This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Tiffany & Co. (TIF: chart) on March 24, 2008.

Chairman of the Board, Chief Executive Officer: Michael J. Kowalski
Chief Financial Officer, Executive Vice President: James N. Fernandez
Vice President, Investor Relations: Mark L. Aaron

Key Investors Issues

- Earnings per share fell to 89 cents versus $1.02 per share in prior year.
- Quarterly revenue rose 10% over previous year to $1.05 billion.
- In Q4, Tiffany repurchased 9,299,491 shares at an average cost of $44.99 per share.

Fourth Quarter Fiscal 2007 Financial Highlights

Net earnings in the fourth quarter declined 16% to $118.3 million or 89 cents per diluted share, from $140.5 million or $1.02 per diluted share, in the prior year.

Net earnings in the fiscal year increased 20% to $303,772,000, or $2.20 per share, compared with $253,927,000, or $1.80 per share.

Earnings in the current year were adversely affected by several one-time items:

- In the fourth quarter, the company recorded a pre-tax charge of 9 cents per share after tax, in cost of sales for product obsolescence related to management''s decision to discontinue certain watch models in anticipation of the start-up of its strategic alliance with The Swatch Group Ltd.
- In the fourth quarter, the company recorded a pre-tax impairment charge of 7 cents per share after tax, in selling, general and administrative expenses; this charge resulted from lower-than-expected store performance and a related reduction in future cash flow projections associated with the company''s IRIDESSE subsidiary.

- In the fourth quarter, the company recorded a pre-tax impairment charge of 22 cents per share after tax, in SG&A expenses to reflect the expectation that loans made by the company to Tahera Diamond Corporation will not be repaid. This charge represents the full amount of loans to Tahera, inclusive of accrued interest. In January 2008, Tahera sought judicial protection from creditors.
- In the third quarter, the company completed the sale-leaseback of the multi-tenant building housing its Tokyo flagship store for proceeds of $327,537,000. The company recorded as other operating income a pre-tax gain of 48 cents per diluted share after tax; a deferred pre-tax gain of $75,244,000 will be amortized in SG&A expenses over the 15-year lease period. The company contributed 4 cents per share after tax, of the proceeds to The Tiffany & Co. Foundation.
- In the third quarter, the company sold its Little Switzerland business for proceeds of $32,870,000. The company''s full year pre-tax loss associated with Little Switzerland of $59,661,000, or 20 cents per diluted share after tax, included a pre-tax charge of $54,260,000, or 16 cents per diluted share after tax, tied to the sale.

Net sales in the fourth quarter rose 10% to $1.05 billion.

On a constant-exchange-rate basis, net sales increased 7% due to incremental sales from newly-opened stores and a 1% increase in worldwide comparable store sales.

- U.S. Retail sales increased 4% to $527,945,000 in the fourth quarter due to higher spending per transaction as well as an increased number of transactions.
- International Retail sales rose 21% to $422,567,000 in the fourth quarter. On a constant-exchange-rate basis, sales rose 14% due to increased sales in markets other than Japan.
- Direct Marketing sales declined 1% in the fourth quarter to $77,355,000.
- Other sales rose 9% to $25,290,000 in the fourth quarter. Sales growth was largely due to wholesale sales of diamonds.

Net sales in the fiscal year increased 15% to $2,938,771,000. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales increased 13% and worldwide comparable store sales increased 7%.

The 10% worldwide sales growth in the quarter was spread across a number of jewelry categories.

Engagement jewelry sales continued at a strong pace in the U.S. and internationally for the quarter and solitaire diamond ring sales rose more than 20% for the year. The average price of an engagement ring sold rose to $7,000 worldwide in 2007, from $6500 in the prior year.

Celebration ring sales are also maintaining strong popularity with existing and new designs and the legacy jewelry collection is a solid performer, along with some of the established favorites like the swing, jazz, and bubbles collection.

At more modest prices, sales of charm jewelry in silver and gold also rose at a strong pace and the firm is pleased with the results from its new Somerset collection. The ongoing favorites in silver and gold also include the Atlas, 1837, and Return to Tiffany collections. The average price per piece of silver jewelry sold in 2007 rose to $196 worldwide from $189 in the prior year. Name designer jewelry sales posted a decent increase in the quarter and year.

Despite some softening in the U.S. in the fourth quarter, worldwide statement jewelry sales for the year were quite strong, most notably in the U.S. as well as in certain international markets. Strong unit growth in statement jewelry was supplemented by an increase in the average price per piece sold to $96,000 worldwide from $93,000 in the prior year.

Gross margin, as a percentage of net sales, was 56.9% in the fourth quarter versus 57.6% in the prior year.