PART I
Item 1. Business
Overview
The Company, a Pennsylvania corporation, was founded in 1898 and is one of the largest regional department store operators in the United States,
offering a broad assortment of brand-name fashion apparel and accessories for women, men and children. Our merchandise offerings also include cosmetics, home furnishings and other goods. We currently
operate 262 stores 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, encompassing
a total of approximately 24 million square feet.
Industry Overview
We compete in the department store segment of the U.S. retail industry, a highly competitive environment. The department store industry
continues to evolve in response to competitive retail formatsmass merchandisers, national chain retailers, specialty retailers and online retailersand the expansion of mobile
technology and social media.
Our
operating results and performance, and that of our competitors, depend significantly on economic conditions and their impact on consumer spending. Presently, there are numerous
business and economic factors affecting the retail industry, including the department store sector. These factors include underemployment and the low labor participation rate, fluctuating consumer
confidence, consumer buying habits and slow growth in the U.S. economy and around the globe.
Merchandise
Merchandise Assortment
Our stores offer a broad assortment of quality fashion apparel and accessories for women, men and children, as well as cosmetics, home
furnishings and other goods at moderate and better price points. Our comprehensive merchandise assortment includes nationally distributed brands at competitive prices and unique products at compelling
values through our private brands. We further
1
differentiate
our merchandise assortment with exclusive products from nationally distributed brands. The following table illustrates our percent of net sales by product category for the last three
years:
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Merchandise Category
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2016
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2015
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2014
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Women's Apparel
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24.0
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%
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24.5
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%
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24.6
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%
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Home
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17.4
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16.9
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17.1
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Cosmetics
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13.8
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13.6
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13.7
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Men's Apparel
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12.5
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12.3
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11.8
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Accessories
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9.5
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9.7
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9.9
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Footwear
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9.3
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9.4
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9.6
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Children's Apparel
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6.8
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6.9
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6.8
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Intimate Apparel
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3.9
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3.9
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3.9
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Young Contemporary Apparel
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2.6
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2.6
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2.5
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Other
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0.2
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0.2
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0.1
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Total
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100.0
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%
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100.0
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%
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100.0
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%
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Nationally Distributed Brands
Our nationally distributed brand assortment includes many of the most well-known and popular labels in the apparel, accessories, footwear,
cosmetics and home furnishings industries such as Anne Klein, Calvin Klein, Carters, Chaps, Clarks, Clinique, Coach, Estée Lauder, Fossil, Free People, Frye, Jessica Simpson, Kenneth
Cole, Keurig, Lancôme, Lauren, Levi's, Michael Kors, Nine West, Polo, Sperry, Steve Madden, UGG, Under Armour and Vince Camuto. We believe these, and other, brands enable us to position
our stores as headquarters for fashion, offering both newness and wardrobe staples at competitive prices. We believe we maintain excellent relationships with our merchandise vendors, working
collaboratively to select the most compelling assortments for our customers.
Private Brands
Our exclusive private brands complement our offerings of nationally distributed brands and are a key component of our overall merchandising
strategy. Our private brand portfolio includes popular brands such as Laura Ashley, Ruff Hewn, Relativity, Studio Works, Breckenridge, Exertek, Living Quarters, Paradise Collections, Le Tigre, Cuddle
Bear, John Bartlett and Casa by Victor Alfaro.
By
providing exclusive fashion products at price points that are more attractive than nationally distributed brand alternatives, our private brand program creates value for our customers
and increases our brand exclusiveness, competitive differentiation and customer loyalty. Our private brand program also presents the opportunity to increase our overall gross margin by virtue of the
more efficient cost structure inherent in the design and sourcing of in-house brands.
Vendor Relationships and Sourcing
Our highly experienced team of buyers has developed long-standing and strong relationships with many of the leading vendors in the marketplace.
Our scale, geographic footprint and market position make us an important distribution channel for leading merchandise vendors to reach their target consumers. We believe our status as a key account to
many of our vendors serves to strengthen our ability to negotiate for merchandise exclusive to our stores as well as favorable pricing terms. We monitor and evaluate the sales and profitability of
each vendor and adjust our purchasing decisions based upon the results of this analysis.
Consistent
with industry practice, we receive allowances from some of our vendors in support of the merchandise sold to us that was marked down or otherwise did not allow us to achieve
certain
2
margins
when sold to our customers. Additionally, we receive advertising allowances and reimbursement of certain payroll expenses from some of our vendors, which primarily represent reimbursements of
specific, incremental and identifiable costs incurred to promote and sell the vendors' merchandise.
Marketing and Customer Service
We are committed to providing our customers with a satisfying shopping experience by offering trend-right fashions, differentiated product,
value and convenience. Critical elements of our customer service approach are:
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omnichannel marketing programs designed to promote customer awareness of our fashion, quality and value;
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customer targeting strategies that foster and strengthen long-term relationships;
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frequent shopper promotions for our private label credit card holders; and
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knowledgeable, friendly and well-trained sales associates.
Marketing
Our strategic marketing initiatives develop and enhance our brand equity and support our position as a leading shopping destination among our
target customers. Our multi-faceted marketing program is designed to engage our customers through multiple media channels and allows us to attract new customers and to maintain loyalty with our
existing customer base. We are focused on enhancing our media mix strategy to optimize media channel allocations and maximize our return on investment. We will continue to adjust our media mix,
leveraging traditional print media as well as broadcast and digital media to support our multi-channel marketing programs. We are expanding our use of highly targeted digital media as well as
increasing our investments in social media platforms. We will continue to enhance our efforts with regard to localizing content as well as implementing personalization strategies for email and direct
marketing to further increase the relevancy of our marketing messages for individual customers.
We
use a combination of (1) advertising and sales promotion activities to build brand image and increase customer traffic and (2) customer-specific communications and
purchase incentives to drive customer spending and loyalty. Both types of marketing efforts focus primarily on our target customer, women between the ages of 25 and 60 with average annual household
income of $55,000 to $125,000, with the intention of increasing visit frequency and purchases per visit. Our marketing activities also seek to attract a broader audience. We seek to attract new
customers and to maintain our customer loyalty by actively communicating with our customers through the execution of targeted marketing facilitated by sophisticated customer relationship management
capabilities.
We
are focused on important charitable causes and events to enhance our connection with the communities in which we operate and with the customers we serve. These strategic initiatives
garner favorable publicity, increase customer traffic and generate incremental sales. Additionally, these efforts serve to differentiate us from our competitors.
We
maintain an active calendar of in-store events to promote our merchandise and sales efforts. These events include designer appearances, fashion shows and national makeup artist
events.
Private Label Credit Card
Evidencing our customer satisfaction and loyalty is the high penetration rate of our private label credit card program. We have approximately
3.8 million active private label credit card holders. Our
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private
label credit card program is administered by Comenity Bank, a subsidiary of Alliance Data Systems Corporation ("ADS").
Our
private label credit card loyalty program is designed to cultivate long-term relationships with our customers by offering rewards and privileges to all members, including advanced
sales notices, savings and events. The program is designed to promote increased visits to our stores and shopping across multiple departments within our stores.
Customer Service
We maintain a sales force of knowledgeable and well-trained sales associates to deliver excellent service to our customers. Sales associates are
trained in the areas of customer service, selling skills and product knowledge. Our new associates receive computer-based training to deliver an effective, efficient and uniform training experience.
In 2017, we will continue to conduct "Customer
First" training for all newly-hired associates, a program designed to increase engagement with our customers on the selling floor, and use point-of-sale ("POS") modules as training tools for selling
skills, product knowledge and trend updates for our sales associates. We view customer service as a key element of our growth strategy and have identified opportunities to enhance service and deliver
meaningful results. To that end, we implemented a training program for our store personnel with a focus on the customer service aspects of our "Let Us Find It" software that provides customer-friendly
access to 100% of the Company's available inventory.
We
employ a two-tiered strategy to achieve effective customer service. First, in selected areas, we offer one-on-one selling with dedicated associates to assist customers with
merchandise selections. Second, we offer the convenience of self-service formats in many departments and efficient service centers to expedite customer purchases. We actively monitor and analyze,
through our scheduling program, the service levels in our stores in order to maximize sales associate productivity and store profitability.
We
believe that customers are responding favorably to retailers that make it convenient for them to shop on their terms. Our customer order management system, established a solid
foundation to support omnichannel sales growth. Our successful "Let Us Find It" program allows our selling associates to use search capabilities to help customers find a brand, size, or color
currently not available at a store location, or from our extensive omnichannel assortment for delivery directly to their homes. We expanded our store order fulfillment locations, which provided the
ability to better serve our customers by directing omnichannel orders to store locations for fulfillment. Our service strategy is reinforced through the use of technology to foster customer
interaction, affording us an opportunity to enhance our brand and broaden our appeal to younger customers. In the fall of 2016, we updated our omnichannel capabilities with new mobile commerce
capabilities and to offer our customers the option to "Buy Online Pick Up In-Store" in all locations, adding an additional convenience service. We will continue exploring ways to use new tools and
capabilities to make our sales floor more responsive to our customer.
Competition
The retail industry is highly competitive. We face competition for customers from traditional department store operators such as Boscov's
Department Store LLC, Dillard's, Inc., Macy's, Inc. and Von Maur Inc.; national chain retailers such as J.C. Penney Company, Inc., Kohl's Corporation and Sears
Holdings Corporation; mass merchandisers such as Target Corporation and Wal-Mart Stores, Inc.; online retailers such as Amazon.com Inc.; specialty stores; off-price retailers; and
catalogue retailers. In a number of our markets, we compete for customers with national department store chains which offer a similar mix of branded merchandise as we do. In other markets, we face
potential competition from national chains that, to date, have not entered such markets and from national chains that have stores
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in
our markets but currently do not carry similar branded goods. In all markets, we generally compete for customers with stores offering moderately-priced goods. In addition, we face competition for
suitable store locations from other department stores, national chain retailers, mass merchandisers and other large-format retailers. Many of our competitors have substantially greater financial and
other resources than we do, and many of those competitors have significantly less debt than we do and may thus have greater flexibility to respond to changes in our industry.
Success
in these competitive marketplaces is based on factors such as price, product assortment and quality, service and convenience. We believe that we compare favorably with our
competitors with respect to quality of product, depth and breadth of merchandise, prices for comparable quality merchandise, customer service and store environment. We also believe our knowledge of
and focus on small to mid-size markets, developed over our many years of operation, give us an advantage in these markets that cannot be readily duplicated. In markets in which we face traditional
department store competition, we believe that we compete effectively.
Trademarks and Trade Names
We own or license various trademarks and trade names, including our store nameplates and private brands. We believe our trademarks and trade
names are important and that the loss of certain of our trademarks or trade names, particularly our store nameplates, could have a material adverse effect on us. We are not aware of any claims of
infringement or other challenges to our right to use our trademarks in the United States that would have a material adverse effect on our consolidated financial position, results of operations or
liquidity.
Information Technology and Systems
Our information technology initiatives are focused on (1) continuing the strong growth of our omnichannel business and enabling new
growth initiatives, (2) updating systems and business processes with emphasis on enhancing our customers' shopping experience through all channels, (3) strengthening our cybersecurity
programs to protect customer, employee, and corporate data, (4) applying advanced analytic techniques in merchant reporting systems to quickly identify sales, margin, merchandise assortment and
inventory management opportunities, (5) updating our
merchandising and planning systems in support of localization initiatives, (6) improving associate productivity and consistency of process execution and (7) reducing operating costs.
During
2016, investments in technology infrastructure equipment and software were focused on omnichannel selling systems and operating efficiencies to drive down costs. Our omnichannel
sites were updated, including the implementation of new advanced search and navigation capabilities to improve key word accuracy and prioritization, and to permit new product presentation options
designed to improve relevancy and conversion. Our mobile site was upgraded to support new mobile applications for our customers and associates. The site is designed and developed using responsive
technologies to synchronize mobile functionality with our primary sites in order to deliver a similar experience to our customers regardless of how they access our omnichannel sites. A new mobile
application was delivered to our customers to strengthen our capabilities to support this fast growing customer engagement touchpoint. The application delivers promotions directly to customers' mobile
devices, provides access to our Your Rewards loyalty program, includes a barcode scanner and more. Customers can simply scan merchandise and be directed to our omnichannel sites to find more colors
and sizes, or access our full online assortment anytime they want to shop.
Another
major improvement in our omnichannel capabilities is the introduction of "Buy Online Pick Up In-Store" enabling the convenience of online ordering, and the option to pick up
merchandise at a nearby store. Along with improvements at our new West Jefferson fulfillment center, we expanded our store order fulfillment locations, and invested in advanced order sourcing
capabilities to better
5
utilize
store inventory and manage order shipping costs. A new loyalty programLove Style Rewardswas introduced for our customers who prefer to use payment methods other than
our private label credit card. Our new merchandise sample management system was expanded to integrate with automated item set up processes to further reduce the time between receipt of new merchandise
and its availability to sell on omnichannel sites and through in store selling tools.
We
completed our implementation of point to point encryption of card data, card number tokenization and Europay, MasterCard, Visa (EMV) "chip card" technologies, substantially reducing
the risks associated with credit card processing. "Guest Networks" are available in all locations where broadband service is available providing our customers Wi-Fi access. Through the use of
broadband communications technologies, we have significantly increased our network and cellular capacities, and retained the existing network capability, all focused on improving our customers'
experience and our associates' capabilities to serve our customers in a digital marketplace. The new network infrastructure continues to provide lower operating costs. Inventory management programs
utilizing radio frequency identification technologies continue to provide value through improved accuracy of footwear and luggage display samples to ensure stock room inventory is always represented
on the selling floor.
In
2017, we will continue business process improvements to improve our customers' shopping experience in store and online. Our focus will remain on improving our omnichannel
capabilities, adding new mobile application capabilities and improving operating efficiency.
Inventory Management
Our merchandising function is centralized, with a staff of buyers and a planning and allocation team who have responsibility for determining the
merchandise assortment, quantities to be purchased and allocation of merchandise to each store. In order to support our localization initiative, our centralized staff includes regional store planners,
who have responsibilities of communicating merchandise opportunities and developing specialized assortments by store through analytical review of store data, frequent on-site visits and local
competitive assessments.
We
primarily operate using a pre-distribution model through which we allocate merchandise on our initial purchase orders to each store. This merchandise is shipped from our vendors to
our distribution facilities for delivery to designated stores. We have the ability to direct replenishment merchandise to the stores that demonstrate the highest customer demand. This reactive
distribution technique helps minimize excess inventory and affords us timely and accurate replenishment.
We
utilize electronic data interchange (EDI) technology with most vendors, which is designed to move merchandise onto the selling floor quickly and cost-effectively by allowing vendors
to deliver merchandise pre-labeled for individual store locations. In addition, we utilize high-speed automated conveyor systems in our distribution facilities to scan bar coded labels on incoming
cartons of merchandise and direct cartons to the proper processing areas. Most of our merchandise is unloaded in the receiving area and immediately "cross-docked" to the shipping dock for delivery to
the stores. Certain processing areas are staffed with personnel equipped with hand-held radio frequency devices that can scan a vendor's bar code and transmit the necessary information to a computer
to record merchandise on hand. We utilize third-party carriers to distribute our merchandise to our stores.
The
majority of our merchandise is held in our stores. We closely monitor inventory levels and assortments in our stores to facilitate reorder and replenishment decisions, satisfy
customer demand and maximize sales. Our business follows a seasonal pattern; merchandise inventories fluctuate with seasonal variations, reaching their highest level in October or November in advance
of the holiday season.
In
addition to inventories to support our store operations, we maintain inventories to support our growing online business. These inventories are administered through similar procurement
methods and
6
are
staged in our fulfillment center to complete customer orders received from our omnichannel sites and customer orders taken at POS modules in our store locations. We lease an approximately 743,000
square foot highly automated direct-to-consumer fulfillment center to support our growing omnichannel operations. This fulfillment center became fully operational in the fall of 2015. We consolidated
our omnichannel fulfillment activity at this site which has significantly expanded our shipping capacity with improved operational efficiency.
We
have a customer return policy allowing customers to return merchandise, for which a reserve is provided in our consolidated statements of operations for estimated returns. The reserve
is based on historical returns experience, and is reflected as an adjustment to sales and costs of merchandise sold.
Seasonality
Our business, like that of most retailers, is subject to seasonal fluctuations, with the major portion of sales and income realized during the
second half of each year, which includes the holiday season. Due to the fixed nature of certain costs, our selling, general and administrative ("SG&A") expenses are typically higher as a percentage of
net sales during the first half of each year. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full year. In
addition, quarterly results of operations depend upon the timing and amount of revenues and costs associated with the opening, closing and remodeling of existing stores.
Capital Investments
We make capital investments to support our long-term business goals and objectives. We invest capital in new and existing stores, distribution
and support facilities and information technology.
We
anticipate our 2017 capital expenditures will not exceed $41.9 million (excluding external contributions, primarily leasehold improvement and fixture allowances received from
landlords or
vendors, of $11.9 million, reducing budgeted net capital investments to $30.0 million). Projects include ongoing store remodels, information technology and store improvements. We believe
these investments will drive growth and profitable returns.
We
believe capital investments for information technology are necessary to support our business strategies. We are continually upgrading our information systems to improve efficiency and
productivity. Included in the 2017 capital budget are expenditures for numerous information technology projects, most notably efforts to enhance our online presence and omnichannel capabilities,
selling tools, merchant reporting and security measures.
Associates
As of March 24, 2017, we had approximately 23,300 full-time and part-time associates. We employ additional part-time associates during
peak selling periods. We believe that our relationship with our associates is good.
Available Information
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports
are available without charge on our website, www.bonton.com, as soon as reasonably practicable after they are filed electronically with the Securities and Exchange Commission ("SEC").
We
also make available on our website, free of charge, the following documents:
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Audit Committee Charter
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Human Resources and Compensation Committee Charter
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Governance and Nominating Committee Charter
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Code of Ethical Standards and Business Practices
7
Executive Officers
The following table sets forth certain information regarding our executive officers:
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NAME
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AGE
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POSITION
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Tim Grumbacher
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77
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Chairman of the Board of Directors and Strategic Initiatives Officer
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Kathryn Bufano
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64
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President and Chief Executive Officer and Director
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William X. Tracy
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62
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Chief Operating Officer
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Nancy A. Walsh
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56
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Executive Vice PresidentChief Financial Officer
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Stephen R. Byers
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63
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Executive Vice PresidentStores, Visual and Loss Prevention
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Luis Fernandez
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49
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Executive Vice PresidentChief Marketing Officer
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Jimmy Mansker
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47
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Executive Vice PresidentMerchandise Planning and Optimization
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Mr. Grumbacher
has served as Chairman of the Board of Directors and Strategic Initiatives Officer since June 2013. He served as
Executive Chairman of the Board of Directors from February 2005 to February 2012, when he resigned that position and was appointed Chairman Emeritus and Strategic Initiatives Officer. He served as
Chairman of the Board of Directors from August 1991 to February 2005. He was Chief Executive Officer from 1985 to 1995 and in positions of senior management since 1977.
Ms. Bufano
has served as President and Chief Executive Officer and Director of the Company since August 2014. Ms. Bufano
served as President and Chief Merchandising Officer of Belk Inc. from August 2010 through August 2014 and previously served as its President, Merchandising and Marketing from January 2008 to
August 2010. From 2006 to January 2008, Ms. Bufano was the Chief Executive Officer
of Vanity Shops, Inc. Ms. Bufano pursued higher education from 2003 to 2006, and from 2002 to 2003 she was Executive Vice President, General Manager Soft-lines for Sears Roebuck &
Company. Prior to 2002, Ms. Bufano served as President, Chief Merchandising Officer for Dress Barn, Inc. and in various positions in the Macy's East and Lord & Taylor divisions of
Federated Department Stores.
Mr. Tracy
has been Chief Operating Officer since July 2015. He served as Executive Vice PresidentSupply Chain,
Logistics, Omnichannel Fulfillment and Global Sourcing of Hudson's Bay Company from 2013 to July 2015. Previous assignments at Hudson's Bay Company from 2007 to 2013 included Executive Vice
PresidentSupply Chain, Logistics, Omnichannel Fulfillment and Information Services, Senior Vice PresidentSupply Chain, Logistics and eCommerce Fulfillment and Executive Vice
PresidentOperations.
Ms. Walsh
has been Executive Vice PresidentChief Financial Officer since November 2015. She was most recently employed
with Coach, Inc., where she served as Senior Vice President of Finance from 2007 to 2013. Previous assignments at Coach from 1999 to 2007 included Chief Risk Officer, Vice President of Finance
and Chief Financial Officer of its worldwide wholesale division.
Mr. Byers
has served as Executive Vice PresidentStores, Visual and Loss Prevention since May 2011, having served as
Vice ChairmanStores, Distribution, Real Estate and Construction from February 2008 to May 2011. He served as Vice ChairmanStores, Operations, Private Brand, Planning and
Allocation from October 2006 to February 2008, and as Executive Vice PresidentStores and Visual Merchandising from April 2006 to October 2006.
Mr. Fernandez
has served as Executive Vice PresidentChief Marketing Officer since August 2015, having served as
Executive Vice PresidentChief Omnichannel Officer from September 2013 to August 2015. He was appointed to the position of Executive Vice PresidentChief Marketing Officer and
eCommerce in May 2012, having joined the Company from Neiman Marcus Group where he most recently served as Vice President, Last Call Marketing and Customer Insight. From 2007 to 2010, he served as
Vice President, Marketing, Online and Catalog, and from 2002 to 2006, Vice President, Marketing and Systems Strategy at Neiman Marcus Group.
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Mr. Mansker
was appointed to the position of Executive Vice PresidentMerchandise Planning and Optimization in April
2014. He served as Senior Vice PresidentMerchandise Planning from May 2012 to April 2014 and Senior Vice PresidentMerchandise Planning and eCommerce from April 2008 to May
2012.
Mr. Mansker joined the Company in May 2007 and was appointed Vice PresidenteCommerce. Prior to that, he worked many years at RadioShack Corporation where he most recently served as
Vice PresidenteCommerce.
Item 1A. Risk Factors
Cautionary Statements Relating to Forward-Looking Information
We have made, including in this Annual Report on Form 10-K, other reports and communications with shareholders, forward-looking
statements relating to developments, results, conditions or other events we expect or anticipate will occur. These statements may relate to revenues, earnings, store openings, business strategy,
general economic conditions, market conditions and the competitive environment. The words or phrases "believe," "may," "might," "will," "estimate," "intend," "expect," "anticipate," "plan," "look
forward to" and similar expressions as they relate to the Company, or future or conditional verbs, such as "will," "should," "would," "may" and "could," are intended to identify forward-looking
statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's then-current views and assumptions and we undertake no obligation to update
them. Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from those projected. The reader is cautioned not to place undue reliance on any such
forward-looking statements.
An
investment in our securities carries certain risks. Investors should carefully consider the risks described below, and other risks which may be disclosed in our filings with the SEC,
before investing in our securities.
General economic conditions could have a material adverse effect on our financial condition and results of
operations.
Consumer spending habits, including spending for the merchandise that we sell, are affected by, among other things, prevailing economic
conditions, levels of employment, salaries and wage rates, prevailing interest rates and credit terms, housing costs, energy costs, income tax rates and policies, inflation, deflation, consumer
confidence and consumer perception of economic conditions. In addition, consumer purchasing patterns may be influenced by consumers' disposable income, credit
availability and debt levels. A slowdown in the United States' economy or an uncertain economic outlook could adversely affect consumer spending habits, resulting in lower net sales and gross margin,
which would cause reduced annual net profits or increased net losses, including the potential write-down of the current valuation of long-lived assets, intangible assets and deferred tax assets.
Our
vendors, landlords, lenders and other business partners could also be adversely affected by difficult economic conditions. This, in turn, could impact us through increasing the risk
of bankruptcy of our vendors, landlords, lenders and business partners, increasing the cost of goods, creating a void in product, reducing access to liquid funds or credit, increasing the cost of
credit or other impacts which we are unable to fully anticipate.
Reduced consumer traffic in traditional shopping malls could have a material adverse effect on our financial
condition and results of operations.
Customer traffic in our stores is a significant factor in driving sales. We work to increase customer traffic and conversion both in stores and
online. There is no assurance that we will be successful in increasing or retaining traffic and conversion levels. In addition, external events outside of our control, including closed anchor store
locations, may dissuade customers from visiting shopping malls. There is
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no
assurance that we will be able to reverse any decline in traffic or that increases in online sales will offset any decline in store traffic. We may need to respond to any declines in customer
traffic or conversion rates by increasing markdowns or promotions to attract customers, which could adversely impact our financial results.
We conduct our operations in a highly competitive retail environment which could have an adverse effect on
our business, financial condition and results of operations.
We compete with other department stores and many other retailers, including store-based, mail-order and internet retailers. Many of our
competitors have financial and marketing resources that greatly exceed ours. The principal competitive factors in our business are price, quality and selection of merchandise, reputation, store
location, advertising and customer service. We cannot
ensure that we will be able to compete successfully against existing or future competitors, or that prolonged periods of deep discount pricing by our competitors during periods of weak consumer
confidence or economic instability will not have a material adverse effect on our business. Our expansion into new markets served by our competitors and the entry of new competitors into, or expansion
of existing competitors in, our markets could have a material adverse effect on our business, financial condition and results of operations.
Current store locations may become less desirable, and desirable new locations may not be available for a
reasonable price, if at all.
The success of any store depends substantially upon its location. There can be no assurance that current locations will continue to be desirable
as demographic patterns change. Neighborhood or economic conditions where stores are located could decline in the future, resulting in potentially reduced sales in those locations. In addition, if we
cannot obtain desirable new locations our sales will suffer, and if we cannot obtain desirable locations at reasonable prices our cost structure will increase.
The financial condition of some shopping mall operators could adversely impact our stores.
As the great majority of our stores are located in malls, we are dependent upon the continued popularity of malls as a shopping destination for
our customers. An economic slowdown in the United States could impact shopping mall operators' financial ability to develop new shopping malls and properly maintain existing shopping malls, which
could adversely affect our sales. In addition, consolidation of ownership of shopping malls through the merger or acquisition of shopping mall operators may give landlords increased leverage in lease
negotiations and adversely affect our ability to control our lease costs.
There can be no assurance that our liquidity will not be adversely affected by changes in the Company's
performance or credit rating, financial markets or global economy.
Historically, we have generated cash flow from operating activities and used supplemental borrowings under our credit facility to provide the
liquidity we need to operate our business. A downturn in the global economy and distress in the financial markets could result in volatility in the capital markets. Adverse changes in the Company's
performance, a downgrade in our credit rating or the potential tightening of credit markets could make it more difficult for us to access funds, to refinance our existing indebtedness, to enter into
agreements for new indebtedness or to
obtain funding through the issuance of securities and could potentially increase our borrowing costs. If such conditions were to persist, we would seek alternative sources of liquidity, but there can
be no assurance that we would be successful in obtaining such additional liquidity. As a result, we may not be able to meet our obligations as they become due. In addition, any refinancing of our debt
could be at higher interest rates and could require us to comply with more onerous covenants, which could harm our business.
10
In
addition, vendors and their factors may potentially seek assurances to protect against non-payment of amounts due to them. If we experience declining operating performance, and if we
experience severe liquidity challenges, vendors and their factors may demand that we accelerate payment for their products. These demands could have a significant adverse impact on our operating cash
flow and result in a severe diminishment of our liquidity.
Our debt could adversely affect our financial condition.
As of January 28, 2017, we had total debt, including capital lease and financing obligations, of $989.3 million, which is subject
to restrictions and financial covenants. Our indebtedness, and the limitations imposed on us by the instruments and agreements governing such indebtedness, could result in events which would have a
material adverse effect on our financial condition, liquidity, results of operations and/or business. For example, it could:
-
-
increase our vulnerability to general adverse economic and industry conditions;
-
-
limit our ability to borrow money or sell equity to fund future working capital requirements, capital expenditures, debt service requirements
and other general corporate requirements;
-
-
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing our ability to use our
cash flow for other purposes, including capital expenditures;
-
-
limit our flexibility in planning for, or reacting to, changes in our business and the retail industry;
-
-
make it more difficult for us to meet our debt service obligations in the event there is a substantial increase in interest rates because the
debt under our senior secured credit facility bears interest at fluctuating rates;
-
-
restrict our ability to make certain types of investments, pay dividends, or sell all of our assets or merge or consolidate with another
company; and
-
-
place us at a competitive disadvantage compared with our competitors that have less debt.
Our
ability to service our debt depends upon, among other things, our ability to replenish inventory at competitive prices and terms, generate sales and maintain our stores. If we do not
generate sufficient cash from our operations to service our debt obligations, we may need to take one or more actions, including refinancing our debt, obtaining additional financing, selling assets,
obtaining additional equity capital or reducing or delaying capital expenditures. We cannot be certain that our cash flow will be sufficient to allow us to pay the principal and interest on our debt
and meet our other obligations.
Debt
under our senior secured credit facility bears interest at a floating rate. Accordingly, changes in prevailing interest rates may affect our ability to meet our debt service
obligations. A higher interest rate on our debt would adversely affect our operating results. If we are unable to meet our debt service obligations or if we default under our credit facilities, our
lenders could elect to declare all borrowings outstanding, together with accumulated and unpaid interest and other fees, immediately due and payable, and may foreclose on the collateral securing such
indebtedness consisting of substantially all of our assets, which would have a material adverse effect on our business, financial condition and results of operations.
11
Our discretion in some matters is limited by the restrictions contained in our debt facilities, which could
harm our business, profitability and growth prospects.
The agreements that govern our senior secured credit facility and the indentures that govern our second lien senior secured notes, contain a
number of covenants that limit the discretion of our management with respect to certain business matters and may impair our ability to respond to changing business and economic conditions. The senior
secured credit facility and the indentures, among other things, restrict our ability to:
-
-
incur additional debt or issue guarantees of debt;
-
-
sell preferred stock;
-
-
create liens;
-
-
make restricted payments (including the payment of dividends or the repurchase of our common stock);
-
-
make certain types of investments;
-
-
sell stock in our restricted subsidiaries;
-
-
pay dividends or make payments from subsidiaries;
-
-
enter into transactions with affiliates; and
-
-
sell all or substantially all of our assets or merge or consolidate with another company.
If
we fail to comply with the financial covenants or the other restrictions contained in our senior secured credit facility or the indentures that govern our second lien senior secured
notes, an event of default would occur. An event of default could result in the acceleration of our debt due to the cross-default provisions within our debt agreements. If the debt is accelerated, we
would not have, and may not be able to obtain, sufficient funds to repay our debt, which could have a material adverse effect on our business, financial condition and results of operations.
Increases in the price of merchandise, raw materials, fuel and labor or their reduced availability could
increase our cost of goods and negatively impact our financial results.
Fluctuations in the price and availability of merchandise, raw materials, fuel and labor have not materially affected our cost of goods in
recent years, but an inability to mitigate these cost increases, unless sufficiently offset with retail pricing adjustments, might cause a decrease in our profitability. Related retail pricing
adjustments, however, might cause a decline in our sales volume. Additionally, any decrease in the availability of raw materials could impair our ability to meet our purchasing requirements in a
timely manner. Both the increased cost and lower availability of merchandise, raw materials, fuel and labor may also have an adverse impact on our cash and working capital needs as well as those of
our suppliers.
Failure to maintain key vendor and factor relationships may adversely affect our business, financial
condition and results of operations.
Our business is dependent to a significant degree upon close relationships with our vendors and their factors and our ability to purchase brand
name merchandise at competitive prices and terms. The loss of key vendor and factor support could have a material adverse effect on our business. There can be no assurance that we will be able to
acquire brand name merchandise at competitive prices or on competitive terms in the future. Additionally, certain merchandise may be allocated by vendors based upon the vendors' internal distribution
strategy, which is beyond our control. In addition, if our vendors are unable to access liquidity or become insolvent, they could be unable to supply us with product or
12
continue
with their support of our advertising and promotional programs. Any such disruptions could negatively impact our ability to acquire merchandise or obtain vendor allowances in support of our
advertising and promotional programs, which in turn could have a material adverse impact on our business, financial condition or results of operations.
Changes in the terms of our private label credit card program could have an adverse effect on our operations.
Our private label credit card program is operated, under agreement, by ADS. ADS issues our private label credit cards to our customers and we
receive a percentage of the net credit sales and outstanding credit balances thereunder. ADS may be unable or unwilling to provide support for our private label credit card program under similar terms
or conditions as exist today or our agreement with ADS may be terminated under circumstances in which we are unable to quickly and adequately contract with a comparable replacement vendor causing our
customers, who have accounts under our private label credit card program, to not be able to use their cards. Either of these cases would likely result in a decrease in sales, a loss of the revenues
attributable to the payments from ADS and an adverse effect on customer goodwill, any or all of which could have a material adverse effect on our business and results of operations.
We might not be able to successfully implement our business strategies.
We have identified strategies to achieve sales growth and improve our financial performance in the years ahead, such as strategies with regard
to merchandising, marketing and customer service. These strategies are described in "Management's Discussion and Analysis2017 Strategies and Guidance" and in other communications,
including our Chief Executive Officer's letter to our shareholders. If we are unable to successfully execute those strategies, our operating results may suffer. Even if we are able to successfully
execute our strategies, there can be no assurance that these strategies will necessarily result in our improved financial performance. In addition, the employment of any new approach involves risks
and potential increased costs that may prove to be detrimental to our operating results.
Insufficient or ineffective allocation of capital could adversely impact operations and our operating
results.
We depend on cash flow from operations and supplemental borrowings under our credit facility to fund capital spending. If we are unable to
generate sufficient cash flows to support our capital needs or if sufficient financing is not available, we may not be able to allocate required capital to remodeling and maintenance of existing
stores, the opening of new stores and other capital projects.
We might not be able to develop and maintain a robust omnichannel business and it may operate at a margin
lower than our stores.
One of our strategic initiatives is to further our omnichannel capabilities to coalesce our efforts in stores, online and mobile as we look to
engage our customers at all touch points. Omnichannel retailing is rapidly evolving and we must anticipate and meet changing customer expectations. Our omnichannel initiatives include our "Let Us Find
It" and "Buy Online Pick Up In-Store" programs. In addition, we continue to explore ways to enhance our customers' omnichannel shopping experience. These initiatives involve significant investments in
technology and significant operational changes. In addition, our competitors are also investing in omnichannel initiatives, some of which may be more successful than our initiatives. If the
implementation of our omnichannel initiatives is not successful or does not meet customer expectations, we may not realize a return on our omnichannel investments and our reputation and operating
results may be adversely affected.
Over
the past several years, our omnichannel sales have increased significantly, but generate a lower margin than do our stores-only sales. This difference in profitability is due to a
number of factors within our omnichannel business, including the cost to ship merchandise to customers and the
13
competitive
pressures to offer free or reduced shipping on many orders, and the significant cost to provide and maintain the infrastructure and systems necessary to operate our omnichannel business.
There is no assurance that, in light of these factors, our omnichannel business can be operated at profitability levels historically seen in stores sales.
A shutdown or disruption of operations in our distribution or fulfillment centers would have an adverse
effect on the Company's business and operations.
Although we believe that we have appropriate contingency plans, including fulfillment of omnichannel orders through stores and the ability of
any of our distribution centers to service additional stores, unforeseen disruptions in operations at our distribution or fulfillment centers due to fire, weather or natural disasters or other events,
may result in the loss of inventory, delays in fulfilling online orders and disruption of the supply of goods to stores, which would adversely impact our sales.
Our business could be significantly disrupted if we cannot retain or replace members of our management team.
Our success depends to a significant degree upon the continued contributions of our executive officers and other key personnel, both
individually and as a group. Our future performance will be substantially dependent on our ability to retain or replace our executive officers and key personnel and our inability to retain or replace
our executive officers and key personnel could prevent us from executing our business strategy.
We may face increased costs in attracting and retaining quality associates.
Our business is dependent upon attracting and retaining quality associates. As is common with most retailers, a significant number of our
associates are in entry level or part-time positions with historically high rates of turnover. In addition, our staffing needs are highest during the
holiday season when competition for these associates is intense. We must continue to meet our labor needs while controlling labor and benefit (including healthcare) costs. These costs are subject to
external factors such as unemployment levels, prevailing wage rates, Federal, state and local minimum wage legislation, health reform legislation, changing demographics and changes in Federal overtime
pay rules. Any of these factors could increase our employment costs and could have an adverse effect on our operating results and financial condition.
Our business could be significantly disrupted and burdened with additional costs if our associates unionize.
While we believe our relationship with our associates is good, we cannot be assured that we will not become the subject of a unionization
campaign. If some or all of our workforce were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements or work practices,
it could have a material adverse effect on our business, financial condition and results of operations.
Our pension costs could increase at a higher than anticipated rate.
Significant decreases in the fair value of plan assets, investment losses on plan assets and changes in interest rates have affected and could
further affect the funded status of our plans and could increase future funding requirements of the pension plans. A significant increase in future funding requirements could have a negative impact on
our cash flow, financial condition and results of operations.
14
We may not be able to accurately predict customer-based trends and effectively manage our inventory levels,
which could reduce our revenues and adversely affect our business, financial condition and results of operations.
It is difficult to predict what and how much merchandise consumers will want. A substantial part of our business is dependent upon our ability
to make correct trend decisions. Failure to accurately predict constantly changing consumer tastes, spending patterns and other lifestyle
decisions, particularly given the long lead times for ordering much of our merchandise, could adversely affect our long-term relationships with our customers. We focus on inventory levels and balance
these levels with inventory plans and reviews of trends; however, if our inventories become too large, we may have to "mark down" or decrease our sales prices, and we may be required to sell a
significant amount of unsold inventory at discounted prices or even below cost.
An inability to find qualified domestic and international vendors who will provide merchandise at a
reasonable cost could adversely affect our business.
The products we sell are sourced from a wide variety of domestic and international vendors. The availability of products and the ultimate costs
of buying and selling these products, including advertising and promotional costs, are not completely within our control and could increase our merchandise and operating costs. Additionally, costs and
other factors specific to imported merchandise, such as trade restrictions, taxes, tariffs, currency exchange rates and transport capacity and costs, are beyond our control and could restrict the
availability of imported merchandise or significantly increase the costs of our merchandise and adversely affect our business, financial condition and results of operations.
Conditions in, and the United States' relationship with, the countries where we source our merchandise could
adversely affect our business.
A majority of our merchandise is manufactured outside of the United States. Political instability or other events resulting in the disruption of
trade from the countries where our merchandise is manufactured or the imposition of additional regulations relating to, or duties upon, the merchandise we import could cause significant delays or
interruptions in the supply of our merchandise or increase our costs. If we are forced to source merchandise from other countries, those goods may be more expensive than, or of inferior quality to,
the merchandise we now sell. If we are unable to adequately replace the merchandise we currently source with merchandise produced elsewhere, our business, financial condition and results of operations
could be adversely affected.
Our business is seasonal.
Our business is subject to seasonal influences, with a major portion of sales and income historically realized during the second half of the
fiscal year, which includes the holiday season. This seasonality causes our operating results to vary considerably from quarter to quarter and could have a material adverse impact on the market price
of our common stock. We must carry a significant
amount of inventory, especially before the peak selling periods. If we are not successful in selling our inventory, especially during our peak selling periods, we may be forced to rely on markdowns,
vendor support or promotional sales to dispose of the inventory or we may not be able to sell the inventory at all, which could have a material adverse effect on our business, financial condition and
results of operations.
Weather conditions could adversely affect our results of operations.
Because a significant portion of our business is apparel sales and subject to weather conditions in our markets, our operating results may be
unexpectedly and adversely affected by inclement weather. Frequent or unusually heavy snow, ice or rain storms might make it difficult for our customers to travel to our stores or, in particularly
adverse conditions, our stores might be subject to temporary closings,
15
thereby
reducing our sales and profitability. Extended periods of unseasonable temperatures in our markets, such as unusually warm weather during the holiday season, could render a portion of our
inventory incompatible with those unseasonable conditions, reduce sales and adversely affect our business.
The ownership and leasing of significant amounts of real estate expose us to possible liabilities.
We currently own or lease 262 stores, which subjects us to the risks associated with owning and leasing real estate. In particular, because of
changes in the investment climate for real estate, the value of a property could decrease or operating costs could increase. Our store leases generally require us to pay a fixed minimum rent and a
variable amount based on a percentage of sales at that location. These leases generally do not allow for termination prior to the end of the lease term without economic consequences. If a store is not
profitable and we make the decision to close it, we may remain committed to perform certain obligations under the lease, including the payment of rent, for the balance of the lease term. In addition,
as each of the leases expires, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close stores in desirable locations. If an existing
owned store is not profitable, we may be required to record an impairment charge and/or exit costs if we make a decision to close that store. In addition, lease or other obligations may restrict our
right to cease operations of an unprofitable owned or leased store,
which may cause us to continue to operate the location at a loss. A decline in real estate values could also have an adverse effect on our borrowing availability under our senior secured credit
facility.
Risks associated with our private brands could adversely affect our business.
We offer our customers quality products at competitive prices marketed under our private brands. We expect to continue to grow our private label
offerings and have invested in our development and procurement resources and marketing efforts related to these exclusive brand offerings. The expansion of our private brand offerings subjects us to
certain additional risks. These include, among others, risks related to: our failure to comply with government and industry safety standards; mandatory or voluntary product recalls related to our
private brand offerings; our ability to successfully protect our proprietary rights in our exclusive offerings; and risks associated with overseas sourcing and manufacturing. In addition, damage to
the reputation of our private brand trade names may generate negative customer sentiment. Our failure to adequately address some or all of these risks could have a material adverse effect on our
business, results of operations and financial condition.
New legal requirements could make our business operations more costly.
Our results of operations could be adversely affected by new legal requirements, including the Affordable Care Act and any replacement or
modification thereof, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and potential legislation or regulations such as global and domestic greenhouse gas emission requirements and
increased state or federal minimum wage requirements. The financial impact of these new legal requirements cannot be determined with certainty. New laws or regulations may result in increased direct
costs to us for compliance or may cause our vendors to raise prices to us because of increased compliance costs or reduced availability of raw materials.
An unfavorable outcome to a potential litigation claim could have a material adverse effect on our business,
financial condition and results of operations.
In the ordinary course of business, we may be involved in lawsuits and regulatory actions. We are impacted by trends in litigation, including,
but not limited to, intellectual property matters and class-action allegations brought under various consumer protection and employment laws. Due to the inherent uncertainties of litigation and
regulatory proceedings, we cannot accurately predict the
16
ultimate
outcome of any such proceeding. An unfavorable outcome could have a material adverse impact on our business, financial condition and results of operations. In addition, regardless of the
outcome of any litigation or regulatory proceeding, claims brought against us could result in substantial costs and may require that we devote substantial resources to our defense.
Failure to successfully maintain and update information technology systems and enhance existing systems may
adversely affect our business.
To keep pace with changing technology, we must continuously provide for the design and implementation of new information technology systems and
enhancements of our existing systems. Any failure to adequately maintain and update the information technology systems supporting our sales operations, website, mobile application or inventory control
could prevent us from processing and delivering merchandise, which could adversely affect our business, financial condition and results of operations.
Operational disruptions in our information systems may adversely affect our business.
The efficient operation of our business is dependent on our information systems. We rely on our information systems to manage sales,
distribution, merchandise planning and allocation functions. We also generate sales through the operations of our website and mobile application. If our systems are damaged or cease to function
properly, we may have to make a significant investment to fix or replace them and we may suffer interruptions in our operations in the interim. Any material interruption in our computer operations may
have a material adverse effect on our business or results of operations.
A security breach that results in the unauthorized disclosure of customer, employee or Company information
could adversely affect our business, reputation and financial condition.
The protection of customer, employee and Company data is critical to us. The regulatory environment surrounding information security and privacy
is increasingly demanding, with the frequent imposition of new and changing requirements. These new and changing requirements could impose significant costs on our business. In addition, customers
have an expectation that we will adequately protect their personal information. Although we believe we have appropriate security measures in place, our facilities and systems, and those of our
third-party service providers, could be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Recent
retail industry data breaches highlight the risks and costs of these threats. A significant breach of customer, employee or Company data could damage our reputation and affect our business operations
and result in lost sales, fines, lawsuits, government investigations or enforcement actions as well as significant legal and professional services costs.
We are subject to customer payment-related risks that could increase our operating costs, expose us to fraud
or theft, subject us to potential liability and potentially disrupt our business operations.
As a retailer who accepts payments using a variety of methods, including cash, checks, credit and debit cards, and gift cards, we are subject to
rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules
governing electronic funds transfers. The payment methods that we offer also subject us to potential fraud and theft by persons who seek to obtain unauthorized access to or exploit any weaknesses that
may exist in the payment systems.
The
regulatory environment related to information security and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance
with those requirements could result in additional costs or accelerate these costs. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which could
increase over time and
17
raise
our operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and other forms of electronic payment. If these
companies
become unable to provide these services to us, or if their systems are compromised, it could disrupt our business.
If our marketing programs are not successful, our sales and profitability could be adversely affected.
Our business depends on attracting an adequate volume of customers who are likely to purchase our merchandise. We design our marketing programs
to increase awareness of our stores and our brands, which we expect will create and maintain customer loyalty, increase the number of customers that shop our stores and increase our sales. We have a
significant number of marketing initiatives which we regularly review and revise as necessary. There can be no assurance as to our continued ability to effectively execute our advertising and
marketing programs, and any failure to do so could adversely affect our business and results of operations.
Use of social media may adversely impact our reputation or subject us to fines or other penalties.
There has been a substantial increase in the use of social media platforms, including blogs, social media websites and other forms of
internet-based communications, which allow individual's access to a broad audience of consumers and other interested persons. Consumers value readily available information concerning retailers and
their goods and services and often act on such information without further investigation and without regard to its accuracy. Information concerning us may be posted on social media platforms at any
time and may be adverse to our reputation or business. The harm may be immediate without affording us an opportunity for redress or correction. Damage to our reputation could result in declines in
customer loyalty and sales, affect our vendor relationships, development opportunities and associate retention and otherwise adversely affect our business.
As
laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by us, our associates or third parties acting at our direction to abide by applicable
laws and regulations in the use of these platforms and devices could adversely impact our reputation or subject us to fines or other penalties.
Tim Grumbacher has voting control over matters submitted to a vote of the shareholders, and he may take
actions that conflict with the interests of our other shareholders and holders of our debt securities.
Collectively, Tim Grumbacher, trusts for the benefit of Mr. Grumbacher's grandchildren and The Grumbacher Family Foundation beneficially
own shares of our outstanding common stock (which is entitled to one vote per share) and shares of our Class A common stock (which is entitled to ten votes per share) representing, in the
aggregate, more than 50% of the votes eligible to be cast by shareholders in the election of directors and generally. Accordingly, Mr. Grumbacher has the power to control all matters requiring
the approval of our shareholders, including the election of directors and the approval of mergers and other significant corporate transactions. The interests of Mr. Grumbacher and certain other
shareholders may conflict with the interests of our other shareholders and holders of our debt securities.
In addition to Mr. Grumbacher's voting control, certain provisions of our charter documents and
Pennsylvania law could discourage potential acquisition proposals and could deter, delay or prevent a change in control of the Company that our other shareholders consider favorable and could depress
the market value of our common stock.
Certain provisions of our articles of incorporation and by-laws, as well as provisions of the Pennsylvania Business Corporation Law, could have
the effect of deterring takeovers or delaying or
18
preventing
changes in control or management of the Company that our shareholders consider favorable and could depress the market value of our common stock.
Subchapter F
of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, which is applicable to us, may have an anti-takeover effect and may delay, defer or prevent
a tender offer or takeover attempt that a shareholder might consider in his or her best interest. In general, Subchapter F could delay for five years and impose conditions upon "business
combinations" between an "interested shareholder" and us, unless prior approval by our Board of Directors is given. The term "business combination" is defined broadly to include various merger,
consolidation, division, exchange or sale transactions, including transactions using our assets for refinancing purposes. An "interested shareholder," in general, would be a beneficial owner of shares
entitling that person to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors.
Our stock price has been and may continue to be volatile.
The market price of our common stock has been and may continue to be volatile and may be significantly affected
by:
-
-
actual or anticipated fluctuations in our operating results;
-
-
announcements of new services by us or our competitors;
-
-
our level of indebtedness and our ability to refinance and service our debt;
-
-
developments with respect to conditions and trends in our industry;
-
-
governmental regulation;
-
-
general market conditions, particularly periods of decline;
-
-
changes in general economic conditions; and
-
-
other factors, many of which are beyond our control.
Natural disasters, war, acts of terrorism, other armed conflicts and public health issues may adversely
impact our business.
The occurrence of, or threat of, a natural disaster, war, acts of terrorism, other armed conflicts and public health issues could disrupt our
operations, disrupt international trade and supply chain efficiencies, suppliers or customers or result in political or economic instability. If commercial transportation is curtailed or substantially
delayed our business may be adversely impacted, as we may have difficulty shipping merchandise to our distribution centers, fulfillment centers, stores or directly to customers. As a result of the
occurrence of, or threat of, a natural disaster or acts of terrorism in the United States, we may be required to suspend operations in some or all of our stores, which could have a material adverse
impact on our business, financial condition and results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We currently operate 262 stores in 25 states, encompassing approximately 24 million square feet. We own 25 stores, have ground leases on
seven stores and lease 230 stores.
19
We
operate under seven nameplates, as follows:
|
|
|
|
|
|
Nameplate
|
|
Stores
|
|
States
|
Bon-Ton
|
|
|
60
|
|
Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, West Virginia
|
Carson's
|
|
|
52
|
|
Illinois, Indiana, Michigan
|
Younkers
|
|
|
49
|
|
Illinois, Iowa, Michigan, Minnesota, Nebraska, South Dakota, Wisconsin
|
Herberger's
|
|
|
44
|
|
Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Utah, Wisconsin, Wyoming
|
Elder-Beerman
|
|
|
31
|
|
Indiana, Kentucky, Michigan, Ohio, West Virginia, Wisconsin
|
Boston Store
|
|
|
14
|
|
Wisconsin
|
Bergner's
|
|
|
12
|
|
Illinois
|
Our
corporate headquarters are located in York, Pennsylvania, where the majority of our administrative and sales support functions reside, and in Milwaukee, Wisconsin, where our
merchandising and marketing functions are located. We own a distribution center located in Rockford, Illinois, and we lease two distribution centers located in Allentown, Pennsylvania, and Fairborn,
Ohio. We have a furniture warehouse attached to our Naperville, Illinois store. We lease a fulfillment center in West Jefferson, Ohio to support our omnichannel operations.
Item 3. Legal Proceedings
We are party to legal proceedings and claims that arise during the ordinary course of business. In the opinion of management, the ultimate
outcome of any such litigation and claims will not have a material adverse effect on the Company's financial condition, results of operations or liquidity.
Item 4. Mine Safety Disclosures
Not applicable.
20
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The
following table presents a reconciliation of net loss and weighted average shares outstanding used in basic and diluted EPS calculations for each of 2016, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Basic Loss Per Common Share
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(63,419
|
)
|
$
|
(57,053
|
)
|
$
|
(6,974
|
)
|
Less: Income allocated to participating securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common shareholders
|
|
$
|
(63,419
|
)
|
$
|
(57,053
|
)
|
$
|
(6,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
19,917,098
|
|
|
19,691,114
|
|
|
19,417,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common share
|
|
$
|
(3.18
|
)
|
$
|
(2.90
|
)
|
$
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per Common Share
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(63,419
|
)
|
$
|
(57,053
|
)
|
$
|
(6,974
|
)
|
Less: Income allocated to participating securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common shareholders
|
|
$
|
(63,419
|
)
|
$
|
(57,053
|
)
|
$
|
(6,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
19,917,098
|
|
|
19,691,114
|
|
|
19,417,681
|
|
Common shares issuablestock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding assuming dilution
|
|
|
19,917,098
|
|
|
19,691,114
|
|
|
19,417,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per common share
|
|
$
|
(3.18
|
)
|
$
|
(2.90
|
)
|
$
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due
to the Company's net loss position in 2016, 2015 and 2014, weighted average unvested restricted shares and restricted stock units (participating securities) of 1,351,722, 948,776 and
702,188 for 2016, 2015 and 2014, respectively, were not considered in the calculation of net loss available to common shareholders used for both basic and diluted EPS.
In
addition, weighted average stock option shares (non-participating securities) totaling 0, 30,751 and 212,750 for 2016, 2015 and 2014, respectively, were excluded from the computation
of diluted weighted average common shares outstanding, as their effect would have been antidilutive. Certain of these stock option shares were excluded solely due to the Company's net loss position.
Had the Company reported net income in 2016, 2015 and 2014, these shares would have increased diluted weighted average common shares outstanding by 0, 4,198 and 86,872, respectively.
Recently Adopted Accounting Standards
Effective January 28, 2017, the Company adopted ASU No. 2014-15,
Disclosure of Uncertainties about an
Entity's Ability to Continue as a Going Concern
("ASU 2014-15") and prospectively applied its provisions. ASU 2014-15 added Financial Accounting Standards Board ("FASB")
Accounting Standards Subtopic 205-40 to provide guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and
to provide related footnote disclosures. Specifically, ASU 2014-15 (1) provides a definition of the term "substantial doubt," (2) requires an evaluation every reporting period,
(3) provides principles for considering the mitigating effect of management's plans, (4) requires certain disclosures when substantial doubt is
F-17
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
alleviated
as a result of consideration of management's plans, (5) requires a statement and other disclosures when substantial doubt is not alleviated and (6) requires an assessment for
a period of one year after the date that financial statements are issued. The adoption of this standard did not have any impact on the Company's financial statement disclosures.
Effective
January 31, 2016, the Company adopted ASU No. 2015-03,
InterestImputation of Interest
("ASU 2015-03")
and ASU No. 2015-15 (an amendment to ASU 2015-03) and retrospectively applied their provisions. The new standards require that debt issuance costs related to a recognized debt liability, other
than those relating to line-of-credit arrangements, be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. As a result of adopting this guidance, as
of January 30, 2016, the Company reclassified $6,580 of the unamortized debt issuance costs for all debt instruments except the senior secured credit facility from other long-term assets to
long-term debt on the consolidated balance sheet.
Effective
January 31, 2016, the Company adopted ASU No. 2015-05,
IntangiblesGoodwill and OtherInternal-Use
Software,
and prospectively applied its provisions. The new standard provides guidance on the accounting for fees paid by a customer in a cloud computing arrangement. If a
cloud computing arrangement includes a software license, then the customer is required to account for the software license consistent with the acquisition of other software licenses. Conversely, if
the arrangement does not include a software license, the customer should account for the arrangement as a service contract. The adoption of this guidance did not have a material impact on the
Company's consolidated financial statements.
Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers
("ASU 2014-09"). The new standard provides a single revenue recognition model which is intended to enhance disclosures and improve comparability over a range of industries, companies and
geographical boundaries. ASU 2014-09 creates a five-step model that requires companies to exercise judgment when considering all relevant facts and circumstances in the determination of when and how
revenue is recognized. In August 2015, the FASB issued ASU No. 2015-14,
Revenue from Contracts with Customers: Deferral of the Effective Date.
The standard amends ASU 2014-09 to defer the effective date for all entities by one year. As a result of the deferral, the new guidance is effective for fiscal years beginning after
December 15, 2017. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect of the adoption recognized as of the date
of adoption.
The
Company is currently assessing the impact that this revised guidance will have on its consolidated financial statements and has not yet decided on which adoption alternative to apply
upon the adoption in the first quarter of fiscal 2018. However, the Company does not expect to change the manner or timing of recognizing revenue for a majority of its revenue transactions, as revenue
is generally recognized when the products are delivered. The Company does not expect that this standard will have a material impact on its consolidated financial statements.
In
January 2016, the FASB issued ASU No. 2016-01,
Financial Instruments: Recognition and Measurement of Financial Assets and Financial
Liabilities
. The new standard requires financial assets and
F-18
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
financial
liabilities to be separately presented by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements. The guidance is
effective for fiscal years beginning after December 15, 2017. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
In
February 2016, the FASB issued ASU No. 2016-02,
Leases
. The new standard requires recognition of right of use assets and
corresponding lease liabilities for leases previously classified as operating leases. The guidance is effective for fiscal years beginning after December 15, 2018, and is required to be applied
with a modified retrospective approach to each prior reporting period presented with various optional practical expedients.
The
Company plans to adopt the new lease accounting guidance in the first quarter of fiscal 2019 and continues to assess the impact this new guidance will have on its consolidated
financial statements and related disclosures. Based on this ongoing assessment, the Company expects that the new guidance will have a material impact on its consolidated balance sheet for recognition
of right of use assets and corresponding lease liabilities. See Note 12 for the undiscounted amount of noncancelable minimum lease payments of operating leases that will be subjected to this
new accounting standard.
In
March 2016, the FASB issued ASU No. 2016-04,
LiabilitiesExtinguishments of Liabilities: Recognition of Breakage for Certain Prepaid
Stored-Value Products
. The new standard states that liabilities from the sale of prepaid stored-value products are financial liabilities and specifies how they should be
derecognized. The guidance is effective for fiscal years beginning after December 15, 2017. The Company is currently reviewing the guidance and assessing the potential impact on its
consolidated financial statements.
In
March 2016, the FASB issued ASU No. 2016-09,
Stock Compensation.
The new standard is intended to simplify several aspects of the
accounting for share-based payment award transactions. The guidance is effective for fiscal years beginning after December 15, 2016. The Company plans to adopt this guidance in the first
quarter of 2017 using a modified retrospective approach. Under the new guidance, the Company expects to make a policy election to modify the timing of expense recognition for forfeitures under its
share-based compensation plan. However, this change is not expected to have a material impact on its consolidated financial statements.
In
August 2016, the FASB issued ASU No. 2016-15,
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash
Payments
. The new standard provides guidance on eight targeted areas and how they are presented and classified in the statement of cash flows. The guidance is effective for
fiscal years beginning after December 15, 2017. The Company is currently reviewing the guidance and assessing the potential impact on its consolidated financial statements.
In
March 2017, the FASB issued ASU No. 2017-07,
Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost
. The new standard requires that an employer disaggregate the service costs components of net benefit cost. Also, these amendments provide guidance
on how to present the service costs component and the other components of net benefit costs in the income statement and allow only the service cost component of net benefit costs be eligible for
capitalization. The guidance is effective for fiscal years beginning after December 15, 2017. The Company is currently reviewing the guidance and assessing the potential impact on its
consolidated financial statements.
F-19
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
3. PROPERTY, FIXTURES AND EQUIPMENT
Property, fixtures and equipment and related accumulated depreciation and amortization consisted of:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Land and improvements
|
|
$
|
77,492
|
|
$
|
77,492
|
|
Buildings and leasehold improvements
|
|
|
673,842
|
|
|
677,014
|
|
Furniture and equipment
|
|
|
693,825
|
|
|
683,839
|
|
Buildings and equipment under capital and financing leases
|
|
|
164,079
|
|
|
148,775
|
|
|
|
|
|
|
|
|
|
|
|
|
1,609,238
|
|
|
1,587,120
|
|
Less: Accumulated depreciation and amortization
|
|
|
(1,024,435
|
)
|
|
(951,786
|
)
|
|
|
|
|
|
|
|
|
Net property, fixtures and equipment
|
|
$
|
584,803
|
|
$
|
635,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation and amortization includes $44,197 and $35,883 at January 28, 2017 and January 30, 2016, respectively, related to buildings and equipment under
capital and financing leases. Amortization of buildings and equipment under capital and financing leases is included within depreciation and amortization expense.
Depreciation
and amortization expense of $90,823, $90,283 and $88,489 related to property, fixtures and equipment was included in depreciation and amortization expense for 2016, 2015 and
2014, respectively.
Asset
impairment charges of $14,024, $1,790 and $2,392, which resulted in a reduction in the carrying amount of certain store properties due to marginal performance, were recorded in
2016, 2015 and 2014, respectively. The expenses are included in impairment charges.
F-20
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Intangible assets subject to amortization
|
|
|
|
|
|
|
|
Gross amount
|
|
|
|
|
|
|
|
Lease-related interests
|
|
$
|
70,501
|
|
$
|
73,011
|
|
Customer lists and relationships
|
|
|
22,600
|
|
|
22,600
|
|
|
|
|
|
|
|
|
|
Total gross amount
|
|
|
93,101
|
|
|
95,611
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
Lease-related interests
|
|
|
(44,960
|
)
|
|
(42,888
|
)
|
Customer lists and relationships
|
|
|
(20,686
|
)
|
|
(19,316
|
)
|
|
|
|
|
|
|
|
|
Total accumulated amortization
|
|
|
(65,646
|
)
|
|
(62,204
|
)
|
|
|
|
|
|
|
|
|
Net intangible assets subject to amortization
|
|
|
27,455
|
|
|
33,407
|
|
|
|
|
|
|
|
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
Trade names
|
|
|
36,000
|
|
|
38,400
|
|
Private label brand names
|
|
|
9,656
|
|
|
10,255
|
|
|
|
|
|
|
|
|
|
Total intangible assets not subject to amortization
|
|
|
45,656
|
|
|
48,655
|
|
|
|
|
|
|
|
|
|
Net intangible assets
|
|
$
|
73,111
|
|
$
|
82,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease-related
interests reflect below-market-rate leases purchased in acquisitions completed in 1992 through 2006 that were adjusted to reflect fair market value. The lease-related
interests, including the unfavorable lease-related interests included in other long-term liabilities, are being amortized on a straight-line method and reported as "amortization of lease-related
interests" in the consolidated statements of operations. At January 28, 2017, these lease-related interests have weighted-average remaining lives of eight years for amortization purposes.
At
January 28, 2017, customer lists and relationships are being amortized on a declining-balance method over the remaining lives of two years. The amortization from the customer
lists and relationships is included within depreciation and amortization expense.
During
2016, 2015 and 2014, amortization of $1,371, $1,500 and $1,629, respectively, was recorded on customer lists and relationships. Amortization of $4,209, $4,245 and $4,542 was
recorded for favorable and unfavorable lease-related interests during 2016, 2015 and 2014, respectively. The Company anticipates amortization associated with customer lists and relationships of $1,262
in 2017 and $652 in 2018. The Company anticipates amortization associated with favorable and unfavorable lease-related interests of $3,787 in 2017, $3,604 in 2018, $3,240 in 2019, $2,839 in 2020 and
$2,686 in 2021.
As
a result of its review in 2016 of the carrying value of intangible assets, the Company recorded asset impairment charges of $2,999 related to the reduction in the value of three
indefinite-lived trade names and four indefinite-lived private label brand names. In 2015, the Company recorded asset impairment charges of $1,842 related to the reduction in the value of three
indefinite-lived trade names and one indefinite-lived private label brand name. In 2014, the Company recorded asset impairment charges of $100 related to the reduction in the value of one
indefinite-lived trade name. The expense is included in impairment charges.
F-21
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
5. FAIR VALUE MEASUREMENTS
ASC Topic 820,
Fair Value Measurements and Disclosures
("ASC 820") defines fair value and establishes a framework for measuring fair
value. ASC 820 establishes fair value hierarchy levels that prioritize the inputs used in valuations determining fair value. Level 1 inputs are unadjusted quoted prices in active markets for
identical assets or liabilities. Level 2 inputs are primarily quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either
directly or indirectly. Level 3 inputs are unobservable inputs based on the Company's own assumptions.
The
carrying values of the Company's cash and cash equivalents, accounts payable and financial instruments reported within prepaid expenses and other current assets and other long-term
assets approximate fair value.
The
carrying value and estimated fair value of the Company's long-term debt, excluding capital lease and financing obligations and unamortized second lien senior secured notes deferred
financing costs and discount on senior secured credit facilityTranche A-1, as of January 28, 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Carrying
Value
|
|
Total
Estimated
Fair Value
|
|
Quoted
Prices in
Active Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Second lien senior secured notes
|
|
$
|
350,000
|
|
$
|
177,331
|
|
$
|
177,331
|
|
$
|
|
|
$
|
|
|
Senior secured credit facility
|
|
|
506,689
|
|
|
506,689
|
|
|
|
|
|
|
|
|
506,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
856,689
|
|
$
|
684,020
|
|
$
|
177,331
|
|
$
|
|
|
$
|
506,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
carrying value and estimated fair value of the Company's long-term debt, excluding capital lease and financing obligations and unamortized second lien senior secured notes deferred
financing costs, as of January 30, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Carrying
Value
|
|
Total
Estimated
Fair Value
|
|
Quoted
Prices in
Active Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Second lien senior secured notes
|
|
$
|
407,292
|
|
$
|
168,584
|
|
$
|
168,584
|
|
$
|
|
|
$
|
|
|
Senior secured credit facility
|
|
|
455,265
|
|
|
455,265
|
|
|
|
|
|
|
|
|
455,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
862,557
|
|
$
|
623,849
|
|
$
|
168,584
|
|
$
|
|
|
$
|
455,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Level 3 fair value estimates are determined by a discounted cash flow analysis utilizing a discount rate the Company believes is appropriate and would be used by market
participants. There was no change in the valuation technique used to determine the Level 3 fair value estimates.
F-22
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
5. FAIR VALUE MEASUREMENTS (Continued)
The
following table presents the fair value measurement for assets measured at fair value on a nonrecurring basis as of January 28, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
Quoted
Prices in
Active Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
Losses
|
|
Property, fixtures and equipment
|
|
$
|
7,957
|
|
$
|
|
|
$
|
|
|
$
|
7,957
|
|
$
|
(14,024
|
)
|
Intangible assets
|
|
$
|
16,794
|
|
$
|
|
|
$
|
|
|
$
|
16,794
|
|
$
|
(2,999
|
)
|
In
2016, in accordance with ASC 360-10-35, property, fixtures and equipment with a carrying amount of $21,981 were written down to their fair value of $7,957, resulting in an impairment
charge of $14,024, which is reflected in impairment charges.
Additionally
in 2016, in accordance with ASC 350-30-35, intangible assets not subject to amortization with a carrying amount of $19,793 were written down to their fair value of $16,794
resulting in an impairment charge of $2,999, which is reflected in impairment charges.
The
following table presents the fair value measurement for assets measured at fair value on a nonrecurring basis as of January 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 30,
2016
|
|
Quoted
Prices in
Active Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
Losses
|
|
Property, fixtures and equipment
|
|
$
|
2,923
|
|
$
|
|
|
$
|
|
|
$
|
2,923
|
|
$
|
(1,790
|
)
|
Intangible assets
|
|
$
|
16,100
|
|
$
|
|
|
$
|
|
|
$
|
16,100
|
|
$
|
(1,842
|
)
|
In
2015, in accordance with ASC 360-10-35, property, fixtures and equipment with a carrying amount of $4,713 were written down to their fair value of $2,923, resulting in an impairment
charge of $1,790, which is reflected in impairment charges.
Additionally
in 2015, in accordance with ASC 350-30-35, intangible assets not subject to amortization with a carrying amount of $17,942 were written down to their fair value of $16,100
resulting in an impairment charge of $1,842, which is reflected in impairment charges.
6. SUPPLEMENTAL BALANCE SHEET INFORMATION
Prepaid expenses and other current assets were comprised of the following:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Other receivables
|
|
$
|
68,270
|
|
$
|
60,514
|
|
Prepaid expenses
|
|
|
30,288
|
|
|
36,740
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
98,558
|
|
$
|
97,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-23
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
6. SUPPLEMENTAL BALANCE SHEET INFORMATION (Continued)
Accrued
expenses were comprised of the following:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Customer liabilities
|
|
$
|
46,283
|
|
$
|
45,379
|
|
Taxes
|
|
|
34,470
|
|
|
32,814
|
|
Other
|
|
|
69,688
|
|
|
69,185
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
150,441
|
|
$
|
147,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
long-term liabilities were comprised of the following:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Deferred landlord allowances
|
|
$
|
71,802
|
|
$
|
77,524
|
|
Deferred proprietary credit card program signing bonus
|
|
|
17,680
|
|
|
21,702
|
|
Deferred income taxes
|
|
|
10,377
|
|
|
9,768
|
|
Other
|
|
|
76,504
|
|
|
79,917
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
176,363
|
|
$
|
188,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. SUPPLEMENTAL CASH FLOW INFORMATION
The following supplemental cash flow information is provided for the periods reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
Interest, net of amounts capitalized
|
|
$
|
61,158
|
|
$
|
59,504
|
|
$
|
58,807
|
|
Income taxes, net of refunds received
|
|
|
|
|
|
(56
|
)
|
|
(3
|
)
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
Property, fixtures and equipment included in accrued expenses
|
|
$
|
4,767
|
|
$
|
5,453
|
|
$
|
8,232
|
|
Assets acquired under capital lease
|
|
|
600
|
|
|
88,228
|
|
|
|
|
Declared dividends to shareholders included in accrued expenses
|
|
|
|
|
|
|
|
|
991
|
|
8. EXIT OR DISPOSAL ACTIVITIES
The Company closed five stores in 2016, two stores in 2015 and three stores in 2014. In connection with the closing of these stores, the Company incurred involuntary associate
termination costs and other closing costs, which are included in SG&A expense.
In
2016, the Company also incurred additional involuntary associate termination costs related to the Company's expense efficiency initiative of $1,858. These costs are included in SG&A
expense in 2016.
F-24
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
8. EXIT OR DISPOSAL ACTIVITIES (Continued)
In
2015, the Company also incurred additional involuntary associate termination costs related to the consolidation of eCommerce fulfillment activities in connection with the Company's
new eCommerce fulfillment center and the Company's expense efficiency initiative of $213 and $3,908, respectively. These costs are included in SG&A expense in 2015.
Following
is a reconciliation of accruals related to the Company's closing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Accrued beginning balance
|
|
$
|
3,696
|
|
$
|
1,279
|
|
$
|
420
|
|
Provisions:
|
|
|
|
|
|
|
|
|
|
|
Associate termination benefits
|
|
|
2,287
|
|
|
3,913
|
|
|
2,370
|
|
Other closing costs
|
|
|
254
|
|
|
331
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,541
|
|
|
4,244
|
|
|
2,552
|
|
Payments:
|
|
|
|
|
|
|
|
|
|
|
Associate termination benefits
|
|
|
(5,031
|
)
|
|
(1,496
|
)
|
|
(1,324
|
)
|
Other closing costs
|
|
|
(254
|
)
|
|
(331
|
)
|
|
(369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(5,285
|
)
|
|
(1,827
|
)
|
|
(1,693
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Accrued balance at year-end
|
|
$
|
952
|
|
$
|
3,696
|
|
$
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. EMPLOYEE BENEFIT PLANS
The Company provides eligible employees with retirement benefits under a 401(k) salary reduction and employer contribution plan (the "Plan"). Employees become eligible to receive company
contributions after they reach the age of 18, complete one year of service and have worked 1,000 hours in their first year of service or, if not, in any calendar year thereafter. Participants
are eligible to receive a company matching contribution if they have contributed match eligible pre-tax dollars to the Plan and are employed on the last day of the Plan year with exceptions for
retirement, death and disability. The company matching contributions consist of two parts: a match based on an employee's years of service and a profit sharing match. Under the Plan provisions, the
majority of eligible employees are permitted to contribute up to 50% of their compensation to the Plan. Employees are permitted to begin non-matching contributions to the Plan after three months of
service in a benefit status position. Employees are permitted to begin match-eligible contributions to the Plan after they complete one year
of service and have worked 1,000 hours in their first year of service or, if not, in any calendar year thereafter. Employees are automatically enrolled to contribute 3% of pay, which increased
to 4% March 3, 2017, unless the employee actively modifies or declines the election. Company matching contributions, not to exceed 6% of eligible employees' compensation, are at the discretion
of the Company. Company matching contributions under the Plan become fully vested for eligible employees after three years of service in which the employee works 1,000 hours annually.
The
Plan also allows for a company retirement contribution. Participants are eligible to receive a company retirement contribution in the Plan if they have worked 1,000 hours in
the calendar year and are employed on the last day of the Plan year. Company retirement contributions made during 2008 and beyond become fully vested after three years of service.
F-25
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
The Company's 2016, 2015 and 2014 expense under the Plan was $0, $0 and $1,571, respectively. Pursuant to the provisions of the Plan, the Company determined that no company matching
contribution or retirement contribution would be made for 2016 or 2015, and that only a company matching contribution would be made for 2014.
The
Company provides a non-qualified defined benefit supplementary pension plan to certain former key executives. Former employees became 100% vested in the plan benefits after achieving
a specific age as defined in each employee's agreement. The benefits from this unfunded plan are paid upon retirement, providing the employee is age 60.
In
addition, as a result of an acquisition, the Company assumed a liability for a non-qualified defined benefit supplementary pension plan. The benefits from this unfunded plan are paid
upon retirement, provided that the participant is age 65 or older. All participants in this plan are fully vested.
As
part of an acquisition, the Company acquired a qualified defined benefit pension plan and an unfunded non-qualified defined benefit supplemental pension plan. In connection with the
acquisition, all future benefit accruals in the qualified defined benefit plan were frozen. The qualified defined benefit pension plan is also closed to new participants.
The
Company also acquired an unfunded postretirement benefit plan as part of an acquisition. The unfunded postretirement plan provides medical and life insurance benefits. The medical
portion of the plan is contributory, and contains cost-sharing features such as deductibles and co-insurance. The life insurance benefits of this plan are noncontributory.
Benefit
obligations, fair value of plan assets and funded status of the plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
195,600
|
|
$
|
220,537
|
|
$
|
1,796
|
|
$
|
2,172
|
|
Interest cost
|
|
|
7,140
|
|
|
6,803
|
|
|
62
|
|
|
63
|
|
Participant contributions
|
|
|
|
|
|
|
|
|
57
|
|
|
69
|
|
Benefits paid
|
|
|
(16,554
|
)
|
|
(14,826
|
)
|
|
(269
|
)
|
|
(206
|
)
|
Actuarial loss (gain)
|
|
|
2,963
|
|
|
(16,914
|
)
|
|
(122
|
)
|
|
(302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
|
189,149
|
|
|
195,600
|
|
|
1,524
|
|
|
1,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in the fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets at beginning of year
|
|
|
140,702
|
|
|
151,824
|
|
|
|
|
|
|
|
Actual return on plan assets
|
|
|
10,795
|
|
|
(6,714
|
)
|
|
|
|
|
|
|
Company contributions
|
|
|
607
|
|
|
10,418
|
|
|
212
|
|
|
137
|
|
Participant contributions
|
|
|
|
|
|
|
|
|
57
|
|
|
69
|
|
Benefits paid
|
|
|
(16,554
|
)
|
|
(14,826
|
)
|
|
(269
|
)
|
|
(206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets at end of year
|
|
|
135,550
|
|
|
140,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(53,599
|
)
|
$
|
(54,898
|
)
|
$
|
(1,524
|
)
|
$
|
(1,796
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-26
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
Amounts
recognized in the consolidated balance sheets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Accrued expenses
|
|
$
|
(555
|
)
|
$
|
(702
|
)
|
$
|
(267
|
)
|
$
|
(327
|
)
|
Other long-term liabilities
|
|
|
(53,044
|
)
|
|
(54,196
|
)
|
|
(1,257
|
)
|
|
(1,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
(53,599
|
)
|
$
|
(54,898
|
)
|
$
|
(1,524
|
)
|
$
|
(1,796
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
recognized in accumulated other comprehensive loss ("AOCI") consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net actuarial loss (gain):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount recognized
|
|
$
|
64,003
|
|
$
|
69,720
|
|
$
|
(1,856
|
)
|
$
|
(2,165
|
)
|
Deferred tax expense
|
|
|
10,480
|
|
|
8,343
|
|
|
282
|
|
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
74,483
|
|
$
|
78,063
|
|
$
|
(1,574
|
)
|
$
|
(1,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accumulated benefit obligation for all of the defined benefit and supplemental pension plans was $189,149 and $195,600 at January 28, 2017 and January 30, 2016,
respectively. The benefit obligation and the accumulated benefit obligation for each of the pension benefit plans exceeded its assets at January 28, 2017 and January 30, 2016.
Components
of net periodic benefit expense (income) and other amounts recognized in other comprehensive income or loss ("OCI") before income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
Net periodic benefit expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
7,140
|
|
$
|
6,803
|
|
$
|
7,990
|
|
$
|
62
|
|
$
|
63
|
|
$
|
89
|
|
Expected return on plan assets
|
|
|
(8,401
|
)
|
|
(9,639
|
)
|
|
(9,959
|
)
|
|
|
|
|
|
|
|
|
|
Recognition of net actuarial loss (gain)
|
|
|
6,286
|
|
|
6,791
|
|
|
3,774
|
|
|
(431
|
)
|
|
(426
|
)
|
|
(519
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit expense (income)
|
|
|
5,025
|
|
|
3,955
|
|
|
1,805
|
|
|
(369
|
)
|
|
(363
|
)
|
|
(430
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other changes in plan assets and benefit obligations recognized in OCI, before taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial net loss (gain)
|
|
|
569
|
|
|
(562
|
)
|
|
33,261
|
|
|
(122
|
)
|
|
(302
|
)
|
|
(49
|
)
|
Recognition of net actuarial (loss) gain
|
|
|
(6,286
|
)
|
|
(6,791
|
)
|
|
(3,774
|
)
|
|
431
|
|
|
426
|
|
|
519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in OCI, before taxes
|
|
|
(5,717
|
)
|
|
(7,353
|
)
|
|
29,487
|
|
|
309
|
|
|
124
|
|
|
470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in net periodic cost and OCI, before taxes
|
|
$
|
(692
|
)
|
$
|
(3,398
|
)
|
$
|
31,292
|
|
$
|
(60
|
)
|
$
|
(239
|
)
|
$
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-27
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
The
Company estimates the following amounts will be amortized from AOCI to net periodic cost during 2017:
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
Net actuarial loss (gain)
|
|
$
|
5,628
|
|
$
|
(493
|
)
|
Weighted
average assumptions used to determine benefit obligations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Discount rate
|
|
|
3.70
|
%
|
|
3.80
|
%
|
|
3.70
|
%
|
|
3.80
|
%
|
Rate of compensation increase
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Weighted
average assumptions used to determine net periodic benefit expense (income) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
Discount rate
|
|
|
3.80
|
%
|
|
3.20
|
%
|
|
4.20
|
%
|
|
3.80
|
%
|
|
3.20
|
%
|
|
4.20
|
%
|
Expected long-term return on plan assets
|
|
|
6.30
|
%
|
|
6.50
|
%
|
|
6.80
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
For
measurement of the medical and life insurance benefits plan, the Company assumed an 8.5% annual rate of increase in the per capita cost of covered health care benefits for 2017,
grading down to 5.0% by 2024.
Assumed
health care cost trend rate can have a significant effect on the amounts reported for the postretirement health care plan. A one-percentage point change in assumed health care
costs would have the following effects:
|
|
|
|
|
|
|
|
|
|
One-
Percentage
Point
Increase
|
|
One-
Percentage
Point
Decrease
|
|
Effect on total service and interest cost components
|
|
$
|
3
|
|
$
|
(2
|
)
|
Effect on postretirement benefit obligation
|
|
|
70
|
|
|
(62
|
)
|
The
Company's discount rate assumption is evaluated annually. The Company utilizes the Citibank Pension Discount Curve to develop its discount rate assumption. A single constant discount
rate is developed based on the expected timing of the benefit payments.
The
Company bases its asset return assumption on current and expected allocations of assets, as well as a long-term view of expected returns on the plan asset categories. The Company
assesses the
F-28
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
appropriateness
of the expected rate of return on an annual basis and, when necessary, revises the assumption.
At
January 28, 2017, the Company's target pension plan asset allocation was 49% equity securities, 41% debt securities and 10% hedge funds. Investment objectives for the pension
plan assets include:
-
-
Providing a long-term return on plan assets that provides sufficient assets to fund pension plan liabilities at an acceptable level of risk.
-
-
Attempting to achieve a consistent, above-average rate of return through appreciation, income and reinvestment of funds consistent with a
reasonable level of growth.
-
-
Diversifying investments within asset classes to reduce the impact of losses in a single investment.
The
weighted average pension plan asset allocation is as follows:
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Cash and cash equivalents
|
|
|
2
|
%
|
|
1
|
%
|
Equity securities
|
|
|
48
|
%
|
|
47
|
%
|
Debt securities
|
|
|
40
|
%
|
|
42
|
%
|
Hedge funds
|
|
|
10
|
%
|
|
10
|
%
|
F-29
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
The
fair value of each class of the pension plan assets as of January 28, 2017 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Cash and cash equivalents
|
|
$
|
2,124
|
|
$
|
|
|
$
|
2,124
|
|
$
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large-cap companiesdiversified sectors
|
|
|
8,059
|
|
|
8,059
|
|
|
|
|
|
|
|
U.S. small-cap companiesdiversified sectors
|
|
|
2,287
|
|
|
2,287
|
|
|
|
|
|
|
|
Real estate investment trust companies
|
|
|
253
|
|
|
253
|
|
|
|
|
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income(1)
|
|
|
4,499
|
|
|
4,499
|
|
|
|
|
|
|
|
International emerging economies fixed income
|
|
|
4,597
|
|
|
4,597
|
|
|
|
|
|
|
|
Real estate investment trust companies
|
|
|
4,146
|
|
|
4,146
|
|
|
|
|
|
|
|
Pooled funds(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-strategy equity
|
|
|
6,376
|
|
|
|
|
|
6,376
|
|
|
|
|
Fixed income(1)
|
|
|
20,827
|
|
|
|
|
|
20,827
|
|
|
|
|
Pooled funds at net asset value(2)(3)(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large-cap equity
|
|
|
15,289
|
|
|
|
|
|
|
|
|
|
|
U.S. small-cap equity
|
|
|
1,230
|
|
|
|
|
|
|
|
|
|
|
International small-cap equity
|
|
|
3,904
|
|
|
|
|
|
|
|
|
|
|
International developed economies equity
|
|
|
15,381
|
|
|
|
|
|
|
|
|
|
|
International emerging economies equity
|
|
|
7,464
|
|
|
|
|
|
|
|
|
|
|
Fixed income(1)
|
|
|
21,021
|
|
|
|
|
|
|
|
|
|
|
Senior loan
|
|
|
3,842
|
|
|
|
|
|
|
|
|
|
|
Multi-strategy hedge funds(4)(5)
|
|
|
14,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
135,550
|
|
$
|
23,841
|
|
$
|
29,327
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Primarily
invested in U.S. government securities, municipals, mortgage-backed securities and investment grade and high yield bonds.
-
(2)
-
Pooled
funds consist primarily of common collective trusts, limited partnerships and 103-12 investment entities.
-
(3)
-
Certain
investments in this category are subject to redemption frequency restrictions, advance notification requirements or both.
-
(4)
-
Investments
are measured at fair value using the net asset per share (or its equivalent) practical expedient and have not been categorized in the fair value
hierarchy. The fair value amounts presented in this table are intended to permit a reconciliation of the fair value hierarchy to the pension plan assets.
-
(5)
-
These
investments are subject to quarterly redemption frequency restrictions, subject to advance notification requirements ranging from 60 to 91 days.
F-30
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
The fair value of each class of the pension plan assets as of January 30, 2016 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Cash and cash equivalents
|
|
$
|
686
|
|
$
|
|
|
$
|
686
|
|
$
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large-cap companiesdiversified sectors
|
|
|
7,858
|
|
|
7,858
|
|
|
|
|
|
|
|
U.S. small-cap companiesdiversified sectors
|
|
|
2,457
|
|
|
2,457
|
|
|
|
|
|
|
|
Real estate investment trust companies
|
|
|
427
|
|
|
427
|
|
|
|
|
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income(1)
|
|
|
4,849
|
|
|
4,849
|
|
|
|
|
|
|
|
International emerging economies fixed income
|
|
|
4,848
|
|
|
4,848
|
|
|
|
|
|
|
|
Floating rate debt securities
|
|
|
3,771
|
|
|
3,771
|
|
|
|
|
|
|
|
Real estate investment trust companies
|
|
|
4,459
|
|
|
4,459
|
|
|
|
|
|
|
|
Pooled funds(2)(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-strategy equity
|
|
|
7,256
|
|
|
|
|
|
7,256
|
|
|
|
|
Fixed income(1)
|
|
|
22,486
|
|
|
|
|
|
22,486
|
|
|
|
|
Pooled funds at net asset value(2)(4)(5):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. large-cap equity
|
|
|
16,160
|
|
|
|
|
|
|
|
|
|
|
U.S. small-cap equity
|
|
|
1,191
|
|
|
|
|
|
|
|
|
|
|
International small-cap equity
|
|
|
4,208
|
|
|
|
|
|
|
|
|
|
|
International developed economies equity
|
|
|
15,401
|
|
|
|
|
|
|
|
|
|
|
International emerging economies equity
|
|
|
7,058
|
|
|
|
|
|
|
|
|
|
|
Fixed income(1)
|
|
|
22,992
|
|
|
|
|
|
|
|
|
|
|
Multi-strategy hedge funds(5)(6)
|
|
|
14,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
140,702
|
|
$
|
28,669
|
|
$
|
30,428
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Primarily
invested in U.S. government securities, municipals, mortgage-backed securities and investment grade and high yield bonds.
-
(2)
-
Pooled
funds consist primarily of common collective trusts, limited partnerships and 103-12 investment entities.
-
(3)
-
During
2016, management re-evaluated the classification of its pension plan investments relative to the determination of whether certain plan investments have a
readily determinable fair value. Based on further evaluation, certain plan investments as of January 30, 2016 previously disclosed as measured at net asset value ("NAV") as a practical
expedient and excluded from the fair value hierarchy have been corrected and included within the above table as Level 2 investments. This change in disclosure is not considered material to the
consolidated financial statements and is consistent with presentation of amounts as of January 28, 2017.
-
(4)
-
Certain
investments in this category are subject to redemption frequency restrictions, advance notification requirements or both.
F-31
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
9. EMPLOYEE BENEFIT PLANS (Continued)
-
(5)
-
Investments
are measured at fair value using the net asset per share (or its equivalent) practical expedient and have not been categorized in the fair value
hierarchy. The fair value amounts presented in this table are intended to permit a reconciliation of the fair value hierarchy to the pension plan assets.
-
(6)
-
These
investments are subject to quarterly redemption frequency restrictions, subject to advance notification requirements ranging from 60 to 91 days.
The
pooled funds and hedge funds are valued using the NAV provided by the administrator of the funds. The NAV is a quoted transactional price for participants in the fund, based on the
underlying investments of the fund. The pension plan assets are invested in compliance with the Employee Retirement Income Security Act, as amended, and any subsequent regulations and laws. The
Company does not permit direct purchases of its securities by the pension plan.
Information
about the expected cash flows related to the pension and other postretirement benefit plans is as follows:
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Medical and
Life Insurance
Benefits
|
|
Expected company contributions in 2017
|
|
$
|
555
|
|
$
|
267
|
|
Expected plan benefit payments (net of expected participant contributions) for year:
|
|
|
|
|
|
|
|
2017
|
|
$
|
18,052
|
|
$
|
267
|
|
2018
|
|
|
14,174
|
|
|
234
|
|
2019
|
|
|
13,579
|
|
|
202
|
|
2020
|
|
|
12,870
|
|
|
174
|
|
2021
|
|
|
12,631
|
|
|
151
|
|
2022-2026
|
|
|
57,628
|
|
|
450
|
|
F-32
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
10. LONG-TERM DEBT
Long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Senior secured credit facilityTranche A expires on December 12, 2018 and Tranche A-1 expires on the earlier of (a)
March 15, 2021 and (b) the expiration date of Tranche A; interest payable periodically at varying rates (3.9% weighted average for 2016)
|
|
$
|
506,689
|
|
$
|
455,265
|
|
Second lien senior secured notesmature on July 15, 2017; interest payable each March 15 and September 15 at 10.625%
|
|
|
|
|
|
57,292
|
|
Second lien senior secured notesmature on June 15, 2021; interest payable each June 15 and December 15 at 8.00%
|
|
|
350,000
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
856,689
|
|
|
862,557
|
|
Less:
|
|
|
|
|
|
|
|
Unamortized deferred financing costs on second lien senior secured notes
|
|
|
(5,500
|
)
|
|
(6,580
|
)
|
Unamortized discount on senior secured credit facilityTranche A-1
|
|
|
(2,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
848,777
|
|
$
|
855,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit Facility
On March 21, 2011, The Bon-Ton Department Stores, Inc.; The Elder-Beerman Stores Corp.; Carson Pirie Scott II, Inc.;
Bon-Ton Distribution, Inc.; and McRIL, LLC, as borrowers (the "Borrowers"), and the Company and certain other subsidiaries as obligors (together with the Borrowers and the Company, the
"Obligors") entered into the Second Amended and Restated Loan and Security Agreement (the "Second Amended Revolving Credit Facility") with Bank of America, N.A., as Agent, and certain financial
institutions as lenders that amended and restated the Company's prior revolving credit facility.
During
2015, pursuant to the terms of commitment increase letter acknowledgments, the Tranche A revolving commitments under the Second Amended Revolving Credit Facility were
increased from $575,000 to $730,000. This brought total revolving commitments under the Second Amended Revolving Credit Facility to $830,000.
On
January 15, 2016, the Obligors entered into a Consent and Third Amendment to the Second Amended Revolving Credit Facility, which, among other changes, provided for the joinders
of the special purpose entities (each an "SPE" and, collectively, the "SPEs") that had previously participated
in the Company's mortgage loan facility as Obligors under the Second Amended Revolving Credit Facility. Pursuant to the amendment, all 18 properties owned by the SPEs became real estate in which
security interests were granted under the Second Amended Revolving Credit Facility. As a result, (1) borrowing base availability under the revolving credit facility increased to reflect the
addition of the properties and (2) interest margins applicable to borrowings increased.
On
August 15, 2016, the Obligors entered into a Fourth Amendment (the "Fourth Amendment") to the Second Amended Revolving Credit Facility which, among other changes, increased
lender commitments under the A-1 Tranche of the Second Amended Revolving Credit Facility to $150,000
F-33
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
10. LONG-TERM DEBT (Continued)
from
the previous $100,000. This brought total commitments under the Second Amended Revolving Credit Facility to $880,000 (including a $150,000 sub-line for letters of credit and $75,000 for swing
line loans). As a result of this transaction, the Company incurred a loss on extinguishment of debt of $676 for costs related to the write-off of deferred financing fees.
The
Second Amended Revolving Credit Facility provides that the Borrowers may make requests to increase the commitments up to $950,000 in the aggregate upon the satisfaction of certain
conditions, provided that the lenders are under no obligation to provide any such increases.
All
borrowings under the Second Amended Revolving Credit Facility are limited by amounts available pursuant to a borrowing base calculation, which is based on percentages of eligible
inventory, real estate and receivables, in each case subject to reductions for applicable reserves. Under the terms of the Second Amended Revolving Credit Facility, the Borrowers are jointly and
severally liable for all of the obligations incurred under the Second Amended Revolving Credit Facility and the other loan documents, which obligations are guaranteed on a joint and several basis by
the Company, the other Obligors and all future domestic subsidiaries of the Obligors (subject to certain exceptions).
Borrowings
under the Second Amended Revolving Credit Facility bear interest at either (1) Adjusted LIBOR (equal to the London Interbank Offered Rate for an interest period
selected by the Borrowers) plus an applicable margin or (2) a base rate (based on the highest of (a) the Federal Funds Rate plus 0.5%, (b) the Bank of America prime rate and
(c) Adjusted LIBOR based on an interest period of one month plus 1.0%) plus the applicable margin. Following the Fourth Amendment, the applicable margins in respect of the Tranche A-1
facility are 9.5% for LIBOR loans and 8.5% for base rate loans; there is also a 1.0% LIBOR floor utilized when determining Adjusted LIBOR for that Tranche. The applicable margins in respect of the
Tranche A facility continue to be based upon the excess availability under the Second Amended Revolving Credit Facility.
The
Second Amended Revolving Credit Facility is secured by a first priority security position on substantially all of the current and future assets of the Borrowers and the other
Obligors, including, but not limited to, inventory, certain accounts receivable, general intangibles, trademarks, equipment, real estate and proceeds from any of the foregoing, subject to certain
exceptions and permitted liens.
The
first financial covenant contained in the Second Amended Revolving Credit Facility requires that the minimum excess availability be an amount greater than or equal to the greater of
(1) 10% of the lesser of: (a) the aggregate commitments at such time and (b) the aggregate borrowing base at such time and (2) $75,000. The Fourth Amendment added a second
financial covenant which stipulates that, if at any time on or after January 29, 2017 and for so long as excess availability under the Second Amended Revolving Credit Facility is less than 20%
of the lesser of (a) the aggregate commitments at such time and (b) the aggregate borrowing base at such time, the fixed charge coverage ratio shall be at least 1.00 to 1.00. The
affirmative covenants include requirements that the Obligors and their subsidiaries provide the lenders with certain financial statements, forecasts and other reports, borrowing base certificates and
notices; comply with various federal, state and local rules and regulations, their organizational documents and their material contracts; maintain their properties; and take certain actions with
respect to any future subsidiaries. In addition, there are certain limitations on the Obligors and their subsidiaries, including limitations on any debt the Obligors may have in addition to the
existing debt and the terms of that debt; acquisitions, joint ventures and investments; mergers and
F-34
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
10. LONG-TERM DEBT (Continued)
consolidations;
dispositions of property; dividends by the Obligors or their subsidiaries (dividends paid may not exceed $10,000 in any year or $30,000 during the term of the agreement; however,
additional dividends may be paid subject to meeting other requirements); transactions with affiliates; changes in the business or corporate structure of the Obligors or their subsidiaries; prepaying,
redeeming or repurchasing certain debt; changes in accounting policies or reporting practices, unless required by generally accepted accounting principles; and speculative transactions. The Second
Amended Revolving Credit Facility also provides that it is a condition precedent to borrowing that no event has occurred that could reasonably be expected to have a material adverse effect, as defined
in the agreement, on the Company. If the Company fails to comply with the financial covenants or the other restrictions contained in the Second Amended Revolving Credit Facility or with the indentures
that govern the second lien senior secured notes, an event of default would occur. An event of default could result in the acceleration of the Company's debt due to the cross-default provisions within
the debt agreements. The borrowing base calculation under the Second Amended Revolving Credit Facility contains an inventory advance rate subject to periodic review at the lenders' discretion.
As
of January 28, 2017, the Company had borrowings of $506,689 under the Second Amended Revolving Credit Facility, with $233,833 of borrowing availability (before taking into
account the minimum borrowing availability covenant, which was $75,000 as of January 28, 2017) and letter-of-credit commitments of $4,889.
Senior Notes
At January 30, 2016, The Bon-Ton Department Stores, Inc. (the "Issuer") had outstanding $57,292 of 10
5
/
8
% Second
Lien Senior Secured Notes due 2017 (the "2017 Notes") and $350,000 of 8.00% Second Lien Senior Secured Notes due 2021 (the "2021 Notes" and, together with the 2017 Notes, the "Notes"). The outstanding
Notes are guaranteed by the Parent and by each of its subsidiaries, other than the Issuer, that is an Obligor under the Company's Second Amended Revolving Credit Facility.
On
January 15, 2016, the SPEs that had previously participated in the Company's mortgage loan facility (the "Mortgage Loan Facility") were designated as "Restricted Subsidiaries"
and guarantors under the Indentures for the Notes. The SPEs and their assets were then added to the Second Amended Revolving Credit Facility.
On
November 29, 2016, the Company redeemed all of its outstanding 2017 Notes with borrowings under its Second Amended Revolving Credit Facility. These notes, which had a balance
of $57,292, were redeemed at a redemption price of 100%, plus accrued and unpaid interest. As a result of this transaction, the Company incurred a loss on extinguishment of debt of $76 for costs
related to the redemption and the write-off of deferred financing fees.
The
2021 Notes and their related guarantees are secured by a second-priority lien on collateral owned by the Issuer and each of the guarantors consisting of substantially all of the
Issuer's and guarantors' tangible and intangible assets securing the Second Amended Revolving Credit Facility, except for capital stock of the Issuer and certain of the Issuer's subsidiaries and
certain other exceptions. However, the capital stock or other securities of any subsidiary of Issuer that are owned by the Issuer or any other guarantor and pledged as collateral are deemed to be
pledged as collateral only to the extent that separate financial statements of such subsidiary would not be required to be filed
F-35
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
10. LONG-TERM DEBT (Continued)
with
the Securities and Exchange Commission pursuant to Rule 3-16 of Regulation S-X under the Securities Act of 1933, as amended (or any other law, rule or regulation). Accordingly, the
collateral securing the Notes and their related guarantees excludes the capital stock and other securities of any subsidiary of the Issuer that are owned by the Issuer or any other guarantor, in each
case to the extent necessary for the Company to not be required to provide the financial statements required by Rule 3-16 of Regulation S-X (or any other law, rule or regulation).
Mortgage Facilities
On March 6, 2006, certain bankruptcy remote SPEs that are indirect wholly owned subsidiaries of the Parent entered into loan agreements
with Bank of America, pursuant to which Bank of America provided a Mortgage Loan Facility in the aggregate principal amount of $260,000.
On
June 26, 2015, the Company entered into a sale-leaseback arrangement with an unrelated party. Under the arrangement, the Company sold six retail stores for $84,000 and leased
them back for a period of 20 years with three optional 10-year renewal terms. (See further details regarding this lease in Note 12.)
Proceeds
from the sale-leaseback transaction, supplemented with borrowings under the Second Amended Revolving Credit Facility, were used to pay $104,538 on the balance of the Mortgage
Loan Facility. As a result of such prepayment, the Company paid an early termination fee of $4,741. Unamortized deferred financing fees of $121 were accelerated on the date of the termination. Fees
paid and deferred financing fees accelerated were recognized in loss on extinguishment of debt. Also in connection with this prepayment, the mortgages on 11 retail stores and a distribution center
were eliminated.
On
January 15, 2016, the Company retired the remaining segment of its Mortgage Loan Facility using borrowings from the Second Amended Revolving Credit Facility and cash on hand.
The Mortgage Loan Facility had principal outstanding of $102,371. As a result of such prepayment, the Company paid an early termination fee of $1,307. Unamortized deferred financing fees of $39 were
accelerated on the date of the termination. Fees paid and deferred financing fees accelerated were recognized in loss on extinguishment of debt. The Second Amended Revolving Credit Facility was
amended to include the SPEs that had previously participated in the Company's Mortgage Loan Facility. Supplemental Indentures were issued for the Notes as the former SPE's were added to the list of
Restricted Subsidiaries and guarantors under those facilities. Properties owned by the SPEs became additional collateral under both the Second Amended Revolving Credit Facility and the Notes.
On
February 3, 2014, in connection with the sale of its remaining Rochester store, the Company prepaid its outstanding indebtedness of $1,072 under the related mortgage loan
agreement. The Company was required to pay an additional $127 due to the early termination. In addition, $26 of unamortized deferred financing fees related to the mortgage agreement was accelerated on
the date of termination. The required additional payment and accelerated deferred financing fees were recognized in loss on extinguishment of debt.
The
Company was in compliance with all loan agreement restrictions and covenants during 2016.
F-36
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
10. LONG-TERM DEBT (Continued)
Debt
maturities by year at January 28, 2017 are as follows:
|
|
|
|
|
2017
|
|
$
|
|
|
2018
|
|
|
506,689
|
|
2019
|
|
|
|
|
2020
|
|
|
|
|
2021
|
|
|
350,000
|
|
2022 and thereafter
|
|
|
|
|
|
|
|
|
|
|
|
$
|
856,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Note 5 for disclosure of the fair value measurement of the Company's long-term debt.
11. INTEREST COSTS
Interest costs for the Company are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Interest costs incurred, including amortization of deferred financing fees
|
|
$
|
67,088
|
|
$
|
63,108
|
|
$
|
62,029
|
|
Interest income
|
|
|
(39
|
)
|
|
(94
|
)
|
|
(4
|
)
|
Capitalized interest
|
|
|
(225
|
)
|
|
(468
|
)
|
|
(289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
66,824
|
|
$
|
62,546
|
|
$
|
61,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12. COMMITMENTS AND CONTINGENCIES
Leases
The Company is obligated under operating leases for a significant portion of its store properties. Certain leases provide for additional rental
payments based on a percentage of sales in
excess of a specified base (contingent rentals) and for payment by the Company of operating costs (taxes, maintenance and insurance), both of which vary by lease.
F-37
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
12. COMMITMENTS AND CONTINGENCIES (Continued)
At
January 28, 2017, future minimum lease payments for the noncancelable terms of operating leases, including lease renewals determined to be reasonably assured, and the present
value of net minimum lease payments under capital lease and financing obligations are as follows:
|
|
|
|
|
|
|
|
Year
|
|
Capital Lease and
Financing Obligations
|
|
Operating
Leases
|
|
2017
|
|
$
|
16,095
|
|
$
|
87,708
|
|
2018
|
|
|
15,756
|
|
|
83,643
|
|
2019
|
|
|
15,003
|
|
|
76,296
|
|
2020
|
|
|
15,776
|
|
|
69,884
|
|
2021
|
|
|
15,927
|
|
|
58,875
|
|
2022 and thereafter
|
|
|
141,669
|
|
|
202,126
|
|
|
|
|
|
|
|
|
|
Total net minimum rentals(1)
|
|
|
220,226
|
|
$
|
578,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing obligation
|
|
|
13,250
|
|
|
|
|
Less: Amount representing interest
|
|
|
(92,934
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Present value of net minimum lease payments, of which $6,685 is due within one year
|
|
$
|
140,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Total
net minimum rentals have not been reduced by minimum sublease rentals of $411 and $1,259 related to capital lease and financing obligations and operating
leases, respectively, due in the future under noncancelable operating subleases.
Certain
leases contain renewal options ranging from one to 50 years. Included in the minimum lease payments under operating leases are leased real estate, vehicles, postage
meters, computer equipment and a related-party commitment with an entity associated with the Company's majority shareholder of $224 for each of years 2017 through 2021.
Rental
expense, net of sublease income, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Operating leases:
|
|
|
|
|
|
|
|
|
|
|
Buildings:
|
|
|
|
|
|
|
|
|
|
|
Rental expense
|
|
$
|
78,598
|
|
$
|
81,903
|
|
$
|
82,148
|
|
Contingent rentals
|
|
|
3,572
|
|
|
4,573
|
|
|
4,912
|
|
Fixtures and equipment
|
|
|
1,156
|
|
|
1,129
|
|
|
1,315
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
83,326
|
|
$
|
87,605
|
|
$
|
88,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
expense includes amounts paid to an entity related to the Company's majority shareholder of $224 for each of 2016, 2015 and 2014.
Selling
space has been licensed to certain other retailers ("leased departments") in many of the Company's facilities. Future minimum lease payments and rental expense disclosed above
are reflected without a reduction for leased departments' license income.
F-38
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
12. COMMITMENTS AND CONTINGENCIES (Continued)
On
June 26, 2015, the Company entered into a sale-leaseback arrangement with an unrelated party. Under the arrangement, the Company sold six retail stores for $84,000 and leased
them back for a period of 20 years with three optional 10-year renewal terms. The basic rent payable in connection with the lease is $6,888 per year, subject to annual adjustments for increases
in the Consumer Price Index with a 2% minimum increase and a 4% maximum increase each year.
The
leaseback has been accounted for as a capital lease, and the Company recorded a capital lease asset and obligation of $88,228 at the beginning of the lease term. The loss of $1,783
on this transaction was deferred and is being amortized to expense over the term of the lease.
Gain on Insurance Recovery
In November 2014, there was a fire at the Company's store located in North Riverside, Illinois. The merchandise in the store, which had a cost
of $5,980, was damaged from the smoke and the Company filed an insurance claim to cover the inventory loss and property damage. The Company recognized a gain on insurance recovery related to the
inventory loss of $1,356 and $10,779 in 2015 and 2014, respectively, which is shown separately in the accompanying consolidated statements of operations.
Contingencies
The Company is party to legal proceedings and claims that arise during the ordinary course of business. In the opinion of management, the
ultimate outcome of any such litigation and claims will not have a material adverse effect on the Company's financial condition, results of operations or liquidity.
13. SHAREHOLDERS' (DEFICIT) EQUITY
The Company's capital structure consists of common stock with one vote per share and Class A common stock with ten votes per share. Transfers of the Company's Class A
common stock are restricted. Upon sale or transfer of ownership or voting rights of Class A common stock to other than permitted transferees, such shares will convert to an equal number of
common stock shares. Dividends, which are declared and paid on shares of common stock and Class A common stock, totaled $0.15 per share in 2015, and $0.20 per share in 2014 for each class of
shares. There were no dividends declared in 2016. Dividends in the aggregate totaled $0, $2,596 and $3,374 in 2016, 2015 and 2014, respectively, for common stock; dividends in the aggregate totaled $0
in 2016, $442 in 2015 and $590 in 2014 for Class A common stock. Additionally, the Company has authorized 5,000,000 shares of preferred stock; however, no preferred shares have been issued.
Treasury stock, which consists of the Company's common stock, is accounted for using the cost method.
F-39
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
14. COMPREHENSIVE INCOME (LOSS)
AOCI is comprised entirely of the net actuarial loss associated with the pension and postretirement benefit plans.
The
related tax effects allocated to OCI are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Before-Tax
Amount
|
|
Tax (Expense)
Benefit
|
|
Net-of-Tax
Amount
|
|
2016:
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustments for prior net actuarial loss
|
|
$
|
5,855
|
|
$
|
(2,376
|
)
|
$
|
3,479
|
|
Actuarial net loss
|
|
|
(447
|
)
|
|
181
|
|
|
(266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
$
|
5,408
|
|
$
|
(2,195
|
)
|
$
|
3,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015:
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustments for prior net actuarial loss
|
|
$
|
6,365
|
|
$
|
(2,594
|
)
|
$
|
3,771
|
|
Actuarial net gain
|
|
|
864
|
|
|
(352
|
)
|
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
$
|
7,229
|
|
$
|
(2,946
|
)
|
$
|
4,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014:
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustments for prior net actuarial loss
|
|
$
|
3,255
|
|
$
|
|
|
$
|
3,255
|
|
Actuarial net loss
|
|
|
(33,212
|
)
|
|
|
|
|
(33,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
$
|
(29,957
|
)
|
$
|
|
|
$
|
(29,957
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
before-tax amounts of reclassification adjustments related to pension and postretirement benefit plans (see Note 9) were recorded within SG&A expense.
As
a result of the full deferred tax asset valuation allowance maintained throughout 2016, 2015 and 2014, the changes recognized within OCI were recorded on a gross basis for 2014. The
changes recognized within OCI for 2016 and 2015 are net of $2,195 and $2,946 tax expense, respectively (see Note 16).
15. SHARE-BASED COMPENSATION
The Company's Amended and Restated 2009 Omnibus Incentive Plan (the "2009 Omnibus Plan"), as approved by shareholders on June 12, 2012, provides for the granting of common stock
options, restricted shares, restricted stock units, performance shares, stock appreciation rights, phantom stock and dividend equivalent rights to certain employees, executive officers, directors,
consultants and advisors. A maximum of 4,500,000 shares may be granted under the 2009 Omnibus Plan, in addition to 209,812 available shares transferred from the Company's Amended and Restated
2000 Stock Incentive and Performance-Based Award Plan. At January 28, 2017, 249,321 shares were available within the 2009 Omnibus Plan. Vesting periods for the awards are at the discretion of
the Company's Board of Directors.
F-40
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
15. SHARE-BASED COMPENSATION (Continued)
Stock
options are granted with an exercise price equal to the market value of the underlying stock on the grant date, and vest over one to four years with a contractual term of seven
years. No stock options were granted during 2016, 2015 or 2014.
Restricted
shares granted during 2016, 2015 and 2014 vest over one to three years. Employees who are granted restricted shares are not required to pay for the shares; however, the shares
will be forfeited if the employee does not remain employed with the Company until the restrictions on the shares lapse. In addition, vesting of certain restricted shares awarded during 2016, 2015 and
2014 was subject to the achievement of specified criteria based on Company performance.
Restricted
stock units granted during 2016, 2015 and 2014 vest over one year. Employees and directors who are granted restricted stock units are not required to pay for the shares;
however, the shares will
be forfeited if the employee or director does not remain employed with the Company, or continue to serve as a member of its Board of Directors, until the restricted stock units vest.
The
Company recognizes share-based compensation pursuant to ASC 718. The Company measures the cost of grantee services received in exchange for an award of equity instruments based on
the grant date fair value of the award, and recognizes that cost over the period that the grantee is required to provide service in exchange for the award. For stock option awards, the Company
estimates grant date fair value using the Black-Scholes option valuation model. For restricted share and restricted stock unit grants, grant date fair value is determined based upon the closing
trading value of the Company's stock on the day of the grant. Certain restricted share grants for which vesting is based on service and performance requirements are additionally contingent on
achievement of a positive total shareholder return measure; for these grants, the grant date fair value is determined using a Monte Carlo simulation model estimate. The Company generally issues new
stock to satisfy share-based awards.
The
compensation cost that has been recorded within SG&A expense for the Company's share-based award plans was $2,700, $3,021 and $2,502 for 2016, 2015 and 2014, respectively. There was
no income tax benefit or expense recognized in the 2016, 2015 and 2014 consolidated statements of operations for share-based award compensation due to continuation of a full valuation allowance on all
net deferred tax assets related to share-based award compensation.
Cash
received from exercised stock options was $0, $454 and $22 for 2016, 2015 and 2014, respectively. Actual tax deduction benefits from exercised stock options and vested restricted
shares totaled $216, $474 and $1,965 for 2016, 2015 and 2014, respectively.
Awards
with graded vesting are recognized using graded amortization.
Based
upon an examination of forfeiture rates for the various classes of restricted stock units and restricted shares, Company management does not believe the total number of shares that
are vested and expected to vest as of January 28, 2017 are materially different from the respective number of options or shares outstanding as of January 28, 2017.
Stock Options
No stock options were redeemed during 2016, and none were outstanding at January 28, 2017 or January 30, 2016.
F-41
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
15. SHARE-BASED COMPENSATION (Continued)
The
total intrinsic value of options exercised during 2016, 2015 and 2014 was $0, $91 and $26, respectively.
Restricted Stock Units
Restricted stock units consist of units granted from the 2009 Omnibus Plan. The fair value of each restricted stock unit award is determined
based upon the closing trading value of the Company's stock on the day of the grant. A summary of the restricted stock units as of January 28, 2017 and changes during 2016 is presented below:
|
|
|
|
|
|
|
|
|
|
Service Required
|
|
|
|
Restricted
Stock Units
|
|
Weighted-Average
Grant Date Fair Value
|
|
Outstanding as of January 30, 2016
|
|
|
447,266
|
|
$
|
7.70
|
|
Granted
|
|
|
322,653
|
|
|
1.50
|
|
Settled
|
|
|
(80,143
|
)
|
|
7.24
|
|
|
|
|
|
|
|
|
|
Outstanding as of January 28, 2017
|
|
|
689,776
|
|
$
|
4.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of January 28, 2017, there was $192 of total unrecognized compensation cost related to restricted stock units that is expected to be recognized over a weighted average period
of 0.38 years. Vested awards will be settled in shares after certain events and time periods occur, as defined within the terms of the restricted stock unit grant agreements.
The
total fair value of restricted stock units vested during 2016, 2015 and 2014 was $163, $233 and $242, respectively. The weighted-average grant date fair value of service restricted
stock units granted during 2016, 2015 and 2014 was $1.50 per unit, $4.73 per unit and $10.01 per unit, respectively.
Outstanding
restricted stock units totaling 322,653 and 107,821 were unvested as of January 28, 2017 and January 30, 2016, respectively, with a weighted-average grant date
fair value of $1.50 per unit and $4.73 per unit, respectively. All restricted stock units granted during 2016 were unvested as of January 28, 2017.
The
Company pays cash dividend equivalents on all outstanding restricted stock units.
Restricted Shares
The Company's restricted shares consist of shares granted from the 2009 Omnibus Plan. The fair value of each restricted share award is
determined based upon the closing trading value of the Company's stock on the day of the grant, except for performance and service grants with vesting additionally contingent on achievement of a
positive total shareholder return measure for which the
F-42
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
15. SHARE-BASED COMPENSATION (Continued)
grant
date fair value is determined using a Monte Carlo simulation model estimate. A summary of the restricted share awards as of January 28, 2017 and changes during 2016 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
Weighted-Average Grant Date Fair Value
|
|
|
|
Performance
and Service
Required(1)
|
|
Service
Required
|
|
Performance
and Service
Required(1)
|
|
Service
Required
|
|
Nonvested as of January 30, 2016
|
|
|
498,750
|
|
|
1,099,750
|
|
$
|
6.63
|
|
$
|
7.46
|
|
Granted
|
|
|
367,700
|
|
|
266,550
|
|
|
2.06
|
|
|
2.19
|
|
Vested
|
|
|
|
|
|
(253,500
|
)
|
|
|
|
|
11.05
|
|
Forfeited
|
|
|
(110,000
|
)
|
|
(31,150
|
)
|
|
6.14
|
|
|
7.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested as of January 28, 2017
|
|
|
756,450
|
|
|
1,081,650
|
|
$
|
4.48
|
|
$
|
5.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
shares for which vesting was contingent on achievement of a positive total shareholder return measure.
As
of January 28, 2017, there was $1,747 of total unrecognized compensation cost related to restricted shares that is expected to be recognized over a weighted average period of
1.40 years.
The
total fair value of shares vested during 2016, 2015 and 2014 was $508, $1,183 and $4,627, respectively.
The
weighted-average grant date fair value of service restricted shares granted during 2016, 2015 and 2014 was $2.19 per share, $5.47 per share and $10.06 per share, respectively. The
weighted-average grant date fair value of service and performance restricted shares granted during 2016, 2015 and 2014 was $2.06 per share, $6.22 per share and $10.02 per share, respectively.
The
Company pays cash dividends on all outstanding restricted shares, other than those that are performance-based.
F-43
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
16. INCOME TAXES
Components of the income tax (benefit) provision were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
|
|
$
|
|
|
$
|
|
|
State
|
|
|
|
|
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
|
|
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(1,210
|
)
|
|
(2,132
|
)
|
|
1,360
|
|
State
|
|
|
(376
|
)
|
|
257
|
|
|
358
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
(1,586
|
)
|
|
(1,875
|
)
|
|
1,718
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision
|
|
$
|
(1,586
|
)
|
$
|
(1,875
|
)
|
$
|
1,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components
of gross deferred tax assets and liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
January 28,
2017
|
|
January 30,
2016
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
Net operating losses
|
|
$
|
98,939
|
|
$
|
79,154
|
|
General business tax credits
|
|
|
8,628
|
|
|
7,609
|
|
Alternative minimum tax credits
|
|
|
5,529
|
|
|
5,529
|
|
Defined benefit pension obligations
|
|
|
19,817
|
|
|
20,099
|
|
Accrued expenses
|
|
|
5,440
|
|
|
7,283
|
|
Inventories
|
|
|
|
|
|
1,660
|
|
Equity compensation
|
|
|
2,588
|
|
|
2,878
|
|
Rent amortization
|
|
|
39,148
|
|
|
40,831
|
|
Capital leases
|
|
|
55,327
|
|
|
52,520
|
|
Deferred revenue
|
|
|
14,599
|
|
|
15,831
|
|
Other
|
|
|
7,536
|
|
|
8,291
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
257,551
|
|
|
241,685
|
|
Less: Valuation allowance
|
|
|
(206,089
|
)
|
|
(186,582
|
)
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
51,462
|
|
|
55,103
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Property, fixtures and equipment
|
|
|
(42,041
|
)
|
|
(50,876
|
)
|
Trade names
|
|
|
(10,377
|
)
|
|
(9,768
|
)
|
Inventories
|
|
|
(5,053
|
)
|
|
|
|
Other
|
|
|
(4,368
|
)
|
|
(4,227
|
)
|
|
|
|
|
|
|
|
|
Total gross deferred tax liabilities
|
|
|
(61,839
|
)
|
|
(64,871
|
)
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
(10,377
|
)
|
$
|
(9,768
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-44
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
16. INCOME TAXES (Continued)
ASC
740 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence using a "more
likely than not" standard. In assessing the realizability of its deferred tax assets, the Company considered whether it was more likely than not that its deferred tax assets will be realized based
upon all available evidence, including the scheduled reversal of deferred tax liabilities, historical operating results, projected future operating results, tax carry-back availability and limitations
pursuant to Section 382 of the Internal Revenue Code ("Section 382"), among others. Pursuant to ASC 740, significant weight is to be given to evidence that can be objectively verified.
As a result, a company's current or previous losses are given more weight than any projected future taxable income. In addition, a recent three-year historical cumulative loss is considered a
significant element of negative evidence that is difficult to overcome.
The
Company has evaluated its deferred tax assets each reporting period, including assessment of its cumulative income or loss over the prior three-year period, to determine if valuation
allowances were required. With respect to reviews during 2016, 2015 and 2014, the Company's three-year historical cumulative loss and the continuation of uncertain near-term economic conditions
impeded the Company's ability to rely on its projections of future taxable income in assessing valuation allowance requirements. As such, the Company concluded that it was necessary to maintain a full
valuation allowance on its net deferred tax assets. If actual results differ from the Company's underlying estimates, or these estimates are adjusted in future periods, the Company may need to adjust
its valuation allowancewhich could materially impact its financial position and results of operations.
If
sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard for realization under ASC 740, the
valuation allowance would be reduced accordingly in the period that such a conclusion is reached.
As
a result of the partial tax benefit allocated to the loss from continuing operations, the changes recognized within OCI were reported on a net-of-tax basis in 2016 and in 2015. As a
result of the full deferred tax asset valuation allowance maintained throughout 2014, the changes recognized within OCI were recorded on a gross basis.
At
January 28, 2017, the Company had federal and state net operating loss carry-forwards of $204,263 and $487,420, respectively, which are available to offset future federal and
state taxable income, some of which are subject to limitations imposed by Section 382. These net operating losses will expire in various years from 2017 through 2036.
The
Company had carry-forwards for general business tax credits of $8,628 and $7,609 as of January 28, 2017 and January 30, 2016, respectively. These credits will expire in
various years from 2028 through 2036.
The
Company had carry-forwards for alternative minimum tax credits of $5,529 as of January 28, 2017 and January 30, 2016. The Company acquired $2,064 of these credits in
connection with an acquisition; their use is subject to limitations imposed by Section 382. These credits can be carried-forward indefinitely.
F-45
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
16. INCOME TAXES (Continued)
Pursuant to ASC 740, the Company is required to consider all income items (including items recorded in OCI) in determining the amount of tax benefit that results from a loss from
continuing operations and that should be allocated to continuing operations. As a result, in 2016 the Company recorded a net income tax benefit of $1,586 which includes a $2,195 non-cash income tax
benefit from continuing operations. In 2015 the Company recorded a net income tax benefit of $1,875 which includes a $2,946 non-cash income tax benefit from continuing operations. Since OCI was also a
loss in 2014, no tax benefit was allocated to continuing operations that year. In 2016 and 2015, the income tax benefit on the loss from continuing operations is exactly offset by income tax expense
on OCI. However, while the income tax benefit from continuing operations is reported in the consolidated statement of operations, the income tax expense on OCI is recorded directly to AOCI, which is a
component of shareholders' equity. Because the income tax expense on OCI is equal to the income tax benefit from continuing operations in 2016 and 2015, the Company's year-end net deferred tax
position is not impacted by this tax allocation. The resulting residual income tax expense will remain in AOCI until all amounts in AOCI that relate to the plan or program that gave rise to the
residual income taxes are recognized in the consolidated statement of operations. The Company will reclassify to earnings all residual tax amounts relating to its pension and retiree medical liability
in the period in which these plans or programs are terminated.
A
reconciliation of the tax (benefit) provision to the tax at the statutory federal income rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Tax benefit at statutory rate
|
|
$
|
(22,751
|
)
|
$
|
(20,625
|
)
|
$
|
(1,874
|
)
|
State income taxes, net of federal benefit
|
|
|
(3,583
|
)
|
|
(3,879
|
)
|
|
(1,865
|
)
|
Valuation allowance changes, net
|
|
|
21,504
|
|
|
26,062
|
|
|
4,684
|
|
Expired federal net operating losses
|
|
|
4,310
|
|
|
|
|
|
|
|
Tax benefit resulting from OCI allocation
|
|
|
(2,195
|
)
|
|
(2,946
|
)
|
|
|
|
Tax credits
|
|
|
(355
|
)
|
|
(677
|
)
|
|
(534
|
)
|
Nondeductible expenses
|
|
|
1,037
|
|
|
256
|
|
|
1,031
|
|
Changes in state deferred tax rate
|
|
|
293
|
|
|
(107
|
)
|
|
178
|
|
Other, net
|
|
|
154
|
|
|
41
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Tax (benefit) provision at effective rate
|
|
$
|
(1,586
|
)
|
$
|
(1,875
|
)
|
$
|
1,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
accordance with ASC 740, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions
are measured at the largest amount that is greater than 50% likely of being realized. Changes in
F-46
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
16. INCOME TAXES (Continued)
recognition
or measurement are reflected in the period in which the change in judgment occurs. A reconciliation of the beginning and ending gross unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Balance at beginning of year
|
|
$
|
9,064
|
|
$
|
9,064
|
|
$
|
9,162
|
|
Increases (decreases) related to prior year tax positions
|
|
|
22
|
|
|
|
|
|
(19
|
)
|
Lapse of statute
|
|
|
|
|
|
|
|
|
(79
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
9,086
|
|
$
|
9,064
|
|
$
|
9,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
total amount of gross unrecognized tax benefits that, if recognized, would impact the effective tax rate was $0 as of January 28, 2017 and January 30, 2016. The gross
unrecognized tax benefits are not expected to significantly increase or decrease during 2017.
It
is the Company's policy to record interest and penalties on unrecognized tax benefits as an income tax provision. For 2016 and 2015, the Company did not record any interest or penalty
on unrecognized tax benefits. For 2014, the Company recorded $6 as an income tax provision, offset by a $26 reduction of accrued interest due to a statute expiration. At each of January 28,
2017 and January 30, 2016, the Company did not have any accruals for interest and penalties on unrecognized tax benefits.
The
Company's federal tax returns for the years ended February 1, 2014 through the present are open to examination, as are the Company's various state tax returns for the years
ended February 2, 2013 through the present.
17. QUARTERLY RESULTS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
2016:
|
|
April 30,
2016
|
|
July 30,
2016
|
|
October 29,
2016
|
|
January 28,
2017
|
|
Net sales
|
|
$
|
591,007
|
|
$
|
542,360
|
|
$
|
589,942
|
|
$
|
877,283
|
|
Costs of merchandise sold
|
|
|
390,913
|
|
|
344,273
|
|
|
382,892
|
|
|
559,648
|
|
Selling, general and administrative expense
|
|
|
216,185
|
|
|
211,872
|
|
|
213,816
|
|
|
238,755
|
|
(Loss) income from operations
|
|
|
(22,876
|
)
|
|
(23,718
|
)
|
|
(12,881
|
)
|
|
62,046
|
|
Net (loss) income
|
|
|
(37,818
|
)
|
|
(38,736
|
)
|
|
(31,582
|
)
|
|
44,717
|
|
Basic (loss) earnings per share
|
|
$
|
(1.91
|
)
|
$
|
(1.95
|
)
|
$
|
(1.58
|
)
|
$
|
2.09
|
|
Diluted (loss) earnings per share
|
|
$
|
(1.91
|
)
|
$
|
(1.95
|
)
|
$
|
(1.58
|
)
|
$
|
2.09
|
|
The
quarter ended October 29, 2016 includes a loss on extinguishment of debt totaling $676 due to the write-off of certain deferred financing fees in connection with the Second
Amended Revolving Credit Facility amendment (see Note 10).
The
quarter ended January 28, 2017 includes impairment charges of $13,709 resulting in a reduction in the carrying amount of certain store properties (see Note 3) and
$2,999 related to the reduction in the value of certain intangible assets (see Note 4).
F-47
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
17. QUARTERLY RESULTS (UNAUDITED) (Continued)
Per
share amounts are computed independently for each of the quarters presented. The sum of the quarters does not equal the total year amount due to a mixture of net loss and net income
quarters, with differing application of basic and diluted common shares outstanding pursuant to the two-class method.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
2015:
|
|
May 2,
2015
|
|
August 1,
2015
|
|
October 31,
2015
|
|
January 30,
2016
|
|
Net sales
|
|
$
|
610,938
|
|
$
|
555,431
|
|
$
|
623,400
|
|
$
|
927,922
|
|
Costs of merchandise sold
|
|
|
404,465
|
|
|
350,828
|
|
|
415,025
|
|
|
605,397
|
|
Selling, general and administrative expense
|
|
|
218,686
|
|
|
215,186
|
|
|
220,183
|
|
|
251,597
|
|
(Loss) income from operations
|
|
|
(19,043
|
)
|
|
(19,743
|
)
|
|
(18,345
|
)
|
|
66,957
|
|
Net (loss) income
|
|
|
(34,074
|
)
|
|
(39,563
|
)
|
|
(33,992
|
)
|
|
50,576
|
|
Basic (loss) earnings per share
|
|
$
|
(1.74
|
)
|
$
|
(2.01
|
)
|
$
|
(1.72
|
)
|
$
|
2.42
|
|
Diluted (loss) earnings per share
|
|
$
|
(1.74
|
)
|
$
|
(2.01
|
)
|
$
|
(1.72
|
)
|
$
|
2.42
|
|
The
quarter ended August 1, 2015 includes a gain on insurance recovery of $748 as a result of a fire at one of the Company's stores (see Note 12) and a loss on
extinguishment of debt totaling $4,862 for fees and accelerated amortization of deferred fees in conjunction with the repayment of one of the mortgage facilities (see Note 10).
The
quarter ended January 30, 2016 includes impairment charges of $1,365 resulting in a reduction in the carrying amount of certain store properties (see Note 3) and $1,842
related to the reduction in the value of certain intangible assets (see Note 4). Fourth quarter results also includes a gain on insurance recovery of $608 as a result of a fire at one of the
Company's stores (see Note 12) and a loss on extinguishment of debt totaling $1,346 for fees and accelerated amortization of deferred fees in conjunction with the repayment of the mortgage
facility (see Note 10).
Per
share amounts are computed independently for each of the quarters presented. The sum of the quarters does not equal the total year amount due to a mixture of net loss and net income
quarters, with differing application of basic and diluted common shares outstanding pursuant to the two-class method.
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
Certain debt obligations of the Company, which constitute debt obligations of the Issuer, are
guaranteed by the Parent and by each of its subsidiaries, other than the Issuer, that is an Obligor under the Company's Second Amended Revolving Credit Facility. Separate financial statements of the
Parent, the Issuer and such subsidiary guarantors are not presented because the guarantees by the Parent and each 100% owned subsidiary guarantor are joint and several, full and unconditional, except
for certain customary limitations which are applicable only to a subsidiary guarantor. These customary limitations include releases of a guarantee (1) if the subsidiary guarantor no longer
guarantees other indebtedness of the Issuer; (2) if there is a sale or other disposition of the capital stock of a subsidiary guarantor and if such sale complies with the covenant regarding
asset sales; and (3) if the subsidiary guarantor is properly designated as an "unrestricted subsidiary."
F-48
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The
condensed consolidating financial information for the Parent, the Issuer and the guarantor subsidiaries as of January 28, 2017 and January 30, 2016 and for 2016, 2015
and 2014 as presented below has been prepared from the books and records maintained by the Parent, the Issuer and the guarantor subsidiaries. The condensed financial information may not necessarily be
indicative of the results of operations or financial position had the guarantor subsidiaries operated as independent entities. Certain intercompany revenues and expenses included in the subsidiary
records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time.
On
January 15, 2016, the Obligors entered into a Consent and Third Amendment to the Second Amended Revolving Credit Facility, which among other changes, provided for the joinders
of the SPEs that had previously participated in the Company's mortgage loan facility as Obligors under the Second Amended Revolving Credit Facility, and as "Restricted Subsidiaries" and guarantors
under the indentures for the Notes. The SPEs and their assets were then added to the second lien security agreement. For comparative purposes, the 2015 condensed consolidating financial information as
presented below has been retrospectively adjusted as if the activity described above occurred at the beginning of the period.
F-49
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
January 28, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1
|
|
$
|
3,575
|
|
$
|
3,160
|
|
$
|
|
|
$
|
6,736
|
|
Merchandise inventories
|
|
|
|
|
|
475,816
|
|
|
248,638
|
|
|
|
|
|
724,454
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
94,585
|
|
|
4,153
|
|
|
(180
|
)
|
|
98,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1
|
|
|
573,976
|
|
|
255,951
|
|
|
(180
|
)
|
|
829,748
|
|
Property, fixtures and equipment at cost, net
|
|
|
|
|
|
277,511
|
|
|
307,292
|
|
|
|
|
|
584,803
|
|
Intangible assets, net
|
|
|
|
|
|
17,715
|
|
|
55,396
|
|
|
|
|
|
73,111
|
|
Investment in and advances to affiliates
|
|
|
(22,782
|
)
|
|
414,949
|
|
|
446,521
|
|
|
(838,688
|
)
|
|
|
|
Other long-term assets
|
|
|
|
|
|
19,800
|
|
|
733
|
|
|
(3,132
|
)
|
|
17,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
(22,781
|
)
|
$
|
1,303,951
|
|
$
|
1,065,893
|
|
$
|
(842,000
|
)
|
$
|
1,505,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' (Deficit) Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
$
|
185,900
|
|
$
|
|
|
$
|
|
|
$
|
185,900
|
|
Accrued payroll and benefits
|
|
|
|
|
|
21,405
|
|
|
4,416
|
|
|
|
|
|
25,821
|
|
Accrued expenses
|
|
|
|
|
|
70,988
|
|
|
79,633
|
|
|
(180
|
)
|
|
150,441
|
|
Current maturities of capital lease and financing obligations
|
|
|
|
|
|
1,995
|
|
|
4,690
|
|
|
|
|
|
6,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
280,288
|
|
|
88,739
|
|
|
(180
|
)
|
|
368,847
|
|
Long-term debt and capital lease and financing obligations, less current maturities
|
|
|
|
|
|
920,782
|
|
|
61,852
|
|
|
|
|
|
982,634
|
|
Other long-term liabilities
|
|
|
|
|
|
132,165
|
|
|
47,330
|
|
|
(3,132
|
)
|
|
176,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
1,333,235
|
|
|
197,921
|
|
|
(3,312
|
)
|
|
1,527,844
|
|
Shareholders' (deficit) equity
|
|
|
(22,781
|
)
|
|
(29,284
|
)
|
|
867,972
|
|
|
(838,688
|
)
|
|
(22,781
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' (deficit) equity
|
|
$
|
(22,781
|
)
|
$
|
1,303,951
|
|
$
|
1,065,893
|
|
$
|
(842,000
|
)
|
$
|
1,505,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-50
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
January 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1
|
|
$
|
2,822
|
|
$
|
4,056
|
|
$
|
|
|
$
|
6,879
|
|
Merchandise inventories
|
|
|
|
|
|
467,262
|
|
|
244,437
|
|
|
|
|
|
711,699
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
88,346
|
|
|
9,088
|
|
|
(180
|
)
|
|
97,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1
|
|
|
558,430
|
|
|
257,581
|
|
|
(180
|
)
|
|
815,832
|
|
Property, fixtures and equipment at cost, net
|
|
|
|
|
|
319,736
|
|
|
315,598
|
|
|
|
|
|
635,334
|
|
Intangible assets, net
|
|
|
|
|
|
20,964
|
|
|
61,098
|
|
|
|
|
|
82,062
|
|
Investment in and advances to affiliates
|
|
|
34,915
|
|
|
437,894
|
|
|
382,958
|
|
|
(855,767
|
)
|
|
|
|
Other long-term assets
|
|
|
|
|
|
19,846
|
|
|
863
|
|
|
(3,311
|
)
|
|
17,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
34,916
|
|
$
|
1,356,870
|
|
$
|
1,018,098
|
|
$
|
(859,258
|
)
|
$
|
1,550,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
|
$
|
162,831
|
|
$
|
|
|
$
|
|
|
$
|
162,831
|
|
Accrued payroll and benefits
|
|
|
|
|
|
23,154
|
|
|
5,373
|
|
|
|
|
|
28,527
|
|
Accrued expenses
|
|
|
|
|
|
70,386
|
|
|
77,172
|
|
|
(180
|
)
|
|
147,378
|
|
Current maturities of capital lease and financing obligations
|
|
|
|
|
|
1,395
|
|
|
3,999
|
|
|
|
|
|
5,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
257,766
|
|
|
86,544
|
|
|
(180
|
)
|
|
344,130
|
|
Long-term debt and capital lease and financing obligations, less current maturities
|
|
|
|
|
|
929,377
|
|
|
53,292
|
|
|
|
|
|
982,669
|
|
Other long-term liabilities
|
|
|
|
|
|
138,810
|
|
|
53,412
|
|
|
(3,311
|
)
|
|
188,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
1,325,953
|
|
|
193,248
|
|
|
(3,491
|
)
|
|
1,515,710
|
|
Shareholders' equity
|
|
|
34,916
|
|
|
30,917
|
|
|
824,850
|
|
|
(855,767
|
)
|
|
34,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
34,916
|
|
$
|
1,356,870
|
|
$
|
1,018,098
|
|
$
|
(859,258
|
)
|
$
|
1,550,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-51
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net sales
|
|
$
|
|
|
$
|
1,582,141
|
|
$
|
1,018,451
|
|
$
|
|
|
$
|
2,600,592
|
|
Other income
|
|
|
|
|
|
45,185
|
|
|
28,574
|
|
|
|
|
|
73,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,627,326
|
|
|
1,047,025
|
|
|
|
|
|
2,674,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of merchandise sold
|
|
|
|
|
|
1,027,708
|
|
|
650,018
|
|
|
|
|
|
1,677,726
|
|
Selling, general and administrative
|
|
|
|
|
|
541,019
|
|
|
360,696
|
|
|
(21,087
|
)
|
|
880,628
|
|
Depreciation and amortization
|
|
|
|
|
|
51,178
|
|
|
41,016
|
|
|
|
|
|
92,194
|
|
Amortization of lease-related interests
|
|
|
|
|
|
1,872
|
|
|
2,337
|
|
|
|
|
|
4,209
|
|
Impairment charges
|
|
|
|
|
|
14,506
|
|
|
2,517
|
|
|
|
|
|
17,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
|
|
|
(8,957
|
)
|
|
(9,559
|
)
|
|
21,087
|
|
|
2,571
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany income
|
|
|
|
|
|
2,434
|
|
|
57,058
|
|
|
(59,492
|
)
|
|
|
|
Equity in (losses) earnings of subsidiaries
|
|
|
(65,005
|
)
|
|
43,140
|
|
|
|
|
|
21,865
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
(100,870
|
)
|
|
(4,359
|
)
|
|
38,405
|
|
|
(66,824
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
(752
|
)
|
|
|
|
|
|
|
|
(752
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(65,005
|
)
|
|
(65,005
|
)
|
|
43,140
|
|
|
21,865
|
|
|
(65,005
|
)
|
Income tax (benefit) provision
|
|
|
(1,586
|
)
|
|
(1,586
|
)
|
|
17
|
|
|
1,569
|
|
|
(1,586
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(63,419
|
)
|
$
|
(63,419
|
)
|
$
|
43,123
|
|
$
|
20,296
|
|
$
|
(63,419
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Comprehensive (Loss) Income
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net (loss) income
|
|
$
|
(63,419
|
)
|
$
|
(63,419
|
)
|
$
|
43,123
|
|
$
|
20,296
|
|
$
|
(63,419
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans
|
|
|
3,213
|
|
|
3,213
|
|
|
|
|
|
(3,213
|
)
|
|
3,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(60,206
|
)
|
$
|
(60,206
|
)
|
$
|
43,123
|
|
$
|
17,083
|
|
$
|
(60,206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-52
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net sales
|
|
$
|
|
|
$
|
1,640,912
|
|
$
|
1,076,779
|
|
$
|
|
|
$
|
2,717,691
|
|
Other income
|
|
|
|
|
|
43,632
|
|
|
28,174
|
|
|
|
|
|
71,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,684,544
|
|
|
1,104,953
|
|
|
|
|
|
2,789,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of merchandise sold
|
|
|
|
|
|
1,081,054
|
|
|
694,661
|
|
|
|
|
|
1,775,715
|
|
Selling, general and administrative
|
|
|
|
|
|
560,726
|
|
|
369,464
|
|
|
(24,538
|
)
|
|
905,652
|
|
Gain on insurance recovery
|
|
|
|
|
|
|
|
|
(1,356
|
)
|
|
|
|
|
(1,356
|
)
|
Depreciation and amortization
|
|
|
|
|
|
49,590
|
|
|
42,193
|
|
|
|
|
|
91,783
|
|
Amortization of lease-related interests
|
|
|
|
|
|
1,928
|
|
|
2,317
|
|
|
|
|
|
4,245
|
|
Impairment charges
|
|
|
|
|
|
1,794
|
|
|
1,838
|
|
|
|
|
|
3,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
|
|
|
(10,548
|
)
|
|
(4,164
|
)
|
|
24,538
|
|
|
9,826
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany income
|
|
|
|
|
|
2,511
|
|
|
43,997
|
|
|
(46,508
|
)
|
|
|
|
Equity in (losses) earnings of subsidiaries
|
|
|
(58,928
|
)
|
|
20,635
|
|
|
|
|
|
38,293
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
(71,526
|
)
|
|
(12,990
|
)
|
|
21,970
|
|
|
(62,546
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
(6,208
|
)
|
|
|
|
|
(6,208
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(58,928
|
)
|
|
(58,928
|
)
|
|
20,635
|
|
|
38,293
|
|
|
(58,928
|
)
|
Income tax (benefit) provision
|
|
|
(1,875
|
)
|
|
(1,875
|
)
|
|
539
|
|
|
1,336
|
|
|
(1,875
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(57,053
|
)
|
$
|
(57,053
|
)
|
$
|
20,096
|
|
$
|
36,957
|
|
$
|
(57,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Comprehensive (Loss) Income
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net (loss) income
|
|
$
|
(57,053
|
)
|
$
|
(57,053
|
)
|
$
|
20,096
|
|
$
|
36,957
|
|
$
|
(57,053
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans
|
|
|
4,283
|
|
|
4,283
|
|
|
|
|
|
(4,283
|
)
|
|
4,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(52,770
|
)
|
$
|
(52,770
|
)
|
$
|
20,096
|
|
$
|
32,674
|
|
$
|
(52,770
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-53
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net sales
|
|
$
|
|
|
$
|
1,643,073
|
|
$
|
1,113,164
|
|
$
|
|
|
$
|
|
|
$
|
2,756,237
|
|
Other income
|
|
|
|
|
|
39,507
|
|
|
27,152
|
|
|
|
|
|
|
|
|
66,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,682,580
|
|
|
1,140,316
|
|
|
|
|
|
|
|
|
2,822,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of merchandise sold
|
|
|
|
|
|
1,064,682
|
|
|
708,271
|
|
|
|
|
|
|
|
|
1,772,953
|
|
Selling, general and administrative
|
|
|
|
|
|
560,886
|
|
|
378,804
|
|
|
(2,404
|
)
|
|
(30,250
|
)
|
|
907,036
|
|
Gain on insurance recovery
|
|
|
|
|
|
|
|
|
(10,779
|
)
|
|
|
|
|
|
|
|
(10,779
|
)
|
Depreciation and amortization
|
|
|
|
|
|
45,476
|
|
|
44,581
|
|
|
61
|
|
|
|
|
|
90,118
|
|
Amortization of lease-related interests
|
|
|
|
|
|
2,117
|
|
|
2,425
|
|
|
|
|
|
|
|
|
4,542
|
|
Impairment charges
|
|
|
|
|
|
1,655
|
|
|
837
|
|
|
|
|
|
|
|
|
2,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
|
|
7,764
|
|
|
16,177
|
|
|
2,343
|
|
|
30,250
|
|
|
56,534
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany income
|
|
|
|
|
|
2,700
|
|
|
43,887
|
|
|
|
|
|
(46,587
|
)
|
|
|
|
Equity in (losses) earnings of subsidiaries
|
|
|
(5,355
|
)
|
|
45,059
|
|
|
|
|
|
|
|
|
(39,704
|
)
|
|
|
|
Interest expense, net
|
|
|
|
|
|
(60,878
|
)
|
|
(17,195
|
)
|
|
|
|
|
16,337
|
|
|
(61,736
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
(153
|
)
|
|
|
|
|
(153
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(5,355
|
)
|
|
(5,355
|
)
|
|
42,869
|
|
|
2,190
|
|
|
(39,704
|
)
|
|
(5,355
|
)
|
Income tax provision
|
|
|
1,619
|
|
|
1,619
|
|
|
901
|
|
|
|
|
|
(2,520
|
)
|
|
1,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,974
|
)
|
$
|
(6,974
|
)
|
$
|
41,968
|
|
$
|
2,190
|
|
$
|
(37,184
|
)
|
$
|
(6,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-54
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Comprehensive (Loss) Income
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net (loss) income
|
|
$
|
(6,974
|
)
|
$
|
(6,974
|
)
|
$
|
41,968
|
|
$
|
2,190
|
|
$
|
(37,184
|
)
|
$
|
(6,974
|
)
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans
|
|
|
(29,957
|
)
|
|
(29,957
|
)
|
|
|
|
|
|
|
|
29,957
|
|
|
(29,957
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(36,931
|
)
|
$
|
(36,931
|
)
|
$
|
41,968
|
|
$
|
2,190
|
|
$
|
(7,227
|
)
|
$
|
(36,931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-55
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net cash provided by operating activities
|
|
$
|
191
|
|
$
|
44,126
|
|
$
|
14,647
|
|
$
|
|
|
$
|
58,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
(29,802
|
)
|
|
(24,819
|
)
|
|
|
|
|
(54,621
|
)
|
Proceeds from sale of property, fixtures and equipment
|
|
|
|
|
|
76
|
|
|
25
|
|
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
(29,726
|
)
|
|
(24,794
|
)
|
|
|
|
|
(54,520
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on long-term debt and capital lease and financing obligations
|
|
|
|
|
|
(774,047
|
)
|
|
(3,999
|
)
|
|
|
|
|
(778,046
|
)
|
Proceeds from issuance of long-term debt and financing obligations
|
|
|
|
|
|
763,784
|
|
|
13,250
|
|
|
|
|
|
777,034
|
|
Deferred financing costs paid
|
|
|
|
|
|
(5,605
|
)
|
|
|
|
|
|
|
|
(5,605
|
)
|
Restricted shares forfeited in lieu of payroll taxes
|
|
|
(191
|
)
|
|
|
|
|
|
|
|
|
|
|
(191
|
)
|
Increase in book overdraft balances
|
|
|
|
|
|
2,221
|
|
|
|
|
|
|
|
|
2,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(191
|
)
|
|
(13,647
|
)
|
|
9,251
|
|
|
|
|
|
(4,587
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
753
|
|
|
(896
|
)
|
|
|
|
|
(143
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
1
|
|
|
2,822
|
|
|
4,056
|
|
|
|
|
|
6,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
1
|
|
$
|
3,575
|
|
$
|
3,160
|
|
$
|
|
|
$
|
6,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-56
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net cash provided by (used in) operating activities
|
|
$
|
4,428
|
|
$
|
(111,827
|
)
|
$
|
133,997
|
|
$
|
(8,776
|
)
|
$
|
17,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
(59,249
|
)
|
|
(25,426
|
)
|
|
|
|
|
(84,675
|
)
|
Intercompany investing activity
|
|
|
(454
|
)
|
|
(47,136
|
)
|
|
|
|
|
47,590
|
|
|
|
|
Proceeds from insurance claim
|
|
|
|
|
|
|
|
|
1,700
|
|
|
|
|
|
1,700
|
|
Proceeds from sale of property, fixtures and equipment
|
|
|
|
|
|
17,632
|
|
|
67,722
|
|
|
|
|
|
85,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(454
|
)
|
|
(88,753
|
)
|
|
43,996
|
|
|
47,590
|
|
|
2,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on long-term debt and capital lease and financing obligations
|
|
|
|
|
|
(693,682
|
)
|
|
(221,323
|
)
|
|
|
|
|
(915,005
|
)
|
Proceeds from issuance of long-term debt and financing obligations
|
|
|
|
|
|
908,644
|
|
|
|
|
|
|
|
|
908,644
|
|
Intercompany financing activity
|
|
|
|
|
|
(4,029
|
)
|
|
42,843
|
|
|
(38,814
|
)
|
|
|
|
Deferred financing costs paid
|
|
|
|
|
|
(1,505
|
)
|
|
|
|
|
|
|
|
(1,505
|
)
|
Cash dividends paid
|
|
|
(4,029
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,029
|
)
|
Restricted shares forfeited in lieu of payroll taxes
|
|
|
(399
|
)
|
|
|
|
|
|
|
|
|
|
|
(399
|
)
|
Proceeds from stock options exercised
|
|
|
454
|
|
|
|
|
|
|
|
|
|
|
|
454
|
|
Decrease in book overdraft balances
|
|
|
|
|
|
(10,235
|
)
|
|
|
|
|
|
|
|
(10,235
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(3,974
|
)
|
|
199,193
|
|
|
(178,480
|
)
|
|
(38,814
|
)
|
|
(22,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
(1,387
|
)
|
|
(487
|
)
|
|
|
|
|
(1,874
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
1
|
|
|
4,209
|
|
|
4,543
|
|
|
|
|
|
8,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
1
|
|
$
|
2,822
|
|
$
|
4,056
|
|
$
|
|
|
$
|
6,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-57
THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)
The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Eliminations
|
|
Company
Consolidated
|
|
Net cash provided by (used in) operating activities
|
|
$
|
5,893
|
|
$
|
25,364
|
|
$
|
30,453
|
|
$
|
(3,802
|
)
|
$
|
(11,279
|
)
|
$
|
46,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
(77,042
|
)
|
|
(13,665
|
)
|
|
|
|
|
|
|
|
(90,707
|
)
|
Intercompany investing activity
|
|
|
(22
|
)
|
|
(785
|
)
|
|
|
|
|
|
|
|
807
|
|
|
|
|
Proceeds from sale of property, fixtures and equipment
|
|
|
|
|
|
46
|
|
|
303
|
|
|
5,000
|
|
|
|
|
|
5,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(22
|
)
|
|
(77,781
|
)
|
|
(13,362
|
)
|
|
5,000
|
|
|
807
|
|
|
(85,358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on long-term debt and capital lease and financing obligations
|
|
|
|
|
|
(716,768
|
)
|
|
(10,200
|
)
|
|
(1,198
|
)
|
|
|
|
|
(728,166
|
)
|
Proceeds from issuance of long-term debt and financing obligations
|
|
|
|
|
|
770,259
|
|
|
|
|
|
|
|
|
|
|
|
770,259
|
|
Intercompany financing activity
|
|
|
|
|
|
(3,956
|
)
|
|
(6,516
|
)
|
|
|
|
|
10,472
|
|
|
|
|
Deferred financing costs paid
|
|
|
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
(69
|
)
|
Cash dividends paid
|
|
|
(3,956
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,956
|
)
|
Restricted shares forfeited in lieu of payroll taxes
|
|
|
(1,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,937
|
)
|
Proceeds from stock options exercised
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
Increase in book overdraft balances
|
|
|
|
|
|
4,271
|
|
|
|
|
|
|
|
|
|
|
|
4,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(5,871
|
)
|
|
53,737
|
|
|
(16,716
|
)
|
|
(1,198
|
)
|
|
10,472
|
|
|
40,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
|
|
1,320
|
|
|
375
|
|
|
|
|
|
|
|
|
1,695
|
|
Cash and cash equivalents at beginning of period
|
|
|
1
|
|
|
2,889
|
|
|
4,168
|
|
|
|
|
|
|
|
|
7,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
1
|
|
$
|
4,209
|
|
$
|
4,543
|
|
$
|
|
|
$
|
|
|
$
|
8,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-58
Schedule II: VALUATION AND QUALIFYING ACCOUNTS
THE BON-TON STORES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
Classification
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs &
Expenses
|
|
Deductions
|
|
Balance at
End
of Period
|
|
Year ended January 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual for sales returns
|
|
$
|
16,884
|
|
|
1,314
|
|
|
|
|
$
|
18,198
|
|
Accrual for purchase order violations reserve
|
|
$
|
746
|
|
|
1,221
|
|
|
(1,351
|
)
|
$
|
616
|
|
Year ended January 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual for sales returns
|
|
$
|
18,198
|
|
|
|
|
|
(1,386
|
)
|
$
|
16,812
|
|
Accrual for purchase order violations reserve
|
|
$
|
616
|
|
|
1,134
|
|
|
(1,264
|
)
|
$
|
486
|
|
Year ended January 28, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual for sales returns
|
|
$
|
16,812
|
|
|
|
|
|
(742
|
)
|
$
|
16,070
|
|
Accrual for purchase order violations reserve
|
|
$
|
486
|
|
|
936
|
|
|
(975
|
)
|
$
|
447
|
|
F-59
EXHIBIT INDEX
|
|
|
|
Exhibit
|
|
Description
|
|
21
|
|
Subsidiaries of the Registrant
|
|
23
|
|
Consent of KPMG LLP
|
|
31.1
|
|
Certification of Kathryn Bufano
|
|
31.2
|
|
Certification of Nancy A. Walsh
|
|
32
|
|
Certification Pursuant to Rules 13a-14(b) and 15d-14(b) of the Securities Exchange Act of 1934
|
|
101.INS
|
|
XBRL Instance Document
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|