<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
Commission File Number 33-43105
TITLE OF PLAN
THE BON-TON STORES, INC.
PROFIT SHARING / RETIREMENT SAVINGS PLAN
ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN
THE BON-TON STORES, INC.
2801 EAST MARKET STREET
YORK, PENNSYLVANIA 17402
(717) 757-7660
------------------
- --------------------------------------------------------------------------------
<PAGE>
THE BON-TON STORES, INC.
PROFIT SHARING/RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
<PAGE>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
INDEX TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31,
1997 2
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31,
1996 3
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE
YEAR ENDED DECEMBER 31, 1997 4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE
YEAR ENDED DECEMBER 31, 1996 6
NOTES TO FINANCIAL STATEMENTS 7
SCHEDULE I - ITEM 27(A)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997 12
SCHEDULE II - ITEM 27(D)--SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE
YEAR ENDED DECEMBER 31, 1997 13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
The Bon-Ton Stores, Inc.
Profit Sharing/Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of The Bon-Ton Stores, Inc. Profit Sharing/Retirement Savings Plan as
of December 31, 1997 and 1996, and the related statements of changes in net
assets available for plan benefits for the years then ended. These financial
statements and the schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 1997 and 1996, and the changes in net assets available for plan benefits for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules, listed in
the index to financial statements, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The fund information in the statement of net assets
available for plan benefits and the statement of changes in net assets available
for plan benefits is presented for purposes of additional analysis rather than
to present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Lancaster, Pa.,
June 10, 1998
-1-
<PAGE>
<TABLE>
<CAPTION>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
DECEMBER 31, 1997
-----------------
Compass Invesco Invesco
Bon-Ton Capital Core Dynamic Total Return Janus
Total Stock Fund Bond Fund Fund Fund Fund
----------- ---------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash $ 15,959 $ 15,959 $ -- $ -- $ -- $ --
----------- ---------- ----------- ----------- ----------- -----------
Contributions receivable -
Employer & employee/participant 1,967,071 130,525 129,939 40,120 369,787 87,327
----------- ---------- ---------- ---------- ---------- ----------
Interest and dividend receivables 155,448 -- 10,250 145,198 -- --
----------- ---------- ---------- ---------- ---------- ----------
Investments, at fair value:
Bon-Ton Common Stock 3,004,079 3,004,079 -- -- -- --
Compass Capital Core Bond Fund 2,001,854 -- 2,001,854 -- -- --
Invesco Dynamic Fund 1,042,962 -- -- 1,042,962 -- --
Invesco Total Return Fund 7,360,413 -- -- -- 7,360,413 --
Janus Fund 2,582,832 -- -- -- -- 2,582,832
Scudder Growth & Income Fund 11,849,119 -- -- -- -- --
PNC Investment Contract Fund 14,803,854 -- -- -- -- --
----------- ---------- ---------- ---------- ---------- ----------
Total investments 42,645,113 3,004,079 2,001,854 1,042,962 7,360,413 2,582,832
----------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $44,783,591 $3,150,563 $2,142,043 $1,228,280 $7,730,200 $2,670,159
=========== ========== ========== ========== ========== ==========
Scudder PNC
Growth Investment
& Income Contract
Fund Fund
------------ ------------
<C> <C>
ASSETS:
Cash $ -- $ --
------------ ------------
Contributions receivable -
Employer & employee/participant 625,526 583,847
----------- -----------
Interest and dividend receivables -- --
----------- -----------
Investments, at fair value:
Bon-Ton Common Stock -- --
Compass Capital Core Bond Fund -- --
Invesco Dynamic Fund -- --
Invesco Total Return Fund -- --
Janus Fund -- --
Scudder Growth & Income Fund 11,849,119 --
PNC Investment Contract Fund -- 14,803,854
----------- -----------
Total investments 11,849,119 14,803,854
----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $12,474,645 $15,387,701
=========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-2-
<PAGE>
<TABLE>
<CAPTION>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
DECEMBER 31, 1996
-----------------
Retirement Savings Funds
---------------------------------------------------------------
Stable Balanced Bon-Ton Stock Index
Total Income Fund Fund Stock Fund Fund Bond Fund
----------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash $10,613,643 $ -- $4,896,012 $ -- $ 70 $ 29
----------- ----------- ---------- ----------- ---------- ----------
Contributions receivable -
Employer & employee/participant 1,697,435 120,707 126,381 40,544 159,963 49,841
----------- ---------- ---------- ---------- ---------- ----------
Interest receivable 46,277 374 142 14 2,150 146
----------- ---------- ---------- ---------- ---------- ----------
Investments, at fair value:
EB Temporary Investment Fund 6,669,434 624,363 129,949 -- 5,258,012 99,736
EB MBA Government Corporate Bond
Index Fund 8,095,179 -- -- -- -- --
DF Government Securities Fund 6,718,992 4,697,155 -- -- -- --
Bon-Ton Common Stock 1,055,172 -- -- 1,055,172 -- --
Barclays Global Investors Bond Fund 1,665,398 -- -- -- -- 1,665,398
----------- ---------- ---------- ---------- ---------- ----------
Total investments 24,204,175 5,321,518 129,949 1,055,172 5,258,012 1,765,134
----------- ---------- ---------- ---------- ---------- ----------
Sales pending settlement 817,817 408,086 -- 1,645 -- --
----------- ---------- ---------- ---------- ---------- ----------
Total assets 37,379,347 5,850,685 5,152,484 1,097,375 5,420,195 1,815,150
LIABILITIES:
Purchases pending settlement 398,705 383,685 -- 1,582 -- --
----------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $36,980,642 $5,467,000 $5,152,484 $1,095,793 $5,420,195 $1,815,150
=========== ========== ========== ========== ========== ==========
Profit Sharing Funds
------------------------
Main Option
Fund Fund
----------- -----------
<C> <C>
ASSETS:
Cash $ 5,717,532 $ --
----------- -----------
Contributions receivable -
Employer & employee/participant 1,154,602 45,397
----------- ----------
Interest receivable 43,418 33
----------- ----------
Investments, at fair value:
EB Temporary Investment Fund 557,374 --
EB MBA Government Corporate Bond
Index Fund 8,095,179 --
DF Government Securities Fund -- 2,021,837
Bon-Ton Common Stock -- --
Barclays Global Investors Bond Fund -- --
----------- ----------
Total investments 8,652,553 2,021,837
----------- ----------
Sales pending settlement 408,086 --
----------- ----------
Total assets 15,976,191 2,067,267
LIABILITIES:
Purchases pending settlement -- 13,438
----------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $15,976,191 $2,053,829
============ ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-3-
<PAGE>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<TABLE>
<CAPTION>
PNC as Trustee
----------------------------------------------------
Compass Invesco Invesco
Bon-Ton Capital Core Dynamic Total Janus
Total Stock Fund Bond Fund Fund Return Fund Fund
----------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 1,859,077 $ 124,217 $ 122,619 $ 37,658 $ 347,003 $ 81,766
Employee/participant 3,169,875 220,506 270,551 35,442 737,824 75,983
----------- ---------- ---------- ----------- ---------- -----------
Total contributions 5,028,952 344,723 393,170 73,100 1,084,827 157,749
----------- ---------- ---------- ----------- ---------- -----------
INVESTMENT INCOME-
Unrealized appreciation
(depreciation) in fair
market value 3,293,288 1,585,615 9,631 (81,628) 822,437 (353,993)
Dividends and interest 2,087,540 960 146,733 145,198 333,284 428,882
Realized gains (losses) 2,189,703 168,912 8,982 2,678 207,758 1,985
----------- ---------- ---------- ----------- ---------- -----------
Total investment income 7,570,531 1,755,487 165,346 66,248 1,363,479 76,874
----------- ---------- ---------- ----------- ---------- -----------
Total additions 12,599,483 2,100,210 558,516 139,348 2,448,306 234,623
----------- ---------- ---------- ----------- ---------- -----------
DEDUCTIONS FROM NET ASSETS:
Benefit payments and withdrawals 4,669,337 148,900 228,545 21,179 814,540 12,679
Administrative expenses 127,197 5,055 2,138 951 7,360 2,174
Interfund transfers - net -- (108,515) 940 (1,111,062) (951,310) (2,450,389)
----------- ---------- ---------- ----------- ---------- -----------
Total deductions 4,796,534 45,440 231,623 (1,088,932) (129,410) (2,435,536)
TRANSFER OF ASSETS FROM MELLON -- -- 1,815,150 -- 5,152,484 --
------------ ----------- ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
7,802,949 2,054,770 2,142,043 1,228,280 7,730,200 2,670,159
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 36,980,642 1,095,793 -- -- -- --
------------ ----------- ------------ ----------- ----------- -----------
End of year $44,783,591 $3,150,563 $2,142,043 $ 1,228,280 $7,730,200 $ 2,670,159
============ =========== ============ =========== =========== ===========
PNC as Trustee
-----------------------------------------
Scudder PNC PNC
Growth Investment Conservative
& Income Contract Profile
Fund Fund Fund
----------- ----------- ------------
<C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 587,370 $ 558,444 $ --
Employee/participant 1,108,719 720,850 --
----------- ----------- -----------
Total contributions 1,696,089 1,279,294 --
----------- ----------- -----------
INVESTMENT INCOME-
Unrealized appreciation
(depreciation) in fair
market value 837,560 473,666 --
Dividends and interest 1,026,137 1,018 5,328
Realized gains (losses) 204,741 152,670 1,441,977
----------- ----------- -----------
Total investment income 2,068,438 627,354 1,447,305
----------- ----------- -----------
Total additions 3,764,527 1,906,648 1,447,305
----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Benefit payments and withdrawals 811,621 1,706,156 925,717
Administrative expenses 11,722 48,368 12,469
Interfund transfers - net (4,113,266) (7,751,708) 16,485,310
----------- ----------- -----------
Total deductions (3,289,923) (5,997,184) 17,423,496
TRANSFER OF ASSETS FROM MELLON 5,420,195 7,483,869 15,976,191
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS $12,474,645 $15,387,701 $ --
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year -- -- --
----------- ----------- -----------
End of year $12,474,645 $15,387,701 $ --
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE>
<TABLE>
<CAPTION>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
(CONTINUED)
-----------
Mellon Bank as Trustee
-----------------------------------------------------------------------------------
Stable Balanced Stock Index Main Option
Income Fund Fund Fund Bond Fund Fund Fund
------------ ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ -- $ -- $ -- $ -- $ -- $ --
Employee/participant -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------- ------------
Total contributions -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------- ------------
INVESTMENT INCOME-
Unrealized appreciation (depreciation) in
fair market value -- -- -- -- -- --
Dividends and interest -- -- -- -- -- --
Realized gains (losses) -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
Total investment income -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
Total additions -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
DEDUCTIONS FROM NET ASSETS-
Benefit payments and withdrawals -- -- -- -- -- --
Administrative expenses 36,960 -- -- -- -- --
Interfund transfers-net -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
Total deductions 36,960 -- -- -- -- --
TRANSFER OF ASSETS FROM MELLON (5,430,040) (5,152,484) (5,420,195) (1,815,150) (15,976,191) (2,053,829)
----------- ----------- ----------- ----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS (5,467,000) (5,152,484) (5,420,195) (1,815,150) (15,976,191) (2,053,829)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 5,467,000 5,152,484 5,420,195 1,815,150 15,976,191 2,053,829
----------- ----------- ----------- ----------- ------------ -----------
End of year $ -- $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-5-
<PAGE>
<TABLE>
<CAPTION>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
Retirement Savings Funds
-----------------------------------------------------
Stable Balanced Bon-Ton Stock Index
Total Income Fund Fund Stock Fund Fund
----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 1,650,737 $ 94,105 $ 98,770 $ 32,013 $ 187,195
Employee/participant 3,430,136 984,186 830,735 304,618 991,331
----------- ---------- ---------- ---------- ----------
Total contributions 5,080,873 1,078,291 929,505 336,631 1,178,526
----------- ---------- ---------- ---------- ----------
INVESTMENT INCOME-
Unrealized appreciation (depreciation) in
fair market value (122,257) (74,850) -- 194,798 --
Dividends and interest 1,612,693 344,696 184,976 722 11,876
Realized gains (losses) 2,376,000 10,398 550,474 (29,888) 903,531
----------- ---------- ---------- ---------- ----------
Total investment income 3,866,436 280,244 735,450 165,632 915,407
----------- ---------- ---------- ---------- ----------
Total additions 8,947,309 1,358,535 1,664,955 502,263 2,093,933
----------- ---------- ---------- ---------- ----------
DEDUCTIONS FROM NET ASSETS-
Benefit payments and withdrawals 5,075,255 1,317,063 589,455 130,439 564,212
Administrative expenses 274,945 64,468 24,479 10,162 29,471
Interfund transfers - net -- 127,103 (40,432) 8,694 (164,041)
----------- ---------- ---------- ---------- ----------
Total deductions 5,350,200 1,508,634 573,502 149,295 429,642
----------- ---------- ---------- ---------- ----------
INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS 3,597,109 (150,099) 1,091,453 352,968 1,664,291
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 33,383,533 5,617,099 4,061,031 742,825 3,755,904
----------- ---------- ---------- ---------- ----------
End of year $36,980,642 $5,467,000 $5,152,484 $1,095,793 $5,420,195
=========== ========== ========== ========== ==========
Retirement
Savings
Funds Profit Sharing Funds
---------- ------------------------
Bond Main Option
Fund Fund Fund
---------- ----------- ----------
<C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 38,655 $ 1,154,602 $ 45,397
Employee/participant 319,266 -- --
---------- ----------- ----------
Total contributions 357,921 1,154,602 45,397
---------- ----------- ----------
INVESTMENT INCOME-
Unrealized appreciation (depreciation) in
fair market value (69,798) (142,136) (30,271)
Dividends and interest 114,000 811,815 144,608
Realized gains (losses) 4,444 947,536 (10,495)
---------- ----------- ----------
Total investment income 48,646 1,617,215 103,842
---------- ----------- ----------
Total additions 406,567 2,771,817 149,239
---------- ----------- ----------
DEDUCTIONS FROM NET ASSETS-
Benefit payments and withdrawals 200,609 1,609,337 664,140
Administrative expenses 20,639 92,516 33,210
Interfund transfers - net 69,300 6,842 (7,466)
---------- ----------- ----------
Total deductions 290,548 1,708,695 689,884
---------- ----------- ----------
INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS 116,019 1,063,122 (540,645)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 1,699,131 14,913,069 2,594,474
---------- ----------- ----------
End of year $1,815,150 $15,976,191 $2,053,829
========== =========== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-6-
<PAGE>
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
1. DESCRIPTION OF PLAN
-------------------
The following description of the Bon-Ton Stores, Inc. Profit Sharing/Retirement
Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.
GENERAL
- -------
The Plan is a defined contribution Plan covering substantially all employees of
The Bon-Ton Stores, Inc. (the "Company") who have one year of service and are
age 21 or older. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
EMPLOYEE CONTRIBUTIONS
- ----------------------
Eligible employees may elect to make basic contributions from 1% to 15% of their
compensation. The Plan has additional limitations on pre-tax contributions for
highly compensated participants. For the Plan years 1997 and 1996, a highly
compensated participant, as defined by the Plan, is a participant with an annual
salary equal to or greater than $80,000 and $66,000, respectively.
EMPLOYER CONTRIBUTIONS
- ----------------------
The Plan's profit sharing contributions are made at the Company's discretion out
of the annual current earnings of the Company subsequent to the close of the
Company's fiscal year. Contributions are paid to the designated trustee of the
Plan and are subject to certain limitations as dictated by the Internal Revenue
Code (IRC). Profit sharing contributions are allocated to each participant's
account based upon the investment elections chosen by them. These contributions
are allocated on or before the last day of the Plan year in the ratio which the
participant's compensation for the Plan year plus the participant's compensation
in excess of 40% of the Social Security Wage Base for the Plan year bears to the
total compensation for the Plan year plus the total compensation in excess of
40% of the Social Security Wage Base for the Plan year of all eligible
participants. The maximum amount which may be allocated to any member is 4.3%
of the sum of the participant's compensation for the Plan year plus the
participant's compensation over 40% of the Social Security Wage Base for the
Plan year.
-7-
<PAGE>
Matching employer contributions are at the discretion of the Board of Directors.
These contributions are allocated to the respective investments based upon the
allocations chosen by the participant. During 1997 and 1996, the Company
contributed 20% of the employees' contributions up to 5% of compensation.
PARTICIPANT ACCOUNTS
- --------------------
Each participant's account is credited with the participant's contribution and
allocation of: (a) the employer's contribution, (b) Plan earnings, and (c)
forfeitures of terminated participants' nonvested accounts. Forfeitures are
allocated on the same basis as profit sharing contributions.
INVESTMENTS
- -----------
Prior to the change in Plan trustee (Note 3) on January 1, 1997, investment of
the Company's contribution to the Plan's profit sharing funds was under the
control and management of the Trustee, subject to the Company's Board of
Directors and/or the Plan's Administrative Committee. Additionally, investment
of participants' and the Company's matching contributions to the Plan's 401(k)
funds were allocated at the discretion of the participant.
Effective with the change in Plan trustee, investment of the participants' and
the Company's contributions, matching and profit sharing, are allocated at the
discretion of the participant.
VESTING
- -------
Participants are fully vested as to their own contributions. With regard to
employer matching contributions, the Plan has adopted a three-year cliff vesting
policy, which provides for 100% vesting after three years of service.
Participants' interest in profit sharing contributions are fully vested after
five years of service.
BENEFIT PAYMENTS
- ----------------
Participants may make withdrawals from their employee pre-tax contribution
accounts at any time after age 59 1/2 or at any time for economic hardship, as
defined by the Plan. After-tax employee contributions may be withdrawn at any
time. Upon termination of employment, participants are entitled to receive the
entire balance in their employee account and employer account (if vested). In
the event of death or disability of a participant before termination of
employment, 100% of a participant's account is distributed to a beneficiary as
defined. Withdrawals may be paid in a lump sum, in installments, as an annuity
for life, as a joint and survivor annuity, or any combination of the foregoing
at the option of the participant.
Benefits due to retired and terminated participants, which are included in the
statement of net assets available for plan benefits at December 31, 1997 and
1996, amounted to $798,353 and $1,872,039, respectively.
-8-
<PAGE>
PLAN TERMINATION
- ----------------
Although it has not expressed an intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
BASIS OF ACCOUNTING
- -------------------
The financial statements of the Plan are reflected on the accrual basis of
accounting.
ESTIMATES
- ---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
INVESTMENTS
- -----------
Participants have the option to invest their contributions and employer
contributions in any of the following seven funds: PNC Investment Contract
Fund, Compass Capital Core Bond Fund, Janus Fund, Scudder Growth & Income Fund,
Invesco Total Return Fund, Invesco Dynamic Fund and Bon-Ton Stock Fund.
All investments are presented at fair market value. As of December 31, 1997,
the Bon-Ton Stock Fund, Invesco Total Return Fund, Janus Fund, Scudder Growth &
Income Fund and the PNC Investment Contract Fund were greater than 5% of net
assets. The following investments as of December 31, 1996 were greater than 5%
of net assets: Mellon Bank EB Temporary Investment Fund, EB MBA Government
Corporate Bond Index Fund and the DF Government Securities Fund.
REALIZED GAINS (LOSSES) AND UNREALIZED APPRECIATION (DEPRECIATION) IN FAIR
- --------------------------------------------------------------------------
MARKET VALUE
- ------------
The computations of both realized gains and losses and the unrealized
appreciation and depreciation in fair market value are based on the difference
between the fair market values of the investments at the beginning of the year
and the fair market values on the sales dates or the end of the year, as
applicable.
ADMINISTRATIVE EXPENSES
- -----------------------
Under terms of the Plan agreement all expenses are paid by the Plan unless paid
directly by the Company.
-9-
<PAGE>
3. TRUSTEES
--------
Effective January 1, 1997 PNC Bank, N.A. became the trustee for the Plan.
During the conversion process the Plan transferred participant balances from its
former trustee, Mellon Bank, N.A. into comparable funds at PNC Bank, N.A. The
Plan transferred the Profit Sharing Main fund from Mellon Bank, N.A. into the
PNC Conservative Profile Fund until the Profit Sharing amounts could be invested
according to the participants' allocations. The PNC Conservative Profile Fund
is not an investment option of the Plan and was liquidated by the Plan during
the year.
During 1996 Mellon Bank, N.A. was the trustee of the Plan. In anticipation of
the change in trustees the Plan sold certain investments and invested the
proceeds in liquid assets as of yearend to facilitate investment changes as of
January 1, 1997.
4. RELATED PARTY TRANSACTIONS
--------------------------
Certain Plan investments are shares of investments managed by PNC Bank, N.A.
PNC Bank, N.A. is the trustee as defined by the Plan and therefore, these
transactions qualify as party-in-interest dealings. Fees paid by the Plan for
recordkeeper services amounted to $90,240 for the year ended December 31, 1997.
There were no fees paid to PNC Bank, N.A. for investment management services.
5. FEDERAL INCOME TAXES
--------------------
The Internal Revenue Service has determined and informed the Company by a letter
dated January 30, 1996, that the Plan is qualified under Sections 401(a) and
401(k) of the IRC and the trust established under the Plan is exempt from
federal income taxes under Section 501(a). The Plan's management believes that
subsequent amendments have not affected the Plan's qualification and that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC.
-10-
<PAGE>
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
---------------------------------------------------
The following is a reconciliation of net assets available for plan benefits on
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31
- - - - - - - - - - - - - - - - - - -
1997 1996
------------------ ------------------
<S> <C> <C>
Net assets available for plan benefits on the financial
statements $44,783,591 $36,980,642
Amounts allocated to withdrawing participants (798,353) (1,872,039)
----------- -----------
Net assets available for plan benefits on the Form 5500 $43,985,238 $35,108,603
=========== ===========
</TABLE>
The following is a reconciliation of benefits paid to participants on the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year ended
December 31, 1997
------------------
<S> <C>
Benefits paid to participants on the financial statements $ 4,669,337
Add: Amounts allocated to withdrawing participants at December 31,
1997 798,353
Less: Amounts allocated to withdrawing participants at December
31, 1996 (1,872,039)
-----------
Benefits paid to participants on the Form 5500 $ 3,595,651
===========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
-11-
<PAGE>
SCHEDULE I
EIN 23-1269309
--------------
Plan 003
--------
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
Item 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------------------
AS OF DECEMBER 31, 1997
-----------------------
Number of
Description of Investment Shares Cost Market
- -------------------------- --------- ---------- ----------
The Bon-Ton Stores, Inc. Common Stock 200,272 $ 1,729,117 $ 3,004,079
Compass Capital Core Bond Fund 204,063 1,958,383 2,001,854
Invesco Dynamic Fund 74,711 1,124,591 1,042,962
Invesco Total Return Fund 253,022 6,689,683 7,360,413
Janus Fund 103,728 2,936,824 2,582,832
Scudder Growth & Income Fund 433,557 11,266,909 11,849,119
PNC Investment Contract Fund* 7,903,820 14,388,542 14,803,854
----------- -----------
$40,094,049 $42,645,113
=========== ===========
*Represents a party-in-interest transaction.
The accompanying notes are an integral part of this schedule.
-12-
<PAGE>
SCHEDULE II
EIN 23-1269309
--------------
Plan 003
--------
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<TABLE>
<CAPTION>
Number of Purchase Number of Selling Cost of Net Gain
Description Purchases Price (1) Sales Price (1) Items Sold (Loss)
- --------------------------------------------- --------- ------------ --------- ----------- ---------- ---------
Single Transactions in Excess of 5%
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PNC Investment Contract Fund* 1 $5,257,317 $ -- $ -- $ --
Compass Capital Money Market 1 5,257,317 -- -- --
Compass Capital Money Market -- 1 5,257,317 5,257,317 --
Compass Capital Money Market 1 6,682,992 -- -- --
Compass Capital Money Market -- 1 6,682,992 6,682,992 --
Compass Capital Money Market 1 8,080,991 -- -- --
Compass Capital Money Market -- 1 8,080,991 8,080,991 --
PNC Investment Contract Fund* 1 6,682,992 -- -- --
PNC Investment Contract Fund* 1 8,080,991 -- -- --
Invesco Total Return Fund 1 5,025,961 -- -- --
Compass Capital Money Market 1 5,025,961 -- -- --
</TABLE>
(Continued)
(1) The purchase prices and selling prices of the above transactions represent
the current value of the assets on the transaction date.
*Represents party-in-interest transactions
The accompanying notes are an integral part of this schedule.
-13-
<PAGE>
SCHEDULE II
EIN 23-1269309
--------------
Plan 003
--------
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
(CONTINUED)
-----------
<TABLE>
<CAPTION>
Number of Purchase Number of Selling Cost of Net Gain/
Description Purchases Price (1) Sales Price (1) Items Sold (Loss)
- --------------------------------------------- --------- ----------- --------- ------------ ----------- ----------
Single Transactions in Excess of 5%
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PNC Conservative Profile Fund* $ -- 1 $8,872,832 $8,219,984 $652,848
PNC Investment Contract Fund* 1 8,872,832 -- -- --
Compass Capital Money Market -- 1 5,025,960 5,025,960 --
Scudder Growth & Income Fund 1 5,258,012 -- -- --
Compass Capital Money Market 1 5,258,012 -- -- --
Compass Capital Money Market -- 1 5,258,012 5,258,012 --
</TABLE>
(Continued)
(1) The purchase prices and selling prices of the above transactions represent
the current value of the assets on the transaction date.
*Represents party-in-interest transactions
The accompanying notes are an integral part of this schedule.
-14-
<PAGE>
SCHEDULE II
EIN 23-1269309
--------------
Plan 003
--------
THE BON-TON STORES, INC.
------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
(CONTINUED)
-----------
<TABLE>
<CAPTION>
Number of Purchase Number of Selling Cost of Net Gain/
Description Purchases Price (1) Sales Price (1) Items Sold (Loss)
- --------------------------------------------- --------- ---------- --------- ---------- ---------- ----------
Series of Transactions in Excess of 5%
- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Compass Capital Money Market 121 7,556,353 115 7,556,353 7,556,353 --
PNC Investment Contract Fund* 136 4,175,215 139 4,093,403 4,009,260 84,143
PNC Conservative Profile Fund* 14 1,198,006 57 8,616,215 8,027,648 588,567
Compass Core Bond Fund 122 2,051,697 93 710,128 699,016 11,112
Invesco Total Return Fund 135 2,928,162 99 1,647,119 1,494,717 152,402
Temporary Asset for Invested Purpose 79 1,625,058 79 1,625,058 1,625,058 --
Scudder Growth and Income Fund 146 6,938,892 101 1,309,603 1,140,746 168,857
Janus Fund 96 3,039,925 26 105,085 102,508 2,577
</TABLE>
(1) The purchase prices and selling prices of the above transactions represent
the current value of the assets on the transaction date.
*Represents party-in-interest transactions
The accompanying notes are an integral part of this schedule.
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned thereunto duly authorized.
THE BON-TON STORES, INC.
Profit Sharing / Retirement Savings Plan
Date: June 25, 1998 By: /s/ Michael L. Gleim
------------------------
Michael L. Gleim
Plan Administrator
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into the Company's previously filed
Registration Statement File No. 33-43105.
/s/Arthur Andersen LLP
Lancaster, Pa.,
June 25, 1998
