Tiffany Reports Third Quarter Results

Net earnings in the three months (third quarter) ended October 31,2005 rose 37% to $23,789,000, or $0.16 per diluted share, versus$17,358,000, or $0.12 per diluted share, in the prior year. For thenine-month period ended October 31, 2005, net earnings increased 31%to $114,398,000, or $0.79 per diluted share, compared with$87,259,000, or $0.59 per diluted share.

Net sales in the third quarter increased 8% to $500,105,000,versus $461,152,000 in the prior year. Net sales for the nine-monthperiod rose 10% to $1,536,707,000, compared with $1,394,709,000 a yearago. On a constant-exchange-rate basis that excludes currency effectsfrom translating foreign-denominated sales into U.S. dollars, netsales increased 9% in the third quarter and 10% in the nine-monthperiod, with worldwide comparable store sales increasing 5% and 4%(see attached Non-GAAP Measures).

Sales in the Company's channels of distribution were as follows:

-- U.S. Retail sales increased 9% to $247,782,000 in the third quarter; comparable store sales rose 7% due to growth of 12% in New York flagship store sales and 6% in branch store sales. In the nine-month period, U.S. Retail sales rose 10% to $771,344,000; comparable store sales rose 8% with equivalent growth in both the New York store and branch stores. Tiffany opened a store in San Antonio, Texas in the quarter and operated 57 TIFFANY & CO. stores in the U.S. at the end of the quarter.

-- International Retail sales increased 7% to $204,287,000 in the third quarter and 7% to $596,707,000 in the nine-month period. On a constant-exchange-rate basis, sales rose 7% in the third quarter and 6% in the nine-month period and comparable store sales increased 1% in the quarter and declined 1% in the nine-month period. On that same basis, comparable store sales in Japan in the quarter were equal to the prior year and declined 3% in the nine-month period; increased 4% and 5% in the Asia-Pacific region outside Japan; and declined 1% and rose 1% in Europe. Total retail sales in Japan rose 5% in the third quarter and 2% in the nine-month period, which reflects the opening of two retail locations in the quarter (Yokohama and Osaka) and the closing of five older locations this year. The Company currently operates 95 TIFFANY & CO. international stores and boutiques.

-- Direct Marketing sales increased 4% to $27,308,000 in the third quarter and 7% to $86,598,000 in the nine-month period due to increased average amounts spent for Internet and catalog orders.

-- Other sales increased 22% to $20,728,000 in the third quarter and 43% to $82,058,000 in the nine-month period. More than half of the increase in both periods was due to wholesale sales of diamonds. In addition, sales increased 10% and 12% in the Company's LITTLE SWITZERLAND stores. The Company's IRIDESSE stores, which commenced operations in late-2004 and which focus exclusively on the pearl jewelry category, added to sales growth.

Michael J. Kowalski, Tiffany's chairman and chief executiveofficer, said, "We were pleased to see continued comparable storesales strength in the U.S. and progress in Japan. Tiffany'sextraordinary product offerings, including new jewelry designs whichcomplement our core designs, ensure that we are competitivelywell-positioned."

Other Financial Highlights:

-- Gross margin (gross profit as a percentage of net sales) was 54.1% in the third quarter (versus 53.2% in the prior year) and 54.5% in the nine-month period (versus 55.1%). These results were due to a variety of factors, including changes in geographic/product sales mix and product costs, as well as wholesale sales of diamonds which earn a minimal or no gross margin. The Company recorded LIFO inventory charges of $4,178,000 in the third quarter and $8,347,000 in the nine months, compared with $8,682,000 and $17,708,000 in the prior year.

-- Selling, general and administrative ("SG&A") expenses rose 9% in the third quarter and 7% in the nine-month period. The Company recorded a charge of $4,316,000 (or $0.02 per diluted share after tax) in the third quarter as a result of the sale of a glassware manufacturing facility and the sale of Tiffany's equity interest in a specialty retailer. The ratio of SG&A expenses as a percentage of net sales was 46.1% in the third quarter (versus 46.0% a year ago) and 42.8% in the nine months (versus 44.1% a year ago), and reflect the underlying leverage effect of sales growth on fixed SG&A expenses.

-- Earnings from operations rose 19% in the third quarter and 17% in the nine-month period and, as a percentage of net sales, was 8.0% in the third quarter (versus 7.2% in the prior year) and 11.7% in the nine-month period (versus 11.0% in the prior year).

-- The effective tax rate was 33.0% in the third quarter and 31.8% in the nine-month period, versus 38.2% and 38.0% in the prior year. The decrease in the third quarter was due to favorable reserve adjustments relating to the expiration of certain statutory periods during the quarter. In addition, the lower rate in the nine-month period was due to tax benefits of $8,100,000, or $0.06 per diluted share, related to the repatriation provisions of the American Jobs Creation Act of 2004.

-- Net inventories at October 31, 2005 were 2% lower than a year ago. Finished goods inventories declined 1%. Combined raw material and work-in-process inventories declined 6% due to the timing in 2004 of internal jewelry manufacturing and rough diamond sourcing.

-- The Company repurchased and retired 790,997 shares of its Common Stock in the third quarter at an average cost of $38.42 per share, and repurchased and retired 3,366,309 shares of its Common Stock in the nine-month period at an average cost of $33.97 per share. Approximately $295 million remains available for future repurchases under the authorized plan.

-- The Company's strong balance sheet at October 31, 2005 included cash and cash equivalents of $111,586,000 (versus $129,776,000 at October 31, 2004) and stockholders' equity of $1,692,647,000 (versus $1,516,334,000). Total debt declined to $403,971,000 from $660,583,000, and, as a percentage of stockholders' equity, declined to 24% from 44% a year ago.

Mr. Kowalski added, "Based on these results and our expectationsfor customer demand during the Holiday selling season, we aremaintaining our previously-published expectations for full year 2005net sales growth of 8-10% and net earnings in a range of $1.55-$1.65per diluted share."

Today's Conference Call

The Company will conduct a conference call today at 8:30 a.m.(EST) to review results and its outlook. Interested parties may listento a broadcast on the Internet at www.tiffany.com (click on "AboutTiffany," "Shareholder Information," "Conference Call") and atwww.streetevents.com.

Next Scheduled Announcement

The Company anticipates reporting its holiday sales results onJanuary 10, 2006 with a conference call at 8:30 a.m. (EST) that day,to be broadcast at www.tiffany.com and www.streetevents.com. Toreceive notifications for conference calls and/or news release alerts,please register at www.tiffany.com (click on "About Tiffany,""Shareholder Information," "Calendar of Events" and "News by E-Mail").

Company Description

Tiffany & Co. operates jewelry and specialty retail stores andmanufactures products through its subsidiary corporations. Itsprincipal subsidiary is Tiffany and Company. The Company operatesTIFFANY & CO. retail stores and boutiques in the Americas,Asia-Pacific and Europe and engages in direct selling throughInternet, catalog and business gift operations. Other operationsinclude consolidated results from ventures operated under trademarksor trade names other than TIFFANY & CO. For additional information,please visit www.tiffany.com or call our shareholder information lineat 800-TIF-0110.

This document contains certain "forward-looking" statementsconcerning the Company's objectives and expectations with respect tosales, store openings, gross margins, expenses, earnings andinventories. Actual results might differ materially from thoseprojected in the forward-looking statements. Information concerningrisk factors that could cause actual results to differ materially isset forth in the Company's 2004 Annual Report and in Forms 10-K, 10-Qand 8-K filed with the Securities and Exchange Commission. The Companyundertakes no obligation to update or revise any forward-lookingstatements to reflect subsequent events or circumstances.
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share amounts)

Three Months Nine Months
Ended October 31, Ended October 31,
------------------------ ---------------------------
2005 2004 2005 2004
---------- ------------ ---------- --------------
Net sales $ 500,105 $ 461,152 $1,536,707 $ 1,394,709

Cost of sales 229,575 215,624 699,272 625,817
---------- ------------ ---------- --------------

Gross profit 270,530 245,528 837,435 768,892

Selling, general and
administrative
expenses 230,735 212,164 657,261 614,663
---------- ------------ ---------- --------------

Earnings from
operations 39,795 33,364 180,174 154,229

Other expenses, net 4,289 5,276 12,353 13,398
---------- ------------ ---------- --------------

Earnings before
income taxes 35,506 28,088 167,821 140,831

Provision for
income taxes 11,717 10,730 53,423 53,572
---------- ------------ ---------- --------------

Net earnings $ 23,789 $ 17,358 $ 114,398 $ 87,259
========== ============ ========== ==============


Net earnings per share:

Basic $ 0.17 $ 0.12 $ 0.80 $ 0.60
========== ============ ========== ==============

Diluted $ 0.16 $ 0.12 $ 0.79 $ 0.59
========== ============ ========== ==============


Weighted-average number of common shares:

Basic 142,280 145,943 143,172 146,376
Diluted 144,993 147,735 145,472 148,546


TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

October 31, January 31, October 31,
2005 2005 2004
----------- ------------ ------------
ASSETS
------

Current assets:
Cash and cash equivalents $ 111,586 $ 187,681 $ 129,776
Short-term investments - 139,200 -
Accounts receivable, net 129,454 133,545 124,080
Inventories, net 1,104,326 1,057,245 1,130,767
Deferred income taxes 74,544 64,790 57,814
Prepaid expenses and other
current assets 73,801 25,428 43,613
---------- ---------- ----------

Total current assets 1,493,711 1,607,889 1,486,050

Property, plant and equipment, net 860,712 917,853 917,837
Other assets, net 145,523 140,376 188,860
---------- ---------- ----------

$2,499,946 $2,666,118 $2,592,747
========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
Short-term borrowings $ 30,365 $ 42,957 $ 267,389
Accounts payable and accrued
liabilities 182,831 186,013 193,458
Income taxes payable 15,460 118,536 12,619
Merchandise and other customer
credits 54,238 52,315 50,230
---------- ---------- ----------

Total current liabilities 282,894 399,821 523,696

Long-term debt 373,606 397,606 393,194
Postretirement/employment benefit
obligations 41,106 40,220 39,639
Deferred income taxes - 33,175 26,256
Other long-term liabilities 109,693 94,136 93,628
Stockholders' equity 1,692,647 1,701,160 1,516,334
---------- ---------- ----------

$2,499,946 $2,666,118 $2,592,747
========== ========== ==========

TIFFANY & CO. AND SUBSIDIARIES
(Unaudited)

NON-GAAP MEASURES

The Company reports information in accordance with U.S. GenerallyAccepted Accounting Principles ("GAAP"). Internally, managementmonitors the sales performance of its international stores andboutiques on a non-GAAP basis that eliminates the positive or negativeeffects that result from translating international sales into U.S.dollars (constant-exchange-rate basis). Management uses thisconstant-exchange-rate measure because it believes it is a morerepresentative assessment of the sales performance of itsinternational stores and boutiques and provides better comparabilitybetween reporting periods.

The Company's management does not, nor does it suggest thatinvestors should, consider such non-GAAP financial measures inisolation from, or as a substitute for, financial information preparedin accordance with GAAP. The Company presents such non-GAAP financialmeasures in reporting its financial results to provide investors withan additional tool to evaluate the Company's operating results.

The following table reconciles net sales percentage increases(decreases) from the GAAP to the non-GAAP basis:
Three Months Ended Nine Months Ended
October 31, 2005 October 31, 2005
------------------------- -------------------------
GAAP Trans- Constant- GAAP Trans- Constant-
Reported lation Exchange- Reported lation Exchange-
Effect Rate Basis Effect Rate Basis
------------------------- -------------------------
Net Sales:
----------
Worldwide 8% (1%) 9% 10% - 10%
U.S. Retail 9% - 9% 10% - 10%
International
Retail 7% - 7% 7% 1% 6%
Japan 3% (2%) 5% 2% - 2%
Other Asia-
Pacific 17% 4% 13% 20% 5% 15%
Europe 6% (1%) 7% 9% 1% 8%
Comparable Store Sales:
-----------------------
Worldwide 5% - 5% 5% 1% 4%
U.S. Retail 7% - 7% 8% - 8%
International
Retail 1% - 1% 1% 2% (1%)
Japan (2%) (2%) - (3%) - (3%)
Other Asia-
Pacific 8% 4% 4% 9% 4% 5%
Europe (2%) (1%) (1)% 2% 1% 1%