-----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, VMJGVWkhTmhHqgPqZmFQ1upWC7VorVZk+WYFwlDA6uwEKnqRmU6kSxsw3ExCS66d XkNSDhR/WUJGytiSjExOIQ== /in/edgar/work/20000609/0000893220-00-000756/0000893220-00-000756.txt : 20000919 0000893220-00-000756.hdr.sgml : 20000919 ACCESSION NUMBER: 0000893220-00-000756 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000429 FILED AS OF DATE: 20000609 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: 652635 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 0001.txt FORM 10-Q FOR APRIL 29,2000 FOR BON-TON 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 April 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 May 26, 2000 there were 12,264,597 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
April 29, January 29, (In thousands except share and per share data) 2000 2000 - ------------------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 13,105 $ 10,807 Trade and other accounts receivable, net of allowance for doubtful accounts of $2,454 and $3,167 at April 29, 2000 and January 29, 2000, respectively 23,915 27,782 Merchandise inventories 217,956 203,489 Prepaid expenses and other current assets 13,347 12,371 Deferred income taxes 648 1,926 ------------------------- Total current assets 268,971 256,375 ------------------------- PROPERTY, FIXTURES AND EQUIPMENT AT COST, less accumulated depreciation and amortization 143,301 144,715 OTHER ASSETS 16,397 16,402 ------------------------- TOTAL ASSETS $ 428,669 $ 417,492 ========================= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 65,090 $ 67,353 Accrued payroll and benefits 6,475 10,016 Accrued expenses 20,164 26,262 Current portion of long-term debt 695 682 Current portion of obligations under capital leases 451 442 Income taxes payable -- 9,832 ------------------------- Total current liabilities 92,875 114,587 ------------------------- LONG-TERM DEBT, LESS CURRENT MATURITIES 143,973 106,247 OBLIGATIONS UNDER CAPITAL LEASES, LESS CURRENT MATURITIES 1,315 1,431 DEFERRED INCOME TAXES 1,567 1,362 OTHER LONG-TERM LIABILITIES 3,117 3,174 ------------------------- TOTAL LIABILITIES 242,847 226,801 ------------------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common Stock - authorized 40,000,000 shares at $0.01 par value; issued and outstanding shares of 12,264,597 and 12,276,860 at April 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 April 29, 2000 and January 29, 2000 30 30 Additional paid-in-capital 108,020 108,083 Deferred compensation (1,876) (2,172) Retained earnings 79,525 84,627 ------------------------- Total shareholders' equity 185,822 190,691 ------------------------- Total liabilities and shareholders' equity $ 428,669 $ 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 WEEKS ENDED ------------------------- (In thousands except per share data) April 29, May 1, (Unaudited) 2000 1999 - ----------------------------------------------------------------------------------------- NET SALES $ 152,135 $ 142,399 OTHER INCOME, NET 572 517 ------------------------- 152,707 142,916 ------------------------- COSTS AND EXPENSES: Costs of merchandise sold 100,449 93,190 Selling, general and administrative 54,025 48,560 Depreciation and amortization 4,121 3,256 ------------------------- LOSS FROM OPERATIONS (5,888) (2,090) INTEREST EXPENSE, NET 2,339 1,920 ------------------------- LOSS BEFORE INCOME TAXES (8,227) (4,010) INCOME TAX BENEFIT (3,127) (1,524) ------------------------- LOSS BEFORE EXTRAORDINARY ITEM (5,100) (2,486) EXTRAORDINARY ITEM - loss on early extinguishment of debt, net of income tax benefit of $232 -- (378) ------------------------- NET LOSS $ (5,100) $ (2,864) ========================= PER SHARE AMOUNTS: BASIC: Loss before extraordinary item $ (0.34) $ (0.17) Effect of extraordinary item -- (0.02) ------------------------- Net loss $ (0.34) $ (0.19) ========================= BASIC SHARES OUTSTANDING 14,802 14,703 DILUTED: Loss before extraordinary item $ (0.34) $ (0.17) Effect of extraordinary item -- (0.02) ------------------------- Net loss $ (0.34) $ (0.19) ========================= DILUTED SHARES OUTSTANDING 14,802 14,703
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
THIRTEEN WEEKS ENDED ----------------------- (In thousands) April 29, May 1, (Unaudited) 2000 1999 - ----------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (5,100) $ (2,864) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 4,121 3,256 Changes in operating assets and liabilities, net (25,857) (30,039) ----------------------- Net cash used in operating activities $(26,836) $(29,647) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net (2,499) (9,252) Proceeds from sale of property, fixtures and equipment -- 28 Proceeds from sale of accounts receivable, net (6,000) (3,000) Payment for the acquisition of business, net of cash received -- (2,192) ----------------------- Net cash used in investing activities (8,499) (14,416) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt and capital lease obligations (59,518) (51,713) Proceeds from issuance of long-term debt 97,150 95,300 Exercised stock options 1 6 ----------------------- Net cash provided by financing activities 37,633 43,593 Net increase (decrease) in cash and cash equivalents 2,298 (470) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,807 10,607 ----------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,105 $ 10,137 ======================= SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 2,534 $ 1,522 Income taxes paid $ 7,567 $ 7,286
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. 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.
April 29, May 1, 2000 1999 ------------ ------------ Basic Calculation 14,802,000 14,703,000 Dilutive Securities --- Restricted Shares - - Options - - ------------------------------- Diluted Calculation 14,802,000 14,703,000 ------------------------------- Antidilutive shares and options --- Restricted Shares 457,000 563,000 Options 1,424,000 1,308,000
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 first quarter of 2000 and 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 first quarter of 2000 and 1999.
April 29, May 1, 2000 1999 -------- ------ Approximate Dilutive Securities --- Restricted Shares - 92,000 Options - 54,000
Options to purchase shares with exercise prices greater than the average market price were excluded from the above table for the first quarter of 2000 and the first quarter of 1999 in the approximate amounts of 1,424,000 and 853,000, respectively, as they would have been antidilutive. 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 WEEKS ENDED -------------------- April 29, May 1, 2000 1999 - ------------------------------------------------------------------------------------ NET SALES 100.0% 100.0% OTHER INCOME, NET 0.4 0.4 ------------------ 100.4 100.4 ------------------ COSTS AND EXPENSES: Costs of merchandise sold 66.0 65.4 Selling, general and administrative 35.5 34.1 Depreciation and amortization 2.7 2.3 ------------------ LOSS FROM OPERATIONS (3.9) (1.5) INTEREST EXPENSE, NET 1.5 1.3 ------------------ LOSS BEFORE INCOME TAXES (5.4) (2.8) INCOME TAX BENEFIT (2.1) (1.1) ------------------ LOSS BEFORE EXTRAORDINARY ITEM (3.4) (1.7) EXTRAORDINARY ITEM - loss on early extinguishment of debt -- (0.3) ------------------ NET LOSS (3.4)% (2.0)% ==================
THIRTEEN WEEKS ENDED APRIL 29, 2000 COMPARED TO THIRTEEN WEEKS ENDED MAY 1, 1999 For the purposes of the following discussions, all references to "first quarter of 2000" and "first quarter of 1999" are to the Company's thirteen week period ended April 29, 2000 and May 1, 1999, respectively. 6 7 THE BON-TON STORES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued) NET SALES. Net sales were $152.1 million for the thirteen weeks ended April 29, 2000, an increase of 6.8% to the same period last year. Comparable store sales decreased 1.0% for the period, with coats, cosmetics, home, dresses, mens sportswear/furnishings, childrens and womens achieving sales increases during the quarter. OTHER INCOME, NET. Net other income, which consisted mainly of income from leased departments, remained constant at 0.4% of net sales in the first quarter of 2000. COSTS AND EXPENSES. Gross margin, in the first quarter of 2000, increased $2.5 million compared to the first quarter of 1999 reflecting the increase in sales, offset by an increase in the ratio of markdowns to sales. Gross profit as a percentage of net sales decreased 0.6 percentage points to 34.0% for the thirteen week period ended April 29, 2000 from 34.6% for the comparable period last year. Selling, general and administrative expenses for the first quarter of 2000 were $54.0 million, or 35.5% of net sales, as compared to $48.6 million, or 34.1% of net sales, in the first quarter of 1999. The increase in the first quarter of 2000 was primarily attributable to the cost of operating six new stores, including additional payroll costs; rent expense; utilities and insurance costs, and a decrease in income from credit operations. Depreciation and amortization increased to 2.7% of net sales in the first quarter of 2000 from 2.3% of net sales in the first quarter of 1999. The increase was primarily due to $46.5 million of fixed asset additions in fiscal 1999. LOSS FROM OPERATIONS. The loss from operations in the first quarter of 2000 amounted to $5.9 million, or 3.9% of net sales, compared to a loss from operations of $2.1 million, or 1.5% of net sales, in the first 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 first quarter of 2000 and $1.7 million in the first 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 $3.7 million in the first quarter of 2000 and loss from operations of $0.4 million for the first quarter of 1999. INTEREST EXPENSE, NET. Net interest expense increased $0.4 million to $2.3 million, or 1.5% of net sales, in the first quarter of 2000 from $1.9 million, or 1.3% of net sales, in the first quarter of 1999. The additional interest expense was primarily attributable to increased average borrowing levels and rates. EXTRAORDINARY ITEM. The Company amended its revolving credit facility in the first quarter of 1999. 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. NET LOSS. The net loss in the first quarter of 2000 amounted to $5.1 million compared to a net loss of $2.9 million in the first 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. 7 8 THE BON-TON STORES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued) 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 material measures of the Company's liquidity and capital resources:
April 29, May 1, (Dollars in millions) 2000 1999 --------------------------------------------------------------------- Working capital $ 176.1 $ 163.1 Current ratio 2.90:1 2.91:1 Funded debt to total capitalization 0.44:1 0.40:1 Unused availability under lines of credit $ 38.6 $ 51.2
For the thirteen weeks ended April 29, 2000, net cash used in operating activities amounted to $26.8 million as compared to $29.6 million for the comparable period last year. The reduction in net cash used in the first quarter of 2000 as compared to the first quarter of 1999 was primarily attributable to the smaller working capital requirements partially offset by the increase in the Company's loss. The reduced working capital requirements relates to a decrease in the cash required for accounts payable, partially offset by an increase in merchandise inventories. Net cash used in investing activities amounted to $8.5 million in the first quarter of 2000 compared to $14.4 million for the comparable period last year. The reduction in net cash used for the thirteen week period ended April 29, 2000 primarily reflects a decrease in capital expenditures, partially offset by a reduction in the net proceeds from the sale of accounts receivable. Net cash provided by financing activities amounted to $37.6 million for the first quarter of 2000 compared to $43.6 million for the comparable period of 1999. The decrease in cash provided by financing activities in the first quarter of 2000 was attributable to increased payments on the Company's long-term debt, partially offset by advances from the Company's revolving credit facilities. 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. "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. 8 9 THE BON-TON STORES, INC. AND SUBSIDIARIES ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company does not believe its interest rate risks, as described in its 1999 Annual Report, have changed materially. 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 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 First Amendment to Employment Agreement with Heywood Wilansky 10.2 2000 Performance-Based Compensation Plan for Heywood Wilansky 27 Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter. None. 9 10 THE BON-TON STORES, INC. AND SUBSIDIARIES 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: June 9, 2000 BY: /s/ Michael L. Gleim ------------------- ------------------------------- Michael L. Gleim Vice Chairman and Chief Operating Officer DATE: June 9, 2000 BY: /s/ James H. Baireuther ------------------- ------------------------------- James H. Baireuther Executive Vice President and Chief Financial Officer 10 EX-10.1 2 0002.txt FIRST AMENDMENT TO EMPLOYEE AGREEMENT WILANSKY 1 AMENDMENT TO EMPLOYMENT AGREEMENT This Amendment is made this 27th day of April, 2000 ("Effective Date") to an Employment Agreement by and between The Bon-Ton Stores, Inc., a Pennsylvania Corporation (the "Company") and Heywood Wilansky (the "Executive"). WHEREAS, the Company and the Executive entered into an Employment Agreement ("Employment Agreement") dated February 27, 1998; and WHEREAS, paragraph 7(b) of the Employment Agreement provides for tax loans to the Executive which he is required to repay to the Company on the terms stated therein; and WHEREAS, the Company desires to offer the Executive the opportunity by achieving certain performance objectives to reduce or eliminate Executive's repayment obligation without having to sell shares in the Company; NOW THEREFORE, in consideration of the provisions contained herein and intending to be legally bound hereby, the Company and the Executive agree as follows: 1. Executive agrees that at all times between the Effective Date of this Amendment and February 1, 2003, he shall own at least the total number of the shares of the Company's stock granted to him pursuant to paragraph 3(e) of his Employment Agreement dated August 18, 1995 and the shares of the Company stock granted to him pursuant to paragraph 3(c) of the Employment Agreement. Notwithstanding the foregoing, the number of shares which Executive shall be required to own on February 1, 2003 shall be reduced by 83,333 in the event of the Company's share price reaches $14 per share between the Effective Date and February 1, 2003, and by an additional 83,333 shares at such time as the share price reaches $15, $16, $17 and $18 per share respectively. In the event Executive sells any shares, he shall be required to repay the interest and principal 2 attributable to the tax loan relating to such shares as required by paragraph 7(b) of the Employment Agreement. 2. Paragraph 7(b) of the Employment Agreement is amended, and Executive shall not be obligated to pay to the Company annually, the interest which has accumulated or which will accumulate in connection with all tax loans. Interest on the loans will continue to accrue at the rate set forth in the Employment Agreement. The Executive's obligation to pay such interest shall be deferred until the earliest of (a) the termination of the Executive's employment for any reason (b) sale of the shares as permitted by paragraph 1 above, or (c) February 1, 2003. On February 1, 2003, provided that the Executive is still in the employ of the Company and has not breached the Employment Agreement in any material respect and further provided that the net after tax income of the Company in its fiscal year ending on or about February 1, 2001 is at least $3,000,000, the interest payment otherwise then due to the Company from Executive shall be forgiven and Executive shall have no obligation to repay the interest. The Company will also, no later than April 1, 2003, make a cash payment to Executive to compensate him for any tax liability attributable to the Company's forgiveness of Executive's obligation to repay the interest on the tax loans, subject only to the "cap" contained in paragraph 5 below. 3. In the event that the Company's net after tax income for its fiscal years ending on or about February 1, 2001, February 1, 2002, and February 1, 2003 meet or exceed the targets established by the Compensation Committee as set forth in Exhibit A in every year, the Executive's obligation to repay the principal of all tax loans made pursuant to paragraph 7(b) of the Employment Agreement shall be forgiven effective February 1, 2003. The Company will also no later than April 1, 2003 make a cash payment as a performance -2- 3 bonus equal to the tax liability attributable to the Company's forgiveness of the loans, provided that the stock of the Company has not at any time between the Effective Date of this Amendment and February 1, 2003 reached $14 per share in value, and subject to the "cap" set forth in paragraph 5 below. In the event that the Executive's employment terminates for any reason prior to February 1, 2003, the loan principal shall be immediately repayable. Should the company fail to meet or exceed each of the targets in the fiscal years ending February 1, 2001 and/or February 1, 2002 set forth in Exhibit A by less than 5%, Executive may earn forgiveness of the loan principal and his performance bonus for the tax liability provided that the Company's net after tax earnings in its fiscal year ending on or about February 1, 2003 exceed the target for that year by the amount of the cumulative shortfall in the earlier two fiscal years. Additionally, in the event of a significant acquisition or disposition of assets or an extraordinary one time gain or charge affecting the Company's earnings goals, the above targets will be adjusted by the Compensation Committee to reflect the effect of the acquisition, disposition or extraordinary one time gain or charge. 4. Twenty percent (20%) of the principal otherwise to be forgiven based upon the Company's satisfaction of the earnings targets set forth in paragraphs 3(a), (b) and (c) above shall nevertheless be due and owing by Executive to the Company on February 1, 2003 should the share price of the Company reach $14 per share at any time between the Effective Date of this Amendment and February 1, 2003. The amount of principal otherwise repayable to the Company shall increase to 40% in the event that the Company's share price between the Effective Date and February 1, 2003 reaches $15 per share, 60% in the event the share price reach $16 per share at any time between the -3- 4 Effective Date and February 1, 2003, 80% in the event the share price reach $17 per share at any time between the Effective Date and February 1, 2003, and 100% in the event the share price reaches $18 per share at any time between the Effective Date and February 1, 2003. The percentage of the Executive's obligation to repay the loan which is preserved by this paragraph 4 shall be computed prior to application of the payment cap set forth in paragraph 5 below. 5. The sum of (a) all interest to be forgiven pursuant to paragraph 2 above, (b) all principal to be forgiven pursuant to paragraph 3 above, and (c) all payments made to Executive pursuant to paragraphs 2 and 3 above to compensate him for the tax liability attributable to forgiveness of the interest and principal shall be subject to a total overall cap of $4 million. In the event that the sum exceeds $4 million, the Executive shall be required to repay such amount of principal as the Company may determine is required in order to avoid the payment cap of $4 million from being exceeded. 6. In measuring Executive's achievement of the net income targets set forth in paragraphs 2 and Exhibit A, the Company will disregard the effect on the Company's income of accounting charges attributable solely to this Amendment. 7. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one in the same instrument. 8. This Amendment and the performance objectives set forth in paragraph 3 hereof shall be subject to approval by the Compensation Committee and the shareholders of the Company. -4- 5 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have duly executed and delivered, in Pennsylvania this Amendment as of the date first above written. THE BON-TON STORES, INC. By: /s/ M. Thomas Grumbacher ------------------------------------ M. Thomas Grumbacher, Chairman /s/ Heywood Wilansky ---------------------------------------- Heywood Wilansky -5- EX-10.2 3 0003.txt 2000 PERFORMANCE-BASED COMPENSATION PLAN WILANSKY 1 THE BON-TON STORES, INC. 2000 PERFORMANCE-BASED COMPENSATION PLAN FOR HEYWOOD WILANSKY 1. PURPOSE. The purpose of this Plan is to provide, subject to shareholder approval, certain additional benefits to Heywood L. Wilansky to encourage the retention of shares of the Company's stock owned by him and to assist the Company in motivating and retaining him as a key executive of the Company as part of the Company's overall compensation program for its executive employees. 2. DEFINITIONS. The following words and phrases as used herein shall have the following meanings, unless a different meaning is plainly required by the context: (a) "Board of Directors" shall mean the Board of Directors of the Company. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Committee" shall mean the Compensation Committee of the Board of Directors, provided such committee consists exclusively of two or more Outside Directors, or such other committee, consisting exclusively of two or more Outside Directors, as may be appointed by the Board of Directors to act as the Committee with respect to the Plan. (d) "Company" shall mean the Bon-Ton Stores, Inc., a Pennsylvania corporation, and any successor thereto. (e) "Employment Agreement" shall mean the Employment Agreement of the Participant with the Company dated February 27, 1998, and as amended from time to time. (f) "Maximum Benefit Amount" means the maximum benefit to which the Participant is entitled under the Plan. (g) "Outside Director" shall mean a member of the Board of Directors who is treated as an "outside director" for purposes of Code Section 162(m). (h) "Participant" shall mean Heywood L. Wilansky and such other key executives as may be designated by the Committee to participate in the Plan from time to time. (i) "Plan" shall mean the 2000 Performance-based Compensation Plan for Heywood Wilansky. 3. PARTICIPATION. Heywood L. Wilansky shall be the sole participant in the Plan. 2 4. Term of Plan. Subject to approval of the Plan by the shareholders of the Company, the Plan shall be in effect commencing as of April 25, 2000 (the "Effective Date") and shall continue through April 1, 2003 unless terminated sooner by the Board of Directors. 5. Benefit Entitlements. (a) Forgiveness of Principal. Effective as of February 1, 2003, subject to reduction under Section 8 of the Plan, and subject further to the maximum benefit permitted under Section 5(c), below, the outstanding principal amount of certain loans (the "Tax Loans") made to the Participant under the terms of the Participant's Employment Agreement in connection with certain tax liabilities attributable to Company stock awards made to the Participant shall be forgiven, and an additional cash payment shall be made to the Participant as soon as practicable thereafter equal to the tax liability attributable to such debt forgiveness by the Company, provided the performance goals described in Section 6 and established by the Committee pursuant to the terms of the Plan have been achieved and such achievement has been certified in writing by the Committee. (b) Forgiveness of Interest. Effective as of the Effective Date, payment of interest otherwise payable to the Company with respect to the Tax Loans shall be deferred pursuant to the provisions of the Employment Agreement, and shall be payable in the amount and at the time or times required under the terms of the Tax Loans, as modified by the Employment Agreement; provided, however, that such obligation to pay the interest outstanding as of February 1, 2003 shall be forgiven and an additional cash payment shall be made to the Participant as soon as practicable thereafter equal to the tax liability attributable to such interest forgiveness by the Company, provided the applicable performance target established by the Committee has been achieved and such achievement has been certified in writing by the Committee. (c) Notwithstanding the foregoing, participant shall not be entitled to any benefits under the Plan if all of the other requirements for benefit eligibility set forth in Section 7 of the Plan are not met. (d) In no event shall the benefit to the Participant under the Plan exceed the Maximum Benefit Amount, which is equal to $4,000,000, subject to reduction by reason of certain other payments. The reduction of the Maximum Benefit Amount adjustment shall be made to the extent necessary so that the aggregate benefit, including forgiveness of interest with respect to certain tax loans and the cash payments to compensate the Participant for the tax liability attributable to such forgiveness of interest (as provided for under the terms of the Employment Agreement), and all benefits (both debt forgiveness and cash payments) under this Plan, shall not, in the aggregate, exceed $4,000,000. 6. Performance Goals. (a) The performance goals referred to in Section 5, above, are satisfied if the Company's net after tax income, or earnings per share, as the case may be, for its fiscal years ending on or about February 1, 2001, February 1, 2002, and February 1, 2003 meet or exceed the targets established by the Committee with respect to each such fiscal year, as such targets may be 2 3 amended from time to time by the Committee; provided, however, that such amendments shall, with respect to each fiscal year, not be made after the 90th day of each such fiscal year unless, at the discretion of the Committee, other performance periods and targets, based on net after tax income or earnings per share, are established by the Committee for purposes of the Plan in order to take into account changes in circumstances that the Committee determines are likely to make changed targets and or changed performance periods a more appropriate measure of performance. In the event any performance periods are used other than the fiscal year of the Company, the Committee shall establish the performance targets for such periods within the first 25% of such performance period, and in no event later than the 90th day of such performance period. (b) Notwithstanding the foregoing, the performance targets that have been established by the Committee may, at any time, be adjusted by the Committee to reduce or to increase the target level otherwise required to be achieved under the Plan in the event of a significant acquisition or disposition of business assets or operations or an extraordinary one time gain or charge affecting the Company's net after tax earnings or earnings per share, as the case may be; provided, however, that such adjustments shall be made by the Committee consistent with the requirements under the Code and applicable Treasury Regulations for the remuneration provided under the Plan to be treated for purposes of Code Section 162(m) as performance-based compensation. The performance targets shall be based on the Company's net after tax income or earnings per share, but such targets may include adjustments to the manner in which such measures are to be calculated as are deemed appropriate by the Committee. 7. Additional Requirements for Benefits Under the Plan. (a) The Participant must remain employed by the Company at all times from the Effective Date through the date as of which Participant becomes eligible for a benefit under the Plan. (b) The Participant must, at all times between the Effective Date of the Plan and February 1, 2003, own at least the total number of the shares of the Company's stock granted to him pursuant to paragraph 1(c) of his Employment Agreement and the shares of the Company stock granted to him pursuant to paragraph 3(c) of the Employment Agreement; provided, however, that the number of shares which the Participant shall be required to own on February 1, 2003 shall be reduced by 83,333 in the event of the Company's share price reaches $14 per share at any time between the Effective Date and February 1, 2003, and by an additional 83,333 shares in the event the Company's share price reaches $15, $16, $17 and $18 per share respectively. In the event Participant sells any shares, he shall be required to repay the interest and principal attributable to the tax loan relating to such shares as required by paragraph 7(b) of the Employment Agreement. 8. Reduction of Benefits. Notwithstanding the provisions of Section 5, above, the portion of the outstanding principal, if any, to be forgiven as of February 1, 2003, shall, if the per share price of the Company's common stock equals or exceeds $14 at any time during the period commencing as of the Effective Date, and ending as of February 1, 2003, be determined by applying the Applicable Percentage set forth in the table below to the amount of outstanding principal that would be forgiven under the applicable provisions of the Plan determined without regard to this Section 8. 3 4
Applicable Percentage Share Price 80% $14 60% $15 40% $16 20% $17 0% $18 or above
The Applicable Percentage to be used shall be determined by reference to the highest per share price attained by the Company's common stock at any time during the period commencing as of the Effective Date, and ending as of February 1, 2003. 9. COMMITTEE. (a) Powers. The Committee shall have the power and duty to do all things necessary or convenient to effect the intent and purposes of the Plan and not inconsistent with any of the provisions hereof, whether or not such powers and duties are specifically set forth herein, and, by way of amplification and not limitation of the foregoing, the Committee shall have the power to: (i) provide rules and regulations for the management, operation and administration of the Plan, and, from time to time, to amend or supplement such rules and regulations; (ii) construe the Plan, which construction, as long as made in good faith, shall be final and conclusive upon all parties hereto; and (iii) correct any defect, supply any omission, or reconcile any inconsistency in the Plan in such manner and to such extent as it shall deem expedient to carry the same into effect, and it shall be the sole and final judge of when such action shall be appropriate. The resolution of any questions with respect to payments and entitlements pursuant to the provisions of the Plan shall be determined by the Committee, and all such determinations shall be final and conclusive. (b) Indemnity. No member of the Committee shall be directly or indirectly responsible or under any liability by reason of any action or default by him as a member of the Committee, or the exercise of or failure to exercise any power or discretion as such member. No member of the Committee shall be liable in any way for the acts or defaults of any other member of the Committee, or any of its advisors, agents or representatives. The Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his own membership on the Committee. (c) Compensation and Expenses. Members of the Committee shall receive no separate compensation for services other than compensation for their services as members of the 4 5 Board of Directors, which compensation can include compensation for services at any committee meeting attended in their capacity as members of the Board of Directors. Members of the Committee shall be entitled to receive their reasonable expenses incurred in administering the Plan. Any such expenses, as well as extraordinary expenses authorized by the Company, shall be paid by the Company. (d) Participant Information. The Company shall furnish to the Committee in writing all information the Company deems appropriate for the Committee to exercise its powers and duties in administration of the Plan. Such information shall be conclusive for all purposes of the Plan and the Committee shall be entitled to rely thereon without any investigation thereof; provided, however, that the Committee may correct any errors discovered in any such information. (e) Inspection of Documents. The Committee shall make available to the Participant, for examination at the principal office of the Company (or at such other location as may be determined by the Committee), a copy of the Plan and such of its records, or copies thereof, as may pertain to any benefits of the Participant under the Plan. 10. EFFECTIVE DATE, TERMINATION AND AMENDMENT. (a) Effective Date of Plan. Subject to shareholder and Committee approval of the Plan, participation in this Plan shall be effective as of the Effective Date. (b) Amendment and Termination of the Plan. The Plan may be terminated or revoked by the Company at any time and amended by the Company from time to time, provided that neither the termination, revocation or amendment of the Plan may, without the written approval of the Participant, reduce the benefit to which the Participant would otherwise be entitled; and provided further that no changes that would increase the benefit available to the Participant under the Plan shall be effective without approval by the Committee and without disclosure to and approval by the shareholders of the Company in a separate vote prior to the date Participant would become entitled to such increased benefit. In addition, the Plan may be modified or amended by the Committee, as it deems appropriate, in order to comply with any rules, regulations or other guidance promulgated by the Internal Revenue Service with respect to applicable provisions of the Code, as they relate to the exemption for "performance-based compensation" under the limitations on the deductibility of compensation imposed under Code Section 162(m). 11. MISCELLANEOUS PROVISIONS. (a) Unsecured Creditor Status. A Participant entitled to a bonus payment hereunder, shall rely solely upon the unsecured promise of the Company, as set forth herein, for the payment thereof, and nothing herein contained shall be construed to give to or vest in a Participant or any other person now or at any time in the future, any right, title, interest, or claim in or to any specific asset, fund, reserve, account, insurance or annuity policy or contract, or other property of any kind whatever owned by the Company, or in which the Company may have any right, title, or interest, now or at any time in the future. 5 6 (b) Other Company Plans. It is agreed and understood that any benefits under this Plan are in addition to any and all benefits to which a Participant may otherwise be entitled under any other contract, arrangement, or voluntary pension, profit sharing or other compensation plan of the Company, whether funded or unfunded, and that this Plan shall not affect or impair the rights or obligations of the Company or a Participant under any other such contract, arrangement, or voluntary pension, profit sharing or other compensation plan. (c) Separability. If any term or condition of the Plan shall be invalid or unenforceable to any extent or in any application, then the remainder of the Plan, with the exception of such invalid or unenforceable provision, shall not be affected thereby, and shall continue in effect and application to its fullest extent. (d) Continued Employment. Neither the establishment of the Plan, any provisions of the Plan, nor any action of the Committee shall be held or construed to confer upon any Participant the right to a continuation of employment by the Company. The Company reserves the right to dismiss any employee (including a Participant), or otherwise deal with any employee (including a Participant) to the same extent as though the Plan had not been adopted. (e) Jurisdiction. The Plan shall be construed, administered, and enforced according to the laws of the Commonwealth of Pennsylvania, except to the extent that such laws are preempted by the Federal laws of the United States of America. (f) Claims. If, pursuant to the provisions of the Plan, the Committee denies the claim of a Participant for benefits under the Plan, the Committee shall provide written notice, within 60 days after receipt of the claim, setting forth in a manner calculated to be understood by the claimant: (i) the specific reasons for such denial; (ii) the specific reference to the Plan provisions on which the denial is based; (iii) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is needed; and (iv) an explanation of the Plan's claim review procedure and the time limitations of this subsection applicable thereto. A Participant whose claim for benefits has been denied may request review by the Committee of the denied claim by notifying the Committee in writing within 60 days after receipt of the notification of claim denial. As part of said review procedure, the claimant or his authorized representative may review pertinent documents and submit issues and comments to the Committee in writing. The Committee shall render its decision to the claimant in writing in a manner calculated to be understood by the claimant not later than 60 days after receipt of the request for review, unless special circumstances require an extension of time, in which case decision shall be rendered as soon after the sixty-day period as possible, but not later than 120 days after receipt of 6 7 the request for review. The decision on review shall state the specific reasons therefor and the specific Plan references on which it is based. (g) Withholding. The Participant shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other tax requirements applicable to the accrual or payment of benefits under the Plan. If no other arrangements are made, the Company may provide, at its discretion, for any withholding and tax payments as may be required. (h) Interpretation. The Plan is intended to pay compensation only on the attainment of the performance goals set forth above in a manner that will exempt such compensation from the limitations on the deduction of certain compensation payments under Code Section 162(m). To the extent that any provision of the Plan would cause a conflict with the conditions required for such an exemption or would cause the administration of the Plan to fail to satisfy the applicable requirements for the performance-based compensation exemption under Code Section 162(m), such provision shall be deemed null and void to the extent permitted by applicable law. 7 EX-27 4 0004.txt FDS
5 THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED APRIL 29, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS FEB-03-2001 JAN-30-2000 APR-29-2000 13,105 0 26,369 2,454 217,956 268,971 254,564 111,263 428,669 92,875 145,288 0 0 153 185,669 428,669 152,135 152,707 100,449 158,595 0 0 2,339 (8,227) (3,127) (5,100) 0 0 0 (5,100) (0.34) (0.34)
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