To ensure the integrity of our supply chain, Tiffany created Laurelton Diamonds, a wholly owned
subsidiary that procures rough diamonds and manages our worldwide supply chain that sources,
cuts, polishes and supplies finished stones to Tiffany.

Laurelton Diamonds sources diamonds from known sources across the globe, primarily in
Africa, Canada and Russia.

In creating Laurelton Diamonds, Tiffany recognized early on that diamond-producing countries want,
and indeed deserve, to benefit from their diamond resources. We wholeheartedly support this
process of producer country beneficiation. We believe that diamond activities should be used to
further develop and sustain economies, to create employment opportunities and to support the
broader social goals of communities and nations. It is our responsibility to contribute to this effort.

Our first investment in a producer country was in Yellowknife, Canada in 2002. Since then we
have invested in diamond sourcing and polishing operations in South Africa, Namibia and Botswana.
Our approach to investing is based on long-term sustainability. Our facilities are equipped with
custom-designed, state-of-the-art equipment and our employee development and training programs
are designed to equip the local workforce to meet Tiffany’s exacting quality standards.

Tiffany & Co. purchases diamonds only in those countries that are full participants in the Kimberley
Process Certification Scheme (KPCS). This is an international cooperative monitoring system
created to eliminate the flow of "conflict diamonds"—diamonds that are smuggled out of war-torn
regions by those seeking to finance violence. The Kimberley Process requires the participating
countries to tightly control the import and export of rough diamonds. Also, the KPCS requires
establishing control systems over private sectors that trade in rough diamonds. To comply with this
process, rough diamonds may only move among participating countries in sealed containers with
accompanying documentation evidencing that the diamonds are conflict-free.

We applaud the creation of the KPCS thanks to the cooperative efforts of governments, the diamond
industry and nongovernmental organizations such as Global Witness and Partnership Africa Canada.
We are encouraged by the progress that has been made since the system was put in place in 2003.

The KPCS is not yet perfect and much work remains to be done. Tiffany supports a strengthening of
the Kimberley Process, including the development of minimum control standards to be implemented in
every participating country, more rigorous compliance monitoring of rough diamond imports and
exports and the implementation of auditable systems to allow more objective assessment of industry
compliance with the Kimberley Process. Tiffany also supports more transparent reporting of diamond
production and trade statistics and the establishment of permanent funding mechanisms to assure
that financial resources are available to support Kimberley Process Certification Scheme activities.