What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 172 added, 162 removed, 276 unchanged (55% of the section changed)

Financial Statements

our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring

9 unchanged sentences

year ended December 31, 2019 included in our annual report filed on Form 10-K.

results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for

the entire fiscal year.

results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected

for the entire fiscal year.

PARFUMS, INC.

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thousands except share and per share data)

September 30,

and cash equivalents

receivable, net

current assets

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Receivables, other

Other current assets

Income taxes receivable

Total current assets

Equipment and leasehold improvements, net

Right-of-use assets, net

Trademarks, licenses and other intangible assets, net

Deferred tax assets

LIABILITIES AND EQUITY

taxes receivable

current assets

and leasehold improvements, net

licenses and other intangible assets, net

portion of long-term debt

portion of lease liabilities

payable – trade

taxes payable

current liabilities

Current portion of long-term debt

Current portion of lease liabilities

Accounts payable – trade

Accrued expenses

Income taxes payable

Dividends payable

Total current liabilities

Long–term debt, less current portion

Lease liabilities, less current portion

Inter Parfums, Inc.

debt, less current portion

liabilities, less current portion

Parfums, Inc.

shareholders’ equity:

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authorized 100,000,000 shares;

outstanding 31,532,558 and 31,513,018 shares at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Treasury stock, at cost, 9,864,805 shares at June 30, 2020 and December 31, 2019

Total Inter Parfums, Inc.

outstanding 31,537,558 and 31,513,018 shares at September 30, 2020 and December 31, 2019, respectively

paid-in capital

other comprehensive loss

Treasury stock, at cost, 9,864,805 shares at September 30, 2020 and December 31, 2019

Inter Parfums, Inc.

shareholders’ equity

Noncontrolling interest

Total liabilities and equity

Noncontrolling

liabilities and equity

notes to consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

STATEMENTS OF INCOME (LOSS)

STATEMENTS OF INCOME

thousands except per share data)

September 30,

general and administrative expenses

(loss) from operations

from operations

expenses (income):

loss on foreign currency

(loss) before income taxes

taxes (benefit)

income (loss)

before income taxes

income attributable to the noncontrolling interest

income (loss) attributable to Inter Parfums, Inc.

(loss) per share:

income (loss) attributable to Inter Parfums, Inc.

income attributable to Inter Parfums, Inc.

common shareholders:

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thousands except per share data)

September 30,

Comprehensive

income (loss)

comprehensive income:

derivative instrument gain (loss), net of tax

derivative instrument loss, net of tax

from OCI into earnings

2 unchanged sentences

Comprehensive

income attributable to the noncontrolling interests:

comprehensive income (loss):

income (loss) attributable to the noncontrolling interests:

comprehensive income:

derivative instrument loss, net of tax

1 unchanged sentence

Comprehensive

income attributable to the noncontrolling interests

income (loss) attributable to the noncontrolling interests

Comprehensive

4 unchanged sentences

STATEMENTS OF CHANGES IN EQUITY

September 30,

stock, beginning of period

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STATEMENTS OF CASH FLOWS

from operating activities:

September 30,

flows from operating activities:

to reconcile net income to net cash provided by (used in) operating activities:

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from sale of short-term investments

Purchase of equity investment

of equity investment

of equipment and leasehold improvements

for intangible assets acquired

cash used in investing activities

cash provided by (used in) investing activities

flows from financing activities:

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health emergency and its related disruptions are uncertain.

Since March 2020, retail stores in several jurisdictions around the

world began reopening and business is slowly picking up.

However, we anticipate that limited traffic in reopened stores and the

shutdown of international air traffic have and will continue to unfavorably impact our business.

anticipate significant challenges for the remainder of 2020 due to uncertain market conditions.

While we expect business with

many of our retail partners to improve considerably in the second half of 2020, we do not see a resurgence anytime soon in connection

with travel retail.

In addition, the COVID-19 pandemic has led to high levels of unemployment and deteriorating economic conditions

in many countries where our products are sold, forcing many consumers to limit discretionary purchases.

We believe that the impact

of the COVID-19 pandemic will continue to have a material adverse effect on our results of our operations, financial position

and cash flows through at least the end of this year.

Since March 2020, retail stores in many jurisdictions around the world

began reopening and business has improved considerably.

However, limited traffic in reopened stores and the virtual shutdown of

international air traffic have and is expected to continue to have an unfavorable impact our business.

have faced significant challenges in 2020 and we anticipate that these challenges will continue for at least the remainder of

2020 due to uncertain market conditions.

Business has significantly improved during the three months ended September 30, 2020,

as compared to the prior quarter as retail stores began reopening and consumers have increased their on-line purchasing.

this trend to continue, however, we do not see a resurgence anytime soon in travel retail as air traffic continues to suffer due

in part to governmental restrictions on international air travel.

In addition, the recent resurgence of COVID-19 cases in various

parts of the world, including the United Kingdom, Ireland and other countries in Europe, has caused the re-implementation

of government restrictions to prevent further spread of the virus.

These restrictions include the temporary closure of businesses

deemed “non-essential”, travel bans and restrictions, social distancing and quarantines.

Lastly, the COVID-19 pandemic has led to high levels of

unemployment and deteriorating economic conditions in many countries where our products are sold, forcing many consumers to limit

discretionary purchases.

We believe that the impact of the COVID-19 pandemic will continue to have a material adverse effect on

our results of our operations, financial position and cash flows through at least the end of this year and into 2021.

PARFUMS, INC.

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Origines-parfums

In June 2020, the Company, through its 73% owned French

subsidiary, Interparfums SA, and Divabox SAS (“Divabox”), owner of the Origines-parfums e-commerce platform for beauty

products, signed a strategic agreement and equity investment pursuant to which we acquired 25% of Divabox capital for €12.5

million ($14 million), through a capital increase.

The difference between the purchase price and the fair value of net assets acquired

of €7.9 million has been allocated to goodwill, pending final purchase price allocation, and the entire purchase price is

included in other assets on the accompanying balance sheet as of June 30, 2020.

In connection with the acquisition, the Company

entered into a €12 million ($13.4 million), three-year term loan payable in three equal annual installments bearing interest

at 0.85% above the EURIBOR 3-month rate.

The loan requires the maintenance of certain financial covenants, tested annually, including

a maximum leverage ratio.

June 2020, the Company, through its 73% owned French subsidiary, Interparfums SA, and Divabox SAS (“Divabox”), owner

of the Origines-parfums e-commerce platform for beauty products, signed a strategic agreement and equity investment pursuant to

which we acquired 25% of Divabox capital for $14 million, through a capital increase.

The difference between the purchase price

and the fair value of net assets acquired of $8.8 million has been allocated to goodwill, pending final purchase price allocation.

The investment is being accounted for under the equity method

and is included in other assets on the accompanying balance sheet as of September 30, 2020.

In connection

with the acquisition, the Company entered into a $13.4 million, three-year term loan payable in three equal annual installments

bearing interest at 0.85% above the EURIBOR 3-month rate.

The loan requires the maintenance of certain financial covenants, tested

annually, including a maximum leverage ratio.

June 2020, the Company entered into an exclusive, 5-year worldwide license agreement with a potential 5-year extension with Moncler

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financial statements.

consist of the following:

materials and component parts

PARFUMS, INC.

1 unchanged sentence

to Consolidated Financial Statements

consist of the following:

materials and component parts

Value Measurement:

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The fair value hierarchy has three levels based on the reliability of the inputs used to determine

Value Measurements at June 30, 2020

Prices in Active Markets for

Identical Assets

Value Measurements at

September 30,

Prices in Active Markets for Identical Assets

Other Observable Inputs

Unobservable Inputs

currency forward exchange contracts not accounted for using hedge accounting

Value Measurements at December 31, 2019

Value Measurements at

Prices in Active Markets for Identical Assets

3 unchanged sentences

currency forward exchange contracts not accounted for using hedge accounting

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

carrying amount of cash and cash equivalents including money market funds, accounts receivable, other receivables, and accounts

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swaps are the discounted net present value of the swaps using third party quotes obtained from financial institutions.

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

Financial Instruments:

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Such gains and

losses were immaterial for both six month periods ended June 30, 2020 and 2019.

losses were immaterial for both nine month periods ended September 30, 2020 and 2019.

derivative instruments are reported as either assets or liabilities on the balance sheet measured at fair value.

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The valuation

of foreign currency forward exchange contracts at June 30, 2020 resulted in an asset and is included in other current assets on

the accompanying balance sheet.

June 30, 2020, we had foreign currency contracts in the form of forward exchange contracts in the amount of approximately U.S.

of foreign currency forward exchange contracts at September 30, 2020 resulted in an asset and is included in other current assets

on the accompanying balance sheet.

September 30, 2020, we had foreign currency contracts in the form of forward exchange contracts of approximately U.S.

$ 48.0 million

and GB £

4.0 million which all have maturities of less than one year.

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

Company leases its offices and warehouses, vehicles, and certain office equipment, substantially all of which are classified as

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the present value of lease payments.

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

of June 30, 2020, the weighted average remaining lease term was 6.1 years and the weighted average discount rate used to determine

the operating lease liability was 2.6 %.

Rental expense related to operating leases was $ 1.5 million and $ 3.3 million for the three

and six months ended June 30, 2020, respectively, as compared to $ 1.1 million and $ 2.9 million for the corresponding periods of

the prior year.

Operating lease payments included in operating cash flows totaled $ 3.0 million and $ 3.2 million for the six months

ended June 30, 2020 and 2019, respectively.

Noncash additions to operating lease assets totaled $ 1.0 million and $ 35.0 million

for the six months ended June 30, 2020 and 2019, respectively.

of September 30, 2020, the weighted average remaining lease term was 6.0 years and the weighted average discount rate used to

determine the operating lease liability was 2.6 %.

Rental expense related to operating leases was $ 1.4 million and $ 4.7 million

for the three and nine months ended September 30, 2020, respectively, as compared to $ 1.7 million and $ 4.9 million for the corresponding

periods of the prior year.

Operating lease payments included in operating cash flows totaled $ 4.3 million and $ 4.5 million for

the nine months ended September 30, 2020 and 2019, respectively.

Noncash additions to operating lease assets totaled $ 1.0 million

and $ 33.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Based Payments:

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have a six-year term and vest over a four to five-year period.

The fair value of shares vested for the six months ended June 30,

The fair value of shares vested for the nine months ended September

30, 2020 and 2019 aggregated $ 0.09 million and $ 0.07 million, respectively.

Compensation cost is recognized on a straight-line basis

over the requisite service period for the entire award.

It is generally our policy to issue new shares upon exercise of stock

following table sets forth information with respect to nonvested options for the six month period ended June 30, 2020:

Average Grant Date Fair Value

Compensation cost is recognized on a straight-line

basis over the requisite service period for the entire award.

It is generally our policy to issue new shares upon exercise of

stock options.

following table sets forth information with respect to nonvested options for the nine month period ended September 30, 2020:

Average Grant

Date Fair Value

options – beginning of period

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options – end of period

based payment expense decreased income before income taxes by $ 1.07 million and $ 1.19 million for the three and six months ended

June 30, 2020, respectively, as compared to $ 0.95 million and $ 1.9 million for the corresponding periods of the prior year.

based payment expense decreased income attributable to Inter Parfums, Inc.

by $ 0.67 million and $ 0.86 million for the three and

six months ended June 30, 2020, respectively, as compared to $ 0.56 million and $ 1.14 million for the corresponding periods of

the prior year.

following table summarizes stock option information as of June 30, 2020:

Average Exercise

at January 1, 2020

at June 30, 2020

available for future grants

based payment expense decreased income before income taxes by $ 0.62 million and $ 1.81 million for the three and nine months ended

September 30, 2020, respectively, as compared to $ 0.8 million and $ 2.7 million for the corresponding periods of the prior year.

Share based payment expense decreased income attributable to Inter Parfums, Inc.

by $ 0.43 million and $ 1.29 million for the three

and nine months ended September 30, 2020, respectively, as compared to $ 0.5 million and $ 1.7 million for the corresponding periods

of the prior year.

PARFUMS, INC.

1 unchanged sentence

to Consolidated Financial Statements

of June 30, 2020, the weighted average remaining contractual life of options outstanding is 3.53 years ( 2.13 years for options

following table summarizes stock option information as of September 30, 2020:

Average Exercise Price

at January 1, 2020

at September 30, 2020

available for future grants

of September 30, 2020, the weighted average remaining contractual life of options outstanding is 3.29 years ( 1.90 years for options

exercisable), the aggregate intrinsic value of options outstanding and options exercisable is $ 2.4 million and $ 1.9 million, respectively,

and unrecognized compensation cost related to stock options outstanding aggregated $ 4.8 million.

proceeds, tax benefits and intrinsic value related to stock options exercised during the six months ended June 30, 2020 and 2019

were as follows:

proceeds, tax benefits and intrinsic value related to stock options exercised during the nine months ended September 30, 2020

and 2019 were as follows:

proceeds from stock options exercised

1 unchanged sentence

weighted average fair values of the options granted by Inter Parfums, Inc.

during the six months ended June 30, 2020 and 2019

during the nine months ended September 30, 2020 and

2019 were $ 12.16 and $ 14.83 per share, respectively, on the date of grant using the Black-Scholes option pricing model to calculate

the fair value of options granted.

assumptions used in the Black-Scholes pricing model for the periods ended June 30, 2020 and 2019 are set forth in the following

assumptions used in the Black-Scholes pricing model for the periods ended September 30, 2020 and 2019 are set forth in the

following table:

average expected stock-price volatility

Weighted average

expected option life

Weighted average

risk-free interest rate

Weighted average

dividend yield

average expected option life

average risk-free interest rate

average dividend yield

volatility is estimated based on historic volatility of the Company’s common stock.

3 unchanged sentences

Treasury yield curve in effect at the time of the grant of the

option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors would increase

as the earnings of the Company and its stock price continue to increase.

December 2018, Interparfums SA, our 73 % owned French subsidiary, approved a plan to grant an aggregate of 26,600 shares of its

stock to employees with no performance condition requirement, and an aggregate of 133,000 shares to officers and managers, subject

to certain corporate performance conditions.

The shares, subject to adjustment for stock splits, are expected to be distributed

in June 2022.

In order to avoid dilution of the Company’s ownership of Interparfums SA, all shares to be distributed pursuant

to the plan will be pre-existing shares of Interparfums SA purchased in the open market by Interparfums SA in prior years.

In March 2020, due to the potential

impact on future net sales and operating results resulting from the COVID-19 pandemic, the estimated number of shares to be distributed,

after forfeited shares, was reduced from 142,571 to 82,162 .

As the Company had already purchased shares in contemplation of the

higher anticipated distribution, shares purchased in excess of the reduced anticipated distribution were transferred to treasury

shares at Interparfums SA level.

The fair value of the grant had

been determined based on the quoted stock price of Interparfums SA shares as reported by the NYSE Euronext on the date of grant.

The original cost of the grant was approximately $ 4.4 million, and the March 2020 revaluation resulted in a reduction of the cost,

to approximately $ 2.5 million.

As a result, a $ 0.3 million reduction of cost, net, was recorded for the three months ended March

June 2020, the performance conditions were modified effecting 96 employees and resulting in an increase in the estimated number

of shares to be distributed, after forfeited shares, to 125,341 .

The increase in shares anticipated to be distributed were transferred

from treasury shares at the Interparfums SA level.

option and the dividend yield was based on the assumption that the dividend payout as authorized by the Board of Directors would

increase as the earnings of the Company and its stock price continue to increase.

PARFUMS, INC.

1 unchanged sentence

to Consolidated Financial Statements

original cost of the grant was approximately $ 4.4 million, and the June 2020 modification resulted in a

revised cost of approximately $ 3.8 million.

December 2018, Interparfums SA, our 73 % owned French subsidiary, approved a plan to grant an aggregate of 26,600 shares of its

stock to employees with no performance conditions, and an aggregate of 133,000 shares to officers and managers, subject to certain

corporate performance conditions.

The shares, subject to adjustment for stock splits, are expected to be distributed in June 2022.

In order to avoid dilution of the Company’s ownership of Interparfums SA, all shares to be distributed pursuant to the plan

will be pre-existing shares of Interparfums SA purchased in the open market by Interparfums SA in prior years.

March 2020, due to the potential impact on future net sales and operating results resulting from the COVID-19 pandemic, the estimated

number of shares to be distributed, after forfeited shares, was reduced from 142,571 to 82,162 .

As the Company had already purchased

shares in contemplation of the higher anticipated distribution, shares purchased in excess of the reduced anticipated distribution

were transferred to treasury shares at the Interparfums SA level.

fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the NYSE

Euronext on the date of grant.

The original cost of the grant was approximately $ 4.4 million, and the March 2020 revaluation resulted

in a reduction of the cost, to approximately $2.5 million.

As a result, a $ 0.3 million reduction of cost, net, was recorded for

the three months ended March 31, 2020.

June 2020, the performance conditions were modified effecting 96 employees.

As of September 30, 2020, the number of shares to

be distributed, after forfeited shares, increased to 120,943 .

The increase in shares anticipated to be distributed were transferred

from treasury shares at the Interparfums SA level.

The original cost of the grant was approximately $ 4.4 million, and the modification

resulted in a revised cost of approximately $ 3.8 million.

Income Attributable to Inter Parfums, Inc.

7 unchanged sentences

plus the incremental shares outstanding assuming the exercise of dilutive stock options using the treasury stock method.

reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:

income (loss) attributable to Inter Parfums, Inc.

The reconciliation

between the numerators and denominators of the basic and diluted EPS computations is as follows:

income attributable to Inter Parfums, Inc.

average shares

1 unchanged sentence

for diluted earnings per share

income (loss) attributable to Inter Parfums, Inc.

common shareholders:

income attributable to Inter Parfums, Inc.

shareholders:

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

included in the above computations are the effect of antidilutive potential common shares which consist of outstanding options

to purchase 0.80 and 0.59 million shares of common stock for both the three and six months ended June 30, 2020, as compared to

0.18 million shares of common stock for the three and six months ended June 30, 2019.

to purchase 0.52 and 0.47 million shares of common stock for both the three and nine months ended September 30, 2020, as compared

to 0.18 million shares of common stock for the three and nine months ended September 30, 2019.

and Geographic Areas:

6 unchanged sentences

brand name fragrances.

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

on our operations by geographical areas is as follows:

income (loss) attributable to Inter Parfums, Inc.:

September 30,

income attributable to Inter Parfums, Inc.:

Reclassifications:

1 unchanged sentence

period presentation.

PARFUMS, INC.

AND SUBSIDIARIES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements