10-K 1 w48423e10-k.txt FORM 10-K THE BON TON STORES, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended Commission File Number February 3, 2001 0-19517 THE BON-TON STORES, INC. 2801 EAST MARKET STREET YORK, PENNSYLVANIA, 17402 (717) 757-7660 INCORPORATED IN PENNSYLVANIA IRS NO. 23-2835229 --------------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value The Registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days. Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is contained in Registrant's proxy statement incorporated by reference in Part III of this Form 10-K. As of April 5, 2001, the aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $20,545,154, based upon the closing price of $2.53 per share on April 5, 2001.* As of April 5, 2001, there were 12,218,804 shares of Common Stock, $.01 par value, and 2,989,853 shares of Class A Common Stock, $.01 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part II - Portions of our 2000 Annual Report to security holders ("Annual Report"). Part III - Portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders ("Proxy Statement"). ------------------------------------- * Calculated by excluding all shares that may be deemed to be beneficially owned by executive officers and directors of the Registrant, without conceding that all such persons are "affiliates" of the Registrant for purposes of the federal securities laws. 1 2 References to a year in this Form 10-K refer to The Bon-Ton's fiscal year, which is the 52 or 53 week period ending on the Saturday nearer January 31 of the following calendar year (e.g. a reference to 2000 is a reference to the fiscal year ended February 3, 2001.) PART I ITEM 1. BUSINESS GENERAL The Bon-Ton Stores, Inc., together with its subsidiaries, is the successor to S. Grumbacher & Son, a family business founded in 1898, and operates quality fashion department stores offering moderate and better apparel, home furnishings, cosmetics, accessories and shoes. In many of its markets, The Bon-Ton is the primary destination for branded fashion merchandise such as Calvin Klein, Liz Claiborne, Nautica, Ralph Lauren and Tommy Hilfiger. We presently operate 73 stores in secondary markets - 36 stores in Pennsylvania, 26 in New York, three stores in each of New Jersey and Maryland and one store in each of Connecticut, New Hampshire, Massachusetts, Vermont and West Virginia. Our strategy focuses on being the premier fashion apparel retailer in markets that demand, but often have limited access to, better branded merchandise. The Bon-Ton's executive offices are located at 2801 East Market Street, York, Pennsylvania. MERCHANDISING The Bon-Ton stores offer moderate and better fashion apparel, home furnishings, cosmetics, accessories, shoes and other items. Sales of apparel constituted 62% of sales in 2000. The following chart illustrates sales by product category for 2000, 1999 and 1998.

MERCHANDISE CATEGORY 2000 1999 1998 -------------------- ---- ---- ---- Women's clothing 27.6% 27.2% 27.7% Men's clothing 18.0 18.0 18.7 Home 13.5 13.6 12.9 Cosmetics 10.9 10.5 9.9 Accessories 7.9 7.8 7.5 Children's clothing 6.9 7.1 7.2 Shoes 5.3 5.8 5.6 Intimate apparel 5.2 5.2 5.1 Junior's clothing 4.7 4.8 5.4 ------ ------ ------ Total 100.0% 100.0% 100.0% ====== ====== ======

2 3 We carry a number of highly recognized brand names, including Calvin Klein, Cole Haan, Estee Lauder, Jones New York, Kenneth Cole, Liz Claiborne, Nautica, Nine West, Ralph Lauren and Tommy Hilfiger, and within these brands choose collections which balance fashion, price and selection. We depend on our relationships with our key vendors and our ability to purchase branded merchandise from them at competitive prices. If we lose the support of these vendors, it could have a material adverse effect on The Bon-Ton. Complementing branded merchandise, our private brand merchandise provides fashion at competitive pricing under names such as Andrea Viccaro, Jenny Buchanan, Stuart Hughes and Zigg's. We view this private brand merchandise as a strategic addition to our strong array of highly recognized, quality national brands and as an opportunity to increase brand exclusiveness, customer loyalty and competitive differentiation. Private brand merchandise represented approximately 13% of 2000 total sales. Our business, like that of most retailers, is subject to seasonal fluctuations, with the major portion of sales and income realized during the latter half of each year, which includes the back-to-school and holiday seasons. MARKETING We attract customers by offering services such as free gift wrap and special order capability. In addition, through our "Certified Value" program, we maintain everyday value prices on staple items such as turtlenecks, T-shirts, shorts and denim within major product groups. Our advertising and promotional programs are conducted through newspaper advertisements, direct mail and, to a lesser extent, local television and radio. We maintain an in-house advertising group that produces substantially all our print advertising. The effectiveness of our direct mail efforts has been greatly enhanced through database management systems. By accurately identifying the predictors of response to direct mail pieces, we have the ability to rank, score and select customers with event-specific information. MANAGEMENT INFORMATION AND CONTROL SYSTEM We are in the process of enhancing our management information and control system in order to expedite the flow of merchandise through the distribution centers. We believe this will provide improved productivity, lower labor costs and better in-stock availability. We also continue to modernize our in-store systems. A new Point-of-Sale System will be piloted in 2001 followed by a rollout, including an updated gift registry system, to all stores. This technology upgrade will simplify associate training, improve inventory management and enhance our customers' shopping experience. 3 4 CUSTOMER CREDIT Our customers may pay for their purchases with The Bon-Ton proprietary credit card, Visa, Mastercard, cash or check. The Bon-Ton credit card holders generally constitute our most loyal and active customers; during 2000, the average dollar amount for proprietary credit card purchases substantially exceeded the average dollar amount for cash purchases. We believe our credit card is a particularly productive tool for customer segmentation and target marketing. The following table summarizes the percentage of total sales generated by payment type:

TYPE OF PAYMENT 2000 1999 1998 ---- ---- ---- Bon-Ton credit card 48% 47% 48% Visa, Mastercard, American Express* 26 25 23 Cash or check 26 28 29 --- --- --- Total 100% 100% 100% === === ===

* The Company ceased accepting American Express during 1998. During 2000, we issued 276,000 Bon-Ton credit cards for newly opened accounts. Sales on The Bon-Ton's proprietary credit card represent a significant portion of our business. Deterioration in the quality of these accounts receivable because customers fail to pay on time or at all, or any adverse changes in laws regulating the granting or servicing of credit, could have a material adverse effect on our business and financial condition. COMPETITION We face competition for customers from traditional department stores such as those operated by J.C. Penney Company, Inc., Federated Department Stores Inc., The May Department Stores Company, Kohl's Corporation and Sears, Roebuck and Co., from regional department stores such as Boscov's Department Store, Inc., and from specialty stores and catalogue and internet retailers. In a number of our markets, we compete with national department store chains which are better established, and in other markets we face potential competition from national chains that have not yet entered such markets. In all markets, we generally compete for customers with department stores offering moderately priced goods. Many of our competitors have substantially greater financial and other resources than The Bon-Ton, and some of our competitors have greater leverage with vendors, which may allow such competitors to obtain merchandise more easily or on better terms. In several of our markets, we compete with department stores which have a larger store or a better location in the market. 4 5 We believe we compare favorably with our competitors with respect to quality, depth and breadth of merchandise, prices for comparable quality merchandise, customer service and store environment. We also believe our knowledge of secondary markets, developed over many years of operation, gives us a competitive advantage as we focus on secondary markets as our primary area of operation. ASSOCIATES As of February 3, 2001, we had approximately 3,700 full-time and 5,300 part-time associates. We also employ additional part-time associates during peak periods. None of our associates are represented by a labor union. We believe that our relationship with our associates is good. EXECUTIVE OFFICERS The Executive Officers of the Company are:

NAME AGE POSITION ---- --- -------- Tim Grumbacher 61 Chairman of the Board and Chief Executive Officer Michael L. Gleim 58 Vice Chairman and Chief Operating Officer and Director Frank Tworecke 54 Vice Chairman and Chief Merchandising Officer and Director James H. Baireuther 54 Executive Vice President and Chief Financial Officer Lynn C. Derry 45 Senior Vice President - General Merchandise Manager H. Stephen Evans 51 Senior Vice President - Real Estate, Legal and Governmental Affairs John S. Farrell 55 Senior Vice President - Stores Robert A. Geisenberger 40 Senior Vice President - General Merchandise Manager William T. Harmon 46 Senior Vice President - Sales Promotion and Marketing Gary Kellman 58 Senior Vice President - General Merchandise Manager Patrick J. McIntyre 56 Senior Vice President - Chief Information Officer Jeffrey D. Moore 34 Senior Vice President - General Merchandise Manager Ryan J. Sattler 56 Senior Vice President - Human Resources and Operations Stephanie Stough 49 Senior Vice President - Merchandise Planning and Control

5 6 Mr. Tworecke joined the Company in November 1999 as Vice Chairman and Chief Merchandising Officer and a Director. From January 1996 until November 1999, he was President and Chief Operating Officer of Jos. A. Bank Clothiers, and from August 1994 to December 1995, he was President of Merry- Go-Round Enterprises, Inc. Mr. Baireuther was elected Senior Vice President and Chief Financial Officer in June 1996 and appointed Executive Vice President and Chief Financial Officer in January 2000. From September 1994 until June 1996, he was Senior Vice President - Chief Financial Officer at DAC Vision, a manufacturer and distributor of optical supplies. From 1989 to 1994, he was Executive Vice President - Chief Financial Officer for Eye Care Centers of America, a retail optical superstore chain and wholly-owned subsidiary of Sears. From 1969 to 1989, Mr. Baireuther held a variety of positions with Sears, Roebuck and Co. including Director of Mergers and Acquisitions, Manager of Corporate Financial Analysis and Controller. Ms. Derry was appointed Senior Vice President - General Merchandise Manager in February 2001. For more than five years prior to that time, Ms. Derry was a Divisional Merchandise Manager for The Bon-Ton. Mr. Farrell was appointed Senior Vice President in June 2000. For more than five years prior to that time, Mr. Farrell was Vice President - Stores for The Bon-Ton. Mr. Geisenberger was appointed Senior Vice President - General Merchandise Manager in July 2000. For more than five years prior to that time, Mr. Geisenberger was a Divisional Merchandise Manager for The Bon-Ton. Mr. Harmon joined the Company as Senior Vice President - Sales Promotion, Marketing and Strategic Planning in June 1997. From 1989 to 1997, Mr. Harmon was with The May Company, serving as Senior Vice President - Merchandise Planning of Foley's from November 1994 to June 1997, Vice President - Merchandise Planning of Foley's from December 1992 to October 1994, and Vice President - Assistant to the President of Filene's from June 1989 to December 1992. Prior to that, he was employed by McKinsey & Company for seven years. Mr. Kellman became Senior Vice President - General Merchandise Manager in August 1999. From November 1996 to April 1999, he was Executive Vice President of Today's Man, Inc., and from March 1989 to June 1996 he was Senior Vice President - Merchandising at Lord & Taylor. Mr. McIntyre joined The Bon-Ton as Senior Vice President - Chief Information Officer in June 1997. From 1988 to June 1997, Mr. McIntyre was Senior Vice President - Chief Information Officer for the Cato Corporation, a women's specialty retailer. Prior to that, he held similar positions with the Higbee Company and Burdine's Department Store. Mr. Moore was appointed Senior Vice President - General Merchandise Manager in February 2001. He joined the Company as Vice President - Divisional Merchandise Manager in July 1998. From July 1990 to 1998, Mr. Moore was with Lord & Taylor, most recently as the divisional merchandise manager for men's clothing and furnishings. 6 7 Messrs. Grumbacher, Gleim, Evans, Sattler and Ms. Stough have been executive officers of The Bon-Ton for more than five years. CAUTIONARY STATEMENTS RELATING TO FORWARD-LOOKING INFORMATION The Company and its representatives may, from time to time, make written or verbal forward-looking statements. Those statements relate to developments, results, conditions or other events the Company expects or anticipates will occur in the future. Without limiting the foregoing, those statements may relate to future revenues, earnings, store openings, market conditions and the competitive environment. Forward-looking statements are based on management's then-current views and assumptions and, as a result, are subject to risks and uncertainties that could cause actual results to differ materially from those projected. All forward-looking statements are qualified by the following which contain several of the important factors that could cause actual results to differ materially from those predicted by the forward-looking statements: Competitive, Sales, and Gross Margin Pressures Our retail business is highly competitive. We compete for customers, employees, locations, products, services and other important items necessary for the successful operation of our businesses with local, regional and national retailers. Those competitors, some of which have greater financial and other resources than those of the Company, include department stores, specialty apparel stores, outlet stores, discount stores, general and mass merchandisers, mail-order and electronic commerce retailers, and other forms of retail commerce. Changes in the pricing and other practices of those competitors may affect our expected results by decreasing our sales or gross margin percentage. Customer Trends It is difficult to predict what merchandise consumers will want. A substantial part of our business is dependent on our ability to make the correct trend decisions for a wide variety of goods and services. Failure to accurately predict constantly changing consumer tastes, preferences, spending patterns and other lifestyle decisions could adversely affect short-term results and long-term relationships with our customers. Credit Operations Sales of merchandise and services are facilitated by the Company's credit card operations. These credit card operations also generate additional revenue from fees related to extending credit. Our ability to extend credit to our customers depends on many factors including compliance with federal and state laws which may change from time to time. In addition, changes in credit card use, payment patterns and default rates may result from a variety of economic, legal, social and other factors that we cannot control or predict with certainty. Changes that adversely affect our ability to extend credit and collect payments could negatively affect our results and financial condition. 7 8 General Economic Conditions General economic factors that are beyond our control influence the Company's forecasts and directly affect performance. These factors include interest rates, recession, inflation, deflation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends and other matters that influence consumer confidence and spending. Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency and magnitude. Increases in interest rates may increase our financing costs. Product Sourcing The products we sell are sourced from a wide variety of domestic and international vendors. Our ability to find qualified vendors and access products in a timely and efficient manner is a significant challenge which is typically even more difficult with respect to goods sourced outside of the United States. Trade restrictions, tariffs, currency exchange rates, transport capacity and costs, and other factors significant to this trade are beyond our control and could affect our business. Advertising and Marketing Programs The Company spends extensively on advertising and marketing. Our business depends on high customer traffic in our stores and effective marketing. If our advertising and marketing efforts are not effective, this could negatively affect our results. Inventory Control The Company's merchants focus on inventory levels and balance these levels with plans and trends. Excess inventories could result in significant markdowns, which could adversely affect our results. Cost Containment The Company's performance depends on appropriate management of its expense structure, including its selling, general and administrative costs. The Company is continuously focused on reducing expenses as a percent of sales. The Company's failure to meet its expense budget or to appropriately reduce expenses during a weak sales season could adversely affect our results. Other Factors Other factors that could cause actual results to differ materially from those predicted include: weather, changes in the availability or cost of capital, the availability of suitable new store locations on acceptable terms, shifts in the seasonality of shopping patterns, work interruptions, the effect of excess retail capacity in our markets, material acquisitions or dispositions, or adverse results in material litigation. 8 9 The foregoing list of important factors is not exclusive, and the Company does not undertake to revise any forward-looking statement to reflect events or circumstances that occur after the date the statement is made. ITEM 2. PROPERTIES. Our stores, which all operate under "The Bon-Ton" name, vary in size from approximately 33,000 to 160,000 square feet. The following table sets forth the number of stores at the beginning and end of each of the last five years:

Fiscal Year 2000 1999 1998 1997 1996 ----------- ---- ---- ---- ---- ---- Number of stores: Beginning of year 72 65 64 64 68 Additions 1 7 2 0 1 Closings 0 0 (1) 0 (5) --- --- --- --- --- End of year 73 72 65 64 64

We plan to maintain our growth by expanding and upgrading existing stores and by opening new stores. In addition, we will consider acquisitions of department store companies or their real estate assets if and when such opportunities arise. Our market positioning strategy has been to locate new stores or acquire existing companies or their stores in secondary markets generally within or contiguous to existing areas of operations. In November 2000, we opened stores in Newburgh, New York (61,800 square feet) and in Scranton, Pennsylvania (102,500 square feet). The Scranton store replaced a smaller store (57,600 square feet) in that market. We also expanded our store in Frederick, Maryland by 19,800 square feet. The following table provides certain information regarding our store properties:

APPROXIMATE SQUARE YEAR OPENED MARKET LOCATION FOOTAGE OR ACQUIRED ------ -------- ------- ----------- PENNSYLVANIA Allentown South Mall 101,800 1994 Bethlehem Westgate Mall 102,000 1994 Bloomsburg Columbia Mall 46,100 1988 Butler Clearview Mall 100,800 1982 Carlisle Carlisle Plaza Mall 59,900 1977 Chambersburg Chambersburg Mall 55,600 1985 Doylestown Doylestown Shopping Center 55,500 1994 Easton Palmer Park Mall 115,100 1994 Greensburg Westmoreland Mall 100,000 1987 Hanover North Hanover Mall 67,600 1971

9 10

APPROXIMATE SQUARE YEAR OPENED MARKET LOCATION FOOTAGE OR ACQUIRED ------ -------- ------- ----------- Harrisburg Capital City Commons 141,200 1987 Colonial Park Shopping Center 136,500 1987 Indiana Indiana Mall 60,400 1979 Johnstown The Galleria 80,900 1992 Lancaster Park City Center 144,800 1992 Lebanon Lebanon Plaza Mall 53,700 1994 Lewistown Central Business District 46,700 1972 Oil City Cranberry Mall 45,200 1982 Pottstown Coventry Mall 88,300 1999 Pottsville Schuylkill Mall 61,100 1987 Quakertown Richland Mall 88,100 1994 Reading Berkshire Mall 159,400 1987 Scranton The Mall at Steamtown 102,500 2000 State College Nittany Mall 70,200 1994 Stroudsburg Stroud Mall 87,000 1994 Sunbury Susquehanna Valley Mall 90,000 1978 Trexlertown Trexler Mall 54,000 1994 Uniontown Uniontown Mall 71,000 1976 Warren Warren Mall 50,000 1980 Washington Crown Washington Center 78,100 1987 Williamsport Lycoming Mall 60,900 1986 Wilkes-Barre Midway Shopping Center 66,000 1987 Wyoming Valley Mall 159,500 1987 York York Galleria 132,000 1989 Queensgate Shopping Center 85,100 1962 West Manchester Mall 80,200 1981 NEW YORK Binghamton Oakdale Mall 80,000 1981 Buffalo Northtown Plaza 100,800 1994 Walden Galleria 150,000 1994 Eastern Hills Mall 151,200 1994 McKinley Mall 97,200 1994 Sheridan/Delaware Plaza 124,100 1994 Southgate Plaza 100,500 1994 Elmira Arnot Mall 74,800 1995 Glens Falls Aviation Mall 80,300 1999 Ithaca Pyramid Mall 52,400 1991 Jamestown Chautauqua Mall 59,900 1998 Lockport Lockport Mall 82,000 1994 Massena St. Lawrence Centre 51,000 1994 Newburgh Newburgh Mall 61,800 2000 Niagara Falls Summit Park Mall 88,100 1994 Olean Olean Mall 73,000 1994 Rochester Greece Ridge Center 144,600 1996 The Marketplace Mall 100,000 1995 Irondequoit Mall 102,600 1995 Eastview Mall 120,600 1995 Saratoga Springs Wilton Mall 71,700 1993 Syracuse Carousel Center 80,000 1994 Camillus Mall 64,700 1994 Great Northern Mall 98,400 1994 Shoppingtown Mall 70,100 1994 Watertown Salmon Run Mall 50,200 1992

10 11

APPROXIMATE SQUARE YEAR OPENED MARKET LOCATION FOOTAGE OR ACQUIRED ------ -------- ------- ----------- MARYLAND Cumberland Country Club Mall 60,900 1981 Frederick Frederick Towne Mall 97,700 1972 Hagerstown Valley Mall 126,000 1974 NEW JERSEY Brick Brick Plaza 53,500 1999 Phillipsburg Phillipsburg Mall 65,000 1994 Red Bank Central Business District 33,300 1999 WEST VIRGINIA Martinsburg Martinsburg Mall 65,800 1994 CONNECTICUT Hamden Hamden Mart 58,900 1999 MASSACHUSETTS Westfield Westfield Shops 50,600 1998 NEW HAMPSHIRE Concord Steeplegate Mall 87,700 1999 VERMONT S. Burlington University Mall 60,000 1999

We lease 65 of our stores and own eight stores, two of which are subject to ground leases. We lease a total of 178,600 square feet for our executive and administrative offices in York, Pennsylvania, lease our 143,700 square foot distribution center in York, Pennsylvania, and lease our 326,000 square foot distribution center in Allentown, Pennsylvania. ITEM 3. LEGAL PROCEEDINGS. We are a party to legal proceedings and claims which arise during the ordinary course of business. We do not expect the ultimate outcome of all such litigation and claims to have a material adverse effect on our financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 11 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Common Stock is traded on the Nasdaq Stock Market (symbol: BONT). There is no established public trading market for the Class A Common Stock. The Class A Common Stock is convertible on a share for share basis into Common Stock. The following table sets forth the high and low sales price of the Common Stock as furnished by Nasdaq:

2000 1999 ----------------- -------------------- High Low High Low ---- --- ---- --- 1st Quarter $4.000 $2.281 $8.125 $4.500 2nd Quarter 2.875 1.750 6.719 5.438 3rd Quarter 2.438 1.688 5.688 3.625 4th Quarter 3.500 1.688 6.375 3.438

On April 5, 2001, there were approximately 332 shareholders of record of Common Stock and five shareholders of record of Class A Common Stock. We have not paid cash dividends since our initial public offering in September 1991 and do not anticipate paying any cash dividends in the foreseeable future. The Company intends to retain its earnings, if any, for the operation and expansion of the business. The payment and rate of future dividends, if any, are subject to the discretion of the Board of Directors and will depend upon earnings, financial condition, capital requirements, contractual restrictions under current indebtedness and other factors. Our revolving credit agreement contains restrictions on our ability to pay dividends and make other distributions. ITEM 6. SELECTED FINANCIAL DATA. Item 6 is hereby incorporated by reference to the material under "Selected Consolidated Financial and Operating Data" on page 22 of our Annual Report, attached hereto as Exhibit 13.1. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Item 7 is hereby incorporated by reference to the material under "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 23 through 27 of our Annual Report, attached hereto as Exhibit 13.2. 12 13 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Item 7A is hereby incorporated by reference to the material under "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 23 through 27 of our Annual Report, attached hereto as Exhibit 13.2. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Item 8 is hereby incorporated by reference to the Report of Independent Public Accountants, Consolidated Financial Statements and Notes thereto on pages 28 through 45 of our Annual Report, attached hereto as Exhibit 13.3. ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information regarding executive officers is included in Part I under the heading Executive Officers. The remainder of the information called for by this Item will be contained in our Proxy Statement and is hereby incorporated by reference thereto. ITEM 11. EXECUTIVE COMPENSATION. The information called for by this Item will be contained in our Proxy Statement and is hereby incorporated by reference thereto (other than the information called for by Items 402(k) and (l) of Regulation S-K, which is not incorporated herein by reference). ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information called for by this Item will be contained in our Proxy Statement and is hereby incorporated by reference thereto. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information called for by this Item will be contained in our Proxy Statement and is hereby incorporated by reference thereto. 13 14 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report: 1. Consolidated Financial Statements -- See Item 8 above. 2. Consolidated Financial Statement Schedules -- See the Index to Consolidated Financial Statement Schedules on page F-1. 3. The Securities and Exchange Commission allows us to "incorporate by reference" information into this Form 10-K, which means we can disclose important information by referring to another document filed with the Commission. The following are exhibits to this Form 10-K and, if incorporated by reference, we have indicated the document previously filed with the Commission in which the exhibit was included.

EXHIBIT NO. DESCRIPTION DOCUMENT IF INCORPORATED BY REFERENCE ------- ----------- ------------------------------------- 3.1 Articles of Incorporation Exhibit 3.1 to the Report on Form 8-B, File No. 0-19517 ("Form 8-B") 3.2 Bylaws Exhibit 3.2 to Form 8-B 10.1 Shareholder's Agreement by and among Exhibit 10.3 to Amendment No. 2 to the Company and the shareholders the Registration Statement on Form named therein S-1, File No. 33-42142 ("1991 Form S-1") * 10.2 (a) Employment Agreement with Heywood Exhibit 99 to the Report on Form 8-K Wilansky dated March 26, 1998 * (b) The Bon-Ton Stores, Inc. Supplemental Exhibit 10.2(b) to the Registration Executive Retirement Plan for Heywood Statement on Form S-1, File No. Wilansky 333-48811 ("1998 Form S-1") * (c) The Bon-Ton Stores, Inc. Five Year Exhibit 10.2(c) to 1998 Form S-1 Cash Bonus Plan for Heywood Wilansky * (d) The Bon-Ton Stores, Inc. Performance Exhibit 4 to the Registration Based Stock Incentive Plan for Statement on Form S-8, File Heywood Wilansky No. 333-58591 * (e) First Amendment to Employment Exhibit 10.1 to the Quarterly Report Agreement with Heywood Wilansky on Form 10-Q for the quarter ended April 29, 2000 ("4/29/00 10-Q") * (f) 2000 Performance-Based Compensation Exhibit 10.2 to the 4/29/00 10-Q Plan for Heywood Wilansky

14 15 * (g) Separation Agreement and General Exhibit 10.3 to the Quarterly Report Release between The Bon-Ton Stores, on Form 10-Q for the quarter ended Inc. and Heywood Wilansky. July 29, 2000 ("7/29/00 10-Q") * 10.3 (a) Employment Agreement with Michael L. Exhibit 10.4 to Form 8-B Gleim * (b) First Amendment to Employment Exhibit 10.1 to the Quarterly Report Agreement with Michael L. Gleim on Form 10-Q for the quarter ended October 31, 1998 * (c) Second Amendment to Employment Exhibit 10.3(c) to the Annual Report Agreement with Michael L. Gleim on Form 10-K for the fiscal year ended January 29, 2000 ("1999 Form 10-K") * 10.4 Employment Agreement with Frank Exhibit 10.2 to the Quarterly Report Tworecke on Form 10-Q for the quarter ended October 30, 1999 * 10.5 Form of severance agreement with Exhibit 10.14 to Form 8-B certain executive officers * 10.6 Supplemental Retirement Plan for Exhibit 10.6 to the 1999 Form 10-K James H. Baireuther * 10.7 (a) Amended and Restated 1991 Stock Exhibit 4.1 to the Registration Option and Restricted Stock Plan Statement on Form S-8, File No. 333-36633 * (b) Phantom Equity Replacement Stock Exhibit 10.18 to 1991 Form S-1 Option Plan 10.8 Purchase Agreement among the Company, M. Thomas Grumbacher and MBM Land Associates Limited Partnership, for the land underlying each of the York Galleria store and the York distribution center 10.9 (a) Sublease of Oil City, Pennsylvania Exhibit 10.16 to 1991 Form S-1 store between the Company and M. Thomas Grumbacher (b) First Amendment to Oil City, Exhibit 10.22 to Amendment No. 1 to Pennsylvania sublease 1991 Form S-1 (c) Corporate Guarantee with respect to Exhibit 10.26 to Amendment No. 1 to Oil City, Pennsylvania lease 1991 Form S-1 * 10.10 The Company's Profit Exhibit 10.24 to the Annual Report on Sharing/Retirement Savings Plan, Form 10-K for the fiscal year ended amended and restated as of July 1, January 28, 1995 1994 10.11 (a) Amended and Restated Receivables Exhibit 10.16(a) to Amendment No. 2 Purchase Agreement dated as of to 1998 Form S-1 January 12, 1995 among The Bon-Ton Receivables Corp., The Bon-Ton Receivables Partnership, L.P., Falcon Asset Securitization Corporation, The First National Bank of Chicago, and the other financial institutions party thereto 15 16 (b) Amendment dated as of June 30, 1995 Exhibit 10.16(b) to Amendment No. 1 to Amended and Restated Receivables to 1998 Form S-1 Purchase Agreement (c) Amendment dated as of October 29, Exhibit 10.1 to the Quarterly Report 1999 to Amended and Restated on Form 10-Q for the quarter ended Receivables Purchase Agreement October 30, 1999 * 10.12 Management Incentive Plan and Exhibit 10.13 to the Annual Report on Addendum to Management Incentive Plan Form 10-K for the fiscal year ended February 1, 1997 ("1996 Form 10-K") * 10.13 The Bon-Ton Stores, Inc. Long-Term Exhibit 10.14 to 1996 Form 10-K Incentive Plan For Principals * 10.14 The Bon-Ton Stores, Inc. 2000 Stock Exhibit 10.2 to the 7/29/00 10-Q Incentive Plan 10.15 (a) Credit Agreement dated as of April Exhibit 10.1 to the Quarterly Report 15, 1997 among the Company, Adam, on Form 10-Q for the quarter ended Meldrum & Anderson Co., Inc., and The May 3, 1997 Bon-Ton Stores of Lancaster, Inc., the Other Credit Parties Signatory thereto, the Lenders Signatory thereto from time to time, the First National Bank of Boston and General Electric Capital Corporation (b) First Amendment to Credit Agreement Exhibit 10.3(b) to 1998 Form S-1 (c) Second Amendment to Credit Agreement Exhibit 10.3(c) to 1998 Form S-1 (d) Third Amendment to Credit Agreement Exhibit 10.3(d) to 1998 Form S-1 (e) Fourth Amendment to Credit Agreement Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended October 31, 1998 (f) Fifth Amendment to Credit Agreement Exhibit 10.14(f) to the Annual Report on Form 10-K for the fiscal year ended January 30, 1999 (g) Sixth Amendment to Credit Agreement Exhibit 10.5(g) to the 1999 Form 10-K (h) Seventh Amendment to Credit Agreement Exhibit 10.1 to the 7/29/00 10-Q 13.1 Page 22 of the Annual Report. 13.2 Pages 23 through 27 of the Annual Report. 13.3 Pages 28 through 45 of the Annual Report. 21. Subsidiaries of The Bon-Ton. 23. Consent of Arthur Andersen LLP. 16 17 (b) Reports on Form 8-K filed during the fourth quarter. None ---------------------------------- * Constitutes a management contract or compensatory plan or arrangement. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned. THE BON-TON STORES, INC. Dated: April 16, 2001 By: /s/ Tim Grumbacher ------------------ Tim Grumbacher Chairman of the Board Chief Executive Officer 17 18 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature Capacity Date --------- -------- ---- /s/ Tim Grumbacher Chairman of the Board April 16, 2001 --------------------------------- and Chief Executive Officer Tim Grumbacher /s/ Samuel J. Gerson Director April 16, 2001 --------------------------------- Samuel J. Gerson /s/ Michael L. Gleim Vice Chairman, Chief April 16, 2001 --------------------------------- Operating Officer Michael L. Gleim and Director /s/ Lawrence J. Ring Director April 16, 2001 --------------------------------- Lawrence J. Ring /s/ Robert C. Siegel Director April 16, 2001 --------------------------------- Robert C. Siegel /s/ Leon D. Starr Director April 16, 2001 --------------------------------- Leon D. Starr /s/ Frank Tworecke Vice Chairman, Chief April 16, 2001 --------------------------- Merchandising Officer Frank Tworecke and Director /s/ Leon F. Winbigler Director April 16, 2001 --------------------------------- Leon F. Winbigler /s/ Thomas W. Wolf Director April 16, 2001 --------------------------------- Thomas W. Wolf /s/ James H. Baireuther Executive Vice President April 16, 2001 --------------------------------- and Chief Financial Officer James H. Baireuther (principal financial and accounting officer)

18 19 INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULE REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS............................... F-2 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS....................... F-3 20 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To The Bon-Ton Stores, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements of The Bon-Ton Stores, Inc. included in this annual report on form 10-K and have issued our report thereon dated March 7, 2001. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the accompanying index is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP Philadelphia, PA March 7, 2000 F-2 21 SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS THE BON-TON STORES, INC. AND SUBSIDIARIES

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F ------- ---------- ---------- --------- ---------- ----------- BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS OTHER END OF CLASSIFICATION OF PERIOD & EXPENSES INCREASE DEDUCTIONS PERIOD -------------- ---------- ---------- -------- ---------- ---------- Year ended January 30, 1999: Allowance for doubtful accounts................. $1,977,000 $ 8,851,000 (1) $ -- $(7,136,000)(2) $3,692,000 Reserve for store closing.. $5,471,000 $ -- $ -- $(2,663,000)(3) $2,808,000 Year ended January 29, 2000: Allowance for doubtful accounts................. $3,692,000 $ 7,038,000 (1) $ -- $(7,563,000)(2) $3,167,000 Reserve for store closing.. $2,808,000 $(2,492,000)(4) $ -- $ (86,000)(3) $ 230,000 Year ended February 3, 2001: Allowance for doubtful accounts................. $3,167,000 $ 7,197,000 (1) $ -- $(6,919,000)(2) $3,445,000 Reserve for store closing.. $ 230,000 $ -- $ -- $ (140,000)(3) $ 90,000

____________________ NOTES: (1) Provision for loss on credit sales. (2) Uncollectible accounts, written off, net of recoveries. (3) Store closing expenses, net of monies received from asset liquidation. (4) Restructuring income, relating to the lease termination as discussed in Note 16 of the financial statements. F-3 22 EXHIBIT INDEX

Exhibit Description ------- ----------- 10.8 Purchase Agreement among the Company, M. Thomas Grumbacher and MBM Land Associates Limited Partnership. 13.1 Page 22 of the Company's Annual Report. 13.2 Pages 23 through 27 of the Company's Annual Report. 13.3 Pages 28 through 45 of the Company's Annual Report. 21. Subsidiaries of the Registrant 23. Consent of Arthur Andersen LLP