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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File Number
January 30, 1999 0-19517
THE BON-TON STORES, INC.
2801 EAST MARKET STREET
YORK, PENNSYLVANIA, 17402
(717) 757-7660
INCORPORATED IN PENNSYLVANIA IRS NO. 23-2835229
____________________
Securities registered pursuant to Section 12(b)
of the Act: None
Securities registered pursuant to Section 12(g)
of the Act: Common Stock, $.01 par
value
The Registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
has been subject to such filing requirements for the past 90 days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
contained in Registrant's proxy statement incorporated by reference in Part III
of this Form 10-K.
As of March 29, 1999, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was approximately $71,208,700, based upon
the closing price of $7.50 per share on March 29, 1999.*
As of March 29, 1999, there were 12,278,120 shares of Common Stock, $.01
par value, and 2,989,853 shares of Class A Common Stock, $.01 par value,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part II - Portions of the Registrant's Annual Report to security holders
for the Fiscal Year Ended January 30, 1999 ("Annual Report").
Part III - Portions of the Registrant's Proxy Statement with respect to
its 1999 Annual Meeting of Shareholders ("Proxy Statement").
____________________________
* 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.
- --------------------------------------------------------------------------------
Certain information included in this Form 10-K contains statements that are
forward looking. Such forward-looking information involves certain risks and
uncertainties that could significantly affect anticipated results in the future,
including, but not limited to, uncertainties affecting retail generally (such as
consumer confidence and demand for soft goods); uncertainties associated with
opening new stores or expanding and remodeling existing stores; and competition
within the markets in which the Company's stores are located.
References to a year in this Form 10-K refer to the Company's fiscal year,
which is the 52 or 53 week period ending on the Saturday nearer January 31 of
the following calendar year (e.g. a reference to 1998 is a reference to the
fiscal year ended January 30, 1999).
PART I
ITEM 1. BUSINESS
GENERAL
The Bon-Ton Stores, Inc., together with its subsidiaries (collectively, the
"Company" or "The Bon-Ton"), is the successor to S. Grumbacher & Son, a family
business founded in 1898. The Company is a leading operator of quality fashion
department stores offering moderate and better apparel, home furnishings,
cosmetics, accessories and shoes in secondary markets. In many of its markets,
The Bon-Ton is the primary destination for branded fashion merchandise such as
Calvin Klein, Liz Claiborne, Nautica, Ralph Lauren and Tommy Hilfiger. The
Company presently operates 65 quality fashion department stores in secondary
markets with 35 stores in Pennsylvania, 24 in New York, three stores in Maryland
and one store in each of Massachusetts, West Virginia and New Jersey. The
Company's strategy focuses on being the premier fashion retailer in smaller
secondary markets that demand, but often have limited access to, better branded
merchandise.
The Bon-Ton provides an in-depth selection of high-quality, well-known
branded merchandise at competitive prices in upscale shopping environments.
None of The Bon-Ton's stores are located in major metropolitan markets, and most
are located in smaller secondary markets. The Company's executive offices are
located at 2801 East Market Street, York, Pennsylvania.
MERCHANDISING
The Bon-Ton stores offer moderate and better fashion apparel, home
furnishings, cosmetics, accessories, shoes and other items. The Company's sales
of apparel constituted 62.9% of sales in 1998. The chart below illustrates the
sales by product category for 1998, 1997 and 1996.
2
MERCHANDISE CATEGORY 1998 1997 1996
- ----------------------- ------ ------ ------
Women's clothing.................... 27.0% 28.0% 27.4%
Men's clothing...................... 18.6 17.8 17.7
Home................................ 12.6 12.2 12.0
Cosmetics........................... 9.7 9.7 9.8
Children's clothing................. 7.0 7.0 7.4
Accessories......................... 7.3 7.3 7.9
Junior's clothing................... 5.3 5.5 5.5
Intimate apparel.................... 5.0 5.0 5.3
Shoes............................... 5.0 5.0 4.7
Fine Jewelry........................ 2.1 2.0 1.7
Beauty Salon........................ 0.4 0.5 0.6
----- ----- -----
Total............................ 100.0% 100.0% 100.0%
===== ===== =====
The Company carries a number of highly recognized brand names, including
Calvin Klein, Cole/./Haan, Estee Lauder, Jones New York, Kenneth Cole, Liz
Claiborne, Nautica, Nine West, Ralph Lauren, Steve Madden, Tommy Hilfiger and
Via Spiga, and within these brands chooses collections which balance fashion,
price and selection. The Company also is placing greater emphasis on vendor
shops within its stores from key vendors such as Calvin Klein, Nautica, Ralph
Lauren and Tommy Hilfiger. In such vendor shops merchandise is grouped and
positioned in preferred floor locations to provide enhanced visibility with
distinctive, vendor-specific fixturing, signage and displays.
Complementing its branded merchandise, the Company's exclusive private
brand merchandise provides fashion at competitive pricing under names such as
Andrea Viccaro, Jenny Buchanan, Susquehanna Trail Outfitters and Susquehanna
Blues. The Bon-Ton views its private brand merchandise as a strategic addition
to its strong array of highly recognized, quality national brands and as an
opportunity to increase brand exclusiveness, customer loyalty and competitive
differentiation. Private brand merchandise represented approximately 17.8% of
apparel sales in 1998.
The Company's business, like that of most retailers, is subject to seasonal
fluctuations, with the major portion of sales and income realized during the
latter half of each fiscal year, which includes the back-to-school and holiday
seasons.
MARKETING
The Company attracts customers by offering services such as free gift wrap,
special order capability and in-store alterations. In addition, through its
"Certified Value" program, the Company maintains everyday value prices on staple
items such as turtlenecks, T-shirts, shorts and denim within major product
groups.
The Company conducts its advertising and promotional programs through
newspaper advertisements, direct mail and, to a lesser extent, local television
and radio. The Company maintains an in-house advertising group that produces
substantially all of its print advertising. The effectiveness of the Company's
direct mail efforts has been greatly enhanced through database management
systems. By accurately identifying the predictors of response to its direct
mail pieces, the Company now has the ability to rank, score and select customers
with event-specific information.
3
CUSTOMER CREDIT
Bon-Ton customers may pay for their purchases with The Bon-Ton proprietary
credit card, Visa, Mastercard, cash or check.
The Bon-Ton credit card holders generally constitute the Company's most
loyal and active customers; during 1998, the average dollar amount for
proprietary credit card purchases substantially exceeded the average dollar
amount for cash purchases. The Company believes that its credit card is a
particularly productive tool for customer segmentation and target marketing.
The following table summarizes the percentage of total sales generated by
payment type:
TYPE OF PAYMENT
----------------
1998 1997 1996
---- ---- ----
Bon-Ton credit card 48% 50% 51%
Visa, Mastercard, American Express* 23 22 20
Cash or check 29 28 29
---- ---- ----
Total 100% 100% 100%
==== ==== ====
*The Company ceased accepting American Express in 1998.
During 1998, the Company issued 244,700 Bon-Ton credit cards for newly
opened accounts.
COMPETITION
The Company faces competition for customers from traditional department
stores such as those operated by J. C. Penney Company, Inc. ("JC Penney"),
Federated Department Stores Inc. ("Federated"), The May Department Stores
Company ("May") and Sears, Roebuck and Co. ("Sears"), from regional department
stores such as Boscov's Department Store, Inc., and from specialty stores and
catalogue and other retailers. In addition, the Company faces competition for
store locations from other department stores and other large retailers. In a
number of its markets, the Company competes for customers with national
department store chains which are better established in such markets than the
Company and which offer a similar mix of better branded merchandise as the
Company. In other markets, the Company faces potential competition from
national chains that to date have not entered such markets. In all markets, the
Company generally competes for customers with department stores offering
moderately priced goods. Many of the Company's competitors are units of large
national or regional chains that may have substantially greater financial and
other resources than the Company. Some of the Company's competitors have
greater leverage with vendors than the Company, which may allow such competitors
to obtain merchandise more easily or on better terms than the Company. In
several of the Company's markets, the Company's stores compete with other
department stores in the immediate vicinity which are larger and/or have a
superior location in the relevant mall or local shopping area.
The Company believes it compares favorably with its competitors with
respect to quality, depth and breadth of merchandise, prices for comparable
quality merchandise, customer service and store environment. The Company also
believes its knowledge of smaller secondary markets, developed over its many
years of operation, and its focus on secondary markets as its primary area of
operation, give it an advantage that cannot be readily duplicated.
4
ASSOCIATES
As of January 30, 1999, the Company had approximately 3,600 full-time and
5,400 part-time associates. The Company also employs additional part-time
clerks and cashiers during peak periods. None of the Company's associates are
represented by a labor union. The Company believes that its relationship with
its associates is good.
ITEM 2. PROPERTIES.
The Company's stores, which all operate under the name "The Bon-Ton", vary
in size from approximately 45,000 to 160,000 square feet. All but three of
The Bon-Ton stores are anchor tenants in shopping malls or are in, or adjacent
to, strip shopping centers.
The Company configures its stores to provide a logical flow from department
to department and continually monitors its product layouts in an attempt to
make shopping easier and to maximize sales per square foot.
The Company maintains a corporate visual merchandising staff and at least
one associate in each store responsible for visual presentation. The Company
continually evaluates all aspects of its visual merchandising program to provide
an aesthetically pleasing atmosphere for its customers.
The following table sets forth the number of stores at the beginning and
end of each of the last five years:
Fiscal Year 1998 1997 1996 1995 1994
- ----------- ---- ---- ---- ---- ----
Number of stores:
Beginning of year 64 64 68 69 35
Additions 2 0 1 4 35
Closings (1) 0 (5) (5) (1)
---- ---- ---- ---- ----
End of year 65 64 64 68 69
The Company plans to maintain its growth by expanding and upgrading its
existing stores and by opening new stores and will consider acquisitions of
department store companies or their real estate assets if and when such
opportunities arise. The Company's market positioning strategy has been to
locate its new stores or acquire existing companies or their stores in secondary
markets generally within or contiguous to its existing areas of operations.
In March 1998, the Company opened a 60,100 square foot store in the
Jamestown, New York market, and in November 1998, the Company opened a 50,600
square foot store in Westfield, Massachusetts. The Company closed its Rome,
Georgia store in April 1998. The Company anticipates opening new stores in
Glens Falls, New York and Pottstown, Pennsylvania, and expanding its existing
stores in Butler, Pennsylvania and Hagerstown, Maryland, during 1999. In
addition, the Company has acquired the leases for department stores in Hamden,
Connecticut, Brick, New Jersey and Red Bank, New Jersey from Steinbach Stores,
Inc. The Company plans to renovate these three stores and open them for
business in the fall of 1999.
The following table provides certain information regarding the Company's
properties:
5
STORE PROPERTIES
----------------
APPROXIMATE
GROSS SQUARE YEAR OPENED
MARKET LOCATION FEET OR ACQUIRED
- ------ -------- ------------- -------------
PENNSYLVANIA
Allentown South Mall 111,000 1994
Bethlehem Westgate Mall 107,100 1994
Bloomsburg Columbia Mall 46,100 1988
Butler Clearview Mall 100,500/(1)/ 1982
Carlisle Carlisle Plaza Mall 59,900 1977
Chambersburg Chambersburg Mall 55,600 1985
Doylestown Doylestown Shopping Center 55,500 1994
Easton Palmer Park Mall 120,200 1994
Greensburg Westmoreland Mall 99,900 1987
Hanover North Hanover Mall 67,600 1971
Harrisburg Camp Hill (Free Standing) 145,200 1987
Colonial Park Shopping Center 136,500 1987
Indiana Indiana Mall 60,400 1979
Johnstown The Galleria 80,900 1992
Lancaster Park City Center 144,800 1992
Lebanon Lebanon Plaza Mall 53,700 1994
Lewistown Central Business District 46,700 1972
Oil City Cranberry Mall 45,200 1982
Pottstown Coventry Mall 88,300 1999/(2)/
Pottsville Schuylkill Mall 61,100 1987
Quakertown Richland Mall 88,100 1994
Reading Berkshire Mall 159,400 1987
Scranton Keyser Oak Plaza 57,600 1980
State College Nittany Mall 70,200 1994
Stroudsburg Stroud Mall 87,000 1994
Sunbury Susquehanna Valley Mall 90,000 1978
Trexlertown Trexler Mall 54,000 1994
Uniontown Uniontown Mall 71,000 1976
Warren Warren Mall 50,000 1980
Washington Crown Washington Center 78,100 1987
Williamsport Lycoming Mall 60,100 1986
Wilkes-Barre Midway Shopping Center 66,000 1987
Wyoming Valley Mall 159,500 1987
York York Galleria 128,200 1989
Queensgate Shopping Center 85,100 1962
West Manchester Mall 80,200 1981
NEW YORK
Binghamton Oakdale Mall 80,000 1981
Buffalo Northtown Plaza 100,800 1994
Walden Galleria 150,000 1994
Eastern Hills Mall 151,200 1994
McKinley Mall 97,200 1994
Sheridan/Delaware Plaza 124,100 1994
Southgate Plaza 100,500 1994
Elmira Arnot Mall 74,800 1995
Glens Falls Aviation Mall 80,300 1999/(3)/
Ithaca Pyramid Mall 52,400 1991
Jamestown Chautauqua Mall 60,100 1998
Lockport Lockport Mall 82,000 1994
Massena St. Lawrence Centre 51,000 1994
Niagara Falls Summit Park Mall 88,100 1994
Olean Olean Mall 73,000 1994
Rochester The Mall at Greece Ridge Center 144,600 1996
The Marketplace Mall 100,000 1995
Irondequoit Mall 102,600 1995
Eastview Mall 118,900 1995
6
APPROXIMATE
GROSS SQUARE YEAR OPENED
MARKET LOCATION FEET OR ACQUIRED
- ------ -------- -------------- -------------
Saratoga Springs Wilton Mall 71,700 1993
Syracuse Carousel Center 80,000 1994
Camillus Mall 64,700 1994
Great Northern Mall 98,400 1994
Shoppingtown Mall 70,100 1994
Watertown Salmon Run Mall 50,200 1992
MARYLAND
Cumberland Country Club Mall 60,900 1979
Frederick Frederick Towne Mall 77,900 1972
Hagerstown Valley Mall 123,000/(4)/ 1974
WEST VIRGINIA
Martinsburg Martinsburg Mall 65,800 1994
CONNECTICUT
Hamden Hamden Mart 58,900 1999/(2)/
NEW JERSEY
Brick Brick Plaza 53,500 1999/(2)/
Phillipsburg Phillipsburg Mall 65,000 1994
Red Bank Freestanding 33,300 1999/(2)/
MASSACHUSETTS
Westfield Westfield Shops 50,600 1998
Footnotes:
- ---------
/(1)/ Includes 40,000 square foot expansion expected to be completed in May
1999.
/(2)/ Anticipated opening date is in August 1999.
/(3)/ Anticipated opening date is in April 1999.
/(4)/ Includes 30,000 square foot expansion expected to be completed in
August 1999.
The Company leases 62 of its stores and owns eight stores, three of which
are subject to ground leases. The Company leases a total of 154,600 square feet
for its executive and administrative offices located in York, Pennsylvania,
leases the land (but owns the building) for its 143,700 square foot distribution
center in York, Pennsylvania, and leases its 326,000 square foot distribution
center in Allentown, Pennsylvania.
The distribution centers currently operate on one shift; however, by
adding second shifts, the capacity of the distribution centers can be at least
doubled. There is substantial space for additional expansion at the York and
Allentown sites and additional truck docks in place not currently used in
Allentown.
7
ITEM 3. LEGAL PROCEEDINGS.
The Company has been named, together with other department stores and
Nine West Group, Inc., a defendant in a number of antitrust class action
lawsuits filed in February 1999, which have been consolidated in the United
States District Court for the Southern District of New York. These lawsuits
allege that the defendants engaged in conduct in violation of the antitrust
laws relating to the sale of shoes manufactured by Nine West, and seek
unspecified damages against all defendants. The Company and its counsel
believe these claims are without merit and intends to vigorously defend
these lawsuits.
The Company is party to other legal proceedings and claims which arise
during the ordinary course of business. The Company does not expect the
ultimate outcome of all such litigation and claims to have a material
adverse effect on the Company's financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM A. EXECUTIVE OFFICERS OF THE COMPANY.
Certain information with respect to the executive officers of the
Company is provided below:
NAME AGE POSITION
- --------------------------------- --- -------------------------------
Heywood Wilansky 51 President - Chief Executive Officer and Director
M. Thomas ("Tim") Grumbacher 59 Chairman of the Board and Director
Michael L. Gleim 56 Vice Chairman - Chief Operating Officer and Director
Douglas Lamm 52 Executive Vice President - Softlines Merchandise
James H. Baireuther 52 Senior Vice President - Chief Financial Officer
Jack Boonshaft 56 Senior Vice President - Stores
J. Rick Cusick 41 Senior Vice President - General Merchandise Manager
H. Stephen Evans 49 Senior Vice President - Real Estate, Legal and Governmental
Affairs
Elizabeth R. Feher 38 Senior Vice President - General Merchandise Manager
Steven D. Goldsmith 32 Senior Vice President - General Merchandise Manager
William T. Harmon 44 Senior Vice President - Sales Promotion, Marketing and
Strategic Planning
8
Cheryl Jan Ladnier 50 Senior Vice President - Product Development, Fashion
Merchandising and Special Events
Patrick J. McIntyre 54 Senior Vice President - Chief Information Officer
Ryan J. Sattler 54 Senior Vice President - Operations
Stephen M. Sloane 52 Senior Vice President - General Merchandise Manager
Stephanie Stough 47 Senior Vice President - Merchandise Planning and Control
Thomas R. Tortoriello 57 Senior Vice President - Human Resources
Mr. Wilansky joined the Company in August 1995 as President, Chief
Executive Officer and a Director. Prior to joining the Company, Mr. Wilansky
was employed by May for more than 19 years. From 1992 to August 1995, he was
President and Chief Executive Officer of the Foley's division of May, and from
1991 to 1992, he was President and Chief Executive Officer of the Filene's
division of May. Prior to that, he was with the Hecht's and Lord & Taylor
divisions of May.
Mr. Grumbacher joined the Company in 1961 and has been Chairman of the
Board since August 1991. From 1977 to 1989, he was President and from 1985 to
1995, he was Chief Executive Officer of the Company.
Mr. Gleim joined the Company in 1989 as Executive Vice President and Chief
Administrative Officer. He became Senior Executive Vice President and a
Director in 1991, and Vice Chairman and Chief Operating Officer in December
1995. Prior to joining the Company, Mr. Gleim was employed by Federated for
more than 25 years.
Mr. Lamm joined the Company as Senior Vice President - General Merchandise
Manager in October 1995 and was appointed Executive Vice President - Softlines
Merchandise in February 1998. Prior to joining the Company, Mr. Lamm owned a
chain of women's large size apparel boutiques from 1988 to 1995, and from 1984
to 1988 was Senior Vice President and General Merchandise Manager of Venture
Stores, Inc. in St. Louis.
Mr. Baireuther joined the Company as Senior Vice President - Chief
Financial Officer in June 1996. From September 1994 until he joined the
Company, Mr. Baireuther was Senior Vice President - Chief Financial Officer at
DAC Vision, a manufacturer and distributor of optical supplies. Prior to that,
he was Executive Vice President - Chief Financial Officer for Eye Care Centers
of America, a retail optical superstore chain and wholly-owned subsidiary of
Sears, from 1989 to 1994. From 1969 to 1989, Mr. Baireuther held a variety of
positions with Sears including Director of Mergers and Acquisitions, Manager of
Corporate Financial Analysis and Controller.
Mr. Boonshaft joined the Company in January 1996 as Vice President -
Stores' Merchandising and was named Senior Vice President - Stores in February
1998. Prior to joining the Company, Mr. Boonshaft was with the Hecht's division
of May, where his last position was Regional Vice President - Stores from 1986
to 1995.
Mr. Cusick joined the Company in October 1996 as Divisional Vice President
- - Divisional Merchandise Manager and was named Senior Vice President - General
Merchandise Manager in July 1997. Prior to joining the Company, Mr. Cusick was
with Marshall's from September 1995 to February 1996. From 1980 to 1995, Mr.
Cusick held a variety of merchandising positions with Filene's, Foley's and The
Broadway.
9
Mr. Evans joined the Company as Senior Vice President - Real Estate in 1991
and was named Senior Vice President - Real Estate, Legal and Governmental
Affairs in 1993.
Ms. Feher joined the Company as Divisional Vice President - Divisional
Merchandise Manager in October 1994 and was named Senior Vice President -
General Merchandise Manager in February 1998. Ms. Feher was previously
associated with Hess's Department Stores, Inc., where she served as Vice
President - Merchandise Manager for over six years.
Mr. Goldsmith joined the Company in February 1997 as Divisional Vice
President - Divisional Merchandise Manager and was named Senior Vice President -
General Merchandise Manager in March 1999. From November 1992 to February 1997,
Mr. Goldsmith was with Foley's, where he held various positions including buyer
and Director of Merchandising Analysis. From 1988 to November 1992, Mr.
Goldsmith was with Filene's and Lord & Taylor.
Mr. Harmon joined the Company as Senior Vice President - Sales Promotion,
Marketing and Strategic Planning in June 1997. From December 1992 to October
1994, Mr. Harmon was Vice President, and from November 1994 to June 1997, Senior
Vice President - Merchandise Planning, and during that entire period, Assistant
to the President, of Foley's, and from June 1989 to December 1992 he was Vice
President - Assistant to the President of Filene's. Prior to that, he was
employed by McKinsey & Company for seven years.
Ms. Ladnier joined the Company as Senior Vice President - Sales Promotion
and Marketing in December 1993 and was subsequently named Senior Vice President
- - Marketing and Corporate Communications. In May 1997 she was named Senior Vice
President - Product Development, Fashion Merchandising and Special Events.
Mr. McIntyre joined the Company as Senior Vice President - Chief
Information Officer in June 1997. From 1988 to June 1997, Mr. McIntyre was
Senior Vice President - Chief Information Officer for the Cato Corporation, a
women's specialty retailer. Prior to that, he held similar positions with the
Higbee Company and Burdine's Department Store.
Mr. Sattler joined the Company as Vice President - Distribution and
Operations in 1986 and was promoted to Senior Vice President - Operations in
1990.
Mr. Sloane joined the Company as Senior Vice President - General
Merchandise Manager in February 1997. From December 1995 until February 1997,
Mr. Sloane was Vice President - General Merchandise Manager at Dick's Clothing &
Sporting Goods, and from July 1995 until December 1995 he was Vice President -
General Merchandise Manager at McRae's Department Stores. Prior to that, Mr.
Sloane was associated with May for over 17 years, having most recently served as
Vice President-Merchandising at Foley's.
Ms. Stough joined the Company in March 1987 as Director of Merchandise
Planning and Control. In February 1991 she was promoted to Vice President -
Merchandise Planning and Control and in May 1997 she was promoted to Senior Vice
President - Merchandise Planning and Control.
Mr. Tortoriello joined the Company in June 1998 as Senior Vice President -
Human Resources. From April 1995 until he joined the Company, Mr. Tortoriello
was Senior Vice President of Organization Development at the Handleman Company,
a distributor to retailers, and from January 1993 to June 1994 he was Senior
Vice President, Human Resources at Office Max.
10
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the Nasdaq National Market (symbol:
BONT). There is no established public trading market for the Company's Class A
Common Stock. The Class A Common Stock is convertible on a share for share
basis into Common Stock. The following table sets forth the range of the sales
price of the Common Stock as furnished by Nasdaq:
1998
------------------
HIGH LOW
-------- --------
1/st/ Quarter $18.000 $13.750
2/nd/ Quarter 17.625 11.250
3/rd/ Quarter 14.000 6.000
4/th/ Quarter 9.250 6.000
1997
------------------
HIGH LOW
-------- --------
1/st/ Quarter $ 7.375 $ 5.625
2/nd/ Quarter 9.125 6.250
3/rd/ Quarter 15.000 7.875
4/th/ Quarter 17.500 11.750
On March 29, 1999, there were approximately 318 shareholders of record of
the Company's Common Stock and five shareholders of record of the Company's
Class A Common Stock.
The Company has not paid cash dividends since its initial public offering
in September 1991 and does not anticipate paying any cash dividends in the
foreseeable future. The Company intends to retain its earnings, if any, for the
operation and expansion of its business. The payment and rate of future
dividends, if any, are subject to the discretion of the Board of Directors and
will depend upon the Company's earnings, financial condition, capital
requirements, contractual restrictions under its current indebtedness and other
factors. The Company's revolving credit agreement contains restrictions on the
Company's ability to pay dividends and make other distributions.
ITEM 6. SELECTED FINANCIAL DATA.
Item 6 is hereby incorporated by reference to the material under "Selected
Consolidated Financial and Operating Data" on page 20 of the Company's Annual
Report attached hereto as Exhibit 13.1.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Item 7 is hereby incorporated by reference to the material under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 21 through 26 of the Company's Annual Report, attached
hereto as Exhibit 13.2.
11
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Item 7A is hereby incorporated by reference to the material under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 21 through 26 of the Company's Annual Report, attached
hereto as Exhibit 13.2.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Item 8 is hereby incorporated by reference to the Report of Independent
Public Accountants, Consolidated Financial Statements and Notes thereto on pages
27 through 44 of the Company's Annual Report, attached hereto as Exhibit 13.3.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information regarding executive officers called for by Item 401 of
Regulation S-K is included in Part I as Item A, in accordance with General
Instruction G(3) to Form 10-K. The remainder of the information called for by
this Item will be contained in the Company's Proxy Statement and is hereby
incorporated by reference thereto.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item will be contained in the Company's
Proxy Statement and is hereby incorporated by reference thereto (other than the
information called for by Item 402(i), (k) and (l) of Regulation S-K, which is
not incorporated herein by reference).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The information called for by this Item will be contained in the Company's
Proxy Statement and is hereby incorporated by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by this Item will be contained in the Company's
Proxy Statement and is hereby incorporated by reference thereto.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements -- See Item 8 above.
2. Consolidated Financial Statement Schedules -- See the Index to
Consolidated Financial Statement Schedules on page F-1.
3. Exhibits:
The following exhibits are filed herewith or incorporated by reference as
indicated below:
EXHIBIT DESCRIPTION DOCUMENT IF INCORPORATED BY REFERENCE
NO.
3.1 Articles of Incorporation Exhibit 3.1 to the Company's Report on Form 8-B,
File No. 0-19517 ("Form 8-B")
3.2 Bylaws Exhibit 3.2 to Form 8-B
10.1 Shareholder's Agreement by and among the Exhibit 10.3 to Amendment No. 2 to the Company's
Company and the shareholders named therein Registration Statement on Form S-1, File No.
33-42142 ("1991 Form S-1")
* 10.2 (a) Employment Agreement between the Company Exhibit 99 to the Company's Report on Form 8-K
and Heywood Wilansky dated March 26, 1998
* (b) The Bon-Ton Stores, Inc. Supplemental Exhibit 10.2(b) to the Company's Registration
Executive Retirement Plan for Heywood Wilansky Statement on Form S-1, File No. 333-48811 ("1998
Form S-1")
* (c) The Bon-Ton Stores, Inc. Five Year Cash Bonus Exhibit 10.2(c) to 1998 Form S-1
Plan for Heywood Wilansky
* (d) The Bon-Ton Stores, Inc. Performance Based Stock Exhibit 4 to the Company's Registration Statement
Incentive Plan for Heywood Wilansky on Form S-8, File No. 333-58591
* 10.3 (a) Employment Agreement between the Company and Exhibit 10.4 to Form 8-B
Michael L. Gleim
* (b) First Amendment to Employment Agreement Exhibit 10.1 to the Company's Quarterly Report on
between the Company and Michael L. Gleim Form 10-Q for the quarter ended October 31, 1998
("Form 10-Q")
13
* 10.4 Form of severance agreement between the Exhibit 10.14 to Form 8-B
Company and certain of its executive officers
* 10.5 (a) Amended and Restated 1991 Stock Option and Exhibit 4.1 to the Company's Registration
Restricted Stock Plan Statement on Form S-8, File No. 333-36633
* (b) Phantom Equity Replacement Stock Option Plan Exhibit 10.18 to 1991 Form S-1
10.6 Ground Leases for distribution center located in Exhibit 10.12 to 1991 Form S-1
York, Pennsylvania between the Company and M.
Thomas Grumbacher, as amended
10.7 Ground Lease for York Galleria store, York, Exhibit 10.14 to 1991 Form S-1
Pennsylvania between the Company and MBM Land
Associates Limited Partnership
10.8 (a) Sublease of Butler, Pennsylvania store between Exhibit 10.15 to 1991 Form S-1
the Company and M. Thomas Grumbacher
(b) First Amendment to Butler, Pennsylvania sublease Exhibit 10.21 to Amendment No. 1 to 1991 Form S-1
(c) Corporate Guarantee with respect to Butler, Exhibit 10.24 to Amendment No. 1 to 1991 Form S-1
Pennsylvania lease
10.9 (a) Sublease of Oil City, Pennsylvania store between Exhibit 10.16 to 1991 Form S-1
the Company and M. Thomas Grumbacher
(b) First Amendment to Oil City, Pennsylvania sublease Exhibit 10.22 to Amendment No. 1 to 1991 Form S-1
(c) Corporate Guarantee with respect to Oil City, Exhibit 10.26 to Amendment No. 1 to 1991 Form S-1
Pennsylvania lease
* 10.10 The Company's Profit Sharing/Retirement Savings Exhibit 10.24 to the Company's Annual Report on
Plan, amended and restated as of July 1, 1994 Form 10-K for the fiscal year ended January 28,
1995 ("1994 Form 10-K")
10.11 (a) Amended and Restated Receivables Purchase Exhibit 10.16(a) to Amendment No. 2 to 1998 Form
Agreement dated as of January 12, 1995 among The S-1
Bon-Ton Receivables Corp., The Bon-Ton
Receivables Partnership, L.P., Falcon Asset
Securitization Corporation, The First National
Bank of Chicago, and the other financial
institutions party thereto
(b) Amendment dated as of June 30, 1995 to Amended Exhibit 10.16(b) to Amendment No. 1 to 1998 Form
and Restated Receivables Purchase Agreement S-1
* 10.12 Management Incentive Plan and Addendum to Exhibit 10.13 to the Company's Annual Report on
Management Incentive Plan Form 10-K for the fiscal year ended February 1,
1997 ("1996 Form 10-K")
* 10.13 The Bon-Ton Stores, Inc. Long-Term Incentive Plan Exhibit 10.14 to 1996 Form 10-K
For Principals
14
10.14 (a) Credit Agreement dated as of April 15, 1997 among Exhibit 10.1 to the Company's Quarterly Report on
the Company, Adam, Meldrum & Anderson Co., Inc., Form 10-Q for the quarter ended May 3, 1997
and The Bon-Ton Stores of Lancaster, Inc., the Other
Credit Parties Signatory thereto, the Lenders Signatory
thereto from time to time, the First National Bank of
Boston and General Electric Capital Corporation
(b) First Amendment to Credit Agreement Exhibit 10.3(b) to 1998 Form S-1
(c) Second Amendment to Credit Agreement Exhibit 10.3(c) to 1998 Form S-1
(d) Third Amendment to Credit Agreement Exhibit 10.3(d) to 1998 Form S-1
(e) Fourth Amendment to Credit Agreement Exhibit 10.2 to Form 10-Q
(f) Fifth Amendment to Credit Agreement
13.1 Page 20 of the Company's Annual Report.
13.2 Pages 21 through 26 of the Company's Annual Report.
13.3 Pages 27 through 44 of the Company's Annual Report.
21. Subsidiaries of the Registrant.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule - Year ended January 30, 1999.
(b) Reports on Form 8-K filed during the fourth quarter.
None
_____________________
* Constitutes a management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE BON-TON STORES, INC.
Dated: April 23, 1999 By: /s/ Heywood Wilansky
-----------------------
Heywood Wilansky
President and
Chief Executive Officer
15
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- --------- -------- ----
/s/ Heywood Wilansky President, Chief Executive April 23, 1999
- --------------------------
Heywood Wilansky Officer and Director
(principal executive officer)
/s/ M. Thomas Grumbacher Chairman of the Board April 23, 1999
- --------------------------
M. Thomas Grumbacher and Director
/s/ Samuel J. Gerson Director April 23, 1999
- --------------------
Samuel J. Gerson
/s/ Michael L. Gleim Vice Chairman, Chief April 23, 1999
- --------------------
Michael L. Gleim Operating Officer
and Director
/s/ Lawrence J. Ring Director April 23, 1999
- --------------------
Lawrence J. Ring
/s/ Robert C. Siegel Director April 23, 1999
- --------------------
Robert C. Siegel
/s/ Leon D. Starr Director April 23, 1999
- -----------------
Leon D. Starr
/s/ Leon F. Winbigler Director April 23, 1999
- ---------------------
Leon F. Winbigler
/s/ Thomas W. Wolf Director April 23, 1999
- ------------------
Thomas W. Wolf
/s/ James H. Baireuther Senior Vice President April 23, 1999
- -----------------------
James H. Baireuther and Chief Financial Officer
(principal financial and
accounting officer)
16
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS................................... F-2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS............................ F-3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Shareholders of
The Bon-Ton Stores, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of The Bon-Ton Stores, Inc.'s included in this
annual report on Form 10-K, and have issued our report thereon dated March 2,
1999 (except with respect to the matter discussed in Note 16 to the consolidated
financial statements, as to which the date is April 7, 1999). Our audit was made
for the purpose of forming an opinion on the basic financial statements taken as
a whole. The schedule listed in the accompanying index is the responsibility of
the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Philadelphia, PA
March 2, 1999
F-2
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
THE BON-TON STORES, INC. AND SUBSIDIARIES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -------- ---------- ---------- -------- ---------- --------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS OTHER END OF
CLASSIFICATION OF PERIOD & EXPENSES INCREASE DEDUCTIONS PERIOD
- -------------- ---------- ---------- -------- ---------- --------
Year ended February 1, 1997:
Allowance for doubtful
accounts.................. $3,113,000 $5,018,000/(1)/ $ --- $(5,362,000) /(2)/ $2,769,000
Reserve for store closing... $9,570,000 $ --- $ --- $(2,586,000) /(3)/ $6,984,000
Year ended January 31, 1998:
Allowance for doubtful
accounts.................. $2,769,000 $3,549,000/(1)/ $ --- $(4,341,000) /(2)/ $1,977,000
Reserve for store closing... $6,984,000 $ --- $ --- $(1,513,000) /(3)/ $5,471,000
Year ended January 30, 1999:
Allowance for doubtful
accounts.................. $1,977,000 $8,851,000/(1)/ $ --- $(7,136,000) /(2)/ $3,692,000
Reserve for store closing... $5,471,000 $ --- $ --- $(2,663,000) /(3)/ $2,808,000
___________________
NOTES:
/(1)/ Provision for loss on credit sales.
/(2)/ Uncollectible accounts, written off, net of recoveries.
/(3)/ Store closing expenses, net of monies received from asset liquidation.
F-3
EXHIBIT INDEX
Exhibit Description
- ------- -----------
10.14(f) Fifth Amendment to Credit Agreement
13.1 Page 20 of the Company's Annual Report.
13.2 Pages 21 through 26 of the Company's Annual Report.
13.3 Pages 27 through 44 of the Company's Annual Report.
21. Subsidiaries of the Registrant
23. Consent of Arthur Andersen LLP
27. Financial Data Schedule - Year Ended January 30, 1999