What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 446 added, 385 removed, 112 unchanged (88% of the section changed)

Financial Statements

In our opinion, the accompanying unaudited

consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present

fairly our financial position, results of operations and cash flows for the interim periods presented.

We have condensed such financial

statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”).

such financial statements do not include all disclosures required by accounting principles generally accepted in the United States

In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential

recognition or disclosure through the date the consolidated financial statements were issued by filing with the SEC.

These financial

statements should be read in conjunction with our audited financial statements for the year ended December 31, 2021, included

in our annual report filed on Form 10-K.

The results of operations for the six months

ended June 30, 2022, are not necessarily indicative of the results to be expected for the entire fiscal year.

INTER PARFUMS, INC.

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

adjustments) necessary to present fairly our financial position, results of operations and cash flows for the interim periods

We have condensed such financial statements in accordance with the rules and regulations of the Securities and Exchange

Commission (“SEC”).

Therefore, such financial statements do not include all disclosures required by accounting principles

generally accepted in the United States of America.

In preparing these consolidated financial statements, the Company has evaluated

events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued

by filing with the SEC.

These financial statements should be read in conjunction with our audited financial statements for the

year ended December 31, 2021, included in our annual report filed on Form 10-K.

results of operations for the nine months ended September 30, 2022, are not necessarily indicative of the results to be expected

for the entire fiscal year.

PARFUMS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share

BALANCE SHEETS

thousands except share and per share data)

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

Property, equipment and leasehold improvements, net

Right-of-use assets, net

Trademarks, licenses and other intangible assets, net

Deferred tax assets

taxes receivable

current assets

equipment and leasehold improvements, net

licenses and other intangible assets, net

LIABILITIES AND EQUITY

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

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:

Preferred stock, $ .001 par;

stock, $ .001 par;

authorized 1,000,000 shares;

Common stock, $ .001 par;

stock, $ .001 par;

authorized 100,000,000 shares;

outstanding 31,845,965 and 31,830,420 shares at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Treasury stock, at cost, 9,864,805 shares at June 30, 2022 and December 31, 2021

Total Inter Parfums, Inc.

shareholders’ equity

Noncontrolling interest

Total liabilities and equity

See notes to consolidated financial statements.

outstanding 31,875,625 and 31,830,420

shares at September 30, 2022 and December 31, 2021, respectively

paid-in capital

other comprehensive loss

stock, at cost, 9,864,805 shares at September 30, 2022 and December 31, 2021

Inter Parfums, Inc.

shareholders’ equity

Noncontrolling

liabilities and equity

notes to consolidated financial statements.

PARFUMS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

STATEMENTS OF INCOME

thousands except per share data)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of sales

Selling, general and administrative expenses

Impairment loss

Income from operations

Selling, general

and administrative expenses

from operations

Other expenses (income):

Interest expense

(Gain) loss on foreign currency

Interest and investment (income) loss

Other (income) expense

Income before income taxes

attributable to the noncontrolling interest

Net income attributable to Inter Parfums, Inc.

(Gain) loss on

foreign currency

Interest and investment

(income) expense

Nonoperating Income (Expense)

before income taxes

income attributable to the noncontrolling interest

income attributable to Inter Parfums, Inc.

Earnings per share:

Net income attributable to Inter Parfums, Inc.

income attributable to Inter Parfums, Inc.

common shareholders:

Weighted average number of shares outstanding:

Dividends declared per share

See notes to consolidated financial statements.

INTER PARFUMS, INC.

average number of shares outstanding:

Dividends declared

notes to consolidated financial statements.

PARFUMS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE

(In thousands)

STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Comprehensive

comprehensive income:

Other comprehensive income:

Net derivative instrument gain (loss), net of tax

Transfer from OCI into earnings

Translation adjustments, net of tax

derivative instrument gain (loss), net of tax

from OCI into earnings

adjustments, net of tax

Comprehensive

income attributable to the noncontrolling interests:

comprehensive income (loss):

Comprehensive income attributable to the noncontrolling interests:

Other comprehensive income (loss):

Net derivative instrument gain (loss), net of tax

Translation adjustments, net of tax

Comprehensive income (loss) attributable to the noncontrolling interests

Comprehensive income attributable to Inter Parfums, Inc.

See notes to consolidated financial statements.

INTER PARFUMS, INC.

derivative instrument gain (loss), net of tax

adjustments, net of tax

Comprehensive

income attributable to the noncontrolling interests

Comprehensive

income attributable to Inter Parfums, Inc.

notes to consolidated financial statements.

PARFUMS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES

(In thousands)

( Unaudited )

Six months ended

Common stock, beginning and end of period

Additional paid-in capital, beginning of period

Shares issued upon exercise of stock options

STATEMENTS OF CHANGES IN EQUITY

Nine months ended

September 30,

stock, beginning and end of period

Additional paid-in

capital, beginning of period

Shares issued upon exercise of

stock options

Share-based compensation

Purchase of subsidiary shares

Transfer of subsidiary shares purchased

Additional paid-in capital, end of period

Shares issued for license acquisition

subsidiary shares purchased

Additional paid-in

capital, end of period

Retained earnings, beginning of period

Share-based compensation

Retained earnings, end of period

Accumulated other comprehensive loss, beginning of period

Foreign currency translation adjustment, net of tax

Transfer from other comprehensive income into earnings

Net derivative instrument gain (loss), net of tax

Accumulated other comprehensive loss, end of period

Treasury stock, beginning and end of period

Accumulated other comprehensive loss,

beginning of period

Foreign currency

translation adjustment, net of tax

Transfer from

other comprehensive income into earnings

derivative instrument loss, net of tax

other comprehensive loss, end of period

stock, beginning and end of period

Noncontrolling interest, beginning of period

Foreign currency translation adjustment, net of tax

Net derivative instrument gain (loss), net of tax

Share-based compensation (adjustment)

Foreign currency

translation adjustment, net of tax

Net derivative

instrument loss, net of tax

Share-based compensation

Purchase of subsidiary shares

Transfer of subsidiary shares purchased

Noncontrolling interest, end of period

See notes to consolidated financial statements.

INTER PARFUMS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Six months ended

Cash flows from operating activities:

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

Depreciation and amortization

Provision for doubtful accounts

Noncash stock compensation

Share of income of equity investment

Impairment loss

Noncash lease expense

Deferred tax provision (benefit)

Change in fair value of derivatives

Accounts receivable

Operating lease liabilities

Accounts payable and accrued expenses

Income taxes, net

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchases of short-term investments

Proceeds from sale of short-term investments

Purchases of property, equipment and leasehold improvements

Payment for intangible assets acquired

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of long-term debt

Repayment of long-term debt

Proceeds from exercise of options

Purchase of subsidiary shares from noncontrolling interest

Dividends paid

Dividends paid to noncontrolling interest

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents - beginning of period

Cash and cash equivalents - end of period

Supplemental disclosure of cash flow information:

Cash paid for:

See notes to consolidated financial statements.

Noncontrolling interest, end of

notes to consolidated financial statements.

PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

Accounting Policies:

accounting policies we follow are set forth in the notes to our consolidated financial statements included in our Form 10-K, which

was filed with the Securities and Exchange Commission for the year ended December 31, 2021.

of COVID-19 Pandemic:

novel strain of coronavirus (“COVID-19”) surfaced in late 2019 and in March 2020, the World Health Organization declared

COVID-19 a pandemic.

In response, various national, state, and local governments issued decrees prohibiting certain businesses

from operating and certain classes of workers from reporting to work.

store closings, event cancellations and a shutdown of international air travel brought our sales to a virtual standstill and caused

a significant unfavorable impact on our results of operations in 2020.

significantly improved in the second half of 2020 and continued to improve throughout 2021 and thus far in 2022, as retail stores

reopened, and consumers increased online purchasing.

While we expect this trend to continue, the introduction of variants of COVID-19

in various parts of the world has caused the temporary re-implementation of governmental restrictions to prevent further spread

STATEMENTS OF CASH FLOWS

Nine months ended

September 30,

flows from operating activities:

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

and amortization

for doubtful accounts

stock compensation

Share of income

of equity investment

lease expense

tax provision (benefit)

in fair value of derivatives

lease liabilities

payable and accrued expenses

cash provided by (used in) operating activities

flows from investing activities:

of short-term investments

from sale of short-term investments

of property, equipment and leasehold improvements

for intangible assets acquired

cash used in investing activities

flows from financing activities:

from issuance of long-term debt

of long-term debt

from exercise of options

of subsidiary shares from noncontrolling interest

paid to noncontrolling interest

cash provided by (used in) financing activities

of exchange rate changes on cash

increase (decrease) in cash and cash equivalents

and cash equivalents - beginning of period

and cash equivalents - end of period

disclosure of cash flow information:

notes to consolidated financial statements.

INTER PARFUMS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Significant Accounting Policies:

The accounting policies we follow

are set forth in the notes to our consolidated financial statements included in our Form 10-K, which was filed with the Securities

and Exchange Commission for the year ended December 31, 2021.

Impact of COVID-19 Pandemic:

A novel strain of coronavirus

(“COVID-19”) surfaced in late 2019 and in March 2020, the World Health Organization declared COVID-19 a pandemic.

response, various national, state, and local governments issued decrees prohibiting certain businesses from operating and certain

classes of workers from reporting to work.

Retail store closings, event

cancellations and a shutdown of international air travel brought our sales to a virtual standstill and caused a significant unfavorable

impact on our results of operations in 2020.

Business significantly

improved in the second half of 2020 and continued to improve throughout 2021 and thus far in 2022, as retail stores reopened,

and consumers increased online purchasing.

While we expect this trend to continue, the introduction of variants of COVID-19 in

various parts of the world has caused the temporary re-implementation of governmental restrictions to prevent further spread

of the virus.

In addition, international air travel remains curtailed in many jurisdictions due to both governmental restrictions

and consumer health concerns.

While COVID-19 has significantly restricted international travel, the travel retail business is

beginning to pick up.

We remain confident that travel retail will once again be a source of growth over the long-term.

the improved economy has put significant strains on our supply chain causing disruptions affecting the procurement of components,

the ability to transport goods, and related cost increases.

These disruptions have come at a time when demand for our product

lines has never been stronger or more sustained.

We have been addressing this issue since the beginning of 2021, by ordering well

in advance of need and in larger quantities.

Since 2021, we have strived to carry more inventory overall, source the same components

from multiple suppliers and when possible, manufacture products closer to where they are sold.

We do not expect the supply chain

bottlenecks to begin lifting until later in 2022.

Therefore, despite recent business improvement, the impact of the COVID-19 pandemic

may have a material adverse effect on our results of our operations, financial position and cash flows through at least the end

October 2021, we closed on a transaction agreement with Salvatore Ferragamo S.p.A., whereby an exclusive and worldwide license

was granted for the production and distribution of Ferragamo brand perfumes.

Our rights under this license are subject to certain

minimum advertising expenditures and royalty payments as are customary in our industry.

The license became effective in October

2021 and will last for 10 years with a 5-year optional term, subject to certain conditions.

respect to the management and coordination of activities related to the license agreement, the Company operates through a wholly-owned

Italian subsidiary based in Florence, that was acquired

from Salvatore Ferragamo on October 1, 2021.

The acquisition together with the license agreement was accounted for as an asset

PARFUMS, INC.

In addition, international air travel remains curtailed in many jurisdictions due to both governmental

restrictions and consumer health concerns.

While COVID-19 has significantly restricted international travel, the travel retail

business is beginning to pick up.

We remain confident that travel retail will once again be a source of growth over the

Lastly, the improved economy has put significant strains on our supply chain causing disruptions affecting the

procurement of components, the ability to transport goods, and related cost increases.

These disruptions have come at a time

when demand for our product lines has never been stronger or more sustained.

We have been addressing this issue since the

beginning of 2021, by ordering well in advance of need and in larger quantities.

Since 2021, we have strived to carry more

inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where

they are sold.

We do not expect the supply chain bottlenecks to begin lifting until the second half of 2023.

despite recent business improvement, the impact of the COVID-19 pandemic might continue to have adverse effects on our results

of our operations, financial position and cash flows through at least the first half of 2023.

Recent Agreements:

Salvatore Ferragamo

In October 2021, we closed on

a transaction agreement with Salvatore Ferragamo S.p.A., whereby an exclusive and worldwide license was granted for the production

and distribution of Ferragamo brand perfumes.

Our rights under this license are subject to certain minimum advertising expenditures

and royalty payments as are customary in our industry.

The license became effective in October 2021 and will last for 10 years

with a 5-year optional term, subject to certain conditions.

With respect to the management

and coordination of activities related to the license agreement, the Company operates through a wholly-owned Italian subsidiary

based in Florence, that was acquired from Salvatore Ferragamo

on October 1, 2021.

The acquisition together with the license agreement was accounted for as an asset acquisition.

INTER PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

following table summarizes the estimated fair values of the assets acquired and liabilities assumed on October 1, 2021.

have been translated to U.S.

Notes to Consolidated Financial Statements

The following table summarizes

the estimated fair values of the assets acquired and liabilities assumed on October 1, 2021.

All amounts have been translated to

dollars at the October 1, 2021 exchange rate.

consideration

October 2021, we also entered into a 10-year exclusive global licensing agreement with a 5-year optional term subject to certain

conditions, with Emanuel Ungaro Italia S.r.l, for the creation, development and distribution of fragrances and fragrance related

products, under the Emanuel Ungaro brand.

(In thousands)

Trademarks and licenses

Assets acquired

Liabilities assumed

Total consideration

Emanuel Ungaro

In October 2021, we also entered

into a 10-year exclusive global licensing agreement with a 5-year optional term subject to certain conditions, with Emanuel Ungaro

Italia S.r.l, for the creation, development and distribution of fragrances and fragrance related products, under the Emanuel Ungaro

Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary

in our industry.

Donna Karan and DKNY

In September 2021, we entered

into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance related

products under the Donna Karan and DKNY brands.

Our rights under this license are subject to certain minimum advertising expenditures

and royalty payments as are customary in our industry.

Karan and DKNY

September 2021, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances

and fragrance related products under the Donna Karan and DKNY brands.

Our rights under this license are subject to certain minimum

advertising expenditures and royalty payments as are customary in our industry.

With this agreement, we are gaining several well-established

and valuable fragrance franchises, most notably Donna Karan Cashmere Mist and DKNY Be Delicious , as well as a significant

loyal consumer base around the world.

With this agreement, we are gaining several well-established and valuable

fragrance franchises, most notably Donna Karan Cashmere Mist and DKNY Be Delicious , as well as a significant loyal

consumer base around the world.

In connection with the grant of license, we issued 65,342 shares of Inter Parfums, Inc.

common stock valued at $ 5 .0 million to the licensor.

The exclusive license became effective July 1, 2022, and we are planning

to launch new fragrances under these brands in 2023.

and Building Acquisition - Future Headquarters in Paris

April 2021, Interparfums SA, our 73 % owned French Subsidiary, completed the acquisition of its headquarters at 10 rue de Solférino

in the 7th arrondissement of Paris from the property developer.

This is an office complex combining three buildings connected

by two inner courtyards, and consists of approximately 40,000 total sq.

purchase price includes the complete renovation of the site and includes the purchase of several apartments in the surrounding

area to be used as additional office space.

As of June 30, 2022, $ 142.7 million of the purchase price, including approximately

$ 4.4 million of acquisition costs, is included in property, equipment and leasehold improvements on the accompanying balance sheet

as of June 30, 2022.

stock valued at $ 5 .0 million to the licensor.

The exclusive license became effective July 1, 2022, and we are planning to launch

new fragrances under these brands in 2024.

Land and Building Acquisition

- Future Headquarters in Paris

In April 2021, Interparfums SA,

our 73 % owned French Subsidiary, completed the acquisition of its headquarters at 10 rue de Solférino in the 7th arrondissement

of Paris from the property developer.

This is an office complex combining three buildings connected by two inner courtyards, and

consists of approximately 40,000 total sq.

The purchase price includes the

complete renovation of the site and includes the purchase of several apartments in the surrounding area to be used as additional

office space.

As of September 30, 2022, $ 135.5 million of the purchase price, including approximately $ 4.1 million of acquisition

costs, is included in property, equipment and leasehold improvements on the accompanying balance sheet as of September 30, 2022.

The purchase price has been allocated approximately $ 55.9 million to land and $ 79.6 million to the building.

The building, which was delivered on February 28, 2022, includes the building structure, development of the property, façade

waterproofing, general and technical installations and interior fittings that will be depreciated over a range of 7 to 50 years.

The Company has elected to depreciate the building cost based on the useful lives of its components.

Approximately $ 5.1 million

of cash held in escrow is included in property, equipment and leasehold improvements on the accompanying balance sheet as of June

PARFUMS, INC.

The building, which

was delivered on February 28, 2022, includes the building structure, development of the property, façade waterproofing,

general and technical installations and interior fittings that will be depreciated over a range of 7 to 50 years.

The Company has

elected to depreciate the building cost based on the useful lives of its components.

Approximately $ 3.4 million of cash held in

escrow is included in property, equipment and leasehold improvements on the accompanying balance sheet as of September 30, 2022.

INTER PARFUMS, INC.

AND SUBSIDIARIES

acquisition was financed by a 10 -year € 120 million (approximately $ 125 million) bank loan which bears interest at one-month

Euribor plus 0.75% .

Approximately € 80 million of the variable rate debt was swapped for variable interest rate debt with

a maximum rate of 2% per annum.

Accounting Pronouncements:

are no recent accounting pronouncements issued but not yet adopted that would have a material effect on our consolidated financial

consist of the following:

Notes to Consolidated

Financial Statements

The acquisition was financed

by a 10 -year € 120 million (approximately $ 117 million) bank loan which bears interest at one-month Euribor plus 0.75% .

Approximately

€ 80 million of the variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum.

Recent Accounting Pronouncements:

There are no recent accounting

pronouncements issued but not yet adopted that would have a material effect on our consolidated financial statements.

Inventories consist

of the following:

(In thousands)

September 30,

Raw materials and component parts

Finished goods

Value Measurement:

following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized

using the fair value hierarchy.

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

PARFUMS, INC.

Fair Value Measurement:

The following tables present

our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value

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

INTER PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

Fair Value Measurements at June 30, 2022

Notes to Consolidated Financial Statements

Fair Value Measurements at September 30, 2022

Quoted Prices in

Significant Other

Active Markets for

Identical Assets

Significant Other

Short-term investments

Interest rate swaps

Foreign currency forward exchange contracts accounted for

using hedge accounting

Foreign currency forward exchange contracts not accounted for

using hedge accounting

Foreign currency forward exchange contracts

accounted for using hedge accounting

Foreign currency forward exchange contracts not

accounted for using hedge accounting

Total liabilities

1 unchanged sentence

Quoted Prices in

Significant Other

Active Markets for

Identical Assets

Significant Other

Short-term investments

Foreign currency forward exchange contracts accounted for using hedge accounting

Foreign currency forward exchange contracts not accounted for using hedge accounting

Foreign currency forward exchange contracts

accounted for using hedge accounting

Foreign currency forward exchange contracts not

accounted for using hedge accounting

Interest rate swaps

Total liabilities

carrying amount of cash and cash equivalents including money market funds, short-term investments, accounts receivable, other

receivables, cash held in escrow, accounts payable and accrued expenses approximate fair value due to the short terms to maturity

of these instruments.

carrying amount of loans payable approximates fair value as the interest rates on the Company’s indebtedness approximate

current market rates.

The fair value of the Company’s long-term debt was estimated based on the current rates offered to

companies for debt with the same remaining maturities and is approximately equal to its carrying value.

PARFUMS, INC.

The carrying amount of cash and

cash equivalents including money market funds, short-term investments, accounts receivable, other receivables, cash held in escrow,

accounts payable and accrued expenses approximate fair value due to the short terms to maturity of these instruments.

The carrying amount of loans

payable approximates fair value as the interest rates on the Company’s indebtedness approximate current market rates.

fair value of the Company’s long-term debt was estimated based on the current rates offered to companies for debt with the

same remaining maturities and is approximately equal to its carrying value.

INTER PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

currency forward exchange contracts are valued based on quotations from financial institutions and the value of interest rate

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

Financial Instruments:

Company enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign

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

Before entering

into a derivative transaction for hedging purposes, it is determined that a high degree of initial effectiveness exists between

the change in value of the hedged item and the change in the value of the derivative instrument from movement in exchange rates.

High effectiveness means that the change in the cash flows of the derivative instrument will effectively offset the change in

the cash flows of the hedged item.

The effectiveness of each hedged item is measured throughout the hedged period and is based

on the dollar offset methodology and excludes the portion of the fair value of the foreign currency forward exchange contract

attributable to the change in spot-forward difference which is reported in current period earnings.

Any hedge ineffectiveness

is also recognized as a gain or loss on foreign currency in the income statement.

For hedge contracts that are no longer deemed

highly effective, hedge accounting is discontinued, and gains and losses accumulated in other comprehensive income are reclassified

If it is probable that the forecasted transaction will no longer occur, then any gains or losses accumulated

in other comprehensive income are reclassified to current-period earnings.

connection with the April 2021 acquisition of the office building complex in Paris, € 120 million of the purchase price was

financed through a 10 -year term loan.

The Company entered into interest rate swap contracts related to € 80 million of the

loan, effectively exchanging the variable interest rate to a variable rate not to exceed 2 %.

This derivative instrument is recorded

at fair value and changes in fair value are reflected in the accompanying consolidated statements of income.

and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives

not designated as hedges are included in (gain) loss on foreign currency on the accompanying income statements.

Such gains and

losses were immaterial for both the six months ended June 30, 2022 and 2021.

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

The valuation

of interest rate swaps is included in other assets on the accompanying balance sheets.

The valuation of foreign currency forward

exchange contracts at June 30, 2022, resulted in a net liability and is included in accrued expenses on the accompanying balance

June 30, 2022, we had foreign currency contracts in the form of forward exchange contracts in the amount of approximately U.S.

$ 103.0 million and GB £ 3.0 million, which all have maturities of less than one year.

PARFUMS, INC.

Notes to Consolidated Financial Statements

Foreign currency forward exchange

contracts are valued based on quotations from financial institutions and the value of interest rate swaps are the discounted net

present value of the swaps using third party quotes from financial institutions.

Derivative Financial Instruments:

The Company enters into foreign

currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and occasionally

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

Before entering into a derivative transaction

for hedging purposes, it is determined that a high degree of initial effectiveness exists between the change in value of the hedged

item and the change in the value of the derivative instrument from movement in exchange rates.

High effectiveness means that the

change in the cash flows of the derivative instrument will effectively offset the change in the cash flows of the hedged item.

The effectiveness of each hedged item is measured throughout the hedged period and is based on the dollar offset methodology and

excludes the portion of the fair value of the foreign currency forward exchange contract attributable to the change in spot-forward

difference which is reported in current period earnings.

Any hedge ineffectiveness is also recognized as a gain or loss on foreign

currency in the income statement.

For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued,

and gains and losses accumulated in other comprehensive income are reclassified to earnings.

If it is probable that the forecasted

transaction will no longer occur, then any gains or losses accumulated in other comprehensive income are reclassified to current-period

In connection with the April

2021 acquisition of the office building complex in Paris, € 120 million of the purchase price was financed through a 10 -year

The Company entered into interest rate swap contracts related to € 80 million of the loan, effectively exchanging

the variable interest rate to a variable rate not to exceed 2 %.

This derivative instrument is recorded at fair value and changes

in fair value are reflected in the accompanying consolidated statements of income.

Gains and losses in derivatives

designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges

are included in (gain) loss on foreign currency on the accompanying income statements.

Such gains and losses were immaterial for

both the nine months ended September 30, 2022 and 2021.

All derivative instruments are

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

The valuation of interest rate swaps is included

in other assets on the accompanying balance sheets.

The valuation of foreign currency forward exchange contracts at September 30,

2022, resulted in a net liability and is included in accrued expenses on the accompanying balance sheet.

At September 30, 2022, we had

foreign currency contracts in the form of forward exchange contracts in the amount of approximately U.S.

$ 90.0 million, GB

£ 2.0 million and JPY ¥ 50.0 million, which all have maturities of less than one year.

INTER 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

operating leases.

The Company currently has no material financing leases.

The Company determines if an arrangement is a lease

at inception.

Operating lease assets and obligations are recognized at the lease commencement date based on the present value

of lease payments over the lease term.

determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to

extend or terminate, depending on the lease.

Renewal, termination or purchase options affect the lease term used for determining

lease asset value only if the option is reasonably certain to be exercised.

The Company generally uses its incremental borrowing

rate based on information available at the lease commencement date for the location in which the lease is held in determining

the present value of lease payments.

of June 30, 2022, the weighted average remaining lease term was 6.3 years and the weighted average discount rate used to determine

the operating lease liability was 2.6 %.

Rental expense related to operating leases was $ 1.3 million and $ 3.1 million for the three

and six months ended June 30, 2022, respectively, as compared to $ 3.1 million and $ 4.9 million for the corresponding periods of

the prior year.

Operating lease payments included in operating cash flows totaled $ 2.8 million and $ 4.6 million for the six months

ended June 30, 2022 and 2021, respectively, and noncash additions to operating lease assets totaled $ 0.5 million and $ 13.8 million

for the six months ended June 30, 2022 and 2021, respectively.

Company maintains a stock option program for key employees, executives and directors.

The plans, all of which have been approved

by shareholder vote, provide for the granting of both nonqualified and incentive options.

Options granted under the plans typically

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

The fair value of shares vested during the six months ended June

30, 2022 and 2021 aggregated $ 0.10 million and $ 0.09 million, respectively.

Compensation cost, net of forfeitures, is recognized

on a straight-line basis over the requisite service period for the entire award.

Notes to Consolidated Financial Statements

The Company leases its offices

and warehouses, vehicles, and certain office equipment, substantially all of which are classified as operating leases.

currently has no material financing leases.

The Company determines if an arrangement is a lease at inception.

Operating lease assets

and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.

In determining lease asset value,

the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on

Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option

is reasonably certain to be exercised.

The Company generally uses its incremental borrowing rate based on information available

at the lease commencement date for the location in which the lease is held in determining the present value of lease payments.

As of September 30, 2022, 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 $ 1.2 million and $ 4.3 million for the three and nine months

ended September 30, 2022, respectively, as compared to $ 1.9 million and $ 6.8 million for the corresponding periods of the prior

Operating lease payments included in operating cash flows totaled $ 3.9 million and $ 6.2 million for the nine months ended

September 30, 2022 and 2021, respectively, and noncash additions to operating lease assets totaled $ 0.5 million and $ 14.0 million

for the nine months ended September 30, 2022 and 2021, respectively.

Share-Based Payments:

The Company maintains a stock

option program for key employees, executives and directors.

The plans, all of which have been approved by shareholder vote, provide

for the granting of both nonqualified and incentive options.

Options granted under the plans typically have a six-year term and

vest over a four to five -year period.

The fair value of shares vested during the nine months ended September 30, 2022 and 2021

aggregated $ 0.11 million and $ 0.09 million, respectively.

Compensation cost, net of forfeitures, is recognized on a straight-line

basis over the requisite service period for the entire award.

Forfeitures are estimated based on historic trends.

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 six months ended June 30, 2022:

It is generally

our policy to issue new shares upon exercise of stock options.

The following table sets forth

information with respect to nonvested options for the nine months ended September 30, 2022:

Number of Shares

Weighted Average Grant-Date Fair Value

Weighted Average

Grant-Date Fair Value

Nonvested options – beginning of period

2 unchanged sentences

Nonvested options – end of period

PARFUMS, INC.

INTER PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

payment expense decreased income before income taxes by $ 1.22 million and $ 1.88 million for the three and six months ended June

Notes to Consolidated Financial Statements

Share-based payment expense decreased

income before income taxes by $ 0.47 million and $ 2.35 million for the three and nine months ended September 30, 2022, respectively,

as compared to $ 0.71 million and $ 2.16 million for the corresponding periods of the prior year.

Share-based payment expense decreased

income attributable to Inter Parfums, Inc.

by $ 0.34 million and $ 1.52 million for the three and nine months ended September 30,

2022, respectively, as compared to $ 0.48 million and $ 1.42 million for the corresponding periods of the prior year.

payment expense decreased income attributable to Inter Parfums, Inc.

by $ 0.74 million and $ 1.18 million for the three and six

months ended June 30, 2022, respectively, as compared to $ 0.46 million and $ 0.94 million for the corresponding periods of the

following table summarizes stock option information as of June 30, 2022:

The following table summarizes

stock option information as of September 30, 2022:

Weighted Average Exercise Price

2 unchanged sentences

Options exercised

Outstanding at June 30, 2022

Outstanding at September 30, 2022

Options exercisable

Options available for future grants

of June 30, 2022, the weighted average remaining contractual life of options outstanding is 2.26 years ( 1.87 years for options

exercisable);

the aggregate intrinsic value of options outstanding and options exercisable is $ 7.8 million and $ 6.4 million, respectively;

and unrecognized compensation cost related to stock options outstanding aggregated $ 2.2 million.

proceeds, tax benefits and intrinsic value related to stock options exercised during the six months ended June 30, 2022 and 2021

were as follows:

As of September 30, 2022, the

weighted average remaining contractual life of options outstanding is 2.12 years ( 1.76 years for options exercisable);

the aggregate

intrinsic value of options outstanding and options exercisable is $ 7.8 million and $ 5.9 million, respectively;

and unrecognized

compensation cost related to stock options outstanding aggregated $ 1.9 million.

Cash proceeds, tax benefits and

intrinsic value related to stock options exercised during the nine months ended September 30, 2022 and 2021 were as follows:

(In thousands)

September 30,

Cash proceeds from stock options exercised

Intrinsic value of stock options exercised

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

during the six months ended June 30, 2021 were $11.35

per share on the date of grant using the Black-Scholes option pricing model to calculate the fair value of options granted.

were no options granted during the six months ended June 30, 2022.

The assumptions used in the Black-Scholes pricing model for

the period ended June 30, 2021 is set forth in the following table:

The weighted average fair values

of the options granted by Inter Parfums, Inc.

during the nine months ended September 30, 2021 were $11.35 per share on the date

of grant using the Black-Scholes option pricing model to calculate the fair value of options granted.

There were no options granted

during the nine months ended September 30, 2022.

The assumptions used in the Black-Scholes pricing model for the period ended September

30, 2021 is set forth in the following table:

September 30,

Weighted average expected stock-price volatility

2 unchanged sentences

Weighted average dividend yield

PARFUMS, INC.

INTER PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

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

The expected term of the option is estimated

based on historic data.

Notes to Consolidated Financial Statements

Expected volatility is estimated

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

The expected term of the option is estimated based on historic

The risk-free rate is based on the U.S.

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 continues to increase.

December 2018, Interparfums SA 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 corporate performance conditions were met and therefore in June 2022, 211,955 shares, adjusted for stock splits, were distributed.

The aggregate cost of the grant of approximately $ 4.8 million was recognized as compensation cost on a straight-line basis over

the requisite three-year service period.

March 2022, Interparfums SA approved an additional plan to grant an aggregate of 88,400 shares to all Interparfums SA employees

and corporate officers having more than six months of employment at grant date, subject to certain corporate performance conditions.

The shares, subject to adjustment for stock splits, will be distributed in June 2025 and will follow the same guidelines as the

December 2018 plan.

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 estimated number of shares to be distributed of 67,372 has been determined taking into account

employee turnover.

The aggregate cost of the grant of approximately $ 3.4 million will be recognized as compensation cost on a

straight-line basis over the requisite three and a quarter year service period.

to the December 2018 plan, in order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distributed

or to be distributed pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums

During the six months ended June 30, 2022, the Company acquired 63,281 shares at an aggregate cost of $ 3.1 million.

share purchases and issuances have been classified as equity transactions on the accompanying balance sheet.

PARFUMS, INC.

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 continues to increase.

In December 2018, Interparfums

SA 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 corporate

performance conditions were met and therefore in June 2022, 211,955 shares, adjusted for stock splits, were distributed.

The aggregate

cost of the grant of approximately $ 4.8 million was recognized as compensation cost on a straight-line basis over the requisite

three-year service period.

In March 2022, Interparfums SA

approved an additional plan to grant an aggregate of 88,400 shares to all Interparfums SA employees and corporate officers having

more than six months of employment at grant date, subject to certain corporate performance conditions.

The shares, subject to adjustment

for stock splits, will be distributed in June 2025 and will follow the same guidelines as the December 2018 plan.

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 estimated number of shares to be distributed of 66,905 has been determined taking into account employee turnover.

The aggregate

cost of the grant of approximately $ 3.2 million will be recognized as compensation cost on a straight-line basis over the requisite

three and a quarter year service period.

Similar to the December 2018

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

pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA.

the nine months ended September 30, 2022, the Company acquired 63,281 shares at an aggregate cost of $ 3.0 million.

All share purchases and issuances

have been classified as equity transactions on the accompanying balance sheet.

INTER PARFUMS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

Income Attributable to Inter Parfums, Inc.

Notes to Consolidated Financial Statements

Net Income Attributable to Inter Parfums, Inc.

Common Shareholders:

income attributable to Inter Parfums, Inc.

per common share (“basic EPS”) is computed by dividing net income attributable

to Inter Parfums, Inc.

Net income attributable to

Inter Parfums, Inc.

per common share (“basic EPS”) is computed by dividing net income attributable to Inter

Parfums, Inc.

by the weighted average number of shares outstanding.

Net income attributable to Inter Parfums, Inc.

per share assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding,

share assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding,

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:

The reconciliation between the

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

Three months ended

Six months ended

Nine months ended

(In thousands)

attributable to Inter Parfums, Inc.

September 30,

Net income attributable to Inter Parfums, Inc.

Weighted average shares

4 unchanged sentences

Net income attributable to Inter Parfums, Inc.

shareholders:

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

to purchase 0.15 million shares of common stock for both three and six months ended June 30, 2022, as compared to 0.18 and 0.26

million shares of common stock for the three and six months ended June 30, 2021, respectively.

common shareholders:

Not included in the above computations

are the effect of antidilutive potential common shares which consist of outstanding options to purchase 0.15 million shares of

common stock for both three and nine months ended September 30, 2022, as compared to 0.17 and 0.23 million shares of common stock

for the three and nine months ended September 30, 2021, respectively.

INTER PARFUMS, INC.

11 unchanged sentences

Three months ended

Six months ended

September 30,

Nine months ended

September 30,

United States

1 unchanged sentence

United States

September 30,

Total Assets:

3 unchanged sentences

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