement, dated as of November 24, 1999, Among The
El-Bee Receivables Corporation, The El-Bee Chargit Corp. and
Bankers Trust Company [Incorporated - Form 10-K, filed
4/27/00]
4.25 Amendment No. 1 to The Series 1997-1 Certificate Purchase
Agreement, dated as of November 25, 1998, Among The El-Bee
Receivables Corporation, Corporate Receivables Corporation,
The Liquidity Providers Named Therein, Citicorp North
America Inc. and Bankers Trust Company [Incorporated - Form
10-K, filed 4/27/00]
4.26 Guaranty, dated December 30, 1999, Made by Elder-Beerman
Holdings, Inc., Elder-Beerman Operations, LLC and
Elder-Beerman Indiana, L.P. [Incorporated - Form 10-K, filed
4/27/00]
4.27 Amendment No. 1 to The Elder-Beerman Master Trust Pooling
and Servicing Agreement, dated as of May 19, 2000, among The
El-Bee Receivables Corporation, The El-Bee Chargit Corp. and
Bankers Trust Company [Incorporated - Form 10-Q, filed
6/13/00]
4.28 Elder-Beerman Master Trust Series 2000-1 Supplement, dated
as of May 19, 2000, among the El-Bee Receivables
Corporation, as Transferor, The El-Bee Chargit Corp., as
Servicer, and Bankers Trust Company, as Trustee
[Incorporated - Form 10-Q, filed 6/13/00]
4.29 Series 2000-1 Certificate Purchase Agreement, dated May 19,
2000, among the El-Bee Receivables Corporation, as Seller,
the Conduit Purchasers Named Therein, the Committed
Purchasers Named Therein, the Managing Agents Named Therein,
Citicorp North America, Inc., as Program Agent for the
Purchasers and Bankers Trust Company, as Trustee
[Incorporated - Form 10-Q, filed 6/13/00]
4.30 Intercreditor Agreement, dated May 19, 2000, among Citicorp
North America, Inc., as Program Agent, The El-Bee
Receivables Corporation, as Transferor, The El-Bee Chargit
Corp., as Originator and Servicer, The Elder-Beerman Stores
Corp., as Originator and Servicer, The Elder-Beerman Stores
Corp., as Borrower and Originator, Bankers Trust Company, as
Trustee and Citicorp USA, Inc., as Bank Agent [Incorporated
- Form 10-Q, filed 6/13/00]
4.31 Amendment No. 1 to The Elder-Beerman Master Trust Series
2000-1 Supplement, dated July 9, 2002 [FILED HEREWITH]

49

4.32 Amendment No. 1 to the Series 2000-1 Certificate Purchase
Agreement, dated July 9, 2002 [FILED HEREWITH]
(10) MATERIAL CONTRACTS
10.1 Severance Agreement, dated as of June 10, 2002, by and
between The Elder-Beerman Stores Corp. and Edward A.
Tomechko. [Incorporated - Form 10-Q, filed 9/12/02]
10.2 The Elder-Beerman Stores Corp. Equity and Performance
Incentive Plan, as amended and restated as of September 21,
2000 [Incorporated - Proxy Statement, filed 8/21/00]
10.3 Form of Restricted Stock Agreement for Non-Employee Director
[Incorporated - Form 10, filed 11/26/97]
10.4 Form of Restricted Stock Agreement [Incorporated - Form 10,
filed 11/26/97]
10.5 Form of Deferred Shares Agreement [Incorporated - Form 10,
filed 11/26/97]
10.6 Form of Nonqualified Stock Option Agreement for Non-Employee
Director [Incorporated - Form 10, filed 11/26/97]
10.7 Form of Nonqualified Stock Option Agreement [Incorporated -
Form 10, filed 11/26/97]
10.8 Amended and Restated Employment Agreement, dated as of
December 30, 1997, Between The Elder-Beerman Stores Corp.
and James M. Zamberlan [ Incorporated - Form 10-K, filed
4/22/99]
10.9 Employment Agreement Between The Elder-Beerman Stores Corp.
and Steven D. Lipton, dated December 30, 1997 [Incorporated
- Form 10-K, filed 4/30/98]
10.10 Modification Agreement, dated June 15, 2001, between The
Elder-Beerman Stores Corp. and Steven D. Lipton
[Incorporated - Form 10-Q, filed 9/13/01]
10.11 Employment Agreement, dated January 23, 2002, by and between
the Company and Byron Bergren [Incorporated -- Form 10-K,
filed 4/19/02]
10.12 Form of Director Indemnification Agreement made by and
between The Elder Beerman Stores corp. and a director of the
Company (previously filed as Exhibit 10(f) to the Form 10
and incorporated herein by reference) [Incorporated - Form
10, filed 11/26/97]
10.13 Form of Director and Officer Indemnification Agreement made
by and between The Elder-Beerman Stores Corp. and a director
and an officer of the Company [Incorporated - Form 10, filed
11/26/97]
(18) LETTER RE CHANGE IN ACCOUNTING PRINCIPLES
18.1 Letter dated March 20, 2003 from Deloitte & Touche LLP to
the Company[FILED HEREWITH]
(21) SUBSIDIARIES OF REGISTRANT
21.1 List of Subsidiaries of Registrant [FILED HEREWITH]
(23) CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Deloitte & Touche LLP [FILED HEREWITH]
(24) POWERS OF ATTORNEY
24.1 Power of Attorney of persons who have executed this Report
pursuant to a power of attorney [FILED HEREWITH]
(99) ADDITIONAL EXHIBITS
99.1 Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. [FILED HEREWITH]
99.2 Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. [FILED HEREWITH]

- ---------------

"Incorporated" means incorporated herein by reference from a previous filing
with the Commission.

"*" indicates that Exhibit relates to indebtedness that does not exceed 10% of
the Company's total assets and is not being filed, but will be furnished to
the Commission upon request.

50