<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, 1998
Commission File Number 33-43105
Title of Plan
THE BON-TON DEPARTMENT 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 DEPARTMENT STORES, INC.
PROFIT SHARING/RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
THE BON-TON DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
INDEX TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN
BENEFITS AS OF DECEMBER 31, 1998 2
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN
BENEFITS AS OF DECEMBER 31, 1997 3
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1998 4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 5
NOTES TO FINANCIAL STATEMENTS 7
SCHEDULE I - Item 27(a)--SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES AS OF DECEMBER 31, 1998 12
SCHEDULE II - Item 27(d)--SCHEDULE OF REPORTABLE
TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1998 13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
The Bon-Ton Department Stores, Inc.
Profit Sharing/Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of The Bon-Ton Department Stores, Inc. Profit Sharing/Retirement
Savings Plan as of December 31, 1998 and 1997, 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, 1998 and 1997, 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 15, 1999
-1-
<PAGE>
THE BON-TON DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
DECEMBER 31, 1998
-----------------
<TABLE>
<CAPTION>
Scudder
Black Invesco Invesco Growth
Bon-Ton Rock Core Dynamic Total Return Janus and Income
Total Stock Fund Bond Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash $ 18,235 $ 18,235 $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Contributions receivable -
Employer and employee/participant 2,106,678 122,006 110,060 86,717 394,138 2,513 568,392
----------- ----------- ----------- ----------- ----------- ----------- -----------
Interest and dividend receivables 12,146 -- 12,146 -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Investments, at fair value:
Bon-Ton Common Stock 1,517,594 1,517,594 -- -- -- -- --
Black Rock Core Bond Fund 2,607,826 -- 2,607,826 -- -- -- --
Invesco Dynamic Fund 2,307,537 -- -- 2,307,537 -- -- --
Invesco Total Return Fund 9,182,587 -- -- -- 9,182,587 -- --
Janus Fund 4,045,956 -- -- -- -- 4,045,956 --
Scudder Growth & Income Fund 12,946,865 -- -- -- -- -- 12,946,865
PNC Investment Contract Fund 13,721,536 -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investments 46,329,901 1,517,594 2,607,826 2,307,537 9,182,587 4,045,956 12,946,865
----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $48,466,960 $ 1,657,835 $ 2,730,032 $ 2,394,254 $ 9,576,725 $ 4,048,469 $13,515,257
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
PNC American
Investment Janus Growth Century
Contract and International
Fund Income Fund Fund
----------- ------------ -------------
<S> <C> <C> <C>
ASSETS:
Cash $ -- $ -- $ --
----------- ------------ -------------
Contributions receivable -
Employer and employee/participant 638,032 183,771 1,049
----------- ------------ -------------
Interest and dividend receivables -- -- --
----------- ------------ -------------
Investments, at fair value:
Bon-Ton Common Stock -- -- --
Black Rock Core Bond Fund -- -- --
Invesco Dynamic Fund -- -- --
Invesco Total Return Fund -- -- --
Janus Fund -- -- --
Scudder Growth & Income Fund -- -- --
PNC Investment Contract Fund 13,721,536 -- --
----------- ------------ -------------
Total investments 13,721,536 -- --
----------- ------------ -------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $14,359,568 $ 183,771 $ 1,049
=========== ============ =============
</TABLE>
The accompanying notes are an integral part of this financial statement.
-2-
<PAGE>
THE BON-TON DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
---------------------------------------------------
DECEMBER 31, 1997
-----------------
<TABLE>
<CAPTION>
Scudder PNC
Black Invesco Invesco Growth Investment
Bon-Ton Rock Core Dynamic Total Return Janus and Income Contract
Total Stock Fund Bond Fund Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash $ 15,959 $ 15,959 $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Contributions receivable -
Employer and employee/participant 1,967,071 130,525 129,939 40,120 369,787 87,327 625,526 583,847
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Interest and dividend receivables 155,448 -- 10,250 145,198 -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Investments, at fair value:
Bon-Ton Common Stock 3,004,079 3,004,079 -- -- -- -- -- --
Black Rock 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 -- -- -- -- -- 11,849,119 --
PNC Investment Contract Fund 14,803,854 -- -- -- -- -- -- 14,803,854
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investments 42,645,113 3,004,079 2,001,854 1,042,962 7,360,413 2,582,832 11,849,119 14,803,854
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS $44,783,591 $ 3,150,563 $ 2,142,043 $ 1,228,280 $ 7,730,200 $ 2,670,159 $12,474,645 $15,387,701
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-3-
<PAGE>
THE BON-TON DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
<TABLE>
<CAPTION>
Scudder
Black Invesco Invesco Growth
Bon-Ton Rock Core Dynamic Total Janus and Income
Total Stock Fund Bond Fund Fund Return Fund Fund Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 2,019,870 $ 117,594 $ 105,347 $ 83,145 $ 374,599 $ -- $ 539,954
Employee/participant 3,604,202 244,425 206,220 129,965 805,206 233,407 1,186,880
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions 5,624,072 362,019 311,567 213,110 1,179,805 233,407 1,726,834
----------- ----------- ----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME-
Unrealized appreciation
(depreciation) in fair market
value 465,198 (1,093,054) (12,198) 119,934 511,363 886,962 (685,003)
Dividends and interest 2,144,293 1,544 175,985 173,971 453,596 104,893 1,234,304
Realized gains (losses) (76,617) (363,436) 5,763 26,117 58,566 57,130 25,635
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment income 2,532,874 (1,454,946) 169,550 320,022 1,023,525 1,048,985 574,936
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions 8,156,946 (1,092,927) 481,117 533,132 2,203,330 1,282,392 2,301,770
----------- ----------- ----------- ----------- ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Benefit payments and withdrawals 4,300,488 308,499 179,255 93,567 703,942 262,486 1,420,801
Administrative expenses 173,089 7,859 4,340 3,078 16,018 5,524 24,021
Interfund transfers - net -- 83,443 (290,467) (729,487) (363,155) (363,928) (183,664)
----------- ----------- ---------- ----------- ----------- ----------- -----------
Total deductions 4,473,577 399,801 (106,872) (632,842) 356,805 (95,918) 1,261,158
----------- ----------- ----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS 3,683,369 (1,492,728) 587,989 1,165,974 1,846,525 1,378,310 1,040,612
NET ASSETS AVAILABLE FOR PLAN
BENEFITS:
Beginning of year 44,783,591 3,150,563 2,142,043 1,228,280 7,730,200 2,670,159 12,474,645
----------- ----------- ----------- ----------- ----------- ----------- -----------
End of year $48,466,960 $ 1,657,835 $ 2,730,032 $ 2,394,254 $ 9,576,725 $ 4,048,469 $13,515,257
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
PNC American
Investment Janus Century
Contract Growth and International
Fund Income Fund Fund
----------- ----------- -----------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 618,964 $ 179,267 $ 1,000
Employee/participant 793,546 4,504 49
----------- ----------- -----------
Total contributions 1,412,510 183,771 1,049
----------- ----------- -----------
INVESTMENT INCOME-
Unrealized appreciation
(depreciation) in fair market
value 737,194 -- --
Dividends and interest -- -- --
Realized gains (losses) 113,608 -- --
----------- ----------- -----------
Total investment income 850,802 -- --
----------- ----------- -----------
Total additions 2,263,312 183,771 1,049
----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Benefit payments and withdrawals 1,331,938 -- --
Administrative expenses 112,249 -- --
Interfund transfers - net 1,847,258 -- --
----------- ----------- -----------
Total deductions 3,291,445 -- --
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS (1,028,133) 183,771 1,049
NET ASSETS AVAILABLE FOR PLAN
BENEFITS:
Beginning of year 15,387,701 -- --
----------- ----------- -----------
End of year $14,359,568 $ 183,771 $ 1,049
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE>
THE BON-TON DEPARTMENT 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
-----------------------------------------------------------------------------------------
Black Invesco Invesco Scudder
Bon-Ton Rock Core Dynamic Total Janus Growth and
Total Stock Fund Bond Fund Fund Return Fund Fund Income Fund
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <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 $ 587,370
Employee/participant 3,169,875 220,506 270,551 35,442 737,824 75,983 1,108,719
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions 5,028,952 344,723 393,170 73,100 1,084,827 157,749 1,696,089
----------- ----------- ----------- ----------- ----------- ----------- -----------
INVESTMENT INCOME-
Unrealized appreciation
(depreciation) in fair market value 3,293,288 1,585,615 9,631 (81,628) 822,437 (353,993) 837,560
Dividends and interest 2,087,540 960 146,733 145,198 333,284 428,882 1,026,137
Realized gains 2,189,703 168,912 8,982 2,678 207,758 1,985 204,741
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment income 7,570,531 1,755,487 165,346 66,248 1,363,479 76,874 2,068,438
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions 12,599,483 2,100,210 558,516 139,348 2,448,306 234,623 3,764,527
----------- ----------- ----------- ----------- ----------- ----------- -----------
DEDUCTIONS FROM NET ASSETS:
Benefit payments and withdrawals 4,669,337 148,900 228,545 21,179 814,540 12,679 811,621
Administrative expenses 127,197 5,055 2,138 951 7,360 2,174 11,722
Interfund transfers - net -- (108,515) 940 (1,111,062) (951,310) (2,450,389) (4,113,266)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total deductions 4,796,534 45,440 231,623 (1,088,932) (129,410) (2,435,536) (3,289,923)
----------- ----------- ----------- ----------- ----------- ----------- -----------
TRANSFER OF ASSETS FROM MELLON -- -- 1,815,150 -- 5,152,484 -- 5,420,195
----------- ----------- ----------- ----------- ----------- ----------- -----------
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 12,474,645
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 $12,474,645
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
PNC PNC
Investment Conservative
Contract Profile
Fund Fund
----------- ------------
<S> <C> <C>
ADDITIONS TO NET ASSETS:
CONTRIBUTIONS-
Employer $ 558,444 $ --
Employee/participant 720,850 --
----------- ------------
Total contributions 1,279,294 --
----------- ------------
INVESTMENT INCOME-
Unrealized appreciation
(depreciation) in fair market value 473,666 --
Dividends and interest 1,018 5,328
Realized gains 152,670 1,441,977
----------- ------------
Total investment income 627,354 1,447,305
----------- ------------
Total additions 1,906,648 1,447,305
----------- ------------
DEDUCTIONS FROM NET ASSETS:
Benefit payments and withdrawals 1,706,156 925,717
Administrative expenses 48,368 12,469
Interfund transfers - net (7,751,708) 16,485,310
----------- ------------
Total deductions (5,997,184) 17,423,496
----------- ------------
TRANSFER OF ASSETS FROM MELLON 7,483,869 15,976,191
----------- ------------
INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS 15,387,701 --
NET ASSETS AVAILABLE FOR PLAN
BENEFITS:
Beginning of year -- --
----------- ------------
End of year $15,387,701 $ --
=========== ============
</TABLE>
(Continued)
The accompanying notes are an integral part of this financial statement.
-5-
<PAGE>
THE BON-TON DEPARTMENT 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)
-----------
<TABLE>
<CAPTION>
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 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------- ------------
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.
-6-
<PAGE>
THE BON-TON DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
1. DESCRIPTION OF PLAN
-------------------
The following description of The Bon-Ton Department 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 Department Stores, Inc. (the "Company") who have completed one year
of service, worked 1,000 hours 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 1998 and 1997, a highly
compensated participant, as defined by the Plan, is a participant with an annual
salary equal to or greater than $80,000.
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 following 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
and cannot exceed 5% of the participant's compensation. These contributions are
allocated to the respective investments based upon the allocations chosen by the
participant. During 1998 and 1997, the Company's matching contributions were 20%
of the employees' pre-tax contributions.
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. Profit Sharing
forfeitures are allocated on the same basis as profit sharing contributions, and
retirement savings plan forfeitures are allocated on the same basis as
retirement savings plan contributions.
Investments
- -----------
Investment of the participants' and the Company's contributions, matching and
profit sharing, are allocated at the discretion of the participant. Effective
January 1999, the Janus Fund was discontinued as an investment option.
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, 1998 and
1997, amounted to $1,169,386 and $798,353, respectively.
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
-8-
<PAGE>
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 nine funds: PNC Investment Contract Fund,
Black Rock Core Bond Fund, Janus Fund, Scudder Growth and Income Fund, Invesco
Total Return Fund, Invesco Dynamic Fund, Bon-Ton Stock Fund, Janus Growth and
Income Fund, and American Century International Fund. Effective January 1999,
the Janus Fund was discontinued as an investment option.
All investments are presented at fair market value. As of December 31, 1998, the
Black Rock Core Bond 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, 1997 were greater than 5%
of net assets: Bon-Ton Stock Fund, Invesco Total Return Fund, Janus Fund,
Scudder Growth and Income Fund, and PNC Investment Contract 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.
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 and investment management services amounted to $103,409
and $69,680, respectively, for the year ended December 31, 1998.
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.
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
- - - - - - - - - - - - - - - - - - -
1998 1997
------------------ ------------------
<S> <C> <C>
Net assets available for plan benefits on the financial
statements $ 48,466,960 $ 44,783,591
Amounts allocated to withdrawing participants (1,169,386) (798,353)
------------------ ------------------
Net assets available for plan benefits on the Form 5500 $ 47,297,574 $ 43,985,238
================== ==================
</TABLE>
-10-
<PAGE>
The following is a reconciliation of benefits paid to participants on the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year ended
December 31, 1998
------------------
<S> <C>
Benefits paid to participants on the financial statements $4,300,488
Add: Amounts allocated to withdrawing participants at
December 31, 1998 1,169,386
Less: Amounts allocated to withdrawing participants at
December 31, 1997 (798,353)
----------
Benefits paid to participants on the Form 5500 $4,671,521
==========
</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 DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
Item 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------------------
AS OF DECEMBER 31, 1998
-----------------------
<TABLE>
<CAPTION>
Number of
Description of Investment Shares Cost Market
------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
The Bon-Ton Department Stores, Inc. Common
Stock 199,029 $ 1,822,394 $ 1,517,594
Black Rock Core Bond Fund 266,377 2,580,524 2,607,826
Invesco Dynamic Fund 146,047 2,231,536 2,307,537
Invesco Total Return Fund 292,812 8,073,867 9,182,587
Janus Fund 120,236 3,436,917 4,045,956
Scudder Growth & Income Fund 492,089 13,080,488 12,946,865
PNC Investment Contract Fund* 6,896,630 12,641,070 13,721,536
------------ ------------
$ 43,866,796 $ 46,329,901
============ ============
</TABLE>
*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 DEPARTMENT STORES, INC.
-----------------------------------
PROFIT SHARING/RETIREMENT SAVINGS PLAN
--------------------------------------
ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
<TABLE>
<CAPTION>
Number of Purchase Number of Selling Cost of
Description Purchases Price (1) Sales Price (1) Items Sold Net Gain
- --------------------------------------------- --------- ------------ --------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Series of Transactions in Excess of 5%
- --------------------------------------
PNC Investment Contract Fund* 123 $2,284,318 194 $4,217,415 $4,031,761 $185,653
Invesco Total Return Fund 164 2,627,846 151 1,375,600 1,243,662 131,938
Scudder Growth and Income Fund 153 4,342,411 146 2,585,298 2,528,833 56,465
</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.
-13-
<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 Department Stores, Inc.
Profit Sharing/Retirement Savings Plan
Date: June 30, 1999 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 29, 1999
