The Bon-Ton Stores, Inc. Announces Third Quarter of Fiscal 2013 Results

  The Bon-Ton Stores, Inc. Announces Third Quarter of Fiscal 2013 Results

   ~ Net Loss per Diluted Share Improved by Approximately 90% to $0.05 per
                               Diluted Share ~

Business Wire

YORK, Pa. -- November 21, 2013

The Bon-Ton Stores, Inc. (NASDAQ:BONT) today reported operating results for
the third quarter of fiscal 2013 ended November 2, 2013.

Third Quarter Highlights

  *Comparable store sales decreased 2.8%.
  *Gross margin rate for the third quarter of fiscal 2013 was flat to the
    gross margin rate in the third quarter of fiscal 2012 at 36.6% of net
    sales.
  *Operating income improved by $5.0 million to $15.9 million, compared with
    operating income of $10.8 million in the third quarter of fiscal 2012.
  *Adjusted EBITDA increased $4.4 million to $38.4 million, compared with
    $34.1 million in the third quarter of fiscal 2012. Adjusted EBITDA is not
    a measure recognized under generally accepted accounting principles (see
    Note 1).
  *Net loss was reduced by $9.2 million to $0.9 million, or $0.05 per diluted
    share, compared with a net loss of $10.1 million, or $0.55 per diluted
    share, for the third quarter of fiscal 2012.

Comments

Brendan Hoffman, President and Chief Executive Officer, commented, “We saw
meaningful improvement in our comparable store sales towards the end of the
quarter. Additionally, due to strategic inventory reductions, we ended the
quarter down approximately 5% on a comparable store basis. Reduced expenses
contributed to 13% growth in Adjusted EBITDA which, together with lower
interest expense, delivered an improved EPS. Strong performances in a number
of key merchandise categories where we increased our investment lead us to
believe that we are on track with our strategic initiatives. Our eCommerce
business continues to grow at a healthy pace, benefiting from traffic-driving
initiatives and our broader merchandise assortment.”

Mr. Hoffman continued, “We are looking forward to the holiday selling season
with a fresh and inspired merchandise assortment that offers our customers
quality and value in an exciting shopping environment. Our marketing campaign
is designed to entice shoppers into our stores and to our eCommerce site. We
will continue to roll out our localization strategies to drive store
productivity and we will maintain inventory management and cost controls as we
execute this new strategy.”

Year-to-date Highlights

  *Comparable stores sales decreased 2.6%.
  *Gross margin rate increased approximately 50 basis points to 36.1%,
    compared with 35.6% in the prior year period.
  *Operating loss improved by $18.6 million to $6.7 million, compared with an
    operating loss of $25.3 million in the prior year period.
  *Adjusted EBITDA increased $16.4 million to $62.4 million, compared with
    $46.0 million in the prior year period.
  *Net loss improved by $31.1 million to $64.9 million, or $3.40 per diluted
    share, compared with a net loss of $96.0 million, or $5.20 per diluted
    share, for the prior year period.

Net Sales

Comparable store sales for the third quarter of fiscal 2013 decreased 2.8%.
Total sales for the third quarter of fiscal 2013 decreased 2.6% to
$651.2million, compared with $668.7million for the third quarter of fiscal
2012.

Other Income

Other income in the third quarter of fiscal 2013 was $15.4 million, compared
with $14.4 million in the third quarter of fiscal 2012.

Gross Margin

In the third quarter of fiscal 2013, gross margin decreased $6.3 million to
$238.2 million, compared with $244.5 million in the third quarter of fiscal
2012. The gross margin rate for the third quarter of fiscal 2013 was flat to
the gross margin rate in the third quarter of fiscal 2012 at 36.6% of net
sales.

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

SG&A expense decreased $9.6 million to $215.2 million in the third quarter of
fiscal 2013, compared with $224.8 million in the third quarter of fiscal 2012.
The SG&A expense rate for the third quarter of fiscal 2013 decreased to 33.0%
of net sales, compared with 33.6% of net sales in the third quarter of fiscal
2012.

Depreciation and Amortization / Amortization of Lease-related Interests

Depreciation and amortization expense, including amortization of lease-related
interests, was $22.3 million in the third quarter of fiscal 2013, compared
with $22.6 million in the third quarter of fiscal 2012.

Interest Expense, Net

In the third quarter of fiscal 2013, interest expense, net, decreased $3.5
million to $16.5 million, compared with $20.0 million in the prior year
period.

Income Tax Provision

An income tax provision of $0.3 million was recorded in the third quarter of
fiscal 2013 and in the prior year period.

Guidance

Keith Plowman, Executive Vice President and Chief Financial Officer, stated,
“We are reaffirming our fiscal 2013 guidance for Adjusted EBITDA in a range of
$170 million to $190 million, for earnings per diluted share in a range of
$0.15 to $0.75 and for cash flow (see Note 2) in a range of $10 million to $30
million. Additionally, our excess borrowing capacity under our revolving
credit facility was $361 million at the end of the third quarter of fiscal
2013.”

Conference Call Details

Investors and analysts interested in participating in the call are invited to
dial (888) 211-7451 at 9:55 a.m. Eastern time and reference conference ID
3350370. A taped replay of the conference call will be available within two
hours of the conclusion of the call and will remain available through
Thursday, December 5, 2013. The number to call for the taped replay is (877)
870-5176 and the replay PIN is 3350370. 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 Thursday, December 5, 2013.

About The Bon-Ton Stores, Inc.

The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania
and Milwaukee, Wisconsin, operates 273 department stores, which includes 10
furniture galleries, in 25 states in the Northeast, Midwest and upper Great
Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman,
Herberger’s and Younkers nameplates. The 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 in a number of ways, including the potential write-down of the current
valuation of intangible assets and deferred taxes; risks related to the
Company’s proprietary credit card program; potential increases 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; changes in, or 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 regulatory requirements including the Health Care
Reform Act and the Dodd-Frank Wall Street Reform and Consumer Protection 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 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 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,
impairment charges 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       November 2,       February 2,
data)
(Unaudited)                                  2013            2013
Assets
Current assets:
Cash and cash equivalents                      $ 8,082           $ 7,926
Merchandise inventories                          914,603           758,400
Prepaid expenses and other current assets     91,120        70,601    
Total current assets                          1,013,805     836,927   
Property, fixtures and equipment at cost,
net of accumulated depreciation and
amortization of $867,012 and $804,559 at         649,966           652,822
November 2, 2013 and February 2, 2013,
respectively
Deferred income taxes                            16,659            15,010
Intangible assets, net of accumulated
amortization of $62,657 and $57,596 at           104,932           110,563
November 2, 2013 and February 2, 2013,
respectively
Other long-term assets                        23,139        18,887    
Total assets                                 $ 1,808,501    $ 1,634,209 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable                               $ 351,281         $ 193,898
Accrued payroll and benefits                     25,369            32,410
Accrued expenses                                 161,224           165,536
Current maturities of long-term debt             7,247             75,886
Current maturities of obligations under          3,878             3,925
capital leases
Deferred income taxes                            23,222            20,256
Income taxes payable                          4             739       
Total current liabilities                     572,225       492,650   
Long-term debt, less current maturities          931,776           768,864
Obligations under capital leases, less           49,609            52,478
current maturities
Other long-term liabilities                   206,017       209,611   
Total liabilities                             1,759,627     1,523,603 
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         179               175
of 17,857,457 and 17,491,277 at November
2, 2013 and February 2, 2013, respectively
Class A Common Stock - authorized
20,000,000 shares at $0.01 par value;            30                30
issued and outstanding shares of 2,951,490
at November 2, 2013 and February 2, 2013
Treasury stock, at cost - 337,800 shares         (1,387    )       (1,387    )
at November 2, 2013 and February 2, 2013
Additional paid-in-capital                       160,185           158,728
Accumulated other comprehensive loss             (68,589   )       (73,242   )
(Accumulated deficit) retained earnings       (41,544   )    26,302    
Total shareholders' equity                    48,874        110,606   
Total liabilities and shareholders' equity   $ 1,808,501    $ 1,634,209 
                                                                             

                                                                       
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                         
                            THIRTEEN                        THIRTY-NINE
                            WEEKS ENDED                   WEEKS ENDED
(In thousands except        November 2,     October 27,     November 2,       October 27,
per share data)
(Unaudited)               2013        2012        2013          2012      
                                                                              
Net sales                   $ 651,161       $ 668,731       $ 1,855,205       $ 1,904,357
Other income               15,412      14,389      44,236        40,320    
                         666,573     683,120     1,899,441     1,944,677 
                                                                              
Costs and expenses:
Costs of merchandise          412,932         424,219         1,185,528         1,226,151
sold
Selling, general and          215,204         224,846         651,553           672,521
administrative
Depreciation and              21,149          21,481          65,248            67,093
amortization
Amortization of               1,117           1,168           3,388             3,529
lease-related interests
Impairment charges         321         593         452           712       
Income (loss) from            15,850          10,813          (6,728    )       (25,329   )
operations
Interest expense, net         16,492          19,995          52,747            61,274
Loss on
exchange/extinguishment    20          617         4,297         8,087     
of debt
                                                                              
Loss before income            (662    )       (9,799  )       (63,772   )       (94,690   )
taxes
Income tax provision       269         349         1,123         1,277     
                                                                              
Net loss                 $ (931    )   $ (10,148 )   $ (64,895   )   $ (95,967   )
                                                                              
Basic loss per share      $ (0.05   )   $ (0.55   )   $ (3.40     )   $ (5.20     )
                                                                              
                                                                              
Diluted loss per share    $ (0.05   )   $ (0.55   )   $ (3.40     )   $ (5.20     )
                                                                              
                                                                              
Other financial data:
Adjusted EBITDA (1)         $ 38,437        $ 34,055        $ 62,360          $ 46,005
                                                                                          

                                                                   
(1) Adjusted EBITDA
reconciliation
                                                                             
The following table reconciles net loss to Adjusted EBITDA for the
periods indicated:
                                                                             
                                                                             
                            THIRTEEN                         THIRTY-NINE
                            WEEKS ENDED                   WEEKS ENDED
(In thousands)              November       October 27,       November 2,     October 27,
                            2,
(Unaudited)              2013         2012           2013          2012
                                                                             
Net loss                    $ (931   )     $ (10,148 )       $ (64,895 )     $ (95,967 )
Adjustments:
Income tax provision          269            349               1,123           1,277
Loss on
exchange/extinguishment       20             617               4,297           8,087
of debt
Interest expense, net         16,492         19,995            52,747          61,274
Depreciation and              21,149         21,481            65,248          67,093
amortization
Amortization of               1,117          1,168             3,388           3,529
lease-related interests
Impairment charges         321        593          452         712     
                                                                             
Adjusted EBITDA           $ 38,437    $ 34,055      $ 62,360     $ 46,005  

Contact:

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