Exhibit 99.1
The Bon-Ton Stores, Inc. Announces
Fourth Quarter And Fiscal 2006 Results
Reports Net Income of $2.78 Per Diluted Share for Fiscal 2006
Non-Recurring Favorable State Tax Adjustment of $4.1 Million, or
$0.24 Per Share
Introduces Guidance for Fiscal 2007
YORK, Pa.--(BUSINESS WIRE)--March 15, 2007--The Bon-Ton Stores,
Inc. (NASDAQ: BONT) today reported results for the fourth quarter and
fiscal year ended February 3, 2007. As previously reported, the
Company acquired the Northern Department Store Group ("Carson's") from
Saks Incorporated effective March 5, 2006 and five Parisian store
locations from Belk Inc. on October 29, 2006.
For the fourth quarter of fiscal 2006, the Company reported net
income of $88.4 million, or $5.20 per diluted share, which included a
non-recurring state tax benefit of $4.1 million, or $0.24 per diluted
share, compared to net income of $38.2 million, or $2.30 per diluted
share, for the fourth quarter of fiscal 2005.
For fiscal 2006, the Company reported net income of $46.9 million,
or $2.78 per diluted share, compared to net income of $26.0 million,
or $1.57 per diluted share, for the prior year. Net income in fiscal
2006 was positively impacted by a non-recurring state tax adjustment
of $4.1 million, or $0.24 per diluted share, and negatively impacted
by severance costs incurred in connection with the closing of the
Carson Pirie Scott State Street store of approximately $2.4 million on
a pre-tax basis, or an after-tax impact of $0.09 per diluted share.
Net income in fiscal 2005 was positively impacted by an income tax
adjustment of approximately $2.2 million, or $0.13 per diluted share,
and negatively impacted by an after-tax impact of $0.08 per diluted
share associated with the sale of the Company's proprietary credit
card operations in the second quarter and an after-tax charge of $0.10
per diluted share associated with the closing of four stores.
Bud Bergren, President and Chief Executive Officer, commented, "We
are pleased with our fourth quarter and fiscal 2006 results, and I am
extremely proud of the team that came together on March 6, 2006 and
what they accomplished as we integrated the Bon-Ton and Carson's
operations. Along with achieving our earnings goals for fiscal 2006,
we succeeded in meeting key milestones during the fourth quarter and
throughout the year. We:
-- completed Phase I and II of the systems integration and ended
the Transition Services Agreement with Saks Incorporated as
scheduled;
-- rolled out the common merchandise assortment across all
locations, including the new private brand offerings, which
received a favorable response from our customers;
-- implemented a common marketing/advertising calendar in the
second half of the year which resulted in less aggressive
discounting in the Company's promotional activity from the
prior year period at the Bon-Ton/Elder-Beerman stores. This
strategy negatively impacted sales, but the gross margin rate
improved;
-- established the private brand organization in Milwaukee, which
is now an integral part of our merchandise organization;
-- established and expanded the Planning and Allocation division,
affording us opportunities for increased sales and
profitability and an improvement in turnover;
-- completed the purchase and integration of Parisian store
locations from Belk Inc.;
-- closed three unprofitable stores, improved the efficiency of
our distribution operations by closing one distribution
center, and announced expansions of two stores and the
renovation and reconfiguration of two existing stores; and
-- continued the execution of our integration process, beginning
2007 with a focus on system enhancements and effectiveness of
our new marketing initiatives."
Mr. Bergren added, "Our accomplishments in 2006 position us well
to achieve our 2007 goals. This is just the beginning of realizing the
potential benefits we can achieve as we begin the second year as a
bigger, smarter, stronger company which strives to exceed the
expectations of our customers, associates and shareholders."
Sales
For the fourth quarter of fiscal 2006, total sales increased 169%
to $1,249.6 million compared to $464.6 million for the prior year
period. Fourth quarter sales include $805.7 million from Carson's and
Parisian stores. Bon-Ton comparable store sales for the thirteen weeks
ended January 27, 2007 decreased 5.6% compared to the prior year
thirteen-week period.
Fiscal 2006 total sales increased 161% to $3,362.3 million
compared to $1,287.2 million for the prior year period. Fiscal 2006
sales include $2,119.1 million from Carson's stores for the period
March 5, 2006 through February 3, 2007 and Parisian stores for the
period October 29, 2006 through February 3, 2007. Bon-Ton comparable
store sales for the fifty-two week period ended January 27, 2007
decreased 2.7% compared to the prior year fifty-two week period.
Carson's sales are not included in the Company's reported
comparable store sales; therefore, the following is provided for
informational purposes only. Carson's comparable store sales for the
thirteen weeks ended January 27, 2007 increased 4.4% and for the
period March 5, 2006 through January 27, 2007 increased 4.3%. For
Carson's and Bon-Ton combined, comparable store sales for the thirteen
weeks ended January 27, 2007 increased 0.5%.
Other Income
Other income increased $21.6 million to $35.9 million in the
fourth quarter of fiscal 2006, compared to $14.3 million in the prior
year period, primarily due to the inclusion of the Carson's operations
in the fourth quarter of fiscal 2006. For the fifty-three weeks ended
February 3, 2007, other income increased $73.1 million to $93.5
million, compared to $20.4 million in the prior year fifty-two week
period, primarily due to the inclusion of the Carson's operations for
11 months of fiscal 2006 and credit card revenues having been
reflected as an offset to selling, general and administrative expenses
through the third quarter in the prior year.
Gross Margin
In the fourth quarter of fiscal 2006, gross margin dollars
increased $305.1 million compared to the prior year period. The gross
margin rate increased 1.0 percentage point, to 38.3% of net sales, as
compared to 37.3% reported in the prior year period. Fiscal 2006 gross
margin dollars increased $778.5 million compared to the prior year
period. The fiscal 2006 gross margin rate increased 0.9 percentage
point to 37.0% of net sales, as compared to 36.1% reported in the
prior year period.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses in the
fourth quarter of fiscal 2006 increased $203.5 million to $324.8
million as compared to the prior year period. The SG&A expense rate
decreased 0.1 percentage point to 26.0% of net sales, compared to
26.1% of net sales in the prior year period. Integration expenses in
the fourth quarter of fiscal 2006 were $3.7 million and for the year,
$15.6 million. Fiscal 2006 SG&A expenses increased $649.3 million to
$1,056.5 million, as compared to the prior year period. The fiscal
2006 SG&A expense rate decreased 0.2 percentage point to 31.4% of net
sales, compared to 31.6% in the prior year period.
EBITDA
EBITDA, defined as net income before interest, income taxes,
depreciation and amortization, increased $123.2 million in the fourth
quarter of fiscal 2006 to $189.3 million compared to $66.2 million in
the fourth quarter of fiscal 2005. Fiscal 2006 EBITDA increased $202.3
million to $280.6 million compared to $78.3 million in the prior year
period. EBITDA is not a measure recognized under generally accepted
accounting principles - see Note 1 below.
Depreciation and Amortization
Depreciation and amortization expense in the fourth quarter of
fiscal 2006 increased $23.7 million to $30.2 million compared to $6.6
million in the prior year period. Fiscal 2006 depreciation and
amortization expense increased $78.8 million to $106.9 million
compared to $28.1 million in the prior year period. Depreciation and
amortization in the fourth quarter and fiscal 2006 reflects the impact
of purchase accounting for the acquired Carson's operations. Fiscal
2006 includes a charge of approximately $3 million to reduce the value
of duplicate and impaired assets.
Interest Expense, Net
Interest expense, net, in the fourth quarter of fiscal 2006
increased $25.7 million to $28.1 million compared to $2.3 million in
the prior year period. Fiscal 2006 interest expense, net, increased
$95.1 million to $107.1 million compared to $12.1 million in the prior
year period. In the first quarter of fiscal 2006, the Company recorded
a charge of $6.8 million reflecting the write-off of fees associated
with a bridge facility and the early payoff of the Company's previous
debt.
Comments
Keith Plowman, Executive Vice President and Chief Financial
Officer, commented, "We are pleased with our fourth quarter and fiscal
2006 financial results for the combined companies as we completed the
first 11 months of integrating our operations. We executed to plan and
exceeded our financial goals for fiscal 2006."
Mr. Plowman added, "We look forward to the second year of the
integration process and remain confident that we have positioned our
combined company to benefit from more efficient operations in 2007 and
beyond. Our guidance for fiscal 2007 earnings per share is a range of
$3.40 to $3.50 and EBITDA in a range of $315 to $320 million.
Assumptions reflected in our guidance include:
-- Total sales growth of 3% to 5%;
-- Comparable stores sales flat to 1.0% increase;
-- Gross margin rate consistent with fiscal 2006;
-- Additional $8 million in cost savings;
-- Reduction of $9.5 million of integration costs;
-- Capital expenditures of $106 million (net of landlord
contributions); and
-- Estimated weighted average shares outstanding of 17.00 million
to 17.35 million."
The Company's quarterly conference call to discuss fourth quarter
and fiscal 2006 results will be broadcast live today at 10:00 a.m.
Eastern time. To access the call, please visit the investor relations
section of the Company's website at www.bonton.com/investor/home.asp.
An online archive of the broadcast will be available within two hours
after the conclusion of the call. You may also participate by calling
(800) 562-8369 at 9:55 a.m. Eastern time. A taped replay of the
conference call will be available within two hours of the conclusion
of the call and will remain available through Friday, March 29, 2007.
The number to call for the taped replay is (888) 203-1112 and the
conference PIN is 8057147.
The Bon-Ton Stores, Inc. operates 280 department stores, which
includes eight furniture galleries in 23 states in the Northeast,
Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston
Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers
nameplates and, under the Parisian nameplate, two stores in the
Detroit, Michigan area. The stores offer a broad assortment of
brand-name fashion apparel and accessories for women, men and
children, as well as cosmetics and home furnishings. For further
information, please visit the investor relations section of the
Company's website at www.bonton.com/investor/home.asp.
Statements made in this press release, other than statements of
historical information, are forward-looking and are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such statements involve 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 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 Forms 10-K and 10-Q filed with
the Securities and Exchange Commission.
Note 1: As used in this release, EBITDA is defined as
net income (loss) before interest, income taxes, depreciation and
amortization. EBITDA is not a measure of financial performance under
generally accepted accounting principles ("GAAP"). However, we present
EBITDA in this release because we consider it to be an important
supplemental measure of our performance and believe that it is
frequently used by securities analysts, investors and other interested
parties to evaluate the performance of companies in our industry and
by some investors to determine a company's ability to service or incur
debt. In addition, our management uses EBITDA internally to compare
the profitability of our stores. EBITDA is not calculated in the same
manner by all companies and accordingly is not necessarily comparable
to similarly entitled measures of other companies and may not be an
appropriate measure for performance relative to other companies.
EBITDA should not be assessed in isolation from or construed as a
substitute for net income or cash flows from operations, which are
prepared in accordance with GAAP. EBITDA is not intended to represent,
and should not be considered to be a more meaningful measure than, or
an alternative to, measures of operating performance as determined in
accordance with GAAP. A reconciliation of net income to EBITDA is
provided in the financial schedules accompanying this release.
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data) February 3, January 28,
(Unaudited) 2007 2006
------------------------
Assets
Current assets:
Cash and cash equivalents $ 24,733 $ 9,771
Merchandise inventories 787,487 284,584
Prepaid expenses and other current assets 84,731 28,412
Deferred income taxes 17,049 7,126
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Total current assets 914,000 329,893
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Property, fixtures and equipment at cost, net
of accumulated depreciation and amortization
of $311,160 and $216,740 at February 3, 2007
and January 28, 2006, respectively 897,886 167,679
Deferred income taxes 77,395 46,453
Goodwill 27,376 2,965
Intangible assets, net of accumulated
amortization of $12,087 and $5,776 at
February 3, 2007 and January 28, 2006,
respectively 176,701 5,013
Other long-term assets 41,441 9,340
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Total assets $2,134,799 $ 561,343
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 209,742 $ 87,318
Accrued payroll and benefits 68,434 18,986
Accrued expenses 178,642 52,692
Current maturities of long-term debt 5,555 961
Current maturities of obligations under
capital leases 1,936 74
Income taxes payable 48,086 26,743
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Total current liabilities 512,395 186,774
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Long-term debt, less current maturities 1,120,169 42,491
Obligations under capital leases, less current
maturities 69,456 24
Other long-term liabilities 86,383 39,960
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Total liabilities 1,788,403 269,249
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Shareholders' equity:
Preferred Stock - authorized 5,000,000
shares at $0.01 par value; no shares
issued - -
Common Stock - authorized 40,000,000 shares
at $0.01 par value; issued shares of
14,469,196 and 14,195,664 at February 3,
2007 and January 28, 2006, respectively 145 142
Class A Common Stock - authorized
20,000,000 shares at $0.01 par value;
issued and outstanding shares of 2,951,490
at February 3, 2007 and January 28, 2006 30 30
Treasury stock, at cost - 337,800 shares at
February 3, 2007 and January 28, 2006 (1,387) (1,387)
Additional paid-in-capital 130,875 129,614
Deferred compensation - (6,663)
Accumulated other comprehensive income
(loss) 1,189 (5)
Retained earnings 215,544 170,363
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Total shareholders' equity 346,396 292,094
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Total liabilities and shareholders'
equity $2,134,799 $ 561,343
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THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOURTEEN THIRTEEN FIFTY-THREE FIFTY-TWO
WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
----------------------------------------------------
(In thousands
except share and
per share data) February 3, January 28, February 3, January 28,
(Unaudited) 2007 2006 2007 2006
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Net sales $ 1,249,633 $ 464,615 $ 3,362,279 $ 1,287,170
Other income 35,885 14,327 93,531 20,425
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1,285,518 478,942 3,455,810 1,307,595
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Costs and
expenses:
Costs of
merchandise
sold 771,420 291,479 2,118,762 822,171
Selling, general
and
administrative 324,750 121,297 1,056,472 407,145
Depreciation and
amortization 30,237 6,559 106,909 28,084
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Income from
operations 159,111 59,607 173,667 50,195
Interest expense,
net 28,061 2,342 107,143 12,052
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Income before
income taxes 131,050 57,265 66,524 38,143
Income tax
provision 42,656 19,094 19,641 12,129
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Net income $ 88,394 $ 38,171 $ 46,883 $ 26,014
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Per share amounts
-
Basic:
Net income $ 5.37 $ 2.34 $ 2.85 $ 1.61
- ----------------------------------------------------------------------
Basic weighted
average shares
outstanding 16,461,968 16,290,287 16,430,554 16,204,414
Diluted:
Net income $ 5.20 $ 2.30 $ 2.78 $ 1.57
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Diluted weighted
average shares
outstanding 16,986,165 16,620,234 16,841,183 16,518,268
Other financial
data:
EBITDA (1) $ 189,348 $ 66,166 $ 280,576 $ 78,279
(1) EBITDA Reconciliation
The following table reconciles net income to EBITDA for the
periods indicated:
FOURTEEN THIRTEEN FIFTY-THREE FIFTY-TWO
WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
------------------------------------------------
(In thousands) February 3, January 28, February 3, January 28,
(Unaudited) 2007 2006 2007 2006
- ----------------------------------------------------------------------
Net income $ 88,394 $ 38,171 $ 46,883 $ 26,014
Adjustments:
Income tax provision 42,656 19,094 19,641 12,129
Interest expense,
net 28,061 2,342 107,143 12,052
Depreciation and
amortization 30,237 6,559 106,909 28,084
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EBITDA $ 189,348 $ 66,166 $ 280,576 $ 78,279
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CONTACT: The Bon-Ton Stores, Inc.
Mary Kerr, 717-751-3071
Vice President Public and Investor Relations
mkerr@bonton.com