Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934


For the Quarter ended May 3, 2008		Commission File Number 0-19517

THE BON-TON STORES, INC.

2801 East Market Street
York, Pennsylvania 17402
(717) 757-7660


Incorporated in Pennsylvania		IRS No. 23-2835229

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of May 30, 2008, there were 14,737,106 shares of Common Stock, $.01 par value, and 2,951,490 shares of Class A Common Stock, $.01 par value, outstanding.

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE BON-TON STORES, INC.

CONSOLIDATED BALANCE SHEETS


(In thousands except share and per share data)	May 3,			February 2,
(Unaudited)	2008			2008
Assets
Current assets:
Cash and cash equivalents	$	18,759		$	21,238
Merchandise inventories		774,294			754,802
Prepaid expenses and other current assets		86,650			78,332
Deferred income taxes		17,536			17,536

Total current assets		897,239			871,908

Property, fixtures and equipment at cost, net of accumulated depreciation and amortization of $446,120 and $418,279 at May 3, 2008 and February 2, 2008, respectively		880,400			885,455
Deferred income taxes		88,105			87,357
Goodwill		17,767			17,767
Intangible assets, net of accumulated amortization of $23,951 and $21,917 at May 3, 2008 and February 2, 2008, respectively		163,464			165,872
Other long-term assets		36,977			39,272

Total assets	$	2,083,952		$	2,067,631

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	230,914		$	220,158
Accrued payroll and benefits		39,661			49,902
Accrued expenses		154,177			166,603
Current maturities of long-term debt		5,797			5,656
Current maturities of obligations under capital leases		2,357			2,239
Income taxes payable		—			899

Total current liabilities		432,906			445,457

Long-term debt, less current maturities		1,142,813			1,079,841
Obligations under capital leases, less current maturities		66,599			67,217
Other long-term liabilities		110,955			112,055

Total liabilities		1,753,273			1,704,570


Contingencies (Note 7)

Shareholders’ equity:
Preferred Stock — authorized 5,000,000 shares at $0.01 par value; no shares issued		—			—
Common Stock — authorized 40,000,000 shares at $0.01 par value; issued shares of 15,074,906 and 14,614,111 at May 3, 2008 and February 2, 2008, respectively		151			146
Class A Common Stock — authorized 20,000,000 shares at $0.01 par value; issued and outstanding shares of 2,951,490 at May 3, 2008 and February 2, 2008		30			30
Treasury stock, at cost - 337,800 shares at May 3, 2008 and February 2, 2008		(1,387	)		(1,387	)
Additional paid-in-capital		141,331			139,805
Accumulated other comprehensive income		1,815			799
Retained earnings		188,739			223,668

Total shareholders’ equity		330,679			363,061

Total liabilities and shareholders’ equity	$	2,083,952		$	2,067,631

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	THIRTEEN
	WEEKS ENDED
(In thousands except share and per share data)	May 3,			May 5,
(Unaudited)	2008			2007

Net sales	$	700,248		$	737,561
Other income		22,775			22,861

		723,023			760,422


Costs and expenses:
Costs of merchandise sold		462,500			490,672
Selling, general and administrative		255,774			260,347
Depreciation and amortization		29,018			26,960
Amortization of lease-related interests		1,208			1,229

Loss from operations		(25,477	)		(18,786	)
Interest expense, net		24,362			27,469


Loss before income taxes		(49,839	)		(46,255	)
Income tax benefit		(15,776	)		(16,956	)


Net loss	$	(34,063	)	$	(29,299	)


Per share amounts —
Basic:
Net loss	$	(2.03	)	$	(1.78	)


Basic weighted average shares outstanding		16,777,587			16,481,756

Diluted:
Net loss	$	(2.03	)	$	(1.78	)


Diluted weighted average shares outstanding		16,777,587			16,481,756

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	THIRTEEN
	WEEKS ENDED
(In thousands)	May 3,			May 5,
(Unaudited)	2008			2007
Cash flows from operating activities:
Net loss	$	(34,063	)	$	(29,299	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		29,018			26,960
Amortization of lease-related interests		1,208			1,229
Share-based compensation expense		1,627			1,702
Excess tax shortfall (benefit) from share-based compensation		96			(175	)
Loss (gain) on sale of property, fixtures and equipment		138			(534	)
Amortization of deferred financing costs		1,033			977
Amortization of deferred gain on sale of proprietary credit card portfolio		(603	)		(603	)
Deferred income taxes		(1,467	)		—
Changes in operating assets and liabilities:
Increase in merchandise inventories		(19,492	)		(37,084	)
Increase in prepaid expenses and other current assets		(8,414	)		(8,946	)
Decrease in other long-term assets		1,524			583
Increase in accounts payable		15,745			20,262
Decrease in accrued payroll and benefits and accrued expenses		(19,168	)		(48,106	)
Decrease in income taxes payable		(899	)		(33,838	)
Increase (decrease) in other long-term liabilities		1,747			(266	)

Net cash used in operating activities		(31,970	)		(107,138	)


Cash flows from investing activities:
Capital expenditures		(25,538	)		(16,200	)
Acquisition, net of cash acquired		—			(51	)
Proceeds from sale of property, fixtures and equipment		39			2,551

Net cash used in investing activities		(25,499	)		(13,700	)


Cash flows from financing activities:
Payments on long-term debt and capital lease obligations		(151,692	)		(179,789	)
Proceeds from issuance of long-term debt		214,305			305,897
Cash dividends paid		(866	)		(857	)
Proceeds from stock options exercised		—			352
Excess tax (shortfall) benefit from share-based compensation		(96	)		175
Deferred financing costs paid		(261	)		(253	)
Decrease in bank overdraft balances		(6,400	)		(5,029	)

Net cash provided by financing activities		54,990			120,496


Net decrease in cash and cash equivalents		(2,479	)		(342	)

Cash and cash equivalents at beginning of period		21,238			24,733


Cash and cash equivalents at end of period	$	18,759		$	24,391


Supplemental Cash Flow Information:
Interest paid	$	36,754		$	39,134
Net income taxes paid	$	4,760		$	39,625

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY


											Accumulated
			Class A					Additional			Other
(In thousands except per share data)	Common		Common		Treasury			Paid-in			Comprehensive		Retained
(Unaudited)	Stock		Stock		Stock			Capital			Income		Earnings			Total

BALANCE AT FEBRUARY 2, 2008	$	146	$	30	$	(1,387	)	$	139,805		$	799	$	223,668		$	363,061


Comprehensive loss (Note 8):
Net loss		—		—		—			—			—		(34,063	)		(34,063	)
Pension plans, net of $48 tax effect												80					80
Change in fair value of cash flow hedges, net of $671 tax effect		—		—		—			—			936		—			936

Total comprehensive loss																	(33,047	)

Dividends to shareholders, $0.05 per share		—		—		—			—			—		(866	)		(866	)
Share-based compensation expense		5		—		—			1,622			—		—			1,627
Excess tax shortfall from share-based compensation		—		—		—			(96	)		—		—			(96	)


BALANCE AT MAY 3, 2008	$	151	$	30	$	(1,387	)	$	141,331		$	1,815	$	188,739		$	330,679

The accompanying notes are an integral part of these consolidated financial statements.

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

1. BASIS OF PRESENTATION

The Bon-Ton Stores, Inc., a Pennsylvania corporation, was incorporated on January 31, 1996 as the successor of a company incorporated on January 31, 1929. The Bon-Ton Stores, Inc. operates, through its subsidiaries, 280 department stores, including eleven furniture galleries, in 23 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner’s, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger’s and Younkers nameplates and, under the Parisian nameplate, stores in the Detroit, Michigan area. The Bon-Ton Stores, Inc. conducts its operations through one business segment.

The accompanying unaudited consolidated financial statements include the accounts of The Bon-Ton Stores, Inc. and its wholly owned subsidiaries (collectively, the “Company”). All intercompany transactions and balances have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all information and footnotes required by generally accepted accounting principles. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair presentation of interim periods have been included. The Company’s business is seasonal in nature and results of operations for the interim periods presented are not necessarily indicative of results for the full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2008.

All references to the “first quarter of 2008” and the “first quarter of 2007” are to the thirteen weeks ended May 3, 2008 and May 5, 2007, respectively. All references to “2008” are to the fifty-two weeks ending January 31, 2009.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain prior year balances presented in the consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. These reclassifications did not impact the Company’s net income for the periods presented.

Future Accounting Changes

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires companies to provide qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about the fair value of and gains and losses on derivative contracts, and details of credit-risk-related contingent features in hedged positions. The statement also requires companies to disclose more information about the location and amounts of derivative instruments in financial statements; how derivatives and related hedges are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities;” and how the hedges affect the entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for years beginning after November 15, 2008. The Company is in the process of evaluating what effect, if any, adoption of SFAS No. 161 may have on its consolidated financial statements.

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

2. PER-SHARE AMOUNTS

The presentation of earnings per share (“EPS”) requires a reconciliation of numerators and denominators used in basic and diluted EPS calculations. The numerator, net loss, is identical in both calculations. The following table presents a reconciliation of weighted average shares outstanding for the respective calculations for each period presented in the accompanying consolidated statements of operations:


	THIRTEEN
	WEEKS ENDED
	May 3,		May 5,
	2008		2007

Basic calculation		16,777,587		16,481,756
Effect of dilutive shares —
Restricted shares and restricted stock units		—		—
Stock options		—		—

Diluted calculation		16,777,587		16,481,756

The following securities were antidilutive and, therefore, were excluded from the computation of diluted EPS for the periods indicated:


	THIRTEEN
	WEEKS ENDED
	May 3,		May 5,
	2008		2007

Antidilutive shares —

Restricted shares and restricted stock units		583,444		701,893

Stock options		927,239		637,626

Certain of the securities noted above were excluded from the computation of dilutive shares solely due to the Company’s net loss position in the thirteen weeks ended May 3, 2008 and May 5, 2007. The following table shows the approximate effect of dilutive securities had the Company reported a profit for these periods:


	THIRTEEN
	WEEKS ENDED
	May 3,		May 5,
	2008		2007

Effect of dilutive securities —

Restricted shares and restricted stock units		198,411		402,042
Stock options		4,729		238,303

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

3. FAIR VALUE MEASUREMENTS

SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements; however, it does not require any new fair value measurements. Effective February 3, 2008, the Company adopted the provisions of SFAS No. 157 for financial assets and liabilities that are measured at fair value on a recurring basis. The adoption of SFAS No. 157 for financial assets and liabilities that are measured at fair value on a recurring basis did not have a material impact on the Company’s consolidated financial statements.

Pursuant to the option for a one-year deferral of SFAS No. 157’s fair-value measurement requirements for non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis, the Company elected to defer application of SFAS No. 157 to, among others, goodwill, fixed asset and intangible asset impairment testing and liabilities for exit or disposal activities initially measured at fair value. The Company is evaluating what effect, if any, the full adoption of SFAS No. 157 may have on its consolidated financial statements.

SFAS No. 157 establishes fair value hierarchy levels which prioritize the inputs used in valuations that determine fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are primarily quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs based on the Company’s own assumptions.

As of May 3, 2008, the Company held two interest rate swap contracts that are required to be measured at fair value on a recurring basis. The fair values of the interest rate swap contracts are derived from discounted cash flow analysis utilizing an interest rate yield curve which is readily available to the public or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized the interest rate swap contracts as a Level 2 fair value measurement.

The following table provides the Company’s assets and liabilities which are carried at fair value and measured on a recurring basis as of May 3, 2008:

Fair Value Measurements at May 3, 2008 Using:

Significant

Quoted Prices

Other

Significant

Total Carrying

in Active

Observable

Unobservable

Value at

Markets

Inputs

Description

May 3, 2008

(Level 1)

(Level 2)

(Level 3)

Interest rate swap liabilities

6,117

—

6,117

—

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

In addition, effective February 3, 2008, the Company adopted the provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits companies to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. SFAS No. 159 also establishes presentation and disclosure requirements to facilitate comparisons between companies that select different measurement attributes for similar types of assets and liabilities.

In accordance with SFAS No. 159 implementation options, the Company chose not to elect the fair value option for its financial assets and liabilities that had not been previously measured at fair value. Therefore, material financial assets and liabilities, such as the Company’s short and long-term debt obligations, are reported at their carrying amounts.

4. SUPPLEMENTAL BALANCE SHEET INFORMATION

Prepaid expenses and other current assets were comprised of the following:


	May 3,		February 2,
	2008		2008
Prepaid expenses	$	36,842	$	35,384
Other current assets		49,808		42,948

Total	$	86,650	$	78,332

5. EXIT OR DISPOSAL ACTIVITIES

The following table summarizes exit or disposal activities during the first quarter of 2008 related to the closing of the Company’s Morgantown East store in Morgantown, West Virginia:


	Termination			Other
	Benefits			Costs			Total
Balance as of February 2, 2008	$	20		$	—		$	20
Provision		(2	)		24			22
Payments		(18	)		(24	)		(42	)

Balance as of May 3, 2008	$	—		$	—		$	—

The above provision was included within selling, general and administrative expense.

In connection with the acquisition of The Elder-Beerman Stores Corp. in October 2003, the Company incurred expenses related to the termination of a lease. The Company made payments of $21 in the first quarter of 2008 related to this lease termination. The liability for this lease termination was $874 as of May 3, 2008 and will be paid over the remaining contract period ending in 2030.

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

6. EMPLOYEE BENEFIT PLANS

The Company provides eligible employees with retirement benefits under a 401(k) salary reduction and retirement contribution plan (the “Plan”). The Company made an annual contribution of $9,201 to the Plan during the first quarter of 2008. The Company recorded Plan expense of $2,300 and $2,808 in the first quarter of 2008 and 2007, respectively.

In addition, the Company provides benefits to certain current and former associates who are eligible under a defined benefit pension plan and various supplemental pension plans (collectively, the “Pension Plans”). Net periodic benefit expense (income) for the Pension Plans includes the following components:


	THIRTEEN
	WEEKS ENDED
	May 3,			May 5,
	2008			2007
Service cost	$	39		$	32
Interest cost		2,935			3,042
Expected return on plan assets		(3,076	)		(3,668	)
Recognition of prior service cost		1			1
Recognition of net actuarial loss		126			79

Net periodic benefit expense (income)	$	25		$	(514	)

During the first quarter of 2008, contributions of $187 were made to the Pension Plans. The Company anticipates contributing an additional $1,209 to fund the Pension Plans in 2008 for an annual total of $1,396.

The Company also provides medical and life insurance benefits to certain former associates under a postretirement benefit plan (“Postretirement Benefit Plan”). Net periodic benefit interest expense of $95 and $103 was recorded in the first quarter of 2008 and 2007, respectively. During the first quarter of 2008, payments under the plan exceeded participant premiums received by $72. The Company anticipates contributing an additional $859 to fund the Postretirement Benefit Plan in 2008 for a net annual total of $931.

7. CONTINGENCIES

On December 8, 2005, Adamson Apparel, Inc. filed a purported class action lawsuit against Saks Incorporated (“Saks”) in the United States District Court for the Northern District of Alabama. In its complaint the plaintiff asserts breach of contract claims and alleges that Saks improperly assessed chargebacks, timely payment discounts and deductions for merchandise returns against members of the plaintiff class. The lawsuit seeks compensatory and incidental damages and restitution. Under the terms of the purchase agreement relating to the acquisition of the Northern Department Store Group from Saks in March 2006, the Company may have an obligation to indemnify Saks for any damages incurred by Saks under this lawsuit by Adamson Apparel, Inc. solely to the extent that such damages relate to the business the Company acquired from Saks.

In addition, the Company is party to legal proceedings and claims that arise during the ordinary course of business.

THE BON-TON STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

In the opinion of management, the ultimate outcome of any such litigation and claims, including the Adamson matter detailed above, will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

8. COMPREHENSIVE LOSS

Comprehensive loss was determined as follows:


	THIRTEEN
	WEEKS ENDED
	May 3,			May 5,
	2008			2007

Net loss	$	(34,063	)	$	(29,299	)
Other comprehensive income (loss):
Amortization of pension plan amounts, net of tax		80			51
Cash flow hedge derivative income (loss), net of tax		936			(442	)

Comprehensive loss	$	(33,047	)	$	(29,690	)

9. SUBSEQUENT EVENT

On May 20, 2008, the Company’s Board of Directors declared a quarterly cash dividend of $0.05 per share on Class A Common Stock and Common Stock, payable August 1, 2008 to shareholders of record as of July 15, 2008.

10. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES

On March 6, 2006, The Bon-Ton Department Stores, Inc. (the “Issuer”), a wholly owned subsidiary of the Company, entered into an Indenture with The Bank of New York, as trustee, under which the Issuer issued $510,000 aggregate principal amount of its 10-1/4% Senior Notes due 2014. The Notes are guaranteed on a senior unsecured basis by the Company and by each of the Company’s subsidiaries, other than the Issuer, that is an obligor under the Company’s senior secured credit facility. The guarantees are full and unconditional and joint and several.

The condensed consolidating financial information for the Company, the Issuer and the Company’s guarantor and non-guarantor subsidiaries as of May 3, 2008 and February 2, 2008 and for the first quarter of 2008 and 2007 as presented below has been prepared from the books and records maintained by the Company, the Issuer and the guarantor and non-guarantor subsidiaries. The condensed financial information may not necessarily be indicative of the results of operations or financial position had the guarantor and non-guarantor subsidiaries operated as independent entities. Certain intercompany revenues and expenses included in the subsidiary records are eliminated in consolidation. As a result of this activity, an amount due to/due from affiliates will exist at any time.

THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
May 3, 2008


	Bon-Ton
	(Parent					Guarantor			Non-Guarantor		Consolidating			Company
	Company)		Issuer			Subsidiaries			Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	1	$	8,793		$	9,965		$	—	$	—		$	18,759
Merchandise inventories		—		367,528			406,766			—		—			774,294
Prepaid expenses and other current assets		—		70,890			15,181			579		—			86,650
Deferred income taxes		—		(4,030	)		21,566			—		—			17,536

Total current assets		1		443,181			453,478			579		—			897,239

Property, fixtures and equipment at cost, net		—		304,405			262,855			313,140		—			880,400
Deferred income taxes		—		22,848			65,257			—		—			88,105
Goodwill		—		8,488			9,279			—		—			17,767
Intangible assets, net		—		68,330			95,134			—		—			163,464
Investment in and advances to (from) affiliates		332,885		730,563			(43,730	)		317		(1,020,035	)		—
Other long-term assets		—		27,995			6,248			2,734		—			36,977

Total assets	$	332,886	$	1,605,810		$	848,521		$	316,770	$	(1,020,035	)	$	2,083,952


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	230,914		$	—		$	—	$	—		$	230,914
Accrued payroll and benefits		—		27,214			12,447			—		—			39,661
Accrued expenses		—		80,538			73,509			130		—			154,177
Current maturities of long-term debt and obligations under capital leases		—		274			2,083			5,797		—			8,154

Total current liabilities		—		338,940			88,039			5,927		—			432,906

Long-term debt and obligations under capital leases, less current maturities		—		886,400			66,599			256,413		—			1,209,412
Other long-term liabilities		2,207		65,158			42,463			1,127		—			110,955

Total liabilities		2,207		1,290,498			197,101			263,467		—			1,753,273


Shareholders’ equity		330,679		315,312			651,420			53,303		(1,020,035	)		330,679


Total liabilities and shareholders’ equity	$	332,886	$	1,605,810		$	848,521		$	316,770	$	(1,020,035	)	$	2,083,952

THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

The Bon-Ton Stores, Inc.
Condensed Consolidating Balance Sheet
February 2, 2008


	Bon-Ton
	(Parent					Guarantor			Non-Guarantor		Consolidating			Company
	Company)		Issuer			Subsidiaries			Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	1	$	9,604		$	11,633		$	—	$	—		$	21,238
Merchandise inventories		—		375,162			379,640			—		—			754,802
Prepaid expenses and other current assets		—		68,727			9,027			578		—			78,332
Deferred income taxes		—		(4,030	)		21,566			—		—			17,536

Total current assets		1		449,463			421,866			578		—			871,908

Property, fixtures and equipment at cost, net		—		304,128			265,250			316,077		—			885,455
Deferred income taxes		—		22,136			65,221			—		—			87,357
Goodwill		—		8,488			9,279			—		—			17,767
Intangible assets, net		—		69,772			96,100			—		—			165,872
Investment in and advances to (from) affiliates		365,267		706,372			(6,984	)		318		(1,064,973	)		—
Other long-term assets		—		28,518			7,948			2,806		—			39,272

Total assets	$	365,268	$	1,588,877		$	858,680		$	319,779	$	(1,064,973	)	$	2,067,631


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	220,158		$	—		$	—	$	—		$	220,158
Accrued payroll and benefits		—		38,275			11,627			—		—			49,902
Accrued expenses		—		91,016			75,500			87		—			166,603
Current maturities of long-term debt and obligations under capital leases		—		260			1,979			5,656		—			7,895
Income taxes payable		—		(6,461	)		7,360			—		—			899

Total current liabilities		—		343,248			96,466			5,743		—			445,457

Long-term debt and obligations under capital leases, less current maturities		—		829,648			59,413			257,997		—			1,147,058
Other long-term liabilities		2,207		66,660			42,082			1,106		—			112,055

Total liabilities		2,207		1,239,556			197,961			264,846		—			1,704,570


Shareholders’ equity		363,061		349,321			660,719			54,933		(1,064,973	)		363,061


Total liabilities and shareholders’ equity	$	365,268	$	1,588,877		$	858,680		$	319,779	$	(1,064,973	)	$	2,067,631

THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended May 3, 2008


	Bon-Ton
	(Parent						Guarantor			Non-Guarantor			Consolidating			Company
	Company)			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Net sales	$	—		$	297,896		$	402,352		$	—		$	—		$	700,248
Other income		—			10,014			12,761			—			—			22,775

		—			307,910			415,113			—			—			723,023

Costs and expenses:
Costs of merchandise sold		—			196,370			266,130			—			—			462,500
Selling, general and administrative		—			118,491			146,124			21			(8,862	)		255,774
Depreciation and amortization		—			13,137			12,944			2,937			—			29,018
Amortization of lease-related interests		—			755			453			—			—			1,208

Loss from operations		—			(20,843	)		(10,538	)		(2,958	)		8,862			(25,477	)

Other income (expense):
Intercompany rental and royalty income		—			—			1,747			7,115			(8,862	)		—
Equity in losses of subsidiaries		(49,839	)		(10,853	)		—			—			60,692			—
Interest expense, net		—			(18,143	)		(1,898	)		(4,321	)		—			(24,362	)


Loss before income taxes		(49,839	)		(49,839	)		(10,689	)		(164	)		60,692			(49,839	)
Income tax benefit		(15,776	)		(15,776	)		(4,655	)		—			20,431			(15,776	)


Net loss	$	(34,063	)	$	(34,063	)	$	(6,034	)	$	(164	)	$	40,261		$	(34,063	)

THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Operations
Thirteen Weeks Ended May 5, 2007


	Bon-Ton
	(Parent						Guarantor			Non-Guarantor			Consolidating			Company
	Company)			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Net sales	$	—		$	140,551		$	597,010		$	—		$	—		$	737,561
Other income		—			4,512			18,349			—			—			22,861

		—			145,063			615,359			—			—			760,422

Costs and expenses:
Costs of merchandise sold		—			95,673			394,999			—			—			490,672
Selling, general and administrative		—			50,596			219,606			(654	)		(9,201	)		260,347
Depreciation and amortization		—			5,659			18,320			2,981			—			26,960
Amortization of lease-related interests		—			58			1,171			—			—			1,229

Loss from operations		—			(6,923	)		(18,737	)		(2,327	)		9,201			(18,786	)

Other income (expense):
Intercompany rental and royalty income		—			—			1,966			7,235			(9,201	)		—
Equity in losses of subsidiaries		(46,255	)		(20,625	)		—			—			66,880			—
Interest expense, net		—			(18,707	)		(3,279	)		(5,483	)		—			(27,469	)


Loss before income taxes		(46,255	)		(46,255	)		(20,050	)		(575	)		66,880			(46,255	)
Income tax benefit		(16,956	)		(16,956	)		(7,459	)		—			24,415			(16,956	)


Net loss	$	(29,299	)	$	(29,299	)	$	(12,591	)	$	(575	)	$	42,465		$	(29,299	)

THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
Thirteen Weeks Ended May 3, 2008


	Bon-Ton
	(Parent						Guarantor			Non-Guarantor			Consolidating			Company
	Company)			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:	$	866		$	(39,302	)	$	9,149		$	2,914		$	(5,597	)	$	(31,970	)


Cash flows from investing activities:
Capital expenditures		—			(18,390	)		(7,148	)		—			—			(25,538	)
Proceeds from sale of property, fixtures and equipment		—			—			39			—			—			39

Net cash used in investing activities		—			(18,390	)		(7,109	)		—			—			(25,499	)


Cash flows from financing activities:
Payments on long-term debt and capital lease obligations		—			(149,806	)		(443	)		(1,443	)		—			(151,692	)
Proceeds from issuance of long-term debt		—			214,305			—			—			—			214,305
Intercompany financing activity		—			(866	)		(3,265	)		(1,466	)		5,597			—
Cash dividends paid		(866	)		—			—			—			—			(866	)
Excess tax shortfall from share-based compensation		—			(96	)		—			—			—			(96	)
Deferred financing costs paid		—			(256	)		—			(5	)		—			(261	)
Decrease in bank overdraft balances		—			(6,400	)		—			—			—			(6,400	)

Net cash (used in) provided by financing activities		(866	)		56,881			(3,708	)		(2,914	)		5,597			54,990


Net decrease in cash and cash equivalents		—			(811	)		(1,668	)		—			—			(2,479	)


Cash and cash equivalents at beginning of period		1			9,604			11,633			—			—			21,238


Cash and cash equivalents at end of period	$	1		$	8,793		$	9,965		$	—		$	—		$	18,759

THE BON-TON STORES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)

The Bon-Ton Stores, Inc.
Condensed Consolidating Statement of Cash Flows
Thirteen Weeks Ended May 5, 2007


	Bon-Ton
	(Parent						Guarantor			Non-Guarantor			Consolidating			Company
	Company)			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:	$	505		$	(111,958	)	$	6,147		$	3,824		$	(5,656	)	$	(107,138	)


Cash flows from investing activities:
Capital expenditures		—			(14,561	)		(1,639	)		—			—			(16,200	)
Acquisition, net of cash acquired		—			(51	)		—			—			—			(51	)
Proceeds from sale of property, fixtures and equipment		—			15			41			2,495			—			2,551

Net cash (used in) provided by investing activities		—			(14,597	)		(1,598	)		2,495			—			(13,700	)


Cash flows from financing activities:
Payments on long-term debt and capital lease obligations		—			(174,455	)		(489	)		(4,845	)		—			(179,789	)
Proceeds from issuance of long-term debt		—			305,897			—			—			—			305,897
Intercompany financing activity		—			(505	)		(3,680	)		(1,471	)		5,656			—
Cash dividends paid		(857	)		—			—			—			—			(857	)
Proceeds from stock options exercised		352			—			—			—			—			352
Excess tax benefit from share-based compensation		—			175			—			—			—			175
Deferred financing costs paid		—			(250	)		—			(3	)		—			(253	)
Decrease in bank overdraft balances		—			(5,029	)		—			—			—			(5,029	)

Net cash (used in) provided by financing activities		(505	)		125,833			(4,169	)		(6,319	)		5,656			120,496


Net (decrease) increase in cash and cash equivalents		—			(722	)		380			—			—			(342	)


Cash and cash equivalents at beginning of period		1			7,122			17,610			—			—			24,733


Cash and cash equivalents at end of period	$	1		$	6,400		$	17,990		$	—		$	—		$	24,391

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For purposes of the following discussion, references to “first quarter of 2008” and “first quarter of 2007” are to the thirteen-week periods ended May 3, 2008 and May 5, 2007, respectively. References to “2008” are to the fifty-two week period ending January 31, 2009; references to “2007” are to the fifty-two week period ended February 2, 2008. References to the “Company,” “we,” “us,” and “our” refer to The Bon-Ton Stores, Inc. and its subsidiaries.

Overview

We are one of the largest regional department store operators (in terms of sales) in the United States, offering a broad assortment of brand-name fashion apparel and accessories for women, men and children. Our merchandise offerings also include cosmetics, home furnishings and other goods. Due primarily to the acquisition of The Elder-Beerman Stores Corp. in October 2003 and the acquisition of the Northern Department Store Group (“Carson’s”) from Saks Incorporated in March 2006, we have grown dramatically in recent years. Sales increased from $713 million in 2002 to $3.4 billion in 2007, and the number of stores increased from 72 stores operating in nine states in the Northeast to 280 stores in 23 states in the Northeast, Midwest and upper Great Plains. These stores, which include eleven furniture galleries and encompass a total of approximately 26 million square feet, are operated under the Bon-Ton, Bergner’s, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger’s and Younkers nameplates and, in the Detroit, Michigan area, under the Parisian nameplate.

We compete in the department store segment of the U.S. retail industry. The department store industry continues to evolve in response to ongoing consolidation among merchandise vendors as well as the evolution of competitive retail formats — mass merchandisers, national chain retailers, specialty retailers and online retailers. Our segment of the retail industry is highly competitive, and we foresee competitive pressures continuing in the future. In addition, we expect the economic environment to remain challenging in the near-term. As such, in 2008 we expect a comparable store sales decrease of 2.5 to 3.5 percent, with a gross margin rate consistent with 2007 results; however, a prolonged or increased deterioration of general economic conditions could negatively impact our expected operating results.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Results of Operations

The following table summarizes changes in selected operating indicators of the Company, illustrating the relationship of various income and expense items to net sales for the respective periods presented (components may not add or subtract to totals due to rounding):


	THIRTEEN
	WEEKS ENDED
	May 3,			May 5,
	2008			2007
Net sales		100.0	%		100.0	%
Other income		3.3			3.1

		103.3			103.1

Costs and expenses:
Costs of merchandise sold		66.0			66.5
Selling, general and administrative		36.5			35.3
Depreciation and amortization		4.1			3.7
Amortization of lease-related interests		0.2			0.2

Loss from operations		(3.6	)		(2.5	)
Interest expense, net		3.5			3.7

Loss before income taxes		(7.1	)		(6.3	)
Income tax benefit		(2.3	)		(2.3	)

Net loss		(4.9	)%		(4.0	)%

Thirteen Weeks Ended May 3, 2008 Compared with Thirteen Weeks Ended May 5, 2007

Net sales : Net sales for the first quarter of 2008 were $700.2 million, compared with $737.6 million for the first quarter of 2007, a decrease of $37.3 million, or 5.1%. Comparable store sales decreased 4.6% in the first quarter of 2008. We believe the comparable store sales decline was due to the continued challenging economic environment — the result of rising energy prices, mortgage and credit market concerns and a weak housing market — which has pressured consumer spending.

The best performing categories in the period were Cosmetics and Children’s Apparel. Sales increases in Cosmetics primarily reflect increased sales of women’s fragrances. Children’s Apparel benefited from the introduction of a new merchandise category from a key vendor and the expansion of this vendor into additional stores, as well as sales growth within our private brand labels. The poorest performing categories in the period were Moderate Sportswear and Dresses (both included in Women’s Apparel), Men’s Apparel and Soft Home (included in Home). Sales of moderately-priced goods across these families of business have been particularly impacted as economic concerns of this customer have resulted in reduced spending on discretionary items. Moderate Sportswear was also affected by the decision made in 2007 by certain of our key vendors to exit the moderate sportswear business. We expect the sales trend in Moderate Sportswear to continue until we introduce new vendors in the fall of 2008.

Other income : Other income, which includes income from revenues received under a credit card program agreement with HSBC Bank Nevada, N.A., leased departments and other customer revenues, was $22.8 million, or 3.3% of net sales, in the first quarter of 2008 as compared with $22.9 million, or 3.1% of net sales, in the first quarter of 2007.

Costs and expenses : Gross margin in the first quarter of 2008 was $237.7 million as compared with $246.9 million in the comparable prior year period, a decrease of $9.1 million. The decrease in gross margin dollars is attributable to the decreased sales volume, as gross margin as a percentage of net sales increased 0.5 percentage point to 34.0% in the first quarter of 2008 from 33.5% in the same period last year. The increase in the gross margin rate primarily reflects decreased markdowns.

Selling, general and administrative (“SG&A”) expense in the first quarter of 2008 was $255.8 million compared with $260.3 million in the first quarter of 2007, a decrease of $4.6 million. The reduction is the result of the Company’s expense control efforts in response to the difficult economic environment. Despite the expense savings, the current year expense rate increased 1.2 percentage points to 36.5% of net sales, compared with 35.3% for the same period last year, due to the reduced sales volume.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Depreciation and amortization expense and amortization of lease-related interests increased $2.0 million, to $30.2 million, in the first quarter of 2008 from $28.2 million in the first quarter of 2007, primarily reflecting the increased expense associated with prior year asset additions.

Loss from operations : The loss from operations in the first quarter of 2008 was $25.5 million, or 3.6% of net sales, as compared with a loss from operations of $18.8 million, or 2.5% of net sales, in the comparable prior year period.

Interest expense, net : Net interest expense was $24.4 million, or 3.5% of net sales, in the first quarter of 2008 as compared with $27.5 million, or 3.7% of net sales, in the first quarter of 2007. The $3.1 million decrease is primarily due to reduced borrowings and lower interest rates.

Income tax benefit : The income tax benefit reflects an effective tax rate of 31.7% in the first quarter of 2008 as compared with 36.7% in the comparable prior year period. The current year rate decrease principally reflects a projected subsidiary pre-tax income mix change from prior year, with current year pre-tax income comprised of a greater portion of taxable loss subsidiaries at higher state statutory tax rates versus taxable income subsidiaries with lower state statutory rates.

Net loss : Net loss in the first quarter of 2008 was $34.1 million, or 4.9% of net sales, compared with a net loss of $29.3 million, or 4.0% of net sales, in the first quarter of 2007.

Seasonality

Our business, like that of most retailers, is subject to seasonal fluctuations, with the major portion of sales and income realized during the second half of each fiscal year, which includes back-to-school and the holiday season. Due to the fixed nature of certain costs, SG&A expense is typically higher as a percentage of net sales during the first half of each fiscal year. We typically finance working capital increases in the second half of each fiscal year through additional borrowings under our revolving credit facility.

Because of the seasonality of our business, results for any quarter are not necessarily indicative of results that may be achieved for a full fiscal year.

Liquidity and Capital Resources

The following table summarizes material measures of the Company’s liquidity and capital resources:


	May 3,		May 5,
(Dollars in millions)	2008		2007

Working capital	$	464.3	$	534.3
Current ratio		2.07:1		2.25:1
Debt to total capitalization ⁽¹⁾		0.79:1		0.81:1
Unused availability under lines of credit ⁽²⁾	$	273.8	$	191.3


(1)		Debt includes obligations under capital leases. Total capitalization includes shareholders’ equity, debt and obligations under capital leases.

(2)		Subject to a minimum borrowing availability covenant of $75 as of May 3, 2008 and May 5, 2007.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Our primary sources of working capital are cash flows from operations and borrowings under our revolving credit facility, which provides for up to $1.0 billion in borrowings.

Decreases in working capital and the current ratio primarily reflect decreased levels of merchandise inventories due to the Company’s inventory management efforts in response to sales trends. The increase in unused availability under lines of credit as compared with the prior year primarily reflects decreases in direct borrowings and standby letters of credit to support the importing of merchandise and as collateral for obligations related to general liability and workers’ compensation insurances.

Net cash used in operating activities amounted to $32.0 million in the first quarter of 2008 as compared with $107.1 million in the prior year period. The decrease in net cash used in the current year primarily reflects reduced working capital requirements, most notably in merchandise inventories, income taxes payable and accrued benefits.

Net cash used in investing activities amounted to $25.5 million in the first quarter of 2008, as compared with $13.7 million in the first quarter of 2007. Capital expenditures in the current period exceeded prior year period expenditures, primarily reflecting acceleration of the roll-out of our existing advanced point-of-sale system in the Carson’s stores.

Net cash provided by financing activities was $55.0 million in the first quarter of 2008, as compared with $120.5 million in the prior year period. The change primarily reflects reduced net borrowings due to decreased cash requirements for current year operating activities.

Aside from planned capital expenditures, our primary cash requirements will be to service debt and finance working capital increases during peak selling seasons.

We paid a quarterly cash dividend of $0.05 per share on shares of Class A Common Stock and Common Stock on May 1, 2008 to shareholders of record as of April 15, 2008. Additionally, a quarterly cash dividend of $0.05 per share was declared on May 20, 2008, payable August 1, 2008 to shareholders of record as of July 15, 2008. Our Board of Directors will consider dividends in subsequent periods as it deems appropriate.

Our capital expenditures in the first quarter of 2008, which do not reflect landlord contributions, totaled $25.5 million. Capital expenditures for 2008, reduced by landlord contributions, are planned at approximately $80.0 million. Included in these planned amounts are expenditures relating to the opening of two new stores, expansions of two stores and renovation of an existing store as well as expenditures relating to information systems.

We anticipate that our cash flows from operations, supplemented by borrowings under our revolving credit facility, will be sufficient to satisfy our operating cash requirements for at least the next twelve months.

Cash flows from operations are impacted by consumer confidence, weather in the geographic markets served by the Company, and economic and competitive conditions existing in the retail industry. A downturn in any single factor or a combination of factors could have a material adverse impact upon our ability to generate sufficient cash flows to operate our business.

We have not identified any probable circumstances that would likely impair our ability to meet our cash requirements or trigger a default or acceleration of payment of our debt.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. Preparation of these financial statements required us to make estimates and judgments that affected reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. On an ongoing basis, we evaluate our estimates, including those related to merchandise returns, inventories, goodwill, intangible assets, income taxes, financings, contingencies, insurance reserves, litigation and pension and supplementary retirement plans. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially lead to materially different results under different assumptions and conditions. Our critical accounting policies are described below:

Inventory Valuation

Inventories are stated at the lower of cost or market with cost determined by the retail inventory method. Under the retail inventory method, the valuation of inventories at cost and the resulting gross margin is derived by applying a calculated cost-to-retail ratio to the retail value of inventories. The retail inventory method is an averaging method that has been widely used in the retail industry. Use of the retail inventory method will result in valuing inventories at the lower of cost or market if markdowns are taken timely as a reduction of the retail value of inventories.

Inherent in the retail inventory method calculation are certain significant management judgments and estimates including, among others, merchandise markups, markdowns and shrinkage, which significantly impact both the ending inventory valuation at cost and the resulting gross margin. These significant estimates, coupled with the fact that the retail inventory method is an averaging process, can, under certain circumstances, result in individual inventory components with cost above related net realizable value. Factors that can lead to this result include applying the retail inventory method to a group of products that is not fairly uniform in terms of its cost, selling price relationship or turnover; or applying the retail inventory method to transactions over a period of time that include different rates of gross profit, such as those relating to seasonal merchandise. In addition, failure to take timely markdowns can result in an overstatement of inventory under the lower of cost or market principle. We believe that the retail inventory method we use provides an inventory valuation that approximates cost and results in carrying inventory in the aggregate at the lower of cost or market.

We regularly review inventory on-hand and record an adjustment for excess or old inventory based primarily on a forecast of merchandise demand for the selling season. Demand for merchandise can fluctuate greatly. A significant increase in the demand for merchandise could result in a short-term increase in the cost of inventory purchases while a significant decrease in demand could result in an increase in the amount of excess inventory on-hand. Additionally, estimates of merchandise demand may prove to be inaccurate, in which case we may have understated or overstated the adjustment required for excess or old inventory. If our inventory is determined to be overvalued in the future, we would be required to recognize such costs in costs of goods sold and reduce operating income at the time of such determination. Likewise, if inventory is later determined to be undervalued, we may have overstated the costs of goods sold in previous periods and would recognize additional operating income when such inventory is sold. Therefore, although every effort is made to ensure the accuracy of forecasts of merchandise demand, any significant unanticipated changes in demand or in economic conditions within our markets could have a significant impact on the value of our inventory and reported operating results.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Prior to the Carson’s acquisition, we utilized the last-in, first-out (“LIFO”) cost basis for all our inventories. In connection with the Carson’s acquisition, we evaluated the inventory costing for the acquired inventories and elected the first-in, first-out (“FIFO”) cost basis for the majority of the acquired Carson’s locations. As of February 2, 2008, approximately 32% of our inventories were valued using a FIFO cost basis and approximately 68% of our inventories were valued using a LIFO cost basis. As is currently the case with many companies in the retail industry, our LIFO calculations yielded inventory increases in recent prior years due to deflation reflected in price indices used. The LIFO method values merchandise sold at the cost of more recent inventory purchases (which the deflationary indices indicated to be lower), resulting in the general inventory on-hand being carried at the older, higher costs. Given these higher values and the promotional retail environment, we have reduced the carrying value of our LIFO inventories to an estimated realizable value. These reductions totaled $37.0 million as of May 3, 2008 and February 2, 2008. Inherent in the valuation of inventories are significant management judgments and estimates regarding future merchandise selling costs and pricing. Should these estimates prove to be inaccurate, we may have overstated or understated our inventory carrying value. In such cases, operating results would ultimately be impacted.

Vendor Allowances

As is standard industry practice, allowances from merchandise vendors are received as reimbursement for charges incurred on marked-down merchandise. Vendor allowances are generally credited to costs of goods sold, provided the allowance is: (1) collectable, (2) for merchandise either permanently marked down or sold, (3) not predicated on a future purchase, (4) not predicated on a future increase in the purchase price from the vendor, and (5) authorized by internal management. If the aforementioned criteria are not met, the allowances are reflected as an adjustment to the cost of merchandise capitalized in inventory.

Additionally, allowances are received from vendors in connection with cooperative advertising programs and for reimbursement of certain payroll expenses. These allowances received from each vendor are reviewed to ensure reimbursements are for specific, incremental and identifiable advertising or payroll costs incurred to sell the vendor’s products. If a vendor reimbursement exceeds the costs incurred, the excess reimbursement is recorded as a reduction of cost purchases from the vendor and reflected as a reduction of costs of merchandise sold when the related merchandise is sold. All other amounts are recognized as a reduction of the related advertising or payroll costs that have been incurred and reflected in SG&A expense.

Income Taxes

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities, and the valuation allowance recorded against net deferred tax assets. The process involves summarizing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheet. We must then assess the likelihood that deferred tax assets will be recovered from future taxable income or tax carry-back availability and, to the extent we do not believe recovery of the deferred tax asset is more likely than not, a valuation allowance must be established. To the extent a valuation allowance is established in a period, an expense must be recorded within the income tax provision in the statement of income.

Our net deferred tax assets were $105.6 million and $104.9 million at May 3, 2008 and February 2, 2008, respectively. In assessing the realizability of the deferred tax assets, we considered whether it was more likely than not that the deferred tax assets, or a portion thereof, will be realized. We considered the scheduled reversal of deferred tax liabilities, projected future taxable income and limitations pursuant to Section 382 of the Internal Revenue Code. As a result, we concluded that a valuation allowance against a portion of the net deferred tax assets was appropriate. A total valuation allowance of $14.3 million was recorded at May 3, 2008 and February 2, 2008. If actual results differ from these estimates or these estimates are adjusted in future periods, the valuation allowance may need to be adjusted, which could materially impact our financial position and results of operations.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Effective February 4, 2007, we adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN No. 48”). FIN No. 48 prescribes a recognition and derecognition threshold and measurement element for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Accordingly, we establish reserves for certain tax positions that we believe are supportable, but are potentially subject to successful challenge by applicable taxing authorities. However, interpretations and guidance surrounding income tax laws and regulations change over time. Changes in our assumptions and judgments could materially impact our financial position and results of operations.

Long-lived Assets

Property, fixtures and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of such assets. Changes in our business model or capital strategy can result in the actual useful lives differing from estimates. In cases where we determined that the useful life of property, fixtures and equipment should be shortened, we depreciated the net book value in excess of the salvage value over the revised remaining useful life, thereby increasing depreciation expense. Factors such as changes in the planned use of fixtures or leasehold improvements could also result in shortened useful lives. Our net property, fixtures and equipment amounted to $880.4 million and $885.5 million at May 3, 2008 and February 2, 2008, respectively.

Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” requires us to test a long-lived asset for recoverability whenever events or changes in circumstances indicate that its carrying value may not be recoverable. Factors that could trigger an impairment review include the following:

	•		Significant under-performance of stores relative to historical or projected future operating results,

	•		Significant changes in the manner of our use of assets or overall business strategy, and

	•		Significant negative industry or economic trends for a sustained period.

If the undiscounted cash flows associated with the asset are insufficient to support the recorded asset, an impairment loss is recognized for the amount (if any) by which the carrying amount of the asset exceeds the fair value of the asset. Cash flow estimates are based on historical results, adjusted to reflect our best estimate of future market and operating conditions. Estimates of fair value represent our best estimate based on industry trends and reference to market rates and transactions, if available. Should cash flow estimates differ significantly from actual results, an impairment could arise and materially impact our financial position and results of operations. Given the seasonality of operations, impairment is not conclusive, in many cases, until after the holiday period in the fourth quarter is concluded.

Newly opened stores may take time to generate positive operating and cash flow results. Factors such as store type, store location, current marketplace awareness of private label brands, local customer demographic data and current fashion trends are all considered in determining the time-frame required for a store to achieve positive financial results. If conditions prove to be substantially different from expectations, the carrying value of new stores’ long-lived assets may ultimately become impaired.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Goodwill and Intangible Assets

Our goodwill was $17.8 million at May 3, 2008 and February 2, 2008.

Net intangible assets totaled $163.5 million and $165.9 million at May 3, 2008 and February 2, 2008, respectively. Our intangible assets at May 3, 2008 are principally comprised of $82.5 million of lease interests that relate to below-market-rate leases and $81.0 million associated with trade names, private label brand names and customer lists. The lease-related interests and the portion of private label brand names subject to amortization are being amortized using a straight-line method. The customer lists are being amortized using a declining-balance method. At May 3, 2008, trade names and private label brand names of $62.2 million have been deemed as having indefinite lives.

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill and other intangible assets that have indefinite lives are reviewed for impairment at least annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Fair value is determined using quoted market prices and/or a discounted cash flow analysis, which requires certain assumptions and estimates regarding industry economic factors and future profitability of acquired businesses. Our policy is to conduct impairment testing based on observable market data and/or our most current business plans, which reflect anticipated changes in the economy and the industry. If actual results prove inconsistent with our assumptions and judgments, we could be exposed to a material impairment charge.

Insurance Reserve Estimates

We use a combination of insurance and self-insurance for a number of risks, including workers’ compensation, general liability and employee-related health care benefits, a portion of which is paid by our associates. We determine the estimates for the liabilities associated with these risks by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. A change in claims frequency and severity of claims from historical experience as well as changes in state statutes and the mix of states in which we operate could result in a change to the required reserve levels.

Pension and Supplementary Retirement Plans

We provide an unfunded supplementary pension plan to certain key executives. Through acquisitions, we acquired a defined benefit pension plan, and assumed the liabilities of three supplementary pension plans and a postretirement benefit plan. Major assumptions used in accounting for these plans include the discount rate and the expected long-term rate of return on the defined benefit plan’s assets.

The discount rate assumption is evaluated annually, utilizing the Citibank Pension Discount Curve (“CPDC”). The CPDC is developed from a U.S. Treasury par curve that reflects the Treasury Coupon and Strips market. Option-adjusted spreads drawn from the double-A corporate bond sector are layered in to develop a double-A corporate par curve, from which the CPDC spot rates are developed. The CPDC spot rates are applied to expected benefit payments, from which a single constant discount rate can then be developed.

We base our asset return assumption on current and expected allocations of assets, as well as a long-term view of expected returns on the plan asset categories. We assess the appropriateness of the expected rate of return on an annual basis and, when necessary, revise the assumption.

Changes in the assumptions regarding the discount rate and expected return on plan assets may result in materially different expense and liability amounts. Actuarial estimations may differ materially from actual results, reflecting many factors including changing market and economic conditions, changes in investment strategies, higher or lower withdrawal rates and longer or shorter life-spans of participants.

THE BON-TON STORES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Future Accounting Changes

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an Amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires companies to provide qualitative disclosures about the objectives and strategies for using derivatives, quantitative data about the fair value of and gains and losses on derivative contracts, and details of credit-risk-related contingent features in hedged positions. The statement also requires companies to disclose more information about the location and amounts of derivative instruments in financial statements; how derivatives and related hedges are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities;” and how the hedges affect the entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for years beginning after November 15, 2008. We are in the process of evaluating what effect, if any, adoption of SFAS No. 161 may have on our consolidated financial statements.

Forward-Looking Statements

Certain information included in this report and other materials filed or to be filed by the Company with the Securities and Exchange Commission contain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as “may,” “could,” “will,” “plan,” “expect,” “anticipate,” “estimate,” “project,” “intend” or other similar expressions, involve important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Factors that could cause such differences include, but are not limited to, risks related to retail businesses generally; a significant and prolonged deterioration of general economic conditions which could negatively impact the Company, including the potential write-down of the current valuation of intangible assets and deferred tax assets; consumer spending patterns and debt levels; additional competition from existing and new competitors; inflation; changes in the costs of fuel and other energy and transportation costs; weather conditions that could negatively impact sales; uncertainties associated with opening new stores or expanding or remodeling existing stores; the ability to attract and retain qualified management; the dependence upon vendor relationships; the ability to reduce SG&A expenses and the ability to obtain financing for working capital, capital expenditures and general corporate purposes. Additional factors that could cause the Company’s actual results to differ from those contained in these forward-looking statements are discussed in greater detail under Item 1A of the Company’s Form 10-K filed with the Securities and Exchange Commission.

THE BON-TON STORES, INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk and Financial Instruments

Refer to disclosures contained on page 33 of our 2007 Annual Report on Form 10-K. There have been no material changes in our exposures, risk management strategies, or hedging positions since February 2, 2008.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report and, based on this evaluation, concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes to our internal controls over financial reporting that occurred during the thirteen weeks ended May 3, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

THE BON-TON STORES, INC.

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS

(a) The following exhibits are filed pursuant to the requirements of Item 601 of Regulation S-K:


Exhibit	Description	Document Location

10.1(a)	Employment Agreement with Stephen Byers dated June 28, 2006	Filed herewith

10.1(b)	First Amendment to Employment Agreement with Stephen Byers effective October 2, 2006	Filed herewith

10.2	Restricted Stock Agreement with Byron L. Bergren	Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 27, 2008

31.1	Certification of Byron L. Bergren	Filed herewith

31.2	Certification of Keith E. Plowman	Filed herewith

32.1	Certification Pursuant to Rules 13a-14(b) and 15d-14(b) of the Securities Exchange Act of 1934	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	THE BON-TON STORES, INC.
DATE: June 11, 2008	BY:	/s/ Byron L. Bergren
		Byron L. Bergren
		President and Chief Executive Officer

DATE: June 11, 2008	BY:	/s/ Keith E. Plowman
		Keith E. Plowman
		Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Exhibit 10.1(a)

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of this 28th day of June 2006, by and between THE BON-TON STORES, INC., a Pennsylvania corporation (the “Company”), and Stephen Byers (“Employee”).

W I T N E S S E T H :

WHEREAS, the Company has offered Employee continued employment and Employee has accepted the Company’s offer commencing on the Effective Date (as hereinafter defined).

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and intending to be legally bound hereby, the Company and Employee agree as follows:

1. Position and Responsibilities .

(a) The Company hereby employs Employee and Employee hereby accepts employment by the Company as the Company’s Executive Vice President, CPS Stores. Employee shall have responsibilities for the Company’s CPS Stores and Visual matters and/or such other responsibilities commensurate with those of Executive Vice President, CPS Stores, and shall report either to the President and Chief Executive Officer of the Company or such other direct report as the President and Chief Executive Officer may designate.

(b) Throughout the term of this Agreement, Employee shall devote his entire working time, energy, attention, skill and best efforts to the affairs of the Company and to the performance of his duties hereunder in a manner that will faithfully and diligently further the business and interests of the Company. Employee may not, directly or indirectly, do any work for or on behalf of a competitor or any other company while employed by the Company.

However, nothing herein contained shall be deemed to prevent or limit the right of Employee to invest any of his personal funds in less than one percent of any class or series of the equity securities of any entity provided such equity securities are traded on a national securities exchange or quoted in an automated inter-dealer quotation system, nor shall this clause be construed as preventing Employee from investing his assets in such other form or manner as will not require any services on the part of the Employee in, and will not permit the control by the Employee of any aspect of, the operation or the affairs of entities (or affiliates of such entities) in which such investments are made. Approval of board memberships and participation in lectures and teaching activities will be at the discretion of the Chief Executive Officer; however, such approval will not be unreasonably withheld, provided that such activities do not significantly interfere with Employee’s duties under this Agreement.

(c) Employee shall not obtain goods or services or otherwise deal on behalf of the Company with any business or entity in which Employee or a member of his immediate family has a financial interest or from which Employee or a member of his immediate family may derive a financial benefit as a result of such transaction, except that this prohibition shall not apply to any entity whose equity securities are traded on a national securities exchange or quoted in an automated inter-dealer quotation system provided that neither Employee nor any member of his immediate family owns one percent or more of any class or series of the outstanding capital stock or other securities of such entity.

2. Term of Agreement . Employee’s employment hereunder, shall commence immediately upon execution by both the Company and Employee (“Effective Date”), and shall continue through and terminate on January 31, 2009, unless sooner terminated in accordance with Paragraph 8 below.

3. Place of Performance . Employee shall be based at the office of the Company in Milwaukee, Wisconsin, except for travel required for Company business.

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4. Compensation .

(a) Salary . Employee shall receive a Base Salary (“Base Salary”) at the annual rate of $425,000. This Base Salary, less taxes and normal deductions, shall be paid to Employee in substantially equal installments in accordance with the Company’s regular executive payroll practices in effect from time to time. The Base Salary and Employee’s performance may be reviewed from time to time during the term of this Agreement by the Company to ascertain whether, in the Company’s sole discretion, such Base Salary should be increased, and once increased, such Base Salary shall not be decreased. The first such salary and performance review shall occur in 2007.

(b) Annual Bonus . Employee will participate in The Bon-Ton Stores, Inc. Cash Bonus Plan (“Cash Bonus Plan”) in accordance with its terms and conditions as it may be amended in accordance with its provisions or such other annual bonus plan as may be established by the Company. For each of the fiscal years of the Company during the Term, Employee shall be eligible to earn a bonus, with the following parameters: a threshold bonus of 33.75% of Employee’s Base Salary; a target bonus of 45% of Employee’s Base Salary; and a maximum bonus of 67.5% of Employee’s Base Salary. If earned, one bonus will be paid depending on the level of achievement with respect to performance measures determined for each of the Company’s fiscal years by the Human Resources and Compensation Committee (“HRCC”) of the Company’s Board of Directors. The HRCC shall retain discretion with respect to this bonus as is provided under the terms of the Cash Bonus Plan. To the extent reasonably practicable, the annual bonus shall be computed within 90 days following the close of the Company’s fiscal year and paid within 30 days of its computation. Employee must be employed on the last day of the Company’s fiscal year to receive a bonus.

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(c) Stock Options . The Company agrees that it has already provided an option or options to purchase shares of the Company’s common stock to the Employee, which options remain in effect without change. The Employee may receive one or more options in the future at the discretion of the Company.

(d) Allowances . The Company shall provide Employee with $6,200 per year, payable monthly or in accordance with Company’s current payroll practices as may be modified from time to time, as an automobile allowance. The Company shall reimburse Employee on a one-time basis for up to $2,000 in attorney’s fees incurred for the review and negotiation of this Agreement.

5. Medical Insurance . Employee and his eligible dependents shall be eligible to participate in the Company’s group medical, dental and vision plans in accordance with the terms of such plans and, subject to the restrictions and limitations contained in the applicable insurance agreement or agreements. The Company shall pay Employee up to $2,300 per year for medical expenses that are not covered by the Company’s medical plan.

6. Other Benefits . Employee shall be eligible to participate in The Bon-Ton Retirement Contribution Plan, deferred compensation plan, discount program, vacation plan, long-term disability plan and employee benefit programs generally made available to other similarly situated employees of the Company who were previously employed in the Northern Department Store Group, including the Carson Pirie Scott division (“Northern Department Store Group”) of Saks Incorporated (“Saks”), subject to their respective generally applicable eligibility requirements, terms, conditions and restrictions; provided however, that severance benefits under this Agreement shall be in lieu of any severance benefits otherwise provided by the Company.

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Nothing in this Agreement shall preclude the Company from amending or terminating any such insurance, benefit, program or plan so long as the amendment or termination is applicable generally to the Company’s executives participating in such insurance, benefit, program or plan. Moreover, the Company’s obligations under this provision shall not apply to any insurance, benefit, program or plan made available on an individual basis to one or more select executive employees by contract if such insurance, benefit, program or plan is not made available to all executive employees. With respect to Employee’s participation in the Company’s vacation plan, Employee shall be eligible for 3 weeks vacation and 2 personal days per calendar year, which vacation entitlement shall be pro-rated in any calendar year in which the Employee does not work the entire calendar year.

7. Business Expenses . The Company shall pay or reimburse Employee for reasonable entertainment and other expenses incurred by Employee in connection with the performance of Employee’s duties under this Agreement upon receipt of vouchers therefore and in accordance with the Company’s regular reimbursement procedures and practices in effect from time to time.

8. Termination of Employment .

(a) Termination by the Company . Notwithstanding any other provision of this Agreement, the Company may terminate Employee’s employment and all of the Company’s obligations or liabilities under this Agreement immediately, excluding any obligations the Company may have under Paragraph 9 below, in any of the following circumstances:

(i) Disability or Incapacity . In the event of Employee’s physical or mental inability to perform his essential duties hereunder, with or without reasonable accommodation, for a period of 13 consecutive weeks or for a cumulative period of 26 weeks during the term of this Agreement.

(ii) Death of Employee . In the event of Employee’s death.

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(iii) Discharge for Cause . Company may discharge Employee at any time for “Cause,” which shall be limited to: Employee’s material and serious breach or neglect of Employee’s responsibilities; willful violation or disregard of standards of conduct established by law; willful violation or disregard of standards of conduct established by Company policy as may from time to time be communicated to Employee; fraud, willful misconduct, misappropriation of funds or other dishonesty; conviction of a crime of moral turpitude; any misrepresentation made by Employee in this Agreement; or any material breach by Employee of any provision of this Agreement (including, without limitation, acceptance of employment with another company or performing work or providing advice to another company, as an employee, consultant or in any other similar capacity while still an employee of the Company).

(iv) Discharge without Cause . Notwithstanding any other provision of this Agreement, Employee’s employment and any and all of the Company’s obligations under this Agreement (excluding any obligations the Company may have under Paragraph 9 below) may be terminated by the Company at any time without Cause.

(b) Resignation .

(i) Resignation for Good Reason . Employee may resign for “Good Reason,” defined below, upon 30 days’ written notice by Employee to the Company except as set forth in Paragraph 8(c) below. The Company may waive Employee’s obligation to work during this 30 day notice period and terminate his employment immediately, but if the Company takes this action in the absence of agreement by Employee, Employee shall receive the salary that otherwise would be due through the end of the notice period. For purposes of this Agreement, “Good Reason” shall mean any of the following violations of this Agreement by the Company: causing Employee, without Employee’s consent to cease to have duties and responsibilities commensurate with those of Executive Vice President, CPS Stores; any reduction in the Employee’s Base Salary;

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any reduction in the Employee’s potential bonus eligibility amount; any required relocation from the Milwaukee, Wisconsin area; and any substantial breach of any material provision of this Agreement. Notwithstanding the foregoing, the acts or omissions described above shall not constitute “Good Reason” unless the Employee provides the Company with written notice detailing the matters he asserts to be “Good Reason” that the Company does not cure within thirty (30) days of receiving the written notice.

(ii) Resignation Without Good Reason . Notwithstanding any other provision of this Agreement, Employee’s employment and any and all of the Company’s obligations under this Agreement (excluding any obligations the Company may have under Paragraph 9 below) may be terminated by Employee without Good Reason.

(c) Change of Control . In the event of a Change of Control of the Company, the Employee shall be prohibited from resigning for Good Reason for a period of six months following the Change of Control (unless Employee is required during this six (6) month period to relocate from the Milwaukee, Wisconsin area). For purposes of this Agreement, a Change of Control shall be deemed to occur if:

(i) any “person,” as such term is defined under Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), who is not an affiliate of Company on the date hereof, becomes a “beneficial owner,” as such term is used in Rule 13d-3 under the Exchange Act, of a majority of the outstanding voting power of the Company’s capital stock;

(ii) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets;

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(iii) the Company is party to a merger, consolidation, other form of business combination or a sale of all or substantially all of its assets, unless the business of the Company is continued following any such transaction by a resulting entity (which may be, but need not be, the Company) and the shareholders of the Company immediately prior to such transaction hold, directly or indirectly immediately after such transaction, a majority of the voting power of the resulting entity in substantially the same relative percentages as prior to such transaction.

9. Payments Upon Termination .

(a) Discharge Without Cause, or Resignation for Good Reason . If Employee is Discharged Without Cause or Resigns for Good Reason, Employee shall receive severance pay at his then current rate of Base Salary as of his termination, less taxes and normal deductions:

(i) if Employee is Discharged Without Cause, or Resigns for Good Reason, on or before March 4, 2008: seventy-eight (78) weeks in accordance with the Saks Incorporated Amended and Restated 2000 Change of Control and Material Transaction Severance Plan; or

(ii) if Employee is Discharged Without Cause, or Resigns for Good Reason, on or after March 5, 2008: fifty-two (52) weeks; payable in equal installments in accordance with the Company’s regular payroll practices, provided (whether the Discharge Without Cause or Resignation for Good Reason occurs before, on or after March 4, 2008) that Employee signs and does not timely revoke a general release of claims (including, without limitation, contractual, common law and statutory claims) against the Company and its officers, directors, employees and agents in a form acceptable to the Company.

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These severance payments shall be in lieu of any bonus or other Company paid benefits to which Employee is or may be entitled after Employee’s termination of employment with the Company for any reason whatsoever, whether by Employee or the Company, including any other severance payments to which Employee is or may be entitled by reason of any severance plan sponsored by Saks or the Company, or any other agreement, policy or practice. Employee will also have the opportunity for continued participation in the Company’s group medical plans, at his expense, pursuant to COBRA. The Company’s obligations under this Paragraph 9(a) shall, as applicable:

(iii) cease in the event that Employee breaches any of Employee’s obligations under this Agreement; and/or

(iv) be offset by any disability insurance benefits and/or workers compensation benefits received by Employee during the period covered by the severance payments.

(b) Death or Disability/Incapacity .

(i) On death, Employee’s estate’s sole entitlement will be to his then current rate of Base Salary for any days worked prior to his death, amounts payable on account of Employee’s death under any insurance or benefit plans or policies maintained by the Company, and any vested benefits to which Employee is entitled under the Company’s employee benefit or other plans in accordance with, to the extent provided in, and subject to the restrictions and payout schedules contained in those plans.

(ii) On termination for disability or incapacity, Employee’s sole entitlement will be to his then current rate of Base Salary for any days worked prior to the date of termination, amounts payable on account of disability or incapacity under any insurance or benefit plans or policies maintained by the Company and any vested benefits to which Employee is entitled under the Company’s employee benefit or other plans in accordance with, to the extent provided in, and subject to the restrictions and payout schedules contained in those plans.

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(c) Discharge for Cause or Resignation without Good Reason . If Employee is discharged for Cause or resigns without Good Reason, Employee’s sole entitlement will be the receipt of his then current rate of Base Salary for any days worked through the date of termination and any vested benefits to which Employee is entitled under the Company’s employee benefit or other plans in accordance with, to the extent provided in, and subject to the restrictions and payout schedules contained in those plans.

(d) Change of Control . Notwithstanding any other provision of this Agreement, if the aggregate present value of the “parachute payments” to the Employee, determined under Section 280G(b) of the Internal Revenue Code of 1986, as amended (the “Code”), would be at least three times the “base amount” determined under Code Section 280G, then the “280G Permitted Payment” shall be the maximum amount that may be paid as a Change of Control Payment under this Paragraph 9(d) such that the aggregate present value of such “parachute payments” to the Employee is less than three times his “base amount.” In addition, in the event the aggregate present value of the parachute payments to the Employee would be at least three times his base amount even after a reduction of the Change of Control Payment to $0 (all as determined for purposes of Code Section 280G), compensation otherwise payable under this Agreement and any other amount payable hereunder or any other severance plan, program, policy or obligation of the Company or any other affiliate thereof shall be reduced so that the aggregate present value of such parachute payments to the Employee, as determined under Code Section 280G(b) is less than three times his base amount. Any decisions regarding the requirement or implementation of such reductions shall be made by such tax counsel as may be selected by the Company and reasonably acceptable to the Employee.

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10. Company Property . All advertising, sales, manufacturers’ and other materials or articles or information, including, without limitation, data processing reports, customer sales analyses, invoices, price lists or information or any other materials or data of any kind furnished to Employee by the Company or developed by Employee on behalf of the Company or at the Company’s direction or for the Company’s use or otherwise in connection with Employee’s employment with the Company, are and shall remain the sole and confidential property of the Company.

11. Non-Competition and Confidentiality . To the maximum extent permissible by law:

(a) During his employment with the Company and for a period of one year after the termination of his employment with the Company for any reason whatsoever, whether by Employee or by the Company and whether during the term of this Agreement or subsequent to the expiration or termination of this Agreement, Employee shall not, directly or indirectly:

(i) Induce or intentionally influence any customer, employee, consultant, independent contractor or supplier of the Company to change its business relationship with or terminate employment with the Company.

(ii) Engage in (as a principal, partner, director, officer, agent, employee, consultant, owner, independent contractor or otherwise) or be financially interested in the retail department store business of any Competitor of the Company. For purposes of this Agreement, a Competitor means each of Federated Department Stores, Dillard’s Inc., Kohl’s Corporation, Belk, Inc., Limited Brands, Inc., Target Corporation, Boscov’s, Inc., Sears Holdings Corporation, J. C. Penney Company, Inc. or the affiliates and successors of each of them.

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(b) During his employment with the Company and at all times thereafter, and except as required by law, Employee shall not use for his personal benefit, or disclose, communicate or divulge to, or use for the direct or indirect benefit of, any person, firm, association or company other than the Company, any Confidential Information (defined below) of the Company that Employee acquires in the course of his employment, unless such Confidential Information is lawfully known by and readily available to the general public, was received from a third party who was not under any restriction to disclose such information, or is independently developed without the use of the Company’s Confidential Information. This Confidential Information includes, but is not limited to: any material referred to in Paragraph 10 or any non-public information regarding the business, marketing, legal or accounting methods, policies, plans, procedures, strategies or techniques; research or development projects or results; trade secrets or other knowledge or processes of or developed by the Company; names and addresses of employees, suppliers or customers (“Confidential Information”). Employee confirms that such information is confidential and constitutes the exclusive property of the Company, and agrees that, immediately upon his termination, whether by Employee or by the Company and whether during the term of this Agreement or subsequent to the expiration of this Agreement, Employee shall deliver to Company all correspondence, documents, books, records, lists, computer programs and other writings relating to Company’s business; and Employee shall retain no copies, regardless of where or by whom said writings were kept or prepared. Confidential Information includes such information of the Northern Department Store Group that relates to business assets that were acquired by the Company from Saks.

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(c) Both during his employment with the Company and following his termination for any reason, whether by Employee or by the Company and whether during the term of this Agreement or following the expiration of the Agreement, Employee shall, upon reasonable notice, furnish to the Company such information pertaining to his employment with the Company as may be in his possession. The Company shall reimburse Employee for all reasonable expenses incurred by him in fulfilling his obligations under this subparagraph (c).

(d) The provisions of subparagraphs (a), (b) and (c) shall survive the cessation of Employee’s employment for any reason, as well as the expiration of this Agreement at the end of its term or at any time prior thereto.

(e) Employee acknowledges that the restrictions contained in this Paragraph 11, in view of the nature of the business in which the Company is engaged and the Employee’s position with the Company, are reasonable and necessary to protect the legitimate interests of the Company, and that any violation of those restrictions would result in irreparable injury to the Company. Employee therefore agrees that, in the event of his violation of any of those restrictions, the Company shall be entitled to obtain from any court of competent jurisdiction preliminary and permanent injunctive relief against Employee, in addition to damages from Employee and an equitable accounting of all commissions, earnings, profits and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.

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(f) Employee agrees that if any or any portion of the foregoing covenants, or the application thereof, is construed to be invalid or unenforceable, the remainder of such covenant or covenants or the application thereof shall not be affected and the remaining covenant or covenants will then be given full force and effect without regard to the invalid or unenforceable portions. If any covenant is held to be unenforceable because of the area covered, the duration thereof, or the scope thereof, Employee agrees that the Court making such determination shall have the power to reduce the area and/or the duration, and/or limit the scope thereof, and the covenant shall then be enforceable in its reduced form. If Employee violates any of the restrictions contained in subparagraph (a), the period of such violation (from the commencement of any such violation until such time as such violation shall be cured by Employee to the satisfaction of the Company) shall not count toward or be included in the one year (or such longer period as may be prescribed by such section) restrictive period contained in subparagraph (a).

(g) Employee represents and warrants that the knowledge, skill and abilities he possesses at the time of his execution of this Agreement are sufficient to permit him to earn a living by working for a non-competitor of the Company for the restrictive period set forth in subparagraph (a) above.

(h) For purposes of Paragraphs 10 and 11 of this Agreement, the term “Company” shall include not only The Bon-Ton Stores, Inc., but also any of its successors, assigns, subsidiaries or affiliates.

12. Taxes . Employee agrees that he is responsible for paying any and all federal, state and local income taxes assessed with respect to any money, benefits or other consideration received from the Company and that the Company is entitled to withhold any tax payments from amounts otherwise due Employee to the extent required by applicable statutes, rulings or regulations.

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13. Prior Agreements .

(a) Employee represents that there are no restrictions, agreements or understandings whatsoever to which Employee is a party that could impact upon his employment under the Agreement or would prevent or make unlawful his execution of this Agreement or his employment hereunder.

(b) Employee agrees that he will not use or disclose any confidential or proprietary information of any of his prior employers during the course of his employment under this Agreement. This prohibition does not apply to information of the Northern Department Store Group that relates to business assets that were acquired by the Company from Saks, which information is subject to the restrictions of Paragraph 11.

14. Indemnification . Employee shall be entitled to indemnification against claims by third parties arising out of his acts and omissions within the scope of his employment pursuant to the terms of the Company’s by-laws.

15. Entire Understanding . This Agreement contains the entire understanding between the Company and Employee with respect to the subject matter hereof and supersedes all prior and contemporary employment and severance agreements and understandings, inducements or conditions, express or implied, written or oral, between the Company and Employee except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

16. Modifications . This Agreement may not be modified orally but only by written agreement signed by Employee and the Company’s Chief Executive Officer or such other person as the Company’s Board of Directors may designate specifically for this purpose.

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17. Provisions Separable . The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

18. Compliance With Code Section 409A .

(a) Notwithstanding anything to the contrary herein, no payment otherwise required to be made hereunder that the Company determines constitutes a payment of nonqualified deferred compensation for purposes of Section 409A of the Code shall be paid to Employee at a time or in a manner that will be treated as a violation of the distribution rules of Code Section 409A(a)(2) and no alternative form of payment of such amount(s) shall be permitted to be made hereunder if such alternative benefit form would violate any of the requirements of Code Section 409A(a)(3) or (4) relating to acceleration of benefits and changes in time and form of distribution (taking into account any regulations or other guidance issued by Treasury or the Internal Revenue Service with regard to these Code provisions as may be in effect from time to time).

(b) The intent of this provision is to ensure that no additional tax liabilities are imposed on any payments or benefits provided hereunder pursuant to Code Section 409A, and may require, for example, a delay in commencement of payments until six months after Employee’s termination of employment with the Company. In the event any payment is delayed by reason of this Paragraph 18, such payment shall, when made, be increased by an amount representing “interest” from the date payment would otherwise have been made, through the date payment is actually made, calculated using the Company’s cost of borrowing as the interest rate, as determined by the Company at its discretion.

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19. Consolidation, Merger or Sale of Assets . Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or a substantial portion of its assets to, another entity that assumes this Agreement and all obligations and undertakings of the Company hereunder. Under such a consolidation, merger or transfer of assets and assumption, the term “Company” as used herein, shall mean such other entity and this Agreement shall continue in full force and effect.

20. Notices . All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when delivered (personally, by courier service such as Federal Express, or by messenger) or when deposited in the United States mails, registered or certified mail, postage pre-paid, return receipt requested, addressed as set forth below:

	(a)		If to the Company:

			The Bon-Ton Stores, Inc. 2801 East Market Street York, PA 17402 Attention: Chief Executive Officer

			with a copy to:

			Henry F. Miller, Esquire Wolf, Block, Schorr and Solis-Cohen LLP 1650 Arch Street 22nd Floor Philadelphia, PA 19103-2097

	(b)		If to Employee:

			Stephen Byers 629 Fox Glen Drive St. Charles, IL 60174

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In addition, notice by mail shall be by air mail if posted outside of the continental United States. Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this paragraph for the giving of notice.

21. No Attachment . Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

22. Binding Agreement . This Agreement shall be binding upon, and shall inure to the benefit of the Company and its successors, representatives, and assigns and shall be binding upon Employee, his heirs, executors and legal representatives.

23. Assignment by Employer . Employee consents to the assignment of this Agreement to any purchaser of the Company or a substantial portion of its assets.

24. No Assignment by Employee . Employee acknowledges that the services to be rendered by him are unique and personal. Accordingly, Employee may not assign or delegate any of his rights or obligations hereunder, except that he may assign certain rights hereunder if agreed to in writing by the Chief Executive Officer.

25. Indulgences . Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

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26. Paragraph Headings . The paragraph headings in this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

27. Controlling Law . This Agreement and all questions relating to its validity, interpretation, performance and enforcement, (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of such state or any other jurisdiction to the contrary, and without the aid of any canon, custom or rule of law requiring construction against the draftsman.

28. Chief Employee Officer . In the absence of the President and Chief Executive Officer, the decisions of the President and Chief Executive Officer hereunder may be made by such other person as designated by the Company’s Board of Directors.

29. Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when any number of counterparts hereof, individually or taken together, shall bear the signatures of all of the parties hereto.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have duly executed and delivered, in Pennsylvania, this Agreement as of the date first above written.


THE BON-TON STORES, INC.

By:	/s/ BYRON BERGREN	Date: 6/28/06

	Byron Bergren Chief Executive Officer

EMPLOYEE

/s/ STEPHEN BYERS		Date: 6/28/06

Stephen Byers

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Exhibit 10.1(b)

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

This FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (“First Amendment”), is by and between THE BON-TON STORES, INC., a Pennsylvania corporation (the “Company”), and STEPHEN BYERS (“Employee”).

W I T N E S S E T H:

WHEREAS, the Company and Employee entered into an Employment Agreement dated as of June 28, 2006 (“Agreement”) with respect to the employment of Employee as the Company’s Executive Vice President, CPS Stores;

WHEREAS, Employee has been promoted to the position of Vice Chairman, Stores, Operations, Private Brand, Merchandise Planning and Allocation;

WHEREAS, the Human Resources and Compensation Committee (“HRCC”) of the Company’s Board of Directors (“Board”) and the Company’s Board have approved certain modifications to the Agreement as modified by this First Amendment; and

WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Agreement.

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and intending to be legally bound hereby, the Company and Employee agree as follows:

Section 1 . Position and Responsibilities . Effective as of October 2, 2006, the Company has promoted Employee to the position of Vice Chairman, Stores, Operations, Private Brand, Merchandise Planning and Allocation, and Employee accepts such position on the terms and conditions set forth in this First Amendment. Employee shall have the responsibilities as determined by the President and Chief Executive Officer and/or the Board and shall report either to the President and Chief Executive Officer or such other direct report of the President and Chief Executive as the President and Chief Executive Officer and/or Board may designate.

Section 2 . Base Salary . Effective as of October 2, 2006, Employee’s annualized Base Salary shall be increased to Five Hundred Twenty-Five Thousand Dollars ($525,000).

Section 3 . Annual Bonus . Amendment of Paragraph 4(b) of the Agreement . The following is substituted for Paragraph 4(b) of the Agreement:

“4(b). Annual Bonus .

(i) Employee will participate in The Bon-Ton Stores, Inc. Cash Bonus Plan (“Cash Bonus Plan”) in accordance with its terms and conditions as it may be amended in accordance with its provisions, or a similar plan, program or practice. The HRCC shall retain discretion with respect to any such bonuses as is provided under the terms of the Cash Bonus Plan. To the extent reasonably practicable, the bonus shall be computed within 90 days following the close of the Company’s fiscal year and paid within 30 days of its computation. Employee must be employed on the last day of the Company’s fiscal year to receive a bonus.

(ii) For the fiscal year of the Company beginning January 29, 2006 (“Current Fiscal Year”), Employee’s bonus eligibility shall be calculated on a pro rata basis, based upon the date of his promotion to the position of Vice Chairman, Stores, Operations, Private Brand, Merchandise Planning and Allocation, as follows:

(A) For the period through October 1, 2006, Employee shall be eligible for a bonus with the following parameters: a threshold bonus of 33.75% of Employee’s Base Salary in effect at the end of the Current Fiscal Year; a target bonus of 45% of Employee’s Base Salary in effect at the end of the Current Fiscal Year; and a maximum bonus of 67.5% of Employee’s Base Salary in effect at the end of the Current Fiscal Year.

(B) For the period commencing October 2, 2006, Employee shall be eligible for a bonus with the following parameters: a threshold bonus of 56.25% of Employee’s Base Salary in effect at the end of the Current Fiscal Year; a target bonus of 75% of Employee’s Base Salary in effect at the end of the Current Fiscal Year; and a maximum bonus of 112.5% of Employee’s Base Salary in effect at the end of the Current Fiscal Year.

(C) If earned, one bonus will be paid, based upon provisions of subsections (A) and (B) above, depending upon the level of achievement with respect to the performance measures determined by the HRCC.

(iii) For fiscal years of the Company subsequent to the Current Fiscal Year during the Term of this Agreement, Employee shall be eligible to earn a bonus, with the following parameters: a threshold bonus of 56.25% of Employee’s Base Salary; a target bonus of 75% of Employee’s Base Salary; and a maximum bonus of 112.5% of Employee’s Base Salary. If earned, one bonus will be paid depending upon the level of achievement with respect to the performance measures determined by the HRCC.”

Section 4. Long Term Incentive Plan . Amendment of Paragraph 4(c) of the Agreement . The following is substituted for Paragraph 4(c) of the Agreement:

“4(c). Long Term Incentives

(i) Restricted Share Grant . On October 2, 2006, Employee received, under The Bon-Ton Stores, Inc. Amended and Restated 2000 Stock Incentive and Performance-Based Award Plan (“Stock Incentive Plan”), a one time grant of 5,250 restricted shares of the Company’s Common Stock (“Restricted Shares”). Employee’s ownership of these Restricted Shares shall vest on October 2, 2009 provided that Employee is continuously employed by the Company through October 2, 2009.

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(ii) On October 2, 2006, Employee received, under the Stock Incentive Plan, a one time grant of options to purchase 21,500 shares of the Company’s Common Stock at a purchase price equal to the fair market value of the stock on October 2, 2006 (“Options”). The Options shall vest ratably, provided that Employee is continuously employed by the Company on each respective date, in three installments as follows: 7,166 shares on October 2, 2007; 7,167 shares on October 2, 2008; and 7,167 shares on October 2, 2009.

(iii) Employee may receive grants of restricted shares or options in the future in the discretion of the Company.”

Section 5 . Resignation for “Good Reason .” The following shall apply in lieu of Paragraph 8(b)(i) of the Agreement:

Employee may resign for “Good Reason,” defined below, upon 30 days’ written notice by Employee to the Company except as set forth in Paragraph 8(c) of the Agreement. The Company may waive Employee’s obligation to work during this 30 day notice period and terminate his employment immediately, but if the Company takes this action in the absence of agreement by Employee, Employee shall receive the salary that otherwise would be due through the end of the notice period. For purposes of this Agreement, “Good Reason” shall mean any of the following: (A) the Company’s transfer of Employee to a position below the level of an Executive Vice President; (B) the reduction of Employee’s annualized Base Salary to an amount that is less than Four Hundred Twenty-Five Thousand Dollars ($425,000); (C) the reduction of Employee’s threshold bonus potential below 33.75%, Employee’s target bonus potential below 45% or Employee’s maximum bonus potential below 67.5%; (D) any required relocation from the Milwaukee, Wisconsin area; or (E) any other substantial breach of any material provision of the Agreement as modified by this First Amendment. The parties agree that any changes in Employee’s position, Base Salary or bonus potential that do not constitute “Good Reason” under (A), (B) or (C) of this subsection shall not be deemed to be a breach of the Agreement or of this First Amendment for any purpose. It is understood that the acts or omissions referenced above shall not constitute “Good Reason” unless the Employee provides the Company with written notice detailing the matters he asserts to be “Good Reason” that the Company does not cure within thirty (30) days of receiving the written notice.

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Section 6 . Term of Agreement; Effective Date of this First Amendment. Amendment of Paragraph 2 of the Agreement .

(a) This First Amendment is effective as of October 2, 2006.

(b) In all other respects, Paragraph 2 of the Agreement shall remain in effect.

Section 7 . Controlling Law . This First Amendment and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of such state or any other jurisdiction to the contrary, and without the aid of any canon, custom or rule of law requiring construction against the draftsman.

Section 8 . Execution in Counterparts . This First Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This First Amendment shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties hereto.

Section 9 . Effect of First Amendment . Except as may be affected by this First Amendment, all of the provisions of the Agreement, as amended hereby, shall continue in full force and effect. The provisions of this First Amendment shall not constitute a waiver or modification of any terms or conditions of the Agreement other than as expressly set forth herein.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have duly executed and delivered this Agreement, in Pennsylvania.


THE BON-TON STORES, INC.

By:	/s/ BYRON BERGREN	12/20/06

	Byron Bergren	Date
	President and Chief Executive Officer

/s/ STEPHEN BYERS		12/12/06

Stephen Byers		Date

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EXHIBIT 31.1

CERTIFICATION OF BYRON L. BERGREN

I, Byron L. Bergren, certify that:

I have reviewed this Quarterly Report on Form 10-Q of The Bon-Ton Stores, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


DATE: June 11, 2008	By:	/s/ Byron L. Bergren
		Byron L. Bergren
		President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF KEITH E. PLOWMAN

I, Keith E. Plowman, certify that:

I have reviewed this Quarterly Report on Form 10-Q of The Bon-Ton Stores, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


DATE: June 11, 2008	By:	/s/ Keith E. Plowman
		Keith E. Plowman
		Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Exhibit 32.1

CERTIFICATIONS PURSUANT TO RULES 13a-14(b) and 15d-14(b) OF THE
SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of The Bon-Ton Stores, Inc. on Form 10-Q for the period ended May 3, 2008, as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned officers of The Bon-Ton Stores, Inc., certifies pursuant to 18 U.S.C. Section 1350, that, to his respective knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The Bon-Ton Stores, Inc.


DATE: June 11, 2008	By:	/s/ Byron L. Bergren
		Byron L. Bergren
		President and Chief Executive Officer

	By:	/s/ Keith E. Plowman
		Keith E. Plowman
		Executive Vice President, Chief Financial Officer and Principal Accounting Officer

A signed original of this written statement has been provided to The Bon-Ton Stores, Inc. and will be retained by The Bon-Ton Stores, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.