This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Neiman Marcus Inc. (NMG: chart) on September 24, 2008.

Management:

- President, Chief Executive Officer: Burton M. Tansky
- Executive Vice President, Chief Financial Officer: James E. Skinner
- Vice President – Finance, Treasurer: Stacie Shirley

Key Investors Issues

- Sales were $4.6 billion, up 4.8% from $4.4 billion in 2007
- Adjusted operating earnings were $537.4 million, up 2.4%.

Fourth Quarter Highlights:

- The company reported total revenues of $1.03 billion, up 4.92% compared to $981.7 million in the prior year.
- Adjusted operating earnings were $43.4 million compared to $55.8 million in 2007, a decrease of 22.2%.

Full Year Highlights

The firm ended the year with sales of $4.6 billion, up 4.8% from $4.4 billion in the prior year as comparable revenues increased 1.7%, which was primarily due to the strength of the Internet business.

- Sales per square foot were relatively flat at $634 for the year compared to $638 last year.
- Neiman Marcus continue to hold an industry-leading position in terms of productivity.
- Gross margin was under pressure at 36.2%, which is a decline of approximately 110 basis points from last year.
- When it became apparent that demand would fall short of expectations, the firm moved aggressively to bring inventory in line with sales.

It took actions to minimize inventory exposure, including cancelling orders, returning things to vendors, and working with vendor partners to support the needed markdowns.

- The firm incurred higher markdowns which negatively impacted gross margin, but at the same time helped to further liquidate inventory.
- Partially offsetting margin decline was an improvement in the expense rate.
- Adjusted operating earnings were $537.4 million compared to $550.4 million or for the comparable period a year ago, a decrease of 2.4%.
- The firm recorded other income of $32.5 million in the first quarter, which represents a one-time pension curtailment gain as a result of the company’s decision to freeze certain pension and retirement benefits as of December 31st, 2007.

Net interest expense was $240 million or 5.2% of revenues compared to $260 million or 5.9% of revenues for the previous year.

- The $20 million decline is primarily due to the decrease in term loan interest rates, as well as the pay down of $250 million that was made during fiscal 2007.
- SG&A rate improved approximately 40 basis points due to lower payroll costs, including incident compensation costs.
- SG&A was also driven by a decrease in marketing and advertising costs as a percent of sales primarily due to the planned shift from catalogue to web-based marketing. Web marketing costs are generally lower as a percentage of revenue than print catalogue.

These improvements were partially offset by an increase in long-term benefit costs for 20 basis points and the higher level of advertising and promotional costs incurred by the specialty retail division.

- The firm ended the year with cash at $239 million compared to $141 million a year ago.
- Capital expenditures were about $147 million for the year, mostly invested in new stores, major and minor remodels, IT enhancements, and many in-store selling projects.
- The firm also invested a significant amount of capital and expense on security issues in order to achieve compliance with the Paynet card industry standards.

Update of Current Business Activities:

- Focus remains on the long-term success of the company, which means continuing to invest in the businesses while applying the strictest return hurdles to capital projects.
- At the speciality retail stores division, which includes Neiman Marcus stores and Bergdorf Goodman, plans for remodels and new stores remain intact.
- The firm has just opened the 40th full-line Neiman Marcus store in Topanga, which is in the San Fernando Valley in California.

The firm has publicly announced six additional locations, including a 125,000-square-foot store in Bellevue, Washington.

- It recently announced a new store plan for Walnut Creek, which is in northern California’s East Bay.
- Also in the Fall of 2010 is an 80,000-square-foot store in Sarasota, Florida, a 90,000-square-foot store in Princeton, New Jersey, in the Fall of 2011, and in the Fall of 2011 in San Jose, California.
- Over the course of the past year, the firm has continued to invest in capital projects at Bergdorf Goodman, remodelling part of the main floor in the jewellery area, including adding a private viewing room.
- It recently opened the fifth Cusp store in Chestnut Hill, a suburb of Boston, this past August, which is approximately 6,000 square feet.

The Direct Marketing Division: