Joining us today from tiffanys are CEO Michael Kowalski; EVP, CFO, James Fernandez; and Vice President of Investor Relations, Mark Aaron. With that, I will turn it over to Michael. ROXANNE MEYER, ANALYST, OPPENHEIMER& CO.: My name is Roxanne Meyer, specialty retail analyst at Oppenheimer. It is my pleasure to introduce our next speaker from Tiffany. Tiffany is based in New York City and engages in the design, manufacture and retail of fine jewelry as well as timepieces, accessories and items for the home with stores worldwide. Its jewelry products include diamond and gem stone jewelry as well as gold, platinum and sterling silver jewelry. Despite the tough environment, Tiffany has benefited from its iconic brands and the strength of foreign tourist spending in the US as well as exceptional growth in Asian markets. MICHAEL KOWALSKI, CHAIRMAN, CEO, TIFFANY & CO.: Thank you Roxanne, good morning everyone. Before continuing (multiple speakers) okay, let's try that again. Good morning. Before continuing, if you would please note our Safe Harbor slide. Five weeks ago we reported Tiffanys first quarter results. Those results were exceptionally strong, exceeding everyone's expectations including certainly our own. And I'm going to be happy to share the specifics of those results with you a little later in the presentation. But let me begin today by pointing out that the strength of those results demonstrates a critically important development, specifically Tiffanys successful and continuing evolution into a geographically diversified branded retailer; a branded retailer not dependent upon any single geographic market to achieve its long-term sales and its earnings expectations; a branded retailer that entered 2008 with Tiffany stores in 18 countries with 80 of those stores in the Americas, 87 in Asia-Pacific and 17 in Europe as well as wholesale sales to retail partners in more than 30 countries around the world; most importantly, a branded retailer with very substantial remaining opportunities to expand its global presence by more intensely penetrating markets where we already have a meaningful presence and expanding into the many countries where our presence is modest or in some cases nonexistent. To begin, let's take a look at a snapshot of Tiffanys geographical sales mix in 2007 indicating that 62% of our sales occurred in the Americas region, 30% were in the Asia-Pacific region and 8% were in Europe. In 2007, we increased the number of Company-operated locations by approximately 10%. This slide indicates those new locations and we're very pleased with their initial results. As you will note, some stores were opened in markets entirely new to tiffanys while others helped us to further penetrate existing markets. One of the highlights of our 2007 openings was our new store at 37 Wall Street. This physically breathtaking store makes an extraordinarily important brand statement in this most important of retail markets and has enjoyed rather remarkable sales success under the circumstances. We are very excited about our global growth opportunities. As you are aware in 2007 Tiffany experienced very strong growth in the Asia-Pacific region outside of Japan as well as in Europe and that growth has continued. In the Asia-Pacific region we have been substantially increasing our sales through more than 35 stores anchored by our very substantial presence in Hong Kong. We also have very sizable businesses in markets like Australia, Taiwan, Singapore and Korea. Tiffanys business in China is also developing robustly. We currently operate seven stores on the mainland as well as two in Macau and anticipate having at least 25 to 30 stores in China within five years. Our growing on-the-ground presence in the PRC, our already very strong presence in Hong Kong and our continuing investment in media advertising, public relations and an informational website are clearly building brand awareness and driving rapid sales growth. Japan, on the other hand, is our most mature market in the region and continues to face a range of macroeconomic and demographic challenges. We're continuing to pursue specific sales initiatives tied to store productivity and customer development and are hopeful that these should strengthen our relative position there. Later this year we will complete an exciting renovation of our Tokyo flagship store on the Ginza. We've also seen very strong growth across Europe led by our large business in London along with strong growth throughout continental Europe. We currently operate 19 stores in Europe which includes our store that we opened in Brussels earlier this week. We will be entering two new additional countries this year when we open stores in Dublin, Island; and Madrid, Spain. There are numerous opportunities for us to further expand Tiffanys presence throughout Western Europe, to penetrate increasingly affluent cities in Eastern Europe and to expand our currently small but growing presence in Russia. Over the medium-term, we believe Tiffany has the potential to more than double its European store base to at least 40 stores. As shown here, we are taking advantage of some exceptional location opportunities this year by accelerating the rate of new store openings to 18 stores and boutiques. Customer awareness of Tiffany is growing rapidly and we intend to take full advantage of growth opportunities as affluent markets throughout Asia-Pacific and Europe continue to develop by adding 10 to 15 locations annually in 2009 and beyond. And we should also note our growing presence -- our business of wholesale sales to retailers and distributors primarily in Russia, the Middle East and Latin America which presents Tiffany with incremental sales growth and brand exposure. Examples of our wholesale presences are shown on this slide. Here in the Americas we operate 72 Tiffany & Co. stores in the United States and our expansion plans include annually opening five to seven full line stores. We envision ultimately having at least 100 full line stores in the United States and this slide shows store openings in 2008. Over the years, we have steadily evolved our US store format to improve store productivity and profitability. For example, over the past 10 years, sales per gross square foot in the United States has improved from $1700 in 1997 to $2700 in 2007. For non-US locations, sales per square foot are even higher and grew from $2200 in '97 to $3300 last year. Since we are already in many of the largest metropolitan markets across the United States as indicated again on this map, we're now focusing on secondary markets. Our selection process concentrates on understanding affluent consumers within these markets, analyzing how specifically they shop with us either through our website or other stores, and how these markets are likely to evolve over time. In pursuit of these opportunities, we have developed a new 2000 square foot store format. It is designed to present an edited assortment of Tiffanys signature jewelry with a merchandising approach that celebrates Tiffanys style. It is a format that focuses on the breadth and diversity of tiffany jewellery collections that are most often purchased by the wearer herself and therefore excludes engagement jewelry and statement jewelry. The product will be presented in more acceptable open display formats designed to encourage the customer to experiment and create her very own Tiffany personal style. The format will be [asset] efficient and will deliver strong operating margins as it focuses on some of our highest gross margin, fastest-turning product categories with lower CapEx than the current store model. We will place these stores within existing markets that are not fully served by existing stores as well as the new smaller markets. We believe we can increase the ultimate number of stores in the United States from our former goal of 100 to as many as 170 stores. The first store will open in October in Glendale, California and we're planning additional openings at the rate of three to five per year which will increase total US store annual expansion to a rate of eight to 12 per year. Rounding out the Americas regions are Tiffanys very successful stores in Canada as well our developing businesses in Mexico and Brazil. We envision further expansion in all of those regions. In total then, we are increasing our worldwide base of Company-owned Tiffany stores by approximately 13% this year with likely high single-digit annual increases in future years. This will take us from 184 Company-operated stores and boutiques at the end of 2007 to approximately 300 locations by 2012. Beyond aggressive distribution growth, product development and the introduction of new designs and collections over a broad range of materials and price points will also continue to be a primary growth driver to Tiffany. Clearly, new product introductions bring excitement and freshness to our merchandise assortment all within the framework of our vision of legendary iconic style that is synonymous with Tiffany and consistent with our Company's mission to enrich the lives of our customers by creating enduring objects of extraordinary beauty that will be cherished for generations. Some of our more recent notable product introductions have included Tiffany Novo engagement rings, Tiffanys whimsical charms in both silver and gold, the woven elegance of Tiffanys Somerset collection, and an expanded assortment of classic legacy rings. Our Tiffany designers are also con-tributing to the sense of product excitement with Elsa Peretti geometrically perfect round enjoying great success along with Paloma Picasso's colorful and contemporary sugar stacks and Frank Gehry's modern and elemental torque. As I hope all of you know by now, we are pursuing a major initiative to dramatically expand our watch business in partnership with the Swatch Group. Through a new company owned by Swatch and in which Tiffany has a substantial profit participation, Tiffany branded watches will be manufactured, marketed and distributed through the world's finest watch and jewelry stores in addition to our own Tiffany stores. The existing successful Mark, Atlas and Grand collections will be continued and by next year we will see the introductions of new designs in conjunction with substantially expanded distribution. And finally there's Tiffanys first ever eyewear collection which was recently introduced celebrating some of our best loved design motifs in eyewear for women. Through our agreement with Luxottica, distribution through Tiffany stores and select retailers has been successfully launched. Given the strength of Tiffanys merchandise offerings, the role of marketing is to continue to bring the messages of Tiffanys superlative design, enduring style and lasting value to consumers around the world. To accomplish this, our immediate plans are layered to include traditional print media as well as important touch points on the Internet and mobile communications can now offer. Early this fall, Tiffany will be launching a new advertising campaign around the world. At its heart, the campaign is about Tiffanys legendary style, style that has a rich and famous heritage but is relevant and breathtaking today; style that is chic, elegant and timeless. In a series of distinctive and dramatic executions, Tiffany will invite women to discover their personal Tiffany style and layer iconic Tiffany jewelry designs. Because nothing defines a woman's style more than jewelry, we believe the campaign will touch a powerful cord. Tiffany.com is playing a growing role in our marketing communications mix. In addition of course to its revenue generating role, it's also a marketing hub for consumers to research, study and dream about their next Tiffany purchase. The newly designed site was relaunched in the fall of 2007. In addition to deeper functionality and the ability to deliver multiple marketing messages simultaneously, we think it is the most beautiful jewelry site on the Internet. Another layer is our catalog business where we benefit from the important retail marketing role catalogs perform for us. We have also begun increasingly to harness the efficiency of communicating with our customers through e-mail allowing for targeted messages and the customer convenience of immediate click-through to Tiffany.com to explore and of course to shop. And finally, we would like to note the continued success of the Celebration ring campaign inviting every woman to celebrate her life with [band rings] of perfection. That message continues to resonate well around the globe. Beyond adding new stores and new products, we also believe we can achieve market share driven growth by engaging our clients more intimately through events, [workshop] tours and a variety of customer outreach programs. The selling events surrounding the introduction of our annual Tiffany Blue Book have been especially productive providing us with the opportunity to present our most spectacular designs to an appreciative group of our best customers. And our public relations efforts and sponsorships have positioned Tiffany as glamorous and aspirational with the press and consumers alike. Witness these models at one of our events or Maria Sharapova wearing our jewelry in Grand Slam tennis competition. Turning very briefly to operations, Tiffany is now benefiting from several years of heavy investments in distribution and manufacturing infrastructure and we continue to invest in our worldwide diamond sourcing and processing network helping to ensure product supply, control costs and most importantly support the long-term expansion of our business. A special note is the development of our diamond sourcing and processing operations in both Namibia and Botswana and the expansion of our diamond (inaudible) processing facilities in Vietnam. The results of all of these initiatives of course was reflected in our strong earnings growth in 2007 and the first quarter of 2008. Our business is certainly not immune to economic downturns, however, we are increasingly benefiting from the global diversification of our sales base both in terms of sales made to local customers in their home countries as well as sales made to travelers. And we saw that impact very specifically in the first quarter of this year. Worldwide sales increased 12%, sales in the Americas region grew 6%, the result of sales from new stores as well as increased levels of foreign tourist spending. US comp stores were unchanged from prior years and sales in the Asia-Pacific region rose 21% reflecting strong growth in most markets outside of Japan. And sales in Europe rose 38%, again reflecting broad-based sales growth and the benefit of new store openings. So in total, soft results in the US were more than offset by strength elsewhere demonstrating again our global reach. Our operating margin increased 0.7 points in the first quarter as a higher gross margin more than offset a modest increase in SG&A spending. And our improving gross margin demonstrates we believe that Tiffany is weathering any pressure from rising metal prices and diamond costs reasonably well. In total net earnings from continuing operations rose 20% and the related earnings per share increased 28% which surpassed our expectations and led us to the time we reported results to increase earnings guidance for the year. In terms of Tiffanys balance sheet at April 30, net inventories were up 10% over the prior year but almost half of that was the result of foreign translation. We were active in our stock repurchase program in the quarter and total debt to stockholders' equity was 35% at April 30 versus 28% in the prior year. In closing, let me state what we certainly believe is obvious but nevertheless we think always bears repeating. The Tiffany & Co. brand is strong and grows stronger everyday. That strength is evident not just in good times in markets with robust economies, but also in economies experiencing slow growth or even recession. In fact, we do believe that the Tiffany brand message is especially resonant in those challenging economic times when the future is obscured by so much uncertainty and so much pessimism. We believe that's what has made Tiffany an extraordinarily enduring brand is that our customers do trust us to create those special objects that transcend times, even difficult times like those we confront today; objects that are cherished, passed from one generation to the next; objects that inspire, that matter and that last. Those are the things that we think are of special importance today and there's little doubt in our own minds that managing the Tiffany & Co. brand to sustain and enhance that very special character remains even more critically important today and is the key to our long-term sustainable growth. Thank you and I and my colleagues would be happy to take any questions you might have or we could wait for the breakout session. Are there any questions? Thank you sir. Questions and Answers UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: I'm going to ask Mark specifically what we reported lest I make a mistake. MARK AARON, VP, IR, Tiffany & co.: [Inaudible - microphone inaccessible] MICHAEL KOWALSKI: New York is where most of the tourist impact, as you would imagine, is focused. Other questions? Okay. Sorry. UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: A number of -- I think it really is a reflection of the maturity and the expansiveness of our store expansion plans or realities to date. I think hereto for most of the markets in which we opened we felt we're capable of easily sustaining a full line tiffanys store. A goodly number of the new store format for stores will be focused on fill-in opportunities and the logic in some sense is very simple. But if you're shopping for an engagement ring in the Los Angeles area, to the extent that is a very significant purchase we are making the assumption that the customer is willing to drive for example to our Beverly Hills store. On the other hand, if that customer is simply shopping for silver jewelry or gold charms or Somerset collection, that the immediate proximity of the shopping experience is critically important. We have also done a fair amount of research. And one of the surprises of the research we have done within the past two years is despite having 70 plus stores in the United States the fact that accessibility continues to be -- accessibility in the sense of immediate geographic proximity seems to be a continuing issue and it's always better to be lucky than to be smart. We certainly think that some of what happened in terms of the gas crisis and changing personal dynamics about the willingness to travel to shop also probably provides advantages for this sort of concept. The margins themselves are unchanged though. It's really a matter of not presenting engagement rings and statement jewelry which have always had a lesser margin. Other questions? Sir? UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] JIM FERNANDEZ, CFO, TIFFANY & CO.: [Inaudible - microphone inaccessible] UNIDENTIFIED AUDIENCE MEMBER: [Inaudible - microphone inaccessible] MICHAEL KOWALSKI: We'll start with Swatch because clearly that is the more significant opportunity. Again a bit of history -- we felt -- we've always believed that Tiffany has had a very credible watch assortment and watch offering. We have often -- we've recognized how over the years that we have been handicapped by our lack of wholesale distribution. So as we thought about expanding our watch business, we did reach the conclusion actually several years ago that at some point wholesale distribution was essential so that we clearly wanted to look for a partner who could provide us with that sort of marketing distribution capability. Swatch can do that. We also felt that if we were to be a major player in the watch business, we needed a degree of vertical integration much like we've achieved in diamond sourcing and jewelry. Since we were not willing to become a major primary watch manufacturer or component manufacturer we thought that the most logical partner was the most significant movement and watch manufacturer -- quality watch manufacturer in the world. So it kind of let us very naturally to Swatch. The eyeglass opportunity is a much less significant opportunity. As you think about opportunities I certainly would focus heavily on watches. And no, we don't have any immediate plans or we don't see any immediate opportunities that would -- we are not about to start licensing the Tiffany brand in any aggressive sort of way. So we're going to stand right where we are right now. UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: No baseball caps. Maybe (multiple speakers) UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: It can be significantly, significantly larger and we haven't been any more specific than that. UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: We're imagining a percentage of sales if on a final retail basis that would -- not obviously but would be multiples of that, how many multiples to be seen. UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: Not much. Most of it is all -- the vast majority of it is concentrated in New York, a little bit of Japanese tourism in Hawaii but that's not a significant number. So when you see the New York number you pretty have of all of it. By the way, I should also say New York also does benefit from domestic tourism which is an important consideration. So the strength of the New York store is not simply driven by international tourism. UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: We have fortuitously -- or we haven't experienced pricing resistance. As some of you who who followed us for many years know, three or four years ago we were reluctant to raise diamond prices specifically in platinum prices in engagement rings for fear of market share loss. In hindsight that probably was a mistake and for the past three years we have been pretty much keeping pace with metals and gem stone driven cost inflation and so far have not really experienced customer resistance. And again because obviously all of our competitors are facing the same cost pressures and we have yet to see substitution effects yet for people not buying jewelry instead of something else. So we feel pretty good about our ability to pass on prices. UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: No, I think we -- a couple of years ago we caught up on the diamond side of the business and I think we have been -- our price increases largely reflected the pressures in each segment of our business. Any other -- yes sir? UNIDENTIFIED AUDIENCE MEMBER: [Inaudible question - microphone inaccessible] MICHAEL KOWALSKI: Jim, try to answer that? JIM FERNANDEZ: [Inaudible - microphone inaccessible] MICHAEL KOWALSKI: Just to say the obvious, year-over-year is a fair comparison because (inaudible). Any other questions? All right. Thank you very much, look forward to seeing you in breakout. Thank you. [Thomson Financial reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. 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