The Right Place: for Our Customers Fourth Quarter $39.36 $31.84 8
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CC13571-01p15-AnnRep_cara 5/10/07 4:19 PM Page 1 CORPORATE INFORMATION Corporate Stock Listing and Prices: The Bon-Ton Stores, Inc. common stock trades on The Nasdaq Global Select Stock MarketSM under the symbol BONT. As of April 2, 2007, there were 198 shareholders of record of the Company’s common stock and four shareholders of contents record of the Company’s Class A common stock. 2006 ANNUAL REPORT The quarterly high and low sales prices for 2006 and 2005 are listed below: 1. selected highlights Market Price 2006 High Low 2. letter to our shareholders First Quarter $34.14 $18.88 Second Quarter $29.36 $20.22 Third Quarter $38.60 $24.02 4. the right place: for our customers Fourth Quarter $39.36 $31.84 8. the right place: for our communities Market Price 2005 High Low 10. the right place: for our investors First Quarter $19.78 $15.41 Second Quarter $21.90 $16.75 12. senior management committee and Third Quarter $23.22 $15.55 board of directors Fourth Quarter $22.73 $17.71 SHAREHOLDER INFORMATION Transfer Agent and Registrar Annual Meeting American Stock Transfer & Trust Company June 19, 2007, 9:00 a.m. Eastern Time 59 Maiden Lane The Bon-Ton Stores, Inc. New York, New York 10038 Corporate Headquarters 1-800-937-5449 2801 E. Market Street Website: www.amstock.com York, PA 17402 Email: [email protected] Independent Registered Public Accounting Firm Corporate Headquarters KPMG LLP 2801 E. Market Street Philadelphia, Pennsylvania York, PA 17402 (717) 757-7660 Investor Relations Website: www.bonton.com The Bon-Ton Stores, Inc. Email: [email protected] PO Box 2821 York, PA 17405 General Counsel Email: [email protected] Wolf, Block, Schorr and Solis-Cohen LLP Philadelphia, Pennsylvania “Safe Harbor” Statement Statements made in this Annual Report, other than statements of historical information, are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve the Company’s current beliefs with respect to current and future events and financial performance. Such forward-looking statements are subject to risks and uncertainties that may cause results to differ materially from those set forth in these statements. Factors that could cause such differences include, but are not limited to, risks related to retail businesses generally, additional competition from existing and new competitors, uncertainties associated with opening new stores or expanding or remodeling existing stores, risks related to the Company’s integration of the business and operations comprising the recently-acquired Carson’s and Parisian stores, the ability to attract and retain qualified management, the right place the dependence upon key vendor relationships and the ability to obtain financing for working capital, capital expenditures and general corporate purposes. Additional factors that could cause the Company’s actual results to differ from those contained in these forward-looking statements are discussed in greater detail under Item 1 A of the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed, or to be filed, with the Securities and Exchange Commission. Consequently, forward-looking statements made by the Company in this Annual Report and in other documents are qualified by such factors and readers are cautioned not to place undue reliance on these statements. The Company does not undertake to update or revise any forward-looking statement, except as may be required by law. contents 1. selected highlights 2. letter to our shareholders 4. the right place: for our customers 8. the right place: for our communities 10. the right place: for our investors 12. senior management committee and board of directors financial highlights $2.78 14.7% 4.3x $1.57 9.4% 2.6x 9.1% 2.5x $1.33 8.0% $1.24 $0.62 4.6% 1.4x 0.6x 02 03 04 05 2006 02 03 04 05 2006 02 03 04 05 2006 earnings per diluted share return on average equity debt to EBITDA 5.2% $46.9 0.9% 4.5% $26.0 3.9% 3.5% 3.5% $20.6 $20.2 $9.6 -1.2% -1.6% -2.0% -2.7% 02 03 04 05 2006 02 03 04 05 2006 02 03 04 05 2006 income from operations net income comparable store sales (percent to sales) (dollars in millions) (percentage increase/decrease to prior year) dollars in thousands except per share data 2006 2005 2004 2003 2002 financial results (1) (2) (3) net sales $3,362,279 $1,287,170 $1,310,372 $926,409 $713,230 comparable store sales change(4) -2.7% -1.6% 0.9% -2.0% -1.2% income from operations 173,667 50,195 45,479 42,010 24,805 net income 46,883 26,014 20,162 20,601 9,605 earnings per diluted share $2.78 $1.57 $1.24 $1.33 $0.62 other financial data (3) total assets $2,134,799 $561,343 $646,156 $629,900 $400,817 long-term debt, including capital leases 1,189,625 42,515 178,355 171,716 64,662 shareholders’equity 346,396 292,094 262,557 239,484 212,346 return on average shareholders’equity 14.7% 9.4% 8.0% 9.1% 4.6% (1) 2006 includes operations of Carson's for the period from March 5, 2006 through February 3, 2007. 2003 includes operations of Elder-Beerman for the period from October 24, 2003 through January 31, 2004. (2) 2006 reflects the 53 weeks ended February 3, 2007. All other periods presented include 52 weeks. (3) Certain prior year balances have been reclassified to conform to the current year presentation. These reclassifications did not impact the Company's net income for any of the years presented. (4) Comparable store sales data reflects stores open for the entire current and prior fiscal year. 2006 comparable store sales data does not include Carson’s stores. 2005 comparable store sales data includes stores of Elder-Beerman. The Bon-Ton Stores, Inc. operates on a fiscal year, which is the 52 or 53 week period ending on the Saturday nearer January 31 of the following calendar year. References to “2006,”“2005,”and “2004”represent the fiscal 2006 year ended February 3, 2007, fiscal 2005 year ended January 28, 2006 and fiscal 2004 year ended January 29, 2005, respectively. References to “2007”represent the fiscal 2007 year ending February 2, 2008. 1 Kalispell Havre Great Falls Missoula Minot MONTANA Butte NORTH DAKOTA Bemidji Dickinson Virginia Bismarck Billings Fargo Moorhead MINNESOTA Duluth S Fergus Falls Brainerd Alexandria Aberdeen St. Cloud Willmar Stillwater SOUTH DAKOTA Watertown Minneapolis/St. Paul (3) Rapid City WYOMING New Ulm Mankato Rochester Sioux Falls Albert Lea Austin Rock Springs Mason City Cedar Falls Scottsbluff Sioux City Fort Dodge Norfolk IOWA Waterloo Ames NEBRASKA Marshalltown North Platte Des Moines (5) Omaha (2) Grand Island Kearney Hastings Lincoln Ottumwa Grand Junction COLORADO BON-TON (70) ELDER-BEERMAN (64) BERGNER’S (13 ) HERBERGER’S (40) BOSTON STORE (9) YOUNKERS (46) CARSON PIRIE SCOTT (27) FURNITURE GALLERIES (8) PARISIAN (2) TOTAL (279) CORPORATE OFFICES: • YORK, PA • MILWAUKEE, WI Strategic business planning and development has taken Bon-Ton from a single millinery shop founded in 1898 to one of the largest regional department store chains in the United States. Our stores reach 30% of America’s households operating under eight nameplates: Bon-Ton, Bergner’s, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger’s, Parisian (in the Detroit, Michigan area) and Younkers. Each nameplate has strong regional recognition and a heritage that approaches or exceeds 100 years. Bon-Ton operates 279 stores, including eight furniture stores, which encompass a total of approximately 26 million square feet extending across 23 contiguous states in the Northeast, Midwest and upper Great Plains. We are the hometown store, providing fashion, quality and value in our broad assortment of our national and private brand merchandise. We offer an upscale presentation and high level of service. uperior Marquette Massena S. Burlington Rice Lake WISCONSIN Marinette Sturgeon Bay NEW YORK VT NH Wausau Traverse City Eau Claire Watertown Marshfield Concord Green Bay Queensbury Wisconsin Rapids Plover Appleton MICHIGAN Saratoga Springs Manitowoc Rochester (4) Syracuse Latham Midland Bay City Camillus La Crosse Fond du Lac Sheboygan MA Niagara Falls Lockport Kohler Westfield Beaver Dam Buffalo (5) West Bend Muskegon Port Huron Ithaca Grandville Lansing (2) Madison (2) Milwaukee (5) Johnson City Holland Horseheads CT Howell Lakewood Hamden Janesville Racine Olean Newburgh Beloit Rochester Hills Erie Jackson Dubuque Detroit Warren Scranton Rockford (2) Benton Harbor PENNSYLVANIA Monroe Wilkes-Barre (2) Coldwater Adrian Pennsdale Cedar Rapids (2) Chicago (23) Michigan City Stroudsburg Elkhart Toledo (2) Cranberry Bloomsburg Coralville Sterling De Kalb Sandusky Du Bois Frackville Phillipsburg Davenport Woodmar Bowling Green Selinsgrove Bethlehem (5) Moline Southlake Defiance State College LaSalle/Peru Warsaw Alliance Butler Lewistown Wyomissing Doylestown Muscatine Findlay Brick Wooster Indiana Harrisburg (2) g Galesbur ILLINOIS INDIANA Lima Johnstown Carlisle Lancaster Marion New Philadelphia Greensburg York (3) Peoria (2) Marion NJ West Burlington Kokomo OHIO Washington Chambersburg Hanover Pekin Bloomington St. Clairsville Uniontown Hagerstown Piqua Newark Anderson Muncie Zanesville Lavale Frederick Champaign Danville Springfield Morgantown (2) Richmond Lancaster Martinsburg Quincy Forsyth Indianapolis Dayton (8) MD Springfield Athens Bridgeport Hamilton Parkersburg Mattoon Terre Haute Chillicothe Columbus WEST Hurricane VIRGINIA Ashland Charleston Jasper Barboursville Frankfort Beckley KENTUCKY Pacudah Dear Fellow Shareholders: Bon-Ton accomplished a great deal in 2006. $2.78 in 2006 versus $1.57 in the prior year. Current year We are not the same company we were a year ago. earnings include a favorable state tax adjustment of $0.24 On March 6, 2006, we completed the acquisition of the per share, and an unfavorable after-tax adjustment of Northern Department Store Group (“Carson’s”) from $0.09 per share for severance costs incurred in connection Saks Incorporated and started a two-year integration plan.