12.GUARANTOR AND NON-GUARANTOR SUBSIDIARIES

Certain debt obligations of the Company, which constitute debt obligations of The Bon-Ton Department Stores, Inc. (the “Issuer”), are guaranteed by the Parent and by each of its subsidiaries, other than the Issuer, that is an obligor under the Company’s senior secured credit facility. Separate financial statements of the Parent, the Issuer and such subsidiary guarantors are not presented because the guarantees by the Parent and each 100% owned subsidiary guarantor are joint and several, full and unconditional, except for certain customary limitations which are applicable only to a subsidiary guarantor. These customary limitations include releases of a guarantee (1) if the subsidiary guarantor no longer guarantees other indebtedness of the Issuer; (2) if there is a sale or other disposition of the capital stock of a subsidiary guarantor and if such sale complies with the covenant regarding asset sales; and (3) if the subsidiary guarantor is properly designated as an “unrestricted subsidiary.”

The condensed consolidating financial information for the Parent, the Issuer and the guarantor and non-guarantor subsidiaries as of August 1, 2015, August 2, 2014 and January 31, 2015 and for the second quarter in each of 2015 and 2014 and the 26 weeks ended August 1, 2015 and August 2, 2014 as presented below has been prepared from the books and records maintained by the Parent, the Issuer and the guarantor and non-guarantor subsidiaries. The condensed financial information may not necessarily be indicative of the results of operations or financial position had the guarantor and non-guarantor subsidiaries operated as independent entities. Certain intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time.

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

August 1, 2015

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

Assets
Current assets:
Cash and cash equivalents	$	1	$	3,043	$	4,247	$	13,644	$	—		$	20,935
Merchandise inventories	—		505,907		232,182		—		—			738,089
Prepaid expenses and other current assets	—		72,712		5,187		2,543		(516		)	79,926

Total current assets	1		581,662		241,616		16,187		(516		)	838,950
Property, fixtures and equipment at cost, net	—		324,926		181,127		150,252		(14,557		)	641,748
Deferred income taxes	—		3,575		9,664		—		—			13,239
Intangible assets, net	—		23,147		63,817		—		—			86,964
Investment in and advances to affiliates	15,528		349,768		427,172		—		(792,468		)	—
Other long-term assets	—		25,352		822		108		(3,431		)	22,851

Total assets	$	15,529	$	1,308,430	$	924,218	$	166,547	$	(810,972	)	$	1,603,752


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	241,272	$	—	$	—	$	—		$	241,272
Accrued payroll and benefits	—		19,192		5,244		—		—			24,436
Accrued expenses	—		70,471		68,366		276		(516		)	138,597
Current maturities of long-term debt and obligations under capital leases	—		1,293		3,840		103,916		—			109,049
Deferred income taxes	—		9,197		13,637		—		—			22,834

Total current liabilities	—		341,425		91,087		104,192		(516		)	536,188

Long-term debt and obligations under capital leases, less current maturities	—		813,522		55,333		—		—			868,855
Other long-term liabilities	—		140,530		41,436		4,645		(3,431		)	183,180

Total liabilities	—		1,295,477		187,856		108,837		(3,947		)	1,588,223

Shareholders’ equity	15,529		12,953		736,362		57,710		(807,025		)	15,529


Total liabilities and shareholders’ equity	$	15,529	$	1,308,430	$	924,218	$	166,547	$	(810,972	)	$	1,603,752

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

August 2, 2014

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

Assets
Current assets:
Cash and cash equivalents	$	1	$	2,874	$	4,813	$	—	$	—		$	7,688
Merchandise inventories	—		480,852		242,602		—		—			723,454
Prepaid expenses and other current assets	—		64,590		5,272		2,834		(578		)	72,118

Total current assets	1		548,316		252,687		2,834		(578		)	803,260
Property, fixtures and equipment at cost, net	—		250,215		150,065		232,421		—			632,701
Deferred income taxes	—		3,144		16,240		—		—			19,384
Intangible assets, net	—		26,114		67,418		—		—			93,532
Investment in and advances to affiliates	59,588		322,324		393,082		—		(774,994		)	—
Other long-term assets	—		22,692		446		564		—			23,702

Total assets	$	59,589	$	1,172,805	$	879,938	$	235,819	$	(775,572	)	$	1,572,579


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	238,077	$	—	$	—	$	—		$	238,077
Accrued payroll and benefits	—		20,434		5,013		—		—			25,447
Accrued expenses	—		73,378		69,402		74		(578		)	142,276
Current maturities of long-term debt and obligations under capital leases	—		446		3,394		7,171		—			11,011
Deferred income taxes	—		7,940		19,315		—		—			27,255

Total current liabilities	—		340,275		97,124		7,245		(578		)	444,066

Long-term debt and obligations under capital leases, less current maturities	—		649,957		41,281		207,843		—			899,081
Other long-term liabilities	—		123,485		44,587		1,771		—			169,843

Total liabilities	—		1,113,717		182,992		216,859		(578		)	1,512,990

Shareholders’ equity	59,589		59,088		696,946		18,960		(774,994		)	59,589


Total liabilities and shareholders’ equity	$	59,589	$	1,172,805	$	879,938	$	235,819	$	(775,572	)	$	1,572,579

The Bon-Ton Stores, Inc.

Condensed Consolidating Balance Sheet

January 31, 2015

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

Assets
Current assets:
Cash and cash equivalents	$	1	$	4,209	$	4,543	$	—	$	—		$	8,753
Merchandise inventories	—		483,270		251,686		—		—			734,956
Prepaid expenses and other current assets	—		74,956		14,906		3,966		(434		)	93,394

Total current assets	1		562,435		271,135		3,966		(434		)	837,103
Property, fixtures and equipment at cost, net	—		268,224		146,793		226,979		—			641,996
Deferred income taxes	—		4,889		10,892		—		—			15,781
Intangible assets, net	—		24,618		65,533		—		—			90,151
Investment in and advances to affiliates	87,647		324,668		435,870		—		(848,185		)	—
Other long-term assets	—		22,685		391		407		—			23,483

Total assets	$	87,648	$	1,207,519	$	930,614	$	231,352	$	(848,619	)	$	1,608,514


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	208,882	$	—	$	—	$	—		$	208,882
Accrued payroll and benefits	—		23,637		5,211		—		—			28,848
Accrued expenses	—		76,599		81,857		—		(434		)	158,022
Current maturities of long-term debt and obligations under capital leases	—		460		3,501		6,788		—			10,749
Deferred income taxes	—		10,081		14,397		—		—			24,478

Total current liabilities	—		319,659		104,966		6,788		(434		)	430,979

Long-term debt and obligations under capital leases, less current maturities	—		651,436		39,790		204,753		—			895,979
Other long-term liabilities	—		150,152		41,921		1,835		—			193,908

Total liabilities	—		1,121,247		186,677		213,376		(434		)	1,520,866

Shareholders’ equity	87,648		86,272		743,937		17,976		(848,185		)	87,648


Total liabilities and shareholders’ equity	$	87,648	$	1,207,519	$	930,614	$	231,352	$	(848,619	)	$	1,608,514

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Operations

Thirteen Weeks Ended August 1, 2015

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

Net sales	$	—		$	327,803		$	227,628		$	—		$	—		$	555,431
Other income	—			9,150			6,418			—			—			15,568

	—			336,953			234,046			—			—			570,999


Costs and expenses:
Costs of merchandise sold	—			206,924			143,904			—			—			350,828
Selling, general and administrative	—			132,276			89,232			(14,560		)	8,238			215,186
Gain on insurance recovery	—			—			(748		)	—			—			(748		)
Depreciation and amortization	—			12,975			8,794			2,478			(54		)	24,193
Amortization of lease-related interests	—			494			567			—			—			1,061
Impairment charges	—			222			—			—			—			222

(Loss) income from operations	—			(15,938		)	(7,703		)	12,082			(8,184		)	(19,743		)

Other income (expense):
Intercompany income	—			446			5,582			5,683			(11,711		)	—
Equity in losses of subsidiaries	(39,801		)	(7,450		)	—			—			47,251			—
Interest expense, net	—			(16,859		)	(901		)	(2,774		)	5,338			(15,196		)
Loss on extinguishment of debt	—			—			—			(4,862		)	—			(4,862		)


(Loss) income before income taxes	(39,801		)	(39,801		)	(3,022		)	10,129			32,694			(39,801		)
Income tax (benefit) provision	(238		)	(238		)	232			—			6			(238		)


Net (loss) income	$	(39,563	)	$	(39,563	)	$	(3,254	)	$	10,129		$	32,688		$	(39,563	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Comprehensive (Loss) Income

Thirteen Weeks Ended August 1, 2015

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

Net (loss) income	$	(39,563	)	$	(39,563	)	$	(3,254	)	$	10,129	$	32,688		$	(39,563	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	906			906			—			—		(906		)	906

Comprehensive (loss) income	$	(38,657	)	$	(38,657	)	$	(3,254	)	$	10,129	$	31,782		$	(38,657	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Operations

Thirteen Weeks Ended August 2, 2014

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

Net sales	$	—		$	331,840		$	231,612		$	—		$	—		$	563,452
Other income	—			8,678			6,007			—			—			14,685

	—			340,518			237,619			—			—			578,137


Costs and expenses:
Costs of merchandise sold	—			210,790			146,462			—			—			357,252
Selling, general and administrative	—			133,709			89,346			32			(7,280		)	215,807
Depreciation and amortization	—			12,446			8,876			2,721			—			24,043
Amortization of lease-related interests	—			552			607			—			—			1,159
Impairment charges	—			174			—			—			—			174

Loss from operations	—			(17,153		)	(7,672		)	(2,753		)	7,280			(20,298		)

Other income (expense):
Intercompany income	—			449			4,169			6,597			(11,215		)	—
Equity in losses of subsidiaries	(35,745		)	(3,986		)	—			—			39,731			—
Interest expense, net	—			(15,055		)	(849		)	(3,478		)	3,935			(15,447		)


(Loss) income before income taxes	(35,745		)	(35,745		)	(4,352		)	366			39,731			(35,745		)
Income tax provision	447			447			235			—			(682		)	447


Net (loss) income	$	(36,192	)	$	(36,192	)	$	(4,587	)	$	366		$	40,413		$	(36,192	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Comprehensive (Loss) Income

Thirteen Weeks Ended August 2, 2014

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

Net (loss) income	$	(36,192	)	$	(36,192	)	$	(4,587	)	$	366	$	40,413		$	(36,192	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	814			814			—			—		(814		)	814

Comprehensive (loss) income	$	(35,378	)	$	(35,378	)	$	(4,587	)	$	366	$	39,599		$	(35,378	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Operations

Twenty-Six Weeks Ended August 1, 2015

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

Net sales	$	—		$	688,269		$	478,100		$	—		$	—		$	1,166,369
Other income	—			18,620			13,252			—			—			31,872

	—			706,889			491,352			—			—			1,198,241


Costs and expenses:
Costs of merchandise sold	—			446,036			309,257			—			—			755,293
Selling, general and administrative	—			267,107			180,455			(14,525		)	835			433,872
Gain on insurance recovery	—			—			(748		)	—			—			(748		)
Depreciation and amortization	—			24,183			16,898			5,199			(54		)	46,226
Amortization of lease-related interests	—			989			1,173			—			—			2,162
Impairment charges	—			222			—			—			—			222

(Loss) income from operations	—			(31,648		)	(15,683		)	9,326			(781		)	(38,786		)

Other income (expense):
Intercompany income	—			896			10,276			12,353			(23,525		)	—
Equity in losses of subsidiaries	(74,034		)	(11,007		)	—			—			85,041			—
Interest expense, net	—			(32,275		)	(1,699		)	(6,161		)	9,749			(30,386		)
Loss on extinguishment of debt	—			—			—			(4,862		)	—			(4,862		)


(Loss) income before income taxes	(74,034		)	(74,034		)	(7,106		)	10,656			70,484			(74,034		)
Income tax (benefit) provision	(397		)	(397		)	468			—			(71		)	(397		)


Net (loss) income	$	(73,637	)	$	(73,637	)	$	(7,574	)	$	10,656		$	70,555		$	(73,637	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Comprehensive (Loss) Income

Twenty-Six Weeks Ended August 1, 2015

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

Net (loss) income	$	(73,637	)	$	(73,637	)	$	(7,574	)	$	10,656	$	70,555		$	(73,637	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	1,888			1,888			—			—		(1,888		)	1,888

Comprehensive (loss) income	$	(71,749	)	$	(71,749	)	$	(7,574	)	$	10,656	$	68,667		$	(71,749	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Operations

Twenty-Six Weeks Ended August 2, 2014

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

Net sales	$	—		$	692,040		$	478,872		$	—		$	—		$	1,170,912
Other income	—			17,680			12,078			—			—			29,758

	—			709,720			490,950			—			—			1,200,670


Costs and expenses:
Costs of merchandise sold	—			445,157			305,205			—			—			750,362
Selling, general and administrative	—			273,385			181,786			(2,339		)	(14,706		)	438,126
Depreciation and amortization	—			23,512			16,590			5,503			—			45,605
Amortization of lease-related interests	—			1,128			1,213			—			—			2,341
Impairment charges	—			174			—			—			—			174

Loss from operations	—			(33,636		)	(13,844		)	(3,164		)	14,706			(35,938		)

Other income (expense):
Intercompany income	—			913			9,535			13,267			(23,715		)	—
Equity in losses of subsidiaries	(66,809		)	(3,042		)	—			—			69,851			—
Interest expense, net	—			(31,044		)	(1,711		)	(6,972		)	9,009			(30,718		)
Loss on extinguishment of debt	—			—			—			(153		)	—			(153		)


(Loss) income before income taxes	(66,809		)	(66,809		)	(6,020		)	2,978			69,851			(66,809		)
Income tax provision	895			895			470			—			(1,365		)	895


Net (loss) income	$	(67,704	)	$	(67,704	)	$	(6,490	)	$	2,978		$	71,216		$	(67,704	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Comprehensive (Loss) Income

Twenty-Six Weeks Ended August 2, 2014

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

Net (loss) income	$	(67,704	)	$	(67,704	)	$	(6,490	)	$	2,978	$	71,216		$	(67,704	)
Other comprehensive income, net of tax:
Pension and postretirement benefit plans	1,628			1,628			—			—		(1,628		)	1,628

Comprehensive (loss) income	$	(66,076	)	$	(66,076	)	$	(6,490	)	$	2,978	$	69,588		$	(66,076	)

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Cash Flows

Twenty-Six Weeks Ended August 1, 2015

							Guarantor			Non-Guarantor			Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	2,403		$	(24,619	)	$	9,523		$	29,278		$	(5,621	)	$	10,964


Cash flows from investing activities:
Capital expenditures	—			(37,807		)	(9,543		)	—			—			(47,350		)
Intercompany investing activity	(454		)	(32,239		)	—			—			32,693			—
Proceeds from insurance claim	—			—			1,510			—			—			1,510
Proceeds from sale of property, fixtures and equipment	—			16,344			66			67,656			—			84,066

Net cash (used in) provided by investing activities	(454		)	(53,702		)	(7,967		)	67,656			32,693			38,226


Cash flows from financing activities:
Payments on long-term debt and capital lease obligations	—			(277,965		)	(1,852		)	(112,366		)	—			(392,183		)
Proceeds from issuance of long-term debt	—			370,390			—			—			—			370,390
Intercompany financing activity	—			(2,004		)	—			29,076			(27,072		)	—
Cash dividends paid	(2,004		)	—			—			—			—			(2,004		)
Restricted shares forfeited in lieu of payroll taxes	(399		)	—			—			—			—			(399		)
Proceeds from stock options exercised	454			—			—			—			—			454
Decrease in book overdraft balances	—			(13,266		)	—			—			—			(13,266		)

Net cash (used in) provided by financing activities	(1,949		)	77,155			(1,852		)	(83,290		)	(27,072		)	(37,008		)


Net (decrease) increase in cash and cash equivalents	—			(1,166		)	(296		)	13,644			—			12,182

Cash and cash equivalents at beginning of period	1			4,209			4,543			—			—			8,753


Cash and cash equivalents at end of period	$	1		$	3,043		$	4,247		$	13,644		$	—		$	20,935

The Bon-Ton Stores, Inc.

Condensed Consolidating Statement of Cash Flows

Twenty-Six Weeks Ended August 2, 2014

							Guarantor			Non-Guarantor			Consolidating			Company
	Parent			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	2,452		$	(14,644	)	$	8,000		$	4,529		$	(5,992	)	$	(5,655	)


Cash flows from investing activities:
Capital expenditures	—			(32,171		)	(5,490		)	—			—			(37,661		)
Intercompany investing activity	—			(147		)	—			—			147			—
Proceeds from sale of property, fixtures and equipment	—			7			1			5,000			—			5,008

Net cash (used in) provided by investing activities	—			(32,311		)	(5,489		)	5,000			147			(32,653		)


Cash flows from financing activities:
Payments on long-term debt and capital lease obligations	—			(275,234		)	(1,866		)	(4,675		)	—			(281,775		)
Proceeds from issuance of long-term debt	—			327,232			—			—			—			327,232
Intercompany financing activity	—			(991		)	—			(4,854		)	5,845			—
Deferred financing costs paid	—			(69		)	—			—			—			(69		)
Cash dividends paid	(991		)	—			—			—			—			(991		)
Restricted shares forfeited in lieu of payroll taxes	(1,461		)	—			—			—			—			(1,461		)
Decrease in book overdraft balances	—			(3,998		)	—			—			—			(3,998		)

Net cash (used in) provided by financing activities	(2,452		)	46,940			(1,866		)	(9,529		)	5,845			38,938


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

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


Cash and cash equivalents at end of period	$	1		$	2,874		$	4,813		$	—		$	—		$	7,688