What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-01 compared with 2020-03-02 · 13 added, 619 removed, 67 unchanged (90% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities

Market for Registrant’s Common Equity, Related

Stockholder Matters and Issuer Purchases of Equity Securities

The Market for Our Common Stock

Our Company’s common stock, $.001 par value

per share, is traded on The Nasdaq Global Select Market under the symbol “IPAR”.

The following table sets forth in

dollars, the range of high and low closing prices for the past two fiscal years for our common stock.

Our Company’s common stock, $.001

par value per share, is traded on The Nasdaq Global Select Market under the symbol “IPAR”.

The following table sets

forth in dollars, the range of high and low closing prices for the past two fiscal years for our common stock.

High Closing Price

17 unchanged sentences

for the periods indicated in the graph of our common stock with the performance of the Nasdaq Market Index and the average performance

of a group of the Company’s peer corporations consisting of:

Avon Products Inc., CCA Industries, Inc., Colgate-Palmolive

4 unchanged sentences

the graph, and that all dividends were reinvested.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL

Among Inter Parfums, Inc., the NASDAQ Composite Index,

and a Peer Group

* $100 invested on 12/31/14 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Below is the list of the data points for

4 unchanged sentences

authorized a 20% increase in the annual dividend to $1.32 per share on an annual basis.

In October 2019, our Board of Directors

authorized a 20% increase in the annual dividend to $1.32 per share on an annual basis.

The next quarterly cash dividend of $0.33

per share is payable on April 15, 2020 to shareholders of record on March 31, 2020.

In April 2020, as a result of the uncertainties

raised by the COVID-19 pandemic, the Board of Directors authorized a temporary suspension of the annual cash dividend.

2021, our Board of Directors authorized a reinstatement of an annual dividend of $1.00, payable quarterly.

The next quarterly cash

dividend of $0.25 per share is payable on March 31, 2021 to shareholders of record on March 15, 2021.

Sales of Unregistered Securities

32 unchanged sentences

Inter Parfums, Inc.

shareholders’

shareholders’ equity

Dividends declared per share

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

We operate in the fragrance business, and

manufacture, market and distribute a wide array of fragrances and fragrance related products.

We manage our business in two segments,

European based operations and United States based operations.

Certain prestige fragrance products are produced and marketed by

our European operations through our 73% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as

27% of Interparfums SA shares trade on the NYSE Euronext.

We produce and distribute our European based

fragrance products primarily under license agreements with brand owners, and European based fragrance product sales represented

approximately 76%, 80% and 81% of net sales for 2019, 2018 and 2017, respectively.

We have built a portfolio of prestige brands,

which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade New York, Lanvin, Montblanc, Paul Smith, Repetto, Rochas,

Dupont and Van Cleef & Arpels , whose products are distributed in over 120 countries around the world.

Through our United States operations, we

also market fragrance and fragrance related products.

United States operations represented 24%, 20% and 19% of net sales in 2019,

2018 and 2017, respectively.

These fragrance products are sold or to be sold primarily pursuant to license or other agreements

with the owners of the Abercrombie & Fitch, Anna Sui, bebe, Dunhill, French Connection, Graff, GUESS, Hollister, MCM and

Oscar de la Renta brands.

With respect to the Company’s largest

brands, we own the Lanvin brand name for our class of trade, and license the Montblanc, Jimmy Choo, Coach and GUESS brand names.

As a percentage of net sales, product sales for the Company’s largest brands were as follows:

Year Ended December 31,

GUESS (license commenced April 1, 2018)

Quarterly sales fluctuations are influenced

by the timing of new product launches as well as the third and fourth quarter holiday season.

In certain markets where we sell

directly to retailers, seasonality is more evident.

We sell directly to retailers in France as well as through our own distribution

subsidiaries in Italy, Spain and the United States.

We grow our business in two distinct ways.

First, we grow by adding new brands to our portfolio, either through new licenses or other arrangements or out-right acquisitions

Second, we grow through the introduction of new products and by supporting new and established products through advertising,

merchandising and sampling as well as by phasing out underperforming products so we can devote greater resources to those products

with greater potential.

The economics of developing, producing, launching and supporting products influence our sales and operating

performance each year.

Our introduction of new products may have some cannibalizing effect on sales of existing products,

which we take into account in our business planning.

Our business is not capital intensive, and

it is important to note that we do not own manufacturing facilities.

We act as a general contractor and source our needed components

from our suppliers.

These components are received at one of our distribution centers and then, based upon production needs, the

components are sent to one of several third party fillers, which manufacture the finished product for us and then deliver them

to one of our distribution centers.

As with any global business, many aspects

of our operations are subject to influences outside our control.

We believe we have a strong brand portfolio with global reach

and potential.

As part of our strategy, we plan to continue to make investments behind fast-growing markets and channels to grow

market share.

Our reported net sales are impacted by changes

in foreign currency exchange rates.

A strong U.S.

dollar has a negative impact on our net sales.

However, earnings are positively

affected by a strong dollar, because over 45% of net sales of our European operations are denominated in U.S.

dollars, while almost

all costs of our European operations are incurred in euro.

Conversely, a weak U.S.

dollar has a favorable impact on our net sales

while gross margins are negatively affected.

We address certain financial exposures through a controlled program of risk management

that includes the use of derivative financial instruments, and primarily enter into foreign currency forward exchange contracts

to reduce the effects of fluctuating foreign currency exchange rates.

We are also carefully monitoring currency trends in

the United Kingdom as a result of the volatility created from the United Kingdom’s exit from the European Union.

evaluated our pricing models and we do not expect any significant pricing changes.

However, if the devaluation of the British Pound

worsens, it may affect future gross profit margins from sales in the territory.

Recent Important Events

Abercrombie & Fitch and Hollister

In November 2019, we extended our license

for both the Abercrombie & Fitch and Hollister brands until December 31, 2022, and added automatic renewals unless terminated

on 3 years’

In September 2019, we entered into an exclusive,

10-year worldwide license agreement with German luxury fashion house MCM for the creation, development and distribution of fragrances

under the MCM brand.

Our rights under such license are subject to certain minimum advertising expenditures and royalty payments

as are customary in our industry.

Oscar de la Renta

In September 2019, we extended our license

through December 31, 2031, and added an additional five-year extension option through December 31, 2036.

The original license agreement,

signed in October 2013, would have expired on December 31, 2025.

Kate Spade New York

In June 2019, we entered into an exclusive

11-year worldwide license agreement with Kate Spade New York for the creation, development and distribution of fragrances under

the Kate Spade brand.

Our rights under such license are subject to certain minimum advertising expenditures and royalty payments

as are customary in our industry.

Discussion of Critical Accounting Policies

We make estimates and assumptions in the

preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America.

Actual results could differ significantly from those estimates under different assumptions and conditions.

We believe the following

discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial

condition and results of operations.

These accounting policies generally require our management’s most difficult and subjective

judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

of the Company has discussed the selection of significant accounting policies and the effect of estimates with the Audit Committee

of the Board of Directors.

Sales Returns

Generally, we do not permit customers to

return their unsold products.

However, for U.S.

based customers, we allow returns if properly requested, authorized and approved.

We regularly review and revise, as deemed necessary, our estimate of reserves for future sales returns based primarily upon historic

trends and relevant current data, including information provided by retailers regarding their inventory levels.

In addition, as

necessary, specific accruals may be established for significant future known or anticipated events.

The types of known or anticipated

events that we consider include, but are not limited to, the financial condition of our customers, store closings by retailers,

changes in the retail environment and our decision to continue to support new and existing products.

We record our estimate

of potential sales returns as a reduction of sales and cost of sales with corresponding entries to accrued expenses, to record

the refund liability, and inventory, for the right to recover goods from the customer.

Returned products are valued based

upon their estimated realizable value.

The physical condition and marketability of returned products are the major factors we consider

in estimating realizable value.

Actual returns, as well as estimated realizable values of returned products, may differ significantly,

either favorably or unfavorably, from our estimates, if factors such as economic conditions, inventory levels or competitive conditions

differ from our expectations.

Long-Lived Assets

We evaluate indefinite-lived intangible

assets for impairment at least annually during the fourth quarter, or more frequently when events occur or circumstances change,

such as an unexpected decline in sales, that would more likely than not indicate that the carrying value of an indefinite-lived

intangible asset may not be recoverable.

When testing indefinite-lived intangible assets for impairment, the evaluation requires

a comparison of the estimated fair value of the asset to the carrying value of the asset.

The fair values used in our evaluations

are estimated based upon discounted future cash flow projections using a weighted average cost of capital of 7.94%.

The cash flow

projections are based upon a number of assumptions, including, future sales levels and future cost of goods and operating expense

levels, as well as economic conditions, changes to our business model or changes in consumer acceptance of our products which are

more subjective in nature.

If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment

charge is recorded.

We believe that the assumptions we have

made in projecting future cash flows for the evaluations described above are reasonable.

However, if future actual results do not

meet our expectations, we may be required to record an impairment charge, the amount of which could be material to our results

of operations.

At December 31, 2019 indefinite-lived intangible

assets aggregated $121.0 million.

The following table presents the impact a change in the following significant assumptions would

have had on the calculated fair value in 2019 assuming all other assumptions remained constant:

$ in millions

Increase (decrease) to fair

Weighted average cost of capital

Future sales levels

Intangible assets subject to amortization

are evaluated for impairment testing whenever events or changes in circumstances indicate that the carrying amount of an amortizable

intangible asset may not be recoverable.

If impairment indicators exist for an amortizable intangible asset, the undiscounted future

cash flows associated with the expected service potential of the asset are compared to the carrying value of the asset.

projection of undiscounted future cash flows is in excess of the carrying value of the intangible asset, no impairment charge is

If our projection of undiscounted future cash flows is less than the carrying value of the intangible asset, an impairment

charge would be recorded to reduce the intangible asset to its fair value.

The cash flow projections are based upon a number of

assumptions, including future sales levels and future cost of goods and operating expense levels, as well as economic conditions,

changes to our business model or changes in consumer acceptance of our products which are more subjective in nature.

In those cases

where we determine that the useful life of long-lived assets should be shortened, we would amortize the net book value in excess

of the salvage value (after testing for impairment as described above), over the revised remaining useful life of such asset thereby

increasing amortization expense.

We believe that the assumptions we have made in projecting future cash flows for the evaluations

described above are reasonable.

In determining the useful life of our Lanvin

brand names and trademarks, we applied the provisions of ASC topic 350-30-35-3.

The only factor that prevented us from determining

that the Lanvin brand names and trademarks were indefinite life intangible assets was Item c.

“Any legal, regulatory, or

contractual provisions that may limit the useful life.”

The existence of a repurchase option in 2025 may limit the useful

life of the Lanvin brand names and trademarks to the Company.

However, this limitation would only take effect if the repurchase

option were to be exercised and the repurchase price was paid.

If the repurchase option is not exercised, then the Lanvin brand

names and trademarks are expected to continue to contribute directly to the future cash flows of our Company and their useful life

would be considered to be indefinite.

With respect to the application of ASC topic

350-30-35-8, the Lanvin brand names and trademarks would only have a finite life to our Company if the repurchase option were exercised,

and in applying ASC topic 350-30-35-8, we assumed that the repurchase option is exercised.

When exercised, Lanvin has an obligation

to pay the exercise price and the Company would be required to convey the Lanvin brand names and trademarks back to Lanvin.

exercise price to be received (Residual Value) is well in excess of the carrying value of the Lanvin brand names and trademarks,

therefore no amortization is required.

Quantitative Analysis

During the three-year period ended December

31, 2019, we have not made any material changes in our assumptions underlying these critical accounting policies or to the related

significant estimates.

The results of our business underlying these assumptions have not differed significantly from our expectations.

While we believe the estimates we have made

are proper and the related results of operations for the period are presented fairly in all material respects, other assumptions

could reasonably be justified that would change the amount of reported net sales, cost of sales, and selling, general and administrative

expenses as they relate to the provisions for anticipated sales returns, allowance for doubtful accounts and inventory obsolescence

For 2019, had these estimates been changed simultaneously by 5% in either direction, our reported gross profit would

have increased or decreased by approximately $0.5 million and selling, general and administrative expenses would have changed by

approximately $0.1 million.

The collective impact of these changes on 2019 operating income, net income attributable to Inter Parfums,

Inc., and net income attributable to Inter Parfums, Inc.

per diluted share would be an increase or decrease of approximately $0.5

million, $0.2 million and $0.01, respectively.

Results of Operations

Years ended December 31,

(in millions)

European based product sales

United States based product sales

Total net sales

Net sales increased 6% in 2019 to $713.5

million, as compared to $675.6 million in 2018.

At comparable foreign currency exchange rates, net sales increased 8%.

increased 14% in 2018 to $675.6 million, as compared to $591.3 million in 2017.

At comparable foreign currency exchange rates,

net sales increased 13%.

The average U.S.

dollar/euro exchange rates were 1.12 in 2019 and 1.18 in 2018 and 1.13 in 2017.

European based product sales increased 1%

in 2019 to $542.1 million, as compared to $537.6 million in 2018.

At comparable foreign currency exchange rates, European based

product sales increased 4% in 2019.

European based product sales increased 13% in 2018 to $537.6 million, as compared to $476.5

million in 2017.

At comparable foreign currency exchange rates, European based product sales increased 11% in 2018.

European based product sales came in as

expected in 2019 despite fighting a stronger dollar throughout the year.

Our largest brand, Montblanc, grew full year sales by

23% with the excellent performance of the new Montblanc Explorer scent as well as the continued strength of the brand’s

Legend fragrance family.

In constant dollars, Jimmy Choo brand sales were up slightly.

However, due to the strengthening

of the dollar brand sales for our second largest brand were down nominally in actual dollars.

Coach brand sales were also down

slightly in 2019 in actual dollars but ahead of 2018 in constant dollars.

Of note, Coach brand sales in 2018 were 73.3% ahead of

the prior year.

Two of our mid-sized brands, Karl Lagerfeld and Van Cleef & Arpels, achieved year-over-year sales growth of

5.0% and 6.8%, respectively.

European based product sales in 2018 were

stronger than our original expectations even though no new fragrance families were launched that year.

Top line growth was primarily

attributed to established scents and brand extensions for our largest brands.

Coach brand sales accounted for much of the 2018

upside surprise with brand sales increasing 73.3% in 2018 to $99.7 million, as compared to $57.5 million in 2017, making it our

portfolio’s third largest brand.

The other largest brands in our European operations portfolio performed as expected with

Montblanc, Jimmy Choo and Lanvin, achieving year-over-year sales growth of 1%, 8%, and 7%, respectively.

United States based product sales increased

24% in 2019 to $171.4 million, as compared to $138.0 million in 2018.

GUESS brand fragrances had an extraordinary year due to the

addition of two brand extensions, 1981 Los Angeles and Seductive Noir , the continued popularity of legacy scents,

and the success of our international distribution and marketing programs.

Also contributing to the top line growth by U.S.

were Abercrombie & Fitch and Hollister, both of which achieved significant sales growth spurred by the launch of the Authentic

fragrance duo for Abercrombie & Fitch, and brand extensions for the Wave and Festival fragrance families for

Oscar de la Renta fragrance sales rose slightly, supported by legacy scents and our growing Bella fragrance family

United States based product sales increased

20% in 2018 to $138.0 million, as compared to $114.8 million in 2017.

The inclusion of legacy GUESS fragrances, which began in

the second quarter of 2018, was a major contributor to the increase in net sales.

Also factoring into the 2018 increase was the

successful launch of brand extensions for Abercrombie & Fitch and Hollister.

With the popularity of Anna Sui fragrances throughout

Asia, we enjoyed dramatic increases in Anna Sui brand sales in that region in 2018.

We maintain confidence in our future as

we continue to strengthen advertising and promotional investments supporting all portfolio brands, accelerate brand development

and build upon the strength of our worldwide distribution network.

We have a more robust launch schedule in 2020 on both sides

of the Atlantic.

operations, the most important launch will be our first blockbuster scent for women under the GUESS brand

unveiling this spring, domestically, followed in the fall by an international rollout.

A new fragrance duo for Hollister, Canyon

Escape , is scheduled for a spring launch.

We look to Sky by Anna Sui to reinvigorate brand sales when it debuts in the

fall of 2020.

Our first fragrance collection under the Graff label debuts in Harrod’s for a six-month exclusive starting

in the spring, followed by select international luxury distribution.

For European operations, our new Coach scent for women, Coach

Dreams , came to market this winter.

We have new women’s scents for the Montblanc brand debuting in the spring, and

for Kate Spade New York our first scent is coming to market this summer.

For Jimmy Choo our new women’s fragrance launch

should be close to year-end, with much of the sell-in continuing into 2021.

In addition, as always, we will strengthen fragrance

families with brand extensions as well as limited edition and holiday programs throughout the year.

Lastly, we hope to benefit from our strong

financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee.

However, we cannot

assure you that any new license or acquisition agreements will be consummated.

Customers by Region

Years ended December 31,

(in millions)

North America

Western Europe

Eastern Europe

Central and South America

Virtually all regions registered growth

for the year ended December 31, 2019, as compared to 2018 with Central and South America being the only decline.

Even Asia, which

appears to be down slightly in 2019, is actually up in constant dollars.

The strongest gains were achieved by the Middle East,

North America and Eastern Europe, which increased sales by 22%, 11% and 5%, respectively.

For the year ended December 31, 2018,

as compared to 2017, the strongest gains were achieved by Asia, North America and the Middle East, which increased sales by 24%,

19% and 17%, respectively.

Gross Margins

Years ended December 31,

(in millions)

Cost of sales

Gross margin, as a percent of net sales

As a percentage of net sales, gross profit

margin was 62.5%, 63.3%, and 63.6% in 2019, 2018 and 2017, respectively.

For European based operations, gross profit margin as

a percentage of net sales was 65.7%, 66.3% and 67.1% in 2019, 2018 and 2017, respectively.

We carefully monitor movements in foreign

currency exchange rates as over 45% of our European based operations net sales is denominated in U.S.

dollars, while most of our

costs are incurred in euro.

From a margin standpoint, a strong U.S.

dollar has a positive effect on our gross margin while a weak

dollar has a negative effect.

The average dollar/euro exchange rate was 1.12 in 2019, as compared to 1.18 in 2018.

dollar in 2019 resulted in a benefit to our gross margin in 2019, however, our new Montblanc Explorer product line has a

greater than typical cost of sales, which more than offset the benefit of the stronger dollar.

The small fluctuation in gross margin as

a percentage of sales for our European operations in 2018, as compared to 2017, is primarily the effect of exchange rate changes

as the average dollar/euro exchange rate was 1.18 in 2018, as compared to 1.13 in 2017.

For United States operations, gross profit

margin was 52.5%, 51.4% and 49.3% in 2019, 2018 and 2017, respectively.

Sales growth for our United States operations has primarily

come from increased sales of higher margin prestige products under licenses.

Costs relating to purchase with purchase

and gift with purchase promotions are reflected in cost of sales, and aggregated $38.9 million, $36.4 million and $33.8 million

in 2019, 2018 and 2017, respectively, and represented 5.5%, 5.4% and 5.7% of net sales, respectively.

Generally, we do not bill customers for

shipping and handling costs and such costs, which aggregated $7.7 million, $7.1 million and $5.9 million in 2019, 2018 and 2017,

respectively, are included in selling, general and administrative expenses in the consolidated statements of income.

Company’s gross margins may not be comparable to other companies, which may include these expenses as a component of cost

of goods sold.

Selling, General & Administrative

Years ended December 31,

(in millions)

Selling, general & administrative expenses

Selling, general & administrative expenses as a percent of net sales

Although selling, general and administrative

expenses increased 2.5% in 2019 as compared to 2018 and increased 12.6% in 2018 as compared to 2017, as a percentage of sales,

selling, general and administrative expenses exhibited a steady decrease, and were 47.8%, 49.3% and 50.0% in 2019, 2018 and 2017,

respectively.

For European operations, selling, general and administrative expenses declined 1.0% in 2019 and increased 10.5% in

2018, as compared to the corresponding prior year period and represented 50.8%, 51.7% and 52.8% of sales in 2019, 2018 and 2017,

respectively.

As discussed in more detail below, the fluctuations which are in line with the fluctuations in sales for European

operations, are primarily from variations in promotion and advertising expenditures.

For United States operations, selling, general

and administrative expenses increased 20.2% in 2019 and 25.0% in 2018, as compared to the corresponding prior year period and represented

38.5%, 39.8% and 38.2% of sales in 2019, 2018 and 2017, respectively.

The increase, which is also in line with the increase in

sales, is the result of royalties and promotional and advertising expenses required under our license agreements.

Promotion and advertising included in selling,

general and administrative expenses aggregated $144.6 million, $139.7 million and $123.7 million in 2019, 2018 and 2017, respectively.

Promotion and advertising as a percentage of sales represented 20.3%, 20.7% and 20.9% of net sales in 2019, 2018 and 2017, respectively.

We continue to invest heavily in promotional spending to support new product launches and to build brand awareness.

We anticipated

that on a full year basis, promotion and advertising expenditure would aggregate approximately 21% of 2019 net sales, which was

in line with prior year’s annual promotion and advertising expenditures as a percentage of sales.

The slight decline in promotion

and advertising expense as a percentage of sales in 2019 is the result of minor fluctuations in launch schedules.

Royalty expense included in selling, general

and administrative expenses aggregated $53.0 million, $48.9 million and $39.6 million in 2019, 2018 and 2017, respectively.

expense as a percentage of sales represented 7.4%, 7.2% and 6.7% of net sales in 2019, 2018 and 2017, respectively.

in 2019 and 2018, as a percentage of sales, is directly related to new licenses and increased royalty based product sales.

Service fees, which are fees paid within

our European operations to third parties relating to the activities of our distribution subsidiaries, aggregated $7.5 million,

$9.7 million and $11.7 million in 2019, 2018 and 2017, respectively.

The 2019 and 2018 decrease is primarily the result of the

discontinuation of certain European distribution subsidiaries, and a return to a third party distribution model in those territories.

Impairment Loss

The Company reviews intangible assets with

finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Product sales of some of our mass market product lines have been declining for many years.

In 2017, the Company set in motion a

plan to discontinue several of these product lines over the next few years.

As a result, the Company recorded an impairment loss

of $2.1 million in 2017.

Income from Operations

As a result of the above analysis regarding

net sales, gross profit margins, selling, general and administrative expenses and impairment loss, income from operations increased

10.6% to $104.7 million in 2019 as compared to $94.7 million in 2018, which was an increase of 20.5% from $78.6 million in 2017.

Operating margins aggregated 14.7%, 14.0% and 13.3% for the years ended December 31, 2019, 2018 and 2017, respectively.

small fluctuations in gross margin were mitigated by small fluctuations in selling, general and administrative expenses, primarily

promotion and advertising expenditures.

Overall the Company has been able to increase sales with a steady increase in its operating

Other Income and Expenses

Interest expense aggregated $2.1 million,

$2.6 million and $2.0 million in 2019, 2018 and 2017, respectively.

Interest expense is primarily related to the financing of brand

and licensing acquisitions.

We use the credit lines available to us, as needed, to finance our working capital needs as well as

our financing needs for acquisitions.

Long-term debt including current maturities aggregated $23.1 million, $46.1 million and $60.6

million as of December 31, 2019, 2018 and 2017, respectively.

Foreign currency losses aggregated $1.1

million, $0.3 million and $1.5 million in 2019, 2018 and 2017, respectively.

We typically enter into foreign currency forward exchange

contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally

to manage risks related to future sales expected to be denominated in a foreign currency.

Over 45% of 2019 net sales of our European

operations were denominated in U.S.

Interest and dividend income aggregated

$3.7 million, $4.0 million and $3.0 million in 2019, 2018 and 2017, respectively.

Cash and cash equivalents and short-term investments

are primarily invested in certificates of deposit with varying maturities.

In December 2017, the U.S.

passed the Tax Cuts and Jobs Act (“the Tax Act”).

The Tax Act made broad and complex changes to the U.S.

including, but not limited to reducing the U.S.

federal corporate tax rate from 35% to 21% beginning in 2018, and requiring companies

to pay a one-time transition tax on certain unremitted earnings of foreign subsidiaries.

The Tax Act also established new tax laws

that took effect in 2018, including, but not limited to:

(i) the reduction of the U.S.

federal corporate tax rate discussed

(ii) a general elimination of U.S.

federal income taxes on dividends from foreign subsidiaries;

(iii) a provision

designed to tax global intangible low-taxed income (“GILTI”);

and (iv) a provision that allows a domestic corporation

an immediate deduction for a portion of its foreign derived intangible income (“FDII”).

The Securities and Exchange Commission staff

issued Staff Accounting Bulletin (“SAB”) 118, which provides a measurement period that was not to extend beyond one

year from the Tax Act enactment date for companies to complete the related accounting under ASC 740, Accounting for Income Taxes.

In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting

under ASC 740 is complete.

To the extent that a company’s accounting for a certain income tax effect of the Tax Act was incomplete,

but it was able to determine a reasonable estimate, it was required to record a provisional estimate in the financial statements.

In connection with its initial analysis

of the impact of the Tax Act, the Company recorded a tax expense of $1.1 million for the year ended December 31, 2017.

This estimate consists of no expense for the one-time transition tax, and an expense of $1.1 million related to revaluation

of deferred tax assets and liabilities caused by the lower corporate tax rate.

There were no material differences between the Company’s

2017 estimates and the final calculated amounts.

The Company has estimated of the effect

of GILTI and has determined that it has no tax liability related to GILTI as of December 31, 2019 and 2018.

The Tax Act also contains a provision that

allows a domestic corporation an immediate deduction for a portion of its foreign derived intangible income (“FDII”).

The Company estimated the effect of FDII and recorded a tax benefit of $0.9 million and $0.6 million as of December 31, 2019 and

2018, respectively.

Our effective income tax rate was 27.7%,

27.3% and 29.2% in 2019, 2018 and 2017, respectively.

The French government had introduced a 3% tax on dividends or deemed dividends

for entities subject to French corporate income tax in 2012.

In 2017, the French Constitutional Court released a decision declaring

that the 3% tax on dividends or deemed dividends is unconstitutional.

As a result of that decision, the Company filed a claim for

refund of approximately $3.9 million for these taxes paid since 2015 including accrued interest of approximately $0.4 million.

The Company recorded the refund claim as of December 31, 2017 and received the entire refund in 2018.

Excluding the 2017 adjustment to deferred

tax benefit as a result of the Tax Act and the 2017 claim for refund, our effective tax rate for 2017 was 32.4%.

The French authorities are considering that

the existence of IP Suisse, a wholly-owned subsidiary of Interparfums SA, does not, in and of itself, constitute a permanent establishment

and therefore Interparfums, SA should pay French taxes on all or part of the profits of that entity.

The French Tax Authority recently

notified the Company that IP Suisse will be the subject of a tax audit covering the period January 1, 2010 through December 31,

No claim or assessment for any taxes or penalties has been made at this time.

The Company disagrees and is prepared to vigorously

defend its position.

Consequently, no provision has been made in the accompanying financial statements as we believe it is more

likely than not that our position will be sustained based on its technical merits.

Although we believe that we have sufficient

arguments to support our position, there exists a risk that the French authorities may prevail.

The Company’s exposure in

connection with this matter is approximately $5.8 million, net of recover taxes already paid to the Swiss authorities, and excluding

Lastly, pursuant to an action plan released

by the French Prime Minister, the French corporate income tax rate is expected to be cut from approximately 33% to 25% over a three-year

period which began in 2020.

Other than as discussed above, we did not experience any significant changes in tax rates, and none

were expected in jurisdictions where we operate.

Net Income and Earnings per Share

Year ended December 31,

(In thousands except share and per share data)

Net income attributable to European operations

Net income attributable to United States operations

Net income attributable to the noncontrolling interest

Net income attributable to Inter Parfums, Inc.

common shareholders:

Weighted average number of shares outstanding:

Net income has continued to increase over

the past three years, and aggregated $76.1 million, $69.7 million and $55.3 million in 2019, 2018 and 2017, respectively.

attributable to European operations was $56.3 million, $56.5 million and $48.2 million in 2019, 2018 and 2017, respectively, while

net income attributable to United States operations was $19.7 million, $13.2 million and $7.0 million in 2019, 2018 and 2017, respectively.

The fluctuations in net income for European operations are directly related to the previous discussions relating to changes in

sales, gross profit margins, selling, general and administrative expenses and the French tax refund.

For United States operations the significant

fluctuations in net income are also directly related to the previous discussions relating to changes in sales, gross profit margins

and selling, general and administrative expenses.

In addition, results for 2017 include the effect of the $2.1 million impairment

The noncontrolling interest arises primarily

from our 73% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 27% of Interparfums SA shares

trade on the NYSE Euronext.

Net income attributable to the noncontrolling interest is related to the profitability of our European

operations, and aggregated 28.1%, 28.2% and 28.3% of European operations net income in 2019, 2018 and 2017, respectively.

attributable to Inter Parfums, Inc.

aggregated $60.2 million, $53.8 million and $41.6 million in 2019, 2018 and 2017, respectively.

Net margins attributable to Inter Parfums, Inc.

aggregated 8.4%, 8.0% and 7.0% in 2019, 2018 and 2017, respectively.

Liquidity and Capital Resources

The Company’s financial position remains strong.

31, 2019, working capital aggregated $389 million, and we had a working capital ratio of over 3 to 1.

Cash and cash equivalents

and short-term investments aggregated $253 million most of which is held in euro by our European operations and is readily convertible

We have not had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and

cash equivalents and short-term investments held by our European operations.

Approximately 81% of the Company’s total assets

are held by European operations including approximately $176 million of trademarks, licenses and other intangible assets.

The Company hopes to benefit from its strong

financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee.

Opportunities for

external growth continue to be examined, with the priority of maintaining the quality and homogeneous nature of our portfolio.

However, we cannot assure you that any new license or acquisition agreements will be consummated.

Cash provided by operating activities aggregated

$76.5 million, $63.0 million and $35.9 million in 2019, 2018 and 2017, respectively.

In 2019, working capital items used $11.7

million in cash from operating activities, as compared to $20.9 million in 2018 and $32.5 million in 2017.

Although accounts receivable

is up slightly from that of the prior year, day’s sales outstanding improved to 68 days in 2019, as compared to 71 days and

67 days in 2018 and 2017, respectively.

Inventory days on hand aggregated 225 days in 2019, as compared to 223 days in 2018 and

189 days in 2017, respectively.

The increase in 2018 was primarily the result of the required buildup of inventory for new licenses

entered into in 2018 where we do not have a full year of sales.

At year-end 2019, higher inventory levels were needed to support

our robust new product launch schedule for 2020.

In terms of cash flow, inventory levels at December 31, 2019 are up only 3.7%

from that date of the prior year.

Cash flows used in investing activities

reflect the purchase and sales of short-term investments.

These investments are primarily certificates of deposit with maturities

greater than three months.

At December 31, 2019, approximately $65 million of certificates of deposit contain penalties where we

would forfeit a portion of the interest earned in the event of early withdrawal.

Our business is not capital intensive as

we do not own any manufacturing facilities.

On a full year basis, we spent approximately $5.4 million on capital expenditures including

tools and molds needed to support our new product development calendar.

Capital expenditures also include amounts for office fixtures,

computer equipment and industrial equipment needed at our distribution centers.

Payments for licenses, trademarks and other intangible

assets primarily represent upfront entry fees incurred in connection with new license agreements.

In December 2016, the Company

agreed to a buyout of one of its licenses, effective December 31, 2016, for a payment aggregating approximately $5.9 million.

Company received the buyout payment in May 2017.

In 2018, in connection with a new license

agreement, we agreed to pay $15.0 million in equal annual installments of $1.1 million including interest imputed at 4.1%.

in connection with a brand acquisition, we entered into a 5-year term loan payable in equal quarterly installments of €5.0

million (approximately $5.6 million) plus interest.

In order to reduce exposure to rising variable interest rates, we entered into

a swap transaction effectively exchanging the variable interest rate to a fixed rate of approximately 1.2%.

Our short-term financing requirements are expected to be met

by available cash on hand at December 31, 2019, cash generated by operations and short-term credit lines provided by domestic and

foreign banks.

The principal credit facilities for 2020 consist of a $20.0 million unsecured revolving line of credit provided

by a domestic commercial bank and approximately $28.1 million in credit lines provided by a consortium of international financial

institutions.

There were no balances due from short-term borrowings as of December 31, 2019 and 2018.

Purchase of subsidiary shares from noncontrolling

interest primarily represents the purchase of treasury shares of Interparfums SA, which are expected to be issued to Interparfums

SA employees pursuant to its Free Share Plan.

In October 2017, our Board authorized a

24% increase in the annual dividend to $0.84 per share.

In October 2018, our Board authorized a 31% increase in the annual dividend

to $1.10 per share and in October 2019, our Board authorized a further 20% increase in the annual dividend to $1.32 per share.

The next quarterly cash dividend of $0.33 per share is payable on April 15, 2020 to shareholders of record on March 31, 2020.

Dividends paid, including dividends paid once per year to noncontrolling stockholders of Interparfums SA, aggregated $44.2 million,

$35.0 million and $27.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The cash dividends to be paid

in 2020 are not expected to have any significant impact on our financial position.

We believe that funds provided by or used

in operations can be supplemented by our present cash position and available credit facilities, so that they will provide us with

sufficient resources to meet all present and reasonably foreseeable future operating needs.

Inflation rates in the U.S.

countries in which we operate did not have a significant impact on operating results for the year ended December 31, 2019.

Contractual Obligations

The following table summarizes our contractual

obligations over the periods indicated, as well as our total contractual obligations ($ in thousands):

Payments due by period

Contractual Obligations

Less than 1 year

More than 5 years

Long-Term Debt

Lease Liabilities

Purchase Obligations (1)

Consists of purchase commitments for advertising and promotional items, minimum royalty guarantees, including fixed or minimum obligations, and estimates of such obligations subject to variable price provisions.

Future advertising commitments were estimated based on planned future sales for the license terms that were in effect at December 31, 2019, without consideration for potential renewal periods and do not reflect the fact that our distributors share our advertising obligations.

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-K

Item 5. Market for Registrant’s Common Equity