-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CrpqTzpGRPHYfxJWAXlRKy2IHmCqhO1KlRHrlBUoIVg3eIXDc/8udBpPOo8ECqia R5QGmsbDvsEhvp2fKR1R0w== /in/edgar/work/20000908/0000893220-00-001059/0000893220-00-001059.txt : 20000922 0000893220-00-001059.hdr.sgml : 20000922 ACCESSION NUMBER: 0000893220-00-001059 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000729 FILED AS OF DATE: 20000908 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BON TON STORES INC CENTRAL INDEX KEY: 0000878079 STANDARD INDUSTRIAL CLASSIFICATION: [5311 ] IRS NUMBER: 232835229 STATE OF INCORPORATION: PA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19517 FILM NUMBER: 719399 BUSINESS ADDRESS: STREET 1: 2801 E MARKET ST CITY: YORK STATE: PA ZIP: 17402-2406 BUSINESS PHONE: 7177577660 MAIL ADDRESS: STREET 1: P O BOX 2821 CITY: YORK STATE: PA ZIP: 17405-2821 10-Q 1 w40231e10-q.txt 10-Q FOR BON TON FOR 7/29/00 1 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 July 29, 2000 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 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of August 25, 2000 there were 12,226,769 shares of Common Stock, $0.01 par value, and 2,989,853 shares of Class A Common Stock, $0.01 par value, outstanding. 2 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE BON-TON STORES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
July 29, January 29, (In thousands except share and per share data) 2000 2000 - ---------------------------------------------- ---- ---- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,925 $ 10,807 Trade and other accounts receivable, net of allowance for doubtful accounts of $2,853 and $3,167 at July 29, 2000 and January 29, 2000, respectively 23,783 27,782 Merchandise inventories 208,819 203,489 Prepaid expenses and other current assets 17,613 12,371 Deferred income taxes 1,474 1,926 --------- --------- Total current assets 262,614 256,375 --------- --------- PROPERTY, FIXTURES AND EQUIPMENT AT COST, less accumulated depreciation and amortization 143,022 144,715 OTHER ASSETS 16,100 16,402 DEFERRED INCOME TAXES 359 -- --------- --------- TOTAL ASSETS $ 422,095 $ 417,492 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 66,859 $ 67,353 Accrued payroll and benefits 7,439 10,016 Accrued expenses 17,960 26,262 Current portion of long-term debt 6,593 682 Current portion of obligations under capital leases 460 442 Income taxes payable -- 9,832 --------- --------- Total current liabilities 99,311 114,587 --------- --------- LONG-TERM DEBT, LESS CURRENT MATURITIES 131,910 106,247 OBLIGATIONS UNDER CAPITAL LEASES, LESS CURRENT MATURITIES 1,197 1,431 DEFERRED INCOME TAXES -- 1,362 OTHER LONG-TERM LIABILITIES 8,365 3,174 --------- --------- TOTAL LIABILITIES 240,783 226,801 --------- --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common Stock-authorized 40,000,000 shares at $0.01 par value; issued and outstanding shares of 12,226,769 and 12,276,860 at July 29, 2000 and January 29, 2000, respectively 123 123 Class A Common Stock -authorized 20,000,000 shares at $0.01 par value; issued and outstanding shares of 2,989,853 at July 29, 2000 and January 29, 2000 30 30 Additional paid-in-capital 107,525 108,083 Deferred compensation (395) (2,172) Retained earnings 74,029 84,627 --------- --------- TOTAL SHAREHOLDERS' EQUITY 181,312 190,691 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 422,095 $ 417,492 ========= =========
The accompanying notes are an integral part of these consolidated statements. 2 3 THE BON-TON STORES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
THIRTEEN TWENTY-SIX WEEKS ENDED WEEKS ENDED ----------- ----------- (In thousands except per share data) July 29, July 31, July 29, July 31, (Unaudited) 2000 1999 2000 1999 - ----------- ---- ---- ---- ---- NET SALES $ 156,346 $ 149,449 $ 308,481 $ 291,848 OTHER INCOME, NET 539 521 1,111 1,038 --------- --------- --------- --------- 156,885 149,970 309,592 292,886 --------- --------- --------- --------- COSTS AND EXPENSES: Costs of merchandise sold 98,150 92,719 198,599 185,909 Selling, general and administrative 54,175 53,311 108,200 101,871 Depreciation and amortization 4,121 3,145 8,242 6,401 Unusual expense 6,485 -- 6,485 -- --------- --------- --------- --------- (LOSS) INCOME FROM OPERATIONS (6,046) 795 (11,934) (1,295) INTEREST EXPENSE, NET 2,821 2,048 5,160 3,968 --------- --------- --------- --------- LOSS BEFORE INCOME TAXES (8,867) (1,253) (17,094) (5,263) INCOME TAX BENEFIT (3,370) (476) (6,497) (2,000) --------- --------- --------- --------- LOSS BEFORE EXTRAORDINARY ITEM (5,497) (777) (10,597) (3,263) EXTRAORDINARY ITEM -loss on early extinguishment of debt, net of income tax benefit of $232 -- -- -- (378) --------- --------- --------- --------- NET LOSS $ (5,497) $ (777) $ (10,597) $ (3,641) ========= ========= ========= ========= PER SHARE AMOUNTS: BASIC: Loss before extraordinary item $ (0.37) $ (0.05) $ (0.72) $ (0.22) Effect of extraordinary item -- -- -- (0.03) --------- --------- --------- --------- Net loss $ (0.37) $ (0.05) $ (0.72) $ (0.25) ========= ========= ========= ========= BASIC SHARES OUTSTANDING 14,813 14,715 14,808 14,709 DILUTED: Loss before extraordinary item $ (0.37) $ (0.05) $ (0.72) $ (0.22) Effect of extraordinary item -- -- -- (0.03) --------- --------- --------- --------- Net loss $ (0.37) $ (0.05) $ (0.72) $ (0.25) ========= ========= ========= ========= DILUTED SHARES OUTSTANDING 14,813 14,715 14,808 14,709
The accompanying notes are an integral part of these consolidated statements. 3 4 THE BON-TON STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWENTY-SIX WEEKS ENDED ----------- (In thousands) July 29, July 31, (Unaudited) 2000 1999 - ----------- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (10,597) $ (3,641) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 8,242 6,401 Proceeds from sale of accounts receivable, net (10,200) (10,500) Changes in operating assets and liabilities, net (12,560) (9,186) --------- --------- Net cash used in operating activities (25,115) (16,926) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net (6,132) (18,828) Proceeds from sale of property, fixtures and equipment 6 28 Payment for the acquisition of business, net of cash received -- (2,192) --------- --------- Net cash used in investing activities (6,126) (20,992) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt and capital lease obligations (125,942) (123,862) Proceeds from issuance of long-term debt 157,300 160,300 Exercised stock options 1 6 --------- --------- Net cash provided by financing activities 31,359 36,444 Net increase (decrease) in cash and cash equivalents 118 (1,474) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,807 10,607 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,925 $ 9,133 ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 4,730 $ 3,750 Income taxes paid $ 7,596 $ 7,297
The accompanying notes are an integral part of these consolidated statements. 4 5 THE BON-TON STORES, INC. AND SUBSIDIARIES The Bon-Ton Stores, Inc., a Pennsylvania corporation, was incorporated on January 31, 1996 as the successor of a company established on January 31, 1929 and currently operates, as one business segment, 72 retail department stores located in Pennsylvania, New York, New Jersey, Maryland, Connecticut, Massachusetts, New Hampshire, Vermont and West Virginia. 1. BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements include accounts of The Bon-Ton Stores, Inc. and its wholly-owned subsidiaries (the "Company"). All intercompany transactions and balances 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 by generally accepted accounting principles. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair presentation for interim periods have been included. The Company's business is seasonal in nature and the results of operations for the interim periods presented are not necessarily indicative of the results for the full fiscal year. It is suggested these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2000 (the "1999 Annual Report"). 2. RECLASSIFICATIONS: Certain prior year balances have been reclassified to conform with the current year presentation. 3. PER SHARE AMOUNTS: The presentation of earnings per share (EPS) requires a reconciliation of the numerators and denominators used in the basic and diluted EPS calculations. The numerator, net loss, is identical in both calculations. The following table presents a reconciliation of the shares outstanding for the respective calculations for each period presented on the accompanying Consolidated Statements of Operations.
THIRTEEN TWENTY-SIX WEEKS ENDED WEEKS ENDED ----------- ----------- July 29, July 31, July 29, July 31, 2000 1999 2000 1999 ---- ---- ---- ---- Basic Calculation 14,813,000 14,715,000 14,808,000 14,709,000 Dilutive Securities-- Restricted Shares -- -- -- -- Options -- -- -- -- ---------- ---------- ---------- ---------- Diluted Calculation 14,813,000 14,715,000 14,808,000 14,709,000 ---------- ---------- ---------- ---------- Antidilutive shares and options-- Restricted Shares 428,000 553,000 443,000 560,000 Options 1,367,000 1,273,000 1,401,000 1,291,000
Antidilutive shares and options, consisting of restricted shares and options to purchase shares outstanding, were excluded from the computation of dilutive securities due to the Company's net loss position in the thirteen weeks and twenty-six weeks ended July 29, 2000 and July 31, 1999. 5 6 THE BON-TON STORES, INC. AND SUBSIDIARIES The following table reflects the approximate dilutive securities calculated under the treasury stock method had the Company reported a profit for the thirteen and twenty-six week periods ended July 29, 2000 and July 31, 1999:
THIRTEEN TWENTY-SIX WEEKS ENDED WEEKS ENDED ----------- ----------- July 29, July 31, July 29, July 31, 2000 1999 2000 1999 ---- ---- ---- ---- Approximate Dilutive Securities-- Restricted Shares -- 78,000 -- 86,000 Options -- 28,000 -- 41,000 Antidilutive Options 1,367,000 1,065,000 1,401,000 960,000
Antidilutive options, options to purchase shares with exercise prices greater than the average market price, were excluded from the above table. 4. UNUSUAL EXPENSE: The Company recorded $6.5 million in unusual expenses related to announcements made in June 2000. On June 9, 2000, the Company announced a workforce reduction of 187 corporate and store personnel. The workforce reduction affected 137 employees and eliminated 50 unfilled positions. Additionally, on June 27, 2000, the Company announced the early retirement of Heywood Wilansky, the Company's President and Chief Executive Officer, and the realignment and elimination of certain senior management positions. As of July 29, 2000, the remaining accrual was $6.2 million. 6 7 THE BON-TON STORES, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table summarizes the changes in selected operating indicators, illustrating the relationship of various income and expense items expressed as a percentage of net sales for each period presented:
THIRTEEN TWENTY-SIX WEEKS ENDED WEEKS ENDED ----------- ----------- July 29, July 31, July 29, July 31, 2000 1999 2000 1999 ---- ---- ---- ---- NET SALES 100.0% 100.0% 100.0% 100.0% OTHER INCOME, NET 0.3 0.3 0.4 0.4 ----- ----- ----- ----- 100.3 100.3 100.4 100.4 ----- ----- ----- ----- COSTS AND EXPENSES: Costs of merchandise sold 62.8 62.0 64.4 63.7 Selling, general and administrative 34.7 35.7 35.1 34.9 Depreciation and amortization 2.6 2.1 2.7 2.2 Unusual expense 4.1 -- 2.1 -- ----- ----- ----- ----- (LOSS) INCOME FROM OPERATIONS (3.9) 0.5 (3.9) (0.4) INTEREST EXPENSE, NET 1.8 1.3 1.7 1.4 ----- ----- ----- ----- LOSS BEFORE INCOME TAXES (5.7) (0.8) (5.5) (1.8) INCOME TAX BENEFIT (2.2) (0.3) (2.1) (0.7) ----- ----- ----- ----- LOSS BEFORE EXTRAORDINARY ITEM (3.5) (0.5) (3.4) (1.1) EXTRAORDINARY ITEM - loss on early extinguishment of debt -- -- -- (0.1) ----- ----- ----- ----- NET LOSS (3.5)% (0.5)% (3.4)% (1.2)% ===== ===== ===== =====
THIRTEEN WEEKS ENDED JULY 29, 2000 COMPARED TO THIRTEEN WEEKS ENDED JULY 31, 1999 For the purposes of the following discussions, all references to "second quarter of 2000" and "second quarter of 1999" are to the Company's thirteen week period ended July 29, 2000 and July 31, 1999, respectively. NET SALES. Net sales were $156.3 million for the thirteen weeks ended July 29, 2000, an increase of 4.6% over the same period last year. Comparable store sales decreased 2.1% for the period, with coats, womens, cosmetics, accessories, mens sportswear/furnishings, petite, childrens, intimate and home achieving sales increases during the quarter. OTHER INCOME, NET. Net other income, which consisted mainly of income from leased departments, remained constant at 0.3% of net sales in the second quarter of 2000 compared to the second quarter of 1999. COSTS AND EXPENSES. Gross margin in the second quarter of 2000 increased $1.5 million compared to the second quarter of 1999, reflecting the increase in sales. Gross profit as a percentage of net sales decreased 0.8 percentage points to 37.2% for the thirteen week period ended July 29, 2000 from 38.0% for the comparable period last year, primarily reflecting increased promotional activity in the form of higher markdowns. Selling, general and administrative expenses for the second quarter of 2000 were $54.2 million, or 34.7% of net sales, as compared to $53.3 million, or 35.7% of net sales, in the second quarter of 1999. The increase 7 8 THE BON-TON STORES, INC. AND SUBSIDIARIES of $0.9 million in the second quarter of 2000 was primarily attributable to the cost of operating six new stores, including additional payroll costs, rent expense, utilities and insurance costs, partially offset by a reduction in corporate expenses. Depreciation and amortization increased to 2.6% of net sales in the second quarter of 2000 from 2.1% of net sales in the second quarter of 1999. The increase was primarily due to $46.5 million of fixed asset additions in fiscal 1999. Unusual expense of $6.5 million was incurred in the second quarter of 2000 relating to the early retirement of Mr. Heywood Wilansky as President and Chief Executive Officer, the realignment and elimination of certain senior management positions and headcount reduction initiatives implemented by the Company. (LOSS) INCOME FROM OPERATIONS. Loss from operations in the second quarter of 2000 amounted to $6.0 million, or 3.9% of net sales, compared to income from operations of $0.8 million, or 0.5% of net sales, in the second quarter of 1999. The Company sells receivables through its accounts receivable facility to provide additional working capital. On a pro-forma basis, if the Company had on-balance sheet financing, it would have reduced selling, general and administrative expenses by $2.2 million in the second quarter of 2000 and $1.8 million in the second quarter of 1999. The lower selling, general and administrative expenses would have been offset by a corresponding increase in interest expense for both periods. The net result of the pro-forma reclassification would reflect a loss from operations of $3.8 million in the second quarter of 2000 and income from operations of $2.6 million for the second quarter of 1999. INTEREST EXPENSE, NET. Net interest expense increased $773,000 to 1.8% of net sales in the second quarter of 2000 from $2.0 million, or 1.3% of net sales, in the second quarter of 1999. The additional interest expense was primarily attributable to increased average borrowing levels and rates. NET LOSS. The net loss in the second quarter of 2000 amounted to $5.5 million compared to a net loss of $0.8 million in the second quarter of 1999. Due to the seasonal nature of the Company's business, the results for the current period are not necessarily indicative of the results that may be achieved for the full fiscal year of 2000. TWENTY-SIX WEEKS ENDED JULY 29, 2000 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 31, 1999 For the purposes of the following discussions, all references to "2000" and "1999" are to the Company's twenty-six week period ended July 29, 2000 and July 31, 1999, respectively. NET SALES. Net sales were $308.5 million for the twenty-six weeks ended July 29, 2000, an increase of 5.7% over the same period last year. Comparable store sales decreased 1.6% for the period, with coats, cosmetics, womens, home, childrens, mens sportswear/furnishings, petites and accessories achieving sales increases. OTHER INCOME, NET. Net other income, which consisted mainly of income from leased departments, remained constant at 0.4% of net sales in 2000 and 1999. COSTS AND EXPENSES. Gross margin in 2000 increased $3.9 million compared to 1999, reflecting the increase in sales, partially offset by increased promotional activity. Gross profit as a percentage of net sales 8 9 THE BON-TON STORES, INC. AND SUBSIDIARIES decreased 0.7 percentage points to 35.6% for the twenty-six week period ended July 29, 2000 from 36.3% for the comparable period last year primarily reflecting the increased markdowns as a percent to sales. Selling, general and administrative expenses for 2000 were $108.2 million, or 35.1% of net sales, as compared to $101.9 million, or 34.9% of net sales, in 1999. The increase in 2000 was primarily attributable to the costs associated with operating six new stores, including additional payroll costs, rent expense, utilities and insurance costs and a decrease in income from credit operations, partially offset by a reduction in corporate expenses. Depreciation and amortization increased to 2.7% of net sales in 2000 from 2.2% of net sales in 1999. The increase was primarily due to the addition of $46.5 million of new assets in fiscal 1999. Unusual expense of $6.5 million was incurred in 2000 relating to the early retirement of Mr. Heywood Wilansky as President and Chief Executive Officer, the realignment and elimination of certain senior management positions and headcount reduction initiatives implemented by the Company. LOSS FROM OPERATIONS. Loss from operations in 2000 amounted to $11.9 million, or 3.9% of net sales, compared to a loss from operations of $1.3 million, or 0.4% of net sales, in 1999. The Company sells receivables through its accounts receivable facility to provide additional working capital. On a pro-forma basis, if the Company had on-balance sheet financing, it would have reduced selling, general and administrative expenses by $4.4 million in 2000 and $3.5 million in 1999. The lower selling, general and administrative expenses would have been offset by a corresponding increase in interest expense for both periods. The net result of the pro-forma reclassification would reflect a loss from operations of $7.5 million in 2000 and income from operations of $2.3 million in 1999. INTEREST EXPENSE, NET. Net interest expense increased to $5.2 million, or 1.7% of net sales, in 2000 from $4.0 million, or 1.4% of net sales, in 1999. The increase was primarily attributable to higher average borrowing levels and rates. EXTRAORDINARY ITEM. The Company amended its revolving credit facility on April 7, 1999 (see Note 2 of the 1999 Annual Report). As a result of this transaction, the Company incurred an extraordinary charge of $0.4 million, net of a $0.2 million income tax benefit, in 1999. NET LOSS. The net loss in 2000 amounted to $10.6 million compared to a net loss of $3.6 million in 1999. Due to the seasonal nature of the Company's business, the results for the current period are not necessarily indicative of the results that may be achieved for the full fiscal year of 2000. 9 10 THE BON-TON STORES, INC. AND SUBSIDIARIES LIQUIDITY AND CAPITAL RESOURCES The Company's working capital requirements are currently met through a combination of cash, borrowings under its revolving credit facility and proceeds from its accounts receivable facility. The following table summarizes the Company's liquidity and capital resources: July 29, July 31, (Dollars in millions) 2000 1999 - --------------------- ---- ---- Working capital $163.3 $149.1 Current ratio 2.64:1 2.59:1 Funded debt to total capitalization 0.43:1 0.39:1 Unused availability under lines of credit $ 23.0 $ 37.7 For the twenty-six weeks ended July 29, 2000, net cash used in operating activities amounted to $25.1 million as compared to net cash used of $16.9 million for the comparable period last year. The increase in net cash used in 2000 as compared to 1999 was primarily attributable to an increase in the Company's loss and increased working capital requirements, partially offset by an increase in long-term liabilities. Accounts receivable decreased $11.2 million in fiscal 2000 compared to a decrease of $15.2 million in fiscal 1999. Merchandise inventories increased $5.3 million in 2000 compared to an increase of $1.7 million in 1999. These increases in working capital requirements primarily reflect the increase in the number of stores and sales in fiscal 2000 compared to fiscal 1999. Net cash used in investing activities amounted to $6.1 million in 2000 compared to $21.0 million for the comparable period last year. The decrease in net cash used for the twenty-six week period ended July 29, 2000 primarily reflects a reduction in capital expenditures. Net cash provided by financing activities amounted to $31.4 million for 2000 compared to $36.4 million for the comparable period of 1999. The decrease in cash provided by financing activities in 2000 was primarily attributable to increased payments on the Company's long-term debt and decreased advances from the Company's revolving credit facility. The Company anticipates its cash flow from operations, supplemented by borrowings under its revolving credit facility and proceeds from its accounts receivable facility, will be sufficient to satisfy its operating cash requirements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company does not believe its interest rate risks, as described in the 1999 Annual Report, have changed materially. 10 11 THE BON-TON STORES, INC. AND SUBSIDIARIES "SAFE HARBOR" STATEMENT Certain information included in this report and other materials filed or to be filed by the Company with the Securities and Exchange Commission contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as "may," "will," "plan," "expect," "anticipate," "estimate," "project," "intend" or other similar expressions, involve important risks and uncertainties that could significantly affect anticipated 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. These risks and uncertainties include, but are not limited to, uncertainties affecting retail in general, such as consumer confidence and demand for soft goods; risks relating to leverage and debt service; competition within markets in which the Company's stores are located; and the need for, and costs associated with, store renovations and other capital expenditures. PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There have been no material developments in any legal proceedings since the Company's disclosure in its 1999 Annual Report. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 13, 2000, the Company held its Annual Meeting of Shareholders. The following matters were submitted for vote: 1. The following individuals were nominated and elected to serve as the directors of the Company: M. Thomas Grumbacher For: 39,856,364 Withhold Authority: 1,094,068 Heywood Wilansky For: 39,856,364 Withhold Authority: 1,094,068 Samuel J. Gerson For: 39,662,164 Withhold Authority: 1,288,268 Michael L. Gleim For: 39,856,364 Withhold Authority: 1,094,068 Lawrence J. Ring For: 39,856,364 Withhold Authority: 1,094,068 Robert C. Siegel For: 39,856,364 Withhold Authority: 1,094,068 Leon D. Starr For: 39,856,364 Withhold Authority: 1,094,068
11 12 Frank Tworecke For: 39,856,364 Withhold Authority: 1,094,068 Leon F. Winbigler For: 39,856,364 Withhold Authority: 1,094,068 Thomas W. Wolf For: 39,856,364 Withhold Authority: 1,094,068
2. The holders of 38,854,240 shares voted in favor of, the holders of 2,073,257 shares voted against and the holders of 22,935 shares abstained with respect to the approval and adoption of The Bon-Ton Stores, Inc. 2000 Stock Incentive Plan. 3. The holders of 35,850,087 shares voted in favor of, the holders of 3,061,501 voted against and the holders of 24,971 shares abstained with respect to the approval and adoption of The Bon-Ton Stores, Inc. 2000 Performance-Based Compensation Plan for Heywood Wilansky. 4. The holders of 40,817,935 shares voted in favor of, the holders of 84,643 shares voted against and the holders of 431,484 shares abstained with respect to the ratification of the appointment of Arthur Andersen LLP to serve as the Company's independent accountants for 2000. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed pursuant to the requirements of Item 601 of Regulation S-K:
Exhibit No. Description 10.1 Seventh Amendment to the Credit Agreement 10.2 The Bon-Ton Stores, Inc. 2000 Stock Incentive Plan 10.3 Separation Agreement and General Release by and between Heywood Wilansky and The Bon-Ton Stores, Inc. 27 Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter. A Current Report on Form 8-K dated June 27, 2000 was filed related to the retirement of Heywood Wilansky, President and Chief Executive Officer. 12 13 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 8, 2000 BY: /s/ Michael L. Gleim -------------------- ----------------------- Michael L. Gleim Vice Chairman and Chief Operating Officer DATE: September 8, 2000 BY: /s/ James H. Baireuther -------------------- -------------------------- James H. Baireuther Executive Vice President and Chief Financial Officer 13 EX-10.1 2 w40231ex10-1.txt SEVENTH AMDMT. TO THE CREDIT AGREEMENT 1 Exhibit 10.1 SEVENTH AMENDMENT TO THE CREDIT AGREEMENT SEVENTH AMENDMENT, dated as of July 31, 2000 (this "Amendment"), among THE BON-TON DEPARTMENT STORES, INC. and THE BON-TON STORES OF LANCASTER, INC. (collectively, the "Borrowers"), the other Credit Parties party to the Credit Agreement referred to below, the Lenders party to such Credit Agreement and GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative Agent (in such capacity, the "Agent"), Collateral Agent (in such capacity, the "Collateral Agent") and Lender. W I T N E S S E T H : WHEREAS, the parties hereto have entered into that certain Credit Agreement, dated as of April 15, 1997 (such Agreement, as amended, supplemented or otherwise modified from time to time, being hereinafter referred to as the "Credit Agreement," and capitalized terms defined therein and not otherwise defined herein are used herein as therein defined); and WHEREAS, the Borrowers desire to have the Lenders amend certain provisions of the Credit Agreement; and WHEREAS, the Lenders have agreed to such amendments upon the terms and subject to the conditions provided herein; NOW, THEREFORE, in consideration of the premises, covenants and agreements contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Amendment. The Lenders, the Agent, the Borrowers and the other Credit Parties hereby agree to the following amendment to the Credit Agreement: (a) (i) the word "and" immediately preceding the first clause (iii) of the definition of "Fixed Asset Availability" in Annex A to the Credit Agreement is hereby deleted and a comma inserted in lieu thereof and (ii) the first clause (iii) of such definition is hereby amended by deleting it in its entirety and inserting in lieu thereof the following: "(iii) from March 1, 1999 through and including July 31, 2000, up to 33 1/3% of Maximum Fixed Asset Availability and (iv) from August 1, 2000 and thereafter, up to 50% of Maximum Fixed Asset Availability". 2 (b) Section 6.8 of the Credit Agreement is hereby amended by inserting the following phrase at the end of clause (g) thereof: ", or any sales permitted under Section 6.12". (c) Section 6.12 of the Credit Agreement is hereby amended by (i) adding "(a)" immediately after the phrase "other than" and (ii) adding at the end thereof the phrase "(b) the Real Estate located at 8 Galleria Mall, York, Pennsylvania and 600 Mt. Zion Road, York, Pennsylvania, up to a maximum of $15,000,000 in the aggregate and (c) up to an additional $15,000,000 in the aggregate of other assets of the Credit Parties not covered under clauses (a) and (b) hereof." (d) Section 6.18 of the Credit Agreement is hereby amended by deleting the phrase "would exceed $25,000,000" and replacing it with the phrase "would exceed $30,000,000". Section 2. Consent. The Requisite Lenders hereby consent to Bon-Ton's creation of a wholly-owned Subsidiary (the "Insurance Subsidiary") to act as a captive reinsurance company for the sole purpose of providing an insurance program to the holders of its Bon-Ton branded credit cards (the "Insurance Program"). None of the Credit Parties may transfer any assets to the Insurance Subsidiary other than for organizational capital and expenses not to exceed $1,000,000 in the aggregate. The Insurance Subsidiary may not engage in any business (other than providing the Insurance Program) or incur any Indebtedness (other than in connection with the Insurance Program). Section 3. Conditions to Effectiveness. This Amendment shall become effective as of the date hereof when the Agent shall have received counterparts of this Amendment executed by each Borrower, each Credit Party, the Agent and the Requisite Lenders or, as to the Requisite Lenders, advice satisfactory to the Agent that the Requisite Lenders have executed this Amendment. Section 4. Representations and Warranties. The Borrowers and the other Credit Parties hereby jointly and severally represent and warrant to the Lenders and the Agent as follows: (a) After giving effect to this Amendment, each of the representations and warranties in Section 3 of the Credit Agreement and in the other Loan Documents are true and correct in all material respects on and as of the date hereof as though made on and as of such date, except to the extent that any such representation or warranty expressly relates to an earlier date and except for changes therein not prohibited by the Credit Agreement. (b) After giving effect to this Amendment, no Default or Event of Default has occurred and is continuing as of the date hereof. 2 3 (c) The execution, delivery and performance by the Credit Parties of this Amendment have been duly authorized by all necessary or proper corporate action and do not require the consent or approval of any Person which has not been obtained. (d) This Amendment has been duly executed and delivered by each Credit Party and each of this Amendment and the Credit Agreement as amended hereby constitutes the legal, valid and binding obligation of the Credit Parties, enforceable against them in accordance with its terms. Section 5. Reference to and Effect on the Loan Documents. (a) Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Credit Agreement "this Agreement," "hereunder," "hereof," "herein," or words of like import, shall mean and be a reference to the Credit Agreement as amended hereby and each reference in the other Loan Documents to "the Credit Agreement" shall mean and be a reference to the Credit Agreement as amended hereby. (b) Except to the extent amended hereby, the provisions of the Credit Agreement and all of the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. Section 6. Costs and Expenses. The Borrowers agree to pay on demand all costs, fees and expenses of the Agent in connection with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered pursuant hereto, including the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto. Section 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. Section 8. Governing Law. This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws. 3 4 IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written. BORROWERS: THE BON-TON DEPARTMENT STORES, INC. By: /s/ H. Todd Dissinger ________________________________ Name: H. Todd Dissinger Title: Treasurer THE BON-TON STORES OF LANCASTER, INC. By: /s/ Robert E. Stern ________________________________ Name: Robert E. Stern Title: Secretary/Treasurer OTHER CREDIT PARTIES: THE BON-TON STORES, INC. By: /s/ H. Todd Dissinger ________________________________ Name: H. Todd Dissinger Title: Treasurer THE BON-TON CORP. By: /s/ Robert E. Stern ________________________________ Name: Robert E. Stern Title: Secretary THE BON-TON NATIONAL CORP. By: /s/ Robert E. Stern ________________________________ Name: Robert E. Stern Title: Secretary THE BON-TON TRADE CORP. By: /s/ Robert E. Stern ________________________________ Name: Robert E. Stern Title: Secretary 4 5 AGENT AND LENDERS: GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Charles D. Chiodo _________________________________ Name: Charles D. Chiodo Title: Authorized Signatory THE CIT GROUP/BUSINESS CREDIT, INC. By: /s/ Mark J. Long _________________________________ Name: Mark J. Long Title: Vice President FIRST UNION NATIONAL BANK By: /s/ Joan Anderson _________________________________ Name: Joan Anderson Title: Vice President MANUFACTURERS AND TRADERS TRUST COMPANY By: /s/ C. Gregory Vogelsang _________________________________ Name: C. Gregory Vogelsang Title: Assistant Vice President FOOTHILL CAPITAL CORPORATION By: /s/ Michael P. Baranowski _________________________________ Name: Michael P. Baranowski Title: Vice President FLEET BUSINESS CREDIT CORPORATION By: /s/ John A. O'Kane _________________________________ Name: John A. O'Kane Title: Senior Vice President UNION BANK OF CALIFORNIA, N.A. By: /s/ Albert R. Joseph _________________________________ Name: Albert R. Joseph Title: Vice President 5 EX-10.2 3 w40231ex10-2.txt THE BON-TON STORES, INC. 2000 STOCK INCENTIVE PLAN 1 Exhibit 10.2 THE BON-TON STORES, INC. 2000 STOCK INCENTIVE PLAN (EFFECTIVE AS OF MARCH 3, 2000) 1. Purpose. The Bon-Ton Stores, Inc. (the "Company") hereby adopts The Bon-Ton Stores, Inc. 2000 Stock Incentive Plan (the "Plan"), effective as of the date of its adoption by the Board, subject to its approval by the Company's shareholders within 12 months of such date, as provided for below. The Plan is intended to recognize the contributions made to the Company by employees (including employees who are members of the Board of Directors), directors, consultants and advisors of the Company or any Affiliate, to provide such persons with additional incentive to devote themselves to the future success of the Company or an Affiliate, and to improve the ability of the Company or an Affiliate to attract, retain, and motivate individuals upon whom the Company's sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company through receipt of rights to acquire the Company's Common Stock, par value $.01 per share (the "Common Stock"). 2. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the following meanings: A. "Affiliate" means a corporation which is a parent corporation or a subsidiary corporation with respect to the Company within the meaning of Section 424(e) or (f) of the Code. B. "Award" means an award of Restricted Stock, granted under the Plan, designated by the Committee at the time of such grant as an Award, and containing the terms specified herein for Awards. C. "Award Document" means the document described in Section 9 which sets forth the terms and conditions of each grant of an Award. D. "Board of Directors" means the Board of Directors of the Company. E. "Change of Control" shall have the meaning as set forth in Section 10 of the Plan. F. "Code" means the Internal Revenue Code of 1986, as amended. G. "Committee" shall have the meaning set forth in Section 3.A. H. "Company" means The Bon-Ton Stores, Inc., a Pennsylvania corporation. I. "Disability" shall have the meaning set forth in Section 22(e)(3) of the Code. J. "Fair Market Value" shall have the meaning set forth in Section 8.B. K. "Grantee" means a person who is granted Restricted Stock. 2 L. "ISO" means an Option granted under the Plan which is intended to qualify as an "incentive stock option" within the meaning of Section 422(b) of the Code. M. "Non-qualified Stock Option" means an Option granted under the Plan which is not intended to qualify, or otherwise does not qualify, as an "incentive stock option" within the meaning of Section 422(b) of the Code. N. "Option" means either an ISO or a Non-qualified Stock Option granted under the Plan. O. "Optionee" means a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated. P. "Option Document" means the document described in Section 8 which sets forth the terms and conditions of each grant of Options. Q. "Option Price" means the price at which Shares may be purchased upon exercise of an Option, as calculated pursuant to Section 8.B. R. "Restricted Stock" means Shares issued to a person pursuant to an Award. S. "Shares" means the shares of Common Stock of the Company which are the subject of Options or Awards. T. "Exchange Act" means the Securities Exchange Act of 1934, as amended. 3. Administration of the Plan. A. Committee. The Plan shall be administered by the Board of Directors, or, in the discretion of the Board of Directors, by a committee composed of two or more of the members of the Company's Board of Directors. To the extent possible, and to the extent the Board of Directors deems it necessary or appropriate, each member of the Committee shall be a "Non-Employee Director" (as such term is defined in Rule 16b-3 promulgated under the Exchange Act) and an "Outside Director" (as such term is defined in Treasury Regulations Section 1.162-27 promulgated under the Code); however, the Board may designate two or more committees to operate and administer the Plan in its stead. Any of such committees designated by the Board of Directors is referred to as the "Committee," and, to the extent that the Plan is administered by the Board of Directors, "Committee" shall also refer to the Board of Directors as appropriate in the particular context. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled by the Board of Directors. B. Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts 2 3 approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee. C. Grants. The Committee shall from time to time at its discretion direct the Company to grant Options or Awards pursuant to the terms of the Plan. The Committee shall have plenary authority to (i) determine the Optionees and Grantees to whom and the times at which Options and Awards shall be granted, (ii) determine the price at which Options shall be granted, (iii) determine the type of Option to be granted and the number of Shares subject thereto, (iv) determine the number of Shares to be granted pursuant to each Award and (v) approve the form and terms and conditions of the Option Documents and of each Award; all subject, however, to the express provisions of the Plan. In making such determinations, the Committee may take into account the nature of the Optionee's or Grantee's services and responsibilities, the Optionee's or Grantee's present and potential contribution to the Company's success and such other factors as it may deem relevant. The interpretation and construction by the Committee of any provisions of the Plan or of any Option or Award granted under it shall be final, binding and conclusive. D. Exculpation. No member of the Committee shall be personally liable for monetary damages as such for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options or Awards thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his office within the meaning of subchapter B of Chapter 17 of the Pennsylvania Business Corporation Law of 1988, as amended, and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this Section 3.D shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute or to the liability of a member of the Committee for the payment of taxes pursuant to local, state or federal law. E. Indemnification. Service on the Committee shall constitute service as a member of the Board of Directors of the Company. Each member of the Committee shall be entitled without further act on his part to indemnity from the Company to the fullest extent provided by applicable law and the Company's Articles of Incorporation and/or Bylaws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options or Awards thereunder in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of the action, suit or proceeding. 4. Grants of Options under the Plan. Grants of Options under the Plan may be in the form of a Non-qualified Stock Option, an ISO or a combination thereof, at the discretion of the Committee. 5. Eligibility. All employees (including employees who are members of the Board of Directors of the Company or its Affiliates), directors, consultants and advisors of the Company or its Affiliates shall be eligible to receive Options or Awards hereunder; provided, that directors (other than directors who are employees of the Company or its Affiliates) shall not be eligible to receive ISOs. The Committee, in its sole discretion, shall determine whether an individual qualifies as an employee, consultant or advisor of the Company or its Affiliates. 3 4 6. Shares Subject to Plan. The aggregate maximum number of Shares for which Options or Awards may be granted pursuant to the Plan is four hundred thousand (400,000) adjusted as provided in Section 11. The Shares shall be issued from authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury of the Company. If an Option terminates or expires without having been fully exercised for any reason, or if Restricted Stock is canceled or forfeited pursuant to the terms of an Award, the Shares for which the Option was not exercised or which were canceled or forfeited pursuant to the Award may again be the subject of an Option or Award granted pursuant to the Plan. 7. Term of the Plan. No Option or Award may be granted under the Plan after March 2, 2010. 8. Option Documents and Terms. Each Option granted under the Plan shall be a Non-qualified Stock Option unless the Option shall be specifically designated at the time of grant to be an ISO for federal income tax purposes. Options granted pursuant to the Plan shall be evidenced by the Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan. A. Number of Option Shares. Each Option Document shall state the number of Shares to which it pertains. An Optionee may receive more than one Option, which may include Options which are intended to be ISOs and Options which are not intended to be ISOs, but only on the terms and subject to the conditions and restrictions of the Plan. The maximum number of Shares for which Options may be granted to any single Optionee in any fiscal year, adjusted as provided in Section 11, shall be two hundred thousand (200,000) Shares. B. Option Price. Each Option Document shall state the Option Price which, for all ISOs, shall be at least 100% of the Fair Market Value of the Shares at the time the Option is granted as determined by the Committee in accordance with this Section 8.B; provided, however, that if an ISO is granted to an Optionee who then owns, directly or by attribution under Section 424(d) of the Code, shares possessing more than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, then the Option Price shall be at least 110% of the Fair Market Value of the Shares at the time the Option is granted. If the Common Stock is traded in a public market, then the Fair Market Value per share shall be, if the Shares are listed on a national securities exchange or included in the NASDAQ National Market System, the last reported sale price thereof on the relevant date, or, if the Shares are not so listed or included, the mean between the last reported "bid" and "asked" prices thereof, as reported on NASDAQ or, if not so reported, as reported by the National Daily Quotation Bureau, Inc., or as reported in a customary financial reporting service, as applicable and as the Committee determines, on the relevant date. If the Common Stock is not traded in a public market on the relevant date, the Fair Market Value shall be as determined in good faith by the Committee. C. Exercise. No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment in full of the Option 4 5 Price for the Shares to be purchased. Each such notice shall specify the number of Shares to be purchased and shall (unless the Shares are covered by a then current registration statement or a Notification under Regulation A under the Securities Act of 1933, as amended (the "Act")), contain the Optionee's acknowledgment in form and substance satisfactory to the Company that (i) such Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act), (ii) the Optionee has been advised and understands that (A) the Shares have not been registered under the Act and are "restricted securities" within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (B) the Company is under no obligation to register the Shares under the Act or to take any action which would make available to the Optionee any exemption from such registration, (iii) such Shares may not be transferred without compliance with all applicable federal and state securities laws, and (iv) an appropriate legend referring to the foregoing restrictions on transfer and any other restrictions imposed under the Option Documents may be endorsed on the certificates. Notwithstanding the foregoing, if the Company determines that issuance of Shares should be delayed pending (I) registration under federal or state securities laws, (II) the receipt of an opinion that an appropriate exemption from such registration is available, (III) the listing or inclusion of the Shares on any securities exchange or in an automated quotation system or (IV) the consent or approval of any governmental regulatory body whose consent or approval is necessary in connection with the issuance of such Shares, the Company may defer exercise of any Option granted hereunder until any of the events described in this Section 8.C has occurred. D. Medium of Payment. An Optionee shall pay for Shares (i) in cash, (ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. Furthermore, the Committee may provide in an Option Document that payment may be made in whole or in part in shares of the Company's Common Stock held by the Optionee for at least six months. If payment is made in whole or in part in shares of the Company's Common Stock, then the Optionee shall deliver to the Company certificates registered in the name of such Optionee representing the shares owned by such Optionee, free of all liens, claims and encumbrances of every kind and having an aggregate Fair Market Value on the date of delivery that is at least as great as the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by the payment in shares of Common Stock, accompanied by stock powers duly endorsed in blank by the Optionee. Notwithstanding the foregoing, the Committee may impose from time to time such limitations and prohibitions on the use of shares of the Common Stock to exercise an Option as it deems appropriate. E. Termination of Options. 1. No Option shall be exercisable after the first to occur of the following: (a) Expiration of the Option term specified in the Option Document, which shall not exceed (i) ten years from the date of grant, or (ii) five years from the date of grant of an ISO if the Optionee on the date of grant owns, directly or by attribution under 5 6 Section 424(d) of the Code, shares possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of an Affiliate; (b) Expiration of ninety (90) days from the date the Optionee's employment or service with the Company or its Affiliates terminates for any reason other than Disability or death or as otherwise specified in Section 8.E.1(d) or Section 10 below; (c) Expiration of one year from the date the Optionee's employment or service with the Company or its Affiliates terminates due to the Optionee's Disability or death; (d) A finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has breached his employment or service contract with the Company or an Affiliate, or has been engaged in any sort of disloyalty to the Company or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment or service, or has disclosed trade secrets or confidential information of the Company or an Affiliate. In such event, in addition to immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which the Company has not yet delivered the share certificates upon refund by the Company of the Option Price of such Shares. Notwithstanding anything herein to the contrary, the Company may withhold delivery of share certificates pending the resolution of any inquiry that could lead to a finding resulting in a forfeiture; or (e) The date, if any, set by the Board of Directors as an accelerated expiration date pursuant to Section 10 hereof. 2. Notwithstanding the foregoing, the Committee may extend the period during which an Option may be exercised to a date no later than the date of the expiration of the Option term specified in the Option Documents, as they may be amended, provided that any change pursuant to this Section 8.E.2 that would cause an ISO to become a Non-qualified Stock Option may be made only with the consent of the Optionee. F. Transfers. No Option granted under the Plan may be transferred, except by will or by the laws of descent and distribution. During the lifetime of the person to whom an Option is granted, such Option may be exercised only by him. Notwithstanding the foregoing, a Non-qualified Stock Option may be transferred pursuant to the terms of a "qualified domestic relations order," within the meaning of Sections 401(a)(13) and 414(p) of the Code or within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended. G. Holding Period. No Option granted under the Plan may be exercised unless six months, or such greater period of time as may be specified in the Option Documents, have elapsed from the date of grant. H. Limitation on ISO Grants. In no event shall the aggregate Fair Market Value of the Shares (determined at the time the ISO is granted) with respect to which an ISO is 6 7 is exercisable for the first time by the Optionee during any calendar year (under all incentive stock option plans of the Company or its Affiliates) exceed $100,000. I. Other Provisions. The Option Documents shall contain such other provisions including, without limitation, provisions authorizing the Committee to accelerate the exercisability of all or any portion of an Option granted pursuant to the Plan, additional restrictions upon the exercise of the Option or additional limitations upon the term of the Option, as the Committee shall deem advisable. J. Amendment. The Committee shall have the right to amend Option Documents issued to an Optionee, subject to the Optionee's consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made under Section 10 of the Plan. 9. Award Documents and Terms. Awards granted pursuant to the Plan shall be evidenced by an Award Document in such form as the Committee shall from time to time approve, which Award Document shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan. A Grantee shall not have any rights with respect to an Award until and unless such Grantee shall have executed an Award Document containing the terms and conditions determined by the Committee. A. Number of Shares and Price. Each Award Document shall state the number of Shares of Restricted Stock to which it pertains. No cash or other consideration shall be required to be paid by the Grantee for an Award. B. Certificates. Each Grantee shall be issued a certificate in respect of Shares subject to an Award. Such certificate shall be registered in the name of the Grantee and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award. The Company may require that the certificate evidencing such Shares be held by the Company until all restrictions on such Shares have lapsed. C. Restrictions. Subject to the provisions of the Plan and the Award Documents, during a period set by the Committee commencing with the date of such Award, which period shall extend for at least six months from the date of such Award (except as provided by Section 9.G), the Grantee shall not be permitted to sell, transfer, pledge, assign, or otherwise dispose of Shares of Restricted Stock awarded under the Plan. D. Lapse of Restrictions. Subject to the provisions of the Plan and the Award Document, restrictions upon Shares of Restricted Stock subject to an Award shall lapse at such time or times and on such terms and conditions as the Committee may determine and set forth in the Award Document; provided, however, that the restrictions upon such Shares shall lapse only if the Grantee on the date of such lapse is, and has continuously been an employee of the Company or its affiliates from the date such Award was granted. The Award Document may provide for the lapse of restrictions in installments, as determined by the Committee. In the event that a Grantee's employment terminates as a result of the Grantee's death or Disability, all remaining restrictions 7 8 with respect to such Grantee's Restricted Stock shall immediately lapse, unless otherwise provided in the Award Document. E. Rights of the Grantee. Grantees may have such rights with respect to the Shares subject to an Award as may be determined by the Committee and set forth in the Award Document, including the right to vote such Shares, and the right to receive dividends paid with the respect to such Shares. F. Dividends. The Committee may, in its sole discretion, provide in an Award Document, that an amount equivalent to any dividends payable with respect to the number of Shares of Restricted Stock granted, but not yet delivered, be invested and reinvested in additional Shares of Restricted Stock, which shall be subject to the same restrictions as Restricted Stock to which the dividends relate. Such Shares of Restricted Stock shall be reflected in accordance with the terms of the Award Document, by the credit of additional full or fractional Shares, calculated to the thousandth of a Share, in an amount equal to the value of the declared dividend divided by the Fair Market Value of a Share on the date of payment of the dividend. Any arrangements for the credit of additional Shares of Restricted Stock shall terminate if, and to the extent that, under the terms of the Award Document, the right to receive the Restricted Stock to which the dividends relate shall terminate or lapse. G. Forfeiture of Restricted Stock. In the event that a Grantee's employment with the Company terminates for any reason, other than because of death or Disability, any Restricted Stock held by such Grantee which is still subject to restrictions shall be forfeited by the Grantee and reacquired by the Company. The Company may, in its sole discretion, waive, in whole or in part, any remaining restrictions with respect to such Grantee's Restricted Stock. H. Delivery of Shares. When the restrictions imposed on Restricted Stock expire or have been canceled with respect to one or more Shares (whether issued as an Award or as additional Restricted Stock pursuant to Section 9.F, the Company shall notify the Grantee that such restrictions no longer apply with respect to such Shares, and shall deliver to the Grantee (or the person to whom ownership rights in such Restricted Stock may have passed by will or the laws of descent and distribution) a certificate for the number of Shares of Restricted Stock for which restrictions have been canceled or have expired, without any legend or restrictions (except those that may be imposed by the Committee in its sole judgment to ensure compliance with the then existing requirements of the Act and the Exchange Act). The right to payment for any fractional Shares that may have accrued shall be satisfied in cash based on the Fair Market Value of a Share on the date the restriction with respect to such fractional Share lapsed or terminated. 10. Change of Control. In the event of a Change of Control, the Committee may take whatever action with respect to Options and Awards outstanding as it deems necessary or desirable, including, without limitation, accelerating the expiration or termination date or the date of exercisability in any Option Documents, or removing any restrictions from or imposing any additional restrictions on any outstanding Awards. A "Change of Control" shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date the shareholders of the Company (or the Board of Directors, if 8 9 shareholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date the shareholders of the Company (or the Board of Directors, if shareholder action is not required) approve a definitive agreement to sell or otherwise dispose of substantially all of the assets of the Company, or (iii) the date the shareholders of the Company (or the Board of Directors, if shareholder action is not required) and the shareholders of the other constituent corporation (or its board of directors if shareholder action is not required) have approved a definitive agreement to merge or consolidate the Company with or into such other corporation, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company's Common Stock or other common voting stock immediately prior to the merger or consolidation will hold at least a majority of the ownership of common stock of the surviving corporation (and, if one class of common stock is not the only class of voting securities entitled to vote on the election of directors of the surviving corporation, a majority of the voting power of the surviving corporation's voting securities) immediately after the merger or consolidation, which common stock (and if applicable voting securities) is to be held in the same proportion to one another as such holders' ownership of Common Stock or other common voting stock of the Company immediately before the merger or consolidation, or (iv) the date any entity, person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than M. Thomas Grumbacher, members of his family, his lineal descendants, or entities of which such persons are the beneficial owners of at least fifty percent (50%) of the voting interests, the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, shall have become the beneficial owner of, or shall have obtained voting control over, outstanding shares of the Company's voting stock representing more than fifty percent (50%) of the voting power of all of the Company's outstanding voting stock, or (v) the first day after the date this Plan is effective when directors constituting a majority of the Board of Directors shall have been members of the Board of Directors for less than twelve (12) months, unless the nomination for election of each new director who was not a director at the beginning of such twelve (12) month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period. 11. Adjustments on Changes in Capitalization. The aggregate number of Shares and class of Shares as to which Options and Awards may be granted hereunder, the limitation granted to individuals set forth in Section 8.A hereof, the number of Shares covered by each outstanding Option or Award, and the Option Price for each related outstanding Option, shall be appropriately adjusted in the event of a stock dividend, stock split, recapitalization or other change in the number or class of issued and outstanding equity securities of the Company resulting from a subdivision or consolidation of the Common Stock and/or, if appropriate, other outstanding equity securities or a recapitalization or other capital adjustment (not including the issuance of Common Stock on the conversion of other securities of the Company which are convertible into Common Stock) affecting the Common Stock which is effected without receipt of consideration by the Company. The Committee shall have authority to determine the adjustments to be made under this Section, and any such determination by the Committee shall be final, binding and conclusive; provided, however, that no adjustment shall be made which will cause an ISO to lose its status as such without the consent of the Optionee, except for adjustments made pursuant to Section 10 hereof. 9 10 12. Amendment of the Plan. The Board of Directors of the Company may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, the Board of Directors of the Company may not: (i) change the class of individuals eligible to receive an ISO, (ii) increase the maximum number of Shares as to which Options or Awards may be granted, or (iii) make any other change or amendment as to which shareholder approval is required in order to satisfy the conditions set forth in Rule 16b-3 promulgated under the Exchange Act, in each case without obtaining approval, within twelve months before or after such action, by (A) vote of a majority of the votes cast at a duly called meeting of the shareholders at which a quorum representing a majority of all outstanding voting stock of the Company is, either in person or by proxy, present and voting on the matter or by (B) a method and in a degree that would be treated as adequate under applicable state law for actions requiring shareholder approval, including without limitation by written consent of shareholders constituting a majority of all shares of outstanding voting stock of the Company entitled to vote. No amendment to the Plan shall adversely affect any outstanding Option or Award, however, without the consent of the Optionee or Grantee. 13. No Commitment to Retain. The grant of an Option or Award pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Affiliate to retain the Optionee or Grantee in the employ of the Company or an Affiliate and/or as a member of the Company's Board of Directors or in any other capacity. 14. Withholding of Taxes. Whenever the Company proposes or is required to deliver or transfer Shares in connection with an Award or the exercise of an Option, the Company shall have the right to (a) require the recipient to remit or otherwise make available to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (b) take whatever other action it deems necessary to protect its interests with respect to tax liabilities. The Company's obligation to make any delivery or transfer of Shares shall be conditioned on the Optionee's or Grantee's compliance, to the Company's satisfaction, with any withholding requirement. 15. Interpretation. The Plan is intended to enable transactions under the Plan with respect to directors and officers (within the meaning of Section 16(a) under the Securities Exchange Act) to satisfy the conditions of Rule 16b-3 promulgated under the Exchange Act; any provision of the Plan which would cause a conflict with such conditions shall be deemed null and void to the extent permitted by applicable law and in the discretion of the Board of Directors. 10 EX-10.3 4 w40231ex10-3.txt SEPARATION AGRMT. AND GENERAL RELEASE 1 Exhibit 10.3 SEPARATION AGREEMENT AND GENERAL RELEASE This Separation Agreement and General Release (hereinafter the "Agreement") is entered into by and between Heywood Wilansky ("Wilansky") and The Bon-Ton Stores, Inc. ("Bon-Ton" or the "Company"), and shall be effective following expiration of the revocation period set forth in paragraph 16 of the Agreement. WHEREAS, Wilansky and Bon-Ton are parties to an Employment Agreement dated February 27, 1998, as amended (the "Employment Agreement"); WHEREAS, Wilansky retired from his employment with Bon-Ton on June 27, 2000; and WHEREAS, Wilansky and Bon-Ton mutually desire to amicably resolve all disputes between them arising out of Wilansky's separation and his rights under the Employment Agreement; NOW, THEREFORE, in consideration of the mutual promises and obligations contained herein, intending to be legally bound, it is hereby agreed as follows: 1. The foregoing recitals are incorporated herein as if set forth at length. 2. The Company will pay Wilansky a pro-rated performance bonus of $170,000 for its fiscal year ending January 31, 2001 on or before March 31, 2001. 3. a. The Company will pay Wilansky his base salary at an annual rate of $1,000,000 (paid in bi-weekly installments subject to normal deductions) through January 31, 2003, the remaining term of the Employment Agreement, subject to the mitigation requirement and offset described in paragraph 3b herein. On the next business day following the effective date of this Agreement, the Company will make a lump sum payment to Wilansky retroactive to June 28, 2000. 2 b. Wilansky shall seek senior executive employment not in violation of paragraph 15 of the Employment Agreement. The Bon-Ton's obligation for base salary under paragraph 3a above shall be offset up to the maximum payment due each year during this Agreement by two-thirds of the amount of any compensation earned by Wilansky through employment or self employment, in excess of (i) $230,000 from June 27, 2000 through January 31, 2001, (ii) $400,000 from February 1, 2001 through January 31, 2002 and (iii) $400,000 from February 1, 2002 through January 31, 2003. Compensation shall include Wilansky's base salary, any signing or performance bonus, variable compensation, deferred compensation or any other type of compensation earned or payment made to Wilansky by virtue of any employment or service performed by Wilansky through January 31, 2003. Compensation shall not include that portion of any signing bonus which is allocated to compensate Wilansky for relocating to accept new employment (up to a maximum of $200,000) or non-cash employee benefits such as health and life insurance, and reimbursement for dues or other expenses. Wilansky will inform Bon-Ton of any offers of employment accepted by him within ten (10) days of acceptance and will provide Bon-Ton upon request with copies of any agreements or other documents evidencing his right to compensation from any third party. 4. Through January 31, 2003, the Bon-Ton will pay the premiums in connection with Wilansky's continued participation in the Bon-Ton's group health plan pursuant to COBRA, subject to such plan's terms, conditions and restrictions, and make available to Wilansky annually an additional $5000 to cover supplemental health insurance expenses. Notwithstanding the foregoing, the Bon-Ton's obligation to continue medical insurance and pay an insurance supplement shall cease upon Wilansky's acceptance of other employment pursuant to which group medical coverage is normally provided. 2 3 5. On the effective date of this Agreement, Wilansky shall be vested in his restricted stock grant awarded under paragraph 3(c) of the Employment Agreement and stock options granted under paragraph 3(d) of the Employment Agreement. Wilansky shall have ninety (90) days from June 27, 2000 to exercise all vested options. 6. Wilansky shall be vested in his entire supplemental retirement benefit (SERP) as set forth in paragraph 6 of the Employment Agreement. No later than the first day of the month following the date Wilansky attains age 55, the Company will purchase an annuity from an insurance company mutually acceptable to both Wilansky and the Company for distribution to Wilansky to pay his SERP benefit in the amount set forth in paragraph 6(a) of the Employment Agreement. In the event of Wilansky's death prior to age 55, the Company will purchase and distribute to his spouse an annuity in the amount set forth in paragraph 6(d) of the Employment Agreement. The Company may at its sole option make a lump sum payment to Wilansky or his spouse as provided by paragraph 6(e) of the Employment Agreement. 7. Wilansky shall invest his Retirement Account maintained pursuant to paragraph 6(h) of the Employment Agreement in a conservative fixed income fund, until Wilansky attains age 55. The accumulated value of the account shall offset the actuarial values used for determining the benefits to be provided by the Company under paragraph 6 above. Wilansky shall continue to provide monthly statements to the Company concerning the Retirement Account as required by paragraph 6(h) of the Employment Agreement. 8. No later than August 31, 2000, Wilansky shall repay to the Company the principal and all accrued but unpaid interest associated with all tax loans made to Wilansky by the Company pursuant to paragraph 7(b) of the Employment Agreement. The Company will 3 4 issue to Wilansky the share certificates for the stock upon Wilansky's satisfaction of these obligations. 9. Except as to any claim for breach of this Agreement, Wilansky, in consideration of the promises contained herein, unconditionally and irrevocably discharges, releases and remises the Bon-Ton and any and all past, present and future subsidiary, parent or related companies and their past, present and future officers, directors, shareholders, attorneys, supervisors, employees, insurers and agents, in their individual as well as official capacities and the respective successors and assigns of each of them (collectively "Releasees"), jointly and severally, all and singularly, of and from any and all claims, causes of action, suits, charges, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, torts, acts or omissions, controversies, agreements, promises, damages, judgments, rights and demands whatsoever, known or unknown, in law or equity, from the beginning of the world to the date of the execution hereof, whether or not capable of proof as of the date of the Agreement, including but not limited to: (a) all claims arising out of Wilansky's employment with the Bon-Ton and the cessation of that employment; (b) all common law claims, now existing or hereafter recognized, including but not limited to libel, slander, defamation, interference with actual or prospective contractual relations, infliction of emotional distress, promissory estoppel, equitable estoppel, misrepresentation, fraud, breach of contract, wrongful discharge, negligence, loss of consortium, assault, battery and breach of covenant of good faith and fair dealing; (c) any claims for unpaid or withheld wages, overtime compensation, severance pay, bonuses, stock, commissions or other compensation or employee benefits of any kind, including but not limited to violations of the Employee Retirement Income Security Act, committed up to the date of the execution of this Agreement; (d) any and all claims under the Employment Agreement; (e) any and all claims for 4 5 attorney's fees, costs and expenses; and (f) any claims of discrimination based on age, sex, disability, perceived disability, race, religion, color, creed, citizenship, national origin or any other factor prohibited by federal, state or local law (including but not limited to The Age Discrimination in Employment Act and all claims under the Pennsylvania Human Relations Act), and any claims of retaliation for raising, asserting or supporting such claims of discrimination, which have arisen before the date of the execution of this Agreement. Plaintiff specifically waives any claim for reinstatement or reemployment. 10. Wilansky remains bound by and shall comply with paragraphs 14 and 15(a)-(f) of the Employment Agreement and represents that as of the date hereof, he has fully complied therewith. For purposes of paragraph 15(a)(ii) the term "traditional retail department store" shall be defined as The May Company (Kauffman and Hecht divisions), Stern's, Filene's and Boscov's. Wilansky further agrees that until January 31, 2003 he will not directly or indirectly solicit for employment or hire any person who was employed by Bon-Ton on the effective date of this Agreement. The Bon-Ton's obligations under paragraphs 2-6 above shall cease in the event that Wilansky breaches any of the restrictions set forth in paragraphs 14 or 15(a)-(f) of the Employment Agreement, or this Agreement but the remaining obligations under this Agreement shall remain in full force and effect. 11. Wilansky represents that he has returned any and all documents and computer information, including disks and information stored on any computer drive, relating in any way to the business of the Bon-Ton and that he has retained no copies. Wilansky further represents that he has returned all tangible Bon-Ton property, including his leased automobile, all computers, computer programs, telephones and credit cards he has received in connection with 5 6 his employment with the Bon-Ton. At his option, Wilansky may purchase the Dell computer previously provided to him for the amount of $1,800.00. 12. Wilansky shall retain his Bon-Ton store discount until January 31, 2003. 13. The Company will transfer ownership of the Company's whole life insurance policies with New York Life and Guardian applicable to Wilansky, to the extent permitted by the terms and conditions thereof, upon the payment by Wilansky to the Bon-Ton of the cash surrender value of the policies and the amount of any premiums paid on the policies after July 14, 2000. 14. Wilansky agrees and represents that: (a) He has read carefully the terms of this Agreement; (b) He has been advised in writing to and has been given ample opportunity to review this Agreement with the attorney of his choice; (c) He understands the meaning and effect of the terms of this Agreement; (d) The entry into and execution of this Agreement is his own free and voluntary act, without compulsion, coercion, or duress of any kind; (e) His obligations, waivers and releases pursuant to this Agreement are in exchange for valuable and adequate consideration to which he is not otherwise entitled; (f) He has had a reasonable period of time to consider the Agreement and has had at least twenty-one days to review this Agreement prior to signing it; and (g) No promises or inducements have been made to him except as expressly provided herein. 6 7 15. Wilansky shall have seven (7) days following execution of this Agreement within which he may revoke his acceptance of it, and the Agreement shall not be effective or enforceable until the revocation period has expired. Any revocation must be in writing, signed by Wilansky and delivered to Robert M. Goldich of Wolf, Block, Schorr and Solis-Cohen LLP on or before the day of expiration. 16. This Agreement is intended by the parties hereto to create legally binding obligations. This Agreement supersedes all prior verbal and written communications between the parties on the subject matter addressed herein, and all prior agreements between the parties, other than the provisions of the Employment Agreement expressly referred to herein. 17. Any amendment or modification of this Agreement must be expressed in a writing signed by each party or else shall not be effective. This Agreement shall be binding upon the parties hereto and their heirs, successors or assigns. Any action which either party might take to enforce its rights and/or recover damages under this Agreement shall have no effect on any of the other party's promises and obligations (including the General Release in paragraph 9) set forth in this Agreement and these promises and obligations, (including the General Release in paragraph 9) shall remain in full force and effect. 18. Wilansky agrees that the Company may withhold any amounts which are required by law to be withheld from any payment due to him. Each party shall be responsible for payment of its own taxes due in connection with this Agreement, and Wilansky has had the opportunity to obtain independent tax advice regarding this Agreement. 7 8 19. In the event that any provision in this Agreement is determined to be legally invalid, the affected provision shall be stricken from the Agreement, and the remaining terms of the Agreement and its enforceability shall remain unaffected thereby. 20. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. 21. This Agreement shall be governed under Pennsylvania law. IN WITNESS WHEREOF, the parties hereby execute this Agreement as set forth below. INTENDING TO BE LEGALLY BOUND: /s/ Heywood Wilansky Date Aug. 18, 2000 - --------------------------------- ---------------- Heywood Wilansky - --------------------------------- Witness /s/ M. Thomas Grumbacher Date Sept 6, 2000 - --------------------------------- ---------------- The Bon-Ton Stores, Inc. /s/ Michael L. Gleim - --------------------------------- Witness EX-27 5 w40231ex27.txt FDS
5 THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JULY 29,2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS FEB-03-2001 JAN-30-2000 JUL-29-2000 10,925 0 26,636 2,853 208,819 262,614 258,108 115,086 422,095 99,311 133,107 0 0 153 181,159 422,095 308,481 309,592 198,599 321,526 0 0 5,160 (17,094) (6,497) (10,597) 0 0 0 (10,597) (0.72) (0.72)
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