The Bon-Ton Stores, Inc. Announces Fourth Quarter and Fiscal 2012 Results

  The Bon-Ton Stores, Inc. Announces Fourth Quarter and Fiscal 2012 Results

           ~ Fourth Quarter Net Income of $3.71 Per Diluted Share ~

             ~ Fiscal 2012 Net Loss of $1.16 Per Diluted Share ~

Business Wire

YORK, Pa. -- March 12, 2013

The Bon-Ton Stores, Inc. (NASDAQ: BONT) today reported operating results for
the fourth quarter and fiscal 2012 ended February 2, 2013. Results for the
fourth quarter and fiscal 2012 are impacted by the inclusion of an additional
week in each period, resulting in a 14-week and 53-week reporting period,
respectively, in accordance with the National Retail Federation fiscal
reporting calendar. This compares with a reporting period of 13 weeks and 52
weeks in the fourth quarter and fiscal 2011, ended January 28, 2012,
respectively.

Fourth Quarter Highlights

  *Comparable store sales increased 1.0% as compared with the same 13-week
    period last year.
  *Gross margin rate increased 160 basis points to 36.2%, compared with 34.6%
    in the fourth quarter of fiscal 2011.
  *Operating income increased $14.9 million to $95.3 million, compared with
    $80.5 million in the fourth quarter of fiscal 2011.
  *Adjusted EBITDA increased $16.4 million to $122.8 million, compared with
    $106.4 million in the fourth quarter of fiscal 2011. Adjusted EBITDA is
    not a measure recognized under generally accepted accounting principles
    (see Note 1).
  *Net income totaled $74.4 million, or $3.71 per diluted share, compared
    with net income of $78.2 million, or $4.00 per diluted share, for the
    fourth quarter of fiscal 2011. Fourth quarter of fiscal 2011 results
    include income of $0.93 per diluted share associated with the net gain on
    extinguishment of debt.

Comments

Brendan Hoffman, President and Chief Executive Officer, commented, “We were
pleased with our fourth quarter results and our accomplishments throughout
2012. We sequentially improved the business each quarter through a number of
key initiatives, including a better balanced merchandise assortment, more
disciplined inventory management, enhanced marketing efforts and upgrades to
our eCommerce business.”

Mr. Hoffman continued, “As we look ahead, we are excited for continued
progress on our initiatives as we gain additional insights into the business.
We believe we laid the foundation in 2012, which we intend to enhance with new
strategies, paving the way for sustainable long-term growth.”

Fiscal 2012 Highlights

  *Comparable stores sales increased 0.5% as compared with the same 52-week
    period last year.
  *Gross margin rate was 35.8%, compared with 36.0% in the prior year.
  *Operating income totaled $70.0 million, compared with $66.6 million in the
    prior year. Operating income for fiscal 2012 includes a $7.9 million
    charge for severance-related costs associated with targeted reductions to
    the Company’s cost structure and a gain of $3.1 million related to the
    Company’s sale of certain Rochester, NY locations.
  *Adjusted EBITDA, inclusive of the aforementioned $7.9 million of
    severance-related costs and the gain of $3.1 million related to the
    Company’s sale of certain Rochester, NY locations, was $168.8 million,
    compared with $170.1 million in the prior year (see Note 1). Adjusted
    EBITDA in fiscal 2012, excluding the noted severance-related costs and the
    gain, was $173.7 million.
  *Net loss totaled $21.6 million, or $1.16 per diluted share, compared with
    a net loss of $12.1 million, or $0.67 per diluted share, for the prior
    year. Fiscal 2012 results include a charge of $7.1 million, or $0.38 per
    diluted share, for fees associated with the senior notes exchange, a
    charge of $7.9 million, or $0.43 per diluted share, for the
    severance-related costs and a net gain of $1.9 million, or $0.10 per
    diluted share, related to the Company’s sale of certain Rochester, NY
    locations and subsequent prepayment penalty on the extinguishment of
    related mortgage debt. Fiscal 2011 results included income of $0.48 per
    diluted share associated with a net gain on extinguishment of debt.

Net Sales

For the fourth quarter of fiscal 2012, total sales in the 14 weeks ended
February 2, 2013 increased 3.2% to $1,015.1 million, compared with $983.2
million in the 13-week period last year. Comparable store sales in the 13
weeks ended January 26, 2013 increased 1.0%, compared with the 13-week period
last year.

Fiscal 2012 total sales for the 53 weeks ended February 2, 2013 increased 1.2%
to $2,919.4 million, compared with $2,884.7 million in the 52-week period last
year. Comparable store sales in the 52 weeks ended January 26, 2013 increased
0.5%, compared with the 52-week period last year.

Other Income

Other income in the fourth quarter of fiscal 2012 was $19.1 million, compared
with $26.0 million in the fourth quarter of fiscal 2011. The fourth quarter of
fiscal 2011 included income related to the initial recognition of gift and
merchandise card breakage. Other income in fiscal 2012 was $59.4 million,
compared with $68.9 million in fiscal 2011.

Gross Margin

In the fourth quarter of fiscal 2012, gross margin increased $27.6 million to
$367.3 million, compared with $339.7 million in the fourth quarter of fiscal
2011. The gross margin rate for the fourth quarter of fiscal 2012 increased to
36.2% of net sales from 34.6% of net sales in the prior year period. The
increase in the gross margin rate in the fourth quarter is largely
attributable to decreased net markdowns. Gross margin dollars in fiscal 2012
increased to $1,045.5 million, compared with $1,037.3 million in fiscal 2011.
The gross margin rate for fiscal 2012 was 35.8%, compared with 36.0% in the
prior year.

Selling, General and Administrative Expense (“SG&A”)

SG&A expense increased $4.3 million to $263.7 million in the fourth quarter of
fiscal 2012, compared with $259.4 million in the fourth quarter of fiscal
2011. The increase in the SG&A expense reflects the inclusion of an additional
week of SG&A expense. The SG&A expense rate for the fourth quarter of fiscal
2012 decreased to 26.0% of net sales, compared with 26.4% in the fourth
quarter of fiscal 2011. Fiscal 2012 SG&A expense was $936.2 million, compared
with $936.1 million in the prior year. Fiscal 2012 SG&A expense rate decreased
to 32.1%, compared with 32.4% in the prior year.

Depreciation and Amortization / Amortization of Lease-related Interests

Depreciation and amortization expense, including amortization of lease-related
interests, was $22.4 million in the fourth quarter of fiscal 2012 and the
fourth quarter of fiscal 2011. Fiscal 2012 depreciation and amortization
expense, including amortization of lease-related interests, decreased $6.8
million to $93.0 million, compared with $99.8 million in the prior year.

Non-Cash Impairment Charges

In the fourth quarter of fiscal 2012, the Company recorded non-cash impairment
charges of $5.1 million, related to reductions in the reported carrying value
of certain long-lived and intangible assets, compared with $3.5 million in the
fourth quarter of fiscal 2011. In fiscal 2012, the Company recorded non-cash
impairment charges of $5.8 million, compared with $3.7 million in fiscal 2011.

Interest Expense, Net

In the fourth quarter of fiscal 2012, interest expense, net, was $21.6
million, compared with $21.5 million in the prior year period. Fiscal 2012
interest expense, net, decreased $6.7 million to $82.8 million, compared with
$89.5 million in the prior year. The decrease in fiscal 2012 primarily
reflects reduced borrowings and interest rates.

Loss on Exchange/Extinguishment of Debt

In the fourth quarter of fiscal 2012, the Company recorded an additional $0.4
million loss on exchange of debt related to fees associated with the fiscal
2012 exchange of its senior notes, having previously recorded $6.7 million of
similar charges. Additionally, in fiscal 2012, the Company recorded a $1.4
million loss on extinguishment of debt related to the prepayment of mortgage
debt associated with the sale of certain of its Rochester, NY locations and
amortization of deferred fees associated with an amendment to the Company’s
revolving credit facility. In the fourth quarter of fiscal 2011, the Company’s
repurchase, at a discount, of $46.0 million (principal amount) of its 10 ¼%
Senior Notes due 2014 (the “2014 Notes”) resulted in a pre-tax gain, net of
costs, of $18.2 million. In the first quarter of fiscal 2011, the Company
recorded a $9.5 million loss on the extinguishment of debt for fees associated
with the voluntary prepayment of the second lien term loan and the amendment
and restatement of the revolving credit facility agreement. The aforementioned
transactions resulted in a loss on exchange/extinguishment of debt of $8.5
million in fiscal 2012 and a net gain on extinguishment of debt of $8.7
million in fiscal 2011.

Income Tax (Benefit) Provision

An income tax benefit of $1.0 million was recorded in the fourth quarters of
fiscal 2012 and fiscal 2011. An income tax provision of $0.2 million was
recorded in fiscal 2012, compared with an income tax benefit of $2.0 million
in fiscal 2011, which includes a $3.2 million benefit resulting from
reclassifying from shareholders’ equity the residual tax effect associated
with certain interest rate swap contracts that expired in July 2011.

Guidance

Keith Plowman, Executive Vice President and Chief Financial Officer, stated,
“As noted in the Company’s January sales release, our excess borrowing
capacity under our revolving credit facility was $518 million at the end of
fiscal 2012. On January 23, 2013, we issued a notice of partial redemption for
$65 million aggregate principal amount of the Company’s outstanding 2014 Notes
at a cash redemption price equal to 100% of the principal amount, plus accrued
and unpaid interest. The redemption was completed February 22, 2013 and
approximately $69 million aggregate principal amount of the 2014 Notes remains
outstanding.”

Mr. Plowman, continued, “Our fiscal 2013 guidance for Adjusted EBITDA is a
range of $180 million to $200 million, for income per diluted share a range of
$0.40 to $1.00 and for cash flow (see Note 2) a range of $20 million to $40
million. Assumptions reflected in our full-year guidance include the
following:

  *Comparable store sales increase in a range of 2.0% to 3.5%;
  *Gross margin rate of 36.0% to 36.4%;
  *SG&A expense, including increased performance incentives up to
    approximately $15 million, flat to down two-tenths as a percent of sales
    compared with fiscal 2012;
  *Effective tax rate of 39%;
  *Capital expenditures not to exceed $70 million, net of external
    contributions; and
  *Estimated 20 million average diluted shares outstanding.”

Conference Call Details

The Company’s quarterly conference call to discuss fourth quarter and fiscal
2012 results will be broadcast live today at 10:00 a.m. Eastern Time.
Investors and analysts interested in participating in the call are invited to
dial (877) 502-9276 at 9:55 a.m. Eastern time. A taped replay of the
conference call will be available within two hours of the conclusion of the
call and will remain available through Tuesday, March 26, 2013. The number to
call for the taped replay is (877) 870-5176 and the conference PIN is 1784357.
The conference call will also be broadcast on the Company’s website at
http://investors.bonton.com. An online archive of the webcast will be
available within two hours of the conclusion of the call and will remain
available through Tuesday, March 26, 2013.

Bank of America Merrill Lynch 2013 Consumer & Retail Conference

The Company will present at the Bank of America Merrill Lynch 2013 Consumer &
Retail Conference, scheduled for 1:30 p.m. Eastern time on Wednesday, March
13, 2013, in New York City. The presentation will be broadcast through a web
broadcast on the Company’s website. To access the web broadcast, please visit
the Company’s website at http://investors.bonton.com. An online archive of the
web cast will be available within two hours of the conclusion of the
presentation.

About The Bon-Ton Stores, Inc.

The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania
and Milwaukee, Wisconsin, operates 271 department stores, which includes 11
furniture galleries, in 24 states in the Northeast, Midwest and upper Great
Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman,
Herberger’s and Younkers nameplates. The stores offer a broad assortment of
national and private brand fashion apparel and accessories for women, men and
children, as well as cosmetics and home furnishings. For further information,
please visit the investor relations section of the Company’s website at
http://investors.bonton.com.

Cautionary Note Regarding Forward-Looking Statements

Certain information included in this press release contains statements that
are forward-looking within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements, which may be identified
by words such as “may,” “could,” “will,” “plan,” “expect,” “anticipate,”
“estimate,” “project,” “intend” or other similar expressions, involve
important risks and uncertainties that could significantly affect results in
the future and, accordingly, such results may differ from those expressed in
any forward-looking statements made by or on behalf of the Company. Factors
that could cause such differences include, but are not limited to, risks
related to retail businesses generally; a significant and prolonged
deterioration of general economic conditions which could negatively impact the
Company, including the potential write-down of the current valuation of
intangible assets and deferred taxes; risks related to the agreement governing
the Company’s proprietary credit card program; potential increase in pension
obligations; consumer spending patterns, debt levels, and the availability and
cost of consumer credit; additional competition from existing and new
competitors; inflation; deflation; changes in the costs of fuel and other
energy and transportation costs; weather conditions that could negatively
impact sales; uncertainties associated with expanding or remodeling existing
stores; the ability to attract and retain qualified management; the dependence
upon relationships with vendors and their factors; a data security breach or
system failure; the ability to reduce or control SG&A expenses, including
initiatives to reduce expenses and improve efficiency; operational
disruptions; unsuccessful marketing initiatives; the failure to successfully
implement our key strategies, including initiatives to improve our
merchandising, marketing and operations; adverse outcomes in litigation; the
incurrence of unplanned capital expenditures; the ability to obtain financing
for working capital, capital expenditures and general corporate purpose; the
impact of new regulatory requirements including the Credit Card Accountability
Responsibility and Disclosure Act of 2009 and the Health Care Reform Act; the
inability or limitations on the Company’s ability to favorably adjust the
valuation allowance on deferred tax assets; and the financial condition of
mall operators. Additional factors that could cause the Company’s actual
results to differ from those contained in these forward-looking statements are
discussed in greater detail under Item 1A of the Company’s Form 10-K filed
with the Securities and Exchange Commission.

Note 1: As used in this release, Adjusted EBITDA is defined as earnings before
interest, income taxes, depreciation and amortization, including amortization
of lease-related interests, impairment charges and loss (gain) on
exchange/extinguishment of debt. Adjusted EBITDA is not a measure of financial
performance under generally accepted accounting principles (“GAAP”). However,
we present Adjusted EBITDA in this release because we consider it to be an
important supplemental measure of our performance and because it is frequently
used by securities analysts, investors and other interested parties to
evaluate the performance of companies in our industry and by some investors to
determine a company’s ability to service or incur debt. In addition, our
management uses Adjusted EBITDA internally to compare the profitability of our
stores. Adjusted EBITDA is not calculated in the same manner by all companies
and, accordingly, is not necessarily comparable to similarly entitled measures
of other companies and may not be an appropriate measure for performance
relative to other companies. Adjusted EBITDA should not be assessed in
isolation from or construed as a substitute for net income or cash flows from
operations, which are prepared in accordance with GAAP. Adjusted EBITDA is not
intended to represent, and should not be considered to be a more meaningful
measure than, or an alternative to, measures of operating performance as
determined in accordance with GAAP. A reconciliation of net income (loss) to
Adjusted EBITDA is provided in the financial schedules accompanying this
release.

Note 2: As used in this release, cash flow reflects the forecasted net income,
plus depreciation and amortization, amortization of lease-related interests,
and taxes, less capital expenditures and pension contributions.


THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share     February 2,     January 28,
data)
(Unaudited)                                   2013          2012      
Assets
Current assets:
Cash and cash equivalents                      $ 7,926           $ 14,272
Merchandise inventories                          758,400           699,504
Prepaid expenses and other current assets     70,601        69,032    
Total current assets                          836,927       782,808   
Property, fixtures and equipment at cost,
net of accumulated depreciation and
amortization of $804,559 and $743,312 at
February 2, 2013 and January 28, 2012,           652,822           677,133
respectively
Deferred income taxes                            15,010            12,385
Intangible assets, net of accumulated
amortization of $57,596 and $51,975 at
February 2, 2013 and January 28, 2012,           110,563           119,165
respectively
Other long-term assets                        18,887        26,712    
Total assets                                 $ 1,634,209    $ 1,618,203 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable                               $ 193,898         $ 205,492
Accrued payroll and benefits                     32,410            31,636
Accrued expenses                                 165,536           162,855
Current maturities of long-term debt             75,886            8,066
Current maturities of obligations under          3,925             4,365
capital leases
Deferred income taxes                            20,256            16,231
Income taxes payable                          739           -         
Total current liabilities                     492,650       428,645   
Long-term debt, less current maturities          768,864           814,271
Obligations under capital leases, less           52,478            56,677
current maturities
Other long-term liabilities                   209,611       187,003   
Total liabilities                             1,523,603     1,486,596 
Shareholders' equity:
Preferred Stock - authorized 5,000,000
shares at $0.01 par value; no shares             -                 -
issued
Common Stock - authorized 40,000,000
shares at $0.01 par value; issued shares
of 17,491,277 and 17,081,376 at February         175               171
2, 2013 and January 28, 2012, respectively
Class A Common Stock - authorized
20,000,000 shares at $0.01 par value;
issued
and outstanding shares of 2,951,490 at           30                30
February 2, 2013 and January 28, 2012
Treasury stock, at cost - 337,800 shares         (1,387    )       (1,387    )
at February 2, 2013 and January 28, 2012
Additional paid-in-capital                       158,728           155,400
Accumulated other comprehensive loss             (73,242   )       (74,356   )
Retained earnings                             26,302        51,749    
Total shareholders' equity                    110,606       131,607   
Total liabilities and shareholders' equity   $ 1,634,209    $ 1,618,203 
                                                                             

                                                                           
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                         
                            FOURTEEN          THIRTEEN          FIFTY-THREE       FIFTY-TWO
                            WEEKS ENDED     WEEKS ENDED     WEEKS ENDED     WEEKS ENDED
(In thousands except        February 2,       January 28,       February 2,       January 28,
per share data)
(Unaudited)               2013          2012          2013          2012      
                                                                                  
Net sales                   $ 1,015,054       $ 983,230         $ 2,919,411       $ 2,884,661
Other income               19,105        25,981        59,425        68,869    
                         1,034,159     1,009,211     2,978,836     2,953,530 
                                                                                  
Costs and expenses:
Costs of merchandise          647,739           643,481           1,873,890         1,847,369
sold
Selling, general and          263,654           259,379           936,175           936,060
administrative
Depreciation and              21,183            21,237            88,276            95,033
amortization
Amortization of               1,167             1,163             4,696             4,747
lease-related interests
Impairment charges         5,088         3,481         5,800         3,690     
Income from operations        95,328            80,470            69,999            66,631
Interest expense, net         21,565            21,502            82,839            89,507
Loss (gain) on
exchange/extinguishment    398           (18,179   )    8,485         (8,729    )
of debt
                                                                                  
Income (loss) before          73,365            77,147            (21,325   )       (14,147   )
income taxes
Income tax (benefit)       (1,049    )    (1,048    )    228           (2,019    )
provision
                                                                                  
Net income (loss)         $ 74,414       $ 78,195       $ (21,553   )   $ (12,128   )
                                                                                  
Basic income (loss) per   $ 3.74         $ 4.00         $ (1.16     )   $ (0.67     )
share
                                                                                  
                                                                                  
Diluted income (loss)     $ 3.71         $ 4.00         $ (1.16     )   $ (0.67     )
per share
                                                                                  
                                                                                  
Other financial data:
Adjusted EBITDA (1)         $ 122,766         $ 106,351         $ 168,771         $ 170,101
                                                                                              

                                                                   
(1) Adjusted EBITDA
reconciliation
                                                                            
The following table reconciles net income (loss) to Adjusted EBITDA for the periods
indicated:
                                                                            
                                                                            
                            FOURTEEN        THIRTEEN        FIFTY-THREE     FIFTY-TWO
                            WEEKS ENDED   WEEKS ENDED   WEEKS ENDED   WEEKS ENDED
(In thousands)              February 2,     January 28,     February 2,     January 28,
(Unaudited)               2013        2012        2013        2012    
                                                                            
Net income (loss)           $ 74,414        $ 78,195        $ (21,553 )     $ (12,128 )
Adjustments:
Income tax (benefit)          (1,049  )       (1,048  )       228             (2,019  )
provision
Loss (gain) on
exchange/extinguishment       398             (18,179 )       8,485           (8,729  )
of debt
Interest expense, net         21,565          21,502          82,839          89,507
Depreciation and              21,183          21,237          88,276          95,033
amortization
Amortization of               1,167           1,163           4,696           4,747
lease-related interests
Impairment charges         5,088       3,481       5,800       3,690   
                                                                            
Adjusted EBITDA           $ 122,766    $ 106,351    $ 168,771    $ 170,101 

Contact:

The Bon-Ton Stores, Inc.
Mary Kerr, 717-751-3071
Vice President
Investor and Public Relations
mkerr@bonton.com
 
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