TIFFANY & CO.
 



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the fiscal year ended January 31, 2004
 
or
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934
    For the transition period from           to

Commission file no. 1-9494

TIFFANY & CO.

(Exact name of registrant as specified in its charter)
     
Delaware
  13-3228013
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
 
727 Fifth Avenue, New York, New York   10022
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code: (212) 755-8000


Securities registered pursuant to Section 12(b) of the Act:

     
Title of each class Name of each exchange On which registered


Common Stock, $.01 par value per share
  New York Stock Exchange
Stock Purchase Rights
  New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:

None

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ          No o

      As of July 31, 2003 the aggregate market value of the registrant’s voting and non-voting stock held by non-affiliates of the registrant was approximately $4,942,290,723 using the closing sales price on this day of $34.36. See Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters below.

      As of March 25, 2004, the registrant had outstanding 146,922,669 shares of its common stock, $.01 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE.

      The following documents are incorporated by reference into this Annual Report on Form 10-K: Registrant’s Annual Report to Stockholders for the Fiscal Year Ended January 31, 2004 (Parts I, II and IV) and Registrant’s Proxy Statement Dated April 12, 2004 (Part III).




 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K, including information incorporated herein by reference, contains certain “forward-looking statements” concerning the Registrant’s objectives and expectations regarding store openings, retail prices, gross margin, expenses, inventory performance, capital expenditures and cash flow. In addition, management makes other forward-looking statements from time to time concerning objectives and expectations. Statements beginning with such words as “believes”, “intends”, “plans”, and “expects” include forward-looking statements that are based on management’s expectations given facts as currently known by management on the date this Annual Report on Form 10-K was first filed with the Securities and Exchange Commission. All forward-looking statements involve risks, uncertainties and assumptions that, if they never materialize or prove incorrect, could cause actual results to differ materially from those expressed or implied by such forward-looking statements. As a jeweler and specialty retailer, the Registrant’s success in achieving its objectives and expectations is partially dependent upon economic conditions, competitive developments and consumer attitudes. However, certain assumptions are specific to the Registrant and/or the markets in which it operates. The following assumptions, among others, are “risk factors” which could affect the likelihood that the Registrant will achieve the objectives and expectations communicated by management: (i) that low or negative growth in the economy or in the financial markets, particularly in the U.S. and Japan, will not occur and reduce discretionary spending on goods that are, or are perceived to be, “luxuries”; (ii) that consumer spending does not decline substantially during the fourth quarter of any year; (iii) that unsettled regional and/or global conflicts or crises do not result in military, terrorist and/or other conditions creating disruptions or disincentives to, or changes in the pattern, practice or frequency of tourist travel to the various regions where the Registrant operates retail stores nor to the Registrant’s continuing ability to operate in those regions; (iv) that sales in Japan will not decline substantially; (v) that there will not be a substantial adverse change in the exchange relationship between the Japanese yen and the U.S. dollar; (vi) that Mitsukoshi Ltd. of Japan and other department store operators in Japan, in the face of declining or stagnant department store sales, will not close or consolidate stores which have TIFFANY & CO. retail locations; (vii) that Mitsukoshi will continue as a leading department store operator in Japan; (viii) that existing product supply arrangements, including license arrangements with third-party designers Elsa Peretti and Paloma Picasso, will continue; (ix) that the wholesale market for high-quality rough and cut diamonds will provide continuity of supply and pricing; (x) that the investment in Aber Diamond Corporation achieves its financial and strategic objectives; (xi) that new systems, particularly for inventory management, can be successfully integrated into the Registrant’s operations; (xii) that distribution and manufacturing productivity and capacity can be further improved to support the Registrant’s expanding requirements; (xiii) that new and existing stores and other sales locations can be leased, re-leased or otherwise obtained on suitable terms in desired markets and that construction can be completed on a timely basis; (xiv) that the Registrant can successfully improve the results of Little Switzerland, Inc. and achieve satisfactory results from any future ventures into which it enters that are operated under non-TIFFANY & CO. trademarks or trade names; and (xv) that the Registrant’s expansion plans for retail and direct selling operations and merchandise development, production and management can continue to be executed without meaningfully diminishing the distinctive appeal of the TIFFANY & CO. brand.

      

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     The statements in this Annual Report on Form 10-K are made as of the date this Annual Report on Form 10-K was first filed with the Securities and Exchange Commission and the Registrant undertakes no obligation to update any of the forward-looking information included in this document, whether as a result of new information, future events, changes in expectations or otherwise.

Website Access to Information

     The Registrant provides access free of charge, through its website at www.tiffany.com, to the Registrant’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission.

PART I

Item 1. Business

     (a) General history of business.

     Registrant (also referred to as the “Company”) is the parent corporation of Tiffany and Company (“Tiffany”). Charles Lewis Tiffany founded Tiffany’s business in 1837. He incorporated Tiffany in New York in 1868. Registrant acquired Tiffany in 1984 and completed the initial public offering of Registrant’s Common Stock in 1987.

     (b) Financial information about industry segments.

     Registrant’s segment information for the fiscal years ended January 31, 2004, 2003 and 2002 is incorporated by reference from Registrant’s Annual Report to Stockholders for the Fiscal Year ended January 31, 2004 (Note R. “Segment Information”). The Executive Officers of the Company do not evaluate the performance of the Company’s assets on a segment basis for internal management reporting and, therefore, such information is not presented.

     (c) Narrative description of business.

     As used below, the terms “Fiscal 2001”, “Fiscal 2002” and “Fiscal 2003” refer to the fiscal years ended on January 31, 2002, 2003 and 2004, respectively. Registrant is a holding company, and conducts all business through its subsidiary corporations.

Products

     Registrant’s principal product categories are fine jewelry, timepieces, sterling silver goods, china, crystal, stationery, fragrances and personal accessories.

     Registrant offers an extensive selection of TIFFANY & CO. brand jewelry at a wide range of prices. In Fiscal 2001, 2002 and 2003, approximately 79%, 80% and 82%, respectively, of

      

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Registrant’s net sales were attributable to jewelry. Products identified in Registrant’s merchandise assortment as engagement jewelry accounted for approximately 19% of net sales in Fiscal 2003. See Merchandise Purchasing, Manufacturing and Raw Materials below. Designs are developed by employees, suppliers, independent designers and independent “name” designers. See Designer Licenses below.

     In addition to jewelry, the Company sells TIFFANY & CO. brand merchandise in the following categories: timepieces and clocks; sterling silver merchandise, including flatware, hollowware (tea and coffee services, bowls, cups and trays), trophies, key holders, picture frames and desk accessories; stainless steel flatware; crystal, glassware, china and other tableware; custom engraved stationery; writing instruments; and fashion accessories. Fragrance products are sold under the trademarks TIFFANY, PURE TIFFANY and TIFFANY FOR MEN. Tiffany also sells other brands of timepieces and tableware in its U.S. stores.

Distribution and Marketing

Channels of Distribution

     For financial reporting purposes, Registrant categorizes its sales as follows:

U.S. Retail consists of retail sales transacted in Tiffany-operated stores in the United States (see U.S. Retail below);

Direct Marketing consists of U.S. business-to-business, direct mail catalog and Internet sales (see Direct Marketing below);

International Retail consists of both retail and wholesale sales to customers located outside the United States, as well as a limited amount of business-to-business sales and Internet sales (see International Retail below); and

Specialty Retail consists of retail and wholesale sales transacted under non-TIFFANY trademarks and trade names. It includes sales transacted in LITTLE SWITZERLAND and TEMPLE ST. CLAIR stores and will include sales under other marks to be developed.

U.S. Retail

New York Flagship

     Tiffany’s New York flagship store on Fifth Avenue accounts for a significant portion of the Company’s sales and is the focal point for marketing and public relations efforts. Approximately 11%, 10% and 9% of total Company net sales for Fiscal 2001, 2002 and 2003, respectively, were attributable to the New York store’s retail sales. In Fiscal 2000, Tiffany commenced a multiyear renovation and reconfiguration project to increase the store’s selling space and provide additional floor space for customer service and special exhibitions. Tiffany opened the additional selling floor in 2001, and renovations of three other floors were completed by the end of Fiscal 2003. Tiffany anticipates completion of its renovation plans within the next three years.

      

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U.S. Branch Stores

     At January 31, 2004, in addition to its New York flagship store, Tiffany had 50 branch stores in the United States. The following table identifies the location and year of opening of each U.S. branch store:

U.S. Branch Store Openings

                     
    Year       Year
Store Location
  Opened
  Store Location
  Opened
San Francisco, California
  1963       Palo Alto, California   1997    
Houston, Texas
  1963       Denver, Colorado   1998    
Beverly Hills, California
  1964       Las Vegas, Nevada   1998    
Chicago, Illinois
  1966       Manhasset, New York   1998    
Atlanta, Georgia
  1969       Seattle, Washington   1998    
Dallas, Texas
  1982       Scottsdale, Arizona   1998    
Boston, Massachusetts
  1984       Century City, California   1999    
Costa Mesa, California
  1988       Dallas (NorthPark), Texas   1999    
Philadelphia, Pennsylvania
  1990       Boca Raton, Florida   1999    
Vienna, Virginia
  1990       Tamuning, Guam   1999    
Palm Beach, Florida
  1991       Old Orchard, (Skokie) Illinois   2000    
Honolulu, Hawaii (Ala Moana)
  1992       Maui, Hawaii (Wailea)   2000    
San Diego, California
  1992       Greenwich, Connecticut   2000    
Troy, Michigan
  1992       Portland, Oregon   2000    
Bal Harbour, Florida
  1993       Tampa, Florida   2001    
Maui, Hawaii
  1994       Santa Clara (San Jose), California   2001    
Oak Brook, Illinois
  1994       Honolulu, Hawaii (Waikiki)   2002    
King of Prussia, Pennsylvania
  1995       Bellevue, Washington   2002    
Short Hills, New Jersey
  1995       East Hampton, New York   2002    
White Plains, New York
  1995       St. Louis, Missouri   2002    
Hackensack, New Jersey
  1996       Orlando, Florida   2002    
Chevy Chase, Maryland
  1996       Coral Gables, Florida   2003    
Charlotte, North Carolina
  1997       Tumon Bay (DFS), Guam ††   2003    
Chestnut Hill, Massachusetts
  1997       Palm Desert, California   2003    
Cincinnati, Ohio
  1997       Walnut Creek, California   2003    

†Replaced two previously existing Honolulu locations.

††Conversion from DFS trade location to U.S. Retail.

     Most of Tiffany’s U.S. branch stores display a representative selection of merchandise, but none of them maintains the extensive selection carried by the New York store. Management currently contemplates the opening of new TIFFANY & CO. branch stores in the United States at the rate of approximately three to five per year. Management regularly evaluates potential markets for new TIFFANY & CO. stores with a view to the demographics of the area to be served, consumer demand and the proximity of other luxury brands and existing TIFFANY & CO. locations, recognizing that over-saturation of any market could diminish the distinctive appeal of the

      

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TIFFANY & CO. brand. However, management believes that there are a significant number of locations remaining in the United States that meet the requirements of a TIFFANY & CO. location, particularly when smaller format stores are opened. Tiffany has entered into lease agreements to open additional branches in 2004 in Edina, Minnesota, Kansas City, Missouri, Palm Beach Gardens, Florida and Westport, Connecticut. See Item 2. Properties below for further information concerning U.S. Retail store leases. U.S. TIFFANY & CO. branch stores range in size from approximately 1,500 to 16,000 gross square feet and total approximately 384,000 gross square feet. Prior to 1993, an average of approximately 45% of the floor space in each branch store was devoted to retail selling. Stores opened between 1993 and 2001 generally range from approximately 4,000 to 7,000 gross square feet and are designed to devote approximately 60-70% of total floor space to retail selling. Branch stores opened after 2001 feature a store design format of approximately 5,000 square feet in size and display primarily fine jewelry and timepieces, with a select assortment of china and crystal giftware. The East Hampton location is approximately 3,000 square feet in size and represents the first “resort” store.

Direct Marketing

Business Sales Division

     Business Sales Division sales executives call on business clients throughout the United States, selling products drawn from the retail product line and items specially developed or sourced for the business market, including trophies and items designed for the particular customer. Price allowances are given to business account holders for certain purchases. Business Sales Division customers have typically purchased for business gift giving, employee service and achievement recognition awards, customer incentives and other purposes. During Fiscal 2003, the Company discontinued its service award programs.1 Products and services are marketed through an organization of approximately 120 persons through advertising in newspapers and business periodicals and through the publication of special catalogs. Business account holders may also make gift purchases through the Company’s Web site at www.tiffany.com.

Catalogs

     Tiffany also distributes catalogs of selected merchandise to its proprietary list of retail mail and telephone customers and to mailing lists rented from third parties. SELECTIONS® catalogs are published, supplemented by COLLECTIONS and other catalogs.

Internet

     The Company distributes a selection of more than 2,400 products through its Web site at www.tiffany.com. The Company expects to continue its expansion of merchandise selection and services on the site based on customer needs.


1   Service award programs represented approximately 14% of Direct Marketing Sales in Fiscal 2002 and 6% of Direct Marketing Sales in Fiscal 2003.

      

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The following table sets forth certain data with respect to mail, telephone and Internet order operations for the periods indicated:

                         
    Fiscal Year
    2001
    2002
   2003
Number of names on catalog mailing and Internet
lists at year-end (consists of customers who
purchased by mail, telephone or Internet prior to
the applicable date):
    1,497,407
 
      1,788,008
 
      2,237,349
 
 
 
Total catalog mailings during fiscal year (in
millions):
    25.9       24.0       24.9  
 
Total mail, telephone or Internet orders received
during fiscal year:
    492,538       614,610       728,525  

International Retail

     Stores and boutiques included in the International Retail channel of distribution are listed on the following page.

      

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International Locations

Locations Operated by Registrant’s Subsidiaries

     
Japan
  Asia-Pacific Excluding Japan
* Operated by Registrant’s Subsidiaries with Mitsukoshi Ltd.
   

 
 
 
Abeno, Kintetsu Department Store
  Australia: Melbourne, Collins Street
Chiba, Mitsukoshi Department Store *
  Australia: Sydney, Chifley Plaza
Fukuoka, Mitsukoshi *
  China, Beijing, The Palace Hotel
Fukuoka, Mitsukoshi Department Store *
  Hong Kong: Hong Kong Airport
Ginza, Mitsukoshi Department Store *
  Hong Kong: International Finance Center
Hiroshima, Mitsukoshi Department Store *
  Hong Kong: Landmark Center
Ikebukuro, Mitsukoshi Department Store *
  Hong Kong: Pacific Place
Ikebukuro, Tobu Department Store
  Hong Kong: Peninsula Hotel
Kagoshima, Mitsukoshi Department Store *
  Hong Kong: Sogo Department Store
Kanazawa, Mitsukoshi *
  Korea: Pusan, Paradise Hotel
Kashiwa, Takashimaya Department Store
  Korea: Seoul, Galleria Department Store
Kawasaki, Saikaya Department Store
  Korea: Seoul, Hyundai Department Store
Kobe, Daimaru Department Store
  Korea: Seoul, Hyundai Coex Department Store
Kochi, Daimaru Department Store
  Korea: Seoul, Lotte Downtown Department Store
Kokura, Izutsuya Department Store
  Korea: Seoul, Lotte World
Koriyama, Usui Department Store
  Malaysia: Suria KLCC
Kumamoto, Tsuruya Department Store
  Singapore: Ngee Ann City
Kurashiki, Mitsukoshi Department Store *
  Singapore: Raffles Hotel
Kyoto, Daimaru Department Store
  Taiwan: Kaohsiung, Hanshin Department Store
Kyoto, Takashimaya Department Store
  Taiwan: Taipei, Regent Hotel
Matsuyama, Mitsukoshi Department Store *
  Taiwan: Taipei, Sogo Department Store
Nagano, Mitsukoshi *(Closed 2/04)
  Taiwan: Taichung, Sogo Department Store
Nagoya Hoshigaoka, Mitsukoshi Dept. Store *
 
Nagoya, Mitsukoshi *
  Europe
Nagoya, Takashimaya Department Store
 
Nihonbashi, Mitsukoshi Department Store *
  England: London, Old Bond Street
Niigata, Mitsukoshi Department Store *
  England: London, The Royal Exchange
Oita, Tokiwa Department Store
  England: London, Harrod’s Department Store
Okayama, Tenmaya Department Store
  England: London, Sloane Street (Opened 4/04)
Okinawa, Mitsukoshi Department Store *
  France: Paris, Rue de la Paix
Osaka, Mitsukoshi Department Store *
  France: Paris, LePrintemps Department Store
Osaka, Takashimaya Department Store
  Germany: Frankfurt
Sagamihara, Isetan Department Store
  Germany: Munich
Sapporo, Mitsukoshi Department Store *
  Italy: Florence
Sapporo, Daimaru Dept. Store
  Italy: Milan
Sendai, Mitsukoshi Department Store *
  Italy: Rome
Shinjuku, Isetan Department Store
  Switzerland: Zurich
Shinjuku, Mitsukoshi Department Store *
   
Shinsaibashi, Daimaru Department Store
   
Shizuoka, Matsuzakaya Department Store
   
Tachikawa, Isetan Department Store
   
Takamatsu, Mitsukoshi Department Store *
   

     Continued on Next Page

     
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Japan (Cont’d)
   
* Operated by Registrant’s Subsidiaries with Mitsukoshi Ltd
  Canada and Central/South America

 
 
 
Tamagawa, Takashimaya Department Store
   
Tokyo Bay, Ikspiari *
  Canada: Toronto
Tokyo, Ginza Flagship Store *
  Mexico: Mexico City, Palacio Store, Polanco
Tottori, Daimaru Department Store
  Mexico: Mexico City, Palacio Store, Perisur
Umeda, Daimaru Department Store
  Mexico: Mexico City, Masaryk
Utsunomiya, Tobu Department Store
  Mexico: Puebla, Palacio Store
Wakayama, Kintetsu Department Store (Opened 3/04)
  Brazil: Sao Paulo, Iguatemi Shopping Center
Yokohama, Landmark Plaza, Mitsukoshi *
  Brazil: Sao Paulo, Jardins
Yokohama, Mitsukoshi Department Store *
   

Business with Mitsukoshi

     On August 1, 2001, Registrant’s wholly-owned subsidiary, Tiffany & Co. Japan Inc. (“Tiffany-Japan”) entered into agreements with Mitsukoshi Ltd. of Japan (“Mitsukoshi”). These agreements continue long-standing commercial relationships that Registrant and its affiliated companies have had with Mitsukoshi. These agreements will expire on January 31, 2007.

     In the fiscal years ended January 31, 2002, 2003 and 2004, respectively, total Japan sales represented 28%, 26% and 24% of Registrant’s net sales. Sales recorded in retail locations operated in connection with Mitsukoshi accounted for 18%, 16% and 14% of Registrant’s net sales in those years.

     Tiffany-Japan has merchandising and marketing responsibilities in the operation of TIFFANY & CO. boutiques in Mitsukoshi’s stores and other locations throughout Japan. Mitsukoshi acts for Tiffany-Japan in the sale of merchandise owned by Tiffany-Japan and Registrant recognizes as revenues the retail price charged to the ultimate consumer in Japan. Tiffany-Japan holds inventories for sale, establishes retail prices, bears the risk of currency fluctuations, provides one or more brand managers in each boutique, controls merchandising and displays within the boutiques, manages inventory and controls and funds all advertising and publicity programs with respect to TIFFANY & CO. merchandise. Mitsukoshi provides and maintains boutique facilities and assumes retail credit and certain other risks.

     Mitsukoshi provides retail staff in “Standard Boutiques” and Tiffany-Japan provides retail staff in “Concession Boutiques.” At present, there are 13 Standard Boutiques and 11 Concession Boutiques. One existing boutique will be converted from a Standard to Concession Boutique. Risk of inventory loss varies depending on whether the boutique is a Standard Boutique or a Concession Boutique. Mitsukoshi bears responsibility for loss or damage to the merchandise in Standard Boutiques and Tiffany-Japan bears the risk in Concession Boutiques.

     Mitsukoshi retains a portion (the “basic portion”) of the net retail sales made in TIFFANY & CO. Boutiques. The basic portion varied depending on the type of Boutique and the retail price of the merchandise involved. Through January 31, 2003, Mitsukoshi’s basic portion was 27% in Standard Boutiques and 20% in Concession Boutiques for most merchandise. From February 1, 2003 through the expiration of the 2001 Agreement, the highest basic portion available to Mitsukoshi in any Standard Boutique will be 26% and for any Concession Boutique, not less than 17%.

     
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     Tiffany-Japan also pays Mitsukoshi an incentive fee of five percent of the amount by which boutique sales increase above “Target Sales” calculated on a per-boutique basis. Target Sales means a year-to-year increase that is greater than the lesser of (i) 10% or (ii) a sales goal set by Tiffany-Japan.

     In June 2003, through its purchase of a trust beneficiary interest, Registrant’s Japanese affiliate acquired the land and building housing the 12,000 square foot TIFFANY & CO. store located in Tokyo’s Ginza shopping district (the “Tokyo Flagship Store”). The Tokyo Flagship Store is leased by Tiffany-Japan to Mitsukoshi. Tiffany-Japan bears all costs of operating the Premises. Tiffany-Japan selects and furnishes merchandise for display in the Flagship Store, prices the merchandise for retail sale, bears all risk of loss until the merchandise is sold to a customer and determines all issues of display, packaging, signage and advertising. Mitsukoshi acts for Tiffany-Japan in the sale of the merchandise, collects and holds the sales proceeds, makes credit available to customers, bears all credit losses and provides its point-of-sale transaction processing system (the “POS System”). Tiffany-Japan provides all necessary staff other than employees provided by Mitsukoshi in connection with the POS System. Management of the Flagship Store, other than with respect to the POS System, is the responsibility of Tiffany-Japan.

     After compensating Tiffany-Japan on a percentage-of-sales basis for rent and staffing, Mitsukoshi is allocated 3% of net sales.

International Wholesale Distribution

     Selected TIFFANY & CO. merchandise is sold to independent distributors for resale in markets in Central/Latin/South American, Caribbean, Canadian, Asia-Pacific, Russian and Middle Eastern regions. Such sales represented 1.5% of total sales in Fiscal 2003.2

     Management anticipates continued expansion of international wholesale distribution in Central/Latin/South American, Caribbean and Asia-Pacific regions as markets are developed.


2   As of the end of fiscal year 2001 the Company discontinued wholesale sales of jewelry and fragrance in Europe. This change has not had a significant impact on sales or profits and has enabled the Company to better manage the TIFFANY & CO. brand and to focus management efforts on Company-operated stores in Europe.
     
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Expansion of Worldwide Retail Operations

     Registrant expects to continue to open stores in locations outside the United States. However, the timing and success of this program will depend upon many factors, including Registrant’s ability to obtain suitable retail space on satisfactory economic terms and the extent of consumer demand for TIFFANY & CO. products in overseas markets. Such demand varies from market to market.

     The Company’s commercial relationship with Mitsukoshi and Mitsukoshi’s ability to continue as a leading department store operator have been and will continue to be substantial factors in the Company’s continued success in Japan. Presently, TIFFANY & CO. boutiques are located in 24 Mitsukoshi department stores and other retail locations operated with Mitsukoshi in Japan. The Company also operates 26 boutiques primarily in department stores other than Mitsukoshi, in locations within Japan but outside of Tokyo, and plans to open more.

     The arrangements with other Japanese department stores are substantially similar to the Company’s relationship with Mitsukoshi, with varying fees from store to store.

     In recent years, the Japanese department store industry has, in general, suffered declining sales. There is a risk that such financial difficulties will force consolidations or store closings. Should one or more Japanese department store operators, such as Mitsukoshi, elect or be required to close one or more stores now housing a TIFFANY & CO. boutique, the Company’s sales and earnings would be reduced while alternate premises are being obtained.

     Tiffany began its ongoing program of international expansion through proprietary retail stores in 1986 with the establishment of the London flagship store. Company-operated international TIFFANY & CO. stores and boutiques range in size from approximately 700 to 15,000 gross square feet and total approximately 248,000 gross square feet devoted to retail purposes. The following chart details the growth in the Company’s stores and boutiques since Fiscal 1987 on a worldwide basis:

     
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Worldwide TIFFANY & CO. Retail Locations Operated by Registrant’s Subsidiary Companies

                                                 
    Americas and Europe
  Asia-Pacific
   
        Canada,                
        Central/Latin                
End of       /South                
Fiscal:
  U.S.
  Americas
  Europe
  Japan
  Elsewhere
  Total
1987
    8       0       2       0       0       10  
1988
    9       0       3       0       1       13  
1989
    9       0       5       0       2       16  
1990
    12       0       5       0       3       20  
1991
    13       1       7       0       4       25  
1992
    16       1       7       7       4       35  
1993
    16       1       6       37 **     5       65  
1994
    18       1       6       37       7       69  
1995
    21       1       6       38       9       75  
1996
    23       1       6       39       12       81  
1997
    28       2       7       42       17       96  
1998
    34       2       7       44       17       104  
1999
    38       3       8       44       17       110  
2000
    42       4       8       44       21       119  
2001
    44       5       10       47       20       126  
2002
    47       5       11       48       20       131  
2003
    51       7       11       50       22       141  

**Prior to July 1993, many TIFFANY & CO. boutiques in Japan were operated by Mitsukoshi (ranging from 21 in 1987 to 29 in 1993). See Business with Mitsukoshi above.

Specialty Retail

     In Fiscal 2002, the Company established this new channel of distribution to include the consolidated results of existing or future ventures that sell or will sell merchandise under non-TIFFANY trademarks and trade names. Specialty retail sales accounted for 4% of net sales in Fiscal 2003.

     Registrant believes that Specialty Retail offers an opportunity to achieve incremental growth in sales and earnings without diminishing the distinctive appeal of the TIFFANY & CO. brand. Ventures to be developed or acquired for the Specialty Retail channel have been and will be chosen with a view to more fully exploiting Registrant’s established infrastructure for distribution and manufacturing of luxury products, manufacturing, store development and brand management.

     
- Page 12 -   Tiffany & Co. Report on Form 10-K FY 2003


 

Little Switzerland, Inc.

     In October 2002, the Company, through a subsidiary, completed the acquisition of all the shares of Little Switzerland, Inc., a specialty retailer of brand name watches, jewelry, china, crystal and giftware. Little Switzerland stores are located on six Caribbean islands (St. Thomas (3); St. Maarten/St. Martin (3); St. John (1); Aruba (6); Curacao (1); and Barbados (1)) and in Florida (Key West (3)) and Alaska (Skagway (2); Juneau (1); and Ketchikan (1)), and appeal primarily to tourists from the United States. Little Switzerland sells primarily non-TIFFANY brand products, but certain stores carry selected TIFFANY & CO. merchandise.

Temple St. Clair L.L.C.

     In December 2002, the Company, through a subsidiary, made an investment in Temple St. Clair L.L.C., a privately held company engaged in the design and wholesale sale of fine jewelry in the United States, using the exclusive designs of Temple St. Clair Carr. In late Fiscal 2003, Temple St. Clair opened its first retail boutiques in Costa Mesa, California and Short Hills, New Jersey. The results of Temple St. Clair operations are being consolidated in the Registrant’s financial statements based upon ownership interest and control over the operations of the business.

Advertising and Promotion

     Tiffany regularly advertises primarily in newspapers and magazines and periodically conducts product promotional events. In Fiscal 2001, 2002 and 2003, Tiffany spent approximately $86.4 million, $101.9 million, and $122.4 million, respectively, on worldwide advertising, which include media, production, catalogs, promotional events and other related costs.

     Public Relations (promotional) activity is a significant aspect of Registrant’s business. Management believes that Tiffany’s image is enhanced by a program of charity sponsorships, grants and merchandise donations. Donations are also made to The Tiffany & Co. Foundation, a private foundation organized to support other 501(c)(3) charitable organizations with efforts concentrated in the education and preservation of the arts and environmental conservation. The Company also engages in a program of retail promotions and media activities to maintain consumer awareness of the Company and its products. Each year, Tiffany publishes its well-known Blue Book which showcases fine jewelry and other merchandise. Tiffany’s window displays are another important aspect of Tiffany’s promotional efforts. John Loring, Tiffany’s Design Director, is the author of numerous books featuring TIFFANY & CO. products. Registrant considers these and other promotional efforts important in maintaining Tiffany’s image as an arbiter of taste and style.

     
- Page 13 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

Trademarks

     The designations TIFFANY® and TIFFANY & CO.® are the principal trademarks of Tiffany, as well as serving as trade names. Through its subsidiaries, the Company has obtained and is the proprietor of trademark registrations for TIFFANY and TIFFANY & CO., as well as the TIFFANY BLUE BOX® and the color TIFFANY BLUE® for a variety of product categories in the United States and in other countries. Over the years, Tiffany has maintained a program to protect its trademarks and has instituted legal action where necessary to prevent others either from registering or using marks which are considered to create a likelihood of confusion with the Company or its products. Tiffany has been generally successful in such actions and management considers that its United States trademark rights in TIFFANY and TIFFANY & CO. are strong. However, use of the designation TIFFANY by third parties (often small companies) on unrelated goods or services, frequently transient in nature, may not come to the attention of Tiffany or may not rise to a level of concern warranting legal action. Tiffany actively pursues those who counterfeit or sell counterfeit TIFFANY & CO. goods through civil action and cooperation with criminal law enforcement agencies. However, counterfeit TIFFANY & CO. goods remain available in many markets and the cost of enforcement is expected to continue to rise.

     Despite the general fame of the TIFFANY and TIFFANY & CO. name and mark for the Company’s products and services, Tiffany is not the sole person entitled to use the name TIFFANY in every category in every country of the world; third parties have registered the name TIFFANY in the United States in the food services category, and in a number of foreign countries in respect of certain product categories (including, in a few countries, the categories of fragrance, cosmetics, jewelry, eyeglass frames, clothing and tobacco products) under circumstances where Tiffany’s rights were not sufficiently clear under local law, and/or where management concluded that Tiffany’s foreseeable business interests did not warrant the expense of litigation.

Designer Licenses

     Tiffany has been the sole licensee for jewelry designed by Elsa Peretti, Paloma Picasso and the late Jean Schlumberger since 1974, 1980 and 1956, respectively. In 1992, Tiffany acquired trademark and other rights necessary to sell the designs of the late Mr. Schlumberger under the TIFFANY-SCHLUMBERGER trademark. Ms. Peretti and Ms. Picasso retain ownership of copyrights for their designs and of their trademarks and exercise approval rights with respect to important aspects of the promotion, display, manufacture and merchandising of their designs. Tiffany is required by contract to devote a portion of its advertising budget to the promotion of their respective products; each is paid a royalty by Tiffany for jewelry and other items designed by them and sold under their respective names. Written agreements exist between Ms. Peretti and Tiffany and between Ms. Picasso and Tiffany but may be terminated by either party following six months notice to the other party. Tiffany is the sole retail source for merchandise designed by Ms. Peretti worldwide; however, she has reserved by contract the right to appoint other distributors in markets outside the United States, Canada, Japan, Singapore, Australia, Italy, the United Kingdom, Switzerland and Germany.

     The designs of Ms. Peretti accounted for 15% of the Company’s net sales in Fiscal 2001, 2002 and 2003. Merchandise designed by Ms. Picasso accounted for 3%, 4% and 4% of the Company’s net sales in Fiscal 2001, 2002 and 2003, respectively.

     
- Page 14 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

     Registrant’s operating results could be adversely affected were it to cease to be a licensee of either of these designers or should its degree of exclusivity in respect of their designs be diminished.

Merchandise Purchasing, Manufacturing and Raw Materials

     Merchandise offered for sale by the Company is supplied from Tiffany’s jewelry and silver goods manufacturing facility in Cumberland, Rhode Island and Tiffany’s workshops in New York City and Pelham, New York; Parsippany, New Jersey; Salem, West Virginia; and Paris, France and through purchases and consignments from others. It is Registrant’s long-term objective to continue its expansion of Tiffany’s internal manufacturing operations. However, it is not expected that Tiffany will ever manufacture all of its needs. Factors to be considered in its decision to outsource manufacturing include product quality, gross margin improvement, access to or mastery of various jewelry-making skills and technology, support for alternative capacity and the cost of capital investments. The following table shows Tiffany’s sources of jewelry merchandise, based on cost, for the periods indicated:

             
Jewelry Merchandise   Fiscal Years
    2001
  2002
  2003
Finished Goods produced by Tiffany*
  58%   58%   57%
 
Finished Goods purchased from others
  42   42   43
 
 
 
 
 
 
 
Total
  100%   100%   100%
 
 
 
 
 
 
 

*Includes raw materials provided by Tiffany to subcontractors; Fiscal 2001 and 2002 have been restated.

     A substantial majority of non-jewelry merchandise is purchased from others.

     Gems and precious metals used in making Tiffany’s jewelry may be purchased from a variety of sources. For the most part, purchases of such materials are from suppliers with which Tiffany enjoys long-standing relationships.

     Products containing one or more diamonds of varying sizes, including diamonds used as accents, side-stones and center-stones, accounted for approximately 38%, 36% and 40% of Tiffany’s net sales in Fiscal 2001, 2002 and 2003, respectively. Products containing one or more diamonds of one carat or larger accounted for less than 10% of net sales in each of those years. Tiffany purchases cut diamonds principally from nine key vendors. Were trade relations between Tiffany and one or more of these vendors to be disrupted, the Company’s sales would be adversely affected in the short term until alternative supply arrangements could be established. Diamonds of one carat or greater of the quality the Company demands are, on a relative basis, more difficult to acquire than smaller diamonds. Established sources for smaller stones would be more easily replaced in the event of a disruption in supply than would established sources for larger-sized stones.

     Except as noted above, Tiffany believes that there are numerous alternative sources for gems and precious metals and that the loss of any single supplier would not have a material adverse effect on its operations.

     
- Page 15 -   Tiffany & Co. Report on Form 10-K FY 2003


 

     In 1999, the Company made a 14.7% equity investment ($71 million) in Aber Diamond Corporation (“Aber”), a publicly-traded company headquartered in Canada, by purchasing 8 million unregistered shares of its common stock. Aber holds a 40% interest in the Diavik Diamond Mine in Northwest Canada. Under the Company’s diamond purchase agreement with Aber, the Company is obligated to purchase at least $50 million in diamonds annually (in assortments of diamonds expected to cut/polish to the Company’s quality standards) during the next 10 years. It is expected that Tiffany’s alliance with Aber will enable the Company to secure a significant portion of its future diamond needs.

     The supply and price of rough (uncut and unpolished) diamonds in the principal world markets have been and continue to be significantly influenced by a single entity, the Diamond Trading Corporation (the “DTC”) of De Beers Centenary AG, a Swiss corporation. However, the role of the DTC is rapidly changing and that change has greatly affected, and will continue to affect, traditional channels of supply in the markets for rough and cut diamonds. The DTC continues to supply a significant portion of the world market for rough, gem-quality diamonds, notwithstanding that its historical ability to control supplies has been somewhat diminished due to changing politics in diamond-producing countries and revised contractual arrangements with independent mine operators. Also, the DTC may no longer maintain a reserve of diamonds as a mechanism to control available supplies. Nonetheless, the DTC continues to exert a significant influence on the demand for polished diamonds through advertising and marketing efforts throughout the world and through the requirements it imposes on those who purchase rough diamonds from the DTC (“sight-holders”). However, the DTC has recently reduced the number of sight-holders and has announced that those who will remain sight-holders will be expected to be involved in diamond advertising, promotional and branding initiatives or to supply diamonds to those who are.

     Until 2003, Tiffany did not purchase rough diamonds and Tiffany has never purchased directly from the DTC or been a sight-holder. Some, but not all, of Tiffany’s suppliers are DTC sight-holders, and it is estimated that 50% of the diamonds that Tiffany has purchased have had their source with the DTC.

     Tiffany expects to continue to purchase rough diamonds from Aber and other sellers through its affiliated companies. To process those stones, Tiffany has, through its affiliated companies, built a diamond sorting and processing facility in Antwerp, Belgium and a diamond cutting/polishing facility in Yellowknife, The Northwest Territories of Canada. Rough diamonds purchased by Tiffany are exported to Belgium, where they are sorted and evaluated for cutting. Some diamonds are returned to Canada for cutting/polishing in Tiffany’s facility. Other diamonds are provided to contractors for cutting/polishing and return. In conducting these activities, it is Tiffany’s intention to supply its own needs for cut/polished diamonds and hope to minimize the number of rough or cut stones that prove unsatisfactory and must be sold to third parties. However, some such sales will be inevitable.

     The availability and price of diamonds to the DTC, Tiffany and Tiffany’s suppliers may be, to some extent, dependent on the political situation in diamond-producing countries, the opening of new mines and the continuance of the prevailing supply and marketing arrangements for rough diamonds. As a consequence of changes in the sight-holder system and increased competition in the retail diamond trade, substantial competition exists for rough diamonds. Sustained interruption in the supply of rough diamonds, an over-abundance of supply or a substantial change in the marketing arrangements described above could adversely affect Tiffany and the retail jewelry industry as a

     
- Page 16 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

whole. Changes in the marketing and advertising policies of DTC and its direct purchasers could affect consumer demand for diamonds. Additionally, an affiliate of the DTC has formed a joint venture with an affiliate of a major luxury goods retailer for the purpose of retailing diamond jewelry. This joint venture has become a competitor of Tiffany. Further, the DTC has encouraged its sight-holders to engage in diamond brand development, which may also increase demand for diamonds and affect the supply of diamonds in certain categories.

     Increasing attention has been focused within the last few years on the issue of “conflict” diamonds. Conflict diamonds are extracted from war-torn regions and sold by rebel forces to fund insurrection. Allegations have been made in the press that diamonds are used as a source to further terrorist activities. Concerned participants in the diamond trade, including Tiffany and non-government organizations, seek to exclude such diamonds, which represent a small fraction of the world’s supply, from legitimate trade through an international system of certification and legislative initiatives. It is expected that such efforts will not substantially affect the supply of diamonds. However, in the near term, efforts by non-governmental organizations to increase consumer awareness of the issue and encourage legislative response could affect consumer demand for diamonds.

     Finished jewelry is purchased from approximately 90 manufacturers, most of which have long-standing relationships with Tiffany. Tiffany believes that there are alternative sources for most jewelry items; however, due to the craftsmanship involved in certain designs, Tiffany would have difficulty in finding readily available alternatives in the short term.

     TIFFANY & CO. brand clocks and components for timepieces are manufactured and assembled by third parties. Approximately 62% of net watch sales during Fiscal 2003 were attributable to a single manufacturer. Nearly all movements for Tiffany’s new MARK line of watches are purchased from a single manufacturer. The loss of this manufacturer could result in the unavailability of timepieces during the period necessary for Tiffany to arrange for new production.

     
- Page 17 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

Competition

     Registrant encounters significant competition in all of its product lines from other third-party providers, some of which specialize in just one area in which the Company is active. Many of the Company’s competitors have established reputations for style and expertise similar to that of the Company and compete on the basis of reputation for high quality products and/or brand recognition. Other jewelers and retailers compete primarily through advertised price promotion. The Company competes on the basis of reputation for high quality products, brand recognition, and distinctive value-priced merchandise and does not engage in price promotional advertising. See Merchandise Purchasing, Manufacturing and Raw Materials above.

     Competition for engagement jewelry sales is particularly fierce and becoming more so. The rise of the Internet and increased use of diamond condition reports issued by independent gemological associations have given rise to the mistaken impression amongst certain consumers that diamonds are commodity items and that significant quality differences do not exist. Tiffany’s price for diamonds reflects the rarity of the stones it offers and the rigid parameters it exercises with respect to the cut, clarity and other quality factors which increase the beauty of Tiffany diamonds, but also increase Tiffany’s cost. Tiffany competes in this market by stressing quality, while some competitors offer inferior diamonds claiming they are comparable, but at lesser prices.

     The international marketplace for the Company’s products is highly competitive. Although the Company believes that the name TIFFANY & CO. is known internationally, and although Tiffany did operate retail stores in London and Paris prior to World War II, the Company did not have a retail presence in Europe in the post-war era until 1986. Accordingly, consumer awareness of Tiffany & Co. and its products is not as strong in Europe as in the U.S. or in Japan, where Tiffany has distributed its products for many years. The Company expects that its overseas stores will continue to experience intense competition from established retailers in international cities where TIFFANY & CO. stores are or may eventually be located.

     Registrant also faces increasing competition in the area of direct marketing. A growing number of direct sellers compete for access to the same mailing lists of known purchasers of luxury goods. In marketing business gifts to corporations and other organizations, the Company faces numerous competitors who sell a wide variety of products at a greater price range than the Company, which has chosen to offer a more limited selection in order to adhere to its established quality standards. Tiffany currently distributes selected merchandise through its Web site at www.tiffany.com and anticipates continuing competition in this area as the technology evolves. Tiffany does not offer diamond engagement jewelry through its Web site, while certain of Tiffany’s competitors do. Nonetheless, Tiffany will seek to maintain and improve its position in the Internet marketplace by refining and expanding its merchandise selection and services.

Seasonality

     As a jeweler and specialty retailer, the Company’s business is seasonal in nature, with the fourth quarter typically representing a proportionally greater percentage of annual sales, earnings from operations and cash flow. Management expects such seasonality to continue.

     
- Page 18 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

Employees

     As of January 31, 2004, the Registrant’s subsidiary corporations employed an aggregate of approximately 6,862 full-time and part-time persons. Of those employees, 5,223 are employed in the United States. Of the total number of employees, approximately 2,712 persons are salaried employees, 898 are engaged in manufacturing and 3,488 are retail store personnel. Approximately 25 of the total number of employees are represented by unions. Registrant believes that relations with its employees and these unions are good.

Item 2. Properties

     Registrant both owns and leases its principal operating facilities and occupies its various store premises under lease arrangements that are generally on a two to ten-year basis.

New York Flagship Store

     In November 1999, Tiffany repurchased the land and building housing its flagship store at 727 Fifth Avenue in New York City. Prior to its repurchase, Tiffany had leased the building since 1984. Constructed for Tiffany in 1940, the building was designed to be a retail store for the Company and is believed to be well located for this function. Currently, approximately 40,000 gross square feet of this 124,000 square foot building are devoted to retail sales, with the balance devoted to administrative offices, certain product services, jewelry manufacturing and storage. In Fiscal 2000, Tiffany commenced a multiyear renovation and reconfiguration project to increase the store’s selling space and provide additional floor space for customer service and special exhibitions. An additional selling floor was opened in November 2001 and renovations of three other floors were completed by the end of Fiscal 2003. Tiffany anticipates completion of its renovation plans within the next three years.

London Flagship Store

     In October 2002, Registrant purchased through a subsidiary the building housing its flagship European store at 25/25A Old Bond Street in London and the adjacent building at 15 Albermarle Street. The London store had been leased since 1986 and was expanded to its current 15,200 square feet in 1991. A renovation and reconfiguration of the store’s interior selling space is scheduled to commence in 2004 and will occur in several phases through the first half of 2006.

Tokyo Flagship Store

     In June 2003, through its purchase of a trust beneficiary interest, Registrant’s Japanese affiliate acquired the land and building housing its flagship store in Tokyo’s Ginza shopping district. The 61,000 square foot, nine-story building houses retail, restaurant and office tenants, including the TIFFANY & CO. store located on the street level, second and third floors. The Tokyo store has been subleased by Tiffany-Japan to Mitsukoshi since 1996 and was expanded to its current 12,000 square feet in 1999.

     
- Page 19 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

Retail Service Center

     In 1995, Tiffany entered into a lease of undeveloped property in Parsippany, New Jersey, in order to construct and occupy a new distribution facility. In April 1997, construction of the “Retail Service Center” (“RSC”) on that property was completed and Tiffany commenced operations. The RSC is a combined warehouse, distribution, light manufacturing, computing and office center. To meet increased demand, the computer and office center areas were expanded during Fiscal 2001. In January 2001, Tiffany exercised its right under the lease to purchase the RSC for a scheduled purchase price. This capital lease buyout was completed on January 31, 2002. Registrant believes that the RSC has been properly designed to handle worldwide distribution functions and that it is suitable for that purpose. The RSC currently comprises approximately 370,000 square feet, of which approximately 186,000 square feet are devoted to office and computer operations use, with the balance devoted to warehousing, shipping, receiving, light manufacturing, merchandise processing and other distribution functions. The distribution functions in which the RSC specializes are receipt of merchandise from around the world and replenishing retail stores.

Customer Fulfillment Center

     In anticipation of growth in sales volume and company-operated stores, in Fiscal 2001 Tiffany entered into a ground lease of undeveloped property in Hanover Township, New Jersey in order to construct and occupy a Customer Fulfillment Center (“CFC”) to manage the warehousing and processing of direct-to-customer orders and to perform other distribution functions. Construction of the CFC was completed and Tiffany commenced operations at this facility in September 2003 under a temporary certificate of occupancy, with a permanent certificate of occupancy anticipated when the landlord completes certain corrective work to the property to the satisfaction of the Township. Tiffany and the landlord also have a dispute over the landlord’s entitlement to reimbursement of certain costs associated with the landlord’s site work. The CFC comprises approximately 266,000 square feet, of which approximately 34,500 square feet are devoted to office use, and the balance to warehousing, shipping, receiving, merchandise processing and other warehouse functions.

Manufacturing Facility — Cumberland, Rhode Island

     Tiffany’s manufacturing facility in Cumberland, Rhode Island commenced operations in May of 2001. It is a 100,000 square foot facility that was specially designed and constructed for Tiffany for the manufacture of jewelry. It produces a significant portion of the silver jewelry and silver accessory items sold under the TIFFANY & CO. trademark.

Manufacturing Facility — Cranston, Rhode Island

     On January 31, 2003 Tiffany purchased a warehouse facility and land located in Cranston, Rhode Island. During Fiscal 2003, Tiffany renovated the 75,000 square foot building to process metals for raw material use.

     
- Page 20 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

Branch and Subsidiary Retail Store Leases

     Set forth below is the expiration date for each of Registrant’s existing branch and subsidiary retail store leases (and, where applicable, optional renewal terms):

U.S. Branch Store Leases

                 
City
  State/Terr.
  Location
  Expiration Date
  Renewal Options
Atlanta
  GA   Phipps Plaza Shopping Center   July 31, 2010    
Bal Harbour
  FL   Bal Harbour Shops   May 31, 2014    
Bellevue
  WA   Bellevue Square   May 31, 2017    
Beverly Hills
  CA   Two Rodeo Drive   October 7, 2005   Two five-year terms
Boca Raton
  FL   Town Center at Boca   January 31, 2010   One five-year term
Boston
  MA   Copley Place   July 31, 2009   Two five-year terms
Century City
  CA   Century City Shopping Center   June 30, 2009    
Charlotte
  NC   SouthPark Mall   December 31, 2015   One five-year term
Chestnut Hill
  MA   The Atrium at Chestnut Hill   January 31, 2008   One five-year term
Chevy Chase
  MD   5500 Wisconsin Avenue   January 31, 2006    
Chicago
  IL   730 North Michigan Avenue   October 20, 2012   Two five-year terms
Cincinnati
  OH   Fountain Place   November 30, 2012   Two five-year terms
Coral Gables
  FL   Village of Merrick Park   January 31, 2014   One five-year term
Costa Mesa
  CA   South Coast Plaza   January 31, 2019    
Dallas
  TX   The Galleria   May 31, 2009    
Dallas
  TX   NorthPark Center   May 31, 2009   One five-year term
Denver
  CO   Cherry Creek Shopping Center   January 31, 2008   One five-year term
East Hampton
  NY   53 Main Street   February 29, 2012   Two five-year terms
Greenwich
  CT   140 Greenwich Avenue   July 31, 2010   Two five-year terms
Hackensack
  NJ   Riverside Square Mall   September 30, 2006    
Honolulu
  HI   Ala Moana Center   January 31, 2011    
Honolulu
  HI   2100 Kalakaua Avenue   October 31, 2017   Two five-year terms
Houston
  TX   The Galleria   September 30, 2006    
King of Prussia
  PA   The Plaza at King of Prussia   November 30, 2005   One five-year term
Las Vegas
  NV   Bellagio   March 1, 2008   One ten-year term
Manhasset
  NY   Americana Shopping Center   June 9, 2008    
Maui
  HI   Whalers Village   July 31, 2005    
Maui
  HI   The Shops at Wailea   November 30, 2010   One five-year term
Oak Brook
  IL   Oakbrook Center   April 30, 2009   Two five-year terms
Old Orchard
  IL   Old Orchard Shopping Center   April 30, 2010   One five-year term
Orlando
  FL   The Mall at Millenia   December 31, 2012   One five-year term
Palm Beach
  FL   259 Worth Avenue   May 31, 2007   Two five-year terms
Palm Desert
  CA   The Gardens on El Pasco   January 31, 2014   One five-year term
Palo Alto
  CA   Stanford Shopping Center   May 31, 2007    
Philadelphia
  PA   The Bellevue   June 30, 2010   One five-year term
Portland
  OR   Pioneer Place   December 31, 2010   One five-year term
San Diego
  CA   Fashion Valley Shopping Center   December 31, 2007   One five-year term
San Francisco
  CA   Union Square   October 23, 2011   One ten-year term
Santa Clara (San
Jose)
  CA   Westfield Shoppingtown Valley
Fair
  January 31, 2012    
Scottsdale
  AZ   Scottsdale Fashion Square   December 31, 2008   One five-year term
Seattle
  WA   Pacific Place   October 28, 2008   Two five-year terms
Short Hills
  NJ   The Mall at Short Hills   January 31, 2010    
St. Louis
  MO   Plaza Frontenac   September 26, 2012   One five-year term
Tampa
  FL   International Plaza   January 31, 2011   One five-year term
Tamuning
  Guam   Tumon Bay — DFS   February 28, 2008    
Tamuning
  Guam   Tumon Sands Plaza   September 30, 2008    
Troy
  MI   The Somerset Collection   September 30, 2007    
Vienna
  VA   Fairfax Square   March 31, 2010   One five-year term
     
- Page 21 -   Tiffany & Co. Report on Form 10-K FY 2003


 

                 
City
  State/Terr.
  Location
  Expiration Date
  Renewal Options
Walnut Creek
  CA   The Corner   April 28, 2013   Two five-year terms
White Plains
  NY   The Westchester   March 31, 2010    

International Branch Store Leases

                 
Country
  City
  Location
  Expiration Date
  Renewal Options
Australia
  Sydney   Chifley Tower   October 18, 2004   One five-year term
Australia
  Melbourne   267 Collins Street   October 31, 2005   Three five-year terms
Brazil
  Sao Paulo   Jardins   February 29, 2008   One five-year term
Brazil
  Sao Paulo   Shopping Center
Iguatemi
  January 1, 2006   Two five-year terms
Canada
  Toronto   85 Bloor Street West   August 31, 2006   One seven-year term
England
  London   The Royal Exchange   August 31, 2016   Three five-year terms
England
  London   145 Sloane Street   March 24, 2014    
France
  Paris   6 Rue de la Paix   April 1, 2011    
Germany
  Frankfurt   20 Goethestrasse   January 31, 2011   One ten-year term
Germany
  Munich   Residenzstrasse 11   January 31, 2009    
Hong Kong
      Hong Kong Int’l Airport   March 19, 2009    
Hong Kong
      Int’l Finance Center   October 26, 2008    
Hong Kong
      The Landmark   May 31, 2005    
Hong Kong
  Kowloon   The Peninsula   February 28, 2007    
Hong Kong
      Pacific Place   September 11, 2004    
Italy
  Florence   Via Tornabuoni   December 31, 2007   One six-year term
Italy
  Milan   Via della Spiga   October 31, 2005   One six-year term
Italy
  Rome   Via Del Babuino   December 31, 2007   One six-year term
Korea
  Pusan   Paradise Hotel   September 20, 2005    
Malaysia
  Kuala Lumpur   Suria KL City Centre   November 30, 2005   One three-year term
Mexico
  Mexico City   Masaryk   May 31, 2004   Two three-year terms
Singapore
      Raffles Hotel   September 15, 2006   One three-year term
Singapore
      Ngee Ann City   September 14, 2005   One one-year term
Switzerland
  Zurich   Bahnhofstrasse 14   September 30, 2005    
Taiwan
  Taipei   Regent Hotel   April 30, 2006    

† Renewal subject to conditions imposed by Italian law, including right of landlord to occupy premises for its own use.

New Store Leases

     In addition to the U.S. leases described herein on pages 21 and 22, Tiffany has entered into the following new leases for domestic stores expected to open in 2004: a 10-year lease for a 5,500 square foot store at the Galleria Shopping Center in Edina, Minnesota, a 15-year lease for a 5,443 square foot store at Country Club Plaza in Kansas City Missouri, a 10-year lease for a 5,328 square foot store at The Gardens of the Palm Beaches in Palm Beach Gardens, Florida, and a 10-year lease for a 5,580 square foot store on Post Road East in Westport, Connecticut.

Item 3. Legal and Environmental Proceedings

     Registrant and Tiffany are from time to time involved in routine litigation incidental to the conduct of Tiffany’s business, including proceedings to protect its trademark rights, litigation with parties claiming infringement of their intellectual property rights by Tiffany, litigation instituted by persons alleged to have been injured upon premises within Registrant’s control and litigation with

     
- Page 22 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

present and former employees. Although litigation with present and former employees is routine and incidental to the conduct of Tiffany’s business, as well as for any business employing significant numbers of U.S.-based employees, such litigation can result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages for actions claiming discrimination on the basis of age, gender, race, religion, disability or other legally protected characteristic or for termination of employment that is wrongful or in violation of implied contracts. However, Registrant believes that litigation currently pending to which it or Tiffany is a party or to which its properties are subject will be resolved without any material adverse effect on Registrant’s financial position, earnings or cash flows.

     In late March 2004, the landlord of Tiffany’s Customer Fulfillment Center filed a complaint against Tiffany in the Superior Court of New Jersey (Morris County), River Park Business Center, Inc. v. Tiffany and Company, alleging claims for unpaid rent and reimbursement obligations under the Ground Lease. The complaint seeks termination of the Lease and damages of at least three months rent ($80,416.67/mo.) and $615,295 for grading costs in connection with River Park’s obligations to perform certain work to the site. If Tiffany is served with the complaint, Tiffany intends to vigorously defend the suit, and file countersuit against River Park for breach of its obligations to complete Landlord’s Work to the site by November 2001, as required under the terms of the Ground Lease and as required by the Township of Hanover. Tiffany also intends to seek judgment against River Park for various other damages sustained by Tiffany due to the River Park's continuous delays in completing its obligations under the terms of the Ground Lease, which damages Tiffany contends are in excess of any damages asserted by River Park.

Item 4. Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of the Company’s security holders during the fourth quarter of the fiscal year ended January 31, 2004.

Executive Officers of the Registrant

     The executive officers of Registrant are:

                     
Name   Age   Position   Year Joined Tiffany
 
                   
Michael J. Kowalski
    52     Chairman of the Board of Directors and Chief Executive Officer     1983  
 
                   
James E. Quinn
    52     President     1986  
 
                   
Beth O. Canavan
    49     Executive Vice President     1987  
 
                   
James N. Fernandez
    48     Executive Vice President and Chief Financial Officer     1983  
 
                   
Victoria Berger-Gross
    48     Senior Vice President — Human Resources     2001  
 
                   
Patrick B. Dorsey
    53     Senior Vice President — General Counsel and Secretary     1985  
     
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Fernanda M. Kellogg
    57     Senior Vice President — Public Relations     1984  
 
                   
Jon M. King
    47     Senior Vice President — Merchandising     1990  
 
                   
Caroline D. Naggiar
    46     Senior Vice President — Marketing     1997  
 
                   
John S. Petterson
    45     Senior Vice President — Operations     1988  

Michael J. Kowalski. Mr. Kowalski assumed the role of Chairman of the Board in January 2003, following the retirement of William R. Chaney. He has served as the Registrant’s Chief Executive Officer since February 1999 and on the Registrant’s Board of Directors since January 1995. Since joining Tiffany in 1983 as Director of Financial Planning, Mr. Kowalski held a variety of merchandising management positions and served as Executive Vice President from 1992 to 1996 with overall responsibility in the areas of merchandising, marketing, advertising, public relations and product design until his election as President in 1997. Mr. Kowalski is a member of the Board of Directors of the Bank of New York.

James E. Quinn. Mr. Quinn was appointed President effective January 31, 2003. He had served as Vice Chairman since 1998. After joining Tiffany in July 1986 as Vice President of branch sales for the Company’s business-to-business sales operations, Mr. Quinn had various responsibilities for sales management and operations. He was promoted to Executive Vice President on March 19, 1992 and assumed responsibility for retail and corporate sales for the Americas in 1994. In January 1995 he became a member of Registrant’s Board of Directors. He has responsibility for worldwide sales. Mr. Quinn is a member of the board of directors of BNY Hamilton Funds, Inc. and Mutual of America Capital Management.

Beth O. Canavan. Ms. Canavan joined Tiffany in May 1987 as Director of New Store Development. She later held the positions of Vice President, Retail Sales Development in 1990, Vice President and General Manager of the New York flagship store in 1992 and Eastern Regional Vice President in 1994. In 1997, she assumed the position of Senior Vice President for U.S. Retail. In January 2000, she was promoted to Executive Vice President responsible for retail sales activities in the U.S. and Canada and retail store expansion. In May 2001, Ms. Canavan also assumed responsibility for direct sales and business sales activities in the U.S. and Canada.

James N. Fernandez. Mr. Fernandez joined Tiffany in October 1983 and has held various positions in financial planning and management prior to his appointment as Senior Vice President-Chief Financial Officer in April 1989. In January 1998, he was promoted to Executive Vice President-Chief Financial Officer. Presently, he has responsibility for accounting, treasury, investor relations, information technology, financial planning, business development and diamond operations, and overall responsibility for distribution, manufacturing, customer service and security. At the request of the Registrant, Mr. Fernandez serves on the board of directors of Aber Diamond Corporation, a publicly-traded company in which the Registrant holds a 14.3% equity interest. Aber is a 40% participant in the Diavik Diamonds Mine in Northwest Canada.

Victoria Berger-Gross. Dr. Berger-Gross joined Tiffany in February 2001 as Senior Vice President — Human Resources. Prior to joining Tiffany, she served as Senior Vice President & Director of Human Resources at Lehman Brothers from May 2000, Senior Director — Human Resources at

     
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Bertelsmann A.G.’s BMG Entertainment from March 1998, and Vice President — Organizational Effectiveness at Personnel Decisions International from January 1990.

Patrick B. Dorsey. Mr. Dorsey joined Tiffany in July 1985 as General Counsel and Secretary.

Fernanda M. Kellogg. Ms. Kellogg joined Tiffany in October 1984 as Director of Retail Marketing. She assumed her current responsibilities in January 1990.

Jon M. King. Mr. King joined Tiffany in 1990 as a jewelry buyer and has held various positions in the Merchandising Division, assuming responsibility for product development in 2002 as group vice president. He assumed his current responsibilities in March 2003.

Caroline D. Naggiar. Ms. Naggiar joined Tiffany in June 1997 as Vice President-Marketing Communications. She assumed her current responsibilities in February 1998.

John S. Petterson. Mr. Petterson joined Tiffany in 1988 as a management associate. He was promoted to Senior Vice President — Corporate Sales in May 1995 and, in February 2000, his responsibilities were expanded to include Direct Mail and the E-Commerce business. In May 2001, Mr. Petterson assumed the new role of Senior Vice President — Operations, with responsibility for worldwide distribution, customer service and security activities. His responsibilities were expanded in February 2003 to include manufacturing operations.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

     Registrant’s Common Stock is traded on the New York Stock Exchange. In consolidated trading, the high and low selling prices per share for shares of such Common Stock for Fiscal 2002 were:

                 
Fiscal 2002
  High
  Low
First Fiscal Quarter
  $ 41.00     $ 31.75  
Second Fiscal Quarter
  $ 40.50     $ 21.07  
Third Fiscal Quarter
  $ 28.00     $ 19.40  
Fourth Fiscal Quarter
  $ 30.70     $ 22.55  

     In consolidated trading, the high and low selling prices per share for shares of such Common Stock for Fiscal 2003 were:

                 
Fiscal 2003
  High
  Low
First Fiscal Quarter
  $ 28.98     $ 21.60  
Second Fiscal Quarter
  $ 35.50     $ 27.19  
Third Fiscal Quarter
  $ 47.55     $ 32.79  
Fourth Fiscal Quarter
  $ 49.45     $ 39.00  
     
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     On March 25, 2004, the high and low selling prices quoted on such exchange were $37.65 and $35.75, respectively. On March 25, 2004 there were 4,845 record holders of Registrant’s Common Stock.

     It is Registrant’s policy to pay a quarterly dividend on the Registrant’s Common Stock, subject to declaration by Registrant’s Board of Directors. In Fiscal 2002, dividends of $0.04 per share of Common Stock were paid on April 10, 2002, July 10, 2002, October 10, 2002 and January 10, 2003. In Fiscal 2003, a dividend of $.04 per share of Common Stock was paid on April 10, 2003, and dividends of $.05 per share of Common Stock were paid on July 10, 2003, October 10, 2003 and January 12, 2004.

     In calculating the aggregate market value of the voting stock held by non-affiliates of the Registrant shown on the cover page of this Report on Form 10-K, 1,543,329 shares of Registrant’s Common Stock beneficially owned by the executive officers and directors of the Registrant (exclusive of shares which may be acquired on exercise of employee stock options) were excluded, on the assumption that certain of those persons could be considered “affiliates” under the provisions of Rule 405 promulgated under the Securities Act of 1933.

Item 6. Selected Financial Data

Incorporated by reference from Registrant’s Annual Report to Stockholders for the Fiscal Year ended January 31, 2004, page 20.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Incorporated by reference from Registrant’s Annual Report to Stockholders for the Fiscal Year ended January 31, 2004, pages 21-32.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Incorporated by reference from Registrant’s Annual Report to Stockholders for the Fiscal Year ended January 31, 2004, pages 31-32.

Item 8. Financial Statements and Supplementary Data

Incorporated by reference from Registrant’s Annual Report to Stockholders for the Fiscal Year ended January 31, 2004, pages 33-57.

Item 9. Changes in and Disagreements with Auditors on Accounting and Financial Disclosure

NONE.

Item 9A. Controls and Procedures

     Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, Registrant’s chief executive officer and chief financial officer concluded that, as of the end of the period covered by this annual report, Registrant’s disclosure controls and procedures

     
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are effective to ensure that information required to be disclosed by Registrant in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

     In addition, Registrant’s chief executive officer and chief financial officer have determined that there have been no changes in Registrant’s internal control over financial reporting during the period covered by this annual report identified in connection with the evaluation described in the above paragraph that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.

     Registrant’s management, including its chief executive officer and chief financial officer necessarily applied their judgment in assessing the costs and benefits of such controls and procedures that, by their nature, can provide only reasonable assurance regarding management’s control objectives. Management does not expect that its disclosure controls and procedures will prevent all errors and fraud. A control system, irrespective of how well it is designed and operated, can only provide reasonable assurance, and cannot guarantee, that it will succeed in its stated objectives.

PART III

Item 10. Directors and Executive Officers of the Registrant

Incorporated by reference from Registrant’s Proxy Statement dated April 12, 2004, pages 14 and 27-30.

Code of Ethics and Other Corporate Governance Disclosures

     Registrant has adopted a Code of Business and Ethical Conduct for its Directors, Chief Executive Officer, Chief Financial Officer and all other officers of Registrant. A copy of this Code is posted on the corporate governance section of the Registrant’s website, www.shareholder.com/tiffany/. Registrant intends to disclose any material amendments to its Code of Business and Ethical Conduct, as well as any waivers by posting such information on the same website. The Registrant will also provide a copy of the Code of Business and Ethical Conduct to stockholders upon request.

Item 11. Executive Compensation

Incorporated by reference from Registrant’s Proxy Statement dated April 12, 2004, pages 16-25.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Incorporated by reference from Registrant’s Proxy Statement dated April 12, 2004, pages 5-7.

Item 13. Certain Relationships and Related Transactions

Incorporated by reference from Registrant’s Proxy Statement dated April 12, 2004, pages 13 and 27-30.

     
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Item 14. Principal Auditor Fees and Services

Incorporated by reference from Registrant’s Proxy Statement dated April 12, 2004, pages 7-8.

PART IV

Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K

(a) List of Documents Filed As Part of This Report:

1. Financial Statements:

Data incorporated by reference from
the 2003 Annual Report to Stockholders
of Tiffany & Co. and Subsidiaries:

Report of Independent Auditors
(following this Form 10-K)

Consolidated Balance Sheets
as of January 31, 2004 and 2003

Consolidated Statements of Earnings
for the years ended January 31, 2004, 2003 and 2002

Consolidated Statements of Stockholders’ Equity and Comprehensive Earnings
for the years ended January 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows
for the years ended January 31, 2004, 2003 and 2002

Notes to consolidated financial statements

2. Financial Statement Schedules:

         The following financial statement schedule should be read in conjunction with the consolidated financial statements incorporated by reference herein:

II.   Valuation and qualifying accounts and reserves.

         All other schedules have been omitted since they are neither applicable nor required, or because the information required is included in the consolidated financial statements and notes thereto.

     
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3. Exhibits:

                   The following exhibits have been filed with the Securities and Exchange Commission but are not attached to copies of this
Form 10-K other than complete copies filed with said Commission and the New York Stock Exchange:

     
Exhibit
  Description
 
   
3.1
  Restated Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1 to Registrant’s Report on Form 8-K dated May 16, 1996.
 
   
3.1a
  Amendment to Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1 to Registrant’s Report on Form 8-K dated May 20, 1999.
 
   
3.1b
  Amendment to Certificate of Incorporation of Registrant dated May 18, 2000. Incorporated by reference from Exhibit 3.1b to Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 2001.
 
   
3.2
  Restated By-Laws of Registrant, as last amended September 18, 2003.
 
   
4.1
  Amended and Restated Rights Agreement dated as of April 8, 2004 by and between Registrant and Mellon Investor Services LLC, as Rights Agent.
 
   
10.5
  Designer Agreement between Tiffany and Paloma Picasso dated April 4, 1985. Incorporated by reference from Exhibit 10.5 filed with Registrant’s Registration Statement on Form S-1, Registration No. 33-12818 (the “Registration Statement”).
 
   
10.122
  Agreement dated as of April 3, 1996 among American Family Life Assurance Company of Columbus, Japan Branch, Tiffany & Co. Japan, Inc., Japan Branch, and Registrant, as Guarantor, for yen 5,000,000,000 Loan Due 2011. Incorporated by reference from Exhibit 10.122 filed with Registrant’s Report on Form 10-Q for the Fiscal quarter ended April 30, 1996.
 
   
10.122a
  Amendment No. 1 to the Agreement referred to in Exhibit 10.122 above dated November 18, 1998. Incorporated by reference from Exhibit 10.122a filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1999.
 
   
10.122b
  Guarantee by Tiffany & Co. of the obligations under the Agreement referred to in Exhibit 10.122 above dated April 3, 1996. Incorporated by reference from Exhibit 10.122b filed with Registrant’s Report on Form 8-K dated August 2, 2002.
 
   
10.122c
  Amendment No. 2 to Guarantee referred to in Exhibit 10.122b above, dated October 15, 1999. Incorporated by reference from Exhibit 10.122c filed with Registrant’s Report on Form 8-K dated August 2, 2002.
 
   
10.122d
  Amendment No. 3 to Guarantee referred to in Exhibit 10.122b above, dated July 16, 2002. Incorporated by reference from Exhibit 10.122d filed with Registrant’s Report on Form 8-K dated August 2, 2002.
     
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10.123
  Agreement made effective as of February 1, 1997 by and between Tiffany and Elsa Peretti. Incorporated by reference from Exhibit 10.123 to Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1997.
 
   
10.126
  Form of Note Purchase Agreement between Registrant and various institutional note purchasers with Schedules B, 5.14 and 5.15 and Exhibits 1A, 1B, and 4.7 thereto, dated as of December 30, 1998 in respect of Registrant’s $60 million principal amount 6.90% Series A Senior Notes due December 30, 2008 and $40 million principal amount 7.05% Series B Senior Notes due December 30, 2010. Incorporated by reference from Exhibit 10.126 filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1999.
 
   
10.126a
  First Amendment and Waiver Agreement to Form of Note Purchase Agreement referred to in previously filed Exhibit 10.126, dated May 16, 2002. Incorporated by reference from Exhibit 126a filed with Registrant’s Report on Form 8-K dated June 10, 2002.
 
   
10.128
  Translation of Loan Agreement between Tiffany & Co. Japan Inc. and the Fuji Bank, Ltd., Hong Kong Branch dated 22 October 1999, Guaranty issued in connection therewith by Registrant and Agreement on Bank Transactions referenced in the aforesaid Loan Agreement; Schedule to Master Agreement dated as of October 18, 1999 between The Chase Manhattan Bank and Tiffany & Co. Japan Inc. (made with reference to International Swap Dealers Association, Inc. Master Agreement form copyrighted 1992), Guaranty dated October 18, 1999 issued in connection with such Master Agreement by Tiffany and Company, Tiffany & Co. International and Registrant in favor of The Chase Manhattan Bank and Confirmation issued October 29, 1999 by The Chase Manhattan Bank. Incorporated by reference from Exhibit 10.128 filed with Registrant’s Report on Form 10-Q for the Fiscal quarter ended October 31, 1999.
 
   
10.129
  Agreement made the 1st day of August 2001 by and between Tiffany & Co. Japan Inc. and Mitsukoshi Ltd. of Japan. Incorporated by reference from Exhibit 10.128 filed with Registrant’s Report on Form 8-K dated August 1, 2001.
 
   
10.130
  Credit Agreement dated as of November 5, 2001, by and among Registrant, Tiffany and Company, Tiffany & Co. International, each other Subsidiary of Registrant that is a Borrower and is a signatory thereto and The Bank of New York, as the Swing Line Lender, as the Issuing Bank, as a Lender, and as Administrative Agent, ABN AMRO Bank N.V., The Chase Manhattan Bank, The Dai-ichi Kangyo Bank Ltd., Firstar Bank, NA, and Fleet National Bank, Fleet Precious Metals Inc. (collectively, as a Lender). Incorporated by reference from Exhibit 10.130 filed with Registrant’s Report on Form 10-Q for the Fiscal quarter ended October 31, 2001.
 
   
10.130a
  Amendment No. 1 to Credit Agreement referred to in previously filed Exhibit 10.130, dated April 12, 2002. Incorporated by reference from Exhibit 10.130a filed with Registrant’s Report on Form 10-Q for the Fiscal quarter ended April 30, 2002.
 
   
10.130b
  Amendment No. 2 to Credit Agreement referred to in previously filed Exhibit 10.130, dated April 12, 2002.
     
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10.131
  Guaranty Agreement dated as of November 5, 2001, with respect to the Credit Agreement (see Exhibit 10.129 above) by and among Registrant, Tiffany and Company, Tiffany & Co. International, and Tiffany & Co. Japan Inc. and The Bank of New York, as Administrative Agent. Incorporated by reference from Exhibit 10.131 filed with Registrant’s Report on Form 10-Q for the Fiscal quarter ended October 31, 2001.
 
   
10.132
  Form of Note Purchase Agreement between Registrant and various institutional note purchasers with Schedules B, 5.14 and 5.15 and Exhibits 1A, 1B and 4.7 thereto, dated as of July 18, 2002 in respect of Registrant’s $40,000,000 principal amount 6.15% Series C Notes due July 18, 2009 and $60,000,000 principal amount 6.56% Series D Notes due July 18, 2012. Incorporated by reference from Exhibit 10.132 filed with Registrant’s Report on Form 8-K dated August 2, 2002.
 
   
10.133
  Guaranty Agreement dated July 18, 2002 with respect to the Note Purchase Agreements (see Exhibit 10.132 above) by Tiffany and Company, Tiffany & Co. International and Tiffany & Co. Japan Inc. in favor of each of the note purchasers. Incorporated by reference from Exhibit 10.133 filed with Registrant’s Report on Form 8-K dated August 2, 2002.
 
   
10.134
  Translation of Condition of Bonds applied to Tiffany & Co. Japan Inc. First Series Yen Bonds due 2010 in the aggregate principal amount of 15,000,000,000 Yen issued September 30, 2003 (for Qualified Investors Only).
 
   
10.135
  Translation of Application of Bonds for Tiffany & Co. Japan Inc. First Series Yen Bonds due 2010 in the aggregate principal amount of 15,000,000,000 Yen issued September 30, 2003 (for Qualified Investors Only).
 
   
10.135a
  Translation of Amendment of Application of Bonds referred to in Exhibit 10.135.
 
   
10.136
  Payment Guarantee dated September 30, 2003 made by Tiffany & Co. for the benefit of the Qualified Investors of the Bonds referred to in Exhibit 10.134.
 
   
13.1
  Annual Report to Stockholders for Fiscal Year ended January 31, 2004 (pages 20-57 of such Annual Report have been filed in electronic format).
 
   
14.1
  Code of Business and Ethical Conduct and Business Conduct Policy.
 
   
21.1
  Subsidiaries of Registrant.
 
   
23.1
  Consent of PricewaterhouseCoopers LLP, independent auditors.
 
   
31.1
  Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.2
  Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
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32.1
  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
32.2
  Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Executive Compensation Plans and Arrangements

     
Exhibit
  Description
 
   
4.3
  Registrant’s Amended and Restated 1998 Employee Incentive Plan and standard terms of stock option award (transferable and non-transferable). Incorporated by reference from Exhibit 4.3 filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 2003.
 
   
4.4
  Registrant’s 1998 Directors Option Plan. Incorporated by reference from Exhibit 4.3 to Registrant’s Registration Statement on Form S-8, file number 333-67725, filed November 23, 1998.
 
   
4.4a
  Standard terms of stock option award (transferable non-qualified option) under Registrant’s 1998 Directors Option Plan, as revised January 21, 1999. Incorporated by reference from Exhibit 4.4a filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1999.
 
   
10.3
  Registrant’s 1986 Stock Option Plan and terms of stock option agreement, as last amended on July 16, 1998. Incorporated by reference from Exhibit 10.3 filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1999.
 
   
10.49
  Form of Indemnity Agreement, approved by the Board of Directors on March 19, 1987. Incorporated by reference from Exhibit 10.49 to the Registration Statement.
 
   
10.60
  Registrant’s 1988 Director Stock Option Plan and form of Stock Option agreement, as last amended on November 21, 1996. Incorporated by reference from Exhibit 10.60 to Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1997.
 
   
10.106
  Amended and Restated Tiffany and Company Executive Deferral Plan originally made effective October 1, 1989, as amended effective January 1, 2003. Incorporated by reference from Exhibit 10.106 filed with Registrant’s Report on Form 10-Q for the Fiscal Quarter ended October 31, 2002.
 
   
10.108
  Registrant’s Amended and Restated Retirement Plan for Non-Employee Directors originally made effective January 1, 1989, as amended through January 21, 1999. Incorporated by reference from Exhibit 10.108 filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1999.
     
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10.109
  Summary of informal incentive cash bonus plan for managerial employees. Incorporated by reference from Exhibit 10.109 filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 1993.
 
   
10.113
  Tiffany and Company Pension Plan, Amended and Restated Effective as of March 30, 2004.
 
   
10.114
  1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated as of December 19, 2003.
 
   
10.127b
  Form of Retention Agreement between and among Registrant and Tiffany and each of its executive officers and Appendices I to III to the Agreement. Incorporated by reference from Exhibit 10.127b filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 2003.
 
   
10.128
  Group Long Term Disability Insurance Policy issued by UnumProvident, Policy No. 533717 001. Incorporated by reference from Exhibit 10.128 filed with Registrant’s Report on Form 10-K for the Fiscal Year ended January 31, 2003.
 
   
10.137
  Summary of arrangements for the payment of premiums on life insurance policies owned by executive officers.
 
   
10.138
  Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits.
     
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(b)    Reports on Form 8-K.

          On November 13, 2003, Registrant filed a Report on Form 8-K reporting sales and earnings for the nine and three-month periods ended October 31, 2003.

          On November 20, 2003, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing the Board of Directors of Registrant has extended the Company’s stock repurchase program until November 30, 2006 and increased the remaining authorization by $100 million.

          On January 8, 2004, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing preliminary unaudited sales figures for the two-month period ended December 31, 2003.

          On February 25, 2004, Registrant filed a Report on Form 8-K reporting the issuance of a press release announcing its sales and earnings for the three-month period and Fiscal Year ended January 31, 2004.

     
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SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

         
           Tiffany & Co.
         (Registrant)
 
 
Date: April 12, 2004  By:   /s/ Michael J. Kowalski    
    Michael J. Kowalski   
    Chief Executive Officer   
 
     
- Page 35 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

             
By:
  /s/ Michael J. Kowalski   By:   /s/ James N. Fernandez
 
 
     
 
  Michael J. Kowalski       James N. Fernandez
  Chairman and Chief Executive Officer       Executive Vice President
  (principal executive officer) (director)       (principal financial officer)
 
           
By:
  /s/ James E. Quinn   By:   /s/ Warren S. Feld
 
 
     
 
  James E. Quinn       Warren S. Feld
  President       Vice President
  (director)       (principal accounting officer)
 
           
By:
  /s/ William R. Chaney   By:   /s/ Rose Marie Bravo
 
 
     
 
  William R. Chaney       Rose Marie Bravo
  Director       Director
 
           
By:
  /s/ Samuel L. Hayes III   By:   /s/ Abby F. Kohnstamm
 
 
     
 
  Samuel L. Hayes, III       Abby F. Kohnstamm
  Director       Director
 
           
By:
  /s/ Charles K. Marquis   By:   /s/ J. Thomas Presby
 
 
     
 
  Charles K. Marquis       J. Thomas Presby
  Director       Director
 
           
By:
  /s/ William A. Shutzer        
 
 
       
  William A. Shutzer        
  Director        

April 12, 2004

     
- Page 36 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

PricewaterhouseCoopers LLP

Report of Independent Auditors

To the Shareholders and
Board of Directors of Tiffany & Co.

Our audits of the consolidated financial statements referred to in our report dated February 24, 2004 appearing in the fiscal 2003 Annual Report to Shareholders of Tiffany & Co. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

New York, New York
February 24, 2004

     
- Page 37 -   Tiffany & Co. Report on Form 10-K FY 2003

 


 

TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                         
Column A
  Column B
  Column C
  Column D
  Column E
            Additions
           
    Balance at   Charged to                
    beginning   costs and   Charged to           Balance at end
Description
  of period
  expenses
  other accounts
  Deductions
  of period
Year Ended
January 31, 2004:
                                       
 
Reserves deducted from
assets:
                                       
 
Accounts receivable allowances:
                                       
 
Doubtful accounts
  $ 2,129,652     $ 2,081,919           $ 1,886,109 (a)   $ 2,325,462  
 
Sales returns
    6,128,611       382,305             1,844,311 (b)     4,666,605  
 
Allowance for inventory
liquidation and
obsolescence
    23,029,454       6,532,576             7,578,845 (c)     21,983,185  
 
Allowance for inventory
shrinkage
    4,361,478       1,272,520             1,042,813 (d)     4,591,185  
 
LIFO reserve
    20,135,443       10,451,809                   30,587,252  


(a)   Uncollectible accounts written off.
(b)   Adjustment related to sales returns previously provided for.
(c)   Liquidation of inventory previously written down to market.
(d)   Physical inventory losses.

 


 

TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                         
Column A
  Column B
  Column C
  Column D
  Column E
            Additions
           
    Balance at   Charged to                
    beginning   costs and   Charged to           Balance at end
Description
  of period
  expenses
  other accounts
  Deductions
  of period
Year Ended
January 31, 2003:
                                       
 
Reserves deducted from
assets:
                                       
 
Accounts receivable allowances:
                                       
 
Doubtful accounts
  $ 2,795,400     $ 828,794     $ 120,083 (d)   $ 1,614,625 (a)   $ 2,129,652  
 
Sales returns
    4,082,816       2,045,795                   6,128,611  
 
Allowance for inventory
liquidation and
obsolescence
    18,833,164       12,258,231       1,436,131 (d)     9,498,072 (b)     23,029,454  
 
Allowance for inventory
shrinkage
    3,518,845       1,555,388       70,676 (d)     783,431 (c)     4,361,478  
 
LIFO reserve
    18,970,581       1,164,862                   20,135,443  


(a)   Uncollectible accounts written off.
(b)   Liquidation of inventory previously written down to market.
(c)   Physical inventory losses.
(d)   Amounts established or assumed in connection with a business acquisition.

 


 

TIFFANY & CO. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                         
Column A
  Column B
  Column C
  Column D
  Column E
            Additions
           
    Balance at   Charged to                
    beginning   costs and   Charged to           Balance at end
Description
  of period
  expenses
  other accounts
  Deductions
  of period
Year Ended
January 31, 2002:
                                       
 
Reserves deducted from
assets:
                                       
 
Accounts receivable allowances:
                                       
 
Doubtful accounts
  $ 3,890,470     $ 1,694,924           $ 2,789,994 (a)   $ 2,795,400  
 
Sales returns
    4,082,816                         4,082,816  
 
Allowance for inventory
liquidation and
obsolescence
    18,394,815       10,084,907             9,646,558 (b)     18,833,164  
 
Allowance for inventory
shrinkage
    3,013,949       3,797,454             3,292,558 (c)     3,518,845  
 
LIFO reserve
    15,942,286       3,028,295                   18,970,581  


(a)   Uncollectible accounts written off.
(b)   Liquidation of inventory previously written down to market.
(c)   Physical inventory losses.

 


 

EXHIBIT INDEX

SEE PAGES 29 THROUGH 33 FOR A COMPLETE LIST OF EXHIBITS FILED, INCLUDING EXHIBITS INCORPORATED BY REFERENCE FROM PREVIOUSLY FILED DOCUMENTS.

     
Exhibit
  Description
 
   
3.2
  Restated By-Laws of Registrant, as last amended September 18, 2003.
 
   
4.1
  Amended and Restated Rights Agreement dated as of April 8, 2004 by and between Registrant and Mellon Investor Services LLC, as Rights Agent.
 
   
10.130b
  Amendment No. 2 to Credit Agreement referred to in previously filed Exhibit 10.130, dated April 12, 2002.
 
   
10.134
  Translation of Condition of Bonds applied to Tiffany & Co. Japan Inc. First Series Yen Bonds due 2010 in the aggregate principal amount of 15,000,000,000 Yen issued September 30, 2003 (for Qualified Investors Only).
 
   
10.135
  Translation of Application of Bonds for Tiffany & Co. Japan Inc. First Series Yen Bonds due 2010 in the aggregate principal amount of 15,000,000,000 Yen issued September 30, 2003 (for Qualified Investors Only).
 
   
10.135a
  Translation of Amendment of Application of Bonds referred to in Exhibit 10.135.
 
   
10.136
  Payment Guarantee dated September 30, 2003 made by Tiffany & Co. for the benefit of the Qualified Investors of the Bonds referred to in Exhibit 10.134.
 
   
13.1
  Annual Report to Stockholders for Fiscal Year ended January 31, 2004 (pages 20-57 of such Annual Report have been filed in electronic format).
 
   
14.1
  Code of Business and Ethical Conduct and Business Conduct Policy.
 
   
21.1
  Subsidiaries of Registrant.
 
   
23.1
  Consent of PricewaterhouseCoopers LLP, independent auditors.
 
   
31.1
  Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.2
  Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 


 

     
32.1
  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
32.2
  Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
10.113
  Tiffany and Company Pension Plan, Amended and Restated Effective as of March 30, 2004.
 
   
10.114
  1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated as of December 19, 2003.
 
   
10.137
  Summary of arrangements for the payment of premiums on life insurance policies owned by executive officers.
 
   
10.138
  Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits.

 

Exhibit 3.2 Tiffany &Co. RESTATED BY-LAWS Report on Form 10-K AS LAST AMENDED SEPTEMBER 18, 2003 -OF- TIFFANY & CO., A DELAWARE CORPORATION (HEREIN CALLED THE "CORPORATION") -oo0oo- ARTICLE I Stockholders SECTION 1.01. Annual Meeting. The Board of Directors by resolution shall designate the time, place and date of the annual meeting of the stockholders for the election of directors and the transaction of such other business as may come before it. SECTION 1.02. Notice of Meetings of Stockholders. Whenever stockholders are required or permitted to take any action at a meeting, written notice of the meeting shall be given (unless that notice shall be waived) which shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. The written notice of any meeting shall be given, personally or by mail, not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 1.03. Quorum. At all meetings of the stockholders, the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of any business. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any stockholders. The stockholders present may adjourn the meeting despite the absence of a quorum and at any such adjourned meeting at which the requisite amount of voting stock shall be represented, the Corporation may transact any business which might have been transacted at the original meeting

had a quorum been there present. SECTION 1.04. Method of Voting. The vote upon any question before the meeting need not be by ballot. All elections and all other questions shall be decided by a plurality of the votes cast, at a meeting at which a quorum is present, except as expressly provided otherwise by the General Corporation Law of the State of Delaware or the Certificate of Incorporation. SECTION 1.05. Voting Rights of Stockholders and Proxies. Each stockholder of record entitled to vote in accordance with the laws of the State of Delaware, the Certificate of Incorporation or these By-laws, shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of stock entitled to vote standing in his name on the books of the Corporation, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. SECTION 1.06. Ownership of its Own Stock. Shares of its own capital stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Nothing in this section shall be construed as limiting the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. SECTION 1.07. Conduct of Meetings. Each meeting of the stockholders shall be presided over by the Chairman of the Board of Directors or such other person as the Board of Directors may designate as chairman of such meeting. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the chairman of the meeting shall appoint a secretary of the meeting. In the conduct of a meeting of the stockholders, all of the powers and authority vested in a presiding officer by law or practice shall be vested in the chairman of the meeting. SECTION 1.08. Notice of Business and Nominations. A. Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the stockholders at an annual meeting of stockholders may be made (1) by or at the direction of the Board of Directors (or any duly authorized committee thereof) pursuant to a notice of meeting or by otherwise properly bringing the matter before an annual meeting of stockholders or (2) by any stockholder of record of the Corporation who was a stockholder of record at the time of the giving of the notice provided for in the following paragraph, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 1.08. B. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (2) of the foregoing paragraph A., the stockholder must comply with the following provisions (1) through (4) of this paragraph B. (1) The stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, as hereinafter provided. To be timely, a stockholder's Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 2

notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days prior to and not more than 120 days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. (2) Such business must be a proper matter for stockholder action under the General Corporation Law of the State of Delaware. (3) If the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, solicits or participates in the solicitation of proxies in support of such proposal or nominees, the stockholder must have timely indicated its, or such beneficial owner's, intention to do so as provided in provision (4)(c)(iii) below. (4) Such stockholder's notice shall set forth the following information: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and such person's written consent to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner, (ii) the class and number of shares of the Corporation that are owned beneficially and of record by such stockholder and such beneficial owner, and (iii) whether either such stockholder or beneficial owner intends to solicit or participate in the solicitation of proxies in favor of such proposal or nominee or nominees. C. Notwithstanding anything in paragraph B.(1) of this Section 1.08 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased above the number in effect at the preceding year's annual meeting of stockholders and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 3

D. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to a notice of meeting issued by or at the direction of a majority vote of the Board of Directors. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to such a notice of meeting (1) by or at the direction of the Board or (2) by any stockholder of record of the Corporation who is a stockholder of record at the time of giving of notice provided for in this paragraph D., who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in the following sentence. The stockholder's notice must include the information required in paragraphs B.(3) and B. (4) of this Section 1.08 and must be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting and not earlier than the 120th day prior to such special meeting. E. Only persons nominated in accordance with the procedures set forth in this Section 1.08 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.08. The chairman of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these By-laws and, if any proposed nomination or business is not in compliance with these By-laws, to declare that such defective proposed business or nomination shall not be presented for stockholder action at the meeting and shall be disregarded. F. For purposes of this Section 1.08, "public announcement " shall mean disclosure in a press release reported by the Dow Jones New Service, Associated Press or a comparable national news service or in a documents publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. G. Notwithstanding the foregoing provisions of this Section 1.08, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 1.08. Nothing in this Section 1.08 shall be deemed to excuse any stockholder from the obligation to comply with the requirements of Rule 14a-8 under the Exchange Act with respect to proposals offered for inclusion in the Corporation's proxy statement. H. Paragraphs A. through G. of this Section 1.08 shall not apply with respect to the 1998 Annual Meeting of Stockholders which shall be governed by the following special provisions: At the 1998 annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who complies Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 4

with the notice procedures set forth in this paragraph H. For business to be properly brought before such meeting by a stockholder, the stockholder must have given notice thereof in writing to the Secretary of the Corporation at the principal executive offices of the Corporation, which written notice must be received by the Secretary of the Corporation not less than 60 days in advance of such meeting or, if later, the fifteenth day following the first public disclosure of the date of such meeting (by mailing of notice of the meeting or otherwise). A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (1) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (2) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (3) the class, series and number of shares of the Corporation that are beneficially owned by the stockholder, and (4) any material interest of the stockholder in such business. In addition, the stockholder making such proposal shall promptly provide any other information reasonably requested by the Corporation. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at such meeting of the stockholders except in accordance with the procedures set forth in this paragraph H. The Chairman of such meeting shall direct that any business not properly brought before the meeting shall not be considered. ARTICLE II Directors SECTION 2.01. Management of Business. The business of the Corporation shall be managed by its Board of Directors. The Board of Directors, in addition to the powers and authority expressly conferred upon it herein, by statute, by the Certificate of Incorporation of the Corporation or otherwise, is hereby empowered to exercise all such powers as may be exercised by the Corporation, except as expressly provided otherwise by the statutes of the State of Delaware, by the Certificate of Incorporation of the Corporation or by these By-laws. Without prejudice to the generality of the foregoing, the Board of Directors, by resolution or resolutions, may create and issue, whether or not in connection with the issue and sale of any shares of stock or other securities of the Corporation, rights or options entitling the holders thereof to purchase from the Corporation any shares of its capital stock of any class or classes or any other securities of the Corporation, such rights or options to be evidenced by or in such instrument or instruments as shall be approved by the Board of Directors. The terms upon which, including the time or times, which may be limited or unlimited in duration, at or within which, and the price or prices at which, any such rights or options may be issued and any such shares or other securities may be purchased from the Corporation upon the exercise of any such right or option shall be such as shall be fixed and stated in the resolution or resolutions adopted by the Board of Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 5

Directors providing for the creation and issue of such rights or options, and, in every case, set forth or incorporated by reference in the instrument or instruments evidencing such rights or options. In the absence of actual fraud in the transaction, the judgment of the directors as to the consideration for the issuance of such rights or options and the sufficiency thereof shall be conclusive. In case the shares of stock of the Corporation to be issued upon the exercise of such rights or options shall be shares having a par value, the price or prices so to be received therefor shall not be less than the par value thereof. In case the shares of stock to be issued shall be shares of stock without par value, the consideration therefor shall be determined in the manner provided in Section 153 of the General Corporation Law of the State of Delaware. SECTION 2.02. Qualifications and Number of Directors. Directors need not be stockholders. The number of directors which shall constitute the whole Board shall be nine (9), but such number as determined by the Board of Directors may be increased or decreased and subsequently again from time to time increased or decreased by an amendment to these By-laws, provided that no decrease to such number by action of the Board of Directors shall in itself effect the removal of any sitting director. In order to qualify for election or appointment, directors shall be younger than 72 years when elected or appointed, provided that the Board of Directors may, by specific resolution, waive the provisions of this sentence with respect to an individual director whose continued service is deemed uniquely important to the Corporation. SECTION 2.03. Election and Term. The directors shall be elected at the annual meeting of the stockholders, and each director shall be elected to hold office until his successor shall be elected and qualified, or until his earlier resignation or removal. SECTION 2.04. Resignations. Any director of the Corporation may resign at any time by giving written notice to the Corporation. Such resignation shall take effect at the time specified therein, if any, or if no time is specified therein, then upon receipt of such notice by the Corporation; and, unless otherwise provided therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 2.05. Vacancies and Newly Created Directorships. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until their successors shall be elected and qualified, or until their earlier resignation or removal. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as herein provided in the filling of other vacancies. SECTION 2.06. Quorum of Directors. At all meetings of the Board of Directors, a majority of the entire Board, but not less than two directors, shall constitute a quorum for the transaction of business, except that when a board of one director is authorized, then one director shall constitute a quorum. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors except as provided in Section 2.05 hereof. Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 6

A majority of the directors present, whether or not a quorum is present, may adjourn any meeting of the directors to another time and place. Notice of any adjournment need not be given if such time and place are announced at the meeting. SECTION 2.07. Annual Meeting. The newly elected Board of Directors shall meet immediately following the adjournment of the annual meeting of stockholders in each year at the same place, within or without the State of Delaware, and no notice of such meeting shall be necessary. SECTION 2.08. Regular Meetings. Regular meetings of the Board of Directors may be held at such time and place, within or without the State of Delaware, as shall from time to time be fixed by the Board and no notice thereof shall be necessary. SECTION 2.09. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Vice Chairman of the Board of Directors, any Vice-President, the Treasurer or the Secretary or by resolution of the Board of Directors. Special meetings shall be held at such place, within or without the State of Delaware, as shall be fixed by the person or persons calling the meeting and stated in the notice or waiver of notice of the meeting. Special meetings of the Board of Directors shall be held upon notice to the directors or waiver thereof. Unless waived, notice of each special meeting of the directors, stating the time and place of the meeting, shall be given to each director by delivered letter, by transmitted facsimile, by electronic mail, by telegram or by personal communication either over the telephone or otherwise, in each such case not later than 48 hours prior to the meeting, or by mailed letter deposited in the United States mail with postage thereon prepaid not later than the seventh day prior to the meeting. SECTION 2.10. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in a writing or writings and the writing or writings are filed with the minutes of proceedings of the Board or committee. SECTION 2.11. Compensation. Directors shall receive such fixed sums and expenses of attendance for attendance at each meeting of the Board or of any committee and/or such salary as may be determined from time to time by the Board of Directors; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 2.12. Committees. Whereas by resolution adopted by a majority of the whole Board of Directors, the Corporation has elected to be governed by paragraph (2) of Section 141(c) of the General Corporation Law of the State of Delaware, the Board of Directors may, by resolution or resolutions, designate one or more committees (and may discontinue any of same at any time) each to consist of one or more of the directors of the Corporation. The members of each committee shall be appointed by the Board and shall hold office during the pleasure of the Board. Subject to any Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 7

limitations on the delegation of power and authority to such committee in the Corporation's Restated Certificate of Incorporation or under applicable law, a committee may be delegated and may exercise such powers of the Board of Directors in the management of the business and affairs of the Corporation (and may authorize the seal of the Corporation to be affixed to all papers which may require it) as may be delegated to such committee by such a resolution of the Board of Directors. Subject to a resolution of the Board of Directors to the contrary, in the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting of the committee and not disqualified from voting, whether or not such present member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at such meeting of the committee in the place of such absent or disqualified member. Regular meetings of any such committee may be held at such time and place, within or without the State of Delaware, as shall from time to time be fixed by such committee and no notice thereof shall be necessary. Special meetings of any such committee may be called at any time by any officer of the Corporation or any member of any such committee. Special meetings shall be held at such place, within or without the State of Delaware, as shall be fixed by the person calling the meeting and stated in the notice or waiver of the meeting. A majority of the members of any such committee shall constitute a quorum for the transaction of business and the act of a majority present at which there is a quorum shall be the act of such committee. Notice of each special meeting of a committee shall be given (or waived) in the same manner as notice of a directors' meeting. Each committee shall keep written minutes of its meetings and report such minutes to the Board of Directors at the next regular meeting of the Board of Directors. ARTICLE III Officers SECTION 3.01. Number. The officers of the Corporation shall be chosen by the Board of Directors. The officers shall be a Chairman of the Board of Directors, a Chief Executive Officer, a Chief Operating Officer, a President, a Vice Chairman of the Board of Directors, a Secretary and a Treasurer, and such number of Vice-Presidents (including Vice-Presidents designated by the Board of Directors as Senior Vice President and Executive Vice Presidents), Assistant Secretaries and Assistant Treasurers, and such other officers, if any, as the Board may from time to time determine. The Board may choose such other agents as it shall deem necessary. Any number of offices may be held by the same person. SECTION 3.02. Terms of Office. Each officer shall hold his office until his successor is chosen and qualified or until his earlier resignation or removal. Any officer may resign at any time by written notice to the Corporation. SECTION 3.03. Removal. Any officer may be removed from office at any time by the Board of Directors with or without cause. SECTION 3.04. Authority. The powers and duties of the officers of the Corporation shall be determined by resolution of the Board, or by one of the committees of the Board. The Secretary, or Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 8

some other officer designated by resolution of the Board or by one of the committees of the Board, shall record all of the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose. SECTION 3.05. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman of the Board of Directors, the Chief Executive Officer, the President , the Vice Chairman of the Board of Directors, or any Vice-President and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. ARTICLE IV Capital Stock SECTION 4.01. Stock Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, the President, the Vice Chairman of the Board of Directors or a Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned by him in the Corporation. Where such certificate is signed (1) by a transfer agent other than the Corporation or its employee, or (2) by a registrar other than the Corporation or its employee, the signatures of the officers of the Corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. SECTION 4.02. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by the laws of the State of Delaware. SECTION 4.03. Registered Holders. Prior to due presentment for registration of transfer of any security of the Corporation in registered form, the Corporation shall treat the registered owner as the person exclusively entitled to vote, to receive notifications and to otherwise exercise all the rights and powers of an owner, and shall not be bound to recognize any equitable or other claim to, or interest in, any security, whether or not the Corporation shall have notice thereof, except as otherwise provided by the laws of the State of Delaware. SECTION 4.04. New Certificates. The Corporation shall issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, if the owner: (1) so requests before the Corporation as notice that the shares of stock represented by that Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 9

certificate have been acquired by a bona fide purchaser; (2) files with the Corporation a bond sufficient (in the judgment of the directors) to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or theft of that certificate or the issuance of a new certificate; and (3) satisfies any other requirements imposed by the directors that are reasonable under the circumstances. A new certificate may be issued without requiring any bond when, in the judgment of the directors, it is proper so to do. ARTICLE V Miscellaneous SECTION 5.01. Offices. The registered office of the Corporation in the State of Delaware shall be at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The Corporation may also have offices at other places within and/or without the State of Delaware. SECTION 5.02. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words "Corporate Seal Delaware." SECTION 5.03. Checks. All checks or demands for money shall be signed by such person or persons as the Board of Directors may from time to time determine. SECTION 5.04. Fiscal Year. The fiscal year shall begin the first day of February in each year and shall end on the thirty-first day of January of the following year. SECTION 5.05. Waivers of Notice: Dispensing with Notice. Whenever any notice whatever is required to be given under the provisions of the General Corporation Law of the State of Delaware, of the Certificate of Incorporation of the Corporation, or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Whenever any notice whatever is required to be given under the provisions of the General Corporation Law of the State of Delaware, of the Certificate of Incorporation of the Corporation, or of these By-laws, to any person with whom communication is made unlawful by any law of the United States of America, or by any rule, regulation, proclamation or executive order issued under any such law, then the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person; and any action or meeting which shall be taken or held without notice to any such person or without giving or without applying for a license or permit to give any Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 10

such notice to any such person with whom communication is made unlawful as aforesaid, shall have the same force and effect as if such notice had been given as provided under the provisions of the General Corporation Law of the State of Delaware, or under the provisions of the Certificate of Incorporation of the Corporation or of these By-laws. In the event that the action taken by the Corporation is such as to require the filing of a certificate under any of the other sections of this title, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. SECTION 5.06. Loans to and Guarantees of Obligations of Employees and Officers. The Corporation may lend money to or guaranty any obligation of, or otherwise assist any officer or other employee of the Corporation or of a subsidiary, including any officer or employee who is a director of the corporation or a subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including without limitation, a pledge of shares of stock of the Corporation. Nothing in this Section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any other statute. SECTION 5.07. Amendment of By-laws. These By-laws may be altered, amended or repealed at any meeting of the Board of Directors. SECTION 5.08. Section Headings and Statutory References. The headings of the Articles and Sections of these By-laws, and the references in brackets to relevant sections of the General Corporation Law of the State of Delaware, have been inserted for convenience of reference only and shall not be deemed to be a part of these By-laws. ARTICLE VI SECTION 6.01. Indemnification of Directors and Officers. The Corporation shall, to the fullest extent permitted by law, indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including without limitation an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, provided, however, that in the event of any action, suit or proceeding initiated by and in the name of (or by and in the name of a nominee or agent for) a person who would otherwise by entitled to indemnification under this Section 6.01, such person shall be entitled to indemnification hereunder only in the event such action, suit or proceeding was initiated on the authorization of the Board of Directors. The termination of any action, suit or proceeding by judgment, order, Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 11

settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful. The right of indemnity provided herein shall not be exclusive and the Corporation may provide indemnification to any person, by agreement or otherwise, on such terms and conditions as the Board of Directors may approve. Any agreement for indemnification of any director, officer, employee or other person may provide indemnification rights which are broader or otherwise different from those set forth herein. No repeal or modification of this Article or of relevant provisions of the General Corporation Law of the State of Delaware or any other applicable laws shall affect or diminish in any way the rights of any person to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification. SECTION 6.02. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. Restated By-Laws: Tiffany & Co. (DE) 09/18/03 Page 12

EXHIBIT 4.1 Tiffany & Co. Report on Form 10-K AMENDED AND RESTATED RIGHTS AGREEMENT DATED AS OF APRIL 8, 2004 BY AND BETWEEN TIFFANY & CO. AND MELLON INVESTOR SERVICES LLC, AS RIGHTS AGENT

TABLE OF CONTENTS Page ---- SECTION 1. CERTAIN DEFINITIONS.......................................................................... 3 SECTION 2. APPOINTMENT OF RIGHTS AGENT.................................................................. 8 SECTION 3. ISSUE OF RIGHT CERTIFICATES.................................................................. 9 SECTION 4. FORM OF RIGHT CERTIFICATES................................................................... 11 SECTION 5. COUNTERSIGNATURE AND REGISTRATION............................................................ 11 SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES............................................................ 12 SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE........................................................... 13 SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES........................................... 15 SECTION 9. STATUS AND AVAILABILITY OF PREFERRED SHARES.................................................. 16 SECTION 10. PREFERRED SHARES RECORD DATE................................................................. 17 SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS........................... 17 SECTION 12. CERTIFICATE OF ADJUSTMENT.................................................................... 29 SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER......................... 30 SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES...................................................... 32 SECTION 15. RIGHTS OF ACTION............................................................................. 34 SECTION 16. AGREEMENT OF RIGHT HOLDERS................................................................... 34 SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER............................................ 35 SECTION 18. CONCERNING THE RIGHTS AGENT.................................................................. 35 -i-

SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.................................... 36 SECTION 20. DUTIES OF RIGHTS AGENT....................................................................... 37 SECTION 21. CHANGE OF RIGHTS AGENT....................................................................... 40 SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES........................................................... 41 SECTION 23. REDEMPTION................................................................................... 42 SECTION 24. EXCHANGE..................................................................................... 43 SECTION 25. NOTICE OF CERTAIN EVENTS..................................................................... 45 SECTION 26. NOTICES...................................................................................... 46 SECTION 27. SUPPLEMENTS AND AMENDMENTS................................................................... 47 SECTION 28. SUCCESSORS................................................................................... 48 SECTION 29. BENEFITS OF THIS AGREEMENT................................................................... 48 SECTION 30. SEVERABILITY................................................................................. 48 SECTION 31. GOVERNING LAW................................................................................ 48 SECTION 32. COUNTERPARTS................................................................................. 48 SECTION 33. DESCRIPTIVE HEADINGS......................................................................... 49 SECTION 34. ADMINISTRATION............................................................................... 49 EXHIBIT A FORM OF RIGHT CERTIFICATE.................................................................. A-1 -ii-

AMENDED AND RESTATED RIGHTS AGREEMENT Amended and Restated Rights Agreement, dated as of April 8, 2004 (the "Agreement"), between Tiffany & Co., a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey limited liability company (successor to ChaseMellon Shareholder Services, L.L.C.), as rights agent (the "Rights Agent"). WHEREAS, in November 1988 the Company adopted a stockholder rights plan and declared a dividend of one Preferred Stock purchase right (a "Right") for each outstanding share of common stock, par value $0.01 per share, of the Company (a "Common Share") held of record on November 28, 1988 (the "Record Date"), and authorized the issuance of one Right with respect to each additional Common Share thereafter issued; WHEREAS, in connection with and in furtherance of the foregoing, the Company entered into a Rights Agreement with Manufacturers Hanover Trust Company (the predecessor of the Rights Agent) as rights agent dated as of November 17, 1988, as amended as of September 21, 1989 (the "Original Rights Agreement"); WHEREAS, the Rights issued pursuant to the Original Rights Agreement were scheduled to expire on November 17, 1998; WHEREAS, the Original Rights Agreement was amended and supplemented pursuant to the Amended and Restated Rights Agreement dated as of September 22, 1998 (the "1998 Rights Agreement"); -1-

WHEREAS, the 1998 Rights Agreement provides that the Company may amend or supplement such Agreement in any manner and that the Rights Agent shall supplement or amend such Agreement as directed by the Company; WHEREAS, the Board of Directors of the Company has determined that it necessary or desirable, and is in the best interest of the Company, to clarify certain provisions of the Rights Agreement ; WHEREAS, at the time of this Agreement, no Person is an Acquiring Person; WHEREAS, to implement the foregoing the Board of Directors has determined that the Company enter into this Agreement which amends and restates in its entirety the 1998 Rights Agreement and pursuant to which, among other things, (i) each Right outstanding on the date hereof shall evidence the right to purchase one one-hundredth of a Preferred Share at the Purchase Price, as of the date hereof, of $165, (ii) the Final Expiration Date of the Rights shall be September 17, 2008, and (iii) one Right shall be issued with respect to each additional Common Share that shall become outstanding after the date hereof and prior to the earliest of the Close of Business on the Distribution Date, the Redemption Date and the Close of Business on the Final Expiration Date; and WHEREAS, the Company desires that the Rights Agent continue to act as Rights Agent hereunder, and the Rights Agent is willing so to act; NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: -2-

Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: "Acquiring Person" shall mean any Person, other than (i) the Company, (ii) any Subsidiary of the Company, or (iii) any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding Common Shares pursuant to the terms of any such employee benefit plan, which is the Beneficial Owner of 15% or more of the Common Shares then outstanding. Notwithstanding the foregoing: (1) No Person shall be deemed to have become an Acquiring Person solely as the result of an acquisition of Common Shares by the Company which, by reducing the number of outstanding shares, shall have increased the percentage of Common Shares Beneficially Owned by such Person to 15% or more of the then outstanding Common Shares (a "Repurchase Event"). Any Person described in the immediately preceding sentence shall become an Acquiring Person, however, if such Person shall acquire Beneficial Ownership of any additional Common Shares after the public announcement of the Repurchase Event. (2) No Person who shall have acquired Beneficial Ownership of 15% or more of the outstanding Common Shares, who represents to the Company that such Person inadvertently acquired such Beneficial Ownership (an "Inadvertent Acquisition"), shall be deemed to have become an Acquiring Person if the Board of Directors of -3-

the Company, in good faith, determines that such Person is not an Acquiring Person because of the following facts and circumstances: (a) such Person promptly, but in any event within ten (10) business days of receipt of a written request to do so duly issued on behalf of the Board of Directors of the Company, delivers to the Company a certificate signed by an authorized representative of such Person, satisfactory to the Board of Directors of the Company, representing that such Person has not acquired Common Shares with any purpose, or with the effect, of changing the control of the Company, or in connection with or as a participant in any transaction having that purpose or effect; (b) such Person, within the time period required under (a) above, agrees in writing that: (i) such Person will divest, as promptly as practicable, but in any event within such period of time as the Board of Directors of the Company shall determine, a sufficient number of Common Shares so that such Person would no longer be the Beneficial Owner of 15% or more of the outstanding Common Shares; and (ii) until such Person has divested such number of Common Shares, such Person will not acquire Beneficial Ownership of any additional Common Shares; and -4-

(c) such Person in fact divests the number of Common Shares referred to, and within the time period determined as provided in, the immediately preceding clause (b). If such Person shall fail to comply, within the time applicable periods, with the provisions of this paragraph (2), such Person shall be deemed to have become an Acquiring Person on the date that such Person shall have acquired Beneficial Ownership of 15% or more of the outstanding Common Shares. "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. A Person shall be deemed the "Beneficial Owner" of and shall be deemed to "Beneficially Own" any securities: (i) which such Person or any of such Person's Affiliates or Associates beneficially owns (as determined pursuant to the provisions of Rule 13d-3 and Rule 13d-5 of the General Rules and Regulations under the Exchange Act), directly or indirectly; or (ii) which such Person or any of such Person's Affiliates or Associates has: (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), written or otherwise, or upon the exercise of -5-

conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed to be the Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act; or (iii) which are Beneficially Owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), written or otherwise, for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to section (B) of the immediately preceding paragraph (ii)) or disposing of any securities of the Company. -6-

The phrase "then outstanding," when used with reference to a Person's Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to Own Beneficially hereunder. "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Close of Business" on any given date shall mean 5:00 P.M., New York time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day. "Common Shares" shall mean shares of the common stock, par value $0.01 per share, of the Company. "Common Stock", when used with reference to any Person other than the Company, shall mean the capital stock (or equity interest) with the greatest voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person. "common stock equivalents" shall have the meaning set forth in Section 11(a)(iii)(B)(3) hereof. "Current Value" shall have the meaning set forth in Section 11(a)(iii)(A)(1) hereof. "Distribution Date" shall have the meaning set forth in Section 3(a) hereof. "equivalent preferred shares" shall have the meaning set forth in Section 11(b) hereof. "Exchange Ratio" shall have the meaning set forth in Section 24(a) hereof. "Final Expiration Date" shall mean September 17, 2008. -7-

"Person" shall mean any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity. "Purchase Price" shall have the meaning set forth in Section 7(b) hereof. "Preferred Shares" shall mean shares of the Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company. "Redemption Date" shall have the meaning set forth in Section 23 hereof. "Right Certificate" shall mean a certificate evidencing a Right in substantially the form of Exhibit A hereto. "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in Section 11(a)(iii) hereof. "Shares Acquisition Date" shall mean the earlier of the date of (i) the public announcement by the Company or an Acquiring Person that an Acquiring Person has become an Acquiring Person or (ii) the public disclosure of facts by the Company or an Acquiring Person indicating that an Acquiring Person has become an Acquiring Person. "Spread" shall have the meaning set forth in Section 11(a)(iii)(A) hereof. "Subsidiary" of any Person shall mean any Person of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "Substitution Period" shall have the meaning set forth in Section 11(a)(iii) hereof. Section 2. Appointment of Rights Agent. The Company has appointed the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the -8-

Rights Agent has accepted such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable. Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth Business Day (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person) after the date of the commencement by any Person of, or of the first public announcement of the intention of any Person to commence, a tender or exchange offer the consummation of which would result in any Person becoming an Acquiring Person (such date being herein referred to as the "Distribution Date"): (x) the Rights will be evidenced by the certificates for Common Shares registered in the names of the holders thereof (which certificates shall also be deemed to be Right Certificates) and not by separate Right Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of Common Shares. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign and the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate evidencing one Right for each Common Share so held. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates. -9-

(b) With respect to certificates for Common Shares outstanding as of the Record Date, until the Close of Business on the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof. Until the Close of Business on the Distribution Date (or the earlier of the Redemption Date or the Close of Business on the Final Expiration Date), the surrender for transfer of any certificate for Common Shares outstanding on the Record Date or which became outstanding after the Record Date but on or prior to the date of the 1998 Rights Agreement shall also constitute the transfer of the Rights associated with the Common Shares evidenced thereby. (c) Certificates for Common Shares which are issued after the date of the 1998 Rights Agreement but prior to the first to occur of the Close of Business on the Distribution Date, the Redemption Date or the Close of Business on the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed to them the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Amended and Restated Rights Agreement between Tiffany & Co. and the Rights Agent thereunder, dated as of April __, 2004 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Tiffany & Co. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Tiffany & Co. will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written request therefor. Under certain circumstances, Rights that are or were acquired or beneficially owned by Acquiring Persons (as defined in the Rights Agreement) may become null and void. Certificates for Common Shares which were issued after the Record Date but prior to September 22, 1998 bear the legend set forth in the Original Rights Agreement. Certificates for Common Shares which were issued after September 22, 1998 but prior to the date hereof bear the legend set forth in the 1998 Rights Agreement. With respect to such certificates containing the -10-

foregoing legends, until the Close of Business on the Distribution Date, the Rights associated with the Common Shares represented by certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the Common Shares represented thereby. In the event that the Company purchases or acquires any Common Shares prior to the Close of Business on the Distribution Date, any Rights associated with such Common Shares shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common Shares which are no longer outstanding. Section 4. Form of Right Certificates. The Right Certificates (and the forms of election to purchase Preferred Shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit A hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the other provisions of this Agreement, the Right Certificates shall entitle the holders thereof to purchase such number of one one-hundredths of a Preferred Share as shall be set forth therein at the Purchase Price, but the number of one one-hundredths of a Preferred Share and the Purchase Price shall be subject to adjustment as provided herein. Section 5. Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, any of its Vice Presidents, or its Treasurer, either manually or by facsimile signature, -11-

shall have affixed thereto the Company's seal or a facsimile thereof, and shall be attested by the Secretary or any Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned, either manually or by facsimile. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office, books for registration of the transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates. Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 14 hereof, at any time after the Close of Business on the Distribution Date, and prior to the earlier of the Redemption Date or the Close of Business on the Final Expiration Date, any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become void -12-

pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a Preferred Share as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient for any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights; Purchase Price. (a) The registered holder of any Right Certificate (other than a holder whose Rights have become void pursuant to Section 11(a)(ii) hereof or have been exchanged pursuant -13-

to Section 24 hereof) may exercise the Rights evidenced thereby in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at its principal office, together with payment of the Purchase Price for each one one-hundredth of a Preferred Share as to which the Rights are exercised, prior to the earliest of (i) the Close of Business on the Final Expiration Date, (ii) the time at which the right to exercise the Rights terminates pursuant to Section 23 hereof, or (iii) the time at which the right to exercise the Rights terminates pursuant to Section 24 hereof. (b) The purchase price for each one one-hundredth of a Preferred Share to be purchased upon the exercise of a Right shall initially be $165 (the "Purchase Price"), shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in lawful money of the United States of America in accordance with paragraph (c) below. (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and certificate duly executed, accompanied by payment of the Purchase Price for the number of one one-hundredths of a Preferred Share to be purchased and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof by cash, certified check, cashier's check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares certificates for the number of one one-hundredths of a Preferred Share to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) requisition from any depository agent for the Preferred Shares depository receipts representing such number of one -14-

one-hundredths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent with the depository agent) and the Company hereby directs the depository agent to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional Preferred Shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depository receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate. (d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate following the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if -15-

surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Right Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. Section 9. Status and Availability of Preferred Shares. (a) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares delivered upon exercise of Rights shall, at the time of delivery of the certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and non-assessable shares. (b) The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery of certificates or depository receipts for the Preferred Shares in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or to deliver any certificates or depository receipts for Preferred Shares upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by -16-

the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's reasonable satisfaction that no such tax is due. (c) The Company covenants and agrees that it will cause to be reserved and kept available, out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with Section 7 hereof. Section 10. Preferred Shares Record Date. Each person in whose name any certificate for Preferred Shares is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares represented thereby on, and such certificate shall be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein. Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of Preferred Shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a)(i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred Shares or (D) issue any shares of its capital stock in a reclassification of the -17-

Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. (ii) Subject to the following paragraph of this subparagraph (ii) and to Section 24 of this Agreement, in the event any Person shall become an Acquiring Person, each holder of a Right shall thereafter have a right to exercise such holder's Rights, , at a price equal to the then current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of Preferred Shares, and to receive upon exercise such number of Common Shares as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right is then exercisable and dividing that product by (y) 50% of the then current per share market price of the Common Shares (determined pursuant to Section 11(d) hereof) on the date such Person became an Acquiring Person. In the event that any Person shall become an Acquiring Person and the Rights shall then be outstanding, -18-

the Company shall not take any action that would eliminate or diminish the benefits intended to be afforded by the Rights except as expressly permitted by Section 24 below. From and after the occurrence of the time at which any Person shall have become an Acquiring Person, any Rights that are or were acquired or Beneficially Owned by such Acquiring Person (or any Associate or Affiliate of such Acquiring Person) on or after the earlier of (x) the date on which such Person became an Acquiring Person and (y) the Distribution Date shall be void and any holder of such Rights shall thereafter have no right to exercise such Rights under any provision of this Agreement. No Right Certificate shall be issued pursuant to Section 3 that represents Rights Beneficially Owned by an Acquiring Person whose Rights would be void pursuant to the preceding sentence or to any Associate or Affiliate thereof; no Right Certificate shall be issued at any time upon the transfer of any Rights to an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the Rights Agent for transfer to an Acquiring Person whose Rights would be void pursuant to the preceding sentence or any Associate or Affiliate thereof shall be canceled. (iii) In the event that the number of Common Shares which are authorized by the Company's certificate of incorporation and not outstanding or subscribed for, or reserved or otherwise committed for issuance for purposes other than upon exercise of the Rights, are not sufficient to permit the holder of each Right to purchase the number of Common Shares to which he would be entitled upon the exercise in full of the Rights in accordance with the provisions of Section 11(a)(ii) hereof, or should the Board of Directors so elect, the Company shall: (A) determine the excess of (1) the value of the Common Shares issuable upon the exercise of a Right (calculated as provided in the last sentence of this -19-

Section 11(a)(iii)) pursuant to Section 11(a)(ii) hereof (the "Current Value") over (2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each Right, make adequate provision to substitute for such Common Shares, upon payment of the applicable Purchase Price, any one or more of the following having an aggregate value determined by the Board of Directors to be equal to the Current Value: (1) cash, (2) a reduction in the Purchase Price, (3) Common Shares or other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock which the Board of Directors of the Company has determined to have the same value as Common Shares (such shares of preferred stock, "common stock equivalents")), (4) debt securities of the Company, or (5) other assets; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the first occurrence of an event triggering the rights to purchase Common Shares described in Section 11(a)(ii) (the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and cash have an aggregate value equal to the Spread. If the Board of Directors of the Company shall determine in good faith that it is likely that sufficient additional Common Shares could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such period, as it may be extended, the "Substitution Period"). To the -20-

extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof and the last paragraph of Section 11(a)(ii) hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall make a public announcement, and shall deliver to the Rights Agent a statement, stating that the exercisability of the Rights has been temporarily suspended. At such time as the suspension is no longer in effect, the Company shall make another public announcement, and deliver to the Rights Agent a statement, so stating. For purposes of this Section 11(a)(iii), the value of the Common Shares shall be the current per share market price (as determined pursuant to Section 11(d)(i) hereof) of the Common Shares on the Section 11(a)(ii) Trigger Date and the value of any common stock equivalent shall be deemed to have the same value as the Common Shares on such date. (b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares having the same rights, privileges and preferences as the Preferred Shares ("equivalent preferred shares")) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the then current per share market price of the Preferred Shares (as defined in Section 11(d)) on such record date, the Purchase Price to be in effect after such record date shall be adjusted by -21-

multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (c) In case the Company shall fix a record date for the making of a distribution to all holders of the Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend -22-

or a dividend payable in Preferred Shares) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then current per share market price of the Preferred Shares on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Preferred Share and the denominator of which shall be such current per share market price of the Preferred Shares; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (d)(i) For the purpose of any computation hereunder, the "current per share market price" of any security (a "Security" for the purpose of this Section 11(d)(i)) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that in the event that the current per share market price of the Security is determined during a period following the announcement by the issuer of such Security of (A) a dividend or distribution on such Security payable in shares of such Security or securities convertible into such shares, or (B) any subdivision, combination or reclassification of such -23-

Security and prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price shall be appropriately adjusted to reflect the current market price per share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors of the Company. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day. (ii) For the purpose of any computation hereunder, the "current per share market price" of the Preferred Shares shall be determined in accordance with the method set forth in Section 11(d)(i). If the Preferred Shares are not publicly traded, the "current per share market -24-

price" of the Preferred Shares shall be conclusively deemed to be the current per share market price of the Common Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof), multiplied by 100. If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, "current per share market price" shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. (e) No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one millionth of a Preferred Share or one ten-thousandth of any other share or security as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than three years from the date of the transaction which requires such adjustment. (f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Shares, the number of such other shares so receivable upon exercise of any Right shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Section 11(a) through (c), inclusive, and the provisions of Sections -25-

7, 9, 10 and 13 with respect to the Preferred Shares shall apply on like terms to any such other shares. (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a Preferred Share (calculated to the nearest one millionth of a Preferred Share) obtained by (i) multiplying (x) the number of one one-hundredths of a share covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. (i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights in substitution for any adjustment in the number of one one-hundredths of a Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of -26-

the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been distributed, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been distributed, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates to be so distributed shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (j) Irrespective of any adjustment or change in the Purchase Price or the number of one one-hundredths of a Preferred Share issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of one one-hundredths of a Preferred Share which were expressed in the initial Right Certificates issued hereunder. -27-

(k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-hundredth of the then par value of the Preferred Shares issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable Preferred Shares at such adjusted Purchase Price. (l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuing to the holder of any Right exercised after such record date of the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the Preferred Shares and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that any (i) combination or subdivision of the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the current market price, (iii) issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred Shares or (v) issuance of any rights, options or warrants referred to hereinabove in -28-

Section 11(b), hereafter made by the Company to holders of its Preferred Shares shall not be taxable to such stockholders. (n) In the event that at any time after the date of this Agreement and prior to the Distribution Date, the Company shall (i) declare or pay any dividend on the Common Shares payable in Common Shares or (ii) effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise other than by payment of dividends in Common Shares) into a greater or lesser number of Common Shares, then in any such case (i) the number of one one-hundredths of a Preferred Share purchasable after such event upon proper exercise of each Right shall be determined by multiplying the number of one one-hundredths of a Preferred Share so purchasable immediately prior to such event by a fraction, the numerator of which is the number of Common Shares outstanding immediately before such event and the denominator of which is the number of Common Shares outstanding immediately after such event, and (ii) each Common Share outstanding immediately after such event, without further action by the Company or any other Person, shall evidence that number of Rights which each Common Share outstanding immediately prior to such event had evidenced. The adjustments provided for in this Section 11(n) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected. Section 12. Certificate of Adjustment. Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Shares or the Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in -29-

accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained. Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. In the event that, directly or indirectly, at any time after a Person becomes an Acquiring Person, (i) the Company shall consolidate with, or merge with and into, any other Person, (ii) any Person (other than any employee benefit plan of the Company or any Person holding Common Shares pursuant to the terms of any such employee benefit plan) shall consolidate with the Company, or merge with and into the Company and the Company shall be the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the Common Shares shall be changed into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property, or (iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person other than the Company or one or more of its wholly-owned Subsidiaries, then, and in each such case, proper provision shall be made so that (A) each holder of a Right (except as otherwise provided herein) shall thereafter have the right to receive, upon the exercise thereof at a price equal to the then current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of shares of Common Stock of such other Person (including the Company as successor thereto or as the surviving corporation) as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right is then exercisable and dividing that product by (y) 50% of the -30-

then current per share market price of the Common Stock of such other Person (determined pursuant to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer; (B) the issuer of such Common Stock shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement; (C) the term "Company" shall thereafter be deemed to refer to such issuer; and (D) such issuer shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in accordance with Section 9 hereof) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the shares of Common Stock thereafter deliverable upon the exercise of the Rights. The Company covenants and agrees that it shall not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement so providing. The Company shall not enter into any transaction of the kind referred to in this Section 13 if at the time of such transaction there are any rights, warrants, instruments or securities outstanding or any agreements or arrangements which, as a result of the consummation of such transaction, would eliminate or substantially diminish the benefits intended to be afforded by the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. For purposes hereof, the "earning power" of the Company and its Subsidiaries shall be determined in good faith by the Company's Board of Directors on the basis of the operating earnings of each business operated by the Company and its Subsidiaries during the three fiscal years preceding the date of such determination (or, in the case of any business not operated by the Company or any Subsidiary -31-

during three full fiscal years preceding such date, during the period such business was operated by the Company or any Subsidiary). Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the -32-

fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. (b) The Company shall not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the election of the Company, be evidenced by depository receipts, pursuant to an appropriate agreement between the Company and a depository selected by it; provided, that such agreement shall provide that the holders of such depository receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depository receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, the Company shall pay to each registered holder of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Preferred Share as the fraction of one Preferred Share that such holder would otherwise receive upon the exercise of the aggregate number of rights exercised by such holder. For the purposes of this Section 14(b), the current market value of a Preferred Share shall be the closing price of a Preferred Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise. (c) The holder of a Right by the acceptance of the Right expressly waives any right to receive fractional Rights or fractional shares upon exercise of a Right (except as provided above). -33-

Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares) may, without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Shares), on his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of the obligations of any Person subject to, this Agreement. Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares; (b) after the Distribution Date, the Right Certificates are transferable only on the registry books maintained by the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer with a completed form of certification; and -34-

(c) the Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Share certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company shall indemnify the Rights Agent for, -35-

and hold it harmless against, any loss, liability, claim or expense ("Loss") arising out of or in connection with its duties under this Agreement, including the costs and expenses of defending itself against any Loss, unless such Loss shall have been determined by a court of competent jurisdiction to be a result of the Rights Agent's negligence, bad faith or willful misconduct. The obligations of the Company under this section shall survive the termination of this Agreement. The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for Preferred Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper person or persons. Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not -36-

delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations expressly set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Rights Agent. The Rights Agent shall perform those duties and obligations upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. -37-

(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, a Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. In no case, however, will the Rights Agent be liable for special, indirect, incidental or consequential loss or damages of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the possibility of such damages. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except as to its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be -38-

responsible for any adjustment required under the provisions of Sections 11 or 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Preferred Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares will, when so issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, a Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were -39-

not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Common Shares and the Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares and the Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. -40-

Any successor Rights Agent, whether appointed by the Company or by such a court, shall be either (a) a corporation organized and doing business under the laws of the United States or of any state of the United States, in good standing, having an office in the State of New York which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million, or (b) an affiliate of such a corporation. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and the Preferred Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. -41-

Section 23. Redemption. (a) The Board of Directors of the Company, at its option, may redeem all but not less than all the then outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"), provided that at the time of such redemption no Person has become and continues to be an Acquiring Person. The redemption of the Rights by the Board of Directors may be made effective at such time, on such basis and subject to such conditions as the Board of Directors in its sole discretion may establish. (b) Immediately upon the time of the effectiveness of the redemption of the Rights pursuant to paragraph (a) of this Section 23 or such earlier time as may be determined by the Board of Directors of the Company in the action ordering such redemption (although not earlier than the time of such action) (such time the "Redemption Date"), and without any further action and without any notice, the right to exercise the Rights shall terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within 10 days after such action of the Board of Directors ordering the redemption of the Rights pursuant to paragraph (a), the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. If the payment of the Redemption Price is -42-

not included with such notice, each such notice shall state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, other than in connection with the purchase of Common Shares prior to the Distribution Date. Section 24. Exchange. (a) The Board of Directors of the Company may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Shares for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of a majority of the Common Shares then outstanding. (b) Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. -43-

The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights. (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute Preferred Shares or common stock equivalents for Common Shares exchangeable for Rights, at the initial rate of one one-hundredth of a Preferred Share (or an appropriate number of common stock equivalents) for each Common Share, as appropriately adjusted to reflect adjustments in the voting rights of the Preferred Shares pursuant to the terms thereof, so that the fraction of a Preferred Share delivered in lieu of each Common Share shall have the same voting rights as one Common Share. (d) In the event that there shall not be sufficient Common Shares, Preferred Shares or common stock equivalents authorized by the Company's certificate of incorporation and not outstanding or subscribed for, or reserved or otherwise committed for issuance for purposes other than upon exercise of Rights, to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to -44-

authorize additional Common Shares, Preferred Shares or common stock equivalents for issuance upon exchange of the Rights. (e) The Company shall not be required to issue fractions of Common Shares or to distribute certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction of the current per share market value of a whole Common Share. For the purposes of this paragraph (e), the current per share market value of a whole Common Share shall be the closing price of a Common Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24. Section 25. Notice of Certain Events. (a) In case the Company shall after the Distribution Date propose (i) to pay any dividend payable in stock of any class to the holders of its Preferred Shares or to make any other distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the liquidation, dissolution or winding up of the Company, or (vi) -45-

to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares), then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least 10 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares and/or Preferred Shares, whichever shall be the earlier. (b) In case any event set forth in Section 11(a)(ii) hereof shall occur, then the Company shall as soon as practicable thereafter give to each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof. Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if received by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Tiffany & Co. -46-

Fifth Avenue & 57th Street New York, New York 10022 Attention: Senior Vice President and General Counsel Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if received by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: Mellon Investor Services LLC 85 Challenger Road Ridgefield Park, New Jersey, 07660 Attention: Relationship Manager Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. Section 27. Supplements and Amendments. The Company may from time to time, and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without the approval of any holders of Right Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any change to or delete any provision hereof or to adopt any other provisions with respect to the Rights which the Company may deem necessary or desirable; provided, however, that from and after such time as any Person becomes an Acquiring Person, this Agreement shall not be amended or supplemented in any manner which would adversely affect the interests of the holders of Rights (other than an Acquiring Person and its Affiliates and Associates). Any supplement or amendment authorized by this Section 27 will be evidenced by a writing signed by the Company and the Rights Agent. -47-

Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 29. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or entity other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares). Section 30. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 31. Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Section 32. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. -48-

Section 33. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 34. Administration. The Board of Directors of the Company shall have the exclusive power and authority to administer and interpret the provisions of this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or the Company or as may be necessary or advisable in the administration of this Agreement. All such actions, calculations, determinations and interpretations which are done or made by the Board of Directors in good faith shall be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties and shall not subject the Board of Directors to any liability to the holders of the Rights. IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Rights Agreement to be duly executed and attested, all as of the day and year first above written. Attest: TIFFANY & CO. /s/ Patrick B. Dorsey By: /s/ James N. Fernandez _____________________________ ____________________________________ Patrick B. Dorsey James N. Fernandez Senior Vice President Executive Vice President-Chief General Counsel and Secretary Financial Officer Attest: MELLON INVESTOR SERVICES LLC /s/ Robert Kavanagh By: /s/ Deborah Bass _____________________________ ____________________________________ Robert Kavanagh Deborah Bass AVP Client Service Manager -49-

Exhibit A Form of Right Certificate Certificate No. R- ________Rights NOT EXERCISABLE AFTER SEPTEMBER 17, 2008 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. Right Certificate TIFFANY & CO. This certifies that ________________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Amended and Restated Rights Agreement, dated as of April __ 2004 (the "Rights Agreement"), between Tiffany & Co., a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey limited liability company (successor to ChaseMellon Shareholder Services, L.L.C.), as rights agent (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M., City, New York time, on September 17 2008, at the principal office of the Rights Agent, or at the office of its successor as Rights Agent, one one-hundredth of a fully paid non-assessable share of Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share (the "Preferred Shares"), of the Company, at a purchase price of $165 per one one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and surrender of this Right Certificate with the certification and the Form of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and the number of one one-hundredths of a Preferred Share which may be purchased upon exercise hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of September 22, 1998, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and the number of one one-hundredths of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events. From and after the occurrence of an event described in Section 11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right Certificate are or were at any time on or after the earlier of (x) the date of such event and (y) the Distribution Date (as such term is defined in the Rights Agreement) acquired or beneficially owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms are defined in the Rights Agreement), such A-1

Rights shall become void, and any holder of such Rights shall thereafter have no right to exercise such Rights. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company and the offices of the Rights Agent. This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. Subject to the provisions of the Rights Agreement, at the Company's option, the Rights evidenced by this Certificate (i) may be redeemed by the Company at a redemption price of $0.01 per Right or (ii) may be exchanged in whole or in part for shares of the Company's Common Stock, par value $0.01 per share, or Preferred Shares. No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be evidenced by depository receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement. No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided in the Rights Agreement. This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. A-2

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of _____________________ , ____. Attest: TIFFANY & CO. _______________________________________ By: _______________________________ Countersigned: MELLON INVESTOR SERVICES LLC By: __________________________________ Authorized Signature A-3

Form of Reverse Side of Right Certificate FORM OF ASSIGNMENT (To be executed by the registered holder if such holder desires to transfer the Right Certificate.) FOR VALUE RECEIVED ___________________________________ hereby sells, assigns and transfers unto ____________________________________________________ (Please print name and address of transferee) this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint __________________________, Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution. Dated: __________ ___, ____ _______________________ Signature Signature Guaranteed: Signatures must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement). _______________________ Signature A-4

Form of Reverse Side of Right Certificate -- continued FORM OF ELECTION TO PURCHASE (To be executed if holder desires to exercise the Right Certificate.) TIFFANY & CO.: The undersigned hereby irrevocably elects to exercise _________________ Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise of such Rights and requests that certificates for such Preferred Shares be issued in the name of: Please insert social security or other identifying number ________________________________________________________________________________ (Please print name and address) ________________________________________________________________________________ If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number ________________________________________________________________________________ (Please print name and address) ________________________________________________________________________________ ________________________________________________________________________________ Dated: _______________ ___, _______ ___________________ Signature Signature Guaranteed: Signatures must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. A-5

Form of Reverse Side of Right Certificate -- continued The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement). ___________________ Signature NOTICE The signature in the foregoing Forms of Assignment and Election must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. In the event the certification set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such Assignment or Election to Purchase will not be honored. A-6

EXHIBIT 10.113 Tiffany & Co. Report on Form 10-K TIFFANY AND COMPANY PENSION PLAN AMENDED AND RESTATED EFFECTIVE AS OF MARCH 30, 2004

TABLE OF CONTENTS PAGE ---- SECTION 1 - DEFINITIONS................................................... 1 SECTION 2 - PARTICIPATION................................................. 9 SECTION 3 - LEAVES OF ABSENCE............................................. 11 SECTION 4 - VESTING....................................................... 12 SECTION 5 - BENEFITS...................................................... 14 SECTION 6 - CONTRIBUTIONS................................................. 25 SECTION 7 - ADMINISTRATION OF THE PLAN.................................... 26 SECTION 8 - MANAGEMENT OF ASSETS.......................................... 28 SECTION 9 - CERTAIN RIGHTS AND OBLIGATIONS................................ 29 SECTION 10 - CLAIM PROCEDURES............................................. 31 SECTION 11 - NON-ALIENATION OF BENEFITS................................... 32 SECTION 12 - TOP HEAVY PLAN............................................... 33 SECTION 13 - AMENDMENTS................................................... 35 SECTION 14 - CONSTRUCTION................................................. 36 APPENDIX I................................................................ 37 APPENDIX II............................................................... 38 APPENDIX III.............................................................. 39

TIFFANY AND COMPANY PENSION PLAN ======================================== SECTION 1 - DEFINITIONS ======================================== The following words and phrases as used herein shall have the following meanings unless a different meaning is plainly required by the context: (1) "Plan" Tiffany and Company Pension Plan, as described herein or as from time to time hereafter amended or restated. (2) "Company" Tiffany and Company, a New York corporation, Howard H. Sweet & Son, Inc. (formerly, Tiffco Jewelry and Chain Crafts, Inc.), a Delaware corporation, Judel Products Corp. (formerly, Glassware Acquisition Inc.) a West Virginia corporation, L.S. Wholesale, Inc., a Massachusetts corporation, L.S. Holding (Florida), Inc., a Florida corporation, L.S. Holding (USA), Inc., an Alaska corporation, and L.S. Holding, Inc., a U.S. Virgin Islands corporation, provided, however, that, in the case of a person who is an Employee of Tiffany and Company on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to Tiffany and Company, in the case of a person who is an Employee of Howard H. Sweet & Son, Inc. on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to Howard H. Sweet & Son, Inc., in the case of a person who is an Employee of Judel Products Corp. on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to Judel Products Corp., in the case of a person who is an Employee of L.S. Wholesale, Inc. on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to L.S. Wholesale, Inc., in the case of a person who is an Employee of L.S. Holding (Florida), Inc. on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to L.S. (Florida), Inc., in the case of a person who is an Employee of L.S. Holding (USA), Inc. on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to L.S. Holding (USA), Inc., and in the case of a person who is an Employee of L.S. Holding, Inc. on his Employment Commencement Date, the term "Company" as used herein with respect to such person shall refer to L.S. Holding, Inc. 1

(3) "Board of Directors" Board of Directors of Tiffany and Company. (4) "Pre-ERISA Plan" Tiffany and Company Pension Plan and Trust as in effect through January 31, 1976, incorporating an informal pension plan maintained by the Company prior to February 1, 1968. (5) "Affiliate" Any member of the controlled group of companies of which the Company is a member within the meaning of Section 414(b), (c) and (m) of the Code. (6) "Committee" The Pension Committee as described in Section 7. (7) "Plan Year" Each twelve (12) month period commencing February 1 and ending on or before January 31, 1981, the eleven (11) month period ending December 31, 1981 and each calendar year thereafter. (8) "Employee" Any person employed by the Company or by a United States Affiliate of the Company that has adopted this Plan who receives regular stated compensation from the Company or from such other United States Affiliate of the Company, but excluding employees (a) whose principal place of work is outside the United States and (b) who are paid their Compensation from a foreign bank or bank branch or who are eligible to receive retirement, severance or similar benefits under foreign law or as a result of foreign custom. Notwithstanding any other provision of the Plan, in the case of an Employee who shall transfer from a foreign location to a U.S. location or vice versa, the Committee may, by regulation or otherwise and to the extent it considers advisable, treat service and/or compensation during the period of such transfer, including compensation from and service with an Affiliate, as service and/or compensation with the Company for the purposes of vesting and/or for determining the amount of pension or other benefits which may be payable under the Plan. Based on his stated work schedule an Employee shall be classified as a Regular Employee or a Part-time Employee. A change in status between Part-time Employee and Regular Employee shall be deemed effective for purposes of Subsections (3) and (4) of Section 4 as of the first of the month coincident with or next following the date of such change or, in the case of an Employee who terminates employment and is reemployed in a different status prior to incurring a Break in Service, as of the intervening first day of a Plan Year or, if none, as of the first of the month coincident with or next following the date of termination. If a change in status between Part-time Employee and Regular Employee is deemed effective on other than the first day of a Plan Year and clause (ii) (A) of Subsection 4(3) is applicable to the 2

Employee, he shall not incur a Break in Service with respect to the Plan Year in which the change is deemed effective, and shall for purposes of determining Compensation, Average Final Compensation and Creditable Service be considered to have been a Regular Employee for the entirety of such Plan Year; if such a change in status is deemed effective on other than the first day of a Plan Year and clause (ii) (B) of Subsection 4(3) or Subsection 4(4) is applicable to the Employee, he shall for purposes of determining Compensation, Average Final Compensation and Creditable Service be considered to have been a Part-time Employee for the entirety of the Plan Year in which the change is deemed effective. However, "Employee" shall exclude any individual retained by the Company to perform services for the Company (for either a definite or indefinite duration) and is characterized thereby as a fee-for-service worker or independent contractor or in a similar capacity (rather than in the capacity of an employee), regardless of such individual's status under common law, including, without limitation, any such individual who is or has been determined by a third party, including, without limitation, a government agency or board or court or arbitrator, to be an employee of the Company for any purpose, including, without limitation, for purposes of any employee benefit plan of the Company (including this Plan) or for purposes of federal, state or local tax withholding, employment tax or employment law. (9) "Participant" Any person included as a Participant as provided in Section 2, except an Employee covered by a collective bargaining agreement which expressly excludes members of the collective bargaining unit from the Plan. (10) "Compensation" (i) In the case of an Employee who is not paid on a piecework basis, the actual base salary paid to him for services rendered to the Company (exclusive of amounts attributable to the exercise of employee stock options), including straight time for all hours worked, commissions, bonuses, premiums and incentives; and (ii) in the case of an Employee who is paid on a piecework basis, the actual remuneration paid to him; and (iii) in the case of any Employee shown in the attached Appendix I, the reference to Company for purposes of this Subsection 1(10) only shall also refer to Affiliates of the Company prior to October 15, 1984. For the purposes of determining a Participant's Compensation under the Plan, such calculation shall be made without regard to any deductions from a Participant's earnings for (i) contributions to the Tiffany & Co. Employee Profit Sharing and Retirement Savings Plan, (ii) premium payments under any of the Company's health care plan(s), (iii) allocations to a Dependent Care Spending Account, or (iv) deferrals under the Company's Executive 3

Deferral Plan, which are not includable in the gross income of the Participant for the taxable year in which such contributions, payments, allocations and/or deferrals are made. Compensation taken into account under the Plan shall be limited to the maximum amount of Compensation that may be taken into account under Section 401(a)(17) of the Code, as from time to time adjusted and/or amended. (11) "Average Final Compensation" With respect to an Employee, his average annual Compensation during those five years of his last ten years of Creditable Service in which his compensation was highest. If an Employee has less than five years of Creditable Service or less than five Plan Years in which he accrued Creditable Service, as the case may be, his "Average Final Compensation" shall be computed over all such years. Except in respect of subdivision (b) of Subsection 5(1), "Average Final Compensation" shall reflect those five years of his last ten years of creditable service prior to July 31, 1985 or December 31, 1984, as required by Section 5, in which his compensation was highest. Compensation earned subsequent to July 31, 1985 or December 31, 1984, as required by Section 5, shall not be reflected in this calculation. With respect to the change in the definition of Average Final Compensation under Subsection 1(11) of the Plan effective for Plan Years beginning after December 31, 1994, such change shall not apply to any Compensation earned prior to the effective date of such change. Accordingly, if Compensation for any Plan Year beginning prior to January 1, 1995 is taken into account in calculating Average Final Compensation or for any other purpose under the Plan, Compensation for such Plan Year shall be determined in accordance with the previous definition of Average Final Compensation. In addition, the Accrued Benefit determined in accordance with the new definition of Average Final Compensation shall not be less than the Accrued Benefit determined as of December 31, 1994 under the previous definition. (12) "Creditable Service" The period including fractions of a year rounded up to the next whole month of an Employee's service which is counted as a period of service for vesting purposes under Section 4; provided, however, that in the case of an Employee who accrued Creditable Service hereunder both as a Part-time Employee and also as a Regular Employee, any Plan Year during which he completes at least 1,000 hours of service but less than the standard number of hours of service in the regularly scheduled work weeks for the 4

location at which he is employed shall be counted as the corresponding fraction of a year of Creditable Service; and provided, further, that in the event of a change in status to which clause (ii)(B) of Subsection 4(3) applies, there shall be taken into account for purposes of the preceding clause, with respect to the Plan Year in which the change in status is effective, forty-five hours of service for each week or partial week of service performed subsequent to the change in status and before the end of such Plan Year. If an Employee becomes re-employed after February 1, 1976, and again becomes a Participant pursuant to Section 2, subject to Subsection 4(5), his service shall be credited as of his Reemployment Commencement Date. For an Employee shown in the attached Appendix I, any period during which the Employee was an employee of an Affiliate of the Company prior to October 15, 1984. (13) "Actuarial Equivalent" A benefit of equivalent value, when computed on the basis of the factors shown in Appendix II. Effective as of January 1, 2000, the single sum value which is the Actuarial Equivalent of any other form of benefit shall in all cases be determined using the Applicable Interest Rate and the Applicable Mortality Table. (14) "Social Security Benefit" The amount of the Participant's anticipated unreduced primary insurance benefit under Title II of the Federal Social Security Act. The benefit shall be computed on the basis of such Act in effect at the earlier of July 31, 1985, or the time he last ceases to be a Participant, and shall consist of that annual amount to which he would upon proper application be entitled at the date of retirement or termination, or at age 65 if later, on the basis of his Compensation as determined under the Plan irrespective of earnings he may be receiving in excess of any limit on earnings for full entitlement to such benefit. When used in connection with the computation of any retirement allowance other than a retirement allowance payable to a Participant who terminates employment at or after age 65, it shall mean the said Social Security Benefit computed on the assumption that the Participant will continue to receive Compensation until age 65 for purposes of Social Security in the same amount as in effect on the date of his retirement or termination. With respect to periods for which the Participant's actual compensation for Social Security purposes is not available, the Social Security Benefit shall be calculated on the assumption that the Participant had compensation for Social Security purposes after 1951, or age 22 if 5

later and prior to his last date of hire or rehire which increased 6 percent each year to his Compensation on such date of hire or rehire. Each Participant shall have the right to have his Social Security Benefit computed on the basis of the Participant's actual salary history as of the earlier of July 31, 1985, or the time he last ceases to be a Participant, instead of estimated compensation. Each Employee shall be provided with written notice of the Employee's right to supply actual salary history and of the financial consequences of failing to supply such history. The notice must be given each time the summary plan description is provided to the Employee and must also be given upon separation from service. The notice must state that the Employee can obtain the actual salary history from the Social Security Administration. If the Participant supplies documentation of his or her actual salary history, the Participant's benefit will be adjusted to the offset based on actual salary history for years previously estimated before separation from service (assuming no post-separation or post-retirement compensation). Such documentation must be supplied within a reasonable period following the later of the date of separation from service (by retirement or otherwise) or the time when the Participant is notified of the benefit to which he is entitled. (15) "Hour of Service" (1) Any hour for which a Regular Employee or a Part-time Employee is directly or indirectly paid or entitled to payment by the Company for the performance of duties, which such hours shall be credited, in the case of a Part-time Employee, for the computation period or periods in which the duties are performed; (2) Any hour for which a Part-time Employee is directly or indirectly paid or entitled to payment by the Company for reasons (such as vacation, sickness or disability) other than for the performance of duties, which such hours shall be credited to the Part-time Employee in accordance with Department of Labor Regulations section 2530.200b-2; and (3) Any hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Company in the case of a Part-time Employee, which such hours shall be credited to the Part-time Employee for the computation period or periods to which the award or agreement pertains. Any Employee who is paid on a piecework basis shall be credited with ten Hours of Service for each day on which he would be entitled to credit for one Hour of Service under the foregoing definition. 6

(16) "Employment Commencement Date" Except as provided in Section 2(9) below, in the case of a Regular Employee, the date on which he first performs an Hour of Service. In the case of a Part-time Employee, "Employment Commencement Date" shall mean the first day for which he is entitled to be credited with an Hour of Service under subdivision (1) of Subsection 1(15) above. (17) "Discontinuance of Active Employment Date" In the case of a Regular Employee, the earlier of (i) his retirement or other termination of employment with the Company, or (ii) the first anniversary of the first day of any continuing period of absence from service with the Company, with or without pay, which is neither (A) a leave of absence described in Subsection (1), (2) or (3) of Section 3, nor (B) the result of his retirement or termination. (18) "Break in Service" (1) In the case of a Part-time Employee, a Plan Year in which he fails to complete an Hour of Service, other than a Plan Year during any part of which he is on a leave of absence described in Section 3. In the case of a Regular Employee, a Break in Service shall occur when he fails to perform an Hour of Service within a one-year period beginning on any Discontinuance of Active Employment Date. (2) In addition, and notwithstanding the rules described under subdivision (1) of Subsection 1(18) above, any individual who is absent from the service of the Company on account of pregnancy, birth of a child of such individual, or for purposes of caring for such a child during the period immediately following childbirth or placement for adoption shall be credited, for purposes of this Section, with the Hours of Service for which he would normally have received credit had he not been absent from the service of the Company for one of the reasons described above, up to a maximum of five hundred and one (501) Hours of Service, which hours shall be credited in accordance with Section 202(b)(5) of ERISA, as amended by the Retirement Equity Act of 1984, and related regulations. (19) "Reemployment Commencement Date" In the case of a Regular Employee, the date on which he first performs an Hour of Service following a Break in Service. In the case of a Part-time Employee, "Reemployment Commencement Date" shall mean the first day for which he is entitled to be credited with an Hour of Service under subdivision (1) of Subsection 1(15) following (i) a Break in Service which follows either (A) a Plan Year or other eligibility computation period 7

described in Section 2 in which he is credited with at least an Hour of Service, or (B) a Plan Year during any part of which he is on a leave of absence described in Section 3, or (ii) a Plan Year in which he is credited with no Hours of Service which follows a Reemployment Commencement Date established under clause (i). (20) The masculine pronoun wherever used shall include the feminine. (21) "Code" Internal Revenue Code of 1986, as amended. (22) "Taxable Wage Base" The contribution and benefit base under section 230 of the Federal Social Security Act as in effect in the year in question. (23) "Covered Compensation" The average (without indexing) of the Taxable Wage Bases in effect for each calendar year during the 35-year period ending with the year in which the Participant attains (or will attain) social security retirement age, calculated as provided in Treasury Regulation Section 1.401(1)-1(c)(7). (24) "Accrued Benefit" The amount on a given date of the benefits provided under Subsection 5(1) of the Plan using Average Final Compensation, Covered Compensation and Creditable Service determined as of such date. The Accrued Benefit may be expressed in a form which is the Actuarial Equivalent. (25) "Applicable Interest Rate" For any distribution the annual interest rate on 30-year Treasury securities as specified by the Commissioner of the Internal Revenue Service in revenue rulings, notices or other guidance, published in the Internal Revenue Bulletin, for the third month preceding the first day of the month in which the benefit commencement date occurs. (26) "Applicable Mortality Table" The mortality table based on the prevailing commissioners' standard table (described in section 807(d)(5)(A) of the Code) used to determine reserves for group annuity contracts issued on the date as of which present value is determined (without regard to any other subparagraph of section 807(d)(5) of the Code), that is prescribed by the Commissioner of the Internal Revenue Service in revenue rulings, notices, or other guidance, published in the Internal Revenue Bulletin. 8

SECTION 2 - PARTICIPATION ======================================== (1) Any person who is a Participant as of December 31, 1999 shall remain a Participant in the Plan on January 1, 2000. After December 31, 1999, a Regular Employee shall become a Participant on the first anniversary of his Employment Commencement Date, provided that he is an Employee on such first anniversary. A Part-time Employee shall become a Participant on January 1 or July 1 coincident with or next following the first anniversary of his Employment Commencement Date, provided (i) that he is an Employee on such January 1 or July 1, and (ii) that he completes 1,000 Hours of Service during the one-year period commencing on his Employment Commencement Date. If a person would have become a Participant but for the fact that he was not an Employee on the applicable entry date, he shall nevertheless become a Participant immediately upon his again becoming an Employee, provided he again becomes an Employee prior to incurring a Break in Service. (2) If a Part-time Employee does not complete 1,000 Hours of Service during the one-year period commencing on his Employment Commencement Date, he shall become a Participant immediately following the close of the first Plan Year commencing after his Employment Commencement Date in which he does complete 1,000 Hours of Service, other than a Plan Year in which he has a Reemployment Commencement Date, in which case he shall become a Participant immediately following the close of (i) the one-year period commencing on such Reemployment Commencement Date or (ii) the first Plan Year commencing after such Reemployment Commencement Date, in which he completes 1,000 Hours of Service. (3) A Regular Employee who has become a Participant shall cease to be a Participant on his Discontinuance of Active Employment Date, and a Part-time Employee who has become a Participant shall cease to be a Participant on the date he ceases to be an Employee or, if earlier, on the date on which he incurs a Break in Service. Such a former Participant, unless he ceased to be a Participant as a result of incurring a Break in Service, shall immediately again become a Participant if, prior to incurring a Break in Service, he either (i) performs an Hour of Service as a Regular Employee, or (ii) is entitled to be credited with an Hour of Service under subdivision (1) of Subsection 1(15) as a Part-time Employee. (4) If an Employee who is vested ceases to be a Participant and has a subsequent Reemployment Commencement Date on which he is a Regular Employee, he shall again become a Participant as of his Reemployment Commencement Date if (i) he is an Employee on the first anniversary of such date or, (ii) he is not an Employee on such first anniversary but again becomes an Employee prior to incurring a Break in Service which is subsequent to his Reemployment Commencement Date. If an Employee who is vested ceases to be a Participant and has a subsequent Reemployment Commencement Date on which he is a Part-time Employee, he shall again become a Participant as of his Reemployment Commencement Date if he completes 1,000 Hours of Service during the one-year period commencing on his Reemployment Commencement Date or, if he does not, as of the first day of the first Plan Year commencing after his Reemployment Commencement Date in which he completes 1,000 Hours of Service, other than a Plan Year in which he has another Reemployment Commencement Date. (5) If any Employee who is not vested ceases to be a Participant and has a subsequent Reemployment Commencement Date, he shall again become a Participant in accordance with the appropriate rule of Subsection (4) for vested Employees, provided that the number of consecutive one-year Breaks in Service did not equal or exceed the greater of 5 or the aggregate number of years of service before such Break in Service. If his prior service does not satisfy the applicable condition of the preceding sentence, his 9

Reemployment Commencement Date will be deemed his Employment Commencement Date for purposes of this Section, and rules of Subsections (1) and (2) hereof will apply. (6) For purposes of this Section 2, in determining whether an Employee shall become a Participant, service with any Affiliate of the Company shall be taken into account, in accordance with the foregoing rules, as if such service had been rendered to the Company and such service shall include service as a leased employee within the meaning of Code Section 414(n) of the Company or an Affiliate. (7) For purposes of this Section 2, William R. Chaney will not be considered a Participant at any time under the provisions of this Plan. (8) Notwithstanding anything herein to the contrary, for purposes of this Section 2, any person who was an employee of Howard H. Sweet & Son, Inc. (formerly Tiffco Jewelry and Chain Crafts, Inc.) on January 27, 1997, shall become a Participant in the Plan as of his or her Employment Commencement Date. (9) Notwithstanding anything herein to the contrary, for the purposes of this Section 2, any person who was an Employee of L.S. Wholesale, Inc., a Massachusetts corporation, L.S. Holding (Florida), Inc., a Florida corporation, L.S. Holding (USA), Inc., an Alaska corporation, or L.S. Holding, Inc., a U.S. Virgin Islands corporation, on October 8, 2002, shall become a Participant in the Plan as of October 8, 2002 and October 8, 2002 shall be deemed the Employment Commencement Date of such a person. 10

SECTION 3 - LEAVES OF ABSENCE ======================================== (1) The Company may authorize an unpaid or paid leave of absence under its standard personnel practices as applied in a uniform and non-discriminatory manner to all Employees similarly situated, provided that the Employee must return to service with the Company within the period of time specified in the authorization. (2) Any Employee who shall be granted a leave of absence for service in the armed forces of the United States or in emergency government service, or pursuant to a leave granted by the Company, shall be deemed to be an Employee during such leave and his Compensation in the last full calendar year of his employment immediately preceding the beginning of such leave shall be deemed to be his annual Compensation for the purposes of the Plan during such leave, provided that such Employee returns to the employ of the Company within the period provided by law for the protection of his reemployment rights following his discharge or release from active duty in such armed forces. (3) The Committee may, under rules uniformly applicable to all Employees similarly situated, include as service and compensation, respectively, for any Participant retiring hereunder, any period or periods of service and the compensation earned during such period or periods, not otherwise creditable or recognized hereunder, rendered or earned in the employment of any Affiliate; provided that the retirement allowance payable on account of such additional period of service shall be reduced by any employer-provided retirement benefit which is payable on account of the same period of service under any retirement plan of such Affiliate. (4) Anything herein contained to the contrary notwithstanding, the Committee may, under rules uniformly applicable to all Employees similarly situated, include as service such other periods of excused absence from employment as it deems appropriate and consistent with Plan objectives. (5) Except as otherwise specifically provided in this Section 3, where the Company authorizes a paid leave of absence which does not require the Employee to return to service with the Company, such Employee shall be deemed to be an Employee during such leave for all purposes under the Plan. 11

SECTION 4 - VESTING ======================================== (1) A person shall be vested if the period of his service equals or exceeds five years computed in accordance with the rules set forth in this section or when he attains normal retirement age as specified in subdivision (a) of Subsection 5(2) hereof. A person shall also be vested if he was (i) an employee of Howard H. Sweet & Son, Inc. (formerly Tiffco Jewelry and Chain Crafts, Inc.) on January 27, 1997, and (ii) a Participant in the Plan as of such date. (2) There shall be counted as periods of service for vesting purposes the sum of the following periods: (a) any period prior to February 1, 1976 during which a person was an Employee, unless such period would have been disregarded in computing service under the rules of the Plan regarding Breaks in Service then applicable, but including any period which was disregarded solely because of the Participant's age; (b) with respect to a Part-time Employee, each Plan Year beginning on or after February 1, 1976 during which such Employee completes 1,000 Hours of Service; (c) with respect to a Regular Employee, each period of his employment with the Employer, beginning on both (i) the later of February 1, 1976 or his Employment Commencement Date and (ii) any Reemployment Commencement Date after February 1, 1976, and ending on his Discontinuance of Active Employment Date next following; (d) with respect to a Regular Employee, the period between any Discontinuance of Active Employment Date and the date on which he next performs an Hour of Service if such date is within one year of such Discontinuance of Active Employment Date; provided, however, that if a Regular Employee's employment is terminated during any absence from service which would not otherwise result in a Discontinuance of Active Employment Date until the first anniversary of the first day thereof, vesting service shall include the period from his discontinuance of Active Employment Date to the date on which he next performs such an Hour of Service only if he next performs such an Hour of Service within one year of the first day of such absence. (e) with respect to an Employee shown in the attached Appendix I, the period during which the Employee was an employee of an Affiliate of the Company prior to October 15, 1984. Notwithstanding the foregoing, in no event shall the number of years of service credited to an Employee under the Plan as in effect on January 1, 1982 be less than the number of such years credited to him under the Plan as in effect on December 31, 1981. (3) For purposes of Subsection (2) above, if a person's status is changed from Part-time Employee to Regular Employee, he shall receive credit, as of the date such change in status is effective, for a period of service consisting of (i) service credited to him under Subsection (2)(a) and (b) for Plan Years prior to the Plan Year in which the change in status is effective, and (ii) the greater of (A) the period beginning on the first day of the Plan Year in which the change in status is effective (or, if later, the first day he was an Employee during such Plan Year) and ending on the date such change in status is effective, or (B) the service which would be taken into account for such period under Subsection (2)(b) on the basis of Hours of Service completed to the date of change. If clause (ii)(A) of the preceding sentence applies, the Employee shall receive credit for service subsequent to the change in status commencing on the first day thereafter on 12

which he is an Employee; if clause (ii)(B) of such sentence applies, he shall only receive credit for service subsequent to the change in status commencing on the day after the last day of the Plan Year in which the change in status is effective. (4) For purposes of Subsection (2) above, if a person's status is changed from Regular Employee to Part-time Employee, he shall receive credit, as of the date such change in status is effective, for (i) a number of years of service equal to the number of 1-year periods of service credited to him under Subsections (2)(a), (c) and (d) as of the date the change in status is effective, and (ii) forty-five Hours of Service for each week or partial week of any fractional part of a year credited to him under such Subsections (2)(a), (c) and (d) as of the date the change in status is effective, such hours to be credited to him for purposes of Subsection 2(b) in the Plan Year in which the change is effective. (5) Notwithstanding anything to the contrary above, if a former Participant again becomes a Participant after incurring a Break in Service, service credited for vesting purposes prior to the date his participation ceased shall be disregarded if (A) his service for vesting purposes on such date is less than five years and (B) if the number of his consecutive one-year Breaks in Service equals or exceeds 5. However, for purposes of this Subsection (5), there shall be no forfeiture of vesting service prior to the date participation ceased if he remains a Participant at all times during those four consecutive Plan Years next following the Plan year in which he again becomes a Participant. (6) Solely for the purposes of calculating vesting service under this Section 4 and not for the purpose of calculating Creditable Service under Subsection 1(12) hereof (except to the extent provided in Section 3 hereof), service with any Affiliate of the Company shall be taken into account as if the term "Company" in the foregoing rules included such Affiliate and service as a leased employee within the meaning of Section 414(n) on the Company or an Affiliate shall also be taken into account, provided that no period of service shall be taken into account hereunder more than once. 13

SECTION 5 - BENEFITS (1) (a) Subject to Subsection 5(3), any person who ceases to be an active Participant after he is vested shall be entitled to an annual retirement allowance, payable in monthly installments commencing at the end of the calendar month immediately following his Month of Retirement, and continuing to and including the last monthly payment in the month of his death, equal to 1 percent of the Participant's Average Final Compensation not in excess of Covered Compensation multiplied by the number of his years, including fractions thereof, of Creditable Service, plus 1-1/2 percent of his Average Final Compensation in excess of Covered Compensation multiplied by the number of his years, including fractions thereof, of Creditable Service. For this subdivision (a) of Subsection 5(1) only, Compensation earned after January 1, 1985, for any Participant or former Participant who works less than a full Plan Year, will equal the Compensation he would have earned if he had worked the full Plan Year. (b) The annual retirement allowance accrued as of December 31, 1984, shall be equal to the excess of (i) 1-3/4 percent of the Participant's Average Final Compensation (determined as of December 31, 1984) multiplied by the number of his years of Creditable Service (determined as of December 31, 1984) up to ten plus 1-1/2 percent of the Participant's Average Final Compensation (determined as of December 31, 1984) multiplied by his remaining years of Creditable Service (determined as of December 31, 1984) over (ii) 1-1/4 percent of the Participant's Social Security Benefit (determined as if the Participant had terminated as of December 31, 1984) multiplied by the number of his years of Creditable Service (determined as of December 31, 1984) completed by him subsequent to the end of the calendar month in which he attained age 25 (for purposes of this clause (ii) of this Subsection 5(1)(b), prorating Creditable Service accrued for the Plan Year in which he attained age 25 if he was then considered a Part-time Employee), up to a maximum of 50 years. (c) In no event shall the annual retirement allowance computed in subdivisions (a) and (b) of this Subsection (5)(1) be less than the annual retirement allowance computed as the excess of (i) 1-3/4 percent of the Participant's Average Final Compensation (determined as of July 31, 1985) multiplied by the number of his years of Creditable Service (determined as of July 31, 1985) up to ten plus 1-1/2 percent of the Participant's Average Final Compensation (determined as of July 31, 1985), multiplied by his remaining years of Creditable Service (determined as of July 31, 1985) over (ii) 1-1/4 percent of the Participant's Social Security Benefit (determined as if the Participant had terminated as of July 31, 1985) multiplied by the number of his years of Creditable Service (determined as of July 31, 1985) completed by him subsequent to the end of the calendar month in which he attained age 25 (for purposes of this clause (ii) of this Subsection 5(1)(c), prorating Creditable Service accrued for the Plan Year in which he attained age 25 if he was then considered a Part-time Employee), up to a maximum of 50 years. (d) In no event shall the annual retirement allowance computed in subdivisions (a) and (b), and subject to a minimum benefit as computed in subdivision (c) of this Subsection (5)(1) be less than $100 multiplied by the number of his years of Creditable Service. In addition, no Participant's Accrued Benefit shall be less than what such Participant had accrued as of the last day of the last Plan Year beginning before January 1, 1989. (2) (a) Normal Retirement - A Participant who has reached the later of (i) his 65th birthday or (ii) the 5th anniversary of his date of hire (normal retirement age hereunder) may retire on a retirement allowance computed in accordance with Subsection 5(1); except that any Participant shall, at his election, be continued in service after age 65. At normal retirement age, all benefits payable under the Plan shall be nonforfeitable. 14

(b) Early Retirement - Any Participant who has attained age 60 and has rendered 15 or more years of Creditable Service shall be retired by the Committee on a retirement allowance on the first day of the calendar month next following receipt by the Committee of a written application therefor by the Participant. At the Participant's election, he shall receive a retirement allowance commencing on his retirement which shall be equal to the retirement allowance computed in accordance with 5(1) he would otherwise receive upon attaining age 65, reduced by 1/12th of 5 percent for each month by which the date of his retirement allowance would otherwise have commenced under Subsection 5(1). At the time of retirement pursuant to this subsection (b) on a retirement allowance commencing on his retirement, the Participant may elect to convert the retirement allowance otherwise payable to him into an Actuarial Equivalent of such amount so that, with his Social Security Benefit which, for this purpose, shall be assumed to commence as of either his sixty-second or sixty-fifth birthday, as the Participant elects, the Participant will receive, so far as possible, the same amount each year before and after he commences to receive such Social Security Benefit. (c) Vested Retirement - Payments to any person who ceases to be a Participant on or after February 1, 1976, and is entitled to a retirement allowance pursuant to Subsection 5(1) and to whom subdivisions (a) and (b) of Subsection 5(2) do not apply shall commence on the last day of the calendar month next following the later of (i) the occurrence of his 65th birthday or (ii) receipt by the Committee of a written application therefor; provided that if the proper amount of such payment cannot for any reason be ascertained by such date, a payment retroactive to such date shall be made within sixty days of the earliest date on which it can be ascertained. Such a person may, by written notice to the Committee, elect to have his retirement allowance commence at any time after he has attained age 60 and completed 15 years of Creditable Service and after receipt by the Committee of his application for benefits; provided, however, that payment of such allowance prior to the attainment of age 65 shall be in a reduced amount and shall be the Actuarial Equivalent as of the date payments commence of the retirement allowance computed in accordance with Subsection 5(1) which he would otherwise receive after attaining age 65. (3) Optional Benefits in Lieu of Regular Benefits. (a) Prior to commencement of the payment of a retirement allowance to a Participant, he shall be given a written explanation of the benefits and the options under subdivision (b) hereof pursuant to which he may provide a benefit for his spouse in the event of his death after his retirement. Unless an optional form of benefit is selected pursuant to an election meeting the same requirements as prescribed in Section 5(3)(c), or with respect to former Participants in Section 5(4)(f), within the ninety (90) day period ending on the date benefit payments would commence, a married Participant shall be deemed to have elected to convert his retirement allowance into an Actuarial Equivalent in the form of an annuity for his life with a survivor annuity for the life of his spouse equal to one-half of the amount of the annuity payable during their joint lives. (b) Any Participant may, by written notice made in accordance with the same requirements for former Participants as prescribed in Section 5(4)(f) and filed with the Committee prior to the date of the commencement of his retirement allowance, elect to convert his retirement allowance into the Actuarial Equivalent thereof paying a proportionately reduced retirement allowance during his life, with the provision that after his death an allowance of 50%, 66-2/3%, 75% or 100% of the rate of his reduced allowance, at his designation, shall continue during the life of, and shall be paid to, the beneficiary designated by him at the time of electing the option. The election of an optional benefit may be revoked or changed by the Participant at any time prior to the benefit commencement date; provided, however, that if the Participant or the beneficiary designated under the option dies prior to the date the election of the option becomes effective, the option shall thereby be automatically revoked; and provided, further, that if the designated beneficiary is other than the Participant's spouse, the present value of the payments to be made to such 15

Participant shall be more than 50 percent of the present value of the total payments to be made to the Participant and his beneficiaries. A Participant's designation of a beneficiary other than the Participant's spouse shall not be effective unless (i) the Participant and his spouse have waived the spouse's allowance defined in Subsection 5(4)(d) and the spouse has waived his or her right to be the Participant's beneficiary, (ii) the Participant has no spouse, or (iii) the spouse cannot be located. (c) In the event that a married Participant elects to receive his Plan benefit in a form other than an annuity for his life with a survivor annuity for the life of his spouse, such election shall not take effect unless written consent of the spouse to such election, witnessed by a notary public or a member of the Committee, is on file with the Committee. Such consent shall be irrevocable as to any specific waiver or designation of any beneficiary. (The requirement of spousal consent may be waived by the Committee under certain limited circumstances in accordance with Section 417(a)(2) of the Code and related regulations.) A spousal consent filed with the Committee shall be applicable only with respect to the spouse who has signed such form. (d) A Participant shall be furnished a written explanation of (i) the terms and conditions of the normal form of benefit; (ii) the right of the Participant to make, and the effect of, an election to reject the normal form of benefit, which includes an explanation of the optional forms of benefit and their relative values; (iii) the right of the Participant's spouse, if any, to consent or not to consent to such election; and (iv) the right of the Participant to make, and the effect of, a revocation of such an election. Prior to January 1, 1997, the explanation shall be provided not more than 90 days and not less than 30 days before a Participant's benefit commencement date. After December 31, 1996, the explanation shall be provided not more than 90 days before and no later than 60 days after a Participant's benefit commencement date. Notwithstanding the foregoing, after December 31, 1996, a benefit commencement date which is not at least 30 days after the written explanation described above was provided to the Participant will be permitted if (i) the written explanation explains that the Participant has the right to at least 30 days to consider whether to make an election; (ii) the Participant is permitted to revoke a benefit election at any time until the benefit commencement date, or if later, at any time before the end of the 7-day period beginning on the day after the written explanation is provided to the Participant; and (iii) distribution of benefits does not begin before the date the 7-day period described above expires (which date may be later than the benefit commencement date). (4) Survivorship Benefits. (a) Upon (i) the death of a Participant who has become vested in his Accrued Benefit, as provided in Section 4 of the Plan, (ii) the death of a Participant who has attained normal retirement age as specified in Subdivision (a) of Subsection 5(2), (iii) the death of a former Participant who had attained age 60 and rendered 15 or more years of Creditable Service prior to the date he ceased to be a Participant (but who was not receiving at the time of his death any retirement allowance), or (iv) the death of a former Participant who had not both attained age 60 and rendered 15 or more years of Creditable Service but had become vested in his Accrued Benefit prior to the date he ceased to be a Participant (but who was not receiving at the time of his death any retirement allowance) there shall be payable to the Participant's or former Participant's spouse, if any, a spouse's allowance as provided for in this Section 5(4) below. (b) The amount of the spouse's allowance shall be determined by Section 5(4)(d) below for the spouse of a Participant described in Section 5(4)(a)(i) or (ii) above or for the spouse of a former Participant described in Section 5(4)(a)(iii) above. The amount of the spouse's allowance shall be determined by Section 5(4)(e) below for the spouse of a former Participant described in Section 5(4)(a)(iv) above. 16

(c) The spouse's allowance shall commence as the first day of the calendar month following the month in which the Participant or former Participant died or would have been age 60, whichever is the later, except that the Committee may, under rules uniformly applicable to all Participants and former Participants similarly situated, direct payment commencing on the first day of any earlier calendar month after the Participant's or former Participant's death. (d) If the Committee does not direct early commencement of payment, the spouse's allowance for the spouse of a person described in Section 5(4)(a)(i), (ii) or (iii) above shall be the greater of (i) an allowance for the life of the spouse, payable monthly, which is equal to 20 percent of the Participant's or former Participant's annual rate of compensation at the time of his death or earlier termination of employment, or (ii) an allowance equal to the allowance the spouse would have received if the Participant or former Participant were deemed to have terminated his service on the date of his death (whether or not an earlier termination of service occurred) and elected to receive, based on his Average Final Compensation and years of Creditable Service at his actual date of termination of service with the Company, the maximum retirement allowance payable to him under Subsections 5(1) and 5(2) that would commence at the later of normal retirement age or the date of death, reduced for election of the 100% survivorship option at such deemed termination date, and continuing after his death in the same monthly amount during the life of his spouse. If the Committee does direct early commencement of payment, the spouse's allowance shall be a monthly allowance for the life of the spouse which is the Actuarial Equivalent of the allowance the spouse would otherwise have received pursuant to the preceding sentence. Notwithstanding the foregoing, in no event shall the spouse's allowance be less than the amount the spouse would have received under the terms of the Plan as in effect on December 31, 1984, had the Participant died on that date. (e) If the Committee does not direct early commencement of payment, and unless an optional form of benefit is selected within the election periods pursuant to a qualified election, the spouse's allowance for the spouse of a person described in Section 5(4)(iv) above shall equal the allowance the spouse would have received if the former Participant were deemed to have retired at the normal retirement age and elected to receive, based on his Average Final Compensation and years of Creditable Service at the actual date of termination of service with the Company, a retirement allowance payable to him under Subsection 5(1) and 5(2), reduced for election of the 50% survivorship option at the normal retirement age, and continuing after his death in an amount equal to 50% of the amount that would have been payable to the Participant during his life. If the Committee does direct early commencement of payment, the spouse's allowance shall be a monthly allowance for the life of the spouse which is the Actuarial Equivalent of the allowance the spouse would otherwise receive pursuant to the preceding sentence. Notwithstanding the foregoing, in no event shall the spouse's allowance be less than the amount the spouse would have received under the terms of the plan as in effect on December 31, 1984 had the former Participant died on that date. 17

(5) Restoration to Participation. Anything herein contained to the contrary notwithstanding, if a former Participant who has received or is receiving benefits under this Section 5 again becomes an Employee, (i) any benefits he is receiving shall cease upon his reemployment if he is reemployed as a Regular Employee, or upon his satisfying the participation requirements of Section 2 if he is reemployed as a Part-time Employee, provided that benefits will not be suspended in any calendar month unless the Employee has completed at least 40 hours of service with the company in service recognized under Section 203(a)(3)(B) of ERISA or received payment for any such hours of service performed on each of 8 or more days in such month, (ii) he shall then again become a Participant, and (iii) the Creditable Service which he had when he last ceased to be an Employee shall be restored to him. On his subsequent retirement the benefit payable shall be based on his Compensation and Creditable Service before and after the period of prior retirement, reduced by an amount which is the Actuarial Equivalent of the benefits he received prior to his restoration to participation; provided, however, that such benefit shall not be less than the benefit he was receiving during his prior retirement. If benefit payments have been suspended, payments shall resume no later than the first day of the third calendar month after the calendar month in which the Employee ceases to be employed in ERISA Section 203(a)(3)(B) service. No payment shall be withheld by the Plan pursuant to this section unless the Plan notifies the Employee by personal delivery or first class mail during the first calendar month or payroll period in which the Plan withholds payments that his benefits are suspended. Such notifications shall contain a description of the specific reasons why benefit payments are being suspended, a description of the Plan provision relating to the suspension of payments, a copy of such provisions, and a statement to the effect that applicable Department of Labor regulations may be found in Section 2530.203-3 of the Code of Federal Regulations. In addition, the notice shall inform the Employee of the Plan's procedures for affording a review of the suspension of benefits. Requests for such reviews may be considered in accordance with the claims procedure adopted by the Plan pursuant to Section 503 of ERISA and applicable regulations. (6) Termination of Benefit Payments. Payment of benefits under this Section 5 to a former Participant, his spouse or other beneficiary shall cease with the monthly payment for the month in which such former Participant, spouse or beneficiary dies. (7) Disabled Participants. Anything herein contained to the contrary notwithstanding, any Participant while in receipt of payments under the Company's Short Term Illness Plan, Extended Illness Plan, Short Term Disability Plan or Long Term Disability Plan (collectively, the "Program"), shall be treated as a Participant and shall continue to accrue Creditable Service until he dies, retires, or becomes ineligible for further payments under such Program, and his Compensation in the last full year of his employment shall be deemed to be his annual Compensation for purposes of the Plan during such period. In the event such a Participant dies, retires or becomes ineligible for further payments under such Program and is not restored to active service, any retirement allowance payable on his account under the Plan shall be made on the basis of his age, Average Final Compensation and Creditable Service at the time he died, retired or became ineligible. (8) Maximum Trust Benefits. (a) Any other provision of the Plan to the contrary notwithstanding, the maximum annual benefit under the Plan (exclusive of any benefits derived from the Participant's own contributions and exclusive of any benefits which are not directly related to retirement income benefits) shall, subject to the following provisions of this Section, not exceed the lesser of: (1) $90,000, or (2) 100% of the Participant's average "compensation" (as defined herein) from the Group (as modified pursuant to Section 415(h) of the Code) during the three 18

consecutive calendar years of participation during which his compensation was highest. The applicable maximum described in subsection (a)(1) or (2) above shall apply to a retirement benefit payable in the form of a single life annuity or a Qualified Joint and Survivor Annuity. (b) A benefit not payable in the form of an annual straight life annuity within the meaning of Section 415(b)(2)(A) of the Code shall be adjusted as follows when applying the limits described in subparagraph (a) (1) and (2) above. The benefit is determined in the form of a straight life annuity commencing at the annuity starting date that is actuarially equivalent to the plan benefit. For this purpose, the actuarially equivalent benefit must be the greater of the equivalent annual benefit calculated using the factors set forth in Appendix II of the Plan for the particular form of benefit payable and the equivalent annual benefit calculated using the Applicable 415 Rate and the Applicable Mortality Table. The amount determined under this subparagraph (b) cannot exceed the lesser of (1) the amount determined under subparagraph (c) or (d) below (as applicable), or (2) the amount determined under subparagraph (a) (2) above. (c) In the event that retirement benefits commence under the Plan at or after age 62 but prior to an Participant's Social Security Retirement Age, the $90,000 limitation described in subparagraph (a)(1) above shall be reduced by 5/9 of 1% for each of the first 36 months and by 5/12 of 1% for each of the next 24 months by which such commencement date precedes the Participant's Social Security Retirement Age. If the commencement date is earlier than age 62, the limitation is the actuarial equivalent of the age 62 limitation based on either (1) the factors set forth in Appendix II of the Plan for the particular form of benefit payable at the applicable age or (2) the Applicable Mortality Table and 5%, whichever would yield the lesser limitation. (d) In the event that retirement benefits commence under the Plan after the Participant's attainment of his or her Social Security Retirement Age, the determination as to whether the $90,000 limitation described in subparagraph (a)(1) above has been satisfied shall be made in accordance with guidance issued by the Internal Revenue Service, by increasing such limitation actuarially to the equivalent of $90,000 commencing at such Social Security Retirement Age. The increased limitation shall be based on either (1) the factors set forth in Appendix II of the Plan for the particular form of benefit payable at the applicable age, or (2) the Applicable Mortality Table and 5%, whichever would yield the lesser limitation. (e) If the Participant has fewer than 10 years of Service, the applicable maximum described in subparagraph (a)(2) above shall be multiplied by a fraction of which the numerator is his or her years of Service and the denominator is 10. If the Participant has fewer than 10 years of participation in the Plan, the applicable maximum described in subparagraph (a)(1) above shall be multiplied by a fraction of which the numerator is his or her years of participation and the denominator is 10. The fraction described hereunder shall not be less than 1/10. (f) The $90,000 limitation described in subparagraph (a)(1) above shall be adjusted for increases in the cost of living in accordance with regulations prescribed by the Internal Revenue Service under Section 415(d) of the Code. (g) For purposes of this Section, the following definitions shall apply: (1) "Applicable 415 Rate" means, in the case of a distribution in a form of benefit not subject to Section 417(e) of the Code, 5%, and in the case of a distribution in 19

a form of benefit subject to Section 417(e)(3) of the Code, the Applicable Interest Rate. (2) "Compensation" means compensation as defined in Section 415(c)(3) of the Code and Treas. Reg. sec. 1.415-2(d). (3) "Limitation Year" means the calendar year. (4) "Qualified Joint and Survivor Annuity" means, for purposes of this Section only, an annuity for the life of the Participant with a survivor annuity for the life of his or her Spouse which is not less than one-half of, or greater than, the amount of the annuity payable during the joint lives of the Participant and spouse and which is the actuarial equivalent of a single life annuity for the life of the Participant, as determined in accordance with the factors or assumptions set forth in Appendix II of the Plan. (5) "Social Security Retirement Age" means the social security retirement age as defined in Section 415(b)(8) of the Code. (h) Limitation for Multiple Plans - In any case in which an Employee is a participant in both a tax-qualified defined benefit plan and a tax-qualified defined contribution plan maintained by the Company, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any Plan Year beginning prior to January 1, 2000 shall not exceed 1.0. In the event such sum would otherwise exceed 1.0, the benefit projected under the defined benefit plan will be reduced as necessary so that such sum shall equal 1.0. (1) The defined benefit plan fraction for any Plan Year is a fraction: (a) the numerator of which is the projected annual benefit of the Participant under the Plan (determined as of the close of the Plan Year), and (b) the denominator of which is the lesser of (i) or (ii), as follows: (i) 1.25 multiplied by the defined benefit plan dollar limitation under Subsection (8)(a)(1) in effect for such year, or (ii) 1.4 multiplied by the amount specified under Subsection (8)(a)(2) for such year, (determined as of the close of the Plan Year). (2) The defined contribution plan fraction for any calendar year is a fraction: (a) the numerator of which is the sum of the "annual additions", as defined in Section 415(c) of the Code, to the Participant's account as of the close of the Plan Year, and (b) the denominator of which is the sum of the lesser of (i) or (ii) for such year and each prior Year of Service with the Company: (i) 1.25 multiplied by the defined contribution plan dollar limitation in effect for such year, or (ii) 1.4 multiplied by twenty-five percent (25%) of the Participant's Compensation for such year. (9) Prior Plan Provisions. Anything to the contrary herein notwithstanding, the Accrued Benefit and service credited for vesting purposes of any person who is a Participant on December 31, 1984 and January 1, 1985 for any period of service ending on or before December 31, 1984 shall be no less than the benefit he would have accrued at December 31, 1984 or the vesting service he would have completed at December 31, 1984 under the terms of the Plan as in effect on such date, assuming his credited service and Average Final Compensation were computed on such date. (10) Limitation on Timing of Commencement of Benefit Payments. As required under Sections 401(a)(14) and 401(a)(9) of the Code, the timing of the commencement of payment of benefits under the Plan shall be subject to the following rules: 20

(a) General Rule - Unless the Participant otherwise elects, the payment of benefits under the Plan to a Participant may not be delayed beyond the later of the sixtieth (60th) day after the close of the Plan Year in which the latest of the following events occurs: (1) the Participant's 65th birthday, (2) the tenth (10th) anniversary of the year in which the Participant commenced participation in the Plan, or (3) the Participant's termination of service with the Company. (b) In general, distribution of benefits shall not be made or commence later than April 1 of the calendar year following the calendar year in which the employee attains age 70-1/2. For the purposes of this Section, Participants who are age 70-1/2 or older as of January 1, 1989, and who have not retired shall be deemed to have attained age 70-1/2 on such date. Notwithstanding the foregoing, a Participant who has attained age 70-1/2 either (i) before January 1, 1988, or (ii) after December 31, 1998, and who is not a 5-percent owner (as defined in Section 416(i) of the Code) will not commence payments until his retirement. With respect to Participants who attain age 70-1/2 on or after January 1, 2003, (A) in the case of a 5% owner, a Participant's interest in the Plan must commence distribution no later than the April 1 of the calendar year following the year in which he attains age 70-1/2, and (B) in all other cases, a Participant's interest in the Plan must commence distribution no later than the April 1 of the calendar year following the later of the year in which he (i) attains age 70-1/2 or (ii) retires. In the event a distribution of benefits to a Participant is required to begin under this Subsection before a Participant's actual retirement, such Participant's Accrued Benefit shall be determined as of the December 31 immediately preceding the date such distribution is required to begin. As of each succeeding December 31 prior to the Participant's actual retirement and as of his actual retirement, the Participant's Accrued Benefit shall be recomputed as if each such date were his actual retirement date. However, the amount of any additional Accrued Benefit resulting from such recomputation shall be reduced by the Actuarial Equivalent of the total benefits received by the Participant under the Plan prior to such recomputation. In no event, however, shall the Participant's Accrued Benefit, upon any recomputation hereunder, be less than the greater of (i) such Participant's Accrued Benefit as of December 31, 1994, and (ii) such Participant's Accrued Benefit as of the immediately preceding recomputation. In the event a distribution of benefits to a Participant is not required to begin under this Subsection before the Participant's actual retirement, such Participant's Accrued Benefit shall be determined as of April 1 of the calendar year following the calendar year in which the Participant attains age 70-1/2. As of each succeeding December 31 prior to the Participant's actual retirement and as of his actual retirement, the Participant's Accrued Benefit shall be recomputed as if each such date were his actual retirement date. The amount of Accrued Benefit resulting from such recomputation shall be the greater of (a) the Accrued Benefit computed in accordance with Section 5 (without regard to this Subsection) based on his Average Final Compensation and Creditable Service as of the recomputation date or (b) the Actuarial Equivalent of the Accrued Benefit determined at the immediately preceding recomputation date. In no event, however, shall the Participant's Accrued Benefit, upon any recomputation hereunder, be less than the greater of (i) such Participant's Accrued Benefit as of December 31, 1998, and (ii) such Participant's Accrued Benefit as of the immediately preceding recomputation. For this Section, Actuarial Equivalent amounts shall be determined using (1) the Applicable Interest Rate and (2) the Applicable Mortality Table. 21

(11) Compensation Limit. In addition to other applicable limitations which may be set forth in the Plan and notwithstanding any other contrary provision of the Plan, for Plan Years beginning on or after January 1, 1994, the annual compensation of each employee taken into account under the Plan shall not exceed the annual compensation limit established by the Omnibus Budget Reconciliation Act of 1993 ("OBRA '93"). The annual compensation limit is $150,000, as adjusted by the Commissioner of Internal Revenue for increases in the cost of living in accordance with Section 401(a)(17) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (a "Determination Period") beginning in such calendar year. If a Determination Period consists of fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the Determination Period, and the denominator of which is 12. For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA '93 annual compensation limit set forth in the provision. If compensation for any prior Determination Period is taken into account in determining a Participant's benefits accruing in the current Plan Year, the compensation for that prior Determination Period is subject to the OBRA '93 annual compensation limit in effect for that prior Determination Period. For this purpose, for Determination Periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual compensation limit is $150,000. Notwithstanding any other provision in the Plan, each Section 401(a)(17) Participant's Accrued Benefit under this Plan will be the greater of: (a) such Participant's Accrued Benefit as of the last day of the Plan Year beginning before January 1, 1994, frozen in accordance with Section 1.401(a)(4)-13 of the Code regulations; or (b) such Participant's Accrued Benefit determined with respect to the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the Participant's total years of Creditable Service taken into account under the Plan for purposes of benefit accruals. For purposes of this Subsection, a Section 401(a)(17) Participant means a Participant whose current Accrued Benefit as of a date on or after January 1, 1994, is based on Compensation for a year beginning prior to the first day of the first Plan Year beginning on or after January 1, 1994, that exceeded $150,000. (12) Intentionally omitted. (13) Required Cash-outs of Certain Accrued Benefits. If a Participant terminates service and the present value of the vested accrued pension or survivor benefit provided under Subsection 5(2), 5(3), or 5(4) in respect of such Participant is equal to or less than $5,000, the person to whom such benefits would otherwise be paid in monthly installments shall receive a lump-sum distribution of the present value of the entire vested portion of such Accrued Benefit, except that, in the case of a qualified joint and survivor annuity or qualified pre-retirement survivor annuity, as such terms are defined under Code Sections 417(b) and 417(c), respectively, no such lump-sum distribution shall be made after the annuity starting date, as defined under Section 417(f)(2) of the Code. In the event that the present value exceeds $5,000 but as of any January 1, beginning January 1, 2002, such value declines to $5,000 or less, such present value may be distributed as of such January 1. For the purposes of determining the present value of a vested Accrued Benefit under this Subsection in respect of (i) current and future Participants who terminate service with the Company on and after January 1, 1997, and (ii) former Participants who, as of January 1, 1997, have not previously received 22

a mandatory lump-sum distribution and are not currently receiving an annual retirement allowance under the Plan, the interest rate assumption shall be the annual rate of interest on 30-year U.S. Treasury securities in the third month prior to the date of distribution; and the mortality rate assumption shall be based on the GAM 1983 Mortality Table (with mortality rates composed of 50% of the male rates and 50% of the female rates), as such may be amended from time to time. For this Section, effective as of January 1, 2000, Actuarial Equivalent amounts shall be determined using (1) the Applicable Interest Rate and (2) the Applicable Mortality Table. Notwithstanding Subsections 1(12) and 4(5) and any other provision herein to the contrary, if a former Employee who has received a lump-sum distribution of his entire non-forfeitable benefit under the Plan pursuant to this Subsection is re-employed by the Company, he shall be treated as a new Employee and prior service performed by the Employee in respect of such distribution shall be disregarded for purposes of determining his Accrued Benefit under the Plan. (14) Rollover of Eligible Distributions. Notwithstanding any provision in the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Pension Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section: (a) "eligible rollover distribution" shall mean any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include (i) any distribution that is one of a series of substantially equal payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a period of ten years or more, (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code, and (iii) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (b) "eligible retirement plan" shall mean an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or an qualified trust described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to a surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (c) "distributee" shall mean a Participant or former Participant. In addition, the Participant's or former Participant's surviving spouse and the Participant's or former Participant's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (d) "direct rollover" shall mean a payment by the Plan to the eligible retirement plan specified by the distributee. (15) Additional Benefit Amounts for Certain Retirees. With respect to each former Participant in the Plan, or surviving spouse or other designated beneficiary of such former Participant, who in either case is listed by name or social security number in the attached Appendix III, such person shall be paid on a monthly basis, in addition to any monthly benefit such person is otherwise entitled to receive under the terms of the Plan, the amount set opposite such person's name in Appendix III, beginning May 1, 1999, and 23

continuing until such person's death. Thereafter, if such person is a former Participant and shall have made one of the elections described in and in accordance with Section 3(b) hereof and such election is then in effect and has not been revoked, such payments shall continue during the life of, and shall be paid to, such person's surviving spouse or other beneficiary designated in such election until his or her death, provided, however, that, if such election provides for less than 100% of the former Participant's retirement allowance be paid to his or her surviving spouse or other beneficiary after the former Participant's death, the supplemental payments provided for in this Section 5(15) to such surviving spouse or other beneficiary shall be reduced in the same proportion as the former Participant's retirement allowance is adjusted pursuant to such election. (16) Notwithstanding any provision of the Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. 24

SECTION 6 - CONTRIBUTIONS (1) All contributions under the Plan shall be made by the Company, and no contributions shall be required of Participants. The contributions shall be payable at such intervals as may be agreed upon by the Company and the Committee, but at least annually, and shall consist of such contributions as the Board of Directors may deem advisable, but at least an amount sufficient to maintain the Plan on a sound actuarial basis. All contributions shall be transferred by the Company to the Trustee or Trustees to be used in accordance with the Plan, except that such contributions are to revert to the Company, without earnings thereon but reduced by any losses thereon, under the following conditions: (a) In the case of a contribution which is made by the Company by reason of a mistake in fact, such contribution shall be returned to the Company within one (1) year following its payment to the Plan; and (b) If all or a portion of any contribution is determined to be non-deductible under Section 404 of the Code, such contribution, to the extent that it is determined to be non-deductible, shall be returned to the Company within one (1) year following such determination. (2) Forfeitures arising from termination of service, death, or for any other reason shall not be applied to increase the benefits which any person would otherwise receive under the Plan but shall be used to reduce Plan contributions. 25

SECTION 7 - ADMINISTRATION OF THE PLAN (1) The general administration of the Plan shall be the responsibility of a Pension Committee of no less than three members appointed from time to time by the Board of Directors to serve at the pleasure of the Board of Directors. The Committee is designated as the named fiduciary within the meaning of Section 402(a) of the Employee Retirement Income Security Act of 1974. (2) Any Employee appointed a member of the Committee shall serve without compensation with respect to his services on the Committee. Any member of the Committee may resign by delivering his written resignation to the Board of Directors. (3) The Board of Directors shall appoint one of the members of the Committee as Chairman. The Secretary, who need not be one of the members of the Committee, shall be designated by the Committee. (4) The administrative expenses of the Plan shall be paid by the Company. (5) The Committee shall designate bank depositories and shall delegate authority in connection therewith. It may delegate any portion of its authority to designated individuals or committees, and may retain legal counsel, auditors, actuaries and consultants and obtain clerical, accounting and other services, all as it deems necessary in carrying out the provisions of the Plan. (6) The Committee may act at a meeting or in writing without a meeting. Meetings shall be held upon such notice, at such places and at such times as the Committee may from time to time determine. A majority of the member of the Committee shall constitute a quorum for the transaction of business. All actions taken by the Committee shall be by the vote of a majority of the members of the Committee, including actions in writing taken without a meeting. (7) The Committee from time to time may establish rules for the administration of the Plan and the transaction of its business. All rules and decisions of the Committee shall be uniformly and consistently applied to all Participants who are similarly situated. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished to it by a Participant, the Company, the legal counsel of the Company or the Trustee of the Plan trust. The interpretation and construction of any provision of the Plan by a majority of the members of the Committee shall be final and conclusive. (8) The Committee shall adopt from time to time interest assumptions, service tables, mortality tables and such other data, procedures and methods as may be necessary or desirable for use in all actuarial calculations required in connection with the Plan. As an aid to the Committee, the actuary designated by the Committee shall make annual actuarial valuations of the assets and liabilities, actual and contingent, of the Plan, and shall certify to the Committee the tables which he would recommend for use by the Committee. (9) The Committee shall establish and cause to be maintained a funding standard account and such other and additional accounts as it deems necessary for the proper administration of the Plan. It shall keep or cause to be kept in convenient form such data as may be necessary for actuarial valuations of the assets and liabilities of the Plan. The Committee shall prepare or cause to be prepared annually a report showing in reasonable detail the assets and liabilities of the Plan and giving a brief account of the operation of the Plan for the past year, and recommending the amount of the Company's contribution to the Plan for the ensuing year. Such report shall be submitted to the Board of Directors and shall be filed in the office of the Secretary of the Committee. 26

(10) In addition to the foregoing, the Committee shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following: (a) to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder; (b) to prescribe procedures to be followed by Participants or other beneficiaries filing applications for benefits; (c) to prepare and distribute in such manner as the Committee determines to be appropriate, information explaining the Plan; (d) to receive from the Company and from Participants such information as shall be necessary for the proper administration of the Plan; (e) to furnish the Company, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate; (f) to receive, review and keep on file (as it deems convenient or proper) reports of the financial condition, and of the receipts and disbursements, of the Plan trust from the Trustee; and (g) to appoint or employ individuals to assist in the administration of the Plan and any other agents it deems advisable, including legal and actuarial counsel. The Committee shall have no power to add to, subtract from or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements for eligibility for a benefit under the Plan. (11) The Committee shall issue directions to the Trustee concerning all benefits which are to be paid from the Plan trust pursuant to the provisions of the Plan. (12) The Committee may require a Participant or other beneficiary to complete and file with the Committee an application for a benefit and all other forms approved by the Committee, and to furnish all pertinent information requested by the Committee. The Committee may rely upon all such information so furnished it, including the Participant's or other beneficiary's current mailing address. (13) The Committee and the individual members thereof shall be indemnified by the Company and not from the Plan trust against any and all liabilities arising by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto. (14) In the event of an error in administering the Plan, including, without limitation, as to eligibility, participation or Creditable Service of any Participant, or as to the amount of payments made or to be made to a Participant or other beneficiary, the Committee may take any action, including making such contributions or payments or demanding such refunds or repayments it deems appropriate, to place the Participant or other beneficiary as nearly as possible in the position he would have been in had there been no error. 27

SECTION 8 - MANAGEMENT OF ASSETS (1) All assets of the Plan shall be held as a special trust for use in connection with the Plan and providing the benefits and paying the expenses of the Plan, and no part of the corpus or income shall be used for or diverted to purposes other than for the exclusive benefit of Participants, retired Participants and their beneficiaries under the Plan prior to the satisfaction of all liabilities with respect to such Participants, retired Participants and their beneficiaries under the Plan. No person shall have any interest in or right to any part of the earnings of the trust, or any right in, or to, or under the trust or any part of the assets thereof, except as and to the extent expressly provided in the Plan and trust agreement. (2) The Trustee or Trustees shall be appointed from time to time by the Committee by appropriate instrument with such powers, duties, rights and obligations as the Committee shall approve. The Committee may remove any Trustee at any time, upon reasonable notice, and upon such removal or upon the resignation of any Trustee the Committee shall designate a successor Trustee or Trustees. (3) The Committee shall determine the manner in which the funds of the Plan shall be disbursed but subject to the provisions of the trust instrument under which the assets of the Plan are held. (4) The Committee shall have the power to appoint one or more investment managers, within the meaning of Section 3(38) of the Employee Retirement Income Security Act of 1974, to manage (including the power to acquire and dispose of) any assets of the Plan which have been transferred to any Trustee or a specified portion thereof. In the event that the Committee shall appoint such investment managers, each such investment manager shall be solely responsible for the management and control of the assets to which he or it is appointed. 28

SECTION 9 - CERTAIN RIGHTS AND OBLIGATIONS (1) It is the intention of the Company to continue the Plan and make its contributions regularly each year, but the Company, by action of its Board of Directors, may for any reason terminate or partially terminate the Plan. If all liabilities to or on account of the Participants, retired Participants and their beneficiaries have been satisfied or provided for in full and there is an amount remaining due to erroneous actuarial computations during the previous life of the Plan (within the meaning of the regulations under the Internal Revenue Code), then and not otherwise the Company shall be entitled to receive such remaining amount. (2) The establishment of the Plan shall not be construed as conferring any legal rights upon any Employee or any person for a continuation of employment nor shall it interfere with the right of the Company to discharge any Employee and to treat him without regard to the effect which such treatment might have upon him as a Participant in the Plan. (3) Any rulings made or acts taken under the Plan by the Board of Directors or by the Committee with respect to classification of Employees, contributions, or benefits shall be uniform in their nature and applicable to all those persons similarly situated. No ruling shall be made or act taken which shall be discriminatory under the provisions of the Internal Revenue Code. (4) The provisions of this Subsection (4) shall apply to any one of the 25 highest paid Employees of the Company on any "Commencement Date" whose anticipated retirement allowance provided under the Plan at normal retirement date exceeds $1,500 per annum. "Commencement Date" shall mean the effective date of any amendment to the Plan which increases the benefits. In the event that during the first 10 years following a "Commencement Date" the Plan is terminated, the amount of the retirement allowance provided under the Plan for any one of the aforesaid Employees shall not be greater than the amount of allowance that can be provided by the largest of the following amounts: (a) $20,000, or (b) 20% of the first $50,000 of the Participant's "Annual Compensation", multiplied by the number of years and fractions thereof since the "Commencement Date" in which the full current costs have been met. As used in this paragraph, "Annual Compensation" means average compensation during the five calendar years (or the Participant's period of employment if less than five years) immediately preceding the date of termination of the Plan or immediately preceding the date of commencement of retirement benefits under the Plan, if earlier. The foregoing conditions shall not restrict the current payment of full retirement benefits called for by the Plan for any Participant or beneficiary who has retired while the Plan is in full effect and its full current costs have been met. In the event that the present value of Plan assets as of the date of termination of the Plan, calculated utilizing Pension Benefit Guaranty Corporation assumptions as of the date of termination, equals or exceeds the present value of the total Accrued Benefits for all Participants (whether or not nonforfeitable), Subsection (4) shall not be applicable to restrict the Accrued Benefits payable to the twenty-five (25) highest paid Employees. This Subsection (4) is included in this Plan to conform to the requirements of Treasury Regulations Section 1.401-4(c) and shall cease to be effective at such time as the provisions of Treasury Regulations Section 1.401-4(c) or any substitute therefor are no longer effective or applicable. (5) If any company is now or hereafter becomes an Affiliate of the Company, the Board of Directors may include the employees of such Affiliate in the participation in the Plan upon appropriate action by such 29

company necessary to adopt the Plan. In such event, or if any persons become Employees of the Company as the result of merger or consolidation or as the result of acquisition of all or part of the assets or business of another company, the Board of Directors shall determine to what extent, if any, credit and benefits shall be granted for previous service with such Affiliate, but subject to the continued qualification of the trust for the Plan as tax exempt under the Internal Revenue Code. Any such Affiliate may terminate its participation in the Plan upon appropriate action by it, in which event the funds of the Plan held on account of Participants in the employ of such company not yet retired, after provision in full for all Participants who have retired from the employ of such company, shall be determined by the Committee on the basis of actuarial valuation, and shall be applied as provided in Section 9(1), in the manner there provided if the Plan should be terminated, or shall be segregated by the Trustee as a separate trust, pursuant to certification to the Trustee by the Committee continuing the Plan as a separate Plan for the employees of such company under which the Board of Directors of such company shall succeed to all the powers and duties of the Board of Directors, including the appointment of members of the Committee. (6) The Plan shall not be merged no consolidated with, nor shall there be a transfer of any of its assets or liabilities to, any other plan, unless each Participant, former Participant or beneficiary shall (if the resulting plan were then terminated) be entitled to receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then been terminated). (7) Upon the Plan's termination or partial termination, the rights of all affected Employees to benefits accrued to the date of such termination or discontinuance, to the extent then funded, shall be nonforfeitable. (8) Where a Participant or beneficiary is receiving benefits under the Plan, or where a Participant has been separated from service and has nonforfeitable rights to benefits under the Plan, such benefits will not be decreased because of an increase in the benefit levels or wage payments under Title II of the Social Security Act, if such increase takes place after the later of (a) the last day of the Participant's service with Company or (b) September 2, 1974. (9) Unless otherwise specifically provided herein, the terms of the Plan in effect at the date an Employee's service terminates shall determine his rights and benefits thereafter. 30

SECTION 10 - CLAIM PROCEDURES ======================================== (1) Every claim for benefits under the Plan shall be in writing directed to the Committee or its designee. (2) Each claim filed shall be passed upon by the Committee within a reasonable time from its receipt. If a claim is denied in whole or in part the claimant shall be given written notice of the denial in language calculated to be understood by the claimant, which notice shall: (i) specify the reason or reasons for the denial; (ii) specify the Plan provisions giving rise to the denial; and (iii) describe any further information or documentation necessary for the claim to be honored and explain why such documentation or information is necessary, and explain the Plan's review procedure. (3) Upon the written request of any claimant whose claim has been denied in whole or in part, the Committee shall make a full and fair review of the claim and furnish the claimant with a written decision concerning it. 31

SECTION 11 - NON-ALIENATION OF BENEFITS ======================================== (1) No benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge. Any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit, unless the assignment of such benefit or right is pursuant to a "qualified domestic relations order" as defined at Section 206(d)(3)(B)(i) of ERISA, as amended by the Retirement Equity Act of 1984, and related regulations. (2) If any person entitled to a benefit under the Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any benefit under the Plan except as specifically provided herein, then such benefit shall, in the discretion of the Committee, cease and determine. In that event the Committee shall hold or apply the same for the benefit of such person, his spouse, children, or other dependents, or any of them in such manner and in such proportion as the Committee may deem proper. (3) Effective for judgments, orders and decrees issued, and settlement agreements entered into, on and after August 5, 1997, notwithstanding anything herein to the contrary, however, a Participant's benefit in the Plan may be reduced to satisfy liabilities of the Participant to the Plan due to (i) the Participant being convicted of committing a crime involving the Plan, (ii) a civil judgment (or consent order or decree) entered by a court in an action brought in connection with a violation of the fiduciary provisions of ERISA, or (iii) a settlement agreement between the Secretary of Labor or the Pension Benefit Guaranty Corporation and the Participant in connection with a violation of the fiduciary provisions. Any such reduction shall be consistent with the provisions of Sections 401(a)(13)(C) and (D) of the Code in all respects, including the provisions regarding the Participant's spouse. 32

SECTION 12 - TOP HEAVY PLAN ======================================== (1) Precedence of Section. Anything in this Plan to the contrary notwithstanding, the provisions of this Section 12 shall supercede and take precedence over any other provisions of the Plan for any Plan Year in which the Plan is determined to be a Top Heavy Plan as determined under Section 12(3). (2) Definitions. For purposes of determining whether the Plan is a Top Heavy Plan, as determined under Section 12(3) below, for any Plan Year commencing on or after January 1, 1984, the following terms, wherever capitalized, shall have the meanings set forth below: (a) Accrued Benefit - "Accrued Benefit" means the benefit accrued by a Participant under Section 5 of the Plan. (b) Determination Date - "Determination Date" means the date on which the Plan is tested to determine if it is a Top Heavy Plan, which date shall be the last day of the Plan Year preceding the Plan Year for which the determination is being made. (c) Key Employee - "Key Employee" means an Employee who, at any time during the current Plan Year or any of the four (4) preceding Plan Years, is or was: (1) Officer - An officer of the Company (but not more than the lesser of: (a) fifty (50) Employees, or (b) the greater of three (3) or ten percent of the Employees of the Company shall be considered officers for this purposes) whose annual Compensation is at least $45,000 or such greater amount as may be recognized for increase in the cost of living in accordance with Code Section 416(i)(1)(A)(i), or (2) Employee Owner - One (1) of the ten (10) Employees owning the largest interests in the Company provided that his annual Compensation is at least $30,000 or such greater amount as may be recognized for increases in the cost of living in accordance with Code Section 416(i)(1)(A)(ii) (for purposes of this Section 12(2)(c)(2), if two (2) Employees have the same interest in the Company, the Employee with the greater annual Compensation shall be treated as having a larger interest), or (3) Five Percent Shareholder - An Employee who is an owner of five percent (5%) or more of the Company, or (4) Highly Compensated Shareholder - An Employee who is an owner of one percent (1%) or more of the Company and who has annual Compensation from the Company in excess of $150,000. (d) Former Key Employee - "Former Key Employee" means a Participant in the Plan who, at any time during the four (4) preceding Plan Years, was a Key Employee but who is not a Key Employee in the current Plan Year or who terminated his service with the Company in one of the four (4) preceding Plan Years and was not a Key Employee in the Plan Year in which he terminated. (e) Non-Key Employee - "Non-Key Employee" means a Participant in the Plan who, at any time during the current Plan Year, is neither a Key Employee nor a Former Key Employee. 33

(f) Top Heavy Plan - "Top Heavy Plan" means a Plan which is determined to be a Top Heavy Plan for a Plan Year, as described in Section 12(3). (3) Determination of Top Heavy Plan Status. With respect to each Plan Year commencing on or after January 1, 1984, a calculation shall be made as of the applicable Determination Date to determine if the Plan is a Top Heavy Plan for such Plan Year. A Plan shall be considered to be a Top Heavy Plan for a Plan Year if the aggregate present value of the Accrued Benefit of Key Employees (excluding Former Key Employees) under the Plan exceeds sixty percent (60%) of the aggregate present value of the Accrued Benefit of all Key Employees (excluding Former Key Employees) and all Non-Key Employees under the Plan, determined as of the Determination Date. In making such determination, the Accrued Benefit of all individuals who were not employed by the Company during the five (5) year period ending on the Determination Date shall be excluded. In determining if the Plan is a Top Heavy Plan, it shall be aggregated with each other plan of the Company and/or a related organization in the required aggregation group as defined at Section 416(g)(2)(A)(i) of the Code and may be aggregated with any other plans of the Company and/or a related organization in the permissive aggregation group as defined at Section 416(g)(2)(A)(ii) of the Code. (4) Intentionally omitted. (5) Vesting in Top Heavy Plan Year. With respect to any Plan Year for which the Plan is determined to be a Top Heavy Plan, each Participant's accrued retirement allowance benefit shall vest in accordance with the following vesting schedule, in lieu of the vesting provisions described in Section 4: Years of Service Vesting Percentage ---------------- ------------------ Less than 2 0% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60% 5 but less than 6 80% 6 or more 100% (6) Minimum Benefit Under Top Heavy Plan. Anything in Section 5 to the contrary notwithstanding, if the Plan is determined to be a Top Heavy Plan for any Plan Year commencing on or after January 1, 1984, in no event shall the annual retirement allowance payable to a Participant in the form and manner and at the time specified in Section 5 be less than: (a) 2.0% of the Participant's average Compensation for the five (5) consecutive year period in which his Compensation from the Company was the highest, multiplied by; (b) the number of Plan Years for which the Plan is determined to be a Top Heavy Plan, but in no event more than ten (10) such Plan Years. (7) Maximum Limitation Under Top Heavy Plan. With respect to any Plan Year for which the Plan is determined to be a Top Heavy Plan, a 1.0 limitation shall be substituted for the 1.25 limitations at Subsection (8)(c)(1)(b)(i) and (8)(c)(2)(b)(i) of Section 5. 34

SECTION 13 - AMENDMENTS ======================================== The Board of Directors may, at any time and from time to time, modify or amend in whole or in part any or all of the provisions of the Plan; provided that no such modification or amendment shall make it possible for any part of the assets of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of Participants, former Participants and their beneficiaries under the Plan prior to the satisfaction of all Plan liabilities to them. 35

SECTION 14 - CONSTRUCTION ======================================== The Plan shall be construed, regulated and administered under the laws of the State of New York and the United States. 36

APPENDIX I ======================================== The following employees have prior service with a former affiliate of the Company and will be granted full Vesting and Creditable Service. Thomas Andruskevich Cecelia Arbore Lawrence Burns Daniel DelVechio Michael Eiring Rachelle Epstein Warren Feld James Fernandez Joan Freeman Michael Kowalski Deborah Kramm David Robertson Mary J. Robertson John Schaedel Audrey Scotland Dale Strohl Charles Zacharias 37

APPENDIX II ======================================== The factors to be used in determining the actuarial equivalence between two alternative forms of pension are as follows: Interest rate - 8.00% Mortality - The rates of mortality resulting from a 50% /50% average of the male and female mortality rates of the George B. Buck 1979 Mortality Table. 38

APPENDIX III ======================================== NAME OR SOCIAL SECURITY NUMBER AMOUNT ------------------------------ ------ ###-##-#### $50.00 ###-##-#### $66.95 ###-##-#### $25.00 ###-##-#### $508.00 ###-##-#### $932.10 ###-##-#### $116.69 ###-##-#### $50.00 ###-##-#### $50.00 ###-##-#### $50.00 ###-##-#### $50.00 ###-##-#### $50.00 ###-##-#### $50.00 ###-##-#### $50.00 ###-##-#### $150.00 ###-##-#### $50.00 ###-##-#### $87.66 39

Exhibit 10.114 Tiffany & Co. 1994 TIFFANY AND COMPANY Report on Form 10-K SUPPLEMENTAL RETIREMENT INCOME PLAN AMENDED AND RESTATED AS OF DECEMBER 19, 2003 WHEREAS, Tiffany and Company, a New York Corporation, does hereby intend by the following instrument to establish an unfunded supplemental retirement plan for the benefit of a select group of management or highly compensated employees; and WHEREAS, Tiffany and Company recognizes that certain executives possess an intimate knowledge of the business and affairs of Tiffany and Company and its policies, methods, personnel and problems and that the contributions of these executives are essential to the company's continued growth and success; and WHEREAS, Tiffany and Company wants to provide selected executives with supplemental retirement income in order to induce selected executives to remain employed by Tiffany and Company until their retirement; and WHEREAS, Tiffany and Company replaced its prior Supplemental Retirement Income Plan which became effective the 20th day of October, 1989 with this Plan; and WHEREAS, Tiffany revised this Plan this effective September 18, 2003, which revisions are reflected in this document; NOW, THEREFORE, to carry the above intentions into effect, and intending to be legally bound hereby, Tiffany and Company does enter into this Plan effective the 1st day of February, 1994. This Plan shall be known as the 1994 TIFFANY AND COMPANY SUPPLEMENTAL RETIREMENT INCOME PLAN

ARTICLE I DEFINITIONS FOR THE PURPOSES OF THIS PLAN, THE FOLLOWING CAPITALIZED TERMS AND PHRASES SHALL HAVE THE MEANINGS ASCRIBED TO THEM BELOW: 1.1 "ACTUARIAL EQUIVALENT" means the equivalent value of each form of payment, computed in accordance with accepted actuarial principles and on the basis of the same factors then required for use under the Pension Plan and the Excess Plan for the computation of the Participant's Pension Benefit. 1.2 "ADMINISTRATOR" means the individual appointed to administer the Plan pursuant to Article VII. 1.3 "AVERAGE FINAL COMPENSATION" means, with respect to a Participant, his average Compensation during those five years of his last ten years of Creditable Service in which his Compensation was highest. If an Employee has less than five years of Creditable Service or less than five Plan Years in which he accrued Creditable Service, as the case may be, his or her "Average Final Compensation" shall be computed as the average of his or her Compensation over all such years. 1.4 "BENEFICIARY" means the person, persons, trust or other entity, designated by written revocable designation filed with the Administrator by the Participant to receive payments under this Plan in the event of the Participant's death. In the event Participant fails to effectively make such a designation, the Beneficiary shall be the personal representative of the Participant's estate. 1.5 "BENEFIT" means, with respect to each Participant, the benefit to which Participant is entitled under Sections 3.2 or 3.3 of this Plan. 1.6 "CLAIMANT" means any Participant or Beneficiary who files a claim for benefits, either directly or through an authorized representative, under Section 7.7 of this Plan. 1.7 "COMMITTEE" means the Compensation Committee of the Board of Directors of Tiffany & Co., a Delaware corporation, which shall have authority over this Plan. 1.8 "CODE" means the Internal Revenue Code of 1986, as amended from time to time. 1.9 "COMPENSATION" means the actual base salary paid to Participant for services rendered to the Employer (exclusive of amounts attributable to the exercise of employee stock options), including straight time for all hours worked, commissions, bonuses, premiums and incentives (in the case of any Employee shown in the attached Schedule "A", the reference to Employer for purposes of this Section 1.9 only shall also refer to Affiliates of the Employer prior to October 15, 1984; for the purposes of this Section 1.9 "Affiliate" 2

shall mean any member of the controlled group of companies of which the Employer was a member within the meaning of Section 414(b), (c) and (m) of the Code at such prior time) including any pre-tax elective deferrals to any Employer sponsored retirement savings plan or cafeteria plan, qualified pursuant to Section 401(k) or Section 125 of the Code, and any pre-tax elective deferrals to the Tiffany and Company Executive Deferral Plan, but excluding all other Employer contributions to benefit plans and all other forms of remuneration or reimbursement. 1.10 "CREDITABLE SERVICE" means "Creditable Service" under the Pension Plan. 1.11 "DISABILITY" means an illness or injury which prevents a Participant from performing the Participant's occupation. Disability shall be determined in a uniform manner by the Administrator, provided, however, that no illness or injury shall be deemed a disability for the purposes of this Plan unless the Participant would be entitled to continue to be treated as a "Participant" under the terms of the Pension Plan and to continue to accrue "Creditable Service" under the terms of the Pension Plan during the continuation of such illness or injury. 1.12 "EARLY RETIREMENT" means the first day of the month following, or coincident with, severance from full-time employment (other than by reason of death) by a Participant (i) after attaining age sixty (60) and (ii) with at least fifteen (15) consecutive Years of Service with Employer; provided, however, that in the event a former Participant is Vested by reason of a "Change in Control" (as that term is defined in Section 6.2 below), item (ii) of this Section 1.11 shall not be applicable. 1.13 "EFFECTIVE DATE" means February 1, 1994. 1.14 "ELIGIBLE EMPLOYEE" means an employee of an Employer appointed an officer of Tiffany & Co., a Delaware corporation, and having the title of "Chief Executive Officer," "President", "Executive Vice President" or "Senior Vice President" and such other highly compensated employees identified and approved by the Committee from time to time. 1.15 "EMPLOYER" means Tiffany and Company and any successor organization, or any other business entity which adopts this Plan with consent of the Board of Directors of Tiffany & Co., a Delaware corporation. 1.16 "EMPLOYMENT" means the status of being employed by Employer including periods of active employment and other periods for which the Eligible Employee is listed as an employee of Employer in the payroll records of Employer and periods during which the Eligible Employee is on a Leave of Absence and "EMPLOYED" means of the status of Employment. 1.17 "ENTRY DATE" means February 1, 1994 and each January 1 of each calendar year thereafter. 3

1.18 "EXCESS PLAN" means the 2004 Tiffany and Company Un-Funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits. 1.19 "LEAVE OF ABSENCE" means any absence from employment, with or without pay, authorized by Employer which would not result, on the first anniversary of the first day of such continuing period of absence, in a "Discontinuance of Active Employment Date" under the Pension Plan. 1.20 "PARTICIPANT" means any Eligible Employee who has met the conditions for participation as set forth in Article II. 1.21 "PLAN" means the 1994 Tiffany and Company Supplemental Retirement Income Plan as described in this instrument, as amended from time to time. 1.22 "PLAN YEAR" means a "Plan Year" under the Pension Plan. 1.23 "PENSION BENEFIT" means, with respect to each Participant, the annual retirement allowance to which Participant is entitled at Retirement payable from the Pension Plan and the Excess Plan and actuarially determined on the basis of an annuity for Participant's life utilizing actuarial assumptions as pertain for all other purposes of said Pension Plan and the Excess Plan whether or not such retirement allowance is actually paid, and regardless of any optional form of benefit payment elected under the Pension Plan and the Excess Plan by said Participant. 1.24 "PENSION PLAN" means the Tiffany and Company Pension Plan as such Pension Plan may be amended from time to time. 1.25 "PERMITTED RETIREMENT" means, with respect to each Participant, the earlier of the date on which he takes Early Retirement or Retirement. 1.26 "RETIREMENT" means any severance from full-time employment by a Participant or former Participant (other than by reason of death) after attaining Retirement Age. 1.27 "RETIREMENT AGE" means age sixty-five (65). 1.28 "SOCIAL SECURITY BENEFIT" means the amount of the Participant's anticipated unreduced primary insurance benefit under Title II of the Federal Social Security Act computed on the basis of such Act in effect at Permitted Retirement, and consisting of that annual amount to which the Participant would upon proper application be entitled at Retirement Age irrespective of earnings he may be receiving or might receive in excess of any limit on earnings for full entitlement to such benefit. When used in connection with the computation of a Benefit payable under Section 3.3 of the Plan, "Social Security Benefit" shall mean the said Social Security Benefit computed on the assumption that the 4

Participant will continue to receive Compensation until age 65 for purposes of Social Security in the same amount as in effect on the date of his Permitted Retirement. With respect to periods for which the Participant's actual compensation for Social Security purposes is not available, the Social Security Benefit shall be calculated on the assumption that the Participant has compensation for Social Security purposes after 1951, or age 22 if later, and prior to his or her last date of hire or rehire by Employer which increased 6 percent (6%) each year to his or her Compensation on such date of hire or rehire by Employer. 1.29 "VESTED" means that portion of a Participant's Benefit to which the Participant has a nonforfeitable right as defined in Section 3.6. 1.30 "YEAR OF SERVICE" means a year of Creditable Service. ARTICLE II PARTICIPATION IN THE PLAN 2.1 Commencement of Participation. Each Eligible Employee who is an Eligible Employee on an Entry Date shall become a Participant in the Plan as of the first day of such Plan Year. 2.2 Procedure For and Effect of Admission. Each individual who becomes eligible for admission to participate in this Plan shall complete such forms and provide such data as are reasonably required by the Employer as a condition of such admission and will, on the request of Employer, submit to a physical examination by a physician and make such applications for life insurance in order that the Employer may, if Employer determines to do so, obtain a policy of life insurance for the benefit of Employer on the life of such individual in such amounts as Employer shall, in its sole discretion, determine to be necessary or desirable. By becoming a Participant, each individual shall for all purposes under this Plan be deemed conclusively to have assented to the provisions of this Plan and all amendments hereto and to the termination of the pre-existing Tiffany and Company Supplemental Retirement Income Plan which pre-existing plan became effective the 20th day of October, 1989. 2.3 Cessation of Participation. Subject to Section 2.4 below, Participant shall cease to be a Participant the earlier of: (i) the date on which the Plan terminates, or (ii) the date on which he terminates Employment with an Employer. A former Participant will be deemed a Participant, for all purposes of this Plan, as long as such former Participant retains a Vested interest pursuant to the terms of Article III. 2.4 Disability. In the event a Participant incurs a Disability while Employed (whether or not such Disability arises out of such Employment), and for so long as such Disability continues, such Participant shall continue to be a Participant hereunder until the earlier of (i) Participant's death, (ii) Participant's Permitted Retirement or (iii) the cessation of such 5

Disability, and Participant's Compensation in the last 12 months of his active Employment shall be deemed to be his Compensation for the purposes of this Plan during the period of such Disability. ARTICLE III PLAN BENEFITS 3.1 Overriding Limitation. Except as provided in this Section 3.1, under no circumstances will a Participant or a former Participant be entitled to a Benefit under this Plan unless and until Participant becomes entitled to payment of a Pension Benefit. In the event the Pension Plan and/or the Excess Plan shall have been terminated as of the time a Pension Benefit would have become payable under the Pension Plan to Participant, the Benefit under this Plan shall be calculated by application, by means of the formula set forth in Section 3.2 below, of the Pension Benefit which would have been payable to Participant under the Pension Plan and the Excess Plan as in effect on January 1, 2004, and if Participant would not have been entitled to a Pension Benefit under the Pension Plan as in effect on January 1, 2004 as of the date a Benefit would otherwise become payable hereunder, no Benefit shall be payable under this Plan. 3.2 Retirement Benefit. Commencing the first day of a month within sixty (60) days of Retirement, Employer will pay a Participant an annual Benefit calculated on the basis of such Participant's Years of Service and Average Final Compensation using the following table and then by subtracting Participant's Pension Benefit and Social Security Benefit: BENEFIT AS A PERCENTAGE OF PARTICIPANT'S AVERAGE YEARS OF SERVICE FINAL COMPENSATION 25 or more 60% 20-24 50% 15-19 35% 10-14 20% less than 10 nil% 3.3 Early Retirement Benefit. In lieu of the Benefit provided under Section 3.2 above, commencing the first day of a month within sixty (60) days of Early Retirement, Employer will pay a Participant a Benefit. The annual amount of such Benefit shall be the annual Benefit stated in Section 3.2 reduced by 1/12 of 5 percent for each month that Participant's Early Retirement date precedes the date that such Participant would reach Retirement Age. 3.4 Optional Benefits in Lieu of Regular Benefits. A Participant under this Plan shall be 6

deemed to have elected that the Benefit payable under this Plan be payable in the same form of benefit that the Participant has elected or is deemed to have elected under the Pension Plan, to wit, either as a annuity for the life of the Participant or the Actuarial Equivalent thereof paying a proportionately reduced Benefit during his life, with the provision that after his death an allowance of 50%, 66-2/3%,75% or 100% of the rate of his reduced allowance, at his designation, shall continue during the life of, and shall be paid to, the beneficiary designated by him at the time of electing the option. Any election, notice or designation made or given by the Participant under the Pension Plan shall be deemed an election, notice or designation made or given by the Participant under this Plan and any change or revocation of an election, notice or designation made under the Pension Plan (whether automatic or voluntary) shall be deemed to be a change or revocation under this Plan. All time limitations for making elections or designations or giving notice under the Pension Plan with respect to any form of benefit shall be applicable under this Plan. Any designation of a beneficiary made under this Plan shall be subject to the same limitations and spousal consent and spousal waiver requirements as would apply to a comparable designation under the Pension Plan, provided, however that the Committee may, in its discretion, require that any spousal consent or waiver address this Plan specifically. 3.5 Termination of Employment. No Benefit shall be or become payable to a Participant if the Participant ceases to be a Participant prior to obtaining a Vested interest with respect to his Benefit. 3.6 Vesting and Forfeiture of Vested Benefits. Subject to Section 3.1 above, a Participant shall have a Vested interest with respect to his Benefit upon Permitted Retirement or upon a Change in Control pursuant to Article VI, provided that if a Participant's benefit under the Excess Plan is forfeited as provided for in Section 3.12 of the Excess Plan then any Benefit that would otherwise be payable to a Participant or to the beneficiary of any Participant under this Plan shall be likewise forfeited; any decision regarding such forfeiture made under or pursuant to the provisions of the Excess Plan shall be binding for all purposes of this Plan. 3.7 Adjustment, Amendment, or Termination of Benefit. Notwithstanding any other provision to the contrary, the Employer may not adjust, amend, or terminate its obligations to a Participant under this Article III subsequent to that date on which Participant obtains a Vested interest pursuant to Section 3.6 above except as expressly provided in Section 3.6 above. 3.8 Tax Withholding. To the extent required by the law in effect at the time benefits are distributed pursuant to this Article III, the Employer or its agents shall withhold any taxes required by the federal or any state or local government from payments made hereunder. 7

ARTICLE IV UNFUNDED PLAN 4.1 Unfunded Benefits. Benefits are payable as they become due irrespective of any actual investments the Employer may make to meet its obligations. Neither the Employer, nor any trustee (in the event the Employer elects to use a grantor trust to accumulate funds) shall be obligated to purchase or maintain any asset including any life insurance policy. To the extent a Participant or any person acquires a right to receive payments from the Employer under this Plan, such right shall be no greater than the right of any unsecured creditor of the Employer. ARTICLE V AMENDMENT AND TERMINATION 5.1 Plan Amendment. Subject to Sections 3.6 and 3.7, this Plan may be amended in whole or in part by the Employer at any time. 5.2 Plan Termination. Subject to Sections 3.6 and 3.7, the Employer reserves the right to terminate this Plan at any time but only in the event that the Employer, in its sole discretion, shall determine that the economics of the Plan have been adversely and materially affected by a change in the tax laws, other government action or other event beyond the control of the Participant and the Employer or that the termination of the Plan is otherwise in the best interest of Employer. ARTICLE VI CHANGE IN CONTROL 6.1 Benefits in the Event of a Change in Control. In the event a Change in Control, as defined in Section 6.2, occurs, each Participant shall become Vested in his Benefit. For purposes of computing the Benefit under Section 3.2, Years of Service shall be actual Years of Service, except that, in the case of a Participant having less than ten (10) Years of Service at the time of such Change of Control, such Benefit will be calculated using the greater of ten (10) Years of Service or actual Years of Service. A Change of Control shall not accelerate the date on which any person is entitled to receive a Benefit under this Plan, alter the overriding limitation set forth in Section 3.1 above or relieve Participant from the forfeiture provisions of Section 3.6 above. 6.2 Definition of Change in Control. A "Change in Control" shall be deemed to have occurred if: (A) any person or group of persons acting in concert acquires thirty-five percent (35%) in voting power or amount of the equity securities of Tiffany & Co., a Delaware corporation ("Tiffany-Delaware"), (including the acquisition of any right, option, warrant or other right to obtain such voting power or amount, whether or not presently exercisable) unless such acquisition is authorized or approved of by the Board of Directors of Tiffany-Delaware; (B) individuals who constitute the Board of Directors 8

of Tiffany-Delaware on February 1, 1994 (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board of Directors, provided that any individual becoming a director subsequent to the date February 1, 1994 whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of Tiffany-Delaware in which such individual is named as a nominee for director) shall be, for the purposes of this subsection (B), considered as though such individual were a member of the Incumbent Board; or (C) any other circumstance with respect to a change in control of Tiffany-Delaware occurs which the Compensation Committee of the Board of Directors of Tiffany-Delaware deems to be a Change in Control of Tiffany-Delaware. As used herein, the word "person" shall mean an individual or an entity. ARTICLE VII ADMINISTRATION 7.1 Appointment of Administrator. The Employer is the named fiduciary of the plan for which this document is the written instrument. The Employer shall appoint, on behalf of all Participants, an Administrator. The Administrator may be removed by the Employer at any time and he may resign at any time by submitting his resignation in writing to the Employer. A new Administrator shall be appointed as soon as possible in the event that the Administrator is removed or resigns from his position. Any person so appointed shall signify his acceptance by filing a written acceptance with the Employer. 7.2 Administrator's Responsibilities. The Administrator is responsible for the day to day administration of the Plan. He may appoint other persons or entities to perform any of his functions. Such appointment shall be made and accepted by the appointee in writing and shall be effective upon the written approval of the Employer. The Administrator and any such appointee may employ advisors and other persons necessary or convenient to help him carry out his duties including his fiduciary duties. The Administrator shall have the right to remove any such appointee from his position. 7.3 Records and Accounts. The Administrator shall maintain or shall cause to be maintained accurate and detailed records of Participants and of their rights under the Plan. Such accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by the Employer and by persons designated thereby. 7.4 Administrator's Specific Powers and Duties. In addition to any powers, rights and duties set forth elsewhere in the Plan, the Administrator shall have the following powers and duties: A. To adopt such rules and regulations consistent with the provisions of the Plan; B. To enforce the Plan in accordance with its terms and any rules and regulations he 9

establishes; C. To maintain records concerning the Plan sufficient to prepare reports, returns and other information required by the Plan or by law; D. To construe and interpret the Plan and to resolve all questions arising under the Plan; E. To direct the Employer to pay benefits under the Plan, and to give such other directions and instructions as may be necessary for the proper administration of the Plan; F. To be responsible for the preparation, filing and disclosure on behalf of the Plan of such documents and reports as are required by any applicable federal or state law. 7.5 Employer's Responsibility to Administrator. The Employer shall furnish the Administrator such data and information as he may require. The records of the Employer shall be determinative of each Participant's period of employment, termination of employment and the reason therefore, leave of absence, reemployment, years of service, personal data, and compensation levels. Participants and their Beneficiaries shall furnish to the Administrator such evidence, data, or information, and execute such documents as the Administrator requests. 7.6 Liability. Neither the Administrator nor the Employer shall be liable to any person for any action taken or omitted in connection with the administration of this Plan unless attributable to his own fraud or willful misconduct; nor shall the Employer be liable to any person for such action unless attributable to fraud or willful misconduct on the part of the director, officer or employee of the Employer. 7.7 Procedure to Claim Benefits. Initial Claim. Each Claimant must claim any benefit to which he is entitled under this Plan by a written notification to the Administrator. If a claim is wholly or partially denied, it must be so denied within a reasonable period of time, but not later than 90 days after this Plan's receipt of the claim. This initial 90-day period shall begin at the time the claim is filed, without regard to whether all the information necessary to make a benefit determination accompanies the filing. If the Administrator determines that special circumstances require an extension of time for processing the claim, he shall furnish written notice of the extension of the Claimant prior to the termination of the initial 90-day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which this Plan expects to render the benefit determination. In no event shall the extension exceed a period of 90 days from the end of the initial 90-day period. 10

The whole or partial denial of a claim must be contained in a written notice stating the following: A. The specific reason for the denial, B. Specific reference to the Plan Provision on which the denial is based, C. Description of additional information necessary for the Claimant to present his claim, if any, and an explanation of why such material is necessary, and D. A description of this Plan's review procedures and the time limits applicable to such procedures, including a statement of the Claimant's right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974. Request for Review. The Claimant will have sixty (60) days to request a review of the denial by the Administrator, who will provide a full and fair review. The request for review must be written and submitted to the same person who handles initial claims. The Claimant may review pertinent documents, and may submit issues and comments in writing. Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his benefits. The decision by the Administrator with respect to the review must be given within sixty (60) days after receipt of the request, unless special circumstances require an extension (such as for a hearing). This initial 60-day period shall begin at the time an appeal is filed, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing. If the Administrator determines that special circumstances require an extension of time for processing the review, he shall furnish written notice of the extension to the Claimant prior to the termination of the initial 60-day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which this Plan expects to render the determination on review. In no event shall the extension exceed a period of 60 days from the end of the initial 60-day period. The Administrator's review shall take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The whole or partial denial of a claim on review must be contained in a written notice stating the following: A. The specific reasons for the adverse determination, B. Reference to the specific Plan Provisions on which the adverse determination is based, 11

C. A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits, and D. A statement of the Claimant's right to bring an action under section 502(a) of the Employee Retirement Income Security Act of 1974. All notices and decisions written under this Section 7.7 shall be written in a manner calculated to be understood by the Claimant. The Administrator shall take all necessary steps to ensure and verify that benefit claim determinations made under this Section 7.7 are made in accordance with this Plan and that the Plan Provisions are applied consistently with respect to similarly situated Claimants. Nothing in this Section 7.7 shall be construed to preclude an authorized representative of a Claimant from acting on behalf of such Claimant in pursuing a benefit claim or appeal of a whole or partial denial, provided that the Claimant provides written authorization to the Administrator identifying such representative, signed by the Claimant under the seal of notary, prior to the authorized representative acting on his behalf. ARTICLE VIII MISCELLANEOUS 8.1 Supplemental Benefits. The benefits provided for the Participants under this Plan are in addition to benefits provided by any other plan or program of the Employer and, except as otherwise expressly provided for herein, the benefits of this Plan shall supplement and shall not supersede any plan or agreement between the Employer and any Participant. 8.2 Governing Law. The Plan shall be governed and construed under the laws of the State of New York as in effect at the time of its adoption. 8.3 Jurisdiction. The courts of the State of New York shall have exclusive jurisdiction in any or all actions arising under this Plan. 8.4 Binding Terms. The terms of this Plan shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, executors, administrators and successors. 8.5 Spendthrift Provision. The interest of any Participant or any beneficiary receiving payments hereunder shall not be subject to anticipation, nor to voluntary or involuntary alienation until distribution is actually made. 8.6 No Assignment Permitted. No Participant, Beneficiary or heir shall have any right to commute, sell, transfer, assign or otherwise convey the right to receive any payment under the terms of this Plan. Any such attempted assignment shall be considered null and void. 8.7 Severability. In the event any provision of this Plan shall be held illegal or invalid for any 12

reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been contained therein. 8.8 Construction. All headings preceding the text of the several Articles hereof are inserted solely for reference and shall not constitute a part of this Plan, nor affect its meaning, construction or effect. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, and the singular shall mean the plural. 8.9 No Employment Agreement. Nothing in this Plan shall confer on any Participant the right to continued employment with any Employer and, except as expressly set forth in a written agreement entered into with the express authorization of the Board of Directors of Employer, both the Participant and the Employer shall be free to terminate Participant's employment for any cause or without cause. TIFFANY AND COMPANY ATTEST: /s/ Patrick B. Dorsey By: /s/ Michael J. Kowalski - -------------------------------- ----------------------------------- Patrick B. Dorsey, Secretary Michael J. Kowalski, Chairman ATTEST: /s/ Patrick B. Dorsey By: /s/ James N. Fernandez - -------------------------------- ----------------------------------- Patrick B. Dorsey, Secretary James N. Fernandez, Executive Vice President 13

SCHEDULE A TO SUPPLEMENTAL RETIREMENT INCOME PLAN Thomas A. Andruskevich James N. Fernandez Michael J. Kowalski Dale S. Strohl 14

Exhibit 10.130b Tiffany & Co. TIFFANY & CO. Report on Form 10-K AMENDMENT NO. 2 AMENDMENT NO. 2 (this "Amendment"), dated as of June 30, 2003, to the Credit Agreement, dated as of November 5, 2001, by and among Tiffany & Co., Tiffany and Company, Tiffany & Co. International, the other Borrowers party thereto, the Lenders party thereto and The Bank of New York, as Administrative Agent (as amended by Amendment No. 1, dated as of April 12, 2002, the "Credit Agreement"). Except as otherwise provided herein, capitalized terms used herein which are not defined herein shall have the meanings set forth in the Credit Agreement. In consideration of the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and pursuant to Section 11.1 of the Credit Agreement, the Parent, the Borrowers and the Administrative Agent hereby agree as follows: 1. Amendment to Section 8.1. A. Paragraph (e) of Section 8.1 of the Credit Agreement is hereby relettered to be paragraph (f) of Section 8.1. B. Section 8.1 of the Credit Agreement is hereby amended by inserting the following new paragraph (e) prior to paragraph (f) of Section 8.1: "(e) Indebtedness of the Parent or any of its Subsidiaries to finance the acquisition of the real property permitted pursuant to Section 8.6(c) or any construction thereon pursuant to purchase money mortgages or otherwise and whether owed to the seller or a third party, and any refinancings, extensions or renewals thereof, provided that the aggregate principal amount of such Indebtedness shall not exceed an amount equal to $150,000,000, and" 2. Amendment to Section 8.3. A. Paragraph (k) of Section 8.3 of the Credit Agreement is hereby (i) relettered to be paragraph (l) of Section 8.3 and (ii) amended by replacing the reference to "Section 8.1(e)" with "Section 8.1(f)". B. Section 8.3 of the Credit Agreement is hereby amended by inserting the following new paragraph (k) prior to paragraph (l) of Section 8.3: "(k) Liens securing Indebtedness permitted by Section 8.1(e) on the real property acquired by the Parent or any of its Subsidiaries pursuant to Section

8.6(c), provided that such Liens shall not extend to or cover any other Property of the Parent or such Subsidiary, and" 3. Amendment to Section 8.4. A. Paragraph (d) of Section 8.4 of the Credit Agreement is hereby relettered to be paragraph (e) of Section 8.4 and amended and restated in its entirety to read as follows: "(e) other Dispositions of Property having a fair market value which, when aggregated with the fair market value of all other Dispositions of Property (other than Dispositions described in the preceding subsections (a) through (d)) made on and after the Effective Date, would not exceed $150,000,000 on a Consolidated basis, provided that immediately before and after giving effect thereto, no Default or Event of Default shall or would exist." B. Section 8.4 of the Credit Agreement is hereby amended by inserting the following new paragraph (d) prior to paragraph (e) of Section 8.4: "(d) Disposition of the real property acquired by the Parent or any of its Subsidiaries pursuant to Section 8.6(c), provided that immediately before and after giving effect thereto, no Default or Event of Default shall or would exist, and" 4. Amendment to Section 8.6. A. Paragraph (c) of Section 8.6 of the Credit Agreement is hereby (i) relettered to be paragraph (d) of Section 8.6 and (ii) amended by adding the word "other" immediately before the word "Acquisitions" at the beginning of such subsection. B. Section 8.6 of the Credit Agreement is hereby amended by inserting the following new paragraph (c) prior to paragraph (d) of Section 8.6: "(c) Acquisition by the Parent or any of its Subsidiaries of the real property located at 2-7-17 Ginza, Chuo-ku, Tokyo 104-0061 (the Ginza Tiffany Flagship Store), and" 5. Amendment to Section 8.7(n). Section 8.7(n) of the Credit Agreement is hereby amended by replacing the reference to "Section 8.6(c)" with "Section 8.6(d)". 6. This Amendment shall become effective immediately upon receipt by the Administrative Agent of this Amendment executed by a duly authorized officer or officers of the Parent, the Borrowers, the Required Lenders and the Administrative Agent. 7. Except as amended hereby, the Credit Agreement and the other Loan Documents shall remain in full force and effect. 2

8. In order to induce the Administrative Agent to execute this Amendment and the Required Lenders to consent hereto, the Parent and the Borrowers each hereby (a) certifies that, on the date hereof and immediately before and after giving effect to this Amendment, all representations and warranties contained in the Credit Agreement are and will be true and correct in all respects, (b) certifies that, immediately before and after giving effect to this Amendment, no Default or Event of Default exists or will exist under the Loan Documents, and (c) agrees to pay the reasonable fees and disbursements of counsel to the Administrative Agent incurred in connection with the preparation, negotiation and closing of this Amendment. 9. Each of the Parent and the Borrowers hereby (a) reaffirms and admits the validity, enforceability and continuation of all the Loan Documents to which it is a party and its obligations thereunder, (b) agrees and admits that as of the date hereof it has no valid defenses to or offsets against any of its obligations under the Loan Documents to which it is a party and each of the Guarantors hereby consents to this Agreement and (c) in its capacity as a Guarantor, consents to this Amendment. 10. This Amendment may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one agreement. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged. 11. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. [Signature pages follow] 3

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT The parties have caused this Amendment to be duly executed as of the date first written above. TIFFANY & CO., a Delaware corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Executive Vice President and Chief Financial Officer TIFFANY AND COMPANY, a New York corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Executive Vice President and Chief Financial Officer TIFFANY & CO. INTERNATIONAL, a Delaware corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Chief Financial Officer SOCIETE FRANCAISE POUR LE DEVELOPMENT DE LA PORCELAINE D'ART (S.A.R.L.), a French corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Authorized Signatory TIFFANY & CO. ITALIA S.P.A., an Italian corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Attorney in Fact

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT TIFFANY & CO. JAPAN INC., a Delaware corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Vice President and Chief Financial Officer TIFFANY & CO. PTE., LTD., a Singapore corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Authorized Signatory TIFFANY & CO., a United Kingdom corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Chief Financial Officer

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT TIFFANY & CO. WATCH CENTER AG, a Swiss corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Authorized Signatory TIFFANY KOREA LTD., a Korean corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Chief Financial Officer TIFFANY & CO. MEXICO, S.A. de C.V., a Mexican corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Vice President TIFFANY & CO. OF NEW YORK LIMITED, a Hong Kong corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Attorney by a Power of Attorney SINDAT LIMITED, a Hong Kong corporation By: /s/ James N. Fernandez ------------------------------------------ Name: James N. Fernandez Title: Attorney by a Power of Attorney

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT THE BANK OF NEW YORK, as Administrative Agent By: /s/ Johna M. Fidanza ------------------------------------------ Name: Johna M. Fidanza Title: Vice President

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT AGREED AND CONSENTED TO: THE BANK OF NEW YORK, individually By: /s/ Johna M. Fidanza ------------------------------ Name: Johna M. Fidanza Title: Vice President

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT AGREED AND CONSENTED TO: ABN AMRO BANK N.V. By: /s/ Ronald C. Spurga ------------------------------ Name: Ronald C. Spurga Title: VP /s/ Frederick G. Jennings Frederick G. Jennings VP

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT AGREED AND CONSENTED TO: JPMORGAN CHASE BANK By: /s/ Wendy Weinsier Segal - ---------------------------------- Name: Wendy Weinsier Segal Title: Vice President

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT AGREED AND CONSENTED TO: MIZUHO CORPORATE BANK, LTD. By: /s/ Greg Botshon ------------------------------ Name: Greg Botshon Title: VP

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT AGREED AND CONSENTED TO: U.S. BANK, NATIONAL ASSOCIATION By: /s/ John Franceschi ------------------------------ Name: John Franceschi Title: Vice President

TIFFANY & CO. AMENDMENT NO. 2 THE CREDIT AGREEMENT AGREED AND CONSENTED TO: FLEET NATIONAL BANK/ FLEET PRECIOUS METALS INC. By: /s/ Richard M. Seufert ------------------------------ Name: Richard M. Seufert Title: Sr. Vice President By: /s/ Antonio Marinaro ------------------------------ Name: Antonio Marinaro Title: Assistant Vice President

Exhibit 10.134 Tiffany & Co. (Translation) Report on Form 10-K CONDITIONS OF BONDS These Conditions of Bonds shall be applied to the issue of Tiffany & Co. Japan Inc. First Series Yen Bonds guaranteed by Tiffany & Co. (For Qualified Institutional Investors Only) (the "Bonds") which Tiffany & Co. Japan Inc. (the "Issuer") is duly authorized to issue. SECTION 1. AMOUNT, PRINCIPAL AMOUNT AND FORM (1) Aggregate principal amount of the Bonds shall be 15,000,000,000 Yen. (2) Principal amount per Bond shall be 100,000,000 Yen. (3) The form of the bond certificate of the Bonds (the "Bond Certificates") shall be limited to bearer bonds with coupons attached (such coupons attached to the Bond Certificates shall be hereinafter referred to as the "Coupons") and shall not be converted to nonbearer bonds, split into the Bond Certificates with par value less than 100,000,000 Yen, or consolidated with other Bond Certificates. (4) The Bond Certificates and Coupons shall bear the signature (including the signature in facsimile) of the Executive Vice President and Chief Financial Officer of the Issuer and Tiffany & Co. (the "Guarantor"). SECTION 2. STATUS OF THE BONDS, GUARANTEE AND NEGATIVE PLEDGE (1) The Bonds and Coupons shall be direct, unconditional (subject to limitations under Section 4(2) hereof), unsecured and unsubordinated obligations of the Issuer, ranking pari passu among each other without being preferred or subordinated and (subject to limitations under Section 4(2) hereof) with all other present and future unsecured and unsubordinated obligations of the Issuer (except for preferred obligations by operation of forcible laws); provided, however, that in the event of insolvency, the Bonds and Coupons shall rank in pari passu to the extent permitted under the laws generally affecting creditors' rights. (2) The due and punctual payment by the Issuer of the principal of and interest on the Bonds and all other amounts payable under these Conditions of Bonds is unconditionally and irrevocably guaranteed by the Guarantor in accordance with the payment guarantee (the "Payment Guarantee") governed by the laws of the State of New York which is separately issued and delivered to the Fiscal Agent by the Guarantor. (3) The Bond Certificates shall provide that the Guarantor unconditionally and irrevocably guaranty the due and punctual payment to the holders of the Bonds (the "Bondholders") 1

and holders of the Coupons (the "Couponholders") by the Issuer of the principal of and interest on the Bonds and all other amounts payable at the maturity date or other due dates under these Conditions of Bonds. (4) The Issuer and the Guarantor respectively undertake that, so long as any of the Bonds remains outstanding, each of the Issuer and the Guarantor will procure that no External Indebtedness (as defined below) of itself or of any of its Principal Subsidiaries (as defined below) shall be secured by any mortgage, lien, pledge or other charges, unless the Issuer or the Guarantor, as the case may be, shall forthwith take any and all action necessary to procure that all amounts payable by it under the Bonds and Coupons are secured equally and ratably with such mortgage, lien, pledge or other charge. This Section 2(4), however, shall not apply to External Indebtedness that: (i) is incurred by the Issuer, Guarantor or any Principal Subsidiary in connection with the acquisition of fixed assets (or any improvement thereon); (ii) is assumed by the Issuer, Guarantor or any Principal Subsidiary in connection with the acquisition of any business; or (iii) does not exceed 20% of the Guarantor's consolidated net worth. "External Indebtedness" means all items which constitute, without duplication, indebtedness for borrowings, on or after the issue date of the Bonds, of the Issuer, Guarantor or Principal Subsidiaries (whether in the form of or represented by any bonds, notes or other securities), other than Existing Indebtedness and Intercompany Debt. "Principal Subsidiaries" means Tiffany and Company and Tiffany & Co. International, which are subsidiaries of the Guarantor. "Existing Indebtedness" means indebtedness in existence as of the Issue Date and listed in a schedule attached to the Conditions of Bonds and any refinancing thereof that does not entail the Issuer's or the Guarantor's incurring new liens that are greater than any liens that existed with respect to such indebtedness before its refinancing. "Intercompany Debt" means (i) indebtedness of the Guarantor to one or more of its subsidiaries and (ii) indebtedness of one or more of the subsidiaries of the Guarantor to the Guarantor or any one or more of the other subsidiaries of the Guarantor. In the event that a security interest is created for the Bond in accordance with this Section 2(4), the Issuer shall take all steps and procedures (including without limitation, perfection of such security interest) necessary for the purpose of these Conditions of Bonds. The Issuer shall bear any and all expenses in connection with the creation of such security interests, perfection thereof, exercise of powers and performance of duties. This Section 2(4) shall not apply where the full amount of the Bonds is unable to be redeemed due to the Bondholder's failure to claim for payment on the due date of the Bonds. 2

SECTION 3 FISCAL AGENT AND NO ESTABLISHMENT OF BOND MANAGEMENT COMPANY (1) Mizuho Corporate Bank shall act as the fiscal agent of the Issuer in connection with the Bonds (the "Fiscal Agent"). The Fiscal Agent shall perform duties provided hereunder and under the Fiscal and Paying Agency Agreement dated September 12, 2003 between the Issuer and the Fiscal Agent and Paying Agent (defined in Section 5 hereof). The Fiscal Agent shall act only as an agent of the Issuer, shall have no duties to Bondholders, or agency or trustee relationship with Bondholders. A copy of the Fiscal and Paying Agency Agreement shall be kept at the main office of the Fiscal Agent, and shall be available during normal business hours for inspection and copying by the Bondholders. Persons requesting such copying shall bear all expenses necessary therefor. (2) Because the Bonds satisfy the requirements under the proviso of the Article 297 of the Commercial Code of Japan (Law No. 48, 1900, as amended), a bond management company provided thereunder will not be established for the Bonds. (3) The Issuer may replace or discharge the Fiscal Agent from time to time, provided that the Fiscal Agent shall remain in its duty until its successor is validly appointed. The Issuer shall make an advance public notice to the Bondholders of such change of the Fiscal Agent. SECTION 4 RECORDING OF THE BONDS (1) Recording agent for the Bonds (the "Recording Agent") shall be Mizuho Corporate Bank, Ltd. The Bondholders shall be able to record their Bonds at any time. (2) The Issuer shall bear the expenses of the subscribers' recordation of the Bonds, and persons applying for recordation shall bear expenses for other recordation. Expenses necessary for the preparation and delivery of the Bond Certificates and Coupons upon cancellation of recordation of recorded Bonds shall be borne by persons requesting such cancellation. SECTION 5 PLACE OF PAYMENTS (1) The paying agent for the Bonds (the "Paying Agent") and the place of payment of the principal and interest shall be as follows: Mizuho Corporate Bank, Ltd. Head Office and Osaka Corporate Banking Division (2) The Issuer may change or discharge the Paying Agent from time to time. The Issuer shall publicly notify in advance the Bondholders of such change or discharge. Notwithstanding the foregoing, Paying Agent shall not be appointed by the Issuer in the United States of America (including each of its States and the District of Columbia) or 3

its territories and possessions and other areas which are subject to its jurisdiction (the "United States"), and shall not make payments of principal of and interest on the Bonds within the United States. Payments of the principal of and interest on the Bonds shall not be made in branch offices of the Paying Agent or by other payment agents outside Japan, and no payment shall be made by remittance to a bank account within the United States or check sent to an address in the United States. SECTION 6 INTEREST (1) The interest rate for each of the Bonds shall be 2.02% per annum of the principal amount. (2) The Bonds shall accrue interest from October 1, 2003, and the interest shall first be payable on March 30, 2004 for the interest accumulated to such date, and thereafter, be payable in arrears on March 30 and September 30 of each year for the six-month period ending on and including each such date. Interests for a period other than six months shall be payable for the actual number of days during that period (calculated on daily pro rata basis of 365 days per year, rounded off at the first decimal place). The interest payment dates provided in this subsection shall be hereinafter referred to as the "Interest Payment Date." (3) Interest on the Bonds shall not accrue after the redemption date; provided, however, that if the Issuer or Guarantor fails to redeem the Bonds on the redemption date, delinquency interest shall be payable for the actual number of the days during the period from the date of payment (exclusive) to the date of actual redemption (inclusive) at the rate provided in this Section 6 (calculated on daily pro rata basis of 365 days per year, rounded off at the first decimal place); provided, further, that the period shall not extend beyond 14 days after the public notice by the Fiscal Agent pursuant to Section 8(3) hereof that it has received funds for redemption. SECTION 7 REDEMPTION AND REPURCHASE (1) The Bonds shall be redeemed at the principal amount of the Bonds on September 30, 2010, unless redeemed or repurchased prior to such date. (2) If the Issuer or the Guarantor is highly likely to be obliged to pay an Additional Amount (defined in Section 9) at the next due date for the Bonds as a result of any change or amendment in the laws (or rules or decision under such laws) of the United States or its subdivision, or its tax authorities, or application, authoritative interpretation or change in enforcement of such laws, rules or decisions, and, in the judgment of an authorized officer of the Issuer or Guarantor, the Issuer or Guarantor is not able to avoid payment of the Additional Amount with reasonable measures without incurring substantial 4

expenses, the Issuer or Guarantor may redeem (without deducting applicable withholding amounts), at any time, all of the Bonds (no partial redemption) at 100 % of the principal amount with interest thereon until (and including) the redemption date. Provided, however, that redemption of the Bonds on the grounds that the Guarantor has incurred payment obligation of the Additional Amount can only be made if both the Guarantor and Issuer are unable to avoid paying the Additional Amount by causing the Issuer to pay the principal of and interest on the Bonds. In such event, the Issuer or Guarantor shall notify the Fiscal Agent in writing that: (i) the Issuer or Guarantor is highly likely to bear obligation to pay the Additional Amount; (ii) it has elected to redeem the Bonds without deducting the withholding amount pursuant to this Section 7(2) instead of paying the Additional Amount; (iii) scheduled redemption date; and (iv) the payment obligation is unavoidable by reasonable measures without incurring substantial expenses in the judgment of an authorized officer of the company. The notice shall be accompanied by a legal opinion of an outside counsel appointed by the Issuer or Guarantor (meaning a legal counsel other than an employee of the Issuer, Guarantor or subsidiaries thereof, although a legal counsel regularly retained by the Issuer, Guarantor or subsidiaries thereof shall qualify as the outside counsel hereunder) (hereinafter the "Outside Counsel"), which shall describe that the Issuer or Guarantor is or may be obligated to pay the Additional Amount due to the facts described in the foregoing paragraph. The notice shall be given as soon as practicable upon occurrence of such event. Notices by the Issuer or Guarantor under this Section 7(2) to the Fiscal Agent shall be given 30 days prior to the scheduled redemption date, and the Issuer shall publicly notify the Bondholders 14 days prior to the scheduled redemption date. The notice and legal opinion delivered under this Section 7(2) shall be kept at the main office of the Fiscal Agent, shall be available during normal business hours for inspection and copying by the Bondholders, and persons requesting such copying shall bear all expenses necessary therefor. Under these Conditions of Bonds, the principal of the Bond shall include premiums payable under this Section 7(2), if any. All reasonable expenses necessary for the procedures under this Section 7(2) shall be borne by the Issuer or Guarantor. (3) The Issuer, the Guarantor or any of their respective subsidiaries may, at any time after the issue date, purchase the Bonds in the market or otherwise at any price and retain, resell or cancel them. (4) Unless otherwise provided hereunder, the Issuer shall not pay all or part of the principal of or interest on the Bonds prior to the due dates. 5

SECTION 8 PAYMENT (1) Payment of the principal of or interest on the Bonds represented by the Bond Certificates or Coupons shall be made upon surrender of the relevant Bond Certificates or Coupons, except as provided under Section 15, at either place of payment set forth in Section 5. (2) With respect to recorded Bonds, payment of principal shall be made upon surrender of the relevant principal payment voucher, and payment of interest shall be made upon surrender of the relevant interest payment voucher, at the place of payment designated by the Bondholder at the time of the application for recordation. The Paying Agent shall check the seal affixed on the principal or interest payment voucher against the seal impression submitted to the Recording Agent. (3) In the event that the Fiscal Agent has received the principal of and interest on the Bonds after the relevant due date, the Fiscal Agent shall publicly notify the receipt thereof as soon as practicable but no later than 14 days from the receipt of such amounts. All expenses in connection with the public notice shall be borne by the Issuer. (4) Redemption of the Bond shall be made upon the surrender of the Bond Certificates with all Coupons not yet due, and if such Coupon is lacking, the face amount of such missing Coupon shall be deducted from the principal of the Bond; provided that such holder of a missing Coupon may receive payment for the face amount thereof upon surrender of the Coupon within a 5 year period from the redemption date of the Bond Certificates to which the missing Coupon was attached. (5) If a payment date for the principal of or interest on the Bonds falls within a banking holiday in Tokyo, Japan, the Bondholder or Couponholder shall not be entitled to receive payments due until the next banking day, and no interest shall accrue for the delay of payment. SECTION 9 TAXES (1) All payments of the principal of and interest on the Bonds and Coupons by the Issuer or the Guarantor (including payments under the Payment Guarantee) will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges (the "Taxes") of whatever nature imposed or levied by or on behalf of the United States or any of its subdivisions unless the withholding or deduction of the Taxes is required by law. In such event, the Issuer or Guarantor, as the case may be, will pay such additional amounts (the "Additional Amount") as shall be necessary for the net amounts received by the Bondholders or the Couponholders after such withholding or deduction to equal the respective amounts of principal and interest which would have been receivable in respect of the Bonds or Coupons, as the case may be, in the absence of such withholding or deduction, provided, however, that Additional Amounts shall not be payable for the following: 6

(i) payments to a Bondholder or Couponholder, or to a third party for the same, who has obligations to pay Taxes in connection with the Bonds or Coupons due to any relationship with the United States other than (a) merely being a holder of the Bonds or Coupons or (b) receiving the principal of or interest on the Bonds or Coupons; (ii) payments to a Bondholder or Couponholder, or to a third party for the same, who shall not be subject to such withholding or deduction subject to filing of a statement that the Bondholder or Couponholder is a non-resident or other application for exemption to relevant tax authorities; or (iii) payments on the Bond Certificates or Coupons presented more than 30 days after the Related Date (as defined below) (provided that this shall not apply to the Additional Amount the Bondholder or Couponholder should have been entitled to if the Bond Certificates or Coupons had been surrendered). "Related Date" herein shall mean such first due date, however, if the Fiscal Agent has not received all amounts by the due date, this shall mean the date all amounts have been received and the Fiscal Agent has made a public notice to that effect in accordance with Section 8(3). (2) Principal and interest hereunder shall be deemed to include the Additional Amount respectively payable pursuant to Section 9 in connection with the principal or interest. SECTION 10 EVENTS OF DEFAULT If any of the following events of (a)-(i) below (each an "Event of Default") shall have occurred and be continuing, the Bondholder may send a notice to the main office of the Fiscal Agent to the effect that the Bonds held by such Bondholder shall be payable at 100% of the principal amount with delinquency interest thereon (such Bondholder shall present at the main office of the Fiscal Agent a copy of the book of recordation indicating that it holds the Bond in question), such Bonds shall become due on the date which the written notice is received by the Fiscal Agent, and the principal of and delinquent interest thereon to and including such date shall be payable, provided, however, that this shall not apply when all Events of Default have been cured for all of the Bonds before such date. The Bondholder giving a written notice under this Section may withdraw it upon written notice to the main office of the Fiscal Agent at any time before the payment of such Bonds by the Issuer. Payment of principal and interest under this paragraph shall be made in a manner set forth under Section 8 hereof: (a) there is a default for more than 14 days after the due date in the payment of principal or interest (if any) due in respect of any of the Bonds; (b) the Issuer, the Guarantor or any Principal Subsidiary becomes bound, as a consequence of default by it in its obligation in respect of any other indebtedness 7

in respect of Borrowed Money (as defined below) having an aggregate outstanding principal amount in excess of U.S. $25,000,000 (or its equivalent in any other currency or currencies), to repay any such indebtedness in respect of Borrowed Money having an aggregate outstanding principal amount in excess of U.S. $25,000,000 (or its equivalent in any other currency or currencies) before the maturity of the Bonds, and such obligation is not satisfied or waived within 30 days of the Issuer, the Guarantor or Principal Subsidiary becoming so bound; (c) a resolution is passed or an order of a court of competent jurisdiction is made that the Issuer, the Guarantor or any Principal Subsidiary be wound up or dissolved other than for the purposes of or pursuant to such a consolidation, merger, etc. described under Section 11; (d) an encumbrancer takes possession or a receiver is appointed over all or substantially all of the assets or business of the Issuer, the Guarantor or any Principal Subsidiary; (e) an attachment, execution or seizure before judgment is levied or enforced upon or sued out against all or substantially all of the assets of the Issuer, the Guarantor or any Principal Subsidiary and is not discharged or dismissed within ninety (90) days thereof; (f) the Issuer, the Guarantor or any Principal Subsidiary (otherwise than for the purposes of such a consolidation, merger, etc. under Section 11) ceases or threatens to cease to carry on all or substantially all of its business; (g) proceedings shall have been initiated against the Issuer, the Guarantor or any Principal Subsidiary under any applicable bankruptcy, insolvency or reorganization law and such proceedings shall not have been discharged or stayed within a period of sixty (60) days; (h) the Issuer, the Guarantor or any Principal Subsidiary initiates or consents to proceedings relating to itself under any applicable bankruptcy, composition, insolvency or reorganization law or makes a conveyance or assignment for the benefit of, or enters into any composition with, its creditors; or (i) the Payment Guarantee ceases to be, or is claimed by the Guarantor not to be, in full force and effect. "Borrowed Money" means monies borrowed and premiums and accrued interest in respect thereof including (a) liabilities under or in respect of any acceptance, credit or loan provided by any bank, similar institution or others and (b) the principal and premium (if any) of any notes, bonds, debentures or similar debt instruments whether issued in whole or in part 8

for cash or other consideration but excluding trade payables incurred in the ordinary course of business and liability in connection with endorsement of any instrument for collection. The Issuer shall, without delay, give a public notice to the Bondholders in the event of (i) any of the Events of Default or (ii) situation under which an Event of Default may occur upon passage of time, notice or both. SECTION 11 MERGERS AND CONSOLIDATIONS, ETC. The Issuer may merge with other companies without consent of the Bondholders or Couponholders if the surviving corporation is the Issuer. Further, the Issuer may consolidate or merge into other companies, or transfer, assign or lease all or substantially all of its properties and assets to certain persons, without consent of the Bondholders or Couponholders, subject to the following conditions: (a) The new corporation formed upon the consolidation, surviving corporation upon the merger, or the transferee or lessee of all or substantially all of the Issuer's properties or assets expressly undertakes due and punctual payment of the principal of and interest on all of the Bonds and performance of covenants under the Bonds, by application of law, under an amendment agreement which may be made between the parties thereto with respect to the Fiscal and Paying Agency Agreement and Recording Agency Agreement for the Bonds (the "Related Agreements"), or by other means, and such undertakings set forth that such corporation or person shall pay the Additional Amount so that net payment of the principal of and interest on the Bonds to the Bondholders or Couponholders shall not be less than the amount described in the Bonds which become due at that time; provided that such obligations shall extend to withholdings or deductions of present or future Taxes imposed or levied by or on behalf of the United States or other jurisdiction where such corporation or person is incorporated or its subdivisions or tax authorities thereof or therein, provided, however, that payments with respect to the Bonds and Coupons, the Additional Amount shall not be payable in the following events: (i) payments to a Bondholder or Couponholder, or to a third party for the same, who has obligations to pay Taxes in connection with the Bonds or Coupons due to any relationship with the United States or such other jurisdictions other than (a) merely being a holder the Bonds or Coupons or (b) receiving the principal of or interest on the Bonds or Coupons; (ii) payments to a Bondholder or Couponholder, or to a third party for the same, who shall not be subject to such withholding or deduction subject to filing a 9

statement of being a non-resident or other application for exemption to competent tax authorities; or (iii) payments on the Bond Certificates or Coupons presented more than 30 days after Related Date (provided that this shall not apply to the Additional Amount the Bondholder or Couponholder should have been entitled to if the Bond Certificates or Coupons had been surrendered). Further, such corporation or person shall not be obliged to indemnify or pay taxes borne by each Bondholder or Couponholder arising from the abode or residence of the Bondholder in such other jurisdiction or relationship between the Bondholder and such other jurisdiction. (b) Upon the transactions becoming effective, there has been no Event of Default or situation under which an Event of Default may occur upon passage of time, notice or both, or upon other conditions. (c) The Fiscal Agent delivers a certificate executed by a duly authorized officer of such corporation or persons and a legal opinion by a legal counsel appointed by the Issuer (an in-house counsel of the Issuer will suffice) describing that documents establishing the consolidation, merger, transfer, assignment or lease described above and the undertakings by such corporation or person satisfy all of conditions of (a) and (b) above. During the normal business hours, such documents shall be furnished at the main office of the Fiscal Agent and shall be made available for inspection and copying by the Bondholders (all expenses necessary for the copying shall be borne by persons requesting such copying.) (d) Public notice of such undertakings to the Bondholders is made 14 days before the effective date of the undertakings. As of the effective date of the transaction (subject to conditions (a)-(d) above) such corporation or person (the "Successor") shall, as if it were the Issuer under the Bonds, Coupons and Related Agreements, succeed to and replace the Issuer, and exercise all rights and powers of the Issuer under the Bonds, Coupons and Related Agreements, and succeed to and replace the Issuer and perform all obligations of the Issuer under the Bonds, Coupons and Related Agreements, and, except in the case of lease, the former Issuer shall be released from all obligations and covenants under the Bonds, Coupons and Related Agreements. For the purposes of this Section 11, the term "person" shall mean individual, legal person, partnership, joint venture, association, corporation (kabushiki kaisha), trust, unincorporated organization, government, governmental agency or its subdivisions. All reasonable expenses necessary for procedures under this Section 11 shall be borne by the Issuer, Guarantor or Successor. 10

SECTION 12 QUALIFIED INSTITUTIONAL INVESTORS (1) No registration statement has been filed with respect to the Bonds under Article 4 Paragraph 1 of the Securities and Exchange Law of Japan (Law No. 25 of 1948, as amended). (2) The Bonds shall be issued to qualified institutional investors (defined in Article 4 of Cabinet Office Ordinance Concerning Definitions Provided in Article 2 of Securities and Exchange Law (MOF Ordinance No. 14, March 3, 1993, as amended) as having specialized knowledge and experience in investment in securities (the "Qualified Institutional Investors")). (3) With respect to an offer to acquire the Bonds, the purchase shall be conditioned that any person who intends to acquire the Bonds shall request the recording of the aggregate acquired amount of the bonds pursuant to the provisions of Article 37 of Ordinance Concerning Enforcement of the Law on Recording of Bonds, Etc. of Japan (Imperial Ordinance No. 409 of 1942, as amended). (4) Purchase of the Bonds shall be made on the condition that any person who will acquire the Bonds shall undertake not to transfer the Bonds to any person other than the Qualified Institutional Investors. (5) When transferring any Bonds to any Qualified Institutional Investor, the transferor shall notify the transferee in writing, in advance or at the same time of transfer, that no registration statement has been filed with respect to the Bonds pursuant to the provisions of Article 4, paragraph 1 of the Securities and Exchange Law and as to the conditions in respect of the Bonds set out in this Section 12. SECTION 13 LIMITATION OF APPLICATION FOR RECORDATION OF TRANSFER AS OF PAYMENT DATE Application for recordation of transfer of the Bonds as of the payment date may not be made through the network operated by Japan Bond Settlement Network Co., Ltd. SECTION 14 BONDHOLDERS MEETING The Bondholders meeting for the Bonds shall be governed by applicable provisions under the Commercial Code of Japan. Such Bondholders meeting shall be held in Tokyo, Japan. For the purposes of this Section 14, the Bonds held by the Issuer, Guarantor and each of their subsidiaries shall be excluded and be deemed to be redeemed. All reasonable expenses necessary for procedures under this Section 14 shall, pursuant to applicable laws of Japan, be borne by the Issuer. 11

SECTION 15 SUBSTITUTE BOND CERTIFICATES The Fiscal Agent shall, on behalf of the Company, prepare and deliver substitute Bond Certificates or Coupons to the holders of lost, stolen, destroyed or mutilated Bond Certificates or Coupons, upon application by such holders, which application must be accompanied by a certified transcript of a judgment of nullification rendered by a Japanese court in respect of such Bond Certificates or Coupons. Upon such presentation of the judgment of nullification, the Paying Agent shall pay the principal or interest which has become due without requiring surrender of the Bond Certificates or Coupons with respect thereto. Japanese courts shall have jurisdiction over proceedings governing a judgment of nullification of the Bond Certificates or Coupons. Upon demand by a holder of a Bond Certificate or Coupon which has been lost, stolen, destroyed or mutilated, for the purpose of obtaining a judgment of nullification, for a certificate to the effect that such Bond Certificate or Coupon has been issued by the Company, the Fiscal Agent shall prepare and deliver such certificate. In the case of mutilated Bond Certificates or Coupons, if their authenticity is verifiable by the Fiscal Agent, the Fiscal Agent shall, upon surrender to it of such Bond Certificates or Coupons, prepare and deliver substitute Bond Certificates or Coupons therefor without requiring a judgment of nullification and destroy the surrendered Bond Certificates or Coupons. All expenses incurred in connection with the preparation and delivery of substitute Bond Certificates or Coupons or the certificate shall be borne by the applicant therefor. SECTION 16 REGISTRATION BOOK The registration book for the Bonds shall be prepared and maintained by the Fiscal Agent and kept at its head office on behalf of the Company. SECTION 17 STATUTE OF LIMITATIONS In accordance with Article 316 of the Commercial Code of Japan, the principal of the Bonds shall be subject to 10-year statute of limitations and the interests on the Bonds shall be subject to 5-year statute of limitations. SECTION 18 INDEMNITY OF CURRENCY In the event that judgment or order by a competent court with respect to a claim arising out of the Bonds, Bond Certificates, Coupons or these Conditions of Bonds is in currency other than Japanese Yen, payment pursuant to such judgment or order shall discharge the obligation of the Issuer under these Conditions of Bonds by the equivalent amount in Japanese Yen of such payment at the exchange rate at the time of such payment. The Issuer covenants to pay to the Bondholder or Couponholder the amount necessary to indemnify the balance arising from fluctuation of exchange rates between (i) the date of conversion of the amount in currency other than Japanese Yen under such judgment or order (or a part thereof) or the date of such conversion is deemed to have taken place and (ii) the date of the payment pursuant to such judgment or order. The above covenant is independent from other obligations of the Issuer, 12

separate and independent causes of action, applicable without regard to respite granted by Bondholders or Couponholders from time to time, and remains full force and effect notwithstanding any judgment or order. SECTION 19 NOTICES (1) Public notices with respect to the Bonds shall be made on a daily newspaper reporting current events issued in Tokyo, Japan. No direct notice to each of Bondholders shall be required. Such public notice by the Issuer shall be made by the Fiscal Agent on behalf of the Issuer upon its request and at its expense. The Fiscal and Paying Agency Agreement sets forth that if necessary the Issuer shall make a written request to the Fiscal Agent to make a public notice on behalf of the Issuer. (2) The Issuer shall notify the Bond Holders of the following, provided that a confidentiality agreement reasonably acceptable to the Issuer has been executed with each Bond Holder to whom such disclosure is to be made. The notice shall be made only to the Bond Holders known to the Fiscal Agent by the Fiscal Agent on behalf of the Issuer: (a) within 90 days from the closing date of each fiscal year of the Issuer, the Issuer shall notify an unaudited balance sheet, income statement and cash flow statement (all in U.S. Dollars) of the Issuer for the fiscal year ending on such closing date; and (b) without delay after the last day of March and September each year, the Issuer shall notify nonpublic securities rating as of each such date on long term debt of the Issuer and the Bond by an internationally dominant rating agency. In the event that the Issuer receives the notice of changing such rating and opinion on such rating from the rating agency, the Issuer shall promptly notify to that effect. SECTION 20 GOVERNING LAW AND JURISDICTION Except for authorization of issuance of the Bonds by the Issuer, the form and substance of the Bonds, Bond Certificates, Coupons, and all rights and obligations of all parties including the Bondholders shall be governed by the laws of Japan; provided that the Payment Guarantee shall be governed by the laws of the State of New York. Unless otherwise provided hereunder, the place of performance of obligations under the Bonds shall be Tokyo, Japan. Any legal action or other court procedural action against the Issuer arising from or relating to the Bonds, Bond Certificates, Coupons, or these Conditions of Bonds may be instituted in the Tokyo District Court, to the jurisdiction of which the Issuer hereby expressly, unconditionally and irrevocably submits. 13

The Issuer hereby appoints Managing Director of its Tokyo branch in Tokyo, Japan as the authorized agent of the Issuer upon whom process and any judicial or other court documents may be served in any legal or other court procedural action arising from or relating to the Bonds, Bond Certificates, Coupons, or these Conditions of Bonds that may be instituted in Japan; the Company hereby designates the address from time to time of its Tokyo branch, currently at 1-31, Minami-Aoyama 3-chome, Minato-ku, Tokyo, Japan 107-0062, as the address to receive such process and any judicial or other court documents. The Issuer hereby agrees to take, from time to time and so long as any of the Bonds or Coupons shall remain outstanding, any and all action (including the execution and filing of any and all documents and instruments) that may be necessary to effect and to continue such appointment and designation in full force and effect. If at any time such agent shall not, for any reason, serve as such authorized agent, the Issuer shall immediately appoint, and it shall take any and all action that may be necessary to effect the appointment of, a successor authorized agent in Tokyo, Japan, and the Issuer shall promptly notify the Fiscal Agent and publicly notify the Bondholders of the appointment of such successor agent. Nothing in this Section 20 shall affect the right of the Bondholder to institute legal proceedings against the Issuer in any court of competent jurisdiction under applicable laws or to serve process in any manner otherwise permitted by law. 14

Schedule LIST OF EXISTING INDEBTEDNESS 1. Indebtedness under the BNY Credit Agreement (meaning that certain Credit Agreement, dated as of November 5, 2001, by and among Tiffany & Co., certain Subsidiaries of Tiffany & Co., the banks that are parties thereto, and The Bank of New York, as the administrative agent, as amended, extended, refinanced or renewed from time to time, and each successor loan or credit agreement constituting Tiffany & Co.'s primary bank credit facility, in each case as may be amended from time to time), which may be incurred by Tiffany & Co., and those of its direct and indirect subsidiaries that are or become parties thereto. 2. Guarantees provided by each of the guarantors of the indebtedness described in Item 1 above (unsecured). 3. $60,000,000 6.90% Series A Senior Notes due 2008 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $60,000,000 outstanding). 4. Guarantees provided by each of the guarantors of the indebtedness described in Item 3 above (unsecured). 5. $40,000,000 7.05% Series B Senior Notes due 2010 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $40,000,000 outstanding). 6. Guarantees provided by each of the guarantors of the indebtedness described in Item 5 above (unsecured). 7. Indebtedness of Tiffany & Co. Japan Inc. under Y5,000,000,000 4.50% Loan due 2011 from American Family Life Assurance Company of Columbus, Japan Branch (unsecured; Y5,000,000,000 outstanding). 8. Guaranty provided by Tiffany & Co. of the indebtedness described in Item 7 above (unsecured). 9. Indebtedness of Tiffany & Co. Japan Inc. under Y5,500,000,000 Variable Rate Loan due 2004 from The Fuji Bank, Ltd. (unsecured; Y5,500,000,000 outstanding). 10. Interest Rate Swaps with J.P. Morgan Chase Bank in connection with the indebtedness described in item 9 above (unsecured). 11. Guaranty provided by Tiffany & Co. of the indebtedness described in Item 9 above (unsecured). 15

12. Brazilian Reais 7,250,000 uncommitted line of credit provided to Tiffany-Brasil Ltda. by Bank Boston N.A. (unsecured). 13. $40,000,000 6.15% Series C Senior Notes due 2009 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $40,000,000 outstanding). 14. $60,000,000 6.56% Series D Senior Notes due 2012 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $60,000,000 outstanding). 15. Guarantees provided by the guarantors of the indebtedness described in Items 13 and 14 above (unsecured). 16. Interest Rate Swaps with Lehman Brothers Special Financing, Inc. in connection with the indebtedness described in Items 13 and 14 above. 17. Forward exchange yen contracts, including those arising under that certain Foreign Exchange and Options Master Agreement dated as of March 28, 1997, by and between The Bank of New York and Tiffany and Company ("FEOMA-1") and that certain Foreign Exchange and Option Master Agreement dated as of March 28, 1997, by and between The Bank of New York and Tiffany & Co. International ("FEOMA-2") (unsecured). 18. Guaranty provided by Tiffany & Co. International of the indebtedness arising under FEOMA-1 (unsecured). 19. Guaranty provided by Tiffany and Company of the indebtedness arising under FEOMA-2 (unsecured). 20. Indebtedness under the LSI Credit Agreement (meaning that certain Credit Agreement, dated as of May 13, 2003, by and among Tiffany & Co. and Little Switzerland, Inc., as Borrowers, and Wachovia Bank, National Association, as Lender, as amended, extended, refinanced or renewed from time to time, and each successor loan or credit agreement, in each case as may be amended from time to time), which may be incurred by Tiffany & Co., and those of its direct and indirect subsidiaries that are or become parties thereto. 21. Guarantees provided by each guarantors of the indebtedness described in Item 20 above (unsecured). 22. Indebtedness under the Agreement on Overdraft in Special Current Account (Y11,000,000,000), dated June 26, 2003 between Mizuho Bank, Ltd., as Lender Tiffany & Co. Japan Inc. 16

23. Guaranty provided by Tiffany & Co. of the indebtedness described in Item 22. 24. Indebtedness of World Gift Imports (Barbados) Ltd., a subsidiary of Little Switzerland, Inc., to Almod Diamonds Ltd. ($4,000,000) 17

Exhibit 10.135 Tiffany & Co. (Translation) Report on Form 10-K APPLICATION FOR BONDS September , 2003 Tiffany & Co. Japan Inc. Address: Name: Consenting to the terms described in the application for the bonds prepared by your company with respect to the bonds of the following contents and conditions (the "Bonds") (in which the schedule attached hereto (conditions of bonds with respect to the Bonds (the "Conditions of Bonds")) constitutes an integral part thereof) (the "Application for Bonds"), we hereby apply for the Bonds on the condition that prior to the payment of the issue price, we are entitled to cancel the application hereunder if any of the representations and warranties hereunder by the Issuer or Guarantor is false or inaccurate. Tiffany & Co. Japan Inc. First Series Yen Bonds (Qualified Institutional Investors Only) guaranteed by Tiffany & Co. Principal Amount _________________________________ Yen Only Number of Bonds _________________________________ 1

I Terms of Application for Bonds 1. Trade Name of Company Tiffany & Co. Japan Inc. 2. Trade Name of Bond Management Company Because the Bonds satisfy the requirements under the proviso of the Article 297 of the Commercial Code of Japan, a bond management company will not be established for the Bonds. 3. Aggregate Principal Amount of the Bonds 15,000,000,000 Yen 4. Principal Amount of Each Bond 100,000,000 Yen 5. Interest Rate on the Bonds The interest rate on each of the Bonds shall be 2.02% per annum of the principal amount. 6. Place of Payment of Principal and Interest Mizuho Corporate Bank, Ltd. Head Office and Osaka Corporate Banking Division 7. Method of Redemption and Maturity Date (1) The Bonds shall be redeemed at the principal amount of the Bonds on September 30, 2010, unless redeemed or repurchased prior to such date. (2) If the Issuer or Guarantor is highly likely to be obliged to pay an Additional Amount (defined in Section 9 of the Conditions of Bonds) at the next due date for the Bonds as a result of any change or amendment in the laws (or rules or decisions under such laws) of 2

the United States or its subdivision, or its tax authorities, or application, authoritative interpretation or change in enforcement of such laws, rules or decisions, and, in the judgment of an authorized officer of the Issuer or Guarantor, the Issuer or Guarantor is not able to avoid payment of the Additional Amount with reasonable measures without incurring substantial expenses, the Issuer or Guarantor may redeem (without deducting applicable withholding amounts), at any time, all of the Bonds (no partial redemption) at 100 % of the principal amount with interest thereon until (and including) the redemption date. Provided, however, that redemption of the Bonds on the grounds that the Guarantor has incurred payment obligation of the Additional Amount can only be made if both the Guarantor and the Issuer are unable to avoid paying the Additional Amount by causing the Issuer to pay the principal of and interest on the Bonds. In such event, the Issuer or Guarantor shall notify the Fiscal Agent in writing that: (i) the Issuer or Guarantor is highly likely to bear obligation to pay the Additional Amount; (ii) it has elected to redeem the Bonds without deducting the withholding amount pursuant to Section 7(2) of the Conditions of Bonds instead of paying the Additional Amount; (iii) scheduled redemption date; and (iv) the payment obligation is unavoidable by reasonable measures without incurring substantial expenses in the judgment of an authorized officer of the company. The notice shall be accompanied by a legal opinion of an outside counsel appointed by the Issuer or Guarantor (meaning a legal counsel other than an employee of the Issuer, Guarantor or subsidiaries thereof, although a legal counsel regularly retained by the Issuer, Guarantor or subsidiaries thereof shall qualify as the outside counsel hereunder) (hereinafter the "Outside Counsel"), which shall describe that the Issuer or Guarantor is or may be obligated to pay the Additional Amount due to the facts described in the foregoing paragraph. The notice shall be given as soon as practicable upon occurrence of such event. Notices by the Issuer or Guarantor under Section 7(2) of the Conditions of Bonds to the Fiscal Agent shall be given 30 days prior to the scheduled redemption date, and the Issuer shall publicly notify the Bondholders 14 days prior to the scheduled redemption date. The notice and legal opinion delivered under Section 7(2) of the Conditions of Bonds shall be kept at the main office of the Fiscal Agent, shall be available during normal business hours for inspection and copying by the Bondholders, and persons requesting such copying shall bear all expenses necessary therefor. Under the Conditions of Bonds, the principal of the Bond shall include premiums payable under Section 7(2) of the Conditions of Bonds, if any. 3

All reasonable expenses necessary for the procedures under Section 7(2) of the Conditions of Bonds shall be borne by the Issuer or Guarantor. (3) The Issuer, the Guarantor or any of their respective subsidiaries may, at any time after the issue date, purchase the Bonds in the market or otherwise at any price and retain, resell or cancel them. (4) Unless otherwise provided under the Conditions of Bonds, the Issuer may not pay all or part of the principal of or interest on the Bonds prior to the due dates. 8. Method and Due Date of Interest Payment (1) The Bonds shall accrue interest from October 1, 2003, and the interest shall first be payable on March 30, 2004 for the interest accumulated to such date, and thereafter, be payable in arrears on March 30 and September 30 of each year for the six-month period ending on and including each such date. Interests for a period other than six months shall be payable for the actual number of days during that period (calculated on daily pro rata basis of 365 days per year, rounded off at the first decimal place). The interest payment dates provided in this subsection shall be hereinafter referred to as the "Interest Payment Date." (2) Interest on the Bonds shall not accrue after the redemption date; provided, however, that if the Issuer or Guarantor fails to redeem the Bonds on the redemption date, delinquency interest shall be payable for the actual number of days during the period from the due date (exclusive) to the date of actual redemption (inclusive) at the rate provided in this Section 6 (calculated on daily pro rata basis of 365 days per year, rounded off at the first decimal place); provided, further, that the period shall not extend beyond 14 days after the public notice by the Fiscal Agent pursuant to Section 8(3) of the Conditions of Bonds that it has received funds for redemption. 9. Issue Price of the Bonds 100% of the principal amount of the Bonds 10. Conversion of Bearer Bonds to and from Nonbearer Bonds The form of the bond certificate of the Bonds (the "Bond Certificate") shall be limited to bearer bonds with coupons attached (such coupons attached to the Bond Certificate shall be hereinafter referred to as the "Coupons") and shall not be converted to nonbearer 4

bonds, split into the Bond Certificates with par value less than 100,000,000 Yen, or consolidated with other Bond Certificates. 11. Agreement on Underwriting of Residual Amounts Not applicable. 12. Regulations on Private Placement (1) No registration statement has been filed with respect to the Bonds under Article 4 Paragraph 1 of the Securities and Exchange Law of Japan (Law No. 25 of 1948, as amended). (2) Any person who intends to acquire the Bonds shall request the recording of the aggregate acquired amount of the bonds pursuant to the provisions of Article 37 of Ordinance Concerning Enforcement of the Law on Recording of Bonds, Etc. of Japan (Imperial Ordinance No. 409 of 1942, as amended). (3) Any person who intends to acquire the Bonds shall undertake not to transfer the Bonds to any person other than the Qualified Institutional Investors (as defined in Cabinet Office Ordinance Concerning Definitions Provided in Article 2 of Securities and Exchange Law, hereinafter the same). (4) When transferring any Bonds to any Qualified Institutional Investor, the transferor shall notify the transferee in writing, in advance or at the same time of transfer, that no registration statement has been filed with respect to the Bonds pursuant to the provisions of Article 4, paragraph 1 of the Securities and Exchange Law and as to the conditions in respect of the Bonds set out in this Section 12. 13. Private Placement Arrangers Lehman Brothers Japan Inc., Tokyo Branch, Mizuho Securities Co., Ltd., JP Morgan Securities Asia Private Limited, Tokyo Branch 14. Start Date of Solicitation and Acceptance of Application September 12, 2003 15. Application Period 5

September 12-17, 2003 16. Applicants for the Bonds shall pay the issue price for the Bonds on the issue date to the Head Office of Mizuho Corporate Bank, Ltd. 17. Issue Date September 30, 2003 18. Limitation of Application for Recordation of Transfer as of Payment Date Application for recordation of transfer of the Bonds as of the payment date may not be made through the network operated by Japan Bond Settlement Network Co., Ltd. 19. Terms other than above shall be as described in the schedule attached hereto (Conditions of Bonds), which shall constitute an integral part of this Application for Bonds. II. Representations and Warranties by the Issuer (1) The Issuer is duly organized and validly existing as a limited liability company under the laws of the State of Delaware and has all requisite corporate power and authority to own its property, to execute and deliver related agreements, to issue the Bonds, and, to perform its obligations set forth in the Fiscal and Paying Agency Agreement, the Recording Agency Agreement and an agreement with arrangers of the private placement (collectively, the "Related Agreements") and the Conditions of Bonds pursuant to the provisions thereunder. (2) The issuance of the Bonds and execution and delivery of each of the Related Agreements and the performance of its obligations thereunder and the Conditions of Bonds by the Issuer have been duly authorized by the Issuer's Board of Directors and the aggregated principal amount of the Bonds is within the amount so authorized. The Related Agreements constitute the legal, valid and binding 6

obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights in general. (3) All necessary consents, authorizations and approvals of, and registrations and filings with any court, government agency or other regulatory body or agency required of the Issuer for or in connection with the execution and delivery of the Related Agreements, issuance of the Bonds and compliance with the terms of the Conditions of Bonds and Related Agreements have been obtained or made and remain in full force and effect. (4) The authorization for the issuance of the Bonds, the issuance of the Bonds, the issuance and delivery of the Bond Certificate (including Coupons), the performance of its obligations under the Bonds pursuant to the Conditions of Bonds, and execution of each of the Related Agreements or the performance of its obligations thereunder by the Issuer will not conflict with, or result in a breach of any applicable statute, rule or regulation, any of the certificate of incorporation or other constitutive documents of the Issuer, any material agreement by which it is bound, judgment, injunction, order, decision, or other instruments, or will result in creating any lien on material assets of the Issuer or its subsidiaries. (5) All payments of principal, interest and all other moneys payable by the Issuer in respect of the Bonds shall be free of any present taxes imposed by or on behalf of the United States or any political subdivision (other than U.S. back-up withholding taxes, if any). (6) The Bonds will be legal, valid and binding upon the Issuer as direct, unconditional obligations of the Issuer ranking pari passu with all other unsecured and unsubordinated obligations of the Issuer. 7

(7) When the entire amount of the Issue Price has been paid in full and when the signature of the Board Chairman of the Issuer in facsimile has been put on the Bond Certificates and the Coupons, and the Bond Certificates accompanied by the Coupons have been delivered to or to the order of the purchaser, the Bond Certificates accompanied by the Coupons so delivered will have been duly and validly issued and will represent legally valid and binding obligations of the Issuer enforceable against it in accordance with their respective terms, except that enforceability may be limited by the laws of bankruptcy, insolvency, reorganization or other similar laws relating to creditors' rights in general. (8) No circumstances exist which, had the Bonds already been issued, would, or would with the giving of notice or lapse of time or both, constitute an Event of Default as defined in the Conditions of Bonds. (9) The Issuer is not involved in, any litigation, arbitration or administrative proceedings which would have a material adverse effect, if determined adversely, on the Issuer's ability to perform and comply with its obligations under the Related Agreements and/or the Conditions of Bonds, nor, to the best of the knowledge and belief of the Issuer, are any such proceedings pending or threatened against the Issuer, nor, so far as the Issuer is aware, do circumstances exist which are likely to lead to such proceedings. (10) Neither the Issuer, nor any of its affiliates (as defined in Rule 405 under the U.S. Securities Act of 1933 (the "U.S. Securities Act")), has engaged or will engage in any directed selling efforts to the United States (as defined in Regulation S under the U.S. Securities Act) with respect to the Bonds, and each of the foregoing persons has complied and will comply with the offering restriction requirements of Regulation S under the U.S. Securities Act. 8

III. Representations and Warranties by the Guarantor (1) The Guarantor is a company duly incorporated and validly existing as a limited liability company under the laws of State of Delaware. (2) The execution and delivery of the Guarantee by the Guarantor have been duly authorized by the Guarantor's Board of Directors, and the Guarantee constitutes legal, valid and binding obligations of the Guarantor enforceable against it in accordance with its respective terms, except that enforceability may be limited by the laws of bankruptcy, insolvency, reorganization or other laws relating to creditors' rights in general. (3) The delivery of the Guarantee by the Guarantor will not conflict with, or result in a breach of, any of the terms or provisions of laws or constitutive documents of the Guarantor or any agreement or undertaking whatever by which it is bound. (4) Neither the Guarantor nor any of the Guarantor's Principal Subsidiaries is involved in any litigation, arbitration or administrative proceedings which would have a material adverse effect, if determined adversely, on the Guarantor's ability to perform and comply with its obligations under the Guarantee, nor, to the Guarantor's knowledge, are any such proceedings pending or threatened against the Guarantor or any of its Principal Subsidiaries; nor, so far as the Guarantor is aware, do circumstances exist which are likely to lead to such proceedings. (5) All necessary consents, authorizations and approvals of, and registrations and filings with any court, government agency or other regulatory body or agency required of the Guarantor for or in connection with the execution and delivery of, and compliance with the terms of the Guarantee have been obtained or made and remain in full force and effect. 9

(6) Neither the Guarantor, nor any of its affiliates (as defined in Rule 405 under the U.S. Securities Act) has engaged or will engage in any directed selling efforts (as defined in Regulation S under the U.S. Securities Act) with respect to the Bonds, and each of the foregoing persons has compiled and will comply with the offering restriction requirements of Regulation S under the U.S. Securities Act. September 12, 2003 727 Fifth Avenue New York, New York 10022 The United States of America Director Katsuhiko Nitta End of document 10

Schedule 1 CONDITIONS OF BONDS These Conditions of Bonds shall be applied to the issue of Tiffany & Co. Japan Inc. First Series Yen Bonds guaranteed by Tiffany & Co. (For Qualified Institutional Investors Only) (the "Bonds") which Tiffany & Co. Japan Inc. (the "Issuer") is duly authorized to issue. SECTION 1. AMOUNT, PRINCIPAL AMOUNT AND FORM (1) Aggregate principal amount of the Bonds shall be 15,000,000,000 Yen. (2) Principal amount per Bond shall be 100,000,000 Yen. (3) The form of the bond certificate of the Bonds (the "Bond Certificates") shall be limited to bearer bonds with coupons attached (such coupons attached to the Bond Certificates shall be hereinafter referred to as the "Coupons") and shall not be converted to nonbearer bonds, split into the Bond Certificates with par value less than 100,000,000 Yen, or consolidated with other Bond Certificates. (4) The Bond Certificates and Coupons shall bear the signature (including the signature in facsimile) of the Executive Vice President and Chief Financial Officer of the Issuer and Tiffany & Co. (the "Guarantor"). SECTION 2. STATUS OF THE BONDS, GUARANTEE AND NEGATIVE PLEDGE (1) The Bonds and Coupons shall be direct, unconditional (subject to limitations under Section 4(2) hereof), unsecured and unsubordinated obligations of the Issuer, ranking pari passu among each other without being preferred or subordinated and (subject to limitations under Section 4(2) hereof) with all other present and future unsecured and unsubordinated obligations of the Issuer (except for preferred obligations by operation of forcible laws); provided, however, that in the event of insolvency, the Bonds and Coupons shall rank in pari passu to the extent permitted under the laws generally affecting creditors' rights. (2) The due and punctual payment by the Issuer of the principal of and interest on the Bonds and all other amounts payable under these Conditions of Bonds is unconditionally and irrevocably guaranteed by the Guarantor in accordance with the payment guarantee (the "Payment Guarantee") governed by the laws of the State of New York which is separately issued and delivered to the Fiscal Agent by the Guarantor. (3) The Bond Certificates shall provide that the Guarantor unconditionally and irrevocably guaranty the due and punctual payment to the holders of the Bonds (the "Bondholders") 1

and holders of the Coupons (the "Couponholders") by the Issuer of the principal of and interest on the Bonds and all other amounts payable at the maturity date or other due dates under these Conditions of Bonds. (4) The Issuer and the Guarantor respectively undertake that, so long as any of the Bonds remains outstanding, each of the Issuer and the Guarantor will procure that no External Indebtedness (as defined below) of itself or of any of its Principal Subsidiaries (as defined below) shall be secured by any mortgage, lien, pledge or other charges, unless the Issuer or the Guarantor, as the case may be, shall forthwith take any and all action necessary to procure that all amounts payable by it under the Bonds and Coupons are secured equally and ratably with such mortgage, lien, pledge or other charge. This Section 2(4), however, shall not apply to External Indebtedness that: (i) is incurred by the Issuer, Guarantor or any Principal Subsidiary in connection with the acquisition of fixed assets (or any improvement thereon); (ii) is assumed by the Issuer, Guarantor or any Principal Subsidiary in connection with the acquisition of any business; or (iii) does not exceed 20% of the Guarantor's consolidated net worth. "External Indebtedness" means all items which constitute, without duplication, indebtedness for borrowings, on or after the issue date of the Bonds, of the Issuer, Guarantor or Principal Subsidiaries (whether in the form of or represented by any bonds, notes or other securities), other than Existing Indebtedness and Intercompany Debt. "Principal Subsidiaries" means Tiffany and Company and Tiffany & Co. International, which are subsidiaries of the Guarantor. "Existing Indebtedness" means indebtedness in existence as of the Issue Date and listed in a schedule attached to the Conditions of Bonds and any refinancing thereof that does not entail the Issuer's or the Guarantor's incurring new liens that are greater than any liens that existed with respect to such indebtedness before its refinancing. "Intercompany Debt" means (i) indebtedness of the Guarantor to one or more of its subsidiaries and (ii) indebtedness of one or more of the subsidiaries of the Guarantor to the Guarantor or any one or more of the other subsidiaries of the Guarantor. In the event that a security interest is created for the Bond in accordance with this Section 2(4), the Issuer shall take all steps and procedures (including without limitation, perfection of such security interest) necessary for the purpose of these Conditions of Bonds. The Issuer shall bear any and all expenses in connection with the creation of such security interests, perfection thereof, exercise of powers and performance of duties. This Section 2(4) shall not apply where the full amount of the Bonds is unable to be redeemed due to the Bondholder's failure to claim for payment on the due date of the Bonds. 2

SECTION 3 FISCAL AGENT AND NO ESTABLISHMENT OF BOND MANAGEMENT COMPANY (1) Mizuho Corporate Bank shall act as the fiscal agent of the Issuer in connection with the Bonds (the "Fiscal Agent"). The Fiscal Agent shall perform duties provided hereunder and under the Fiscal and Paying Agency Agreement dated September 12, 2003 between the Issuer and the Fiscal Agent and Paying Agent (defined in Section 5 hereof). The Fiscal Agent shall act only as an agent of the Issuer, shall have no duties to Bondholders, or agency or trustee relationship with Bondholders. A copy of the Fiscal and Paying Agency Agreement shall be kept at the main office of the Fiscal Agent, and shall be available during normal business hours for inspection and copying by the Bondholders. Persons requesting such copying shall bear all expenses necessary therefor. (2) Because the Bonds satisfy the requirements under the proviso of the Article 297 of the Commercial Code of Japan (Law No. 48, 1900, as amended), a bond management company provided thereunder will not be established for the Bonds. (3) The Issuer may replace or discharge the Fiscal Agent from time to time, provided that the Fiscal Agent shall remain in its duty until its successor is validly appointed. The Issuer shall make an advance public notice to the Bondholders of such change of the Fiscal Agent. SECTION 4 RECORDING OF THE BONDS (1) Recording agent for the Bonds (the "Recording Agent") shall be Mizuho Corporate Bank, Ltd. The Bondholders shall be able to record their Bonds at any time. (2) The Issuer shall bear the expenses of the subscribers' recordation of the Bonds, and persons applying for recordation shall bear expenses for other recordation. Expenses necessary for the preparation and delivery of the Bond Certificates and Coupons upon cancellation of recordation of recorded Bonds shall be borne by persons requesting such cancellation. SECTION 5 PLACE OF PAYMENTS (1) The paying agent for the Bonds (the "Paying Agent") and the place of payment of the principal and interest shall be as follows: Mizuho Corporate Bank, Ltd. Head Office and Osaka Corporate Banking Division (2) The Issuer may change or discharge the Paying Agent from time to time. The Issuer shall publicly notify in advance the Bondholders of such change or discharge. Notwithstanding the foregoing, Paying Agent shall not be appointed by the Issuer in the United States of America (including each of its States and the District of Columbia) or 3

its territories and possessions and other areas which are subject to its jurisdiction (the "United States"), and shall not make payments of principal of and interest on the Bonds within the United States. Payments of the principal of and interest on the Bonds shall not be made in branch offices of the Paying Agent or by other payment agents outside Japan, and no payment shall be made by remittance to a bank account within the United States or check sent to an address in the United States. SECTION 6 INTEREST (1) The interest rate for each of the Bonds shall be 2.02% per annum of the principal amount. (2) The Bonds shall accrue interest from October 1, 2003, and the interest shall first be payable on March 30, 2004 for the interest accumulated to such date, and thereafter, be payable in arrears on March 30 and September 30 of each year for the six-month period ending on and including each such date. Interests for a period other than six months shall be payable for the actual number of days during that period (calculated on daily pro rata basis of 365 days per year, rounded off at the first decimal place). The interest payment dates provided in this subsection shall be hereinafter referred to as the "Interest Payment Date." (3) Interest on the Bonds shall not accrue after the redemption date; provided, however, that if the Issuer or Guarantor fails to redeem the Bonds on the redemption date, delinquency interest shall be payable for the actual number of the days during the period from the date of payment (exclusive) to the date of actual redemption (inclusive) at the rate provided in this Section 6 (calculated on daily pro rata basis of 365 days per year, rounded off at the first decimal place); provided, further, that the period shall not extend beyond 14 days after the public notice by the Fiscal Agent pursuant to Section 8(3) hereof that it has received funds for redemption. SECTION 7 REDEMPTION AND REPURCHASE (1) The Bonds shall be redeemed at the principal amount of the Bonds on September 30, 2010, unless redeemed or repurchased prior to such date. (2) If the Issuer or the Guarantor is highly likely to be obliged to pay an Additional Amount (defined in Section 9) at the next due date for the Bonds as a result of any change or amendment in the laws (or rules or decision under such laws) of the United States or its subdivision, or its tax authorities, or application, authoritative interpretation or change in enforcement of such laws, rules or decisions, and, in the judgment of an authorized officer of the Issuer or Guarantor, the Issuer or Guarantor is not able to avoid payment of the Additional Amount with reasonable measures without incurring substantial 4

expenses, the Issuer or Guarantor may redeem (without deducting applicable withholding amounts), at any time, all of the Bonds (no partial redemption) at 100 % of the principal amount with interest thereon until (and including) the redemption date. Provided, however, that redemption of the Bonds on the grounds that the Guarantor has incurred payment obligation of the Additional Amount can only be made if both the Guarantor and Issuer are unable to avoid paying the Additional Amount by causing the Issuer to pay the principal of and interest on the Bonds. In such event, the Issuer or Guarantor shall notify the Fiscal Agent in writing that: (i) the Issuer or Guarantor is highly likely to bear obligation to pay the Additional Amount; (ii) it has elected to redeem the Bonds without deducting the withholding amount pursuant to this Section 7(2) instead of paying the Additional Amount; (iii) scheduled redemption date; and (iv) the payment obligation is unavoidable by reasonable measures without incurring substantial expenses in the judgment of an authorized officer of the company. The notice shall be accompanied by a legal opinion of an outside counsel appointed by the Issuer or Guarantor (meaning a legal counsel other than an employee of the Issuer, Guarantor or subsidiaries thereof, although a legal counsel regularly retained by the Issuer, Guarantor or subsidiaries thereof shall qualify as the outside counsel hereunder) (hereinafter the "Outside Counsel"), which shall describe that the Issuer or Guarantor is or may be obligated to pay the Additional Amount due to the facts described in the foregoing paragraph. The notice shall be given as soon as practicable upon occurrence of such event. Notices by the Issuer or Guarantor under this Section 7(2) to the Fiscal Agent shall be given 30 days prior to the scheduled redemption date, and the Issuer shall publicly notify the Bondholders 14 days prior to the scheduled redemption date. The notice and legal opinion delivered under this Section 7(2) shall be kept at the main office of the Fiscal Agent, shall be available during normal business hours for inspection and copying by the Bondholders, and persons requesting such copying shall bear all expenses necessary therefor. Under these Conditions of Bonds, the principal of the Bond shall include premiums payable under this Section 7(2), if any. All reasonable expenses necessary for the procedures under this Section 7(2) shall be borne by the Issuer or Guarantor. (3) The Issuer, the Guarantor or any of their respective subsidiaries may, at any time after the issue date, purchase the Bonds in the market or otherwise at any price and retain, resell or cancel them. (4) Unless otherwise provided hereunder, the Issuer shall not pay all or part of the principal of or interest on the Bonds prior to the due dates. 5

SECTION 8 PAYMENT (1) Payment of the principal of or interest on the Bonds represented by the Bond Certificates or Coupons shall be made upon surrender of the relevant Bond Certificates or Coupons, except as provided under Section 15, at either place of payment set forth in Section 5. (2) With respect to recorded Bonds, payment of principal shall be made upon surrender of the relevant principal payment voucher, and payment of interest shall be made upon surrender of the relevant interest payment voucher, at the place of payment designated by the Bondholder at the time of the application for recordation. The Paying Agent shall check the seal affixed on the principal or interest payment voucher against the seal impression submitted to the Recording Agent. (3) In the event that the Fiscal Agent has received the principal of and interest on the Bonds after the relevant due date, the Fiscal Agent shall publicly notify the receipt thereof as soon as practicable but no later than 14 days from the receipt of such amounts. All expenses in connection with the public notice shall be borne by the Issuer. (4) Redemption of the Bond shall be made upon the surrender of the Bond Certificates with all Coupons not yet due, and if such Coupon is lacking, the face amount of such missing Coupon shall be deducted from the principal of the Bond; provided that such holder of a missing Coupon may receive payment for the face amount thereof upon surrender of the Coupon within a 5 year period from the redemption date of the Bond Certificates to which the missing Coupon was attached. (5) If a payment date for the principal of or interest on the Bonds falls within a banking holiday in Tokyo, Japan, the Bondholder or Couponholder shall not be entitled to receive payments due until the next banking day, and no interest shall accrue for the delay of payment. SECTION 9 TAXES (1) All payments of the principal of and interest on the Bonds and Coupons by the Issuer or the Guarantor (including payments under the Payment Guarantee) will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges (the "Taxes") of whatever nature imposed or levied by or on behalf of the United States or any of its subdivisions unless the withholding or deduction of the Taxes is required by law. In such event, the Issuer or Guarantor, as the case may be, will pay such additional amounts (the "Additional Amount") as shall be necessary for the net amounts received by the Bondholders or the Couponholders after such withholding or deduction to equal the respective amounts of principal and interest which would have been receivable in respect of the Bonds or Coupons, as the case may be, in the absence of such withholding or deduction, provided, however, that Additional Amounts shall not be payable for the following: 6

(i) payments to a Bondholder or Couponholder, or to a third party for the same, who has obligations to pay Taxes in connection with the Bonds or Coupons due to any relationship with the United States other than (a) merely being a holder of the Bonds or Coupons or (b) receiving the principal of or interest on the Bonds or Coupons; (ii) payments to a Bondholder or Couponholder, or to a third party for the same, who shall not be subject to such withholding or deduction subject to filing of a statement that the Bondholder or Couponholder is a non-resident or other application for exemption to relevant tax authorities; or (iii) payments on the Bond Certificates or Coupons presented more than 30 days after the Related Date (as defined below) (provided that this shall not apply to the Additional Amount the Bondholder or Couponholder should have been entitled to if the Bond Certificates or Coupons had been surrendered). "Related Date" herein shall mean such first due date, however, if the Fiscal Agent has not received all amounts by the due date, this shall mean the date all amounts have been received and the Fiscal Agent has made a public notice to that effect in accordance with Section 8(3). (2) Principal and interest hereunder shall be deemed to include the Additional Amount respectively payable pursuant to Section 9 in connection with the principal or interest. SECTION 10 EVENTS OF DEFAULT If any of the following events of (a)-(i) below (each an "Event of Default") shall have occurred and be continuing, the Bondholder may send a notice to the main office of the Fiscal Agent to the effect that the Bonds held by such Bondholder shall be payable at 100% of the principal amount with delinquency interest thereon (such Bondholder shall present at the main office of the Fiscal Agent a copy of the book of recordation indicating that it holds the Bond in question), such Bonds shall become due on the date which the written notice is received by the Fiscal Agent, and the principal of and delinquent interest thereon to and including such date shall be payable, provided, however, that this shall not apply when all Events of Default have been cured for all of the Bonds before such date. The Bondholder giving a written notice under this Section may withdraw it upon written notice to the main office of the Fiscal Agent at any time before the payment of such Bonds by the Issuer. Payment of principal and interest under this paragraph shall be made in a manner set forth under Section 8 hereof: (a) there is a default for more than 14 days after the due date in the payment of principal or interest (if any) due in respect of any of the Bonds; (b) the Issuer, the Guarantor or any Principal Subsidiary becomes bound, as a consequence of default by it in its obligation in respect of any other indebtedness 7

in respect of Borrowed Money (as defined below) having an aggregate outstanding principal amount in excess of U.S. $25,000,000 (or its equivalent in any other currency or currencies), to repay any such indebtedness in respect of Borrowed Money having an aggregate outstanding principal amount in excess of U.S. $25,000,000 (or its equivalent in any other currency or currencies) before the maturity of the Bonds, and such obligation is not satisfied or waived within 30 days of the Issuer, the Guarantor or Principal Subsidiary becoming so bound; (c) a resolution is passed or an order of a court of competent jurisdiction is made that the Issuer, the Guarantor or any Principal Subsidiary be wound up or dissolved other than for the purposes of or pursuant to such a consolidation, merger, etc. described under Section 11; (d) an encumbrancer takes possession or a receiver is appointed over all or substantially all of the assets or business of the Issuer, the Guarantor or any Principal Subsidiary; (e) an attachment, execution or seizure before judgment is levied or enforced upon or sued out against all or substantially all of the assets of the Issuer, the Guarantor or any Principal Subsidiary and is not discharged or dismissed within ninety (90) days thereof; (f) the Issuer, the Guarantor or any Principal Subsidiary (otherwise than for the purposes of such a consolidation, merger, etc. under Section 11) ceases or threatens to cease to carry on all or substantially all of its business; (g) proceedings shall have been initiated against the Issuer, the Guarantor or any Principal Subsidiary under any applicable bankruptcy, insolvency or reorganization law and such proceedings shall not have been discharged or stayed within a period of sixty (60) days; (h) the Issuer, the Guarantor or any Principal Subsidiary initiates or consents to proceedings relating to itself under any applicable bankruptcy, composition, insolvency or reorganization law or makes a conveyance or assignment for the benefit of, or enters into any composition with, its creditors; or (i) the Payment Guarantee ceases to be, or is claimed by the Guarantor not to be, in full force and effect. "Borrowed Money" means monies borrowed and premiums and accrued interest in respect thereof including (a) liabilities under or in respect of any acceptance, credit or loan provided by any bank, similar institution or others and (b) the principal and premium (if any) of any notes, bonds, debentures or similar debt instruments whether issued in whole or in part 8

for cash or other consideration but excluding trade payables incurred in the ordinary course of business and liability in connection with endorsement of any instrument for collection. The Issuer shall, without delay, give a public notice to the Bondholders in the event of (i) any of the Events of Default or (ii) situation under which an Event of Default may occur upon passage of time, notice or both. SECTION 11 MERGERS AND CONSOLIDATIONS, ETC. The Issuer may merge with other companies without consent of the Bondholders or Couponholders if the surviving corporation is the Issuer. Further, the Issuer may consolidate or merge into other companies, or transfer, assign or lease all or substantially all of its properties and assets to certain persons, without consent of the Bondholders or Couponholders, subject to the following conditions: (a) The new corporation formed upon the consolidation, surviving corporation upon the merger, or the transferee or lessee of all or substantially all of the Issuer's properties or assets expressly undertakes due and punctual payment of the principal of and interest on all of the Bonds and performance of covenants under the Bonds, by application of law, under an amendment agreement which may be made between the parties thereto with respect to the Fiscal and Paying Agency Agreement and Recording Agency Agreement for the Bonds (the "Related Agreements"), or by other means, and such undertakings set forth that such corporation or person shall pay the Additional Amount so that net payment of the principal of and interest on the Bonds to the Bondholders or Couponholders shall not be less than the amount described in the Bonds which become due at that time; provided that such obligations shall extend to withholdings or deductions of present or future Taxes imposed or levied by or on behalf of the United States or other jurisdiction where such corporation or person is incorporated or its subdivisions or tax authorities thereof or therein, provided, however, that payments with respect to the Bonds and Coupons, the Additional Amount shall not be payable in the following events: (i) payments to a Bondholder or Couponholder, or to a third party for the same, who has obligations to pay Taxes in connection with the Bonds or Coupons due to any relationship with the United States or such other jurisdictions other than (a) merely being a holder the Bonds or Coupons or (b) receiving the principal of or interest on the Bonds or Coupons; (ii) payments to a Bondholder or Couponholder, or to a third party for the same, who shall not be subject to such withholding or deduction subject to filing a 9

statement of being a non-resident or other application for exemption to competent tax authorities; or (iii) payments on the Bond Certificates or Coupons presented more than 30 days after Related Date (provided that this shall not apply to the Additional Amount the Bondholder or Couponholder should have been entitled to if the Bond Certificates or Coupons had been surrendered). Further, such corporation or person shall not be obliged to indemnify or pay taxes borne by each Bondholder or Couponholder arising from the abode or residence of the Bondholder in such other jurisdiction or relationship between the Bondholder and such other jurisdiction. (b) Upon the transactions becoming effective, there has been no Event of Default or situation under which an Event of Default may occur upon passage of time, notice or both, or upon other conditions. (c) The Fiscal Agent delivers a certificate executed by a duly authorized officer of such corporation or persons and a legal opinion by a legal counsel appointed by the Issuer (an in-house counsel of the Issuer will suffice) describing that documents establishing the consolidation, merger, transfer, assignment or lease described above and the undertakings by such corporation or person satisfy all of conditions of (a) and (b) above. During the normal business hours, such documents shall be furnished at the main office of the Fiscal Agent and shall be made available for inspection and copying by the Bondholders (all expenses necessary for the copying shall be borne by persons requesting such copying.) (d) Public notice of such undertakings to the Bondholders is made 14 days before the effective date of the undertakings. As of the effective date of the transaction (subject to conditions (a)-(d) above) such corporation or person (the "Successor") shall, as if it were the Issuer under the Bonds, Coupons and Related Agreements, succeed to and replace the Issuer, and exercise all rights and powers of the Issuer under the Bonds, Coupons and Related Agreements, and succeed to and replace the Issuer and perform all obligations of the Issuer under the Bonds, Coupons and Related Agreements, and, except in the case of lease, the former Issuer shall be released from all obligations and covenants under the Bonds, Coupons and Related Agreements. For the purposes of this Section 11, the term "person" shall mean individual, legal person, partnership, joint venture, association, corporation (kabushiki kaisha), trust, unincorporated organization, government, governmental agency or its subdivisions. All reasonable expenses necessary for procedures under this Section 11 shall be borne by the Issuer, Guarantor or Successor. 10

SECTION 12 QUALIFIED INSTITUTIONAL INVESTORS (1) No registration statement has been filed with respect to the Bonds under Article 4 Paragraph 1 of the Securities and Exchange Law of Japan (Law No. 25 of 1948, as amended). (2) The Bonds shall be issued to qualified institutional investors (defined in Article 4 of Cabinet Office Ordinance Concerning Definitions Provided in Article 2 of Securities and Exchange Law (MOF Ordinance No. 14, March 3, 1993, as amended) as having specialized knowledge and experience in investment in securities (the "Qualified Institutional Investors")). (3) With respect to an offer to acquire the Bonds, the purchase shall be conditioned that any person who intends to acquire the Bonds shall request the recording of the aggregate acquired amount of the bonds pursuant to the provisions of Article 37 of Ordinance Concerning Enforcement of the Law on Recording of Bonds, Etc. of Japan (Imperial Ordinance No. 409 of 1942, as amended). (4) Purchase of the Bonds shall be made on the condition that any person who will acquire the Bonds shall undertake not to transfer the Bonds to any person other than the Qualified Institutional Investors. (5) When transferring any Bonds to any Qualified Institutional Investor, the transferor shall notify the transferee in writing, in advance or at the same time of transfer, that no registration statement has been filed with respect to the Bonds pursuant to the provisions of Article 4, paragraph 1 of the Securities and Exchange Law and as to the conditions in respect of the Bonds set out in this Section 12. SECTION 13 LIMITATION OF APPLICATION FOR RECORDATION OF TRANSFER AS OF PAYMENT DATE Application for recordation of transfer of the Bonds as of the payment date may not be made through the network operated by Japan Bond Settlement Network Co., Ltd. SECTION 14 BONDHOLDERS MEETING The Bondholders meeting for the Bonds shall be governed by applicable provisions under the Commercial Code of Japan. Such Bondholders meeting shall be held in Tokyo, Japan. For the purposes of this Section 14, the Bonds held by the Issuer, Guarantor and each of their subsidiaries shall be excluded and be deemed to be redeemed. All reasonable expenses necessary for procedures under this Section 14 shall, pursuant to applicable laws of Japan, be borne by the Issuer. 11

SECTION 15 SUBSTITUTE BOND CERTIFICATES The Fiscal Agent shall, on behalf of the Company, prepare and deliver substitute Bond Certificates or Coupons to the holders of lost, stolen, destroyed or mutilated Bond Certificates or Coupons, upon application by such holders, which application must be accompanied by a certified transcript of a judgment of nullification rendered by a Japanese court in respect of such Bond Certificates or Coupons. Upon such presentation of the judgment of nullification, the Paying Agent shall pay the principal or interest which has become due without requiring surrender of the Bond Certificates or Coupons with respect thereto. Japanese courts shall have jurisdiction over proceedings governing a judgment of nullification of the Bond Certificates or Coupons. Upon demand by a holder of a Bond Certificate or Coupon which has been lost, stolen, destroyed or mutilated, for the purpose of obtaining a judgment of nullification, for a certificate to the effect that such Bond Certificate or Coupon has been issued by the Company, the Fiscal Agent shall prepare and deliver such certificate. In the case of mutilated Bond Certificates or Coupons, if their authenticity is verifiable by the Fiscal Agent, the Fiscal Agent shall, upon surrender to it of such Bond Certificates or Coupons, prepare and deliver substitute Bond Certificates or Coupons therefor without requiring a judgment of nullification and destroy the surrendered Bond Certificates or Coupons. All expenses incurred in connection with the preparation and delivery of substitute Bond Certificates or Coupons or the certificate shall be borne by the applicant therefor. SECTION 16 REGISTRATION BOOK The registration book for the Bonds shall be prepared and maintained by the Fiscal Agent and kept at its head office on behalf of the Company. SECTION 17 STATUTE OF LIMITATIONS In accordance with Article 316 of the Commercial Code of Japan, the principal of the Bonds shall be subject to 10-year statute of limitations and the interests on the Bonds shall be subject to 5-year statute of limitations. SECTION 18 INDEMNITY OF CURRENCY In the event that judgment or order by a competent court with respect to a claim arising out of the Bonds, Bond Certificates, Coupons or these Conditions of Bonds is in currency other than Japanese Yen, payment pursuant to such judgment or order shall discharge the obligation of the Issuer under these Conditions of Bonds by the equivalent amount in Japanese Yen of such payment at the exchange rate at the time of such payment. The Issuer covenants to pay to the Bondholder or Couponholder the amount necessary to indemnify the balance arising from fluctuation of exchange rates between (i) the date of conversion of the amount in currency other than Japanese Yen under such judgment or order (or a part thereof) or the date of such conversion is deemed to have taken place and (ii) the date of the payment pursuant to such judgment or order. The above covenant is independent from other obligations of the Issuer, 12

separate and independent causes of action, applicable without regard to respite granted by Bondholders or Couponholders from time to time, and remains full force and effect notwithstanding any judgment or order. SECTION 19 NOTICES (1) Public notices with respect to the Bonds shall be made on a daily newspaper reporting current events issued in Tokyo, Japan. No direct notice to each of Bondholders shall be required. Such public notice by the Issuer shall be made by the Fiscal Agent on behalf of the Issuer upon its request and at its expense. The Fiscal and Paying Agency Agreement sets forth that if necessary the Issuer shall make a written request to the Fiscal Agent to make a public notice on behalf of the Issuer. (2) The Issuer shall notify the Bond Holders of the following, provided that a confidentiality agreement reasonably acceptable to the Issuer has been executed with each Bond Holder to whom such disclosure is to be made. The notice shall be made only to the Bond Holders known to the Fiscal Agent by the Fiscal Agent on behalf of the Issuer: (a) within 90 days from the closing date of each fiscal year of the Issuer, the Issuer shall notify an unaudited balance sheet, income statement and cash flow statement (all in U.S. Dollars) of the Issuer for the fiscal year ending on such closing date; and (b) without delay after the last day of March and September each year, the Issuer shall notify nonpublic securities rating as of each such date on long term debt of the Issuer and the Bond by an internationally dominant rating agency. In the event that the Issuer receives the notice of changing such rating and opinion on such rating from the rating agency, the Issuer shall promptly notify to that effect. SECTION 20 GOVERNING LAW AND JURISDICTION Except for authorization of issuance of the Bonds by the Issuer, the form and substance of the Bonds, Bond Certificates, Coupons, and all rights and obligations of all parties including the Bondholders shall be governed by the laws of Japan; provided that the Payment Guarantee shall be governed by the laws of the State of New York. Unless otherwise provided hereunder, the place of performance of obligations under the Bonds shall be Tokyo, Japan. Any legal action or other court procedural action against the Issuer arising from or relating to the Bonds, Bond Certificates, Coupons, or these Conditions of Bonds may be instituted in the Tokyo District Court, to the jurisdiction of which the Issuer hereby expressly, unconditionally and irrevocably submits. 13

The Issuer hereby appoints Managing Director of its Tokyo branch in Tokyo, Japan as the authorized agent of the Issuer upon whom process and any judicial or other court documents may be served in any legal or other court procedural action arising from or relating to the Bonds, Bond Certificates, Coupons, or these Conditions of Bonds that may be instituted in Japan; the Company hereby designates the address from time to time of its Tokyo branch, currently at 1-31, Minami-Aoyama 3-chome, Minato-ku, Tokyo, Japan 107-0062, as the address to receive such process and any judicial or other court documents. The Issuer hereby agrees to take, from time to time and so long as any of the Bonds or Coupons shall remain outstanding, any and all action (including the execution and filing of any and all documents and instruments) that may be necessary to effect and to continue such appointment and designation in full force and effect. If at any time such agent shall not, for any reason, serve as such authorized agent, the Issuer shall immediately appoint, and it shall take any and all action that may be necessary to effect the appointment of, a successor authorized agent in Tokyo, Japan, and the Issuer shall promptly notify the Fiscal Agent and publicly notify the Bondholders of the appointment of such successor agent. Nothing in this Section 20 shall affect the right of the Bondholder to institute legal proceedings against the Issuer in any court of competent jurisdiction under applicable laws or to serve process in any manner otherwise permitted by law. 14

Schedule LIST OF EXISTING INDEBTEDNESS 1. Indebtedness under the BNY Credit Agreement (meaning that certain Credit Agreement, dated as of November 5, 2001, by and among Tiffany & Co., certain Subsidiaries of Tiffany & Co., the banks that are parties thereto, and The Bank of New York, as the administrative agent, as amended, extended, refinanced or renewed from time to time, and each successor loan or credit agreement constituting Tiffany & Co.'s primary bank credit facility, in each case as may be amended from time to time), which may be incurred by Tiffany & Co., and those of its direct and indirect subsidiaries that are or become parties thereto. 2. Guarantees provided by each of the guarantors of the indebtedness described in Item 1 above (unsecured). 3. $60,000,000 6.90% Series A Senior Notes due 2008 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $60,000,000 outstanding). 4. Guarantees provided by each of the guarantors of the indebtedness described in Item 3 above (unsecured). 5. $40,000,000 7.05% Series B Senior Notes due 2010 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $40,000,000 outstanding). 6. Guarantees provided by each of the guarantors of the indebtedness described in Item 5 above (unsecured). 7. Indebtedness of Tiffany & Co. Japan Inc. under Y5,000,000,000 4.50% Loan due 2011 from American Family Life Assurance Company of Columbus, Japan Branch (unsecured; Y5,000,000,000 outstanding). 8. Guaranty provided by Tiffany & Co. of the indebtedness described in Item 7 above (unsecured). 9. Indebtedness of Tiffany & Co. Japan Inc. under Y5,500,000,000 Variable Rate Loan due 2004 from The Fuji Bank, Ltd. (unsecured; Y5,500,000,000 outstanding). 10. Interest Rate Swaps with J.P. Morgan Chase Bank in connection with the indebtedness described in item 9 above (unsecured). 11. Guaranty provided by Tiffany & Co. of the indebtedness described in Item 9 above (unsecured). 15

12. Brazilian Reais 7,250,000 uncommitted line of credit provided to Tiffany-Brasil Ltda. by Bank Boston N.A. (unsecured). 13. $40,000,000 6.15% Series C Senior Notes due 2009 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $40,000,000 outstanding). 14. $60,000,000 6.56% Series D Senior Notes due 2012 issued by Tiffany & Co. to certain purchasers thereof (unsecured; $60,000,000 outstanding). 15. Guarantees provided by the guarantors of the indebtedness described in Items 13 and 14 above (unsecured). 16. Interest Rate Swaps with Lehman Brothers Special Financing, Inc. in connection with the indebtedness described in Items 13 and 14 above. 17. Forward exchange yen contracts, including those arising under that certain Foreign Exchange and Options Master Agreement dated as of March 28, 1997, by and between The Bank of New York and Tiffany and Company ("FEOMA-1") and that certain Foreign Exchange and Option Master Agreement dated as of March 28, 1997, by and between The Bank of New York and Tiffany & Co. International ("FEOMA-2") (unsecured). 18. Guaranty provided by Tiffany & Co. International of the indebtedness arising under FEOMA-1 (unsecured). 19. Guaranty provided by Tiffany and Company of the indebtedness arising under FEOMA-2 (unsecured). 20. Indebtedness under the LSI Credit Agreement (meaning that certain Credit Agreement, dated as of May 13, 2003, by and among Tiffany & Co. and Little Switzerland, Inc., as Borrowers, and Wachovia Bank, National Association, as Lender, as amended, extended, refinanced or renewed from time to time, and each successor loan or credit agreement, in each case as may be amended from time to time), which may be incurred by Tiffany & Co., and those of its direct and indirect subsidiaries that are or become parties thereto. 21. Guarantees provided by each guarantors of the indebtedness described in Item 20 above (unsecured). 22. Indebtedness under the Agreement on Overdraft in Special Current Account (Y11,000,000,000), dated June 26, 2003 between Mizuho Bank, Ltd., as Lender Tiffany & Co. Japan Inc. 16

23. Guaranty provided by Tiffany & Co. of the indebtedness described in Item 22. 24. Indebtedness of World Gift Imports (Barbados) Ltd., a subsidiary of Little Switzerland, Inc., to Almod Diamonds Ltd. ($4,000,000) 17

Schedule 2 100,000,000 Yen No. ________________ Tiffany & Co. Japan Inc. First Series Yen Bonds (Qualified Institutional Investors Only) guaranteed by Tiffany & Co. Unsecured 100,000,000 Yen Interest: 2.02% per annum Due September 30, 2010 These Bonds are a part of the Tiffany & Co. Japan Inc. First Series Yen Bonds (Qualified Institutional Investors Only) guaranteed by Tiffany & Co. in the aggregate principal amount of 15,000,000,000 Yen due September 30, 2010 issued on September 30, 2003 by Tiffany & Co. Japan Inc. based on its corporate resolution and in accordance with the Conditions of Bonds indicated on the reverse side of the Bonds. September 30, 2003 Tiffany & Co. Japan Inc. _________________________ Director (signature in facsimile) 1

In accordance with the Payment Guarantee in the form indicated on the reverse side of the Bonds, Tiffany & Co. unconditionally and irrevocably guarantees the Bondholders and Couponholders of the due and punctual payment by Tiffany & Co. Japan Inc. of the principal of (including cases where there is premium on capital stock) and interest on the Bonds, as well as all other amounts payable at the maturity date or other due dates under these Conditions of Bonds described in the form indicated on the reverse side of the Bonds. September 30, 2003 Tiffany & Co. _____________________________ Executive Vice President and Chief Financial Officer (signature in facsimile) [The following wording will be printed in English on the last line of the front face of the Bonds.] Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the United States Internal Revenue Code of 1986, as amended. 2

Schedule 3 Tiffany & Co. Japan Inc. First Series Yen Bonds (Qualified Institutional Investors Only) guaranteed by Tiffany & Co. 100,000,000 Yen Bond Coupon 1,010,000 Yen To be paid on March 30/September 30, ____________ No. __________ Tiffany & Co. Japan Inc. ___________________________ Director (signature in facsimile) 1

In accordance with the Payment Guarantee in the form indicated on the reverse side of the Bonds, Tiffany & Co. unconditionally and irrevocably guarantees the Bondholders and Couponholders of the due and punctual payment by Tiffany & Co. Japan Inc. of amounts payable at the maturity date of the Coupons. Tiffany & Co. ______________________________________ Executive Vice President and Chief Financial Officer (signature in facsimile) [The following wording will be printed in English on the last line of the front face of the Bonds.] Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the United States Internal Revenue Code of 1986, as amended. 2

Exhibit 10.135a Tiffany & Co. (Translation) Report on Form 10-K TIFFANY & CO. JAPAN INC. [letterhead] September 26, 2003 Dear Shareholders: As there was an erroneous description in Section II. (Representations and Warranties by the Issuer), Paragraph (7) of the Application for Bonds pertaining to Tiffany & Co. Japan Inc. First Series Yen Bonds (Qualified Institutional Investors Only) guaranteed by Tiffany & Co., we would like to correct such erroneous description as follows. Thus, in order to verify your consent to this correction, we kindly ask that you specify the date, company name, and your name at the signature column at the end of this letter. We thank you in advance for your kind understanding and cooperation in this matter. Tiffany & Co. Japan Inc. Director, Katsuhiko Nitta (seal) Before Correction: (7) When the entire amount of the Issue Price has been paid in full and when the signature of the Board Chairman of the Issuer in facsimile has been put on the Bond Certificates and the Coupons, and the Bond Certificates accompanied by the Coupons have been delivered to or to the order of the purchaser, the Bond Certificates accompanied by the Coupons so delivered will have been duly and validly issued and will represent legally valid and binding obligations of the Issuer enforceable against it in accordance with their respective terms, except that enforceability may be limited by the laws of bankruptcy, insolvency, reorganization or other similar laws relating to creditors' rights in general. After Correction: (7) When the entire amount of the Issue Price has been paid in full and when the signature of the Director of the Issuer in facsimile has been put on the Bond Certificates and the Coupons, and the Bond Certificates accompanied by the Coupons have been delivered to or to the order of the purchaser, the Bond Certificates accompanied by the Coupons so delivered will have been duly and validly issued and will represent legally valid and binding obligations of the Issuer enforceable against it in accordance with their 1

respective terms, except that enforceability may be limited by the laws of bankruptcy, insolvency, reorganization or other similar laws relating to creditors' rights in general. I hereby approve of and consent to the foregoing correction. September , 2003 ________________________________ Company Name: Name: 2

Exhibit 10.136 Tiffany & Co. PAYMENT GUARANTEE Report on Form 10-K THIS PAYMENT GUARANTEE (this "GUARANTEE"), dated as of September 30, 2003, is made by Tiffany & Co., a Delaware corporation (the "GUARANTOR"), for the benefit of the Holders (as defined below) from time to time of the Bonds (as defined below) of Tiffany & Co. Japan Inc., a Delaware corporation (the "ISSUER"). R E C I T A L S A. The Issuer is issuing on the date hereof Tiffany & Co. Japan Inc. Yen Bonds First Series (for Qualified Institutional Investors Only) Guaranteed by Tiffany & Co. (the "BONDS") in the aggregate principal amount of Y15,000,000,000 and the Guarantor desires to issue this Guarantee for the benefit of the Holders as provided herein. B. The Issuer is indirectly wholly owned by the Guarantor and Guarantor will benefit from the purchase by each Holder. C. Guarantor desires hereby irrevocably and unconditionally to agree to the extent set forth herein to guarantee to the Holders the prompt and unconditional payment of the Payment Obligations (as defined below). NOW, THEREFORE, in consideration of the purchase by each Holder, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the Holders. 1. DEFINITIONS AND INTERPRETATION. (a) Definitions. The terms set forth below shall, unless the context otherwise requires, have the following meanings. "HOLDER" shall mean any holder from time to time of any Bonds of the Issuer and/or any interest coupons appertaining thereto. "PAYMENT OBLIGATIONS" shall mean the principal of and interest on the Bonds and all other amounts payable to the Holders under the conditions of bonds (shasai no yoko) in relation to the Bonds (the "CONDITIONS OF BONDS"). (b) Singular and Plural. Words used in this Guarantee in the singular, where the context so permits, shall be deemed to include the plural and vice versa. The

definitions of words in the singular in this Guarantee shall apply to such words when used in the plural where the context so permits and vice versa. (c) Sections and Headings. Unless the context requires otherwise, any references in this Guarantee to paragraphs, sections or recitals shall be deemed to refer to the paragraphs, sections and recitals to this Guarantee. Section headings to this Guarantee are for convenience only and shall not be used to interpret any provision of this Guarantee. 2. GUARANTEE OF OBLIGATIONS. Guarantor hereby irrevocably and unconditionally guarantees to pay in full to the Holders the Payment Obligations, as and when the same shall be due (except to the extent paid by the Issuer), regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a Payment Obligation may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer or any other controlled subsidiary of Guarantor to pay such amounts to the Holders. 3. NATURE OF GUARANTEE. This Guarantee is an irrevocable, absolute and continuing guarantee of payment and not a guarantee of collection. The obligations of Guarantor under this Guarantee are independent of the obligations of the Issuer with respect to the Bonds and the Guarantor shall be liable as principal and sole debtor hereunder to make the Payment Obligations pursuant to the terms of this Guarantee, and a separate action or actions may be brought and prosecuted against Guarantor to enforce this Guarantee, irrespective of whether any action is brought against the Issuer. 4. WAIVERS. The Guarantor hereby further waives for the benefit of the Holders: (a) any right to require Holders to proceed against the Issuer or any other person or entity before proceeding against the Guarantor; (b) any defense based on any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of a principal; (c) any defense based upon the errors or omissions of Holders to enforce, assert or exercise any right, privilege, power or remedy under the terms of the Bonds; and (d) to the fullest extent permitted by law, any defenses or benefits that may be derived from or afforded by any principles or provisions of law, statutory or otherwise, which limit the liability of or exonerate the Guarantor or sureties, or which may conflict with the terms of this Guarantee.

5. SUBROGATION. The Guarantor shall be subrogated to all rights (if any) of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this Guarantee and shall have the right to waive payment of any amount of the Payment Obligations in respect of which payment has been made to the Holders by the Guarantor pursuant to Section 2; provided, however, that the Guarantor shall not (except to the extent required by law) exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of a payment under this Guarantee unless and until the Payment Obligations have been paid in full. 6. REPRESENTATIONS AND WARRANTIES OF GUARANTOR. The Guarantor makes the following representations and warranties as of the date hereof: (a) The Guarantor is duly organized and validly existing as a corporation under the laws of the State of Delaware. (b) The execution and delivery of this Guarantee by the Guarantor have been duly authorized by the Guarantor's Board of Directors, and this Guarantee constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally. (c) The execution and delivery of the Guarantee by the Guarantor or the giving of the Guarantee by it will not conflict with, or result in a breach of, any of the terms or provisions of (or constitute a breach of or default under) laws or constitutive documents of the Guarantor or any agreement or undertaking whatever by which it is bound. (d) The Guarantor is not involved in any litigation, arbitration or administrative proceedings which would have a material effect, if determined adversely, on the Guarantor's ability to perform and comply with its obligations under the Guarantee, nor, to the best of the Guarantor's knowledge, are any such proceedings pending or threatened against the Guarantor; nor, so far as the Guarantor is aware, do circumstances exist which are likely to lead to such proceedings. (e) All necessary consents, notifications, authorizations and approvals of, and registrations and filings with any court, government department or other regulatory body or agencies required by the Guarantor for or in connection with the execution and delivery of, and compliance with the terms of the Guarantee have been obtained or made and remain in full force and effect. (f) Neither the Guarantor, nor any affiliate (as defined in Rule 405 under the Securities Act) of it has engaged or will engage in any directed selling efforts (as defined in Regulation S under the Securities Act) with respect to the Bonds, and each

of the foregoing persons has compiled and will comply with the offering restriction requirements of Regulation S under the Securities Act. 7. EFFECT OF BANKRUPTCY. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or any agreement, stipulation or settlement, Holders are compelled to rescind or restore any payment, or any part thereof, received by the Holders in satisfaction of the Payment Obligations, as set forth herein, any prior release or discharge from the terms of this Guarantee given to the Guarantor by the Holders shall be without effect, and this Guarantee shall remain in full force and effect to the extent permitted by applicable law. The Guarantor's obligations hereunder shall not be discharged except by the Guarantor's performance of such obligations and then only to the extent of such performance. 8. TERMINATION OF GUARANTEE. This Guarantee is a continuing guarantee and shall remain in full force and effect until the Payment Obligations have been paid in full. 9. SUCCESSORS AND ASSIGNS. This Guarantee and each of the Guarantor's obligations hereunder shall be binding upon the Guarantor and its successors and assigns and shall inure to the benefit of the Holders. 10. MISCELLANEOUS. (a) Notices. Any notice required or permitted to be given under this Guarantee to the Guarantor shall be in writing and either shall be (a) mailed by certified mail, postage prepaid, return receipt requested, (b) sent by overnight air courier service, (c) personally delivered to a representative of the Guarantor, (d) sent by facsimile (provided an identical notice to any such notice other than one delivered by e-mail pursuant to clause (e) of this Section is also sent simultaneously by mail, overnight courier, or personal delivery as otherwise provided in this Section), or (e) sent by e-mail (provided an identical notice is also sent simultaneously by facsimile, mail, overnight courier, or personal delivery as otherwise provided in this Section). Each notice required to be given hereunder to the Guarantor shall be given to the following address, facsimile numbers or e-mail addresses as applicable Tiffany & Co. 15 Sylvan Way, Parsippany, New Jersey 07054-3893 Attention: Vice President - Treasurer Tel: (973) 254-7651 Fax: (973) 254-7645 Email:mconnolly@tiffany.com And

Tiffany & Co. 600 Madison Avenue New York, New York 10022 Attention: Senior Vice President - General Counsel and Secretary Tel: (212) 230-5320 Fax: (212) 230-5324 Email:pdorsey@tiffany.com Any notice required or permitted to be given under this Guarantee to the Holders shall be given by the Guarantor in the same manner as notices sent by the Issuer to the Holders pursuant to the Condition of Bonds. (b) English Language. If this Guarantee is translated into Japanese or any other language for the convenience of the parties or some of them, this English language version shall for all purposes be deemed to be the definitive and binding version hereof. (c) Governing Law. THE PARTIES AGREE THAT THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. (d) Jurisdiction and Venue. THE PARTIES AGREE TO THE EXCLUSIVE JURISDICTION OF COURTS LOCATED IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA, OVER ANY DISPUTES ARISING UNDER OR RELATING TO THIS GUARANTEE OR ENFORCEMENT OF THE GUARANTEE. (e) Waiver of Jury Trial. THE PARTIES HERETO, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION), BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS GUARANTEE. (f) Entire Agreement. This Guarantee replaces, supersedes and cancels all other previous and contemporaneous arrangements, understandings, representations or contracts between the parties hereto either oral or written with respect to the subject matter of this Guarantee. In the event a claim is made relating to any conflict, omission or ambiguity in this Guarantee, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Guarantee was prepared by or at the request of a particular party or its counsel.

(g) Invalid Provisions - Severability. If any provision of this Guarantee is held to be illegal, invalid or unenforceable, such provision shall be fully severable; this Guarantee shall be construed and enforced as is if such illegal, invalid or unenforceable provision had never comprised a part hereof; the remaining provisions of this Guarantee shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom; and in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Guarantee, a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to be legal, valid or enforceable. [NO FURTHER TEXT ON THIS PAGE]

IN WITNESS WHEREOF, the Guarantor has caused this Payment Guarantee to be executed by its duly authorized signatory as of the date first above written. GUARANTOR: TIFFANY & CO. a Delaware corporation By: /s/ James N. Fernandez ---------------------- Name: James N. Fernandez Its: Executive Vice President and Chief Financial Officer

Exhibit 10.137 Tiffany & Co. TIFFANY & CO. Report on Form 10-K LEGAL DEPARTMENT MEMORANDUM OCTOBER 23, 2003 TO: DISTRIBUTION LIST FROM: PATRICK B. DORSEY RE: TERMINATION OF SPLIT-DOLLAR LIFE INSURANCE AGREEMENT; NEW ARRANGEMENTS TO PAY INSURANCE PREMIUMS USING SPECIAL BONUSES Two significant developments have caused the Board of Directors to reconsider the split-dollar life insurance program. - First, the Internal Revenue Service has changed its position with respect to the taxation of split-dollar life insurance agreements of the type Tiffany uses. The IRS takes the position that premium payments made under split-dollar agreements of the type used by the Company will be treated as loans unless the agreements are terminated before January 1, 2004. If treated as a loan, the officer in question would have imputed interest income at market rates on the aggregate amount of the premium payments outstanding. - Second, the Sarbanes-Oxley Act makes loans by companies to their executive officers illegal. In sum, the continued viability of split-dollar life insurance as an attractive means of financing an employee benefit was dealt a mortal blow by the IRS; Sarbanes-Oxley put a nail in the coffin. Tiffany has chosen an alternative means of financing the benefit which should give the executive nearly the same advantages as under the old arrangement: - Prior to January 1, 2004 Tiffany will terminate the existing Split-Dollar Life Insurance Agreements for currently employed policy holders. Each such Agreement contains a provision allowing Tiffany to terminate.(1) - Tiffany will then withdraw from each policy sufficient funds to repay the premiums "loans" that have been made to date. Tiffany will then discharge its lien against the policy, leaving each executive the sole owner of his or her policy. - ----------- (1) These Agreements did not provide "vested" benefits until retirement at age 65, although there was provision for early vesting on a change of control.

- Any cash value remaining in the policy after Tiffany withdraws its funds will pass to the executive tax-free(2); however, Tiffany expects that the cash value will be allowed to remain in the policies as a building block for the funding objectives described below. - Tiffany will continue to pay premiums on the policy and administer the policies(3) to achieve the original funding objectives of the program. Specifically, those objectives are as follows: - Pre-retirement death benefit equal to three times annual compensation (salary plus bonus, averaged over the prior three years); - Post-retirement cash value (i) so that the death benefit can be reduced to two times annual compensation on retirement (salary plus bonus, averaged over the three year period prior to retirement) and (ii) so that no further premium payments need be made to keep such death benefit in force. Retirement is assumed to occur at age 65 and it is assumed that the executive will not take any loans against or remove cash value from the policy, either before or after retirement. - For tax purposes and compensation disclosure purposes, the premium payments made by Tiffany will be treated as non-cash bonuses and will attract income tax as though the bonuses had been paid the executive in cash. To offset the executive's increased tax liability, Tiffany will pay a partial "gross-up" on the premium-bonus amounts through credit to tax withholding accounts. The "gross-up" will be calculated to keep executives roughly whole, on an after-tax basis, with the prior program. Under the prior program income was imputed on the value of term life insurance for the coverage received. LIMITATION OF LIABILITY AND RESERVATION OF RIGHTS. THIS MEMORANDUM DISCUSSES THE CURRENT FUNDING GOALS OF TIFFANY AND COMPANY WITH RESPECT TO THE LIFE INSURANCE BENEFIT FOR EXECUTIVE OFFICERS. IT IS NOT A VESTED BENEFIT AND IT MAY BE DISCONTINUED BY TIFFANY AND COMPANY AT ITS ELECTION. ALTHOUGH TIFFANY AND COMPANY AGREES THAT IT SHALL, UNLESS AND UNTIL THIS PROGRAM IS TERMINATED, PAY PREMIUMS SUFFICIENT TO KEEP THE PRE-RETIREMENT DEATH BENEFIT REFERRED TO ABOVE IN EFFECT FOR EACH POLICY HOLDER, TIFFANY UNDERTAKES NO SPECIFIC CONTRACTUAL OBLIGATION WITH RESPECT TO THE CASH VALUE OF ANY POLICY AT ANY POINT IN TIME. TIFFANY MAY USE ASSUMPTIONS AND ESTIMATES OF FUTURE SALARY INCREASES, BONUSES, POLICY FUNDING RATES AND PERSONAL INCOME TAX RATES IN ORDER TO CALCULATE PREMIUM PAYMENTS AND POLICY CASH VALUES AND TO ACHIEVE ITS FUNDING GOALS. NOTICE OF TERMINATION. THIS MEMORANDUM SHALL SERVE AS WRITTEN NOTICE OF TERMINATION OF THE SPLIT-DOLLAR LIFE INSURANCE AGREEMENTS INDICATED ON THE PERSONAL - ----------------- (2) See IRS Notice 2002-8 and final IRS regulations on split-dollar life insurance published in 2003. (3) The policies have been set up to allow great flexibility in premium payments and to allow for changes in the death benefit payable to account for changes in salary and for repayment of loans, etc. 2

AND CONFIDENTIAL ATTACHMENT HERETO. THE AMOUNTS SHOWN THEREON ARE ILLUSTRATIVE AND BASED ON BEST ESTIMATES. IF THERE IS ANY DISCREPANCY BETWEEN THE AMOUNTS SHOWN AND THE AMOUNTS CARRIED IN THE INSURANCE COMPANY RECORDS, THE LATER WILL CONTROL. Next Steps: Steve Salyk will contact you and arrange to provide you with up-to-date information about policy funding, death benefits and tax effects. 3

DISTRIBUTION LIST NAME Michael J. Kowalski James E. Quinn Beth O. Canavan James N. Fernandez Victoria Berger-Gross Patrick B. Dorsey Fernanda Kellogg John Petterson Caroline Naggiar 4

Exhibit 10.138 Tiffany & Co. Report on Form 10-K 2004 TIFFANY AND COMPANY UN-FUNDED RETIREMENT INCOME PLAN TO RECOGNIZE COMPENSATION IN EXCESS OF INTERNAL REVENUE CODE LIMITS WHEREAS, Tiffany and Company, a New York Corporation, intends by this instrument to establish an unfunded plan to provide supplemental retirement benefits to executive officers and other members of a select group of management employees as a means of recruiting and retaining qualified employees; and WHEREAS, this Plan is intended to constitute both an unfunded excess benefit plan under Section 3(36) of Title I of ERISA and a nonqualified, unfunded deferred compensation plan for a select group of management or highly compensated employees under Title I of ERISA. WHEREAS, all benefits payable under this Plan shall be paid from the general assets of Tiffany and Company. This Plan is not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code of 1986, as amended; WHEREAS, the full earnings of highly compensated employees are not recognized as compensation under the Tiffany and Company Pension Plan due to limitations imposed under the Internal Revenue Code; and WHEREAS, Tiffany and Company, for purposes of calculating supplemental retirement benefits under this plan, wishes to recognize earnings that would be recognized under the Tiffany and Company Pension Plan but for such limitations and pay supplemental retirement benefits under this plan that are not subject to any limitation as to amount under the Code. NOW, THEREFORE, to carry the above intentions into effect, and intending to be legally bound hereby, Tiffany and Company does enter into this Plan effective the first day of January, 2004. This Plan shall be known as the 2004 TIFFANY AND COMPANY UN-FUNDED RETIREMENT INCOME PLAN TO RECOGNIZE COMPENSATION IN EXCESS OF INTERNAL REVENUE CODE LIMITS 1

ARTICLE I DEFINITIONS FOR THE PURPOSES OF THIS PLAN, THE FOLLOWING CAPITALIZED TERMS AND PHRASES SHALL HAVE THE MEANINGS ASCRIBED TO THEM BELOW: "ACCRUED BENEFIT" means, with respect to each Participant, the amount on a given date of the benefits provided under Section 3.2 of this Plan using Average Final Compensation, Covered Compensation and Creditable Service determined as of such date. The Accrued Benefit for any Participant may be expressed in a form which is the Actuarial Equivalent of the Accrued Benefit. "ACTUARIAL EQUIVALENT" shall have the same meaning as in the Pension Plan. "AFFILIATE" means, with reference to any Person, any second Person that controls, is controlled by, or is under common control with, any such first Person, directly or indirectly. "AVERAGE FINAL COMPENSATION" shall have the same meaning as in the Pension Plan. "BENEFIT" means, with respect to each Participant or his beneficiary, the benefit to which Participant is entitled under Article III of this Plan. "BOARD" means the Board of Directors of Tiffany and Company, a New York corporation. "CAUSE" means a termination of Participant's employment, involuntary on Participant's part, which is the result of: (i) Participant's conviction or plea of no contest to a felony involving financial impropriety or a felony which would tend to subject the Company or any of its Affiliates to public criticism or materially interfere with Participant's continued service to the Company or its Affiliate; (ii) Participant's willful and unauthorized disclosure of material "Confidential Information" (as that term is defined in the Non-Competition and Confidentiality Covenants) which disclosure actually results in substantive harm to the Company's or its Affiliate's business or puts such business at an actual competitive disadvantage; (iii) Participant's willful failure or refusal to perform substantially all such proper and achievable directives issued by Participant's superior (other than: (A) any such failure resulting from Participant's incapacity due to physical or mental illness, or (B) any such refusal made by Participant in good faith because Participant believes such directives to be illegal, unethical or immoral) after a written demand for substantial performance is delivered to Participant on behalf of Company, which demand specifically identifies the manner in which Participant has not substantially performed Participant's duties, and which performance is not 2

substantially corrected by Participant within [ten (10)] days of receipt of such demand; (iv) Participant's commission of any willful act which is intended by Participant to result in his personal enrichment at the expense of the Company or any of its Affiliates, or which could reasonably be expected by him to materially injure the reputation, business or business relationships of the Company or any of its Affiliates; (v) A theft, fraud or embezzlement perpetrated by Participant upon Company or any of its Affiliates. For purposes of this definition, no act or failure to act on Participant's part shall be deemed "willful" unless done, or omitted to be done, by Participant in bad faith toward, or without reasonable belief that such action or omission was in the best interests of, Company or its Affiliate. Notwithstanding the foregoing, Participant shall not be deemed to have been terminated for Cause for the purposes of this Plan unless and until there shall have been delivered to Participant a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths (3/4th) of the entire membership of the Board (exclusive of the Participant if Participant is a member of such Board) at a meeting called and held for such purpose (after reasonable notice to Participant and an opportunity for Participant, together with counsel for Participant, to be heard before such Board), finding that, in the good faith opinion of such Board, Cause exists as set forth above. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COMMITTEE" means the Pension Plan Committee of the Company, which shall have authority over this Plan. "COMPANY" shall have the same meaning as in the Pension Plan. "COMPENSATION" shall have the same meaning as in the Pension Plan, provided, however, that, for purposes of this Plan, the annual compensation taken into account for any Participant for any year shall not be subject to the annual compensation limit established by the Omnibus Budget Reconciliation Act of 1993 (Code Section 401(a)(17)). "COVERED COMPENSATION" shall have the same meaning as in the Pension Plan. "CREDITABLE SERVICE" shall have the same meaning as in the Pension Plan. "EARLY RETIREMENT DATE" shall mean, with respect to any Participant, the date such Participant first qualifies to receive a retirement allowance under the provisions of Section 3.4 below. "EFFECTIVE DATE" means January 1, 2004. 3

"ENDING COMPENSATION" means the annual rate of Compensation from the Company in effect for the Participant at the time in question, provided that commissions, bonuses, premiums and incentives shall be determined by reference to such items paid in the last full Plan Year completed at the time in question. "MONTH OF RETIREMENT" shall have the same meaning as in the Pension Plan. "NON-COMPETITION AND CONFIDENTIALITY COVENANTS" means an instrument in substantially the form of Exhibit A attached duly completed and executed by the Participant in question. "NORMAL RETIREMENT" means retirement at age 65, the normal retirement age under the Pension Plan. "NORMAL RETIREMENT AGE" means the later of (i) Participant's 65th birthday or (ii) the 5th anniversary from his date of hire. "NORMAL RETIREMENT PENSION BENEFIT" means, with respect to each Participant at any point in time, the annual retirement allowance to which Participant would be entitled at Normal Retirement payable from the Pension Plan as an annuity for Participant's life, whether or not such retirement allowance is actually paid, and regardless of any optional form of benefit payment elected under the Pension Plan by said Participant based upon such Participant's Average Final Compensation, Covered Compensation and Creditable Service, in each case as determined solely in accordance with the provisions of the Pension Plan and without reference to this Plan. "PARTICIPANT" means a participant in this Plan. "PENSION PLAN" means the Tiffany and Company Pension Plan as such Pension Plan may be amended from time to time. "PENSION BENEFIT" shall have the same meaning as in the Pension Plan. "PERSON" means any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity. "THIS PLAN" means the 2004 Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of IRC Limits as described in this instrument, as amended from time to time. "PLAN YEAR" means a "Plan Year" under the Pension Plan. "SELECT MANAGEMENT EMPLOYEE" means those employees of the Company listed in Schedule I hereto who are, as of the Effective Date, actively employed by Tiffany and Company, or who thereafter return to active employment from a Company-approved approved leave of absence or disability leave and such persons who are thereafter appointed by the Board as an officer of 4

Tiffany and Company with the title of Vice President, Group Vice President, Senior Vice President, Executive Vice President, President, Chairman of the Board, chief operating officer, chief executive officer, and any other management employee of the Company who is specifically designated a Select Management Employee by the Board; for the purpose of this definition, once a person has been appointed a Select Management Employee, he or she will be deemed, for the purposes of this Plan, to remain a Select Management Employee, regardless of subsequent change in title or responsibility. Notwithstanding the foregoing, the term Select Management Employees does not include persons (a) whose principal place of work is outside the United States and (b) who are paid their Compensation from a foreign bank or bank branch or who are eligible to receive retirement, severance or similar benefits under foreign law or as a result of foreign custom. "VESTED" means that the Participant has a right to his Accrued Benefit as provided for in Section 3.12 below forfeitable only as provided in Section 3.12 below. ARTICLE II PARTICIPATION IN THIS PLAN 2.1 Commencement of Participation. Each Select Management Employee shall automatically become a Participant in this Plan as of the latter of (i) the Effective Date, (ii) the date he or she first becomes a Participant in the Pension Plan or (iii) the date he or she is first appointed a Select Management Employee by the Board. 2.2 Cessation of Participation and Re-commencement of Participation. A Participant shall cease to be a Participant on the earlier of: (i) the date on which this Plan terminates or (ii) the date on which he ceases to be a Participant in the Pension Plan. A former Participant shall again become a Participant in this Plan when he again becomes a Participant in the Pension Plan. Except to the extent different treatment is prescribed for former Participants pursuant to the terms of Article III below, a former Participant will be deemed a Participant, for all purposes of this Plan, as long as such former Participant retains a Vested interest pursuant to the terms of Article III below. ARTICLE III PLAN BENEFITS 3.1 Overriding Limitation. Except as provided in this Section 3.1, under no circumstances will a Participant or a former Participant be entitled to a Benefit under this Plan unless Participant becomes Vested in his Normal Retirement Pension Benefit. In the event the Pension Plan shall have been terminated as of the time a Pension Benefit would have become payable to Participant under the Pension Plan, the Benefit under this Plan shall be calculated by application, by means of the formula set forth in Section 3.2 below, of the Normal Retirement Pension Benefit which would have been payable to Participant under the Pension Plan as in effect on January 1, 2004; and if Participant would not have been entitled to a Pension Benefit under the Pension Plan as in effect on January 1, 2004 as of 5

the date a Benefit would otherwise become payable hereunder, no Benefit shall be payable under this Plan. 3.2 Annual Retirement Allowance. Subject to Section 3.12 below, any person who, subsequent to December 31, 2003, ceases to be a Participant after he is Vested shall be entitled to an annual retirement allowance, payable in monthly installments commencing at the end of the later of February 2004 or the calendar month immediately following his Month of Retirement, and continuing to and including the last monthly payment in the month of his death, equal to (A) less (B), where (A) equals 1 percent of the Participant's Average Final Compensation not in excess of Covered Compensation multiplied by the number of his years, including fractions thereof, of Creditable Service, plus 1-1/2 percent of his Average Final Compensation in excess of Covered Compensation multiplied by the number of his years, including fractions thereof, of Creditable Service and (B) equals such person's Normal Retirement Pension Benefit. For purposes of calculating the value of (A) in the foregoing sentence, but not for purposes of calculating the value of (B) therein, Average Final Compensation and Covered Compensation shall be determined without regard to any limit on Compensation imposed by Section 401(a)(17) of the Code. 3.3 Normal Retirement. A Participant who has reached Normal Retirement Age may retire on a retirement allowance computed in accordance with Section 3.2; except that any Participant shall, at his election, be continued in service after age 65. At normal retirement age, all benefits payable under this Plan shall be non-forfeitable except as provided in Section 3.12 below. 3.4 Early Retirement. Subject to Section 3.12 below, any Participant who has attained age 60 and has rendered 15 or more years of Creditable Service shall be retired by the Committee on a retirement allowance on the last day of the calendar month next following receipt by the Committee of a written application therefor by the Participant. At the Participant's election, he shall receive a retirement allowance commencing on his retirement which shall be equal to the annual retirement allowance computed in accordance with Section 3.2 and which he would otherwise receive upon attaining age 65, reduced by 1/12th of 5 percent for each month by which the date of his retirement allowance would otherwise have commenced under Section 3.3. 3.5 Vested Retirement. Subject to Section 3.12 below, payments to any person who ceases to be a Participant on or after January 1, 2003, and who is Vested and entitled to a retirement allowance pursuant to Section 3.2 and to whom Sections 3.3 and 3.4 do not apply shall commence on the last day of the calendar month next following the later of (i) the occurrence of his 65th birthday or (ii) receipt by the Committee of a written application therefor; provided that if the proper amount of such payment cannot for any reason be ascertained by such date, a payment retroactive to such date shall be made within sixty days of the earliest date on which it can be ascertained. Such a person may, by written notice to the Committee, elect to have his retirement allowance commence at any time after he has attained age 60 and completed 15 years of Creditable Service and after receipt by the Committee of his application for benefits; provided, however, that 6

payment of such allowance prior to the attainment of age 65 shall be in a reduced amount and shall be the Actuarial Equivalent as of the date payments commence of the retirement allowance computed in accordance with Section 3.2 which he would otherwise receive after attaining Normal Retirement Age. 3.6 Optional Benefits in Lieu of Regular Benefits. A Participant under this Plan shall be deemed to have elected that the retirement allowance payable under this Plan be payable in the same form of benefit that the Participant has elected or is deemed to have elected under the Pension Plan, to wit, either as an annuity for the life of the Participant or the Actuarial Equivalent thereof paying a proportionately reduced retirement allowance during his life, with the provision that after his death an allowance of 50%, 66-2/3%,75% or 100% of the rate of his reduced allowance, at his designation, shall continue during the life of, and shall be paid to, the beneficiary designated by him at the time of electing the option. Any election, notice or designation made or given by the Participant under the Pension Plan shall be deemed an election, notice or designation made or given by the Participant under this Plan and any change or revocation of an election, notice or designation made under the Pension Plan (whether automatic or voluntary) shall be deemed to be a change or revocation of an election, notice, or designation under this Plan. All time limitations for making elections or designations or giving notice under the Pension Plan with respect to any form of benefit shall be applicable under this Plan. Any designation of a beneficiary made under this Plan shall be subject to the same limitations and spousal consent and spousal waiver requirements as would apply to a comparable designation under the Pension Plan, provided, however that the Committee may, in its discretion, require that any spousal consent or waiver address this Plan specifically. 3.7 Survivorship Benefits. (a) Upon (i) the death of a Participant who has become Vested in his Accrued Benefit, as provided in Section 3.12 of this Plan, (ii) the death of a Participant who has attained Normal Retirement Age, (iii), subject to Section 3.12 below, the death of a former Participant who had both attained age 60 and rendered 15 or more years of Creditable Service prior to the date he ceased to be a Participant (but who was not receiving at the time of his death any retirement allowance) or (iv) subject to Section 3.12 below, the death of a former Participant who had become Vested in his Accrued Benefit but who had not both attained age 60 and rendered 15 or more years of Creditable Service prior to the date he ceased to be a Participant (but who was not receiving at the time of his death any retirement allowance) there shall be payable to the Participant's or former Participant's spouse, if any, a spouse's allowance as provided for in this Section 3.7. (b) The amount of the spouse's allowance shall be determined by Section 3.7(d) below for the spouse of a Participant described in Section 3.7(a)(i) or (ii) above and for the spouse of a former Participant described in Section 3.7(a)(iii) above. The amount of the spouse's allowance shall be determined by Section 3.7(e) below for the spouse of a former Participant described in Section 3.7(a)(iv) above. 7

(c) The spouse's allowance shall commence as of the first day of the calendar month following the month in which the Participant or former Participant died or would have been age 60, whichever is the later, except that the Committee may, under rules uniformly applicable to all Participants and former Participants similarly situated, direct payment commencing on the first day of any earlier calendar month after the Participant's or former Participant's death. (d) If the Committee does not direct early commencement of payment, the spouse's allowance for the spouse of a person described in Section 3.7(a)(i), (ii) or (iii) above shall be the greater of (i) an allowance for the life of the spouse, payable monthly, which is equal to 20 percent of the Participant's or former Participant's Ending Compensation at the earlier of the time of his death or termination of his employment less any spouse's allowance payable under the Pension Plan, or (ii) an allowance equal to the allowance the spouse would have received if the Participant or former Participant were deemed to have terminated his service on the date of his death (whether or not an earlier termination of service occurred) and elected to receive, based on his Average Final Compensation and years of Creditable Service at his actual date of termination of service with the Company, the retirement allowance payable to him under Section 3.3 that would commence at the later of normal retirement age or the date of death, reduced for election of the 100% survivorship option at such deemed termination date, and continuing after his death in the same monthly amount during the life of his spouse. If the Committee does direct early commencement of payment, the spouse's allowance shall be a monthly allowance for the life of the spouse which is the Actuarial Equivalent of the allowance the spouse would otherwise have received pursuant to the preceding sentence. (e) If the Committee does not direct early commencement of payment, and unless an optional form of benefit is selected within the election periods pursuant to a qualified election under the Pension Plan, the spouse's allowance for the spouse of a former Participant described under Section 3.7(a)(iv) above shall equal the allowance the spouse would have received if the former Participant were deemed to have retired at the normal retirement age and elected to receive, based on his Average Final Compensation and years of Creditable Service at the actual date of termination of service with the Company, the retirement allowance payable to him under Section 3.3, reduced for election of the 50% survivorship option at the normal retirement age and continuing after his death in a amount equal to 50% of the amount that would have been payable to the former Participant during his life. If the Committee does direct early commencement of payment, the spouse's allowance shall be a monthly allowance for the life of the spouse which is the Actuarial Equivalent of the allowance the spouse would otherwise receive pursuant to the preceding sentence. 8

(f) With respect to spousal allowances, a Participant under this Plan and his spouse under this Plan shall be deemed to have elected that the retirement allowance payable under this Plan be payable in the same form of benefit that the Participant has elected or is deemed to have elected under the Pension Plan, and any election, notice or designation made or given by the Participant or his spouse under the Pension Plan shall be deemed an election, notice or designation made or given by the Participant or his spouse under this Plan and any change or revocation of an election, notice or designation made under the Pension Plan (whether automatic or voluntary) shall be deemed to be a change or revocation of an election, notice, or designation made under this Plan. 3.8 Termination of Benefit Payments. Payment of Benefits under this Article III to a Participant, former Participant, Participant's spouse or beneficiary, or former Participant's spouse or other beneficiary shall cease with the monthly payment for the month in which such Participant, former Participant, spouse or beneficiary dies. 3.9 Disabled Participants. Notwithstanding any other provisions in this Plan, any Participant while in receipt of payments under the Company's Short Term Illness Plan, Extended Illness Plan, Short Term Disability Plan or Long Term Disability Plan (collectively, the "Program"), shall be treated as a Participant and shall continue to accrue Creditable Service until he dies, retires, or becomes ineligible for further payments under such Program, and his Compensation in the last full year of his employment shall be deemed to be his annual Compensation for purposes of this Plan during such period. In the event such a Participant dies, retires or becomes ineligible for further payments under such Program and is not restored to active service, any retirement allowance payable on his account under this Plan shall be made on the basis of his age, Average Final Compensation and Creditable Service at the time he died, retired or became ineligible. 3.10 Timing of Commencement of Benefit Payments. Payment of benefits under this Plan shall commence when payment of benefits under the Pension Plan commences and all elections and required commencement dates made or applicable under the Pension Plan in respect to the commencement of Payments under the Pension Plan shall be applicable to benefits payable to any Participant or beneficiary under this Plan. 3.11 Required Cash-outs of Certain Accrued Benefits. If a Participant terminates service and the present value of the Vested accrued pension or survivor benefit provided under Article III hereof in respect of such Participant is equal to or less than $5,000, the person to whom such benefits would otherwise be paid in monthly installments shall receive a lump-sum distribution of the present value of the entire Vested portion of such Accrued Benefit. For the purposes of determining the present value of a Vested Accrued Benefit under this Section 3.11, actuarial assumptions used under the Pension Plan for a comparable determination under the Pension Plan shall be used. Notwithstanding any provision in this Plan to the contrary, if a former Participant who has received a lump-sum distribution of his entire non-forfeitable benefit under this Plan pursuant to this Section 3.11 is re-employed by the Company, he shall be treated as a new Employee and 9

prior service performed by the former Participant in respect of such distribution shall be disregarded for purposes of determining his Accrued Benefit under this Plan. 3.12 Vesting and Forfeiture of Vested Benefits. A Participant shall be Vested in his Accrued Benefit under this Plan if that person is vested under the Pension Plan, provided that any Benefit that would otherwise be payable to a Participant or to the beneficiary of any Participant shall be forfeited in the event that (i) Participant's employment with the Company is terminated by the Company for Cause, (ii) Participant voluntarily resigns from the Company prior to reaching Participant's Normal Retirement Age and fails to execute and deliver to the Company the Non-Competition and Confidentiality Covenants prior to the effective date of such resignation, or (iii) a former Participant who has executed and delivered the Non-Competition and Confidentiality Covenants breaches Section 2 of such Covenants. 3.13 Adjustment, Amendment, or Termination of Benefit. Notwithstanding any other provision in this Plan to the contrary, the Company may not adjust, amend, or terminate its obligations to a Participant in respect of his Accrued Benefit under this Article III subsequent to that date on which Participant is Vested pursuant to Section 3.12 above except as expressly provided in Section 3.12 above. 3.14 Tax Withholding. To the extent required by the law in effect at the time benefits are distributed pursuant to this Article III, the Company or its agents shall withhold any taxes required by the federal or any state or local government from payments made hereunder. ARTICLE IV UNFUNDED PLAN 4.1 Unfunded Benefits. Benefits are payable as they become due irrespective of any actual investments the Company may make to meet its obligations. Neither the Company, nor any trustee (in the event the Company elects to use a grantor trust to accumulate funds) shall be obligated to purchase or maintain any asset including any life insurance policy. To the extent a Participant or any other person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of any unsecured creditor of the Company. 4.2 No Contributions. Participants are neither required nor permitted to make contributions to this Plan. ARTICLE V AMENDMENT AND TERMINATION 5.1 Plan Amendment. Subject to Sections 3.12 and 3.13, this Plan may be amended in whole or in part by the Company at any time. 10

5.2 Plan Termination. Subject to Sections 3.12 and 3.13, the Company reserves the right to terminate this Plan at any time but only in the event that the Company, in its sole discretion, shall determine that the economics of this Plan have been adversely and materially affected by a change in the tax laws, other government action or other event beyond the control of the Participant and the Company or that the termination of this Plan is otherwise in the best interest of Company. ARTICLE VI ADMINISTRATION AND CLAIMS PROCEDURES 6.1 Committee. The general administration of this Plan shall be the responsibility of the Committee. The Committee is the named fiduciary of this Plan for which this document is the written instrument. The Committee from time to time may establish rules for the administration of this Plan and the transaction of it business. Except to the extent the Board is required to determine whether the termination of a Participant's employment is for Cause, the Committee shall have the sole discretionary authority to determine eligibility for benefits under this Plan and to construe the terms of this Plan and resolve any ambiguities hereunder. The interpretation and construction of any provision of this Plan by a majority of the members of the Committee at a meeting shall be final and conclusive. The interest assumptions, service tables, mortality tables and such other data, procedures and methods as may be necessary or desirable for use in all actuarial calculations required in connection with this Plan shall be those used in connection with the Pension Plan, except as otherwise required by the express provisions of this Plan. 6.2 Claims Procedures. Except as provided in Section 6.3 this Section shall govern every claim for benefits under this Plan. Every claim for benefits under this Plan shall be in writing directed to the Committee or its designee. Each claim filed shall be passed upon by the Committee within a reasonable time from its receipt. If a claim is denied in whole or in part the claimant shall be given written notice of the denial in language calculated to be understood by the claimant, which notice shall: (i) specify the reason or reasons for the denial; (ii) specify the Plan provisions giving rise to the denial; (iii) describe any further information or documentation necessary for the claim to be honored and explain why such documentation or information is necessary; and (iv) explain this Plan's review procedure. Upon the written request of any claimant whose claim has been denied in whole or in part, the Committee shall make a full and fair review of the claim and furnish the claimant with a written decision concerning it. 6.3 Challenging Forfeiture of Benefits due to Termination for Cause. If the Board, the Committee or both shall have determined that a Participant or his beneficiary shall forfeit a benefit under this Plan due to a termination of employment for Cause, such Participant (or his beneficiary in the event Participant is deceased) shall have the right to elect to challenge such forfeiture through binding arbitration held in New York City, New York under the then existing Commercial Arbitration Rules of the American Arbitration Association. Arbitration proceedings shall be conducted by three arbitrators who shall be authorized to determine whether Cause for termination existed, but solely for the purpose 11

of determining rights to benefits under this Plan. Without limit to their general authority, the arbitrators shall have the right to order reasonable discovery in accordance with the Federal Rules of Civil Procedure. The final decision of the arbitrators shall be binding and enforceable without further legal proceedings in court or otherwise, provided that either party to such arbitration may enter judgment upon the award in any court having jurisdiction. The final decision arising from the arbitration shall be accompanied by a written opinion and decision which shall describe the rational underlying the award and shall include findings of fact and conclusions of law. The cost of such arbitration shall initially be borne equally to the parties to such arbitration (which parties shall be limited to the Company and the Participant (or his beneficiary)), and each party shall bear its or his own legal fees; however, the arbitrators shall have authority to award the Participant (or his beneficiary) his or her legal fees and costs if the arbitrators determine that the decision to forfeit any benefit was made in bad faith. As a condition to proceeding with such arbitration the Company may require the Participant or his beneficiary to agree, in writing, that the arbitration award will be binding upon the Participant or such beneficiary, as the case may be, in connection with rights under this Plan, and that the Participant waives any right to proceed through court proceedings. Such award shall be confidential and shall not be binding or admissible in connection with any other proceeding. ARTICLE VII MISCELLANEOUS 7.1 Supplemental Benefits. The benefits provided for the Participants under this Plan are in addition to benefits provided by any other plan or program of the Company and, except as otherwise expressly provided for herein, the benefits of this Plan shall supplement and shall not supersede any plan or agreement between the Company and any Participant. 7.2 Governing Law. The laws of the State of New York (without giving effect to its conflicts of law principles) govern all matters arising out of or relating to this Plan, including, without limitation, its validity, interpretation, construction, administration and enforcement, except such matters as may be governed by the federal laws of the United States of America. 7.3 Designation of Forum. Any legal action or proceeding arising out of or relating to rights or benefits under this Plan shall be brought, if at all, in the United States District Court for the Southern District of New York or in any court of the State of New York sitting in New York City. 7.4 Binding Terms. The terms of this Plan shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, executors, administrators and successors. 7.5 Non-Alienation of Benefits. No Benefit under this Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge. Any 12

attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such Benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such Benefit. If any person entitled to a Benefit under this Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any Benefit under this Plan except as specifically provided in this Plan, then such Benefit shall, in the discretion of the Committee, cease and determine. In that event the Committee shall hold or apply the same for the Benefit of such person, his spouse, children, or other dependents, or any of them in such manner and in such proportion as the Committee may deem proper. 7.6 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of this Plan, and this Plan shall be construed and enforced as if such illegal or invalid provision had never been contained therein. 7.7 Construction. All headings preceding the text of the several Articles hereof are inserted solely for reference and shall not constitute a part of this Plan, nor affect its meaning, construction or effect. Where the context admits, words in the masculine gender shall include the feminine and neuter genders, and the singular shall mean the plural. 7.8 No Employment Agreement. Nothing in this Plan shall confer on any Participant the right to continued employment with the Company and, except as expressly set forth in a written agreement entered into with the express authorization of the Board of Directors of Company, both the Participant and the Company shall be free to terminate Participant's employment with or without Cause. TIFFANY AND COMPANY ATTEST: /s/ Patrick B. Dorsey By: /s/ Michael J. Kowalski - -------------------------------- ------------------------ Patrick B. Dorsey, Secretary Michael J. Kowalski, Chairman ATTEST: /s/ Patrick B. Dorsey By: /s/ James N. Fernandez - -------------------------------- ----------------------- Patrick B. Dorsey, Secretary James N. Fernandez, Executive Vice President 13

SCHEDULE I NAME OFFICE(S) Michael J. Kowalski Chairman of the Board of Directors and Chief Executive Officer James E. Quinn President Beth O. Canavan Executive Vice President - U.S. Retail Sales James N. Fernandez Executive Vice President and Chief Financial Officer Patrick B. Dorsey Senior Vice President - General Counsel and Secretary Victoria Berger-Gross Senior Vice President - Human Resources Fernanda M. Kellogg Senior Vice President - Public Relations Jon M. King Senior Vice President - Merchandising Caroline D. Naggiar Senior Vice President - Marketing John S. Petterson Senior Vice President - Operations John Loring Design Director Michael C. Christ Group Vice President - U.S. Retail Sales Melvin Kirtley Group Vice President - U.S. Retail Sales Patrick F. McGuiness Group Vice President - Finance Mark L. Aaron Vice President - Investor Relations Sandra M. Alton Vice President - Retail Sales - Philadelphia Market Elisabeth P. Ames Vice President - Northeast Region Francis E. Arcaro Vice President - Merchandising - Elsa Peretti Peter-Tolin Baker Vice President - Visual Merchandising Judith A. Baldissard Vice President - Strategic Planning and Business Development Jeffrey E. Bateman Vice President - Retail Sales Southeast Region Philip M. Bottega Vice President - Store Planning and Facilities Diane R. Brown Vice President - Retail Sales - Washington, D.C. Linda A. Buckley Vice President - Publicity Thomas J. Carroll Vice President - Retail Sales - Mid Atlantic Region Robert L. Cepek Vice President - Specialty Retail Mindy G. Chozick Vice President - Sales Service Pamela Cloud Vice President - Demand and Category Management Charles W. Coleman Vice President - Business Recognition Sales Michael W. Connolly Vice President - Treasurer Raul Dabalsa Vice President - Latin America Robert W. Davidson Vice President - Chief Information Officer Wendy A. Eagan Vice President - General Manager - New York Store David Eisenhower Vice President - Human Resources Catherine Y. Elward Vice President - Retail Sales - Central Region Brian Ensor Vice President - Long Island Market Warren S. Feld Vice President - Controller Susan J. Gearey Vice President - Retail Sales - Northwest Region Edward Gerard Vice President - Retail Sales - Pacific Region 14

Leonard Greendyk Vice President - Business Systems Development Catherine F. Hagan Vice President - Retail Sales - Boston Market Susanne Halmi Vice President - Retail Sales - North Central Market Andrew W. Hart Vice President - Diamond Division Marissa D. Harvey Vice President - General Merchandise Manager Robert B. Headley Vice President - Technical Services Adina C. Kagan Vice President - Advertising Nancy E. Kanterman Vice President - Fragrance Elizabeth A. Lange Vice President - Worldwide Customer Relations David F. McGowan Vice President - Security Worldwide Nancy Marchassalla Vice President - Retail Sales Development Gaspar Marino Vice President - Education & Development Dorothy L. Mason Vice President - Retail Sales - Texas Market Linda M. Mietzner Vice President - Client Development Kevin J. O'Halloran Vice President - Direct Marketing Tarz F. Palomba Vice President - Legal - Assistant Secretary Catherine E. Ramirez Vice President - Retail Sales Southwest Market Kent R. Rauscher Vice President - Distribution Robert S. Rufino Vice President - Visual Merchandising and Creative Services John Schaedel Vice President - Internal Audit and Financial Controls Nellie Seddigh Vice President - Retail Sales - Los Angeles Market Detra K. Segar Vice President - Retail Sales - Pacific North Market Karen L. Sharp Vice President - Legal - Assistant Secretary Frederick S. Shibley Vice President - Business Sales Karen L. Silveira Vice President - Marketing Creative Director 15

Exhibit A NON-COMPETITION AND CONFIDENTIALITY COVENANTS THIS INSTRUMENT is made and given this ___ day of _________ 2___ by __________________("PARTICIPANT") to and for the benefit of Tiffany and Company, a New York corporation and its Affiliates (as defined below) with reference to the following facts and circumstances: A. Participant is a Participant or Former Participant in and under that certain 2004 Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in Excess of Internal Revenue Code Limits (the "EXCESS PLAN") and has resigned or is about to resign his or her employment with Tiffany or its Affiliate; B. Participant's age at the effective date of such resignation was or will be less than 60 years; C. But for Participant's obligation to provide this instrument, Participant is otherwise Vested in a right to a Benefit under the Excess Plan; D. Participant is willing to make the promises set forth in this instrument in order to obtain a Benefit under the Excess Plan; and E. Participant agrees that the right to receive a Benefit under the terms of the Excess Plan is full and fair consideration for the promises made in this instrument, NOW THEREFORE, Participant hereby agrees as follows: 1. DEFINED TERMS. Unless otherwise defined in this instrument, words and phrases that have a defined meaning in the Excess Plan shall have the same meaning in this instrument. The initially capitalized words and phrases set forth below shall have the meanings ascribed to them below: "Affiliate" means, with reference to any Person, any second Person that controls, is controlled by, or is under common control with, any such first Person, directly or indirectly. "Board" means the board of directors of Tiffany and Company, a New York corporation. "Change in Control" means a change in control of Parent of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not Parent is then subject to such reporting requirement; provided, however, that, anything in this Agreement to the contrary notwithstanding, a Change in Control shall be deemed to have occurred if: 1

(i) any Person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, excluding Parent or any of its Affiliates, a trustee or any fiduciary holding securities under an employee benefit plan of Parent or any of its Affiliates, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly by stockholders of Parent in substantially the same proportion as their ownership of Parent, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of Parent representing Thirty-five percent (35%) or more of the combined voting power of Parent's then outstanding securities entitled to vote in the election of directors of Parent; (ii) ten (10) days following the "Shares Acquisition Date" if any Person has in fact become and then remains an "Acquiring Person" under the Rights Plan; (iii) if the Parent Board should resolve to redeem the "Rights" under the Rights Plan in response to a proposal by any Person to acquire, directly or indirectly, securities of Parent representing Fifteen percent (15%) or more of the combined voting power of Parent's then outstanding securities entitled to vote in the election of directors of Parent; (iv) if the Incumbent Directors cease to constitute a majority of the Parent Board; provided, however, that no person shall be deemed an Incumbent Director if he or she was appointed or elected to the Parent Board after having been designated to serve on the Parent Board by a Person who has entered into an agreement with Parent to effect a transaction described in clauses (i), (iii), (v), (vi), (vii), (viii) or (ix) of this definition; (v) there occurs a reorganization, merger, consolidation or other corporate transaction involving Parent, in each case with respect to which the stockholders of Parent immediately prior to such transaction do not, immediately after such transaction, own more than Fifty percent (50%) of the combined voting power of the Parent or other corporation resulting from such transaction, as the case may be; (vi) all or substantially all of the assets of Parent are sold, liquidated or distributed, except to an Affiliate of Parent; (vii) all or substantially all of the assets of Tiffany and Company are sold, liquidated or distributed, except to an Affiliate of Parent; (viii) any Person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, excluding Parent or any of its Affiliates, a 2

trustee or any fiduciary holding securities under an employee benefit plan of Parent or any of its Affiliates, an underwriter temporally holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly by stockholders of Parent in substantially the same proportion as their ownership of Parent, is or becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of Tiffany and Company representing Fifty percent (50%) or more of the combined voting power of Tiffany and Company's then outstanding securities entitled to vote in the election of directors of Tiffany and Company; or (ix) there is a "change of control" or a "change in the effective control" of Parent within the meaning of Section 280G of the Code and the Regulations. "Change in Control Date" shall mean the date on which a Change of Control occurs. "Code" means the Internal Revenue Code of 1986, as amended, and any successor provisions thereto. "Confidential Information" means all information relating in any manner to Tiffany or its business, including but not limited to, contemplated new products and services, marketing and advertising campaigns, sales projections, creative campaigns and themes, financial information, budgets and projections, system designs, employees, management procedures and systems, employee training materials, equipment, production plans and techniques, product and materials specifications, product designs and design techniques, client information (including purchase history and client identifying information) and vendor information (including the identity of vendors and information concerning the capacity of or products or pricing provided by specific vendors); notwithstanding the foregoing, "Confidential Information" shall not include information that becomes generally publicly available other than as a result of a disclosure by Participant or that becomes available to Participant on a non-confidential basis from a Person that to the Participant's knowledge, after due inquiry, is not bound by a duty of confidentiality. "Covered Employee" means an employee of Tiffany. "Duration of Non-Competition Covenant" means the period beginning with Participant's Termination Date and ending upon the first to occur of the following: (i) the second year anniversary of Participant's Termination Date, (ii) a Change in Control Date or (iii) Participant's 65th birthday provided that, in no circumstance shall the Duration of this Covenant be less than six months. "Exchange Act" means the Securities Exchange Act of 1934. 3

"Incumbent Directors" means those individuals who were members of the Parent Board, as of January 1, 2004 and those individuals whose later appointment to the Parent Board, or whose later nomination for election to such Board by the stockholders of Parent, was approved by a vote of at least a majority of those members of such Board who either were members of such Board as of such date, or whose election or nomination for election was previously so approved. "Jewelry" means jewelry (including but not limited to precious metal or silver jewelry or jewelry containing gemstones) and watches. "Parent" means Tiffany & Co., a Delaware corporation. "Parent Board" means the board of directors of Parent. "Person" means any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity. "Retail Jewelry Trade" means the operation of one or more retail outlets (including stores-within-stores, leased departments or concessions) selling Jewelry in any city in the world in which a TIFFANY & CO. store is located at the time in question; for the purpose of this definition, a retail outlet will not be deemed engaged in the Retail Jewelry Trade if less than 5% of the items displayed for sale in such outlet are Jewelry, so that, by way of example, an apparel store that offers Jewelry as an incidental item would not be deemed engaged in the Retail Jewelry Trade. "Regulations" mean regulations under Section 280G of the Code, including proposed and temporary regulations, and any successor provisions thereto. "Rights Plan" means the Amended and Restated Rights Agreement Dated as of September 22, 1998 by and between Tiffany & Co., a Delaware corporation, and ChaseMellon Shareholder Services L.L.C., as Rights Agent, as such Agreement may be further amended from time to time. "Termination Date" means the date Participant ceases to be an employee of Tiffany. "Tiffany" means Tiffany and Company, a New York corporation, and if the context so requires, Tiffany and Company and/or any Affiliate of Tiffany and Company, such term to be interpreted broadly so as to give rights equivalent to Tiffany and Company to any Affiliate of Tiffany and Company. "Wholesale Jewelry Trade" means the sale of Jewelry or gemstones to the Retail Jewelry Trade, the development or design of Jewelry for sale to the Retail Jewelry Trade or the production of Jewelry for sale to the Retail Jewelry Trade regardless of where in the world such activities are conducted. 4

2. NON-COMPETITION. Participant agrees that for the Duration of the Non-Competition Covenant Participant will not directly or indirectly (whether as director, officer, consultant, principal, owner, member, partner, advisor, financier, employee, agent or otherwise): (i) engage in, assist, have any interest in or contribute Participant's knowledge and abilities to, any business or entity in the Retail Jewelry Trade or in the Wholesale Jewelry Trade or seeking to enter or about to become engaged in the Retail Jewelry Trade or the Wholesale Jewelry Trade (provided that this subsection shall not prohibit an investment by Participant not exceeding five percent of the outstanding securities of a publicly traded company); (ii) employ, attempt to employ, or assist anyone in employing a Covered Employee or any person who was a Covered Employee at any time during the Duration of the Non-Competition Covenant or within three (3) months prior thereto (including by influencing any Covered Employee to terminate his/her employment with Tiffany or to accept employment with any Person); or (iii) attempt in any manner to solicit Jewelry purchases by any client of Tiffany or persuade any client of Tiffany to cease doing business or reduce the amount of business that such client has customarily done with Tiffany. 3. CONFIDENTIALITY. Participant acknowledges that Participant has had access to Confidential Information. Participant agrees not to disclose Confidential Information or to use Confidential Information to the detriment of Tiffany. If the Participant is requested in any case by a court or governmental body to make any disclosure of Confidential Information, the Participant shall (i) promptly notify Tiffany in writing, (ii) consult with and assist Tiffany at Tiffany's expense in obtaining an injunction or other appropriate remedy to prevent such disclosure, and (iii) use Participant's reasonable efforts to obtain at the Company's expense a protective order or other reliable assurance that confidential treatment will be accorded to any Confidential Information that must be disclosed. Subject to the foregoing sentence, Participant may furnish that portion (and only that portion) of the Confidential Information that, in the written opinion of Participant's counsel (the form and substance of which opinion shall be reasonably acceptable to Tiffany), the Participant is legally compelled or otherwise required to disclose or else stand liable for contempt or suffer other material penalty. The obligations in this section shall continue beyond the Duration of the Non-Competition Covenant. 4. LOSS OF BENEFIT IN THE EVENT OF BREACH. Should Participant breach Participant's obligations under Section 2 above, he shall forfeit and lose all right to any current or future Benefit under the Excess Plan. 5. ENFORCEMENT. (i) Participant agrees that the restrictions set forth in this instrument are reasonable and necessary to protect the goodwill of Tiffany. If any provision set forth herein is deemed invalid, illegal or unenforceable based upon duration, geographic scope or otherwise, Participant 5

agrees that such provision shall be modified to make it enforceable to the fullest extent permitted by law. (ii) In the event of breach or threatened breach by Participant of the provisions set forth in this instrument, Participant acknowledges that Tiffany will be irreparably harmed and that monetary damages (including loss of benefits) shall be an insufficient remedy to Tiffany. Therefore, Participant consents to the enforcement of this instrument by means of temporary or permanent injunction and other appropriate equitable relief in any competent court, in addition to any other remedies Tiffany may have under this Agreement or otherwise. 6. PROCEDURE TO OBTAIN DETERMINATION. Should Participant wish to obtain a determination that any proposed employment, disclosure, arrangement or association (each a "Proposed Transaction") is not prohibited hereunder, Participant shall direct a written request to the Board. Such request shall fully describe the Proposed Transaction. Within 30 days after receipt of such request, the Board may (i) issue such a determination in writing, (ii) issue its refusal of such request in writing, or (iii) issue a written request for more written information concerning the Proposed Transaction. In the event that alternative (iii) is elected (which election may be made on behalf of the Board by the Legal Department of Tiffany and Company without action by the Board), any action on Participant's request will be deferred for ten (10) days following receipt by said Legal Department of the written information requested. Failure of the Board to act within any of the time periods specified in this Section 4 shall be deemed a determination that the Proposed Transaction is not prohibited hereunder. A determination made or deemed made under this Section 6 shall be limited in effect to the Proposed Transaction described in the submitted materials and shall not be binding or constitute a waiver with respect to any other Proposed Transaction, whether proposed by such Participant or any other Person. In the event that Participant wishes to seek a determination that employment with a management consulting firm, an accounting firm, a law firm or some other provider of consulting services to a wide variety of clients will not be prohibited hereunder should such firm, at some unspecified time, provide services to a Person in the Retail Jewelry Trade or the Wholesale Jewelry Trade, Participant may seek a determination hereunder; in submitting such a Proposed Transaction, the Participant should specify the extent that Participant will be involved in or can be excluded from involvement in the provision of such services. In a making any determination under this Section 6, the Board shall not be deemed to be acting as a fiduciary with respect to the Excess Plan, the Participant or any beneficiary of the Participant and shall be under no obligation to issue a determination that any Proposed Transaction is not prohibited hereunder. 7. ARBITRATION AND EQUITABLE RELIEF. Participant and Tiffany agree that any and all disputes arising out or relating to the interpretation or application of this instrument, including any dispute concerning whether any conduct is in violation of Section 2 or 3 above, shall be subject to arbitration in New York, New York, under the then existing Commercial Arbitration Rules of the American Arbitration Association. Arbitration proceedings shall be conducted by three arbitrators. Without limit to their general authority, the arbitrators shall have the right to order reasonable discovery in accordance with the Federal Rules of Civil Procedure. The final decision of the arbitrators shall be binding and enforceable without further legal proceedings in court or otherwise, provided that either party to such arbitration may enter judgment upon the 6

award in any court having jurisdiction. The final decision arising from the arbitration shall be accompanied by a written opinion and decision which shall describe the rational underlying the award and shall include findings of fact and conclusions of law. The cost of such arbitration shall be borne equally by the parties and each party to the arbitration shall bear its own legal fees. Notwithstanding any provision in this Section 7, the requirement to arbitrate disputes shall not apply to any action to enforce this instrument by means of temporary or permanent injunction or other appropriate equitable relief. 8. MISCELLANEOUS PROVISIONS. (a) Tiffany may assign its rights to enforce this instrument to any of its Affiliates. Participant understands and agrees that the promises in this instrument are for the benefit of Tiffany (which term includes Tiffany and Company and its Affiliates) and for the benefit of the successors and assigns of Tiffany and its Affiliates. (b) Any determination made by the Board under Section 6 above shall bind Tiffany and Company and its Affiliates. (c) If any action by Participant prohibited hereunder causes Participant to lose a right to a Benefit under the Excess Plan, such loss of Benefit shall also be effective with respect to Participant's beneficiaries under the Excess Plan. (d) The laws of the State of New York, without giving effect to its conflicts of law principles, govern all matters arising out of or relating to this instrument and all of the prohibitions and remedies it contemplates, including, without limitation, its validity, interpretation, construction, performance and enforcement. (e) Each Person giving or making any notice, request, demand or other communication (each, a "Notice") pursuant to this Instrument shall (i) give the Notice in writing; and (ii) use one of the following methods of delivery, each of which for purposes of this Agreement is a writing: (A) Personal delivery; (B) Registered or Certified Mail, in each case, return receipt requested and postage prepaid; or (C) Nationally recognized overnight courier, with all fees prepaid. (f) Each Person giving a Notice shall address the Notice to the recipient (the "Addressee") at the address given on the signature page of this Instrument or to a changed address designated in a Notice. 7

(g) A Notice is effective only if the person giving the Notice has complied with subsections (e) and (f) and if the Addressee has received the Notice. A Notice is deemed to have been received upon receipt as indicated by the date on the signed receipt, provided, however, that if the Addressee rejects or otherwise refuses to accept the Notice, or if the Notice cannot be delivered because of a change in address for which no Notice was given, then upon such rejection, refusal or inability to deliver such Notice will be deemed to have been received. Despite the other clauses of this subsection (g), if any Notice is received after 5:00 p.m. on a business day where the Addressee is located, or on a day that is not a business day where the Addressee is located, then the Notice is deemed received at 9:00 a.m. on the next business day where the Addressee is located. (h) This instrument shall not be amended except by a subsequent written instrument that has been executed by Participant and on behalf of Tiffany by a duly authorized officer of Tiffany. Participant's obligations under this instrument may not be waived, except pursuant to a writing executed on behalf of Tiffany or as otherwise provided in Section 6 above. (i) This instrument constitutes the final expression of Participant's post-employment confidentiality and non-competition obligations necessary to receive a Benefit under the Excess Plan. It is the complete and exclusive expression of those obligations and all prior and contemporaneous negotiations and agreements between the parties on those matters are expressly merged into and superceded by this Agreement; notwithstanding the foregoing, Participant's right to receive a Benefit and the amount and terms of payment of such Benefit shall be exclusively determined by the Excess Plan. (continued) 8

(j) Any reference in this instrument to the singular includes the plural where appropriate, and any reference in this instrument to the masculine gender includes the feminine and neuter genders where appropriate. The descriptive headings of the sections of this instrument are for convenience only and do not constitute part of this instrument. IN WITNESS WHEREOF, this instrument has been executed on the date first written above. PARTICIPANT ___________________________ Name: Notice Address: ___________________________ ___________________________ ___________________________ ACCEPTED AND AGREED (AS TO SECTION 7) TIFFANY AND COMPANY By:______________________ Name: Title: Notice Address: The Board of Directors Tiffany and Company Care of: Legal Department 600 Madison Avenue New York, NY 10022 9

EXHIBIT 13.1 Tiffany & Co. Report on Form 10-K SELECTED FINANCIAL DATA The following table sets forth selected financial data, certain of which have been derived from the Company's audited financial statements for 1999-2003. Certain reclassifications were made to prior years' financial data to conform with the current year's presentation. All references to years relate to the fiscal year that ends on January 31 of the following calendar year. (in thousands, except per share amounts, percentages, retail locations and employees) 2003 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------------- EARNINGS DATA Net sales $ 2,000,045 $ 1,706,602 $ 1,606,535 $ 1,668,056 $ 1,471,690 Gross profit 1,157,382 1,011,448 943,477 948,414 821,680 Earnings from operations 355,519 319,197 309,897 327,396 256,883 Net earnings 215,517 189,894 173,587 190,584 145,679 Net earnings per diluted share 1.45 1.28 1.15 1.26 0.97 Weighted-average number of diluted common shares 148,472 148,591 150,517 151,816 149,666 - ---------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET AND CASH FLOW DATA Total assets $ 2,391,088 $ 1,923,586 $ 1,631,074 $ 1,568,340 $ 1,343,562 Cash and cash equivalents 276,115 156,197 173,675 195,613 216,936 Inventories, net 871,251 732,088 611,653 651,717 504,800 Working capital 952,923 770,481 638,709 695,548 633,022 Net cash provided by operations 283,842 221,441 241,506 110,696 230,351 Capital expenditures 272,900 219,717 170,806 108,382 171,237 Short-term borrowings and current portion of long-term debt 93,868 52,552 91,902 28,778 20,646 Long-term debt 392,991 297,107 179,065 242,157 249,581 Stockholders' equity 1,468,200 1,208,049 1,036,945 925,483 757,076 Stockholders' equity per share 10.01 8.34 7.15 6.34 5.22 Cash dividends paid per share 0.19 0.16 0.16 0.15 0.11 - ---------------------------------------------------------------------------------------------------------------------------- RATIO ANALYSIS AND OTHER DATA As a percentage of net sales: Gross profit 57.9% 59.3% 58.7% 56.9% 55.8% Earnings from operations 17.8% 18.7% 19.3% 19.6% 17.5% Net earnings 10.8% 11.1% 10.8% 11.4% 9.9% Return on average assets 10.0% 10.7% 10.9% 13.1% 12.1% Return on average stockholders' equity 16.1% 16.9% 17.7% 22.7% 22.9% Net-debt as a percentage of total capital 12.6% 13.8% 8.6% 7.5% 6.6% Company-operated TIFFANY & CO. retail locations 141 131 126 119 110 Number of employees 6,862 6,431 5,938 5,960 5,368 - ---------------------------------------------------------------------------------------------------------------------------- TIFFANY & CO. AND SUBSIDIARIES 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company is a holding company that operates through its subsidiary companies. The Company's principal subsidiary is an internationally renowned jeweler and specialty retailer whose merchandise offerings include an extensive selection of fine jewelry, timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories. The Company is also engaged in product design and manufacturing activities. The Company operates four channels of distribution: - - U.S. Retail - sales in Company-operated TIFFANY & CO. stores in the U.S. - - International Retail - sales in Company-operated TIFFANY & CO. stores and department store boutiques outside the U.S. (also includes business-to-business sales, Internet sales and wholesale sales of TIFFANY & CO. products outside the U.S.) - - Direct Marketing - business-to-business, catalog and Internet sales of TIFFANY & CO. products in the U.S. - - Specialty Retail - primarily includes the retail sales in Little Switzerland stores, a specialty retailer of jewelry, watches, crystal, china and giftware that operates stores on Caribbean islands, as well as in Florida and Alaska. It also includes worldwide sales made under additional trademarks or trade names other than TIFFANY & CO. The Company's key growth strategies are fourfold: to expand its channels of distribution in important markets around the world without compromising the long-term value of the TIFFANY & CO. trademark; to increase sales in existing stores by developing and marketing new products; to enhance customer awareness and appreciation of the Company through its marketing programs; and to provide customer service that ensures a superior shopping experience. Through consistent execution of these strategies, the Company has strengthened its competitive position among international retailers. Highlights in 2003 included: - - $2 billion in worldwide sales; - - Added 10 retail locations in key U.S. and international markets; - - Purchased the Tokyo, Japan flagship store building; - - Opened its second distribution center in New Jersey; - - Established diamond processing facilities in Antwerp, Belgium and Yellowknife, Canada; and - - Made initial purchases of rough diamonds under its agreement with Aber Diamond Corporation ("Aber") as part of its plan to integrate diamond operations. All references to years relate to the fiscal year that ends on January 31 of the following calendar year. Net sales increased 17% in 2003, which included a translation-related benefit due to a weaker U.S. dollar. The sales increase in 2003 was supported by an increase in worldwide comparable store sales, new store openings and a full year of Little Switzerland's sales (consolidated effective October 2002). Net earnings rose 13% in 2003. The increase in sales was partially offset by lower gross margin and higher operating expenses as further explained below. RESULTS OF OPERATIONS Certain operating data as a percentage of net sales were as follows: 2003 2002 2001 ------------------------ Net sales 100.0% 100.0% 100.0% Cost of sales 42.1 40.7 41.3 ----------------------- Gross profit 57.9 59.3 58.7 Selling, general and administrative expenses 40.1 40.6 39.4 ----------------------- Earnings from operations 17.8 18.7 19.3 Interest, financing and other (income) expenses, net 0.7 1.2 1.3 ----------------------- Earnings before income taxes 17.1 17.5 18.0 Provision for income taxes 6.3 6.4 7.2 ----------------------- Net earnings 10.8% 11.1% 10.8% ======================= TIFFANY & CO. AND SUBSIDIARIES 21

NET SALES Net sales by channel of distribution were as follows: (in thousands) 2003 2002 2001 - ---------------------------------------------------------------------- U.S. Retail $ 948,891 $ 819,814 $ 786,792 International Retail 781,572 683,489 659,028 Direct Marketing 197,397 179,175 160,715 Specialty Retail 72,185 24,124 - ------------------------------------------ $ 2,000,045 $ 1,706,602 $ 1,606,535 ========================================== U.S. Retail sales increased 16% in 2003 and 4% in 2002, due to comparable store sales growth of 12% in 2003 and 2% in 2002 as well as the opening of new stores. Management believes that improved consumer confidence contributed to the increases. Sales in the New York flagship store increased 10% in 2003 and fractionally in 2002, and represented 9%, 10% and 11% of net sales in 2003, 2002 and 2001. Comparable branch store sales rose 12% in 2003 and 2% in 2002. Comparable store sales growth in 2003 resulted from an increased average transaction size and, to a lesser extent, an increased number of transactions; in 2002, an increase in the number of transactions was partially offset by a decline in the average transaction size. Comparable store sales to domestic customers, which account for the vast majority of U.S. Retail sales, increased in both 2003 and 2002, while comparable store sales to foreign tourists increased in 2003 and declined in 2002. International Retail sales increased 14% in 2003 and 4% in 2002. When compared with the prior year, the weighted-average U.S. dollar exchange rate was weaker in 2003 and 2002. Therefore, on a constant-exchange-rate basis, International Retail sales increased 6% in 2003 and 3% in 2002. Japan represented 24%, 26% and 28% of net sales in 2003, 2002 and 2001. Retail sales in local currency increased 1% in 2003 due to new store openings partially offset by a decline in jewelry unit volume, and decreased 1% in 2002 due to a decline in jewelry unit volume which more than offset an increased average price per jewelry unit sold. Comparable store sales declined 3% in 2003 and 8% in 2002. Management believes that Japan sales have been affected by generally weak consumer spending, decreased traffic through department stores where many of the Company's boutiques are located and increased competition (including from jewelers and other sellers of "luxury" goods), as well as shifts in consumer demand. However, there has been growth in the engagement jewelry category, including sales of traditional solitaire diamond rings and new product introductions that include band rings with gemstones. Management is seeking to reverse the trend of reduced unit volume (specifically in silver jewelry) through new product introductions, as well as merchandising and sales initiatives with the expectation of gradually stimulating growth in Japan. In 2001, the Company signed new distribution agreements with Mitsukoshi, Ltd. of Japan ("Mitsukoshi"), whereby TIFFANY & CO. boutiques will continue to operate within Mitsukoshi's stores in Japan until at least January 31, 2007. Under the agreements reached in 2001, the Company is no longer restricted from further expansion of its Tokyo operations. Additionally, the Company pays to Mitsukoshi a percentage of certain sales; this percentage is lower than under prior agreements. Fees paid to Mitsukoshi were reduced in 2002 and further reduced at the start of 2003. There are no further reductions under the current agreement. In addition, the Company will employ increasing numbers of its own personnel in certain Mitsukoshi boutiques in the future. Sales recorded in retail locations operated in connection with Mitsukoshi accounted for 59%, 61% and 67% of total Japan retail sales in 2003, 2002 and 2001. In non-U.S. markets outside of Japan, the Asia-Pacific region represented 6% of net sales in 2003, 2002 and 2001; comparable store sales on a constant-exchange-rate basis rose 13% in 2003 and 5% in 2002 due to growth in most of those markets. Europe represented 6%, 5% and 4% of net sales in 2003, 2002 and 2001; comparable store sales on a constant-exchange-rate basis rose 12% in 2003 and 2% in 2002 due to particularly strong growth in London. Consistent with its annual growth strategy, the Company increased worldwide retail gross square footage of Company-operated TIFFANY & CO. stores by 5% in both 2003 and 2002. TIFFANY & CO. AND SUBSIDIARIES 22

The following table provides a reconciliation of Company-operated TIFFANY & CO. stores and department store boutiques: Other United States Japan Countries ------------- ----------- ------------ 2003 2002 2003 2002 2003 2002 - ------------------------------------------------------------------------ Beginning of year 47 44 48 47 36 35 Opened, net of relocations 4 3 3 2 5 3 Closed - - (1) (1) (1) (2) ----------------------------------------- End of year 51 47 50 48 40 36 ========================================= Plans in the U.S. for 2004 are to open stores in Palm Beach Gardens, Florida, Edina, Minnesota, Kansas City, Missouri and Westport, Connecticut. International plans call for opening two or three retail locations in Japan and one retail location in London, among others. Gross square feet of Company-operated TIFFANY & CO. stores totaled 671,608 in 2003, 641,798 in 2002 and 608,772 in 2001. Sales per gross square foot generated by those stores were $2,477 in 2003, compared with $2,254 in 2002 and $2,290 in 2001. Management expects further improvements in sales per square foot due to comparable store sales growth as well as ongoing expansion that now includes smaller format U.S. stores. These stores offer a more productive merchandise selection, primarily focused on jewelry and timepieces. Direct Marketing sales increased 10% in 2003 and 11% in 2002. Combined Internet and catalog sales represented 67%, 60% and 54% of Direct Marketing sales in 2003, 2002 and 2001; these sales increased 23% in 2003 and 24% in 2002 entirely due to Internet sales growth that resulted from a higher number of orders. The Company currently offers more than 2,400 products online. Catalogs serve as an effective marketing and sales vehicle for both retail and Internet sales. Catalog mailings were 25 million, 24 million and 26 million in 2003, 2002 and 2001 and the Company plans to mail approximately 26 million catalogs in 2004. The Business Sales division's sales declined 9% in 2003 and 3% in 2002. The sales decline in 2003 primarily reflected the Company's decision in November 2002 to discontinue offering products for employee service award programs. Sales affected by this action represented less than $30,000,000 annually, or less than half of the Business Sales division's sales. As a consequence of that decision, the Company recorded a pre-tax charge of $1,400,000 in the fourth quarter of 2002 primarily related to employee separation costs and the disposal of obsolete program-specific inventory. The sales decline in 2002 was due to lower average dollars per order. The Business Sales division will continue to offer a range of business gifts, as well as event-related trophies and other custom-designed products. The Specialty Retail channel of distribution was established in 2002 to provide a vehicle for incremental sales and earnings growth opportunities having the following characteristics: first, growth opportunities would not use the TIFFANY & CO. trademark or trade name so as not to undermine its distinctive appeal to consumers through too rapid or too extensive expansion; and second, growth opportunities would benefit from application of the Company's management, merchandising, distribution, manufacturing and marketing strengths. Initially, Specialty Retail included only the consolidated results of Little Switzerland (effective October 1, 2002), but it now also includes the consolidated results of Temple St. Clair L.L.C. ("Temple St. Clair") and will include the consolidated results from other ventures meeting the characteristics described above as and when they are initiated. Results for Specialty Retail in 2003 are not comparative to 2002 as none of the operations was in place for a full year in 2002. The Company's plans include introducing a new retail trade name in 2004 that will focus on pearl jewelry. GROSS PROFIT Gross profit as a percentage of net sales ("gross margin") declined in 2003 due to several factors: the consolidation of Little Switzerland, which primarily retails goods manufactured by others and achieves a gross margin below the Company's average; the opening of the Company's Customer Fulfillment Center ("CFC"); changes in sales mix toward higher-priced, lower-margin diamond jewelry as the U.S. retail selling environment improved and the decline of higher-margin silver jewelry sales in Japan; startup costs TIFFANY & CO. AND SUBSIDIARIES 23

related to the development of rough-diamond sourcing and processing organizations in Belgium and Canada; and higher inventory costs due to increased precious metal prices. Conversely, gross margin increased in 2002 due to favorable shifts in sales mix (sales of lower-priced silver items, which carry a gross margin higher than the Company's average, increased at a faster rate). In both years, gross margin benefited from improved efficiencies in product manufacturing and sourcing and selective price increases. The Company's hedging program (see Note K to the Consolidated Financial Statements) uses yen put options to stabilize product costs in Japan over the short-term, and the Company adjusts its retail prices in Japan from time to time to address longer-term changes in the yen/dollar relationship and local competitive pricing. Management's long-term strategy and objectives include achieving further product manufacturing/sourcing efficiencies (including increased internal manufacturing and direct rough-diamond sourcing), leveraging its fixed costs and implementing selective price adjustments in order to maintain the Company's gross margin at, or above, prior year levels. As a result, management expects gross margin to increase slightly in 2004. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") SG&A increased 16% in 2003 and 9% in 2002. The increases in both years were partly due to incremental depreciation, staffing and occupancy expenses related to the Company's expansion. SG&A also increased in both years due to higher insurance and marketing expenses (which includes increased advertising for timepieces), the consolidation of Little Switzerland and development costs related to the Specialty Retail channel. In addition, the translation effect of a generally weaker U.S. dollar increased SG&A by 3% in 2003 and fractionally in 2002. As a percentage of net sales, SG&A declined in 2003, as the strong sales growth more than absorbed the rate of increase in fixed expenses, and rose in 2002 due to insufficient sales growth to absorb the rate of increase in fixed expenses. Management's longer-term objective is to continue to reduce this ratio by leveraging anticipated rates of comparable store sales growth against the Company's fixed-expense base, and expects the ratio to be slightly lower in 2004. EARNINGS FROM OPERATIONS (in thousands) 2003 2002 2001 - ------------------------------------------------------------------------------------ Earnings (losses) from operations: U.S. Retail $ 229,873 $ 191,211 $ 191,814 International Retail 217,903 189,727 186,880 Direct Marketing 47,273 42,733 26,573 Specialty Retail (8,460) (1,184) - -------------------------------------------- Earnings from operations for reportable segments 486,589 422,487 405,267 Unallocated corporate expenses (131,070) (103,290) (95,370) -------------------------------------------- Earnings from operations $ 355,519 $ 319,197 $ 309,897 -------------------------------------------- Certain reclassifications were made to prior years' earnings (losses) from operations by segment amounts to conform with the current year's presentation and such reclassifications were principally related to the allocation of certain corporate expenses. Earnings from operations rose 11% in 2003 and 3% in 2002 but as a percentage of net sales declined in both years. On a reportable segment basis, the ratios of earnings from operations (before the effect of unallocated corporate expenses and interest, financing and other (income) expenses, net) to each segment's net sales in 2003, 2002 and 2001 were as follows: U.S. Retail was 24%, 23% and 24%; International Retail was 28%, 28% and 28%; and Direct Marketing was 24%, 24% and 17%. Specialty Retail was (12)% and (5)% in 2003 and 2002. Sales levels, gross margins and the ability to leverage fixed expenses affected changes in profitability in each segment. INTEREST EXPENSE AND FINANCING COSTS Interest expense declined in 2003 primarily due to a lower weighted-average interest rate partially offset by a new yen-denominated debt issuance in 2003 and lower capitalized interest for capital expenditures. Interest expense declined in 2002 primarily due to the effect of the capitalization of interest costs related to the Company's construction of its CFC, effective in the first quarter of 2002, as well as TIFFANY & CO. AND SUBSIDIARIES 24

the Company's decision to purchase its Parsippany, New Jersey Retail Service Center ("RSC"), formerly known as the Customer Service Center ("CSC"). Management expects interest expense and financing costs to increase in 2004 due to a full year of interest expense associated with the yen-denominated debt entered into in 2003 and lower capitalized interest related to capital expenditures. OTHER (INCOME) EXPENSES, NET Other (income) expenses, net includes interest income and realized and unrealized (gains) losses on investment activities and foreign currency transactions. Interest income earned on cash and cash equivalents declined in 2003 and 2002, largely due to lower interest rates. In 2003, 2002 and 2001, the Company recorded pre-tax (gains) losses on investments accounted for under the equity method of $(244,000), $2,893,000 and $(2,633,000), including the gain on Aber's sale of its interest in a mining project in 2001. In 2001, the Company recorded a pre-tax impairment charge of $7,800,000 representing the Company's total investment in a third-party provider of online wedding gift registry services. Management expects that other (income) expenses, net in 2004 will further benefit from the Company's equity interest in Aber. PROVISION FOR INCOME TAXES The Company's effective income tax rate was 37.1% in 2003, 36.6% in 2002 and 40.0% in 2001. The increase in the tax rate from 2002 and the decline from 2001 was largely due to the Company recognizing in 2002 the cumulative effect of prior periods' tax benefits provided by the Extraterritorial Income Exclusion Act of 2000 ("ETI"). Tax benefits related to the ETI were not recognized until the third quarter of 2002 when the Company determined the ETI was applicable to its operations and recorded a nonrecurring, cumulative tax benefit. The 2003 income tax rate also benefited from a favorable reserve adjustment related to the elimination of certain tax exposures. In October 2000, the United States Government repealed the tax provisions associated with Foreign Sales Corporations ("FSC") and enacted, in their place, the ETI. The ETI provides for the exclusion from United States taxable income of certain "extraterritorial" income earned from the sale or license of qualified property. The World Trade Organization ("WTO") has ruled in favor of a formal complaint by the European Union that the ETI exclusion constitutes a prohibited export subsidy under WTO rules. Legislative proposals have been presented in the U.S. Congress to repeal the ETI. The legislative proposals currently being evaluated by Congress provide transition relief for years beyond the year ended January 31, 2004. However, it is uncertain what form the final legislation will take and what effect, if any, it will have on the ETI benefit for years beyond January 31, 2004. NET EARNINGS As a result of the above factors, net earnings increased 13% in 2003 and 9% in 2002. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require management to make certain estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. Actual results could differ from these estimates. Periodically, the Company reviews all significant estimates and assumptions affecting the financial statements and records the effect of any necessary adjustments. The development and selection of the critical accounting policies and the related disclosures below have been reviewed with the Audit Committee of the Board of Directors. The following critical accounting policies rely on assumptions and estimates that were used in the preparation of the Company's consolidated financial statements: Sales returns: Sales are recognized at the "point of sale," which occurs when merchandise is taken in an "over-the-counter" transaction or upon receipt by a customer in a shipped transaction. The Company's customers have the right to return merchandise. Sales are reported net of returns. The Company maintains a reserve for estimated potential product returns based on historical experience. TIFFANY & CO. AND SUBSIDIARIES 25

At January 31, 2004, a 10% change in management's estimate of product returns would have resulted in a change of $467,000 in the reserve for sales returns and gross profit. Credit losses: The Company maintains a reserve for potential credit losses based on estimates of the credit-worthiness of its customers. If the financial condition of its customers was to change, resulting in a change in their ability to make payments, the Company might be required to increase or decrease its reserve. At January 31, 2004, a 10% change in management's estimate of credit losses would have resulted in a change of $233,000 in the reserve for credit losses and SG&A. Inventory: The Company writes down its inventory for discontinued and slow-moving products. This write-down is equal to the difference between the cost of inventory and its estimated market value and is based on assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs might be required. At January 31, 2004, a 10% change in management's estimated market value in evaluating discontinued and slow-moving products would have resulted in a change of $2,198,000 in inventory and cost of sales. The Company's domestic and foreign branch inventories, excluding Japan, are valued using the last-in, first-out (LIFO) method, and inventories held by foreign subsidiaries and Japan are valued using the first-in, first-out (FIFO) method. Fluctuation in inventory levels, along with the costs of raw materials, could impact the carrying value of the Company's inventory. Long-lived assets: The Company's long-lived assets are primarily property, plant and equipment. The Company reviews its long-lived assets for impairment when management determines that the carrying value of such assets may not be recoverable due to events or changes in circumstances. Recoverability of long-lived assets is evaluated by comparing the carrying value of the asset with estimated future undiscounted cash flows. If the comparisons indicate that the asset is not recoverable, an impairment loss is calculated as the difference between the carrying value and the fair value of the asset and the loss is recognized during that period. In 2003, 2002 and 2001, there were no significant impairment losses related to long-lived assets. Non-consolidated investments: Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments. This may not be reflected in an investment's current carrying value, thereby possibly requiring an impairment charge in the future. Income taxes: Income taxes are accounted for by using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. The Company believes that all net-deferred tax assets shown on its balance sheet are more likely than not to be realized in the future. The Company has considered future taxable income with ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event the Company were to determine that it would not be able to realize all or part of its net-deferred tax asset in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination was made. Employee benefit plans: The Company maintains a noncontributory defined benefit pension plan covering substantially all domestic salaried and full-time hourly employees and it provides certain postretirement health-care and life insurance benefits for retired employees. The Company makes certain assumptions that affect the underlying estimates related to pension and other postretirement costs. Significant changes in interest rates, securities market values and projected health-care costs would require the Company to revise key assumptions and would result in a higher or lower charge to earnings. The discount rate is subject to change each year, consistent with changes in applicable high-quality, long-term corporate bonds. Based on the expected duration of the benefit TIFFANY & CO. AND SUBSIDIARIES 26

payments for the pension plan and postretirement benefits, the Company refers to applicable indices such as the high-quality Merrill Lynch corporate bond yields and the Moody's corporate bond yields to select a rate at which it believes the pension and postretirement benefits could be effectively settled. The Company used a discount rate of 6.5% to determine the 2003 pension and postretirement expense. Holding all other assumptions constant, a 0.5% increase in the discount rate would have decreased the 2003 pension and postretirement expenses by approximately $1,600,000 and $400,000. A decrease of 0.5% in the discount rate would have increased the 2003 pension and postretirement expenses by approximately $2,200,000 and $400,000. The expected long-term rate of return on pension plan assets is selected by taking into account the expected duration of the projected benefit obligation for the plan, the rates of return expected for the asset mix (including reinvestment asset return rates), historical performance of plan assets and the fact that the plan assets are actively managed to mitigate downside risk. The Company used an expected long-term rate of return of 7.5% to determine the 2003 pension expense. Holding all other assumptions constant, a 0.5% change in the long-term rate of return would have changed the 2003 pension expense by approximately $440,000. The cost of providing postretirement health-care benefits is shared by the retiree and the Company, with retiree contributions evaluated annually and adjusted in order to maintain the Company/retiree cost sharing target ratio. In September 2003, the share of contributions for current and future retirees was increased, in addition to other benefit changes, in order to maintain the cost sharing target ratio. This change benefited postretirement expense by $1,500,000 in 2003 and is expected to provide a further benefit of $2,500,000 in 2004. NEW ACCOUNTING STANDARDS In December 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46R, "Consolidation of Variable Interest Entities" ("FIN 46R"). FIN 46R replaces the same titled FIN 46 that was issued in January 2003. FIN 46R requires that variable interest entities be consolidated by its primary beneficiary (if any) if the entity's equity investors at risk do not have the characteristics of a controlling financial interest or the equity investors do not have significant equity at risk for the entity to finance its activities without additional financial support. The provisions of FIN 46 were effective immediately for all entities created after January 31, 2003 and FIN 46R is effective for those entities in the first quarter of 2004. Since February 1, 2003, the Company does not have any relationships with entities it believes are variable interest entities. For those entities created prior to February 1, 2003, the Company is required to adopt the provisions of FIN 46R by the end of the first quarter of 2004. The Company is in the process of determining the effects, if any, the adoption of FIN 46R will have on its financial statements but does not expect the adoption to have a significant impact on its financial position, earnings or cash flows. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity needs have been, and are expected to remain, primarily a function of its seasonal working capital requirements and capital expenditure needs, which have increased due to the Company's expansion. The Company achieved net cash inflows from operating activities of $283,842,000 in 2003, $221,441,000 in 2002 and $241,506,000 in 2001. The inflow in 2003 was greater than 2002 due to increased earnings and non-cash items. The inflow in 2002 was less than in 2001 primarily due to increased working capital (primarily inventory purchases of finished goods and raw materials), partly offset by increased net earnings. WORKING CAPITAL Working capital (current assets less current liabilities) and the corresponding current ratio (current assets divided by current liabilities) were $952,923,000 and 3.4:1 at January 31, 2004 compared with $770,481,000 and 3.6:1 at January 31, 2003. Accounts receivable, less allowances at January 31, 2004 were 17% above January 31, 2003 primarily due to sales TIFFANY & CO. AND SUBSIDIARIES 27

growth. On a 12-month rolling basis, accounts receivable turnover was 17 times in 2003 and 16 times in 2002. Inventories, net at January 31, 2004 were 19% above January 31, 2003. Excluding the translation-related effect of a generally weaker U.S. dollar, inventories, net increased 14% on a constant-exchange-rate basis. Finished goods inventories increased 7% due to the effect of translation, new store openings and expanded product offerings. Raw material and work-in-process inventories increased 78% to support the expansion of internal jewelry manufacturing activities and the Company's expansion of its diamond sourcing operations. Management expects that inventory levels will increase in 2004 to support anticipated comparable store sales growth, new stores, product introductions, strategic merchandising investments and the Company's ongoing expansion of its diamond sourcing operations. The Company continually strives to better manage its inventory investment by developing more effective systems and processes for store replenishment, product development, sales forecasting, assortment planning and supply-chain logistics. CAPITAL EXPENDITURES Capital expenditures were $272,900,000 in 2003, $219,717,000 in 2002 and $210,291,000 in 2001 (which included the payment of a capital lease purchase obligation). In all three years, a portion of the expenditures was related to the opening, renovation and expansion of stores and distribution facilities and ongoing investments in new systems. In addition, the Company expended $140,400,000 (U.S. dollar equivalent at the acquisition date) in 2003 to purchase the land and building housing the Company's Tokyo flagship store. In 2002, the Company acquired the property housing its flagship store on Old Bond Street in London and an adjacent building at a cost of $43,000,000 (U.S. dollar equivalent at the acquisition date), in order to proceed with a renovation and reconfiguration of the interior retail selling space; construction is expected to commence in 2004 and be completed in 2006. The Company does not expect to continue to acquire real estate housing retail branch operations because it now owns its three flagship stores. In 2001, the Company commenced construction of its CFC, a leased distribution center. The 266,000 square-foot CFC opened in September 2003 and is being used to process direct shipments to customers. The overall cost of the CFC project was approximately $110,000,000. The Company's RSC, opened in 1997, will now focus on replenishing retail store inventories. In 2000, the Company began a multi-year project to renovate and reconfigure its New York flagship store in order to increase the total sales area by approximately 25% and to provide additional space for customer service, customer hospitality and special exhibitions. The increase in the sales area was completed in 2001 when the renovated second floor opened to provide an expanded presentation of engagement and other jewelry. The renovated sixth floor that now houses the customer service department opened in 2002. The renovated fourth floor that offers tableware merchandise opened in 2003. In conjunction with the New York store project, the Company relocated its after-sales service functions to a new location and relocated several of its administrative functions. The Company has spent $72,509,000 to date for the New York store and related projects. Based on current plans, the Company estimates that the overall cost of these projects will be approximately $110,000,000. Based on current plans, management estimates that capital expenditures will be approximately $170,000,000 in 2004, due to costs related to the opening and renovation of stores and ongoing investments in new systems, and that future expenditures will approximate 7-8% of net sales. ACQUISITIONS AND INVESTMENTS In December 2002, the Company made a $4,000,000 investment in Temple St. Clair, a privately-held company that designs and sells jewelry. In 2003, the Company made additional investments of $4,500,000 in Temple St. Clair. The Company has additional funding commitments of $4,500,000 and the option to buy out and own 100% of Temple St. Clair in the future. Temple St. Clair is being TIFFANY & CO. AND SUBSIDIARIES 28

consolidated in the Company's financial statements based on the percentage of ownership and effective control over the direction of the operations of the business. In May 2001, a subsidiary of the Company purchased 45% of Little Switzerland's outstanding shares of common stock at a cost of $9,546,000. The Company accounted for this investment under the equity method based upon its ownership interest and its significant influence. In 2001, the Company also provided Little Switzerland with an interest-bearing loan in the amount of $2,500,000. The Company recorded equity losses for its share of Little Switzerland's results from operations in other (income) expenses, net and amounted to losses of $1,482,000 (through September 30, 2002) and $2,483,000 in 2001. In October 2002, the Company's subsidiary purchased and paid $27,530,000 for additional shares, which, together with shares previously owned, represented 98% of the outstanding shares of Little Switzerland. On November 20, 2002, the subsidiary merged with and into Little Switzerland. The Company commenced the consolidation of Little Switzerland's operations effective October 1, 2002. The acquisition was accounted for in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations." In February 2000, the Company acquired a 5.4% equity interest in Della.com ("Della"), a provider of online wedding gift registry services. In April 2000, Della merged with and into WeddingChannel.com with the consequence that the Company's equity interest in Della was converted to a 2.7% interest in WeddingChannel.com, assuming the conversion of all outstanding preferred shares to common. In 2001, the Company recorded a pre-tax impairment charge of $7,800,000, representing the Company's total investment. In July 1999, the Company made a strategic investment in Aber by purchasing eight million unregistered shares of its Common Stock, which represented 14.7% (at the purchase date) of Aber's outstanding shares, at a cost of $70,636,000. Aber holds a 40% interest in the Diavik Diamond Mine in Canada's Northwest Territories, an operation developed to mine diamonds. Production commenced in the first quarter of 2003. In addition, the Company entered into a diamond purchase agreement with Aber whereby the Company has the obligation to purchase, subject to the Company's quality standards, a minimum of $50,000,000 (excluding purchases in 2003) of diamonds per year for 10 years beginning in 2004. It is expected that this commercial relationship will enable the Company to secure a considerable portion of its future diamond needs. The Company has established a diamond sorting/processing facility in Antwerp, Belgium and an operation in Yellowknife, Canada to handle a portion of its cutting and polishing requirements. DIVIDENDS Cash dividends paid were $27,700,000 in 2003, $23,256,000 in 2002 and $23,315,000 in 2001. In May 2003, the Board Directors declared a 25% increase in the quarterly dividend rate on common shares, increasing the quarterly rate from $0.04 per share to $0.05 per share. The dividend payout ratio (dividends as a percentage of net earnings) was 13% in 2003, 12% in 2002 and 13% 2001. The Company expects to continue to retain the majority of its earnings to support its business activities and future expansion. STOCK REPURCHASES In November 2003, the Board of Directors extended and expanded the Company's stock repurchase program, which was due to expire in November 2003, until November 30, 2006 and increased the remaining authorization by $100,000,000, allowing the Company to repurchase up to $116,500,000 of the Company's outstanding Common Stock in addition to those which already had been purchased. The timing of purchases and the actual number of shares to be repurchased depend on a variety of factors such as price and other market conditions. In 2003, the Company repurchased and retired 200,000 shares of Common Stock at a cost of $4,610,000, or an average cost of $23.05 per share. In 2002, the Company repurchased and retired 1,350,000 shares of Common Stock at a cost of $37,526,000, or an average cost of $27.80 per share. In 2001, the Company repurchased and retired 1,628,000 of Common Stock at a cost of $39,265,000, or an TIFFANY & CO. AND SUBSIDIARIES 29

average cost of $24.12 per share. At January 31, 2004, $116,500,000 of purchase authority remained available for future share repurchases. RECENT BORROWINGS The Company's sources of working capital are internally-generated cash flows, borrowings available under a multicurrency revolving credit facility ("Credit Facility") and Little Switzerland's revolving credit facility ("LS Facility"). In November 2001, the Company entered into a $200,000,000 Credit Facility with six banks. All borrowings are at interest rates based on a prime rate or LIBOR and are affected by local borrowing conditions. The Credit Facility expires in November 2006. The LS Facility, which expires in November 2005, allows Little Switzerland to borrow up to $10,000,000 at an interest rate of 0.80% above LIBOR or a LIBOR Market Index. Both the Credit Facility and the LS Facility contain covenants that require maintenance of certain debt/equity and interest-coverage ratios, in addition to other requirements customary to loan facilities of this nature. The Company's purchase of the land and building housing its Japan flagship store was financed with a short-term yen 11,000,000,000 bridge loan ("Bridge Loan") with a bank. The bridge loan, which had an interest rate of 0.58%, matured on September 30, 2003 and was paid in full. In September 2003, the Company issued yen 15,000,000,000 of senior unsecured First Series Yen Bonds ("Bonds") due 2010 with principal due upon maturity and a fixed coupon rate of 2.02% payable in semi-annual installments. The Bonds were sold in a private transaction to qualified institutional investors in Japan. The obligations under the Bonds are unconditionally and irrevocably guaranteed by the Company. The proceeds from the issuance have been primarily used by the Company to repay the Bridge Loan. In July 2002, the Company, in a private transaction with various institutional lenders, issued, at par, $40,000,000 of 6.15% Series C Senior Notes Due July 18, 2009 and $60,000,000 of 6.56% Series D Senior Notes Due July 18, 2012 with seven-year and 10-year lump sum repayments upon maturities. The proceeds of these issues were used by the Company for general corporate purposes, including seasonal working capital and to redeem the Company's $51,500,000 principal amount 7.52% Senior Notes which came due in January 2003. The Note Purchase Agreements require maintenance of specific financial covenants and ratios and limit certain changes to indebtedness and the general nature of the business, in addition to other requirements customary to such borrowings. Concurrently with the issuance of such debt, the Company entered into an interest-rate swap agreement to hedge the change in fair value of its fixed-rate interest obligation. Under the swap agreement, the Company pays variable rate interest and receives fixed interest-rate payments periodically over the life of the instrument. The Company accounts for its interest-rate swap as a fair value hedge and, therefore, recognizes gains or losses on the derivative instrument and the hedged item attributable to the hedged risk in earnings in the current period. The terms of the swap agreement match the terms of the underlying debt, thereby resulting in no ineffectiveness. Net-debt (short-term borrowings plus the current portion of long-term debt plus long-term debt less cash and cash equivalents) and the corresponding ratio of net-debt as a percentage of total capital (net-debt plus stockholders' equity) were $210,744,000 and 13% at January 31, 2004, compared with $193,462,000 and 14% at January 31, 2003. Based on the Company's financial position at January 31, 2004, management anticipates that internally-generated cash flows and funds available under the Credit Facility will be sufficient to support the Company's planned worldwide business expansion and seasonal working capital increases that are typically required during the third and fourth quarters of the year, as well as for the scheduled repayment of a yen 5,500,000,000 five-year loan due in October 2004. TIFFANY & CO. AND SUBSIDIARIES 30

CONTRACTUAL CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS The following summarizes the Company's contractual cash obligations at January 31, 2004: 2005- 2007- There- (in thousands) Total 2004 2006 2008 after - ------------------------------------------------------------------------------------------------------------- Long-term debt $ 444,911 $ 51,920 $ - $ 60,000 $ 332,991 Operating leases 460,077 67,894 110,997 86,189 194,997 Inventory purchase obligations 708,868 258,868 100,000 100,000 250,000 Non-inventory purchase obligations 6,912 6,912 - - - Construction-in-progress 12,405 12,405 - - - Other contractual obligations* 13,563 7,813 3,000 2,500 250 ------------------------------------------------------------------------ $ 1,646,736 $ 405,812 $ 213,997 $ 248,689 $ 778,238 ------------------------------------------------------------------------ * Other contractual obligations consist primarily of royalty and marketing commitments and additional funding commitments related to the investment in Temple St. Clair. The following summarizes the Company's commercial commitments at January 31, 2004: Amount of commitment expiration per period -------------------------------- Total Less amounts than 1-3 (in thousands) committed 1 year years - ----------------------------------------------------------------------------- Lines of available credit* $ 214,969 $ 4,969 $ 210,000 Letters of credit and financial guarantees 12,471 12,263 208 -------------------------------- $ 227,440 $ 17,232 $ 210,208 -------------------------------- * At January 31, 2004, $41,948,000 was drawn against these facilities. MARKET RISK The Company is exposed to market risk from fluctuations in foreign currency exchange rates and interest rates, which could affect its consolidated financial position, results of operations and cash flows. The Company manages its exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company uses derivative financial instruments as risk management tools and not for trading or speculative purposes, and does not maintain such instruments that may expose the Company to significant market risk. The Company uses yen-purchased put options and, to a lesser extent, foreign-exchange forward contracts, to minimize the impact of a strengthening U.S. dollar on foreign currency-denominated transactions. Gains or losses on these instruments substantially offset losses or gains on the assets, liabilities and transactions being hedged. Management does not foresee nor expect any significant changes in foreign currency exposure in the near future. The fair value of yen-purchased put options is sensitive to changes in yen exchange rates. If the market yen exchange rate at the time of the option's expiration is stronger than the contracted exchange rate, the Company will allow the option to expire, limiting its loss to the cost of the option contract. The cost of the outstanding option contracts at January 31, 2004 and 2003 was $2,815,000 and $3,115,000. At January 31, 2004 and 2003, the fair value of outstanding yen-purchased put options was $762,000 and $1,512,000. The fair value of the options was determined using quoted market prices for these instruments. At January 31, 2004 and 2003, a 10% appreciation in yen exchange rates from the prevailing market rates would have resulted in a fair value of $70,000 and $132,000. At January 31, 2004 and 2003, a 10% depreciation in yen exchange rates from the prevailing market rates would have resulted in a fair value of $3,940,000 and $7,430,000. The fair value of the Company's fixed-rate long-term debt, including the current portion of long-term debt, is sensitive to interest rate changes. Interest rate changes would result in (gains) losses in the market value of this debt due to differences between market interest rates and rates at the inception of the debt obligation. In order to manage the exposure to interest rate changes, the Company entered into an interest-rate swap to reduce the amount of fixed-rate debt exposed to interest rate movements. Based on a hypothetical immediate 100 basis point increase in interest rates at January 31, 2004 and 2003, the market value of the Company's fixed-rate long-term debt, including the impact of the interest-rate swap, TIFFANY & CO. AND SUBSIDIARIES 31

would have decreased by $17,213,000 and $7,315,000. Based on a hypothetical immediate 100 basis point decrease in interest rates at January 31, 2004 and 2003, the market value of the Company's fixed-rate long-term debt, including the impact of the interest-rate swap, would have increased by $18,403,000 and $10,481,000. The Company also uses an interest-rate swap to manage its yen-denominated floating-rate debt in order to reduce the impact of interest rate changes on earnings and cash flows. The Company monitors its interest-rate risk on the basis of changes in fair values. If there had been a 10% decrease in interest rates at January 31, 2004 and 2003, the loss for changes in market value of the interest-rate swap and the underlying debt would have been $2,000 and $7,000. Management neither foresees nor expects significant changes in exposure to interest rate fluctuations, nor in market risk-management practices. SEASONALITY As a jeweler and specialty retailer, the Company's business is seasonal in nature, with the fourth quarter typically representing a proportionally greater percentage of annual sales, earnings from operations and cash flow. Management expects such seasonality to continue. RISK FACTORS This document contains certain "forward-looking statements" concerning the Company's objectives and expectations with respect to store openings, retail prices, gross margin, expenses, inventory performance, capital expenditures and cash flow. In addition, management makes other forward-looking statements from time to time concerning objectives and expectations. As a jeweler and specialty retailer, the Company's success in achieving its objectives and expectations is partially dependent upon economic conditions, competitive developments and consumer attitudes. However, certain assumptions are specific to the Company and/or the markets in which it operates. The following assumptions, among others, are "risk factors" which could affect the likelihood that the Company will achieve the objectives and expectations communicated by management: (i) that low or negative growth in the economy or in the financial markets, particularly in the U.S. and Japan, will not occur and reduce discretionary spending on goods that are, or are perceived to be, "luxuries"; (ii) that consumer spending does not decline substantially during the fourth quarter of any year; (iii) that unsettled regional and/or global conflicts or crises do not result in military, terrorist or other conditions creating disruptions or disincentives to, or changes in the pattern, practice or frequency of tourist travel to the various regions where the Company operates retail stores nor to the Company's continuing ability to operate in those regions; (iv) that sales in Japan will not decline substantially; (v) that there will not be a substantial adverse change in the exchange relationship between the Japanese yen and the U.S. dollar; (vi) that Mitsukoshi and other department store operators in Japan, in the face of declining or stagnant department store sales, will not close or consolidate stores which have TIFFANY & CO. retail locations; (vii) that Mitsukoshi will continue as a leading department store operator in Japan; (viii) that existing product supply arrangements, including license arrangements with third- party designers Elsa Peretti and Paloma Picasso, will continue; (ix) that the wholesale market for high-quality rough and cut diamonds will provide continuity of supply and pricing; (x) that the investment in Aber achieves its financial and strategic objectives; (xi) that new systems, particularly for inventory management, can be successfully integrated into the Company's operations; (xii) that distribution and manufacturing productivity and capacity can be further improved to support the Company's expanding requirements; (xiii) that new and existing stores and other sales locations can be leased, re-leased or otherwise obtained on suitable terms in desired markets and that construction can be completed on a timely basis; (xiv) that the Company can successfully improve the results of Little Switzerland and achieve satisfactory results from any future ventures into which it enters that are operated under non-TIFFANY & CO. trademarks or trade names; and (xv) that the Company's expansion plans for retail and direct selling operations and merchandise development, production and management can continue to be executed without meaningfully diminishing the distinctive appeal of the TIFFANY & CO. brand. TIFFANY & CO. AND SUBSIDIARIES 32

REPORT OF MANAGEMENT The Company's consolidated financial statements were prepared by management, who are responsible for their integrity and objectivity. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, as such, include amounts based on management's best estimates and judgments. Management is further responsible for maintaining a system of internal accounting control designed to provide reasonable assurance that the Company's assets are adequately safeguarded and that the accounting records reflect transactions executed in accordance with management's authorization. The system of internal control is continually reviewed and is augmented by written policies and procedures, the careful selection and training of qualified personnel and a program of internal audit. The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Independent Auditors. Their report is shown on this page. The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly with financial management and the independent auditors to discuss specific accounting, financial reporting and internal control matters. Both the independent auditors and the internal auditors have full and free access to the Audit Committee. Each year the Audit Committee selects the firm that is to perform audit services for the Company. /s/ Michael J. Kowalski Michael J. Kowalski CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER /s/ James E. Quinn James E. Quinn PRESIDENT /s/ James N. Fernandez James N. Fernandez EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER REPORT OF INDEPENDENT AUDITORS To the Shareholders and Board of Directors of Tiffany & Co. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, stockholders' equity and comprehensive earnings and cash flows present fairly, in all material respects, the financial position of Tiffany & Co. and Subsidiaries at January 31, 2004 and 2003 and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. (PRICEWATERHOUSECOOPERS LLP) PricewaterhouseCoopers LLP New York, New York February 24, 2004 TIFFANY & CO. AND SUBSIDIARIES 33

CONSOLIDATED BALANCE SHEETS January 31, ---------------------------- (in thousands, except per share amount) 2004 2003 - ------------------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 276,115 $ 156,197 Accounts receivable, less allowances of $6,992 and $8,258 131,990 113,061 Inventories, net 871,251 732,088 Deferred income taxes 45,043 44,380 Prepaid expenses and other current assets 23,683 24,662 ---------------------------- Total current assets 1,348,082 1,070,388 Property, plant and equipment, net 885,092 677,630 Deferred income taxes - 6,595 Other assets, net 157,914 168,973 ---------------------------- $ 2,391,088 $ 1,923,586 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 41,948 $ 52,552 Current portion of long-term debt 51,920 - Accounts payable and accrued liabilities 209,842 163,338 Income taxes payable 45,922 41,297 Merchandise and other customer credits 45,527 42,720 ---------------------------- Total current liabilities 395,159 299,907 Long-term debt 392,991 297,107 Postretirement/employment benefit obligations 36,746 33,117 Deferred income taxes 22,397 - Other long-term liabilities 75,595 85,406 Commitments and contingencies Stockholders' equity: Common Stock, $0.01 par value; authorized 240,000 shares, issued and outstanding 146,735 and 144,865 1,467 1,449 Additional paid-in capital 395,182 351,398 Retained earnings 1,058,203 874,694 Accumulated other comprehensive gain (loss), net of tax: Foreign currency translation adjustments 15,856 (14,561) Deferred hedging losses (2,508) (2,284) Minimum pension liability adjustment - (2,647) ---------------------------- Total stockholders' equity 1,468,200 1,208,049 ---------------------------- $ 2,391,088 $ 1,923,586 ============================ See Notes to Consolidated Financial Statements. TIFFANY & CO. AND SUBSIDIARIES 34

CONSOLIDATED STATEMENTS OF EARNINGS Years Ended January 31, ------------------------------------------- (in thousands, except per share amounts) 2004 2003 2002 - ------------------------------------------------------------------------------------------- Net sales $ 2,000,045 $ 1,706,602 $ 1,606,535 Cost of sales 842,663 695,154 663,058 ------------------------------------------- Gross profit 1,157,382 1,011,448 943,477 Selling, general and administrative expenses 801,863 692,251 633,580 ------------------------------------------- Earnings from operations 355,519 319,197 309,897 Interest expense and financing costs 14,906 15,129 19,834 Other (income) expenses, net (2,072) 4,431 751 ------------------------------------------- Earnings before income taxes 342,685 299,637 289,312 Provision for income taxes 127,168 109,743 115,725 ------------------------------------------- Net earnings $ 215,517 $ 189,894 $ 173,587 =========================================== Net earnings per share: Basic $ 1.48 $ 1.31 $ 1.19 =========================================== Diluted $ 1.45 $ 1.28 $ 1.15 =========================================== Weighted-average number of common shares: Basic 145,730 145,328 145,535 Diluted 148,472 148,591 150,517 See Notes to Consolidated Financial Statements. TIFFANY & CO. AND SUBSIDIARIES 35

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE EARNINGS Accumulated Total Other Common Stock Additional Stockholders' Retained Comprehensive ------------------- Paid-in (in thousands) Equity Earnings (Loss) Gain Shares Amount Capital - ------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2001 $ 925,483 $ 630,076 $ (24,846) 145,897 $ 1,459 $ 318,794 Exercise of stock options 6,306 - - 643 7 6,299 Tax benefit from exercise of stock options 5,294 - - - - 5,294 Issuance of Common Stock under the Employee Profit Sharing and Retirement Savings Plan 2,800 - - 89 1 2,799 Purchase and retirement of Common Stock (39,265) (36,805) - (1,628) (17) (2,443) Cash dividends on Common Stock (23,315) (23,315) - - - - Deferred hedging gains, net of tax 6,515 - 6,515 - - - Foreign currency translation adjustments (20,460) - (20,460) - - - Net earnings 173,587 173,587 - - - - ---------------------------------------------------------------------------- Balances, January 31, 2002 1,036,945 743,543 (38,791) 145,001 1,450 330,743 Exercise of stock options 10,654 - - 1,185 13 10,641 Tax benefit from exercise of stock options 11,039 - - - - 11,039 Issuance of Common Stock under the Employee Profit Sharing and Retirement Savings Plan 1,000 - - 29 - 1,000 Purchase and retirement of Common Stock (37,526) (35,487) - (1,350) (14) (2,025) Cash dividends on Common Stock (23,256) (23,256) - - - - Deferred hedging losses, net of tax (8,799) - (8,799) - - - Foreign currency translation adjustments 30,745 - 30,745 - - - Minimum pension liability adjustment, net of tax (2,647) - (2,647) - - - Net earnings 189,894 189,894 - - - - ---------------------------------------------------------------------------- Balances, January 31, 2003 1,208,049 874,694 (19,492) 144,865 1,449 351,398 Exercise of stock options 22,587 - - 1,984 19 22,568 Tax benefit from exercise of stock options 19,517 - - - - 19,517 Issuance of Common Stock under the Employee Profit Sharing and Retirement Savings Plan 2,000 - - 86 1 1,999 Purchase and retirement of Common Stock (4,610) (4,308) - (200) (2) (300) Cash dividends on Common Stock (27,700) (27,700) - - - - Deferred hedging losses, net of tax (224) - (224) - - - Foreign currency translation adjustments, net of tax 30,417 - 30,417 - - - Minimum pension liability adjustment, net of tax 2,647 - 2,647 - - - Net earnings 215,517 215,517 - - - - ---------------------------------------------------------------------------- BALANCES, JANUARY 31, 2004 $ 1,468,200 $ 1,058,203 $ 13,348 146,735 $ 1,467 $ 395,182 ============================================================================ Years Ended January 31, ----------------------------------- 2004 2003 2002 ----------------------------------- Comprehensive earnings are as follows: Net earnings $ 215,517 $ 189,894 $ 173,587 Deferred hedging (losses) gains, net of tax (benefit) expense of $(121), $(4,738) and $3,508 (224) (8,799) 6,515 Foreign currency translation adjustments, net of tax expense of $10,350, $0 and $0 30,417 30,745 (20,460) Minimum pension liability adjustment, net of tax expense (benefit) of $1,863 and $(1,863) 2,647 (2,647) - ----------------------------------- $ 248,357 $ 209,193 $ 159,642 =================================== See Notes to Consolidated Financial Statements. TIFFANY & CO. AND SUBSIDIARIES 36

CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended January 31, ----------------------------------------- (in thousands) 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 215,517 $ 189,894 $ 173,587 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 90,420 78,008 65,159 (Gain) loss on equity investments (244) 2,893 (2,633) Provision for uncollectible accounts 2,082 829 1,702 Provision for inventories 6,533 12,258 10,085 Impairment of investment in third-party online provider - - 7,800 Deferred income taxes 18,497 (1,315) (14,668) Provision for postretirement/employment benefits 3,630 3,117 3,865 Deferred hedging losses (gains) transferred to earnings 3,088 (6,762) (7,188) Changes in assets and liabilities, excluding effects of acquisitions: Accounts receivable (14,128) (7,987) 4,107 Inventories (109,183) (64,460) 2,819 Prepaid expenses and other current assets (3,554) 445 10,079 Other assets, net 10,031 (130) (9,453) Accounts payable 16,559 (3,527) (17,163) Accrued liabilities 22,543 13,235 (6,197) Income taxes payable 21,798 (386) 13,858 Merchandise and other customer credits 2,617 3,786 2,755 Other long-term liabilities (2,364) 1,543 2,992 ----------------------------------------- Net cash provided by operating activities 283,842 221,441 241,506 ----------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (272,900) (219,717) (170,806) Acquisition, net of cash acquired - (26,499) - Equity investment - - (9,546) Proceeds from lease incentives 3,214 2,945 4,554 Investment in note receivable - - (2,500) ----------------------------------------- Net cash used in investing activities (269,686) (243,271) (178,298) ----------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 135,105 100,000 - Repayment of current portion of long-term debt (4,000) (51,500) - (Repayment of) proceeds from short-term borrowings (15,225) (1,905) 13,852 Payment on capital lease obligation - - (39,485) Repurchase of Common Stock (4,610) (37,526) (39,265) Proceeds from exercise of stock options 22,587 10,654 6,306 Cash dividends on Common Stock (27,700) (23,256) (23,315) ----------------------------------------- Net cash provided by (used in) financing activities 106,157 (3,533) (81,907) ----------------------------------------- Effect of exchange rate changes on cash and cash equivalents (395) 7,885 (3,239) ----------------------------------------- Net increase (decrease) in cash and cash equivalents 119,918 (17,478) (21,938) Cash and cash equivalents at beginning of year 156,197 173,675 195,613 ----------------------------------------- Cash and cash equivalents at end of year $ 276,115 $ 156,197 $ 173,675 ========================================= See Notes to Consolidated Financial Statements. TIFFANY & CO. AND SUBSIDIARIES 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. NATURE OF BUSINESS Tiffany & Co. is a holding company that operates through its subsidiary companies. Its principal subsidiary retails and distributes fine jewelry, timepieces, sterling silverware, china, crystal, stationery, fragrances and personal accessories. It is also engaged in product design and manufacturing activities. Sales are made through four segments of business: U.S. Retail includes sales in Company-operated stores in the U.S.; International Retail primarily includes sales in Company-operated retail locations in markets outside the U.S., as well as a limited amount of business-to-business sales, Internet sales and wholesale sales to independent retailers and distributors in certain of those markets; Direct Marketing includes business-to-business, catalog and Internet sales in the U.S.; and Specialty Retail includes sales of Little Switzerland (which the Company acquired in October 2002) and other ventures operated under non-TIFFANY & CO. trademarks or trade names. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FISCAL YEAR The Company's fiscal year ends on January 31 of the following calendar year. All references to years relate to fiscal years rather than calendar years. BASIS OF REPORTING The consolidated financial statements include the accounts of Tiffany & Co. and all majority-owned domestic and foreign subsidiaries ("Company"). Intercompany accounts, transactions and profits have been eliminated in consolidation. The equity method of accounting is used for investments in which the Company has significant influence, but not a controlling interest. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America; these principles require management to make certain estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. The most significant estimates include valuation of inventories, provisions for income taxes and uncollectible accounts and the recoverability of non-consolidated investments and long-lived assets. Actual results could differ from these estimates. Periodically, the Company reviews all significant estimates and assumptions affecting the financial statements relative to current conditions and records the effect of any necessary adjustments. See "New Accounting Standards" for a discussion of variable interest entities. RECLASSIFICATIONS Certain reclassifications were made to prior years' consolidated financial statements and related note disclosures to conform with the current year's presentation. CASH AND CASH EQUIVALENTS Cash and cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash equivalents include highly liquid investments with an original maturity of three months or less and consist of time deposits and money market fund investments with a number of U.S. and non-U.S. financial institutions with high credit ratings. The Company's policy restricts the amounts invested in any one institution. RECEIVABLES AND FINANCE CHARGES The Company's domestic and international presence and its large, diversified customer base serve to limit overall credit risk. The Company maintains reserves for potential credit losses and, historically, such losses, in the aggregate, have not exceeded expectations. Finance charges on retail revolving charge accounts are not significant and are accounted for as a reduction of selling, general and administrative expenses. INVENTORIES Inventories are valued at the lower of cost or market. Domestic and foreign branch inventories, excluding Japan, are valued using the last-in, first-out (LIFO) method. Inventories held by foreign subsidiaries and Japan are valued using the first-in, first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: 39 years for buildings, 5-15 years for machinery and equipment and 3-10 years for office equipment and store TIFFANY & CO. AND SUBSIDIARIES 38

fixtures. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings while expenditures for major renewals and improvements are capitalized. Upon the disposition of property, plant and equipment, the accumulated depreciation is deducted from the original cost, and any gain or loss is reflected in current earnings. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the useful lives of the assets. The Company capitalized interest costs of $2,335,000 in 2003 and $3,296,000 in 2002. No interest was capitalized in 2001. GOODWILL Goodwill represents the excess of cost over fair value of net assets acquired and, until February 1, 2002, was subject to amortization over 20 years using the straight-line method. In 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Accounting for Goodwill and Other Intangible Assets." SFAS No. 142 requires that goodwill no longer be amortized to earnings but instead be reviewed annually for potential impairment. In 2003 and 2002 there were no impairment losses recognized. At January 31, 2004 and 2003, unamortized goodwill was included in other assets, net and consisted of the following by segment: Years Ended January 31, ----------------------- (in thousands) 2004 2003 - ----------------------------------------------------- U.S. Retail $10,312 $10,115 International Retail 831 831 Direct Marketing - - Specialty Retail 10,766 11,499 ----------------------- $21,909 $22,445 ======================= In 2003, Specialty Retail goodwill decreased by $733,000 due to adjustments of deferred taxes related to the acquisition of Little Switzerland, Inc. ("Little Switzerland"). IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews its long-lived assets for impairment when management determines that the carrying value of such assets may not be recoverable due to events or changes in circumstances. Recoverability of long-lived assets is evaluated by comparing the carrying value of the asset with the estimated future undiscounted cash flows. If the comparisons indicate that the asset is not recoverable, an impairment loss is calculated as the difference between the carrying value and the fair value of the asset and the loss is recognized during that period. In 2003, 2002 and 2001, there were no significant impairment losses related to long-lived assets. HEDGING INSTRUMENTS Effective February 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and its related amendment, SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." These standards require that all derivative instruments be recorded on the consolidated balance sheet at their fair value, as either assets or liabilities, with an offset to current or comprehensive earnings, depending on whether a derivative is designated as part of an effective hedge transaction and, if it is, the type of hedge transaction. For fair-value hedge transactions, changes in fair value of the derivative and changes in the fair value of the item being hedged are recorded in current earnings. For cash-flow hedge transactions, the effective portion of the changes in fair value of derivatives are reported as other comprehensive earnings and are recognized in current earnings in the period or periods during which the hedged transaction affects current earnings. Amounts excluded from the effectiveness calculation and any ineffective portions of the change in fair value of the derivative of a cash-flow hedge are recognized in current earnings. At February 1, 2001, the adoption of these new standards resulted in a cumulative effect of an accounting change of $1,653,000, recorded in cost of sales, which reduced net earnings by $975,000, net of tax, and increased accumulated comprehensive earnings by $3,773,000, net of tax of $2,622,000. The Company uses a limited number of derivative financial instruments to mitigate its foreign currency and interest TIFFANY & CO. AND SUBSIDIARIES 39

rate exposures. For a derivative to qualify as a hedge at inception and throughout the hedged period, the Company formally documents the nature and relationships between the hedging instruments and hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions and method of assessing hedge effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and expected terms of a forecasted transaction must be specifically identified, and it must be probable that each forecasted transaction will occur. If it were deemed probable that the forecasted transaction would not occur, the gain or loss would be recognized in current earnings. Financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedge instrument and the item being hedged, both at inception and throughout the hedged period. The Company does not use derivative financial instruments for trading or speculative purposes. PREOPENING COSTS Costs associated with the opening of new retail stores are expensed in the period incurred. ADVERTISING COSTS Media and production costs for print advertising are expensed as incurred, while catalog costs are expensed upon mailing. Media and production costs associated with television advertising are expensed when the advertising first takes place. Advertising costs, which include media, production, catalogs, promotion events and other related costs totaled $122,382,000, $101,867,000 and $86,351,000 in 2003, 2002 and 2001. INCOME TAXES Income taxes are accounted for by using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. The Company, its domestic subsidiaries and the foreign branches of its domestic subsidiaries file a consolidated Federal income tax return. FOREIGN CURRENCY The functional currency of most of the Company's foreign subsidiaries and branches is the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded as a component of other comprehensive earnings within stockholders' equity. Gains and losses resulting from foreign currency transactions have not been significant and are included in other (income) expenses, net. REVENUE RECOGNITION Sales are recognized at the "point of sale," which occurs when merchandise is taken in an "over-the-counter" transaction or upon receipt by a customer in a shipped transaction. Sales are reported net of returns. Shipping and handling fees billed to customers are included in net sales and the related costs are included in cost of sales. Revenues for gift card and certificate sales and store credits are recognized upon redemption. The Company maintains a reserve for potential product returns and it records, as a reduction to sales and cost of sales, its provision for estimated product returns, which is determined based on historical experience. In 2003, 2002 and 2001, the largest portion of the Company's sales was denominated in U.S. dollars. EARNINGS PER SHARE Basic earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share includes the dilutive effect of the assumed exercise of stock options. NEW ACCOUNTING STANDARDS In December 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46R, "Consolidation of Variable Interest Entities" ("FIN 46R"). FIN 46R replaces the same titled FIN 46 that was issued in January 2003. FIN 46R requires that variable interest entities be consolidated by its primary beneficiary (if any) if the entity's equity investors at risk do not have the TIFFANY & CO. AND SUBSIDIARIES 40

characteristics of a controlling financial interest or the equity investors do not have significant equity at risk for the entity to finance its activities without additional financial support. The provisions of FIN 46 were effective immediately for all entities created after January 31, 2003 and FIN 46R is effective for those entities in the first quarter of 2004. Since February 1, 2003, the Company does not have any relationships with entities it believes are variable interest entities. For those entities created prior to February 1, 2003, the Company is required to adopt the provisions of FIN 46R by the end of the first quarter of 2004. The Company is in the process of determining the effects, if any, the adoption of FIN 46R will have on its financial statements but does not expect the adoption to have a significant impact on its financial position, earnings or cash flows. STOCK-BASED COMPENSATION Employee stock options are accounted for under the intrinsic value method in accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and its related interpretations. Compensation costs were not recorded in net earnings for stock options, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. Had compensation expense been determined and recorded based upon the fair-value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," net earnings and earnings per share would have been reduced to pro forma amounts as follows: Years Ended January 31, --------------------------------------------- (in thousands, except per share amounts) 2004 2003 2002 - ------------------------------------------------------------------------------------------ Net earnings as reported $ 215,517 $ 189,894 $ 173,587 Stock-based employee compensation expense determined under fair-value-based method for all awards, net of tax (13,236) (12,803) (10,713) --------------------------------------------- Pro forma net earnings $ 202,281 $ 177,091 $ 162,874 ============================================= Earnings per basic share: As reported $ 1.48 $ 1.31 $ 1.19 Pro forma $ 1.39 $ 1.22 $ 1.12 Earnings per diluted share: As reported $ 1.45 $ 1.28 $ 1.15 Pro forma $ 1.36 $ 1.19 $ 1.08 The weighted-average fair values of options granted for the years ended January 31, 2004, 2003 and 2002 were $14.89, $9.40 and $12.33. The fair value of each option grant is estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Years Ended January 31, -------------------------------------- 2004 2003 2002 - ------------------------------------------------------------------------------------------ Dividend yield 0.6% 0.6% 0.7% Expected volatility 37.5% 37.5% 36.5% Risk-free interest rate 3.3% 2.9% 4.3% Expected life (years) 6 5 5 C. ACQUISITIONS AND DISPOSITIONS In May 2001, a subsidiary of the Company purchased 45% of Little Switzerland's outstanding shares of common stock by means of a direct investment in newly-issued unregistered shares at a cost of $9,546,000. Little Switzerland is a specialty retailer of jewelry, watches, crystal, china and giftware, operating stores primarily on Caribbean islands, as well as in Florida and Alaska. The Company accounted for this investment under the equity method, as provided in APB Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock," as amended, based upon its ownership interest and its significant influence. In 2001, the Company also provided Little Switzerland with an interest-bearing loan in the amount of $2,500,000. The Company's equity share of Little Switzerland's results from operations has been included in other (income) expenses, net and amounted to losses of $1,482,000 in 2002 (through September 30) and $2,483,000 in 2001. In August 2002, the subsidiary of the Company commenced a cash tender offer to acquire the remaining balance of the outstanding shares of Little Switzerland's common stock at $2.40 per share. In October 2002, the Company purchased and paid for the shares acquired, which represented 98% of the outstanding shares of Little Switzerland. On November 20, 2002, the subsidiary merged with and into Little Switzerland. Under the terms of the merger, common stock of Little Switzerland not owned by the subsidiary has been converted into the right to receive the same consideration paid in the tender offer. The cost of acquiring all of the outstanding shares of Little Switzerland, other than those TIFFANY & CO. AND SUBSIDIARIES 41

already owned by the Company, including professional fees and other related costs, was $27,530,000. Pro forma financial data, assuming the acquisition had been completed on February 1, 2001 and 2002, has not been presented since the Little Switzerland acquisition is not significant to the Company's financial condition or results of its operations. The purchase price has been allocated to the assets acquired and liabilities assumed according to estimated fair values. The amount assigned to intangible assets is $10,615,000 and is being amortized over 20 years. The amount assigned to goodwill is $8,803,000, none of which is expected to be deductible for tax purposes. The amount assigned to goodwill at January 31, 2003 was reduced by $733,000 in the third quarter of 2003, due to adjustments of deferred taxes. The Company commenced the consolidation of Little Switzerland's operations effective October 1, 2002, and the interest-bearing loan provided to Little Switzerland in 2001 was eliminated in consolidation. The acquisition was accounted for in accordance with SFAS No. 141, "Business Combinations." In November 2002, the Company made a decision to discontinue offering service award programs which it operated through its Business Sales division. The Company fulfilled its customer commitments in 2003 without soliciting new employee service award programs. Sales affected by this action represented less than $30,000,000 annually, or less than half of the Business Sales division's sales. As a consequence of that decision, the Company recorded a pre-tax charge of $1,400,000 in 2002, primarily related to employee separation costs and the disposal of obsolete, program-specific inventory. At January 31, 2004, all costs related to the exit of the service awards programs have been incurred and there was no reserve remaining. D. INVESTMENTS In December 2002, the Company made a $4,000,000 investment in Temple St. Clair L.L.C. ("Temple St. Clair"), a privately-held company that designs and sells jewelry. In 2003, the Company made additional investments of $4,500,000 in Temple St. Clair. The Company has additional funding commitments of $4,500,000 and the option to buy out and own 100% of Temple St. Clair in the future. Temple St. Clair is being consolidated in the Company's financial statements based on the Company's percentage of ownership and effective control over the direction of the operations of the business. In February 2000, the Company acquired a 5.4% equity interest in Della.com, Inc. ("Della"), a provider of online wedding gift registry services. In April 2000, Della merged with and into WeddingChannel.com with the consequence that the Company's equity interest in Della was converted to a 2.7% interest in WeddingChannel.com, assuming the conversion of all outstanding preferred shares to common. The Company accounted for this investment in accordance with the cost method as provided in APB Opinion No. 18, as amended. In 2001, the Company recorded in other (income) expenses, net a pre-tax impairment charge of $7,800,000, representing the Company's total investment. In July 1999, the Company made a strategic investment in Aber Diamond Corporation ("Aber"), previously known as Aber Resources Ltd., a publicly-traded company headquartered in Canada, by purchasing eight million unregistered shares of its common stock, which represented 14.7% (at the purchase date) of Aber's outstanding shares, at a cost of $70,636,000. Aber holds a 40% interest in the Diavik Diamond Mine in Canada's Northwest Territories, an operation developed to mine diamonds. Production commenced in the first quarter of 2003. This investment is included in other assets, net and was allocated at the time of investment between the Company's interest in the net book value of Aber and the mineral rights obtained. At January 31, 2004 and 2003, the Company's investment in Aber was $32,256,000 and $32,012,000, and the intangible mineral rights balance was $40,305,000 and $41,243,000. On January 31, 2004 and 2003, the Company's investment had aggregate fair-market values of $280,480,000 and $153,280,000, based upon the market price of Aber's common stock on those dates. The amount allocated to the Company's interest in the net book value of Aber is being accounted for under the equity method based upon the Company's significant influence, including representation on Aber's Board of Directors. TIFFANY & CO. AND SUBSIDIARIES 42

The Company's share of equity in undistributed earnings or losses is recorded on a one-quarter lag to facilitate timely reporting and represents Aber's results through October 31, 2003. In February 2001, Aber completed the sale of its interest in a mining project for $114,000,000. As a result of this sale, the Company recorded in other (income) expenses, net a pre-tax gain of $5,257,000, net of mineral rights costs related to this project. The Company's equity share of Aber's results from operations (excluding the gain on the sale of its interest in the mining project) amounted to a gain of $244,000 in 2003 and losses of $1,076,000, and $125,000 in 2002 and 2001. In 2003, depletion of the mineral rights was based on the projected units of production method and amounted to $938,000. There was no depletion recorded in 2002 and 2001. In addition, the Company has entered into a diamond purchase agreement whereby the Company has the obligation to purchase a minimum of $50,000,000 (excluding purchases in 2003) of diamonds meeting the Company's quality standards per year for 10 years beginning in 2004. It is expected that this commercial relationship will enable the Company to secure a considerable portion of its future diamond needs. E. SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for: Years Ended January 31, ------------------------------------------- (in thousands) 2004 2003 2002 - ---------------------------------------------------------------------------------------- Interest, net of interest capitalization $ 12,151 $ 12,562 $ 19,525 Income taxes $ 85,526 $ 100,059 $ 112,158 Details of business acquired in purchase transaction: Years Ended January 31, -------------------------------------------- (in thousands) 2004 2003 2002 - ----------------------------------------------------------------------------------------- Fair value of assets acquired $ - $ 48,090 $ - Liabilities assumed - (20,560) - -------------------------------------------- Cash paid for acquisition - 27,530 - Cash acquired - (1,031) - -------------------------------------------- Net cash paid for acquisition $ - $ 26,499 $ - ============================================ Supplemental noncash investing and financing activities: Years Ended January 31, -------------------------------------------- (in thousands) 2004 2003 2002 - ----------------------------------------------------------------------------------------- Issuance of Common Stock under the Employee Profit Sharing and Retirement Savings Plan $ 2,000 $ 1,000 $ 2,800 F. INVENTORIES January 31, -------------------- (in thousands) 2004 2003 - -------------------------------------------------- Finished goods $659,558 $615,247 Raw materials 165,768 91,505 Work-in-process 50,517 29,698 --------------------- 875,843 736,450 Reserves (4,592) (4,362) --------------------- $871,251 $732,088 ===================== LIFO-based inventories at January 31, 2004 and 2003 represented 69% and 73% of inventories, net, with the current cost exceeding the LIFO inventory value by $30,587,000 and $20,135,000. The LIFO valuation method had the effect of decreasing earnings per diluted share by $0.05 for the year ended January 31, 2004, had no effect on earnings per diluted share for the year ended January 31, 2003 and had the effect of decreasing earnings per diluted share by $0.01 for the year ended January 31, 2002. G. PROPERTY, PLANT AND EQUIPMENT January 31, ---------------------------- (in thousands) 2004 2003 - ---------------------------------------------------------- Land $ 233,335 $ 78,754 Buildings 188,327 171,578 Leasehold improvements 400,276 302,159 Construction-in-progress 16,479 92,132 Office equipment 292,317 275,055 Machinery and equipment 97,122 61,726 ---------------------------- 1,227,856 981,404 Accumulated depreciation and amortization (342,764) (303,774) ---------------------------- $ 885,092 $ 677,630 ============================ In June 2003, the Company acquired the land and building housing its Japan flagship store located in Tokyo's Ginza shopping district. The cost to purchase the land and TIFFANY & CO. AND SUBSIDIARIES 43

building was $140,400,000 (U.S. dollar equivalent at the acquisition date) of which $134,700,000 and $5,200,000 has been allocated to land and building, respectively, with the remaining costs allocated to other balance sheet accounts. The building is being depreciated on a straight-line basis over its estimated useful life of 39 years. The provision for depreciation and amortization for the years ended January 31, 2004, 2003 and 2002 was $91,608,000, $79,682,000 and $65,997,000. In 2003, 2002 and 2001, the Company accelerated the depreciation of certain leasehold improvements and equipment as a result of the shortening of useful lives related to renovations and/or expansions of retail stores and office facilities. The amount of accelerated depreciation recognized was $4,361,000, $5,304,000 and $6,516,000 for the years ended January 31, 2004, 2003 and 2002. H. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES January 31, --------------------- (in thousands) 2004 2003 - --------------------------------------------------- Accounts payable -- trade $ 91,010 $ 67,150 Accrued compensation and commissions 31,597 23,839 Accrued sales, withholding and other taxes 42,396 37,468 Other 44,839 34,881 --------------------- $209,842 $163,338 ===================== I. EARNINGS PER SHARE The following table summarizes the reconciliation of the numerators and denominators for the basic and diluted earnings per share ("EPS") computations: Years Ended January 31, ------------------------------------------- (in thousands) 2004 2003 2002 - ---------------------------------------------------------------------------------------- Net earnings for basic and diluted EPS $ 215,517 $ 189,894 $ 173,587 ------------------------------------------- Weighted-average shares for basic EPS 145,730 145,328 145,535 Incremental shares from the assumed exercise of stock options 2,742 3,263 4,982 ------------------------------------------- Weighted-average shares for diluted EPS 148,472 148,591 150,517 =========================================== For the years ended January 31, 2004, 2003 and 2002, there were 1,791,000, 4,991,000 and 3,220,000 stock options excluded from the computations of earnings per diluted share due to their antidilutive effect. J. DEBT January 31, ----------------------------------------------- Carrying Amount Fair Value ----------------------------------------------- (in thousands) 2004 2003 2004 2003 - --------------------------------------------------------------------------- Short-term borrowings: Credit facility $ 32,861 $ 49,194 $ 32,861 $ 49,194 Little Switzerland 9,087 3,358 9,087 3,358 ----------------------------------------------- 41,948 52,552 41,948 52,552 ----------------------------------------------- Current portion of long-term debt: Variable-rate yen loan 51,920 - 51,920 - Long-term debt: Senior Notes: 6.90% Series A 60,000 60,000 67,907 66,273 7.05% Series B 40,000 40,000 45,854 44,427 6.15% Series C 41,649 41,903 41,649 41,903 6.56% Series D 62,542 63,067 62,542 63,067 4.50% yen loan 47,200 41,970 58,290 52,572 Variable-rate yen loan - 46,167 - 46,167 LS Facility term loan - 4,000 - 4,000 First Series Yen Bonds 141,600 - 150,715 - ----------------------------------------------- 392,991 297,107 426,957 318,409 ----------------------------------------------- $486,859 $349,659 $520,825 $370,961 =============================================== The fair values of short-term borrowings, the variable-rate yen loan and the LS Facility term loan approximate carrying value due to their variable interest-rate terms. The fair values of the First Series Yen Bonds, the 4.50% yen loan and the Senior Notes were determined using the quoted market prices of debt instruments with similar terms and maturities. In September 2003, the Company issued yen 15,000,000,000 of senior unsecured First Series Yen Bonds ("Bonds") due 2010 with principal due upon maturity and a fixed coupon rate of 2.02% payable in semi-annual installments. The Bonds were sold in a private transaction to qualified TIFFANY & CO. AND SUBSIDIARIES 44

institutional investors in Japan. The obligations under the Bonds are unconditionally and irrevocably guaranteed by the Company. The proceeds from the issuance have been primarily used by the Company to repay the yen 11,000,000,000 short-term bridge loan used to finance the purchase of the land and building housing its Japan flagship store which was entered into in June 2003 and matured in September 2003. In July 2002, the Company, in a private transaction with various institutional lenders, issued, at par, $40,000,000 of 6.15% Series C Senior Notes Due 2009 and $60,000,000 of 6.56% Series D Senior Notes Due 2012 with respective seven-year and 10-year lump sum repayments upon maturities. The proceeds of these issues were used by the Company for general corporate purposes, including seasonal working capital and to redeem the Company's $51,500,000 principal amount 7.52% Senior Notes which came due in January 2003. The Note Purchase Agreements require maintenance of specific financial covenants and ratios and limit certain changes to indebtedness and the general nature of the business, in addition to other requirements customary to such borrowings. Concurrently with the issuance of such debt, the Company entered into an interest-rate swap agreement to hedge the change in fair value of its fixed-rate obligation. Under the swap agreement, the Company pays variable-rate interest and receives fixed interest-rate payments periodically over the life of the instrument. The Company accounts for the interest-rate swap agreement as a fair-value hedge of the debt (see Note K), requiring the debt to be valued at fair value. As a result, the carrying value of the Series C and Series D Senior Notes equals the fair value. For the years ended January 31, 2004 and 2003, the interest-rate swap agreement had the effect of decreasing interest expense by $3,965,000 and $1,999,000. In November 2001, the Company entered into a $200,000,000 multicurrency revolving credit facility ("Credit Facility") with six participating banks. All borrowings are at interest rates based on a prime rate or LIBOR. The Credit Facility expires in November 2006. The Credit Facility requires the payment of an annual fee based on the total amount of available credit and contains covenants that require maintenance of certain debt/ equity and interest-coverage ratios, in addition to other requirements customary to loan facilities of this nature. At January 31, 2004 and 2003, the interest rates under the Credit Facility ranged from 0.41% to 11.30% and 0.41% to 11.20%. The weighted-average interest rates for the Credit Facility were 2.65% and 3.95% for the years ended January 31, 2004 and 2003. The Company had other lines of credit totaling $4,969,000, none of which is outstanding at January 31, 2004. In connection with the Company's acquisition of the remaining outstanding shares of Little Switzerland in 2002, the Company assumed its outstanding debt. Little Switzerland had a senior collateralized revolving and term loan credit facility ("LS Facility"), which allowed them to borrow up to $12,000,000 through March 21, 2005, of which up to $8,000,000 was a revolving loan and $4,000,000 was a term loan, at an interest rate of 2.75% above the Adjusted Eurodollar Rate or 0.75% above the Prime Rate, plus customary servicing costs and unused facility fees. In May 2003, the Company replaced the LS Facility with an unsecured revolving credit facility ("LS Credit Facility"), guaranteed by the Company, which allows Little Switzerland to borrow up to $10,000,000 at an interest rate of 0.80% above LIBOR or a LIBOR Market Index. The LS Credit Facility, which expires in November 2005, contains covenants that require the Company to maintain certain debt/equity and interest-coverage ratios, in addition to other requirements customary to loan facilities of this nature. There was no gain or loss associated with the replacement of the LS Facility. The interest rate for the LS Credit Facility at January 31, 2004 was 1.90%. The interest rate for the LS Facility at January 31, 2003 was 4.21%. In October 1999, the Company entered into a yen 5,500,000,000, five-year loan agreement due 2004, bearing interest at a variable rate. The interest rate at January 31, 2004 was 0.57% and is based upon the six-month Japanese LIBOR plus 50 basis points and is TIFFANY & CO. AND SUBSIDIARIES 45

reset every six months ("floating rate"). The proceeds from this loan were used to reduce short-term indebtedness in Japan. Concurrently, the Company entered into a yen 5,500,000,000, five-year interest-rate swap agreement whereby the Company pays a fixed rate of interest of 1.815% and receives the floating rate on the yen 5,500,000,000 loan. The interest-rate swap agreement had the effect of increasing interest expense by $602,000, $551,000 and $508,000 for the years ended January 31, 2004, 2003 and 2002. In December 1998, the Company, in private transactions with various institutional lenders, issued, at par, $60,000,000 principal amount 6.90% Series A Senior Notes Due 2008 and $40,000,000 principal amount 7.05% Series B Senior Notes Due 2010. The proceeds of these issuances were used by the Company for working capital and to refinance a portion of outstanding short-term indebtedness. The Note Purchase Agreements require lump sum repayments upon maturities, maintenance of specific financial covenants and ratios and limit certain payments, investments and indebtedness, in addition to other requirements customary to such borrowings. The Company has a yen 5,000,000,000, 15-year term loan agreement due 2011, bearing interest at a rate of 4.50%. The Company had letters of credit and financial guarantees of $12,471,000 at January 31, 2004. K. HEDGING INSTRUMENTS In the normal course of business, the Company uses financial hedging instruments, including derivative financial instruments, for purposes other than trading. These instruments include interest-rate swap agreements, foreign currency-purchased put options and forward foreign-exchange contracts. The Company does not use derivative financial instruments for speculative purposes. The Company's foreign subsidiaries and branches satisfy all of their inventory requirements by purchasing merchandise from the Company's New York subsidiary. All inventory purchases are payable in U.S. dollars. Accordingly, the foreign subsidiaries and branches have foreign-exchange risk that may be hedged. To mitigate this risk, the Company manages a foreign currency hedging program intended to reduce the Company's risk in foreign currency-denominated (primarily yen) transactions. To minimize the potentially negative impact of a significant strengthening of the U.S. dollar against the yen, the Company purchases yen put options ("options") and enters into forward foreign-exchange contracts that are designated as hedges of forecasted purchases of merchandise and to settle liabilities in foreign currencies. The Company accounts for its option contracts as cash-flow hedges. Effective November 1, 2001, the Company assesses hedge effectiveness based on the total changes in the options' cash flows. The effective portion of unrealized gains and losses associated with the value of the option contracts is deferred as a component of accumulated other comprehensive gain (loss) and is recognized as a component of cost of sales on the Company's consolidated statement of earnings when the related inventory is sold. Prior to November 1, 2001, the Company excluded time value from the assessment of effectiveness, which amounted to pre-tax hedging losses of $375,000, recorded in cost of sales for the year ended January 31, 2002. There was no ineffectiveness related to the Company's option contracts in 2003 and 2002. The fair value of the options was $762,000 and $1,512,000 at January 31, 2004 and 2003. The fair value of the options was determined using quoted market prices for these instruments. At January 31, 2004 and 2003, the Company also had $20,973,000 and $15,620,000 of outstanding forward foreign-exchange contracts, which subsequently matured by March 2004 and February 2003, to primarily support the settlement of merchandise liabilities for the Company's business in Japan. Due to the short-term nature of the Company's forward foreign-exchange contracts, the book value of the underlying assets and liabilities approximates fair value. As discussed in Note J, the Company uses interest-rate swap agreements to effectively convert its variable-rate yen obligation to a fixed-rate obligation and its fixed-rate Senior Notes Series C and Series D obligations to floating-rate obligations. The Company accounts for its variable-rate yen TIFFANY & CO. AND SUBSIDIARIES 46

interest-rate swap as a cash-flow hedge and its fixed-rate Senior Notes Series C and Series D interest-rate swaps as a fair-value hedge. The terms of each swap agreement match the terms of the underlying debt, resulting in no ineffectiveness. The fair value of the Senior Notes' interest-rate swap agreements resulted in a net gain of $4,191,000 and $4,970,000 at January 31, 2004 and 2003. The fair value of the yen interest-rate swap agreement resulted in a net loss of $471,000 and $957,000 at January 31, 2004 and 2003. The fair value of the interest-rate swap agreements was based upon the amounts the Company would expect to pay to terminate the agreements. Hedging activity affected accumulated other comprehensive gain (loss), net of tax, as follows: Years Ended January 31, ----------------------- (in thousands) 2004 2003 - ------------------------------------------ ---------------------- Balance at beginning of period $(2,284) $ 6,515 Derivative losses (gains) transferred to earnings 2,007 (4,395) Change in fair value (2,231) (4,404) ----------------------- $(2,508) $(2,284) ======================= The Company expects $1,768,000 of derivative losses included in accumulated other comprehensive income to be reclassified into earnings within the next 12 months. This amount may vary due to fluctuations in the yen exchange rate. The maximum term over which the Company is hedging its exposure to the variability of future cash flows (for all forecasted transactions, excluding interest payments on variable-rate debt) is 12 months. L. COMMITMENTS AND CONTINGENCIES The Company leases certain office, distribution, retail and manufacturing facilities. Retail store leases may require the payment of minimum rentals and contingent rent based upon a percentage of sales exceeding a stipulated amount. The lease agreements, which expire at various dates through 2032, are subject, in many cases, to renewal options and provide for the payment of taxes, insurance and maintenance. Certain leases contain escalation clauses resulting from the pass-through of increases in operating costs, property taxes and the effect on costs from changes in consumer price indices. In January 2001, the Company notified the lessor of its New Jersey Retail Service Center (formerly known as the Customer Service Center) that it exercised its purchase right included in the lease. The capital lease buyout was completed on January 31, 2002. Rent-free periods and other incentives granted under certain leases and scheduled rent increases are charged to rent expense on a straight-line basis over the related terms of such leases. Rent expense for the Company's operating leases, including escalations, consisted of the following: Years Ended January 31, ------------------------------------------- (in thousands) 2004 2003 2002 - ---------------------------------------------------------------------------------------- Minimum rent for retail locations $ 41,261 $ 35,572 $ 32,044 Contingent rent based on sales 20,571 17,470 15,668 Office, distribution and manufacturing facilities rent 15,292 13,572 10,809 ------------------------------------------- $ 77,124 $ 66,614 $ 58,521 =========================================== Aggregate minimum annual rental payments under noncancelable operating leases are as follows: Minimum Annual Rental Payments Years Ending January 31, (in thousands) - ------------------------------------------------------- 2005 $ 67,894 2006 59,325 2007 51,672 2008 45,983 2009 40,206 Thereafter 194,997 At January 31, 2004, the Company's contractual cash obligations and commercial commitments were: inventory purchases of $708,868,000 including the obligation under the agreement with Aber (see Note D), non-inventory purchases of $6,912,000, construction-in-progress of $12,405,000 and other contractual obligations of $13,563,000, which includes the additional commitment of $4,500,000 (see Note D). In August 2001, the Company signed new agreements with Mitsukoshi whereby TIFFANY & CO. boutiques will continue to operate within Mitsukoshi's stores in Japan TIFFANY & CO. AND SUBSIDIARIES 47

until at least January 31, 2007. The new agreements largely continue the principles on which Mitsukoshi and the Company have been cooperating since 1993, when the relationship was last renegotiated. The main agreement, which will expire on January 31, 2007, covers the continued operation of TIFFANY & CO. boutiques. A separate set of agreements covers the operation of a freestanding TIFFANY & CO. store on Tokyo's Ginza. Under the new agreements, the Company began to pay to Mitsukoshi a reduced percentage fee based on certain sales beginning in 2002, and was followed by a greater reduction in fees beginning in 2003. There are no further reductions under the current agreement. The Company also operates boutiques in other Japanese department stores. The Company pays the department stores a percentage fee based on sales generated in these locations. Fees paid to Mitsukoshi and other Japanese department stores totaled $81,383,000, $84,494,000 and $93,971,000 in 2003, 2002 and 2001. The Company is, from time to time, involved in routine litigation incidental to the conduct of its business, including proceedings to protect its trademark rights, litigation instituted by persons injured upon premises within the Company's control, litigation with present and former employees and litigation claiming infringement of the copyrights and patents of others. Management believes that such pending litigation will not have a significant impact on the Company's financial position, earnings or cash flows. M. RELATED PARTIES The Company's Chairman of the Board and Chief Executive Officer is a member of the Board of Directors of The Bank of New York, which serves as the Company's lead bank for its Credit Facility, provides other general banking services and serves as the plan administrator for the Company's pension plan. Fees paid to the bank for services rendered, interest on debt and premiums on derivative contracts amounted to $1,582,000, $2,058,000 and $3,683,000 in 2003, 2002 and 2001. A member of the Company's Board of Directors is an officer of IBM Corporation, which has had a long-standing business relationship with the Company. Fees paid to that company for equipment and services rendered amounted to $11,837,000, $12,218,000 and $5,577,000 in 2003, 2002 and 2001. A member of the Company's Board of Directors was an officer of Lehman Brothers, which served as a placement agent for the 2003 and 2002 debt issuances and as an advisor for the purchase of the remaining shares of Little Switzerland and other matters. Fees paid to that company for services rendered amounted to $739,000, $956,000 and $35,000 in 2003, 2002 and 2001. N. STOCKHOLDERS' EQUITY STOCK REPURCHASE PROGRAM In November 2003, the Board of Directors extended and expanded the Company's stock repurchase program, which was due to expire in November 2003, until November 30, 2006 and increased the remaining authorization by $100,000,000, allowing the Company to repurchase up to $116,500,000 of the Company's outstanding Common Stock in addition to those which already had been purchased. The program was initially authorized in November 1997 for the repurchase of up to $100,000,000 of the Company's Common Stock in the open market over a three-year period. That authorization was superseded in September 2000 by a further authorization of repurchases of up to $100,000,000 of the Company's Common Stock in the open market. The timing of purchases and the actual number of shares to be repurchased depend on a variety of factors such as price and other market conditions. The Company repurchased and retired 200,000 shares of Common Stock in 2003 at an aggregate cost of $4,610,000, or an average cost of $23.05 per share; repurchased and retired 1,350,000 shares of Common Stock in 2002 at an aggregate cost of $37,526,000, or an average cost of $27.80 per share; and repurchased and retired 1,628,000 shares of Common Stock in 2001 at an aggregate cost of $39,265,000, or an average cost of $24.12 per share. TIFFANY & CO. AND SUBSIDIARIES 48

STOCKHOLDER RIGHTS PLAN In September 1998, the Board of Directors amended and restated the Company's existing Stockholder Rights Plan ("Rights Plan") to extend its expiration date from November 17, 1998 to September 17, 2008. Under the Rights Plan, as amended, each outstanding share of the Company's Common Stock has a stock purchase right, initially subject to redemption at $0.01 per right, which right first becomes exercisable should certain takeover-related events occur. Following certain such events, but before any person has acquired beneficial ownership of 15% of the Company's common shares, each right may be used to purchase 0.0025 of a share of Series A Junior Participating Cumulative Preferred Stock at an exercise price of $165.00 (subject to adjustment); after such an acquisition, each right becomes nonredeemable and may be used to purchase, for the exercise price, common shares having a market value equal to two times the exercise price. If, after such an acquisition, a merger of the Company occurs (or 50% of the Company's assets are sold), each right may be exercised to purchase, for the exercise price, common shares of the acquiring corporation having a market value equal to two times the exercise price. Rights held by such a 15% owner may not be exercised. This statement is a brief summary of the Rights Plan. The Rights Plan document is filed as an exhibit to the Company's Form 10-K. PREFERRED STOCK The Board of Directors is authorized to issue, without further action by the stockholders, shares of Preferred Stock and to fix and alter the rights related to such stock. In March 1987, the stockholders authorized 2,000,000 shares of Preferred Stock, par value $0.01 per share. In November 1988, the Board of Directors designated certain shares of such Preferred Stock as Series A Junior Participating Cumulative Preferred Stock, par value $0.01 per share, to be issued in connection with the exercise of certain stock purchase rights under the Rights Plan. At January 31, 2004 and 2003, there were no shares of Preferred Stock issued or outstanding. CASH DIVIDENDS The Board of Directors declared an increase of 25% in the quarterly dividend rate on common shares in May 2003, increasing the quarterly rate from $0.04 per share to $0.05 per share. On February 19, 2004, the Board of Directors declared a quarterly dividend of $0.05 per common share. This dividend will be paid on April 12, 2004 to stockholders of record on March 19, 2004. O. STOCK COMPENSATION PLANS In May 1998, the stockholders approved both the Company's 1998 Employee Incentive Plan and the Directors Option Plan. Additionally, in 2003, the stockholders approved an amendment to increase the number of common shares subject to issuance under the Employee Incentive Plan by 4,000,000 shares. No award may be made under either plan after March 19, 2008. Under the Employee Incentive Plan, the maximum number of common shares subject to issuance is 14,369,764, as amended (subject to adjustment); awards may be made to employees of the Company or its related companies in the form of stock options, stock appreciation rights, shares of stock and cash; awards made in the form of non-qualified stock options, tax-qualified incentive stock options or stock appreciation rights may have a maximum term of 10 years from the date of grant (vesting in increments of 25% per year over a four-year period on the yearly anniversary date of grant) and may not be granted for an exercise price below fair-market value. With the adoption of the Employee Incentive Plan, no further stock options may be granted under the Company's 1986 Stock Option Plan; however, 2,126,842 shares remain subject to issuance based on prior grants made under such plan. Under the Directors Option Plan, the maximum number of shares of Common Stock subject to issuance is 1,000,000 (subject to adjustment); awards may be made to non-employee directors of the Company in the form of stock options or shares of stock but may not exceed 20,000 (subject to adjustment) shares per non-employee director in any fiscal year; awards made in the form of stock options may have a maximum term of 10 years from the date of TIFFANY & CO. AND SUBSIDIARIES 49

grant (vesting in increments of 50% per year over a two-year period on the yearly anniversary date of grant) and may not be granted for an exercise price below fair-market value unless the director has agreed to forego all or a portion of his or her annual cash retainer or other fees for service as a director in exchange for below market exercise price options. No further options may be granted under the 1988 Directors Option Plan, which has expired; all Director options awarded under the 1988 Plan were granted at 50% below the market value at the date of grant. The Company recognized compensation expense relating to options granted below market value based on the difference between the option price and the fair-market value at the date of grant. A summary of activity for the Company's stock option plans is presented below: Weighted- Number Average of Exercise Shares Price - ----------------------------------------------------------- Outstanding, January 31, 2001 11,330,529 $ 17.85 Granted 2,067,250 33.80 Exercised (642,870) 9.58 Forfeited (246,949) 28.65 ------------------------ Outstanding, January 31, 2002 12,507,960 20.70 Granted 2,231,900 26.28 Exercised (1,184,732) 8.73 Forfeited (349,989) 33.33 ------------------------ Outstanding, January 31, 2003 13,205,139 22.38 Granted 2,159,000 39.08 Exercised (1,983,381) 11.34 Forfeited (235,508) 33.94 ------------------------ OUTSTANDING, JANUARY 31, 2004 13,145,250 $ 26.58 ======================== Options exercisable at January 31, 2004, 2003 and 2002 were 8,167,519, 8,522,446 and 7,805,486. The following tables summarize information concerning options outstanding and exercisable at January 31, 2004: Options Outstanding --------------------------------------------- Weighted- Average Weighted- Remaining Average Range of Number Contractual Exercise Exercise Prices Outstanding Life (years) Price - -------------------------------------------------------------------------- $ 1.97-$ 9.48 2,315,954 3.91 $ 7.34 $ 10.14-$ 25.84 4,098,806 6.95 20.31 $ 25.94-$ 34.02 3,050,165 7.58 32.97 $ 34.80-$ 39.75 2,287,925 9.60 39.34 $ 39.97-$ 43.10 1,392,400 6.07 42.07 -------------------------------------------- 13,145,250 6.93 $ 26.58 ============================================ Options Exercisable -------------------------- Weighted- Average Range of Number Exercise Exercise Prices Exercisable Price - ------------------------------------------------------- $ 1.97-$ 9.48 2,315,954 $ 7.34 $ 10.14-$ 25.84 2,559,671 17.01 $ 25.94-$ 34.02 1,778,115 33.04 $ 34.80-$ 39.75 158,204 37.04 $ 39.97-$ 43.10 1,355,575 42.06 ----------------------- 8,167,519 $ 22.30 ======================= P. EMPLOYEE BENEFIT PLANS PENSIONS AND OTHER POSTRETIREMENT BENEFITS The Company maintains a noncontributory defined benefit pension plan ("Pension Plan") covering substantially all domestic salaried and full-time hourly employees. The Company accounts for pension expense using the projected unit credit actuarial method for financial reporting purposes. Pension Plan benefits are based on the highest five years of compensation or as a percentage of actual compensation, as applicable in the circumstances, and the number of years of service. The actuarial present value of the benefit obligation is calculated based on the expected date of separation or retirement of the Company's eligible employees. The Company funds the Pension Plan's trust in accordance with regulatory limits to provide for current service and for unfunded benefit obligation over a reasonable period. The Company made cash contributions TIFFANY & CO. AND SUBSIDIARIES 50

of $22,469,000 to the Pension Plan in 2003. The Company does not anticipate making any cash contributions to the Pension Plan in 2004. However, this expectation is subject to change based upon asset performance being significantly below the assumed long-term rate of return on pension assets. The Company provides certain health-care and life insurance benefits ("Other Postretirement Benefits") for retired employees and accrues the cost of providing these benefits throughout the employees' active service periods until they attain full eligibility for those benefits. Substantially all of the Company's U.S. employees may become eligible for these benefits if they reach normal or early retirement age while working for the Company. The cost of providing postretirement health-care benefits is shared by the retiree and the Company, with retiree contributions evaluated annually and adjusted in order to maintain the Company/retiree cost sharing target ratio. In September 2003, the share of contributions for current and future retirees was increased, in addition to other benefit changes, in order to maintain the cost sharing target ratio, which benefited postretirement expense by $1,500,000 in 2003. The life insurance benefits are noncontributory. The Company's employee and retiree health-care benefits are administered by an insurance company, and premiums on life insurance are based on prior years' claims experience. The Company uses a December 31 measurement date for its Pension and Other Postretirement Benefit Plans. The Company's Pension Plan asset allocation at December 31, 2003 and 2002 and target asset allocation for fiscal 2004 by asset category are as follows: Percentage of Target Asset Pension Plan Assets Allocation at December 31, ------------------------------------ Asset Category 2003 2002 - ----------------------------------------------------------- Equity securities 60% 65% 56% Debt securities 22 29 37 Hedge Funds 10 - - Real Estate 5 3 2 Other 3 3 5 ------------------------------- 100% 100% 100% =============================== Pension Plan assets include investments in the Company's Common Stock, representing 8% and 7% of Pension Plan assets at December 31, 2003 and 2002. The Company's investment objectives, related to Pension Plan assets, are the preservation of principal and the achievement of a reasonable rate of return over time. As a result, the Pension Plan's assets are allocated based on an expectation that equity securities will outperform debt securities over the long term. Assets of the Pension Plan are broadly diversified consisting primarily of equity mutual funds, common stocks and U.S. government, corporate and mortgage obligations. The Company attempts to mitigate investment risk by rebalancing asset allocation periodically to ensure equity securities do not exceed 75% of total Pension Plan assets. TIFFANY & CO. AND SUBSIDIARIES 51

The following tables provide a reconciliation of benefit obligations, plan assets and funded status of the plans: January 31, ------------------------------------------------------ Other Postretirement Pension Benefits Benefits ------------------------------------------------------ (in thousands) 2004 2003 2004 2003 - -------------------------------------------------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of year $ 122,613 $ 106,373 $ 38,031 $ 38,787 Service cost 8,109 7,094 2,543 2,415 Interest cost 7,945 7,072 2,364 2,042 Participants' contributions - - 45 35 Amendment - - (19,311) - Actuarial loss (gain) 5,468 5,098 4,970 (4,017) Benefits paid (3,103) (3,024) (1,285) (1,231) ------------------------------------------------------ Benefit obligation at end of year * $ 141,032 $ 122,613 $ 27,357 $ 38,031 ====================================================== Change in plan assets: Fair value of plan assets at beginning of year $ 79,368 $ 72,867 $ - $ - Actual return on plan assets 17,209 (7,412) - - Employer contribution 22,469 16,937 1,240 1,196 Participants' contributions - - 45 35 Benefits paid (3,103) (3,024) (1,285) (1,231) ------------------------------------------------------ Fair value of plan assets at end of year $ 115,943 $ 79,368 $ - $ - ====================================================== Funded status $ (25,089) $ (43,245) $ (27,357) $ (38,031) Unrecognized net actuarial loss 20,959 26,805 9,017 4,346 Unrecognized prior service cost 917 1,025 (18,615) 287 ------------------------------------------------------ Accrued benefit cost $ (3,213) $ (15,415) $ (36,955) $ (33,398) ====================================================== *The benefit obligation for Pension Benefits is the projected benefit obligation and for Other Postretirement Benefits is the accumulated benefit obligation. The accumulated benefit pension obligation for the Pension Plan was $116,910,000 and $100,530,000 as of January 31, 2004 and 2003. The following table provides the amounts recognized in the Consolidated Balance Sheets: Years Ended January 31, -------------------------------------------------- Other Postretirement Pension Benefits Benefits -------------------------------------------------- (in thousands) 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------ Accrued benefit liability $ (3,213) $(20,950) $(36,955) $(33,398) Minimum pension liability adjustment: Intangible asset - 1,025 - - Accumulated other comprehensive income (pre-tax) - 4,510 - - -------------------------------------------------- Net amount recognized $ (3,213) $(15,415) $(36,955) $(33,398) ================================================== TIFFANY & CO. AND SUBSIDIARIES 52

Net periodic pension and other postretirement benefit expense included the following components: Years Ended January 31, ------------------------------------------------------------------------------ Other Postretirement Pension Benefits Benefits ------------------------------------------------------------------------------ (in thousands) 2004 2003 2002 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------- Service cost $ 8,109 $ 7,094 $ 6,040 $ 2,543 $ 2,415 $ 2,769 Interest cost 7,945 7,072 6,297 2,364 2,042 2,064 Expected return on plan assets (6,534) (6,428) (5,808) - - Amortization of prior service cost 107 107 41 (408) (6) (6) Amortization of net loss (gain) 639 - - 299 (26) 29 ------------------------------------------------------------------------------ Net expense $ 10,266 $ 7,845 $ 6,570 $ 4,798 $ 4,425 $ 4,856 ============================================================================== Weighted-average assumptions used to determine benefit obligation: Years Ended January 31, ------------------------------------------ Other Postretirement Pension Benefits Benefits ------------------------------------------ 2004 2003 2004 2003 - ------------------------------------------------------------------------------- Discount rate 6.25% 6.50% 6.25% 6.50% Rate of increase in compensation 3.75% 4.00% - - Weighted-average assumptions used to determine net benefit cost: Years Ended January 31, ------------------------------------------ Other Postretirement Pension Benefits Benefits ------------------------------------------ 2004 2003 2004 2003 - ------------------------------------------------------------------------------- Discount rate 6.50% 6.75% 6.50% 6.75% Expected return on plan assets 7.50% 9.00% - - Rate of increase in compensation 4.00% 4.00% - - TIFFANY & CO. AND SUBSIDIARIES 53

The expected long-term rate of return on Pension Plan assets is selected by taking into account the expected duration of the projected benefit obligation for the plan, the rates of return expected for the asset mix (including reinvestment asset return rates), historical performance of plan assets and the fact that the plan assets are actively managed to mitigate downside risk. For postretirement benefit measurement purposes, 10.50% (for pre-age 65 retirees) and 11.50% (for post-age 65 retirees) annual rates of increase in the per capita cost of covered health care were assumed for 2004. The rate was assumed to decrease gradually to 5.00% for both groups by 2017 and remain at that level thereafter. Assumed health-care cost trend rates have a significant effect on the amounts reported for the Company's postretirement health-care benefits plan. A one-percentage-point increase in the assumed health-care cost trend rate would increase the Company's accumulated postretirement benefit obligation by $3,681,000 and the aggregate service and interest cost components of net periodic postretirement benefits by $945,000 for the year ended January 31, 2004. Decreasing the health-care cost trend rate by one-percentage-point would decrease the Company's accumulated postretirement benefit obligation by $3,685,000 and the aggregate service and interest cost components of net periodic postretirement benefits by $748,000 for the year ended January 31, 2004. In January 2004, the FASB issued Staff Position No. 106-1, "Accounting and Disclosure Requirements Related to the Modernization Act of 2003" ("FSP No. 106-1"). The Company has elected to defer accounting for the effects of the Modernization Act of 2003 ("Act") as permitted by FSP No. 106-1. Therefore, in accordance with FSP No. 106-1, the Company's accumulated postretirement benefit obligation and net postretirement benefit expense included in the consolidated financial statements and accompanying notes do not reflect the effects of the Act on the plans. Specific authoritative guidance on the accounting for the federal subsidy is pending, and that guidance, when issued, could require the Company to change previously reported information. OTHER RETIREMENT PLANS On January 1, 2004, the Company established a non-qualified unfunded retirement income plan ("Excess Plan") to recognize compensation in excess of the Internal Revenue Service Code limits. The Excess Plan uses the same retirement benefit formula set forth in the Pension Plan but includes in "average final compensation" the earnings that are excluded under the Pension Plan due to Internal Revenue Service Code limitations. Benefits payable under the Pension Plan offset benefits payable under the Excess Plan. Executives vested under the Pension Plan are vested under the Excess Plan; however, benefits under the Excess Plan are subject to forfeiture if employment is terminated for cause and, for those who leave the Company prior to age 65, for failure to execute and adhere to non-competition and confidentiality covenants. The Company has deferred compensation arrangements for certain executives and eligible employees which generally provide for payments at specified future dates upon retirement, death or termination of employment. Benefit payments are funded by either contributions from eligible participants or from the Company, depending on the plan. The amounts accrued under these plans were $25,611,000 and $20,340,000 at January 31, 2004 and 2003 and are reflected in other long-term liabilities. Amounts contributed and the related investment returns are reflected in other assets, net. PROFIT SHARING AND RETIREMENT SAVINGS PLAN The Company also maintains an Employee Profit Sharing and Retirement Savings Plan ("EPSRS Plan") that covers substantially all U.S.-based employees. Under the profit-sharing portion of the EPSRS Plan, the Company makes contributions, in the form of newly-issued Company Common Stock, to the employees' accounts based upon the achievement of certain targeted earnings objectives established by, or as otherwise determined by, the Board of Directors. The Company recorded charges of $2,625,000, $2,000,000 and $1,000,000 in 2003, 2002 and 2001. Under the retirement savings portion of the EPSRS Plan, employees who meet certain eligibility requirements may participate by contributing up to 15% of their annual TIFFANY & CO. AND SUBSIDIARIES 54

compensation, and the Company provides a 50% matching cash contribution up to 6% of each participant's total compensation. The Company recorded charges of $4,649,000, $4,238,000 and $4,054,000 in 2003, 2002 and 2001. Contributions to both portions of the EPSRS Plan are made in the following year. Under the profit-sharing portion of the EPSRS Plan, the Company's stock contribution is required to be maintained in such stock until the employee either leaves or retires from the Company, subject to certain diversification rights. Under the retirement savings portion of the EPSRS Plan, the employees have the ability to elect to invest their contribution and the matching contribution in company stock. At January 31, 2004, investments in company stock in the profit-sharing portion and in the retirement savings portion represented 23% and 16% of total EPSRS Plan assets. Q. INCOME TAXES Earnings before income taxes consisted of the following: Years Ended January 31, ---------------------------------- (in thousands) 2004 2003 2002 - --------------------------------------------------------------------- United States $224,789 $216,713 $204,955 Foreign 117,896 82,924 84,357 ---------------------------------- $342,685 $299,637 $289,312 ================================== Components of the provision for income taxes were as follows: Years Ended January 31, --------------------------------------- (in thousands) 2004 2003 2002 - -------------------------------------------------------- Current: Federal $ 54,977 $ 64,500 $ 72,943 State 16,803 17,090 21,091 Foreign 46,623 33,362 28,328 --------------------------------------- 118,403 114,952 122,362 ======================================= Deferred: Federal 8,741 (3,367) (5,166) State 2,027 (1,597) (2,429) Foreign (2,003) (245) 958 --------------------------------------- 8,765 (5,209) (6,637) --------------------------------------- $ 127,168 $ 109,743 $ 115,725 ======================================= Deferred tax assets (liabilities) consisted of the following: January 31, ------------------------ (in thousands) 2004 2003 - --------------------------------------------------------------- Deferred tax assets: Postretirement/ employment benefits $ 16,346 $ 15,230 Inventory reserves 26,449 28,088 Accrued expenses 12,891 9,115 Financial hedging instruments (71) 162 Depreciation (2,910) 9,798 Pension contribution 617 7,965 Foreign net operating losses 25,317 25,932 Other - 6,593 ------------------------ 78,639 102,883 Valuation allowance (25,317) (25,932) ------------------------ 53,322 76,951 ------------------------ Deferred tax liabilities: Undistributed earnings of foreign subsidiaries (26,490) (22,328) Trademark amortization (3,462) (3,648) Other (724) - ------------------------ (30,676) (25,976) ------------------------ Net deferred tax asset $ 22,646 $ 50,975 ======================== The Company has recorded a valuation allowance against certain deferred tax assets, primarily related to foreign net operating loss carryforwards where recovery is uncertain. The income tax effects of items comprising the deferred income tax expense (benefit) were as follows: Years Ended January 31, --------------------------------- (in thousands) 2004 2003 2002 - ---------------------------------------------------------------------- Postretirement/employment benefit obligations $(1,575) $(1,395) $(1,730) Undistributed earnings of foreign subsidiaries 4,161 2,609 4,575 Accelerated depreciation 5,175 (4,028) (2,461) Inventory reserves 266 (1,847) (930) Financial hedging instruments 233 (764) 1,775 Inventory capitalization (1,852) (1,602) (6,518) Asset impairment - - (2,732) Accrued expenses (1,805) 1,936 392 Excess pension contribution 4,664 375 753 Other (502) (493) 239 --------------------------------- $ 8,765 $(5,209) $(6,637) ================================= TIFFANY & CO. AND SUBSIDIARIES 55