The Bon-Ton Stores Inc. together with its subsidiaries operates quality fashion department stores. The company's strategy focuses on being the premier fashion retailer in smaller markets that demand but often have limited access to better branded merchandise. In many of its markets The Bon-Ton is the primary destination for branded fashion merchandise from top designers such as Calvin Klein Liz Claiborne Nautica Ralph Lauren and Tommy Hilfiger. BonTon Stores Inc. has a market cap of $89.7 million; its shares were traded at around $4.75 . BonTon Stores Inc. had an annual average earning growth of 11.3% over the past 10 years.
Highlight of Business Operations:Costs and expenses: Gross margin in the first quarter of 2009 was $224.2 million as compared with $237.7 million in the comparable prior year period, a decrease of $13.6 million. The decrease in gross margin dollars is attributable to the decreased sales volume. Gross margin as a percentage of net sales increased 80 basis points to 34.8% in the first quarter of 2009 from 34.0% in the same period last year. The increase in the gross margin rate primarily reflects decreased net markdowns.
Depreciation and amortization expense and amortization of lease-related interests decreased $0.9 million, to $29.3 million, in the first quarter of 2009 from $30.2 million in the first quarter of 2008, primarily due to significant asset impairments recorded in the fourth quarter of 2008.
At May 2, 2009, we had $18.4 million in cash and cash equivalents and $164.6 million available under our asset-based revolving credit facility (before taking into account the minimum borrowing availability covenant under such facility of $75.0 million). In anticipation of continued recessionary pressures in 2009, we heightened our focus on maximizing cash flow by reducing operating expenses and significantly curtailing our planned capital expenditures. Additionally, we are continuing to control inventory levels in order to benefit our working capital needs. We anticipate that these actions, together with projected cash benefits from our cost savings initiatives, will positively impact our 2009 cash flow.
Our primary sources of working capital are cash flows from operations and borrowings under our revolving credit facility, which provides for up to $800.0 million in borrowings. In the first quarter of 2009, we elected to reduce the previous $1.0 billion commitment under our revolving credit facility by $200.0 million, which will reduce interest expense associated with the unused commitment fee.
Our capital expenditures in the first quarter of 2009, which do not reflect reductions for landlord contributions of $1.9 million, totaled $6.1 million. Capital expenditures for 2009, net of approximately $7 million of landlord contributions, are planned at approximately $40 million, a significant reduction from the prior years capital expenditures of $84.8 million (which do not reflect reductions for landlord contributions of $18.9 million), as we are limiting store expansion and remodel activities in the near term. Included in 2009 planned capital expenditures is continued investment in information technology.
Net intangible assets totaled $145.8 million and $148.2 million at May 2, 2009 and January 31, 2009, respectively. Our intangible assets at May 2, 2009 are principally comprised of $75.6 million of lease interests that relate to below-market-rate leases and $70.2 million associated with trade names, private label brand names and customer lists. The lease-related interests are being amortized using a straight-line method. The customer lists are being amortized using a declining-balance method. At May 2, 2009, trade names and private label brand names of $54.1 million have been deemed as having indefinite lives.
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