UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarter ended ~~August~~May 2, ~~2014~~2015		Commission File Number
		0-19517

THE BON-TON STORES, INC.

2801 East Market Street

York, Pennsylvania 17402

(717) 757-7660

Incorporated in Pennsylvania

IRS No. 23-2835229

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)	~~Smaller reporting~~ ~~company~~ o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of ~~August~~May 29, ~~2014,~~2015, there were ~~17,934,593~~17,996,099 shares of Common Stock, $.01 par value, and 2,951,490 shares of Class A Common Stock, $.01 par value, outstanding.

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE BON-TON STORES, INC.

CONSOLIDATED BALANCE SHEETS

	(Unaudited)									(Unaudited)
	August 2,			August 3,			February 1,			May 2,			May 3,			January 31,
(In thousands, except share and per share data)	2014			2013			2014			2015			2014			2015

Assets
Current assets:
Cash and cash equivalents	$	7,688		$	8,140		$	7,058		$	8,711		$	8,221		$	8,753
Merchandise inventories	723,454			720,177			709,733			738,231			711,780			734,956
Prepaid expenses and other current assets	72,118			70,883			76,285			77,834			73,138			93,394
Total current assets	803,260			799,200			793,076			824,776			793,139			837,103
Property, fixtures and equipment at cost, net of accumulated depreciation and amortization of $900,967, $846,396 and $865,111 at August 2, 2014, August 3, 2013 and February 1, 2014, respectively	632,701			643,033			640,004
Property, fixtures and equipment at cost, net of accumulated depreciation and amortization of $931,661, $878,222 and $910,494 at May 2, 2015, May 3, 2014 and January 31, 2015, respectively										642,268			629,453			641,996
Deferred income taxes	19,384			16,432			15,765			17,373			18,261			15,781
Intangible assets, net of accumulated amortization of $61,170, $60,807 and $62,068 at August 2, 2014, August 3, 2013 and February 1, 2014, respectively	93,532			106,797			102,800
Intangible assets, net of accumulated amortization of $64,625, $63,823 and $64,451 at May 2, 2015, May 3, 2014 and January 31, 2015, respectively										88,538			101,045			90,151
Other long-term assets	23,702			23,338			25,584			22,252			24,684			23,483
Total assets	$	1,572,579		$	1,588,800		$	1,577,229		$	1,595,207		$	1,566,582		$	1,608,514

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	238,077		$	235,160		$	200,465		$	197,789		$	188,169		$	208,882
Accrued payroll and benefits	25,447			29,475			28,343			21,116			21,575			28,848
Accrued expenses	142,276			140,090			150,595			152,598			152,328			158,022
Current maturities of long-term debt	7,171			7,129			7,363			209,652			7,058			6,788
Current maturities of obligations under capital leases	3,840			3,936			3,797			4,061			3,785			3,961
Deferred income taxes	27,255			22,561			22,744			26,519			25,686			24,478
Total current liabilities	444,066			438,351			413,307			611,735			398,601			430,979

Long-term debt, less current maturities	852,379			841,948			804,372			697,997			844,080			850,963
Obligations under capital leases, less current maturities	46,702			50,542			48,977			43,629			47,690			45,016
Other long-term liabilities	169,843			208,253			182,617			187,403			180,153			193,908
Total liabilities	1,512,990			1,539,094			1,449,273			1,540,764			1,470,524			1,520,866

Contingencies (Note 9)

Shareholders’ equity
Preferred Stock — authorized 5,000,000 shares at $0.01 par value; no shares issued	—			—			—			—			—			—
Common Stock — authorized 40,000,000 shares at $0.01 par value; issued shares of 17,919,143, 17,874,312 and 17,846,457 at August 2, 2014, August 3, 2013 and February 1, 2014, respectively	179			179			178
Class A Common Stock — authorized 20,000,000 shares at $0.01 par value; issued and outstanding shares of 2,951,490 at August 2, 2014, August 3, 2013 and February 1, 2014	30			30			30
Treasury stock, at cost — 337,800 shares at August 2, 2014, August 3, 2013 and February 1, 2014	(1,387		)	(1,387		)	(1,387		)
Common Stock — authorized 40,000,000 shares at $0.01 par value; issued shares of 18,331,899, 17,831,500 and 17,818,323 at May 2, 2015, May 3, 2014 and January 31, 2015, respectively										183			178			178
Class A Common Stock — authorized 20,000,000 shares at $0.01 par value; issued and outstanding shares of 2,951,490 at May 2, 2015, May 3, 2014 and January 31, 2015										30			30			30
Treasury stock, at cost — 337,800 shares at May 2, 2015, May 3, 2014 and January 31, 2015										(1,387		)	(1,387		)	(1,387		)
Additional paid-in capital	160,461			160,652			160,772			162,253			160,564			161,359
Accumulated other comprehensive loss	(48,820		)	(70,140		)	(50,448		)	(79,423		)	(49,634		)	(80,405		)
(Accumulated deficit) retained earnings	(50,874		)	(39,628		)	18,811			(27,213		)	(13,693		)	7,873
Total shareholders’ equity	59,589			49,706			127,956			54,443			96,058			87,648
Total liabilities and shareholders’ equity	$	1,572,579		$	1,588,800		$	1,577,229		$	1,595,207		$	1,566,582		$	1,608,514

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	THIRTEEN						TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED						WEEKS ENDED
(In thousands, except per share data)	August 2,			August 3,			August 2,			August 3,			May 2,			May 3,
(Unaudited)	2014			2013			2014			2013			2015			2014

Net sales	$	563,452		$	557,140		$	1,170,912		$	1,204,044		$	610,938		$	607,460
Other income	14,685			13,845			29,758			28,824			16,304			15,073
	578,137			570,985			1,200,670			1,232,868			627,242			622,533

Costs and expenses:
Costs of merchandise sold	357,252			351,008			750,362			772,596			404,465			393,110
Selling, general and administrative	215,807			211,253			438,126			436,349			218,686			222,319
Depreciation and amortization	24,043			22,919			45,605			44,099			22,033			21,562
Amortization of lease-related interests	1,159			1,135			2,341			2,271			1,101			1,182
Impairment charges	174			131			174			131
Loss from operations	(20,298		)	(15,461		)	(35,938		)	(22,578		)	(19,043		)	(15,640		)
Interest expense, net	15,447			17,547			30,718			36,255			15,190			15,271
Loss on extinguishment of debt	—			3,917			153			4,277			—			153

Loss before income taxes	(35,745		)	(36,925		)	(66,809		)	(63,110		)	(34,233		)	(31,064		)
Income tax provision	447			404			895			854
Income tax (benefit) provision													(159		)	448

Net loss	$	(36,192	)	$	(37,329	)	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)

Per share amounts —
Basic:
Net loss	$	(1.86	)	$	(1.95	)	$	(3.50	)	$	(3.37	)	$	(1.74	)	$	(1.63	)

Diluted:
Net loss	$	(1.86	)	$	(1.95	)	$	(3.50	)	$	(3.37	)	$	(1.74	)	$	(1.63	)

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	THIRTEEN						TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED						WEEKS ENDED
(In thousands)	August 2,			August 3,			August 2,			August 3,			May 2,			May 3,
(Unaudited)	2014			2013			2014			2013			2015			2014

Net loss	$	(36,192	)	$	(37,329	)	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	814			1,551			1,628			3,102			982			814
Comprehensive loss	$	(35,378	)	$	(35,778	)	$	(66,076	)	$	(60,862	)	$	(33,092	)	$	(30,698	)

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED
(In thousands)	August 2,			August 3,			May 2,			May 3,
(Unaudited)	2014			2013			2015			2014
Cash flows from operating activities:
Net loss	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	45,605			44,099			22,033			21,562
Amortization of lease-related interests	2,341			2,271			1,101			1,182
Impairment charges	174			131
Share-based compensation expense	1,151			3,430			844			1,253
Gain on sale of property, fixtures and equipment	(2,257		)	(399		)	—			(2,303		)
Reclassifications of accumulated other comprehensive loss	1,628			3,102			1,591			814
Loss on extinguishment of debt	153			4,277			—			153
Amortization of deferred financing costs	1,458			2,024			747			724
Deferred income tax provision	890			883
Deferred income tax (benefit) provision							(159		)	445
Changes in operating assets and liabilities:
(Increase) decrease in merchandise inventories	(13,721		)	38,223
Decrease (increase) in prepaid expenses and other current assets	4,168			(282		)
Decrease (increase) in other long-term assets	495			(665		)
Increase in accounts payable	41,394			41,322
Increase in merchandise inventories							(3,274		)	(2,047		)
Decrease in prepaid expenses and other current assets							15,560			3,147
Decrease in other long-term assets							484			212
Decrease in accounts payable							(5,634		)	(4,134		)
Decrease in accrued payroll and benefits and accrued expenses	(11,566		)	(27,799		)	(10,676		)	(3,010		)
Decrease in income taxes payable	—			(739		)
Decrease in other long-term liabilities	(9,864		)	(966		)	(6,373		)	(2,289		)
Net cash (used in) provided by operating activities	(5,655		)	44,948
Net cash used in operating activities							(17,830		)	(15,803		)

Cash flows from investing activities:
Capital expenditures	(37,661		)	(35,498		)	(24,448		)	(15,433		)
Proceeds from sale of property, fixtures and equipment	5,008			1,266			—			5,000
Net cash used in investing activities	(32,653		)	(34,232		)	(24,448		)	(10,433		)

Cash flows from financing activities:
Payments on long-term debt and capital lease obligations	(281,775		)	(799,951		)	(139,000		)	(139,750		)
Proceeds from issuance of long-term debt	327,232			800,997			187,611			177,728
Cash dividends paid	(991		)	(981		)	(991		)	(985		)
Restricted shares forfeited in lieu of payroll taxes	(1,461		)	(2,097		)	(399		)	(1,461		)
Proceeds from stock options exercised	—			595			454			—
Deferred financing costs paid	(69		)	(8,400		)	—			(35		)
Decrease in book overdraft balances	(3,998		)	(665		)	(5,439		)	(8,098		)
Net cash provided by (used in) financing activities	38,938			(10,502		)
Net cash provided by financing activities							42,236			27,399

Net increase in cash and cash equivalents	630			214
Net (decrease) increase in cash and cash equivalents							(42		)	1,163

Cash and cash equivalents at beginning of period	7,058			7,926			8,753			7,058

Cash and cash equivalents at end of period	$	7,688		$	8,140		$	8,711		$	8,221

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

												Accumulated			(Accumulated																	Accumulated			(Accumulated
				Class A					Additional			Other			Deficit)									Class A					Additional			Other			Deficit)
(In thousands, except per share data)	Common			Common		Treasury			Paid-in			Comprehensive			Retained						Common			Common		Treasury			Paid-in			Comprehensive			Retained
(Unaudited)	Stock			Stock		Stock			Capital			Loss			Earnings			Total			Stock			Stock		Stock			Capital			Loss			Earnings			Total

BALANCE AT FEBRUARY 2, 2013	$	175		$	30	$	(1,387	)	$	158,728		$	(73,242	)	$	26,302		$	110,606

Net loss	—			—		—			—			��			(63,964		)	(63,964		)
Other comprehensive income	—			—		—			—			3,102			—			3,102
Dividends to shareholders, $0.10 per share	—			—		—			—			—			(1,966		)	(1,966		)
Restricted shares forfeited in lieu of payroll taxes	(2		)	—		—			(2,095		)	—			—			(2,097		)
Proceeds from stock options exercised	1			—		—			594			—			—			595
Share-based compensation expense	5			—		—			3,425			—			—			3,430
BALANCE AT AUGUST 3, 2013	$	179		$	30	$	(1,387	)	$	160,652		$	(70,140	)	$	(39,628	)	$	49,706

BALANCE AT FEBRUARY 1, 2014	$	178		$	30	$	(1,387	)	$	160,772		$	(50,448	)	$	18,811		$	127,956		$	178		$	30	$	(1,387	)	$	160,772		$	(50,448	)	$	18,811		$	127,956

Net loss	—			—		—			—			—			(67,704		)	(67,704		)	—			—		—			—			—			(31,512		)	(31,512		)
Other comprehensive income	—			—		—			—			1,628			—			1,628			—			—		—			—			814			—			814
Dividends to shareholders, $0.10 per share	—			—		—			—			—			(1,981		)	(1,981		)
Dividends to shareholders, $0.05 per share																					—			—		—			—			—			(992		)	(992		)
Restricted shares forfeited in lieu of payroll taxes	(1		)	—		—			(1,460		)	—			—			(1,461		)	—			—		—			(1,461		)	—			—			(1,461		)
Share-based compensation expense	2			—		—			1,149			—			—			1,151			—			—		—			1,253			—			—			1,253
BALANCE AT AUGUST 2, 2014	$	179		$	30	$	(1,387	)	$	160,461		$	(48,820	)	$	(50,874	)	$	59,589
BALANCE AT MAY 3, 2014																					$	178		$	30	$	(1,387	)	$	160,564		$	(49,634	)	$	(13,693	)	$	96,058

BALANCE AT JANUARY 31, 2015																					$	178		$	30	$	(1,387	)	$	161,359		$	(80,405	)	$	7,873		$	87,648

Net loss																					—			—		—			—			—			(34,074		)	(34,074		)
Other comprehensive income																					—			—		—			—			982			—			982
Dividends to shareholders, $0.05 per share																					—			—		—			—			—			(1,012		)	(1,012		)
Restricted shares forfeited in lieu of payroll taxes																					(1		)	—		—			(398		)	—			—			(399		)
Proceeds from stock options exercised																					1			—		—			453			—			—			454
Share-based compensation expense																					5			—		—			839			—			—			844
BALANCE AT MAY 2, 2015																					$	183		$	30	$	(1,387	)	$	162,253		$	(79,423	)	$	(27,213	)	$	54,443

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

1. BASIS OF PRESENTATION

The Bon-Ton Stores, Inc., a Pennsylvania corporation, was incorporated on January 31, 1996 as the successor of a company incorporated on January 31, 1929. As of ~~August~~May 2, ~~2014,~~2015, The Bon-Ton Stores, Inc. operated, through its subsidiaries, ~~272~~270 stores, including ~~ten~~nine furniture galleries and four clearance centers, in 2526 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates.

The accompanying unaudited consolidated financial statements include the accounts of The Bon-Ton Stores, Inc. (the “Parent”) and its subsidiaries (collectively, the “Company”). ~~Variable interest entities are consolidated where it has been determined the Company is the primary beneficiary of those entities’ operations.~~ All intercompany transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all information and footnotes required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of management, all adjustments considered necessary for a fair presentation of interim periods have been included. The Company’s business is seasonal in nature and results of operations for the interim periods presented are not necessarily indicative of results for the full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended ~~February 1, 2014.~~January 31, 2015.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions about future events. These estimates and assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and the reported amounts of revenues and expenses. Such estimates include those related to merchandise returns, the valuation of inventories, long-lived assets, intangible assets, insurance reserves, contingencies, litigation and assumptions used in the calculation of income taxes and retirement and other post-employment benefits, among others. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

2. PER-SHARE AMOUNTS

The following table presents a reconciliation of net loss and weighted average shares outstanding used in basic and diluted earnings (loss) per share (“EPS”) calculations for each period presented:

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

	THIRTEEN						TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED						WEEKS ENDED
	August 2,			August 3,			August 2,			August 3,			May 2,			May 3,
	2014			2013			2014			2013			2015			2014

Basic Loss Per Common Share
Net loss	$	(36,192	)	$	(37,329	)	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)
Less: Income allocated to participating securities	—			—			—			—			—			—
Net loss available to common shareholders	$	(36,192	)	$	(37,329	)	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)

Weighted average common shares outstanding	19,426,824			19,154,714			19,354,271			18,998,893			19,561,610			19,281,718

Basic loss per common share	$	(1.86	)	$	(1.95	)	$	(3.50	)	$	(3.37	)	$	(1.74	)	$	(1.63	)

Diluted Loss Per Common Share
Net loss	$	(36,192	)	$	(37,329	)	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)
Less: Income allocated to participating securities	—			—			—			—			—			—
Net loss available to common shareholders	$	(36,192	)	$	(37,329	)	$	(67,704	)	$	(63,964	)	$	(34,074	)	$	(31,512	)

Weighted average common shares outstanding	19,426,824			19,154,714			19,354,271			18,998,893			19,561,610			19,281,718
Common shares issuable - stock options	—			—			—			—			—			—
Weighted average common shares outstanding assuming dilution	19,426,824			19,154,714			19,354,271			18,998,893			19,561,610			19,281,718

Diluted loss per common share	$	(1.86	)	$	(1.95	)	$	(3.50	)	$	(3.37	)	$	(1.74	)	$	(1.63	)

Due to the Company’s net loss position, weighted average unvested restricted shares (participating securities) of ~~685,628~~708,961 and ~~908,385~~729,534 for the ~~second~~first quarter in each of ~~2014~~2015 and ~~2013, respectively, and 707,581 and 980,123 for the 26 weeks ended August 2,~~ 2014, ~~and August 3, 2013,~~ 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 ~~200,950~~110,196 and ~~331,068~~256,008 for the ~~second~~first quarter in each of ~~2014~~2015 and ~~2013, respectively, and 228,479 and 432,876 for the 26 weeks ended August 2,~~ 2014, ~~and August 3, 2013,~~ 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 for the ~~second~~first quarter in each of ~~2014~~2015 and ~~2013,~~2014, these shares would have increased diluted weighted average common shares outstanding by ~~99,813~~16,790 and 151,829, respectively. Had the Company reported net income for the 26 weeks ended August 2, 2014 and August 3, 2013, these shares would have increased diluted weighted average common shares outstanding by 101,482 and 161,203,103,150, respectively.

3. FAIR VALUE MEASUREMENTS

Accounting Standards Codification (“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

~~THE BON-TON STORES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In thousands, except share and per share data)~~

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 BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

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, including current maturities but excluding capital leases, as of ~~August~~May 2, ~~2014~~2015 are as follows:

					Fair Value Measurements Using										Fair Value Measurements Using
	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		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	$	384,550	$	384,550	$	—	$	—	$	407,292	$	354,228	$	354,228	$	—	$	—
Mortgage facilities	215,015		217,796		—		—		217,796		209,652		211,637		—		—		211,637
Senior secured credit facility	237,243		237,243		—		—		237,243		290,705		290,705		—		—		290,705
Total	$	859,550	$	839,589	$	384,550	$	—	$	455,039	$	907,649	$	856,570	$	354,228	$	—	$	502,342

The carrying value and estimated fair value of the Company’s long-term debt, including current maturities but excluding capital leases, as of ~~August~~May 3, ~~2013~~2014 are as follows:

					Fair Value Measurements Using										Fair Value Measurements Using
	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		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	$	416,328	$	57,578	$	358,750	$	—	$	407,292	$	392,234	$	392,234	$	—	$	—
Mortgage facilities	222,980		226,817		—		—		226,817		216,710		218,315		—		—		218,315
Senior secured credit facility	218,805		218,805		—		—		218,805		227,136		227,136		—		—		227,136
Total	$	849,077	$	861,950	$	57,578	$	358,750	$	445,622	$	851,138	$	837,685	$	392,234	$	—	$	445,451

The carrying value and estimated fair value of the Company’s long-term debt, including current maturities but excluding capital leases, as of ~~February 1, 2014~~January 31, 2015 are as follows:

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

					Fair Value Measurements Using										Fair Value Measurements Using
	Carrying Value		Estimated Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		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	$	398,972	$	398,972	$	—	$	—	$	407,292	$	345,700	$	345,700	$	—	$	—
Mortgage facilities	219,564		222,168		—		—		222,168		211,541		214,132		—		—		214,132
Senior secured credit facility	184,879		184,879		—		—		184,879		238,918		238,918		—		—		238,918
Total	$	811,735	$	806,019	$	398,972	$	—	$	407,047	$	857,751	$	798,750	$	345,700	$	—	$	453,050

~~The Level 2 fair value estimates were determined by a market approach using prices generated by market transactions.~~ 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 ~~2 or Level~~ 3 fair value estimates.

4. SUPPLEMENTAL BALANCE SHEET INFORMATION

Prepaid expenses and other current assets were comprised of the following:

	August 2,		August 3,		February 1,		May 2,		May 3,		January 31,
	2014		2013		2014		2015		2014		2015
Other receivables	$	30,869	$	28,751	$	39,569	$	35,198	$	32,040	$	59,734
Prepaid expenses	41,249		42,132		36,716		42,636		41,098		33,660
Total	$	72,118	$	70,883	$	76,285	$	77,834	$	73,138	$	93,394

5. SUPPLEMENTAL CASH FLOW INFORMATION

The following supplemental cash flow information is provided for the periods reported:

	TWENTY-SIX					THIRTEEN
	WEEKS ENDED					WEEKS ENDED
	August 2,			August 3,		May 2,		May 3,
	2014			2013		2015		2014

Cash paid for:
Interest, net of amounts capitalized	$	29,605		$	45,484	$	9,315	$	9,512
Income taxes, net of refunds received	(3		)	753		—		(3		)

Non-cash investing and financing activities:
Property, fixtures and equipment included in accrued expenses	$	5,980		$	4,401	$	5,711	$	4,216
Declared dividends to shareholders included in accrued expenses	990			985		1,012		992

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

6. EXIT OR DISPOSAL ACTIVITIES

The following table summarizes exit or disposal activities during the ~~26 weeks ended August 2, 2014~~first quarter of 2015 related to store closings in fiscal ~~2013,~~2014, the consolidation of eCommerce fulfillment activities in advance of the Company’s new eCommerce fulfillment center and the Company’s expense efficiency initiative:

Termination
Benefits

Other Costs

Total

Accrued balance as of February 1, 2014

$
232

$
188

$
420

Provisions:

Thirteen weeks ended May 3, 2014

319

125

444

Thirteen weeks ended August 2, 2014

1,148

18

1,166

Payments:

Thirteen weeks ended May 3, 2014

(217
)
(313
)
(530
)
Thirteen weeks ended August 2, 2014

(377
)
(18
)
(395
)
Accrued balance as of August 2, 2014

$
1,105

$
—

$
1,105

	Termination Benefits			Other Costs			Total
Accrued balance as of January 31, 2015	$	1,279		$	—		$	1,279
Provisions	(122		)	102			(20		)
Payments	(421		)	(102		)	(523		)
Accrued balance as of May 2, 2015	$	736		$	—		$	736

The above provisions were included within selling, general and administrative expense.

7. EMPLOYEE DEFINED AND POSTRETIREMENT BENEFIT PLANS

The Company provides benefits to certain current and former associates who are eligible under a qualified defined benefit pension plan and various non-qualified supplemental pension plans (collectively, the “Pension Plans”). Net periodic benefit expense for the Pension Plans includes the following (income) and expense components:

	THIRTEEN						TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED						WEEKS ENDED
	August 2,			August 3,			August 2,			August 3,			May 2,			May 3,
	2014			2013			2014			2013			2015			2014
Interest cost	$	1,998		$	1,999		$	3,995		$	3,997		$	1,701		$	1,997
Expected return on plan assets	(2,490		)	(2,236		)	(4,980		)	(4,471		)	(2,410		)	(2,490		)
Recognition of net actuarial loss	944			1,641			1,888			3,283			1,698			944
Net periodic benefit expense	$	452		$	1,404		$	903		$	2,809		$	989		$	451

During the ~~26 weeks ended August 2, 2014,~~first quarter of 2015, contributions of ~~$7,003~~$3,102 were made to the Pension Plans. The Company anticipates contributing an additional ~~$8,076~~$3,575 to fund the Pension Plans in fiscal ~~2014~~2015 for an annual total of ~~$15,079.~~$6,677.

The Company also provides medical and life insurance benefits to certain former associates under a postretirement benefit plan (“Postretirement Benefit Plan”). Net periodic benefit income for the Postretirement Benefit Plan includes the following (income) and expense components:

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

	THIRTEEN						TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED						WEEKS ENDED
	August 2,			August 3,			August 2,			August 3,			May 2,			May 3,
	2014			2013			2014			2013			2015			2014
Interest cost	$	22		$	31		$	44		$	61		$	16		$	22
Recognition of net actuarial gain	(130		)	(90		)	(260		)	(181		)	(107		)	(130		)
Net periodic benefit income	$	(108	)	$	(59	)	$	(216	)	$	(120	)	$	(91	)	$	(108	)

During the ~~26 weeks ended August 2, 2014,~~first quarter of 2015, the Company contributed ~~$72~~$20 to fund the Postretirement Benefit Plan, and anticipates contributing an additional ~~$339~~$335 to fund the Postretirement Benefit Plan in fiscal ~~2014,~~2015, for a net annual total of ~~$411.~~$355.

8. INCOME TAXES

The provisions codified within ASC Topic 740, Income Taxes (“ASC 740”), require companies to 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 accordance with ASC 740, the Company maintained a full valuation allowance throughout fiscal ~~2013~~2014 and the ~~26 weeks ended August 2, 2014~~first quarter of 2015 on all of the Company’s net deferred tax assets. The Company’s deferred tax asset valuation allowance totaled ~~$171,126, $178,360~~$175,356, $156,846 and ~~$144,908~~$161,856 as of ~~August~~May 2, 2015, May 3, 2014 ~~August 3, 2013~~ and ~~February 1, 2014,~~January 31, 2015, respectively.

~~Given the Company’s valuation allowance position, no~~The Company recorded a net income tax benefit ~~was recognized~~of $159 which includes a $609 non-cash income tax benefit from continuing operations during the first quarter of 2015. Pursuant to ASC 740, the Company is required to consider all items (including items recorded in other comprehensive income) 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, the Company recorded a tax benefit on the ~~Company’s~~ loss ~~before~~from continuing operations for the first quarter of 2015, which is exactly offset by income ~~taxes in~~tax expense on other comprehensive income. In addition, the ~~13 and 26 weeks ended in each~~net income tax benefit includes $450 for recognition of ~~August 2, 2014 and August 3, 2013.~~deferred tax liabilities associated with indefinite-lived assets. The income tax provision of $448 recorded in the ~~13 and 26 weeks ended in each~~first quarter of ~~August 2,~~ 2014 ~~and August 3, 2013~~ primarily reflects the recognition of deferred tax liabilities associated with indefinite-lived assets.

~~As of August 2, 2014, it is reasonably possible that gross unrecognized tax benefits could decrease by $78 within the next 12 months due to the expiration of certain statutes of limitations.~~

9. 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 position, results of operations or liquidity.

10. COMPREHENSIVE LOSS

Accumulated other comprehensive loss is comprised of the net actuarial loss associated with the Pension Plans and Postretirement Benefit Plan. Other comprehensive income is comprised entirely of the amortization of the net actuarial loss (gain) associated with the Pension Plans and Postretirement Benefit Plan.

~~As a result of the deferred tax asset valuation allowance maintained throughout fiscal 2013 and the 26 weeks ended August 2, 2014 (see Note 8), no tax effect was recorded on the~~The changes recognized within other comprehensive income reflect income tax expense of $609 and $0 for ~~all periods presented.~~the first quarters of 2015 and 2014, respectively (see Note 8).

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The before-tax amount of amortization of net actuarial loss (gain) (see Note 7) was recorded within selling, general and administrative expense.

11. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES

Certain debt obligations of the Company, which constitute debt obligations of The Bon-Ton Department Stores, Inc. (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 senior secured 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.”

The condensed consolidating financial information for the Parent, the Issuer and the guarantor and non-guarantor subsidiaries as of ~~August~~May 2, 2015, May 3, 2014 ~~August 3, 2013~~ and ~~February 1, 2014~~January 31, 2015 and for the ~~second~~first quarter in each of ~~2014~~2015 and ~~2013 and the 26 weeks ended August 2,~~ 2014 ~~and August 3, 2013~~ as presented below has been prepared from the books and records maintained by the Parent, the Issuer and the guarantor and non-guarantor subsidiaries. The condensed financial information may not necessarily be indicative of the results of operations or financial position had the guarantor and non-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.

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

~~August~~May 2, ~~2014~~2015

					Guarantor		Non-Guarantor		Consolidating			Company						Guarantor		Non-Guarantor		Consolidating			Company
	Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated		Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	1	$	2,874	$	4,813	$	—	$	—		$	7,688	$	1	$	3,254	$	5,456	$	—	$	—		$	8,711
Merchandise inventories	—		480,852		242,602		—		—			723,454		—		469,973		268,258		—		—			738,231
Prepaid expenses and other current assets	—		64,590		5,272		2,834		(578		)	72,118		—		66,680		7,374		4,286		(506		)	77,834
Total current assets	1		548,316		252,687		2,834		(578		)	803,260		1		539,907		281,088		4,286		(506		)	824,776
Property, fixtures and equipment at cost, net	—		250,215		150,065		232,421		—			632,701		—		275,383		142,628		224,257		—			642,268
Deferred income taxes	—		3,144		16,240		—		—			19,384		—		4,235		13,138		—		—			17,373
Intangible assets, net	—		26,114		67,418		—		—			93,532		—		23,882		64,656		—		—			88,538
Investment in and advances to affiliates	59,588		322,324		393,082		—		(774,994		)	—		54,442		341,535		413,542		—		(809,519		)	—
Other long-term assets	—		22,692		446		564		—			23,702		—		21,547		374		331		—			22,252
Total assets	$	59,589	$	1,172,805	$	879,938	$	235,819	$	(775,572	)	$	1,572,579	$	54,443	$	1,206,489	$	915,426	$	228,874	$	(810,025	)	$	1,595,207

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	238,077	$	—	$	—	$	—		$	238,077	$	—	$	197,789	$	—	$	—	$	—		$	197,789
Accrued payroll and benefits	—		20,434		5,013		—		—			25,447		—		17,179		3,937		—		—			21,116
Accrued expenses	—		73,378		69,402		74		(578		)	142,276		—		80,922		72,110		72		(506		)	152,598
Current maturities of long-term debt and obligations under capital leases	—		446		3,394		7,171		—			11,011		—		471		3,590		209,652		—			213,713
Deferred income taxes	—		7,940		19,315		—		—			27,255		—		9,640		16,879		—		—			26,519
Total current liabilities	—		340,275		97,124		7,245		(578		)	444,066		—		306,001		96,516		209,724		(506		)	611,735

Long-term debt and obligations under capital leases, less current maturities	—		649,957		41,281		207,843		—			899,081		—		703,062		38,564		—		—			741,626
Other long-term liabilities	—		123,485		44,587		1,771		—			169,843		—		144,805		40,729		1,869		—			187,403
Total liabilities	—		1,113,717		182,992		216,859		(578		)	1,512,990		—		1,153,868		175,809		211,593		(506		)	1,540,764

Shareholders’ equity	59,589		59,088		696,946		18,960		(774,994		)	59,589		54,443		52,621		739,617		17,281		(809,519		)	54,443

Total liabilities and shareholders’ equity	$	59,589	$	1,172,805	$	879,938	$	235,819	$	(775,572	)	$	1,572,579	$	54,443	$	1,206,489	$	915,426	$	228,874	$	(810,025	)	$	1,595,207

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

~~August~~May 3, ~~2013~~2014

					Guarantor		Non-Guarantor			Consolidating			Company						Guarantor		Non-Guarantor		Consolidating			Company
	Parent		Issuer		Subsidiaries		Subsidiaries			Eliminations			Consolidated		Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	1	$	3,010	$	5,129	$	—		$	—		$	8,140	$	1	$	3,042	$	5,178	$	—	$	—		$	8,221
Merchandise inventories	—		475,982		244,195		—			—			720,177		—		447,439		264,341		—		—			711,780
Prepaid expenses and other current assets	—		63,167		4,299		4,068			(651		)	70,883		—		66,035		4,504		3,177		(578		)	73,138
Total current assets	1		542,159		253,623		4,068			(651		)	799,200		1		516,516		274,023		3,177		(578		)	793,139
Property, fixtures and equipment at cost, net	—		224,502		172,615		245,916			—			643,033		—		241,984		152,326		235,143		—			629,453
Deferred income taxes	—		7,160		9,272		—			—			16,432		—		1,062		17,199		—		—			18,261
Intangible assets, net	—		34,944		71,853		—			—			106,797		—		32,734		68,311		—		—			101,045
Investment in and advances to (from) affiliates	49,705		349,448		340,140		(52		)	(739,241		)	—
Investment in and advances to affiliates															96,057		343,552		377,779		—		(817,388		)	—
Other long-term assets	—		21,871		465		1,002			—			23,338		—		23,552		491		641		—			24,684
Total assets	$	49,706	$	1,180,084	$	847,968	$	250,934		$	(739,892	)	$	1,588,800	$	96,058	$	1,159,400	$	890,129	$	238,961	$	(817,966	)	$	1,566,582

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	235,160	$	—	$	—		$	—		$	235,160	$	—	$	188,169	$	—	$	—	$	—		$	188,169
Accrued payroll and benefits	—		24,269		5,206		—			—			29,475		—		17,529		4,046		—		—			21,575
Accrued expenses	—		72,039		68,587		115			(651		)	140,090		—		79,855		72,939		112		(578		)	152,328
Current maturities of long-term debt and obligations under capital leases	—		786		3,150		7,129			—			11,065		—		454		3,330		7,059		—			10,843
Deferred income taxes	—		11,135		11,426		—			—			22,561		—		5,882		19,804		—		—			25,686
Total current liabilities	—		343,389		88,369		7,244			(651		)	438,351		—		291,889		100,119		7,171		(578		)	398,601

Long-term debt and obligations under capital leases, less current maturities	—		631,965		44,674		215,851			—			892,490		—		639,964		42,154		209,652		—			891,770
Other long-term liabilities	—		155,714		50,892		1,647			—			208,253		—		132,091		46,323		1,739		—			180,153
Total liabilities	—		1,131,068		183,935		224,742			(651		)	1,539,094		—		1,063,944		188,596		218,562		(578		)	1,470,524

Shareholders’ equity	49,706		49,016		664,033		26,192			(739,241		)	49,706		96,058		95,456		701,533		20,399		(817,388		)	96,058

Total liabilities and shareholders’ equity	$	49,706	$	1,180,084	$	847,968	$	250,934		$	(739,892	)	$	1,588,800	$	96,058	$	1,159,400	$	890,129	$	238,961	$	(817,966	)	$	1,566,582

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

~~February 1, 2014~~January 31, 2015

					Guarantor		Non-Guarantor			Consolidating			Company						Guarantor		Non-Guarantor		Consolidating			Company
	Parent		Issuer		Subsidiaries		Subsidiaries			Eliminations			Consolidated		Parent		Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	1	$	2,889	$	4,168	$	—		$	—		$	7,058	$	1	$	4,209	$	4,543	$	—	$	—		$	8,753
Merchandise inventories	—		454,718		255,015		—			—			709,733		—		483,270		251,686		—		—			734,956
Prepaid expenses and other current assets	—		67,670		4,437		4,726			(548		)	76,285		—		74,956		14,906		3,966		(434		)	93,394
Total current assets	1		525,277		263,620		4,726			(548		)	793,076		1		562,435		271,135		3,966		(434		)	837,103
Property, fixtures and equipment at cost, net	—		232,869		166,720		240,415			—			640,004		—		268,224		146,793		226,979		—			641,996
Deferred income taxes	—		4,076		11,689		—			—			15,765		—		4,889		10,892		—		—			15,781
Intangible assets, net	—		33,260		69,540		—			—			102,800		—		24,618		65,533		—		—			90,151
Investment in and advances to (from) affiliates	127,955		344,188		387,556		(90		)	(859,609		)	—
Investment in and advances to affiliates															87,647		324,668		435,870		—		(848,185		)	—
Other long-term assets	—		24,169		533		882			—			25,584		—		22,685		391		407		—			23,483
Total assets	$	127,956	$	1,163,839	$	899,658	$	245,933		$	(860,157	)	$	1,577,229	$	87,648	$	1,207,519	$	930,614	$	231,352	$	(848,619	)	$	1,608,514

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	200,465	$	—	$	—		$	—		$	200,465	$	—	$	208,882	$	—	$	—	$	—		$	208,882
Accrued payroll and benefits	—		22,567		5,776		—			—			28,343		—		23,637		5,211		—		—			28,848
Accrued expenses	—		74,115		76,981		47			(548		)	150,595		—		76,599		81,857		—		(434		)	158,022
Current maturities of long-term debt and obligations under capital leases	—		548		3,249		7,363			—			11,160		—		460		3,501		6,788		—			10,749
Deferred income taxes	—		8,451		14,293		—			—			22,744		—		10,081		14,397		—		—			24,478
Total current liabilities	—		306,146		100,299		7,410			(548		)	413,307		—		319,659		104,966		6,788		(434		)	430,979

Long-term debt and obligations under capital leases, less current maturities	—		597,857		43,291		212,201			—			853,349		—		651,436		39,790		204,753		—			895,979
Other long-term liabilities	—		132,690		48,220		1,707			—			182,617		—		150,152		41,921		1,835		—			193,908
Total liabilities	—		1,036,693		191,810		221,318			(548		)	1,449,273		—		1,121,247		186,677		213,376		(434		)	1,520,866

Shareholders’ equity	127,956		127,146		707,848		24,615			(859,609		)	127,956		87,648		86,272		743,937		17,976		(848,185		)	87,648

Total liabilities and shareholders’ equity	$	127,956	$	1,163,839	$	899,658	$	245,933		$	(860,157	)	$	1,577,229	$	87,648	$	1,207,519	$	930,614	$	231,352	$	(848,619	)	$	1,608,514

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Operations

Thirteen Weeks Ended ~~August~~May 2, ~~2014~~2015

							Guarantor			Non-Guarantor			Consolidating			Company									Guarantor			Non-Guarantor			Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated			Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Net sales	$	—		$	331,840		$	231,612		$	—		$	—		$	563,452		$	—		$	360,466		$	250,472		$	—		$	—		$	610,938
Other income	—			8,678			6,007			—			—			14,685			—			9,470			6,834			—			—			16,304
	—			340,518			237,619			—			—			578,137			—			369,936			257,306			—			—			627,242

Costs and expenses:
Costs of merchandise sold	—			210,790			146,462			—			—			357,252			—			239,112			165,353			—			—			404,465
Selling, general and administrative	—			133,709			89,346			32			(7,280		)	215,807			—			134,831			91,223			35			(7,403		)	218,686
Depreciation and amortization	—			12,446			8,876			2,721			—			24,043			—			11,208			8,104			2,721			—			22,033
Amortization of lease-related interests	—			552			607			—			—			1,159			—			495			606			—			—			1,101
Impairment charges	—			174			—			—			—			174
Loss from operations	—			(17,153		)	(7,672		)	(2,753		)	7,280			(20,298		)	—			(15,710		)	(7,980		)	(2,756		)	7,403			(19,043		)

Other income (expense):
Intercompany income	—			449			4,169			6,597			(11,215		)	—			—			450			4,694			6,670			(11,814		)	—
Equity in losses of subsidiaries	(35,745		)	(3,986		)	—			—			39,731			—			(34,233		)	(3,557		)	—			—			37,790			—
Interest expense, net	—			(15,055		)	(849		)	(3,478		)	3,935			(15,447		)	—			(15,416		)	(798		)	(3,387		)	4,411			(15,190		)

(Loss) income before income taxes	(35,745		)	(35,745		)	(4,352		)	366			39,731			(35,745		)	(34,233		)	(34,233		)	(4,084		)	527			37,790			(34,233		)
Income tax provision	447			447			235			—			(682		)	447
Income tax (benefit) provision																			(159		)	(159		)	236			—			(77		)	(159		)

Net (loss) income	$	(36,192	)	$	(36,192	)	$	(4,587	)	$	366		$	40,413		$	(36,192	)	$	(34,074	)	$	(34,074	)	$	(4,320	)	$	527		$	37,867		$	(34,074	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Comprehensive (Loss) Income

Thirteen Weeks Ended ~~August~~May 2, ~~2014~~2015

							Guarantor			Non-Guarantor		Consolidating			Company									Guarantor			Non-Guarantor		Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries		Eliminations			Consolidated			Parent			Issuer			Subsidiaries			Subsidiaries		Eliminations			Consolidated

Net (loss) income	$	(36,192	)	$	(36,192	)	$	(4,587	)	$	366	$	40,413		$	(36,192	)	$	(34,074	)	$	(34,074	)	$	(4,320	)	$	527	$	37,867		$	(34,074	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	814			814			—			—		(814		)	814			982			982			—			—		(982		)	982
Comprehensive (loss) income	$	(35,378	)	$	(35,378	)	$	(4,587	)	$	366	$	39,599		$	(35,378	)	$	(33,092	)	$	(33,092	)	$	(4,320	)	$	527	$	36,885		$	(33,092	)

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Operations

Thirteen Weeks Ended ~~August~~May 3, ~~2013~~2014

							Guarantor			Non-Guarantor			Consolidating			Company									Guarantor			Non-Guarantor			Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated			Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Net sales	$	—		$	322,579		$	234,561		$	—		$	—		$	557,140		$	—		$	360,200		$	247,260		$	—		$	—		$	607,460
Other income	—			7,870			5,975			—			—			13,845			—			9,002			6,071			—			—			15,073
	—			330,449			240,536			—			—			570,985			—			369,202			253,331			—			—			622,533

Costs and expenses:
Costs of merchandise sold	—			203,918			147,090			—			—			351,008			—			234,367			158,743			—			—			393,110
Selling, general and administrative	—			128,433			90,224			30			(7,434		)	211,253			—			139,676			92,440			(2,371		)	(7,426		)	222,319
Depreciation and amortization	—			11,145			9,023			2,751			—			22,919			—			11,066			7,714			2,782			—			21,562
Amortization of lease-related interests	—			443			692			—			—			1,135			—			576			606			—			—			1,182
Impairment charges	—			131			—			—			—			131
Loss from operations	—			(13,621		)	(6,493		)	(2,781		)	7,434			(15,461		)	—			(16,483		)	(6,172		)	(411		)	7,426			(15,640		)

Other income (expense):
Intercompany income	—			470			4,769			6,723			(11,962		)	—			—			464			5,366			6,670			(12,500		)	—
Equity in losses of subsidiaries	(36,925		)	(2,298		)	—			—			39,223			—
Equity in (losses) income of subsidiaries																			(31,064		)	944			—			—			30,120			—
Interest expense, net	—			(17,559		)	(907		)	(3,609		)	4,528			(17,547		)	—			(15,989		)	(862		)	(3,494		)	5,074			(15,271		)
Loss on extinguishment of debt	—			(3,917		)	—			—			—			(3,917		)	—			—			—			(153		)	—			(153		)

(Loss) income before income taxes	(36,925		)	(36,925		)	(2,631		)	333			39,223			(36,925		)	(31,064		)	(31,064		)	(1,668		)	2,612			30,120			(31,064		)
Income tax provision	404			404			236			—			(640		)	404			448			448			235			—			(683		)	448

Net (loss) income	$	(37,329	)	$	(37,329	)	$	(2,867	)	$	333		$	39,863		$	(37,329	)	$	(31,512	)	$	(31,512	)	$	(1,903	)	$	2,612		$	30,803		$	(31,512	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Comprehensive (Loss) Income

Thirteen Weeks Ended ~~August~~May 3, ~~2013~~

Guarantor

Non-Guarantor

Consolidating

Company

Parent

Issuer

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Net (loss) income

$
(37,329
)
$
(37,329
)
$
(2,867
)
$
333

$
39,863

$
(37,329
)
Other comprehensive income, net of tax:

Pension and postretirement benefit plans

1,551

1,551

—

—

(1,551
)
1,551

Comprehensive (loss) income

$
(35,778
)
$
(35,778
)
$
(2,867
)
$
333

$
38,312

$
(35,778
)

~~THE BON-TON STORES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In thousands, except share and per share data)~~

~~The Bon-Ton Stores, Inc.~~

~~Condensed Consolidating Statement of Operations~~

~~Twenty-Six Weeks Ended August 2,~~ 2014

Guarantor

Non-Guarantor

Consolidating

Company

Parent

Issuer

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Net sales

$
—

$
692,040

$
478,872

$
—

$
—

$
1,170,912

Other income

—

17,680

12,078

—

—

29,758

—

709,720

490,950

—

—

1,200,670

Costs and expenses:

Costs of merchandise sold

—

445,157

305,205

—

—

750,362

Selling, general and administrative

—

273,385

181,786

(2,339
)
(14,706
)
438,126

Depreciation and amortization

—

23,512

16,590

5,503

—

45,605

Amortization of lease-related interests

—

1,128

1,213

—

—

2,341

Impairment charges

—

174

—

—

—

174

Loss from operations

—

(33,636
)
(13,844
)
(3,164
)
14,706

(35,938
)

Other income (expense):

Intercompany income

—

913

9,535

13,267

(23,715
)
—

Equity in losses of subsidiaries

(66,809
)
(3,042
)
—

—

69,851

—

Interest expense, net

—

(31,044
)
(1,711
)
(6,972
)
9,009

(30,718
)
Loss on extinguishment of debt

—

—

—

(153
)
—

(153
)

(Loss) income before income taxes

(66,809
)
(66,809
)
(6,020
)
2,978

69,851

(66,809
)
Income tax provision

895

895

470

—

(1,365
)
895

Net (loss) income

$
(67,704
)
$
(67,704
)
$
(6,490
)
$
2,978

$
71,216

$
(67,704
)

~~The Bon-Ton Stores, Inc.~~

~~Condensed Consolidating Statement of Comprehensive (Loss) Income~~

~~Twenty-Six Weeks Ended August 2, 2014~~

							Guarantor			Non-Guarantor		Consolidating			Company									Guarantor			Non-Guarantor		Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries		Eliminations			Consolidated			Parent			Issuer			Subsidiaries			Subsidiaries		Eliminations			Consolidated

Net (loss) income	$	(67,704	)	$	(67,704	)	$	(6,490	)	$	2,978	$	71,216		$	(67,704	)	$	(31,512	)	$	(31,512	)	$	(1,903	)	$	2,612	$	30,803		$	(31,512	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	1,628			1,628			—			—		(1,628		)	1,628			814			814			—			—		(814		)	814
Comprehensive (loss) income	$	(66,076	)	$	(66,076	)	$	(6,490	)	$	2,978	$	69,588		$	(66,076	)	$	(30,698	)	$	(30,698	)	$	(1,903	)	$	2,612	$	29,989		$	(30,698	)

~~THE BON-TON STORES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(In thousands, except share and per share data)~~

~~The Bon-Ton Stores, Inc.~~

~~Condensed Consolidating Statement of Operations~~

~~Twenty-Six Weeks Ended August 3, 2013~~

Guarantor

Non-Guarantor

Consolidating

Company

Parent

Issuer

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Net sales

$
—

$
699,847

$
504,197

$
—

$
—

$
1,204,044

Other income

—

16,444

12,380

—

—

28,824

—

716,291

516,577

—

—

1,232,868

Costs and expenses:

Costs of merchandise sold

—

451,395

321,201

—

—

772,596

Selling, general and administrative

—

265,896

185,440

60

(15,047
)
436,349

Depreciation and amortization

—

21,287

17,310

5,502

—

44,099

Amortization of lease-related interests

—

887

1,384

—

—

2,271

Impairment charges

—

131

—

—

—

131

Loss from operations

—

(23,305
)
(8,758
)
(5,562
)
15,047

(22,578
)

Other income (expense):

Intercompany income

—

968

9,082

13,519

(23,569
)
—

Equity in losses of subsidiaries

(63,110
)
(789
)
—

—

63,899

—

Interest expense, net

—

(35,707
)
(1,827
)
(7,243
)
8,522

(36,255
)
Loss on extinguishment of debt

—

(4,277
)
—

—

—

(4,277
)

(Loss) income before income taxes

(63,110
)
(63,110
)
(1,503
)
714

63,899

(63,110
)
Income tax provision

854

854

469

—

(1,323
)
854

Net (loss) income

$
(63,964
)
$
(63,964
)
$
(1,972
)
$
714

$
65,222

$
(63,964
)

~~The Bon-Ton Stores, Inc.~~

~~Condensed Consolidating Statement of Comprehensive (Loss) Income~~

~~Twenty-Six Weeks Ended August 3, 2013~~

Guarantor

Non-Guarantor

Consolidating

Company

Parent

Issuer

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Net (loss) income

$
(63,964
)
$
(63,964
)
$
(1,972
)
$
714

$
65,222

$
(63,964
)
Other comprehensive income, net of tax:

Pension and postretirement benefit plans

3,102

3,102

—

—

(3,102
)
3,102

Comprehensive (loss) income

$
(60,862
)
$
(60,862
)
$
(1,972
)
$
714

$
62,120

$
(60,862
)

2018

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Cash Flows

~~Twenty-Six~~Thirteen Weeks Ended ~~August~~May 2, ~~2014~~2015

							Guarantor			Non-Guarantor			Consolidating			Company									Guarantor			Non-Guarantor			Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated			Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	2,452		$	(14,644	)	$	8,000		$	4,529		$	(5,992	)	$	(5,655	)	$	1,390		$	(25,585	)	$	6,097		$	3,111		$	(2,843	)	$	(17,830	)

Cash flows from investing activities:
Capital expenditures	—			(32,171		)	(5,490		)	—			—			(37,661		)	—			(20,402		)	(4,046		)	—			—			(24,448		)
Intercompany investing activity	—			(147		)	—			—			147			—			(454		)	(176		)	—			—			630			—
Proceeds from sale of property, fixtures and equipment	—			7			1			5,000			—			5,008
Net cash (used in) provided by investing activities	—			(32,311		)	(5,489		)	5,000			147			(32,653		)
Net cash used in investing activities																			(454		)	(20,578		)	(4,046		)	—			630			(24,448		)

Cash flows from financing activities:
Payments on long-term debt and capital lease obligations	—			(275,234		)	(1,866		)	(4,675		)	—			(281,775		)	—			(135,973		)	(1,138		)	(1,889		)	—			(139,000		)
Proceeds from issuance of long-term debt	—			327,232			—			—			—			327,232			—			187,611			—			—			—			187,611
Intercompany financing activity	—			(991		)	—			(4,854		)	5,845			—			—			(991		)	—			(1,222		)	2,213			—
Deferred financing costs paid	—			(69		)	—			—			—			(69		)
Cash dividends paid	(991		)	—			—			—			—			(991		)	(991		)	—			—			—			—			(991		)
Restricted shares forfeited in lieu of payroll taxes	(1,461		)	—			—			—			—			(1,461		)	(399		)	—			—			—			—			(399		)
Proceeds from stock options exercised																			454			—			—			—			—			454
Decrease in book overdraft balances	—			(3,998		)	—			—			—			(3,998		)	—			(5,439		)	—			—			—			(5,439		)
Net cash (used in) provided by financing activities	(2,452		)	46,940			(1,866		)	(9,529		)	5,845			38,938			(936		)	45,208			(1,138		)	(3,111		)	2,213			42,236

Net (decrease) increase in cash and cash equivalents	—			(15		)	645			—			—			630			—			(955		)	913			—			—			(42		)

Cash and cash equivalents at beginning of period	1			2,889			4,168			—			—			7,058			1			4,209			4,543			—			—			8,753

Cash and cash equivalents at end of period	$	1		$	2,874		$	4,813		$	—		$	—		$	7,688		$	1		$	3,254		$	5,456		$	—		$	—		$	8,711

2119

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Cash Flows

~~Twenty-Six~~Thirteen Weeks Ended ~~August~~May 3, ~~2013~~2014

							Guarantor			Non-Guarantor			Consolidating			Company									Guarantor			Non-Guarantor			Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated			Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	3,078		$	32,102		$	8,170		$	6,308		$	(4,710	)	$	44,948
Net cash provided by (used in) operating activities																			$	2,446		$	(18,857	)	$	3,702		$	1,027		$	(4,121	)	$	(15,803	)

Cash flows from investing activities:
Capital expenditures	—			(29,433		)	(6,065		)	—			—			(35,498		)	—			(13,797		)	(1,636		)	—			—			(15,433		)
Intercompany investing activity	(595		)	(280		)	—			—			875			—			—			(88		)	—			—			88			—
Proceeds from sale of property, fixtures and equipment	—			1,265			1			—			—			1,266			—			—			—			5,000			—			5,000
Net cash used in investing activities	(595		)	(28,448		)	(6,064		)	—			875			(34,232		)
Net cash (used in) provided by investing activities																			—			(13,885		)	(1,636		)	5,000			88			(10,433		)

Cash flows from financing activities:
Payments on long-term debt and capital lease obligations	—			(795,009		)	(1,488		)	(3,454		)	—			(799,951		)	—			(135,715		)	(1,056		)	(2,979		)	—			(139,750		)
Proceeds from issuance of long-term debt	—			800,997			—			—			—			800,997			—			177,728			—			—			—			177,728
Intercompany financing activity	—			(981		)	—			(2,854		)	3,835			—			—			(985		)	—			(3,048		)	4,033			—
Deferred financing costs paid	—			(8,400		)	—			—			—			(8,400		)	—			(35		)	—			—			—			(35		)
Cash dividends paid	(981		)	—			—			—			—			(981		)	(985		)	—			—			—			—			(985		)
Restricted shares forfeited in lieu of payroll taxes	(2,097		)	—			—			—			—			(2,097		)	(1,461		)	—			—			—			—			(1,461		)
Proceeds from stock options exercised	595			—			—			—			—			595
Decrease in book overdraft balances	—			(665		)	—			—			—			(665		)	—			(8,098		)	—			—			—			(8,098		)
Net cash used in financing activities	(2,483		)	(4,058		)	(1,488		)	(6,308		)	3,835			(10,502		)
Net cash (used in) provided by financing activities																			(2,446		)	32,895			(1,056		)	(6,027		)	4,033			27,399

Net (decrease) increase in cash and cash equivalents	—			(404		)	618			—			—			214
Net increase in cash and cash equivalents																			—			153			1,010			—			—			1,163

Cash and cash equivalents at beginning of period	1			3,414			4,511			—			—			7,926			1			2,889			4,168			—			—			7,058

Cash and cash equivalents at end of period	$	1		$	3,010		$	5,129		$	—		$	—		$	8,140		$	1		$	3,042		$	5,178		$	—		$	—		$	8,221

12. RECENTLY ISSUED ACCOUNTING STANDARDS

In ~~May 2014,~~April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2014-09,~~2015-03, ~~Revenue from Contracts with Customers~~Interest-Imputation of Interest ~~(“ASU 2014-09”)~~. The new standard ~~provides~~requires that debt issuance costs related to 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 circumstancesrecognized debt liability be presented in the ~~determination~~balance sheet as a direct deduction from the carrying amount of ~~when and how revenue is recognized.~~that debt liability. The guidance is effective for fiscal years beginning after December 15, ~~2016.~~2015. The Company is currently reviewing the revised guidance and assessing the potential impact on its consolidated financial statements.

In ~~August 2014,~~April 2015, the FASB issued ASU No. ~~2014-15,~~2015-04, ~~Disclosure of Uncertainties about an Entity’s Ability~~Compensation-Retirement benefits. The new standard provides a practical expedient that permits the entity to ~~Continue as a Going Concern~~ ~~(“ASU 2014-15”), was issued, amending FASB Accounting Standards Subtopic 205-40~~measure defined benefit plan assets and obligations using the month-end that is closest to ~~provide~~the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The guidance ~~about management’s responsibility to evaluate whether there~~ is ~~substantial doubt about an entity’s ability to continue as a going concern~~effective for fiscal years beginning after December 15, 2015. The Company is currently reviewing the revised guidance and ~~to provide related footnote disclosures. Specifically,~~assessing the amendments (1) provide a definition of the term “substantial doubt,” (2) require an evaluation every reporting period, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certainpotential impact on its consolidated financial statements.

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THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

~~disclosures when substantial doubt~~In April 2015, the FASB issued ASU No. 2015-05, Intangibles-Goodwill and Other-Internal-Use Software. The new standard provides guidance on the accounting for fees paid by a customer in a cloud computing arrangement, including whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer is ~~alleviated~~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 result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that financial statements are issued. ASU 2014-15service contract. The guidance is effective for fiscal years ~~ending~~beginning after December 15, ~~2016, and for annual periods and interim periods thereafter.~~2015. The Company is currently reviewing the revised guidance and ~~does not anticipate a material~~assessing the potential impact on its consolidated financial statements.

13. SUBSEQUENT EVENT

On ~~September 9, 2014,~~May 19, 2015, the Company declared a quarterly cash dividend of $0.05 per share on shares of Class A common stock and common stock, payable ~~November~~August 3, ~~2014~~2015 to shareholders of record as of ~~October~~July 17, ~~2014.~~2015.

2321

~~THE BON-TON STORES, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For purposes of the following discussion, references to the ~~“second~~“first quarter of ~~2014”~~2015” and the ~~“second~~“first quarter of ~~2013”~~2014” are to the 13 weeks ended ~~August~~May 2, ~~2014~~2015 and ~~August~~May 3, ~~2013,~~2014, respectively. References to ~~“2014” and “2013”~~“fiscal 2015” are to the ~~26 weeks ended August 2, 2014 and August 3, 2013, respectively. References~~52-week period ending January 30, 2016; references to “fiscal 2014” are to the 52-week period ~~ending~~ended January 31, ~~2015; references to “fiscal 2013” are to the 52-week period ended February 1, 2014.~~2015. References to the “Company,” “we,” “us,” and “our” refer to The Bon-Ton Stores, Inc. and its subsidiaries.

Overview

General

The Company, a Pennsylvania corporation, 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 ~~273~~270 stores, including ~~ten~~nine furniture galleries and four clearance centers, in 26 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 25 million square feet.

We ~~operate~~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 ~~the development of~~ competitive retail ~~formats —~~ formats—mass merchandisers, national chain retailers, specialty retailers and online ~~retailers —~~ retailers—and the expansion of mobile technology and social media.

Performance Summary and Fiscal ~~2014~~2015 Guidance

In the ~~second~~first quarter of ~~2014~~2015, we continued to take actions to address our operating performance and focus on strategies to accelerate sales growth and improve our financial results. ~~We are encouraged by progress made in the quarter as~~Despite top-line pressures, we achieved a comparable store sales increase of 0.8%, with growth in both brick and mortar and eCommerce channels. We also effectively controlled our selling, general and administrative (“SG&A”) expense, resulting in a ~~challenging promotional environment with continued soft traffic trends. We responded to cautious discretionary consumer spending~~reduction in both dollars and rate, as we realized benefits from the expense efficiency initiatives implemented during fiscal 2014.

Our revenues in the period by increasing our marketing investment to drive traffic and convey our strong promotions. Despite these aggressive promotional efforts, we managed our gross margin with timely markdowns that enabled us to realize increased value on the sell-through of clearance goods and minimize rate erosion. We effectively managed our inventory, ending the quarter with comparable store inventories approximately even with those of the prior year. Our revenues benefited from ~~continued efforts to drive our~~increased proprietary credit card ~~business and reinforce our “Your Rewards” loyalty program, resulting~~sales. Additionally, we realized continued growth in athe penetration of proprietary credit card sales to total sales which, at 50.9% in the first quarter of ~~approximately 51%, an increase~~2015, exceeded that of ~~200 basis points over the rate in~~ the prior year ~~period.~~period by 159 basis points. We believe that this increase reflects a favorable response to our “Your Rewards” credit card customer loyalty program and confirms our meaningful engagement with this core customer. To further expand our propriety credit card customer base, we are renewing our efforts with regard to new customer acquisition via our loyalty program.

~~Investments~~We believe we have improved the composition of our inventory through the continued refinement of our merchandise assortment of both national and private brands, growing underpenetrated vendors and targeting new vendor opportunities. Private brand goods are a key driver of profitable growth, and we are focusing on significant growth trends in ~~technology~~active categories and seasonal classifications.

We maintained our focus on our localization initiative, tailoring merchandise assortments and marketing programs to better align with customer preferences in a market. Our smaller stores, in particular, continue to ~~provide benefits as our eCommerce business maintained its double-digit~~benefit from this initiative, achieving sales ~~growth~~increases in the ~~period, largely through process achievements~~first quarter of 2015 that exceeded company average.

We are making the systems and infrastructure investments necessary to ~~expedite merchandise availability on the website~~enhance efficiencies and increased conversion. Customer service has been enhanced through our “Let Us Find It” software, which links our point-of-sale ordering system with real-time inventory, allowing our sales associates to sell a product that may be unavailable locally by selecting merchandise from other stores or online fulfillment centers for shipmentcustomer service. We are looking forward to the ~~customer’s home or pick-up at an available store. Our localization strategy has been supported by analytical tools that allow~~fall opening of our ~~merchants~~new state-of-the-art 743,000 square foot eCommerce fulfillment center in West Jefferson, Ohio. We believe this new facility presents a significant opportunity for us to ~~more efficiently formulate strategies by location~~expand our shipping capacity and ~~merchandise category; our smaller locations, in particular, are benefiting~~improve operational efficiencies as we consolidate from ~~increased~~five omnichannel centers to one and ~~targeted investment of inventory dollars~~close two temporary facilities as ~~a result~~part of this ~~initiative.~~

Our expense efficiency initiative, in which we partnered with an outside firm to conduct process and workload analyses to identify expense reduction opportunities and maximize efficiencies, is on track to achieve an estimated $10 million of expense reductions in fiscal 2014, largely expected to be realized in the fall season.process.

2422

~~The expense reductions will~~Based on our performance in the first quarter of 2015, we expect comparable store sales growth to be ~~partially offset by increased costs such that the projected net benefit has been reduced from $5 million~~2.0% to ~~approximately $2 million~~2.5% in fiscal 2014. The increase in the estimated costs reflects the complexity of the initiatives, as well as the level of diligence required to make sustainable adjustments designed to accrue to the long-term benefit of the Company.

~~On August~~2015, and on May 21, ~~2014,~~2015, we ~~revised~~reaffirmed our fiscal ~~2014~~2015 guidance of earnings per diluted share ~~guidance to~~in a range of a loss of $0.25 to ~~$0.55 to~~earnings of $0.25. Our fiscal 2015 guidance does not reflect ~~the estimated increase in implementation costs, primarily consisting of professional fees and severance,~~any potential impact associated with ~~our expense efficiency initiative and expenses associated with the transition~~an early termination of our ~~chief executive officer (totaling an estimated $3 million to $4 million of aggregate increased costs) and to incorporate~~mortgage facilities, thereby excluding the financial ~~results~~effect of ~~our spring season. We provided~~ the ~~following assumptions with respect~~make-whole provision in the agreements, which could range up to ~~our revised guidance:~~

·~~a comparable store sales increase ranging from 1.0% to 2.0%;~~

·~~a gross margin rate flat to 20 basis points higher than the fiscal 2013 rate of 36.2%;~~

·~~a selling, general and administrative (“SG&A”) expense rate, inclusive of potential performance incentives, flat to a 20 basis point increase over the fiscal 2013 rate of 32.5%;~~

·~~an estimated tax rate of 39%;~~

·~~capital expenditures not to exceed $75.0 million, net of external contributions; and~~

·~~an estimated 21 million weighted average shares outstanding, assuming dilution.~~approximately $10 million.

Results of Operations

The following table summarizes changes in selected operating indicators of the Company, illustrating the relationship of various income and expense items to net sales for the respective periods presented (components may not add or subtract to totals due to rounding):

	THIRTEEN				TWENTY-SIX				THIRTEEN
	WEEKS ENDED				WEEKS ENDED				WEEKS ENDED
	August 2,		August 3,		August 2,		August 3,		May 2,		May 3,
	2014		2013		2014		2013		2015		2014
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Other income	2.6		2.5		2.5		2.4		2.7		2.5
	102.6		102.5		102.5		102.4		102.7		102.5
Costs and expenses:
Costs of merchandise sold	63.4		63.0		64.1		64.2		66.2		64.7
Selling, general and administrative	38.3		37.9		37.4		36.2		35.8		36.6
Depreciation and amortization	4.3		4.1		3.9		3.7		3.6		3.5
Amortization of lease-related interests	0.2		0.2		0.2		0.2		0.2		0.2
Impairment charges	—		—		—		—
Loss from operations	(3.6	)	(2.8	)	(3.1	)	(1.9	)	(3.1	)	(2.6	)
Interest expense, net	2.7		3.1		2.6		3.0		2.5		2.5
Loss on extinguishment of debt	—		0.7		—		0.4		—		—
Loss before income taxes	(6.3	)	(6.6	)	(5.7	)	(5.2	)	(5.6	)	(5.1	)
Income tax provision	0.1		0.1		0.1		0.1
Income tax (benefit) provision									—		0.1
Net loss	(6.4	)%	(6.7	)%	(5.8	)%	(5.3	)%	(5.6	)%	(5.2	)%

~~Second~~First Quarter of 2015 Compared with First Quarter of 2014 ~~Compared with Second Quarter of 2013~~

Net sales: Net sales in the ~~second~~first quarter of ~~2014~~2015 were ~~$563.5~~$610.9 million, compared with ~~$557.1~~$607.5 million in the ~~second~~first quarter of ~~2013,~~2014, reflecting an increase of ~~1.1%~~0.6%. Comparable store sales increased ~~1.6%~~0.8% in the period.

The best performing merchandise categories in the ~~second~~first quarter of ~~2014~~2015 were ~~Young Contemporary Apparel, Dresses and Women’s~~Men’s Furnishings (included in Men’s Apparel), Moderate Sportswear ~~(both included~~(included in Women’s Apparel) and ~~Home.~~Footwear. Men’s Furnishings primarily benefited from the improvement in career related merchandise and outerwear due to a longer cold weather season. Moderate Sportswear benefited from inventory investment in seasonal key items and momentum in our activewear. Sales in ~~Young Contemporary Apparel grew~~Footwear increased as a result of continued refinements to the merchandise mix, including the introduction of new national brands and expansion of successful brands. Increased sales in Dresses were primarily the result of the depth of inventory in key items and an initiative to increase the inventory investment in our smaller doors. Women’s Sportswear sales increased through the expansion of ~~better separates to additional doors~~assortment in key brands and momentum in the active/“athleisure” business, sales of which benefited from the introduction of a private brand that has achieved success in other ladies merchandise categories. Home sales benefited from a favorable shift in the promotional calendar, with notable sales increases in bedding and small electronics.merchandise.

Merchandise categories that were challenged in the period included Petites’ ~~and Moderate~~ Sportswear ~~(both included~~(included in Women’s Apparel), Hard Home (included in Home) and Cosmetics. Sales in Petites’ Sportswear have remained challenged; however, performance within growth strategy brands has been ~~difficult for several seasons; we are redirecting inventory investment to those categories and vendors that are performing well.~~strong despite decreases in certain traditional categories. Slow selling of ~~career-related merchandise~~basic hardwares and ~~swimwear~~small electronics hampered sales in ~~Moderate Sportswear. While~~Hard Home. Cosmetic sales were adversely affected by a reduction in ~~Cosmetics improved as compared with first quarter results, continued pressure remains.~~promotional events.

Other income: Other income, which includes income from revenues received under our credit card program agreement, miscellaneous revenue departments and gift and merchandise return card breakage, was ~~$14.7~~$16.3 million in the ~~second~~first quarter of ~~2014~~2015 as compared with ~~$13.8~~$15.1 million in the ~~second~~first quarter of ~~2013.~~2014. The increase primarily reflects increased revenues from our proprietary credit card operations.

Costs and expenses: Gross margin in the ~~second~~first quarter of ~~2014 increased $0.1~~2015 decreased $7.9 million to ~~$206.2~~$206.5 million as compared with ~~$206.1~~$214.4 million in the comparable prior year period. Gross margin as a percentage of net sales decreased 40149 basis points to ~~36.6%~~33.8% in the ~~second~~first quarter of ~~2014~~2015 from ~~37.0%~~35.3% in the comparable prior year period, ~~largely~~ due primarily to increased ~~net markdowns as a result of the competitive environment~~distribution and ~~our focus on inventory management as well as increased~~ delivery costs associated with ~~the growth of~~ our ~~eCommerce operations~~omnichannel selling efforts and ~~“Let Us Find It” customer service initiative.~~an unfavorable comparison to prior year permanent markdowns.

SG&A expense in the ~~second~~first quarter of ~~2014 increased $4.6~~2015 decreased $3.6 million to ~~$215.8~~$218.7 million as compared with ~~$211.3~~$222.3 million in the ~~second~~first quarter of ~~2013. The increase is~~2014. This reduction was largely driven by expense control measures and avoidance of costs incurred in the ~~result~~prior year period in the implementation of ~~higher advertising expenditures and implementation costs, primarily consisting of professional fees and severance, associated with~~ our ~~ongoing~~ expense efficiency initiative, partially offset by ~~decreased performance incentives.~~an unfavorable comparison to a prior year gain on the sale of assets. The current ~~year~~period expense rate, ~~38.3%~~35.8% of net sales, ~~increased 38~~decreased 80 basis points ~~over~~from that of the prior year period.

Depreciation and amortization expense and amortization of lease-related interests increased ~~$1.1~~$0.4 million to ~~$25.2~~$23.1 million in the ~~second~~first quarter of ~~2014~~2015 from ~~$24.1~~$22.7 million in the ~~second~~first quarter of ~~2013.~~2014.

Interest expense, net: Net interest expense was ~~$15.4~~$15.2 million in the ~~second~~first quarter of ~~2014~~2015 as compared with ~~$17.5~~$15.3 million in the ~~second~~first quarter of ~~2013. The $2.1~~2014. Despite an increase in debt levels, the $0.1 million decrease primarily reflects reductions in the borrowing rates ~~average debt levels and amortization of deferred fees.~~

~~Loss on extinguishment of debt:~~ ~~In the second quarter of 2013, we recorded charges totaling $3.9 million for fees, tender premium and accelerated amortization of deferred fees in conjunction~~associated with ~~the tender and redemption of certain of~~ our ~~senior notes. There were no such charges in the second quarter of 2014.~~revolving credit facility.

Income tax ~~provision:~~(benefit) provision: The effective income tax rate in the ~~second~~first quarter in each of ~~2014~~2015 and ~~2013~~2014 largely reflects ~~the Company’s~~our valuation allowance position against all net deferred tax assets. The ~~$0.4~~$0.2 million income tax benefit in the first quarter of 2015 includes a $0.6 million benefit from the loss on continuing operations which was partially offset by the recognition of deferred tax liabilities associated with indefinite-lived assets. The income tax provision of $0.4 in ~~each respective period~~the first quarter of 2014 is primarily due to recognition of deferred tax liabilities associated with indefinite-lived assets.

~~2014 Compared with 2013~~

~~Net sales~~: Net sales in 2014 were $1.171 billion, compared with $1.204 billion in 2013, a decrease of 2.8%. Despite our improved sales performance in the second quarter, comparable store sales decreased 2.4% in the 26 weeks as we were unable to entirely mitigate the sales erosion resulting from an extended period of unseasonable weather in our markets earlier in the year.

The best performing merchandise categories in 2014 were Dresses and Women’s Sportswear (both included in Women’s Apparel) and Young Contemporary Apparel. Both Dresses and Women’s Sportswear benefited from increased inventory investment in our small and mid-size doors. We are reaping the benefits from a successful new business model in Young Contemporary Apparel, in which strategic adjustments to merchandise and in-store placement were first implemented in 2013.

The merchandise categories most challenged in 2014 were the Petites’, Moderate and Better Sportswear areas (all included in Women’s Apparel), Cosmetics and Furniture (included in Home). We are continuing our efforts to optimize our inventory in the Sportswear categories, aligning investment with sales trends and reengineering the businesses through additional merchandise adjustments. Sales in Cosmetics have been hampered by a lack of newness of product; we anticipate an improvement in the sales trend with the scheduled launch of new product in the fall season. Furniture sales were adversely impacted by the discontinuation by our vendors of certain key upholstered pieces and our difficulty in replacing these items as well as slow sales in mattresses in the first quarter.

~~Other income~~~~: Other income was $29.8 million in 2014 as compared with $28.8 million in 2013. The increase primarily reflects increased revenues from our proprietary credit card operations.~~

~~Costs and expenses~~: Gross margin in 2014 was $420.6 million as compared with $431.4 million in 2013, reflecting a decrease of $10.9 million. The decrease in gross margin dollars was due to reduced sales volume in the period. ~~Gross margin as a percentage of net sales increased 8 basis points to 35.9% in the current year from 35.8% last year, primarily due to an increase in the cumulative markup percentage.~~

SG&A expense in 2014 was $438.1 million as compared with $436.3 million in 2013, an increase of $1.8 million. The increase is primarily due to higher advertising expenditures and implementation costs associated with our ongoing expense efficiency initiative, partially offset by decreased performance incentives and a gain on the sale of our remaining Rochester, New York store. The expense rate in 2014, at 37.4% of net sales, was 118 basis points higher than that of the prior year.

~~Depreciation and amortization expense and amortization of lease-related interests increased $1.6 million to $47.9 million in 2014.~~

~~Interest expense, net~~: Net interest expense was $30.7 million in 2014 as compared with $36.3 million in 2013. The $5.5 million decrease is largely due to reductions in borrowing rates, average debt levels and amortization of deferred fees.

~~Loss on extinguishment of debt:~~ In 2014, we recorded a $0.2 million loss on extinguishment of debt related to the prepayment of mortgage debt associated with the sale of our remaining Rochester, New York store. In 2013, we recorded charges totaling $4.3 million for fees, tender premium and accelerated amortization of deferred fees in conjunction with the tender and redemption of certain of our senior notes.

~~Income tax provision:~~ The effective tax rate in each of 2014 and 2013 largely reflects the Company’s valuation allowance position against all net deferred tax assets. The $0.9 million income tax provision in each of 2014 and 2013 primarily reflects recognition of deferred tax liabilities associated with indefinite-lived assets.

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 fiscal year, which includes the holiday season. Due to the fixed nature of certain costs, SG&A expense is typically higher as a percentage of net sales during the first half of each fiscal year. We typically finance working capital increases in the second half of each fiscal year through additional borrowings under our $675.0 million senior secured Second Amended and Restated Loan and Security Agreement (the “Second Amended Revolving Credit Facility”) that expires on December 12, 2018.

Because of the seasonality of our business, results for any quarter are not necessarily indicative of results that may be achieved for a full fiscal year.

Liquidity and Capital Resources

At ~~August~~May 2, ~~2014,~~2015, we had ~~$7.7~~$8.7 million in cash and cash equivalents and ~~$384.2~~$368.3 million available under our Second Amended Revolving Credit Facility (before taking into account the minimum borrowing availability covenant under such facility). Excess availability was ~~$375.8~~$439.0 million as of the comparable prior year period. The ~~favorable~~unfavorable excess availability comparison primarily reflects increased ~~borrowing base availability, partially offset by increased~~ direct borrowings to support ~~current year~~our operations.

Typically, cash flows from operations are impacted by the effect on sales of (1) consumer confidence, (2) weather in the geographic markets served by the Company, (3) general economic conditions and (4) competitive conditions existing in the retail industry. A downturn in any single factor or a combination of factors could have a material adverse impact upon our ability to generate sufficient cash flows to operate our business. While the current economic uncertainty affects our assessment of short-term liquidity, we consider our resources ~~(cash~~(including, but not limited to, cash flows from operations supplemented by borrowings under the Second Amended Revolving Credit Facility) adequate to satisfy our cash needs for at least the next 12 months.

Current maturities of long-term debt of $209.7 million reflects the outstanding balances of our existing mortgage loan facilities which have final payments due April 1, 2016. We are currently reviewing options to address these mortgage facilities prior to their due date.

Our primary sources of working capital are cash flows from operations and borrowings under our Second Amended Revolving Credit Facility, which provides for up to $675.0 million in borrowings (limited by amounts available pursuant to a borrowing base calculation). Our business follows a seasonal pattern; working capital fluctuates with seasonal variations, reaching its highest level in October or November to fund the purchase of merchandise inventories prior to the holiday season. The seasonality of our business historically provides greatest cash flow from operations during the holiday season, with fiscal fourth quarter net sales generating the strongest profits of our fiscal year. As holiday sales significantly reduce inventory levels, this reduction, combined with net income, historically provides us with strong cash flow from operations at the end of our fiscal year.

Cash (used in) provided by our operating, investing and financing activities is summarized as follows:

	TWENTY-SIX						THIRTEEN
	WEEKS ENDED						WEEKS ENDED
	August 2,			August 3,			May 2,			May 3,
(Dollars in millions)	2014			2013			2015			2014

Operating activities	$	(5.7	)	$	44.9		$	(17.8	)	$	(15.8	)
Investing activities	(32.7		)	(34.2		)	(24.4		)	(10.4		)
Financing activities	38.9			(10.5		)	42.2			27.4

Net cash used in operating activities was ~~$5.7~~$17.8 million and $15.8 million in ~~2014; net cash provided by operating~~

~~activities was $44.9 million~~the first quarter in ~~2013.~~each of 2015 and 2014, respectively. The ~~reduction~~increase in cash outflow primarily reflects the increased net loss, partially offset by slightly improved cash flow ~~is primarily~~from working capital. The improved working capital was largely due to ~~the~~a favorable change in prepaid expenses and other current assets partially offset by an unfavorable change in ~~working capital, largely the result of the significant reduction in inventories in the prior year.~~accrued expenses.

Net cash used in investing activities in the current year primarily reflects capital expenditures for aour new ~~store,~~eCommerce fulfillment center, renovations to support our strategic initiatives and information ~~technology, partially offset by proceeds from the sale of property, fixtures and equipment, largely proceeds from the sale of the Rochester, New York store.~~technology. Capital expenditures totaled ~~$37.7~~$24.4 million and ~~$35.5~~$15.4 million in ~~2014~~the first quarter in each of 2015 and ~~2013,~~2014, respectively; these expenditures do not reflect reductions for external contributions (primarily leasehold improvement and fixture allowances received from landlords or vendors) of ~~$8.6~~$0.8 million and ~~$13.7~~$5.6 million in ~~2014~~the first quarter in each of 2015 and ~~2013,~~2014, respectively. We anticipate our fiscal ~~2014~~2015 capital expenditures will not exceed ~~$101.5~~$93.6 million (excluding external contributions of ~~$26.5~~$18.6 million, reducing ~~budgeted~~anticipated net capital investments to $75.0 million).

Net cash provided by financing activities was ~~$38.9~~$42.2 million and $27.4 million in ~~2014; net cash used~~the first quarter in ~~financing activities was $10.5 million in 2013.~~each of 2015 and 2014, respectively. The increased cash inflow in the current year primarily reflects ~~increased cash requirements~~higher net borrowings to support current year operating and investing activities. ~~A significant reduction in deferred financing fees paid resulted in decreased cash outflow in 2014.~~

Aside from planned capital expenditures, the Company’s primary cash requirements will be to service debt and finance working capital increases during peak selling seasons.

We paid a quarterly cash dividend of $0.05 per share on shares of Class A common stock and common stock on February ~~3, 2014,~~2, 2015 and May ~~5, 2014 and August 5, 2014~~4, 2015 to shareholders of record as of January ~~17, 2014,~~16, 2015 and April 17, ~~2014 and July 18, 2014,~~2015, respectively. Additionally, on May 19, 2015, we declared a quarterly cash dividend of $0.05 per share, ~~on shares of Class A common stock and common stock was declared on September 9, 2014,~~ payable ~~November~~August 3, ~~2014~~2015 to shareholders of record as of ~~October~~July 17, ~~2014.~~2015. Our Board of Directors may consider dividends in subsequent periods as it deems appropriate.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts and disclosure of contingent assets and liabilities. There have been no significant changes in the critical accounting policies and estimates described in our Annual Report on Form 10-K for the year ended ~~February 1, 2014.~~January 31, 2015.

Recently Issued Accounting Standards

Recently issued accounting standards are discussed in Note 12 to the Consolidated Financial Statements.

Forward-Looking Statements

Certain information included in this report (as well as other communications made or to be made by the Company) and other materials filed or to be filed by the Company with the Securities and Exchange Commission contain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words or phrases such as “may,” “could,” “would,” “will,” “plan,” “expect,” “believe,” “anticipate,” “estimate,” “project,” “intend,” “look forward to” or other similar expressions, including the Company’s fiscal 2015 guidance, involve important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Factors that could cause such differences include, but are not limited to, risks related to retail businesses generally; a significant and prolonged deterioration of general economic conditions which could negatively impact the Company, including the potential write-down of the current valuation of intangible assets and deferred taxes; risks related to the Company’s proprietary credit card program; potential increases in pension obligations; consumer spending patterns, debt levels, and the availability and cost of consumer credit; additional

competition from existing and new competitors; inflation; deflation; changes in the costs of fuel and other energy and transportation costs; weather conditions that could negatively impact sales; uncertainties associated with expanding or remodeling existing stores; the ability to attract and retain qualified management; the dependence upon relationships with vendors and their factors; a data security breach or system failure; the ability to reduce or control SG&A expenses, including initiatives to reduce expenses and improve efficiency; operational disruptions; unsuccessful marketing initiatives; the ability to expand capacity and improve efficiency through the Company’s new eCommerce fulfillment center; changes in, or the failure to successfully implement, our key strategies, including initiatives to improve our merchandising, marketing and operations; adverse outcomes in litigation; the incurrence of unplanned capital expenditures; the ability to obtain financing for working capital, capital expenditures and general corporate purposes; the impact of regulatory requirements including the Health Care Reform Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act; the inability or limitations on the Company’s ability to favorably adjust the valuation allowance on deferred tax assets; and the financial condition of mall operators. Additional factors that could cause the Company’s actual results to differ from those contained in these forward-looking statements are discussed in greater detail under Item 1A of the Company’s Annual Report on Form 10-K for fiscal ~~2013~~2014 filed with the Securities and Exchange Commission.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Financial Instruments

There were no material changes in our exposures, risk management strategies, or hedging positions since ~~February 1, 2014.~~January 31, 2015. For further information, refer to Item 7A of our ~~2013~~fiscal 2014 Annual Report on Form 10-K.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report and, based on this evaluation, concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes to our internal controls over financial reporting that occurred during the thirteen weeks ended ~~August~~May 2, ~~2014~~2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II:OTHER INFORMATION

ITEM 6. EXHIBITS

(a) The following exhibits are filed pursuant to the requirements of Item 601 of Regulation S-K:

10.1*	~~Amendment to Employment Agreement with Brendan Hoffman dated July 16, 2014 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 17, 2014)~~
10.2*	Employment Agreement dated July 28, 2014 and effective as of August 25, 2014 by and between The Bon-Ton Stores, Inc. and Kathryn Bufano (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 31, 2014 (“7/31/14 Form 8-K”))
10.3*	~~Restricted Stock Agreement for Kathryn Bufano (incorporated by reference to Exhibit 10.2 to the 7/31/14 Form 8-K)~~
10.4*	~~Restricted Stock Agreement — Performance Shares for Kathryn Bufano (incorporated by reference to Exhibit 10.3 to the 7/31/14 Form 8-K)~~
31.1	Certification of Kathryn Bufano
31.2	Certification of Keith E. Plowman
32.1**	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 Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*~~Constitutes a management contract or compensatory plan or arrangement.~~

**Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE BON-TON STORES, INC.


DATE:	~~September~~June 10, ~~2014~~2015	BY:	/s/ Kathryn Bufano
			Kathryn Bufano
			President and
			Chief Executive Officer
			(Principal Executive Officer)

DATE:	~~September~~June 10, ~~2014~~2015	BY:	/s/ Keith E. Plowman
			Keith E. Plowman
			Executive Vice President—
			Chief Financial Officer
			(Principal Financial Officer)

DATE:	~~September~~June 10, ~~2014~~2015	BY:	/s/ Michael W. Webb
			Michael W. Webb
			Group Vice President—
			Chief Accounting Officer
			(Principal Accounting Officer)

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	Termination Benefits			Other Costs			Total
Accrued balance as of February 1, 2014	$	232		$	188		$	420
Provisions:
Thirteen weeks ended May 3, 2014	319			125			444
Thirteen weeks ended August 2, 2014	1,148			18			1,166
Payments:
Thirteen weeks ended May 3, 2014	(217		)	(313		)	(530		)
Thirteen weeks ended August 2, 2014	(377		)	(18		)	(395		)
Accrued balance as of August 2, 2014	$	1,105		$	—		$	1,105