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                                                                  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.

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(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.

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    -    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

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(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.

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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.

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                                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



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