What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-09 · 303 added, 316 removed, 194 unchanged (76% of the section changed)

25 unchanged sentences

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

approximately 70% and 79% of net sales for the six months ended June 30, 2022 and 2021, respectively.

approximately 70% and 79% of net sales for the nine months ended September 30, 2022 and 2021, respectively.

We have built a portfolio

3 unchanged sentences

also market fragrance and fragrance related products.

United States operations represented 30% and 21% of net sales for the six

months ended June 30, 2022 and 2021, respectively.

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

with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan, DKNY, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar

de la Renta and Ungaro brands.

United States operations represented 30% and 21% of net sales for the nine

months ended September 30, 2022 and 2021, respectively.

These fragrance products are sold primarily pursuant to license or other

agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan, DKNY, Ferragamo, Graff, GUESS, Hollister,

MCM, Oscar de la Renta and Ungaro brands.

Substantially all of our

3 unchanged sentences

Choo and GUESS brand names.

INTER PARFUMS,

INTER PARFUMS, INC.

AND SUBSIDIARIES

1 unchanged sentence

sales, product sales for the Company’s largest brands were as follows:

Nine Months Ended

September 30,

Quarterly sales fluctuations are influenced

21 unchanged sentences

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.

We believe we have a well diversified and strong brand portfolio

with global reach and potential.

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

and channels to grow market share.

Our reported net sales are impacted by changes

12 unchanged sentences

contracts to reduce the effects of fluctuating foreign currency exchange rates.

INTER PARFUMS,

INTER PARFUMS, INC.

AND SUBSIDIARIES

10 unchanged sentences

or are being paid in advance.

For the six months ended June 30, 2022,

For the nine months ended September 30,

2022, the activities related to Russia and Ukraine did not have a material impact on our consolidated financial statements.

7 unchanged sentences

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.

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.

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.

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.

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.

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.

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 of 2022.

INTER PARFUMS,

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.

Therefore, 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.

INTER PARFUMS, INC.

AND SUBSIDIARIES

43 unchanged sentences

under these brands in 2024.

INTER PARFUMS,

INTER PARFUMS, INC.

AND SUBSIDIARIES

Land and Building Acquisition - Future

Headquarters in Paris

Land and Building Acquisition –

Future Headquarters in Paris

In April 2021, Interparfums SA, our 73%

6 unchanged sentences

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.

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.

3 unchanged sentences

Approximately $3.4 million

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

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

The acquisition was financed by a 10-year

6 unchanged sentences

Results of Operations

Three and Six Months Ended June 30, 2022 as Compared

to the Three and Six Months Ended June 30, 2021

Three and Nine Months Ended September 30, 2022 as

Compared to the Three and Nine Months Ended September 30, 2021

(in millions)

months ended June 30,

Three months ended

September 30,

Nine months ended

September 30,

European based product sales

2 unchanged sentences

AND SUBSIDIARIES

sales for the three months ended June 30, 2022, increased 18% from the three months ended June 30, 2021.

At comparable foreign

currency exchange rates, net sales increased 24% from the second quarter of 2021.

The average dollar/euro exchange rate for the

current second quarter was 1.06 compared to 1.20 in the second quarter of 2021 while for the first half of 2022, the average dollar/euro

exchange rate was 1.09 compared to 1.20 in the first half of 2021.

Net sales for the six months ended June 30, 2022, increased

22% as compared to the first half of 2021.

At comparable foreign currency exchange rates, net sales increased 27% from the first

half of 2021.

supply chain disruptions, inflation, lockdowns, transportation issues, the strength of the dollar, sanctions, the slow recovery

of international travel, logistics difficulties in the U.S.

caused by a change in shipping software by our local partner, and

the war in Eastern Europe, 2022 is proving to be an exceptionally strong year for us on both sides of the Atlantic.

the growth trend of the first quarter of 2022, second quarter sales by our U.S.

operations were up substantially with comparable

quarterly gains by GUESS, Abercrombie & Fitch, Oscar de la Renta, and MCM, increasing 39%, 40%, 35%, and 56%, respectively.

Incremental sales of Ferragamo fragrances also factored into the increase.

Of note, Uomo by GUESS was the only major launch

during the second quarter;

legacy scents and flankers fueled the gains by the other brands.

Among the new flankers which launched

in the second quarter were Authentic Moment by Abercrombie & Fitch, and a collector’s edition of our MCM scent.

surge in the dollar masked the gains by our leading brands within our European operations.

Montblanc, for example, grew net sales

by 6% in dollars but 20% in euro.

Similarly, Jimmy Choo brand sales rose 4% in dollars and 18% in euro, while Coach sales increased

13% in dollars and 28% in euros.

In fact, in total, our European operations generated sales growth of 17% in euro but only 3%

In the second quarter, we launched the Moncler duo, Jimmy Choo Man Aqua and Lanvin Mon Éclat ,

along with the rollouts of Montblanc Legend Red , Kate Spade Sparkle and Coach Wild Rose which debuted in

the first quarter.

first half of 2022 started on a strong note and we look forward to executing our plans for the remainder of the year.

are in high demand in a robust environment for the fragrance industry.

We have a number of new product launches in the second

half of the year, including Cosmic Sky for Anna Sui, a new Away flanker for Abercrombie & Fitch, and Ferragamo

Bright Leather for U.S.

In addition, during the second half of the year, we will generate our first ever sales

of Donna Karan and DKNY fragrance.

For European operations, a new Coach men’s line will debut along with an extension of

the Jimmy Choo I Want Choo line.

Also planned is a new men’s line for Boucheron, two Rochas flankers for Byzance

and Eau de Rochas , and a new member of the Collection Extraordinaire by Van Cleef & Arpels.

In sum, 2022 has all

the earmarks of another superb year as the growth catalysts currently far outweigh the headwinds.

Net sales for the three months ended September 30, 2022, increased 7% from the three months ended September 30, 2021.

At comparable foreign currency exchange rates, net sales increased 12% from the third quarter of 2021 of which 9% is related to new brands.

The average dollar/euro exchange rate for the current third quarter was 1.01 compared to 1.18 in the third quarter of 2021, while for the nine months ended September 2022 the average dollar/euro exchange rate was 1.06 compared to 1.19 in the nine months ended September 2021.

Net sales for the nine months ended September 30, 2022, increased 16% as compared to the nine months ended September 2021.

At comparable foreign currency exchange rates, net sales increased 21% from the nine months ended September 2021 of which 8% is related to new brands.

Despite supply chain disruptions, inflation,

lockdowns, transportation issues, the strength of the dollar, sanctions, the slow recovery of international travel, logistics difficulties

caused by a change in shipping software by our local partner in the first half of this year, and the war in Eastern

Europe, 2022 is proving to be an exceptionally strong year for us on both sides of the Atlantic.

operations growth was

substantially due to the incremental sales of Ferragamo, Donna Karan and DKNY.

New flankers which launched this year includes Away

by Abercrombie & Fitch, and Wave X by Hollister.

For the three months ended September 30,

2022, the surge in the dollar masked the gains by our leading brands within our European operations.

Montblanc, for example, net

sales declined by 6% in dollars but grew 10% in euro.

Similarly, Jimmy Choo brand sales rose 12% in dollars and 32% in euro, while

Coach sales decreased 12% in dollars and grew 3% in euros.

In fact, in total, our European operations generated sales growth of

12% in euro but decreased 4% in dollars.

This year, we launched Coach Open Road and Jimmy Choo I Want Choo Forever, along

with the continued rollouts of the Moncler duo and Montblanc Legend Red , Jimmy Choo Man Aqua , Lanvin Mon Éclat ,

Kate Spade Sparkle and Coach Wild Rose .

The favorable trends in the first half continued into the third quarter and we look forward to executing

our plans for the remainder of the year.

Our brands are in high demand in a robust environment for the fragrance industry.

a number of new product launches in the fourth quarter of the year, including Cosmic Sky for Anna Sui, Ferragamo AMO

Oriental Wood and Signorina Limited Edition for U.S.

In addition, during the fourth quarter of the year,

we will continue the distribution of existing Donna Karan and DKNY fragrances.

For European operations, Kate Spade Cherie and

a new member of the Collection Extraordinaire by Van Cleef & Arpels will debut.

In sum, 2022 has all the earmarks

of another superb year as the growth catalysts currently far outweigh the headwinds.

PARFUMS, INC.

AND SUBSIDIARIES

Net Sales to Customers by Region

Six months ended June 30,

(In millions)

North America

Western Europe

Central and South America

Eastern Europe

distribution subsidiary for European based products encountered shipping related issues following a change in the distribution

software by its logistics partner.

Although those issues are now largely resolved, U.S.

sales of European brands were negatively

impacted in the first half.

As a result, sales in our largest market, North America, rose only 8% as compared to Western Europe

and Asia where comparable sales increased 40% and 39%, respectively.

Our sales in the Middle East, and Central and South America,

were also robust, up 31% and 35%, respectively.

Gross Profit margin

Three months ended

Six months ended

Sales to Customers by Region

months ended September 30,

and South America

distribution subsidiary

for European based products had encountered shipping related issues following a change in the distribution software by its logistics

partner in the first half of 2022.

Although those issues have been resolved, U.S.

sales of European brands were negatively impacted.

As a result, sales in our largest market, North America, rose only 4% as compared to Western Europe and Asia where comparable sales

increased 34% and 23%, respectively.

Our sales in the Middle East, and Central and South America, were also robust, up 41% and

28%, respectively.

Only sales in Eastern Europe declined owing to the war in Ukraine.

Profit margin

(in millions)

European operations

Cost of sales

Gross margin as a % of net sales

United States operations

margin as a % of net sales

States operations

Cost of sales

Gross margin as a % of net sales

European based operations, gross profit margin as a percentage of net sales was 66.9% and 66.8% for the three and six months ended

June 30, 2022, respectively, as compared to 66.8% and 66.1% for the corresponding periods of the prior year.

We carefully monitor

movements in foreign currency exchange rates as almost 50% of our European based operations net sales is denominated in U.S.

while most of our costs are incurred in euro.

margin as a % of net sales

For European based operations, gross profit margin as a percentage of net sales was 69.5% and 67.8% for

the three and nine months ended September 30, 2022, respectively, as compared to 66.6% and 66.3% for the corresponding periods

of the prior year.

We carefully monitor movements in foreign currency exchange rates as almost 50% 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 U.S.

dollar has a positive effect on our gross margin while a weak U.S.

dollar has a negative effect.

The average dollar/euro exchange rate was 1.09 in the 2022 second quarter

compared to 1.20 in the second quarter of 2021.

The margin gains in 2022 are primarily the result of the stronger U.S.

in 2022, however increased transportation and component costs mitigated much of the exchange rate benefit.

The average dollar/euro exchange

rate was 1.01 in the 2022 third quarter compared to 1.18 in the third quarter of 2021.

The margin gains in 2022 are primarily the

result of the stronger U.S.

Our pricing actions as well as favorable mix, resulting from less giftset sales compared to

the prior year, also added to our gross margin gains, however, increased

transportation and component costs offset much of those benefits.

previously mentioned, supply chain disruptions affecting the procurement of components, the ability to transport goods, and related

cost increases have and are expected to continue to have a negative impact on sales and gross margin.

While we have been addressing

these issues and have implemented processes to mitigate the impact, prolonged disruption could have a material negative effect

on our sales and gross margin.

We have been addressing

these issues and have implemented processes to mitigate the potential impact.

PARFUMS, INC.

AND SUBSIDIARIES

United States operations, gross profit margin was 54.3% and 54.1% for the three and six months ended June 30, 2022, respectively,

as compared to 53.3% and 53.2% for the corresponding periods of the prior year.

The increase in sales in the first half of 2022,

allowed us to better absorb fixed expenses such as depreciation and point of sale expenses, as compared to the corresponding period

of the prior year.

we do not bill customers for shipping and handling costs, and such costs, which aggregated $2.8 million and $5.5 million for the

three and six months ended June 30, 2022, respectively, as compared to $2.0 million and $3.8 million for the corresponding periods

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

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

cost of goods sold.

For United States operations, gross profit margin was 53.8% and 54.0% for the three and nine months ended

September 30, 2022, respectively, as compared to 53.1% and 53.2% for the corresponding periods of the prior year.

in sales for the nine months ended September 30, 2022, as compared to the corresponding period of the prior year, allowed us to

better absorb fixed expenses such as depreciation and

point of sale expenses, and we also benefited from favorable giftset mix.

we do not bill customers for shipping and handling costs, and such costs, which aggregated $5.5 million and $11.0 million for

the three and nine months ended September 30, 2022, respectively, as compared to $3.3 million and $7.1 million for the corresponding

periods of the prior year, are included in selling, general and administrative expenses in the consolidated statements of income.

As such, our Company’s gross profit may not be comparable to other companies, which may include these expenses as a component

of cost of goods sold.

general and administrative expenses

Three months ended

Six months ended

(In millions)

European Operations

Selling, general and administrative expenses

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

United States Operations

Selling, general and administrative expenses

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

European operations, selling, general and administrative expenses increased 11.1% and 13.4% for the three and six months ended

June 30, 2022 as compared to the corresponding period of the prior year, and represented 47.4% and 42.4% of net sales for the

three and six months ended June 30, 2022, respectively, as compared to 44.0% and 40.6% for the three and six months ended June

30, 2021, respectively.

For United States operations, selling, general and administrative expenses increased 76.5% and 79.9% for

the three and six months ended June 30, 2022, as compared to the corresponding period of the prior year, and represented 37.8%

and 39.5% of net sales for the three and six months ended June 30, 2022, respectively, as compared to 36.2% and 37.9% for the

three and six months ended June 30, 2021, respectively.

As discussed in more detail below, the increased selling, general and

administrative expenses as a percent of net sales are primarily the result of increases in promotion and advertising expenditures.

months ended,

general and administrative expenses

general and administrative expenses as a percent of net sales

States Operations

general and administrative expenses

general and administrative expenses as a percent of net sales

For European operations, selling, general and administrative expenses increased 4.4% and 10.0% for the

three and nine months ended September 30, 2022, as compared to the corresponding period of the prior year, and represented 42.1%

and 42.3% of net sales for the three and nine months ended September 30, 2022, respectively, as compared to 38.8% and 39.9% for

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

United States operations, selling, general and administrative expenses increased 71.1% and 76.5% for the three and nine months

ended September 30, 2022, as compared to the corresponding period of the prior year, and represented 41.4% and 40.2% of net sales

for the three and nine months ended September 30, 2022, respectively, as compared to 35.1% and 36.8% for the three and nine months

ended September 30, 2021, respectively.

As discussed in more detail below, the increased selling, general and administrative expenses

as a percent of net sales are primarily the result of increases in promotion and advertising expenditures.

Additionally, as the

US based operations have been growing, expenses related to salaries and benefits has grown more rapidly as we build the organization

to support the growth.

and advertising included in selling, general and administrative expenses aggregated $44.8

million and $80.1 million for the three and six months ended June 30, 2022, respectively, as compared to $33.2 million and $55.0

million for the corresponding periods of the prior year.

Promotion and advertising represented 18.8% and 16.2% of net sales for

the three and six months ended June 30, 2022, respectively, as compared to 16.0% and 13.5% for the corresponding periods

of the prior year.

Throughout 2021, sales rebounded far more rapidly than originally anticipated causing us to play catchup

with promotional and adverting programs throughout the year.

Promotion and advertising are integral parts of our industry, and

we continue to invest heavily to support new product launches and to build brand awareness.

We believe that our promotion and

advertising efforts have had a beneficial effect on online net sales.

All of our brands have benefitted from newly launched and

enhanced e-commerce sites in existing markets in collaboration with our retail customers on their e-commerce sites.

We also continue

to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience.

We anticipate

that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales, which is in line

with pre-COVID historical averages.

million and $124.9 million for the three and nine months ended September 30, 2022, respectively, as compared to $40.3 million

and $95.3 million for the corresponding periods of the prior year.

Promotion and advertising represented 16.0% and 16.1% of net

sales for the three and nine months ended September 30, 2022, respectively, as compared to 15.3% and 14.2% for the corresponding

periods of the prior year.

Throughout 2021, sales rebounded far more rapidly than originally anticipated causing us to

play catchup with promotional and adverting programs throughout the year.

Promotion and advertising are integral parts of our

industry, and we continue to invest heavily to support new product launches and to build brand awareness.

We believe that our

promotion and advertising efforts have had a beneficial effect on online net sales.

All of our brands have benefitted from newly

launched and enhanced e-commerce sites in existing markets in collaboration with our retail customers on their e-commerce sites.

We also continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience.

We anticipate that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales,

which is in line with pre-COVID historical averages.

PARFUMS, INC.

AND SUBSIDIARIES

expense included in selling, general and administrative expenses aggregated $18.9 million

and $38.3 million for the three and six months ended June 30, 2022, respectively, as compared to $16.2 million and $31.5 million

for the corresponding periods of the prior year.

Royalty expense represented 7.7 % of net sales for both the three and six months

ended June 30, 2022, as compared to 7.8% of net sales for the corresponding periods of the prior year.

Royalty expense included in selling, general and administrative expenses aggregated $23.1

million and $61.4 million for the three and nine months ended September 30, 2022, respectively, as compared to $20.5 million and

$52.0 million for the corresponding periods of the prior year.

Royalty expense represented 8.3% and 7.9 % of net sales for the

three and nine months ended September 30, 2022, as compared to 7.8% of net sales for both the corresponding periods of the prior

Royalty expense as a percentage of net sales increased in 2022 as the mix of sales with a royalty basis has increased year

from Operations

a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our

operating margins aggregated 18.6% and 21.5% for the three and six months ended June 30, 2022, respectively, as compared to 21.5%

and 22.8% for the corresponding periods of the prior year.

operating margins aggregated 23.0% and 22.1% for the three and nine months ended September 30, 2022, respectively, as compared

to 25.7% and 24.0% for the corresponding periods of the prior year.

Income and Expense

Traditionally,

interest expense was primarily related to the financing of brand and licensing acquisitions.

However, in April 2021, we completed

the acquisition of the headquarters of Interparfums SA.

The acquisition was financed by a 10-year €120 million (approximately

$125 million) bank loan which bears interest at one-month Euribor plus 0.75%.

Also in 2021, approximately €80 million of

the variable rate debt was swapped for variable rate debt with a maximum interest rate of 2%.

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

Gains and losses on foreign currency transactions have not been significant.

Almost 50% of net sales of our European

operations are denominated in U.S.

and investment (income) loss represents interest earned on cash and cash equivalents and short-term investments.

As of June 30,

2022, short-term investments include approximately $16.8 million of marketable equity securities of other companies in the luxury

goods sector.

Interest and investment (income) loss for the three and six months ended June 30, 2022, includes approximately $2.5

million and $5.9 million of losses on such marketable equity securities.

INTER PARFUMS, INC.

Traditionally, interest

expense was primarily related to the financing of brand and licensing acquisitions.

However, in April 2021, we completed the acquisition

of the headquarters of Interparfums SA.

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%.

Also in 2021, approximately €80 million of the variable rate

debt was swapped for variable rate debt with a maximum interest rate of 2%.

We 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.

Gains and losses on foreign currency

transactions have not been significant.

Almost 50% of net sales of our European operations are denominated in U.S.

Interest and investment

income for the three months ended September 30, 2022, includes a gain of $2.3 million, as compared to a loss of $0.1 million for

the corresponding period of the prior year, resulting from the interest rate swap.

For the nine months ended September 30, 2022,

the Company recognized a gain of $6.4 million related to the interest rate swap which was largely offset by losses of $5.3 million

on marketable equity securities during the same period.

PARFUMS, INC.

AND SUBSIDIARIES

Our consolidated effective tax rate was

24% for the six months ended June 30, 2022, as compared to 30.0% for the corresponding periods of the prior year.

The effective tax rate for European operations

was 25% for the six months ended June 30, 2022, as compared to 32% for the corresponding period of the prior year.

As previously

disclosed, a global settlement agreement was reached with the French Tax Authorities in June 2021, whereby Interparfums SA agreed

to pay €2.5 million (approximately $3.0 million) relating to activities between Interparfums SA and its wholly owned subsidiary,

The balance of the decline is primarily the result of a decrease in the French corporate income tax rate.

consolidated effective tax rate was 23% for the nine months ended September 30, 2022, as compared to 28% for the corresponding

periods of the prior year.

effective tax rate for European operations was 25% for the nine months ended September 30, 2022, as compared to 30% for the corresponding

period of the prior year.

As previously disclosed, a global settlement agreement was reached with the French Tax Authorities in

June 2021, whereby Interparfums SA agreed to pay €2.5 million (approximately $3.0 million) relating to activities between

Interparfums SA and its wholly owned subsidiary, Inter Parfums (Suisse) Sarl.

The balance of the decline is primarily the result of a decrease in

the French corporate income tax rate from 28% to 25%.

Our effective tax rate for U.S.

was 22% for the six months ended June 30, 2022, as compared to 19% for the corresponding period of the prior year.

Our effective

tax rate differs from the 21% statutory rate due to state and local taxes, offset by benefits received from the exercise of stock

options as well as deductions we are allowed for a portion of our foreign derived intangible income.

The lower effective tax rate

in 2021 is primarily a result of discrete tax items related to benefits received from the exercise of stock options.

Other than as discussed above, we did not

experience any significant changes in tax rates, and none were expected in jurisdictions where we operate.

Three months ended

Six months ended

(In thousands)

Net income European operations

Net income United States operations

operations was 11% for the nine months ended September 30, 2022,

as compared to 17% for the corresponding period of the prior year.

Our effective tax rate differs from the 21% statutory rate due

to state, local and foreign taxes, offset by benefits received from the exercise of stock options as well as deductions we are

allowed for a portion of our foreign derived intangible

Additionally, in the third quarter our U.S.

operations recognized a one-time tax benefit of $2.5 million associated with

the 2021 Salvatore Ferragamo acquisition.

At the time of the acquisition, we had not recognized deferred tax benefits as there

were uncertainties concerning its potential recoverability;

however, as of September 30, 2022, the recoverability is deemed likely.

The lower effective tax rate in 2021 is primarily a result of discrete tax items related to benefits received from the exercise

of stock options.

than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where

PARFUMS, INC.

AND SUBSIDIARIES

September 30,

income European operations

income United States operations

Net income attributable to the noncontrolling interest

Net income attributable to Inter Parfums, Inc.

Net income attributable to European operations

was $24.5 million and $64.3 million for the three and six months ended June 30, 2022, respectively, as compared to $22.9 million

and $55.4 million for the corresponding period of the prior year.

Net income attributable to United States operations was $10.0

million and $16.5 million for the three and six months ended June 30, 2022, respectively, as compared to $6.1 million and $10.3

million for the corresponding period of the prior year.

The significant fluctuations in net income for both European operations

and United States operations are directly related to the previous discussions relating to changes in sales, gross margin, and selling,

general and administrative expenses.

INTER PARFUMS, INC.

income attributable to Inter Parfums, Inc.

income attributable to European operations was $42.4 million and $106.7 million for the three and nine months ended September

30, 2022, respectively, as compared to $41.5 million and $96.8 million for the corresponding period of the prior year.

attributable to United States operations was $10.9 million and $27.4 million for the three and nine months ended September 30,

2022, respectively, as compared to $8.4 million and $18.7 million for the corresponding period of the prior year.

The fluctuations

in net income for both European operations and United States operations are directly related to the previous discussions relating

to changes in sales, gross margin, and selling, general and administrative expenses.

noncontrolling interest arises 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 directly

related to the profitability of our European operations and aggregated 28% of European operations net income for all periods presented.

Net margins attributable to Inter Parfums, Inc.

for the nine months ended September 30, 2022 and 2021 aggregated 13.4% and 13.3%,

respectively.

and Capital Resources

conservative financial tradition has enabled us to amass significant cash balances.

As of September 30, 2022, we had $177 million

in cash, cash equivalents and short-term investments, most of which is held in euro by our European operations and is readily

convertible into U.S.

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.

As of September 30, 2022, short-term investments include approximately

$16.2 million of marketable equity securities.

of September 30, 2022, working capital aggregated $459 million and we had a working capital ratio of 2.9 to 1.

Approximately 77%

of the Company’s total assets are held by European operations, and approximately $146 million of trademarks, licenses and

other intangible assets are also held by European operations.

PARFUMS, INC.

AND SUBSIDIARIES

The noncontrolling interest arises 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 directly related to the profitability of our European

operations and aggregated 28% of European operations net income for all periods presented.

Net margins attributable to Inter Parfums,

for the six months ended June 30, 2022 and 2021 aggregated 12.7% and 12.4%, respectively.

Liquidity and Capital Resources

Our conservative financial tradition has

enabled us to amass significant cash balances.

As of June 30, 2022, we had $196 million in cash, cash equivalents and short-term

investments, most of which is held in euro by our European operations and is readily convertible into U.S.

had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term

As of June 30, 2022, short-term investments include approximately $16.8 million of marketable equity securities.

As of June 30, 2022, working capital aggregated

$445 million and we had a working capital ratio of 2.9 to 1.

Approximately 78% of the Company’s total assets are held by

European operations, and approximately $156 million of trademarks, licenses and other intangible assets are also held by European

The Company is party to a number of license

and other agreements for the use of trademarks and rights in connection with the manufacture and sale of its products expiring

at various dates through 2033.

In connection with certain of these license agreements, the Company is subject to minimum annual

advertising commitments, minimum annual royalties and other commitments.

Financial Statements and Supplementary

Data – Note 12 – Commitments in our 2021 annual report on Form 10-K.

Future advertising commitments are estimated based

on planned future sales for the license terms that were in effect at December 31, 2021, without consideration for potential renewal

periods and do not reflect the fact that our distributors share our advertising obligations.

The Company hopes to continue to benefit

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

we recently reported, 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.

This license took effect on July 1, 2022.

Opportunities

for external growth are regularly 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 used in operating activities aggregated

$28.5 million for the six months ended June 30, 2022, as compared to cash provided by operating activities of $38.1 million

for the corresponding period of the prior year.

For the six months ended June 30, 2022, working capital items used $117.2 million

in cash from operating activities, as compared to $45.3 million in the 2021 period.

Although from a cash flow perspective accounts

receivable is up 30% from year end 2021, the balance is reasonable based on second quarter 2022 record sales levels and reflects

strong collection activity as day’s sales outstanding was 76 days, down slightly from 79 days in the corresponding period

of the prior year.

From a cash flow perspective, inventory levels as of June 30, 2022, increased 41% from year end 2021.

December 31, 2021, although inventories include product needed to support new launches, the overall balance was lower than historic

levels due primarily to supply chain disruptions.

We have been addressing this issue 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 believe that our inventory levels are reasonable to support

our projected sales and new product pipeline.

INTER PARFUMS, INC.

Company is party to a number of license and other agreements for the use of trademarks and rights in connection with the manufacture

and sale of its products expiring at various dates through 2033.

In connection with certain of these license agreements, the Company

is subject to minimum annual advertising commitments, minimum annual royalties and other commitments.

Statements and Supplementary Data – Note 12 – Commitments in our 2021 annual report on Form 10-K.

Future advertising

commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2021, without

consideration for potential renewal periods and do not reflect the fact that our distributors share our advertising obligations.

Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a

proprietary basis or as a licensee.

As we recently reported, 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.

took effect on July 1, 2022.

Opportunities for external growth are regularly 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

Cash used in operating activities aggregated $8.2 million for the nine months ended September

30, 2022, as compared to cash provided by operating activities of $101.3 million for the corresponding period of the prior year.

For the nine months ended September 30, 2022, working capital items used $159.2 million in cash from operating activities, as compared

to $36.8 million in the 2021 period.

Although from a cash flow perspective accounts receivable is up 56% from year end 2021, the

balance is reasonable based on 2022 record sales levels and reflects a combination of high volumes of shipments towards the end

of the third quarter as well as some payment schedules extended going into the holiday season resulting in day’s sales outstanding

increasing to 80 days, up from 70 days in the corresponding period of the prior year.

While the day’s sales outstanding has

increased, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable.

From a cash flow perspective, inventory levels as of September 30, 2022, increased 55% from year end 2021.

As of December 31, 2021,

although inventories include product needed to support new launches, the overall balance was lower than historic levels due primarily

to supply chain disruptions.

We have been addressing this issue by ordering well in advance of need and in larger quantities.

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 believe that our inventory levels are reasonable to support our projected sales and

new product pipeline while not exceeding reasonable levels and creating excess and obsolete liabilities.

flows used in investing activities in 2022 reflect purchases and sales of short-term investments.

These investments include certificates

of deposit with maturities greater than three months.

Approximately $41 million of such certificates of deposit contain penalties

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

business is not capital intensive as we do not own any manufacturing facilities.

On a full year basis, we typically spend approximately

$5.0 million on tools and molds, depending on our new product development calendar.

During the nine months ended September 30,

2022, approximately $23.7 million was added to property costs relating to our new Paris corporate headquarters.

Capital expenditures

also include amounts for office fixtures, computer equipment and industrial equipment needed at our distribution centers.

PARFUMS, INC.

AND SUBSIDIARIES

Cash flows used in investing activities

in 2022 reflect purchases and sales of short-term investments.

These investments include certificates of deposit with maturities

greater than three months.

Approximately $44 million of such 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 typically spend approximately $5.0 million on tools and molds,

depending on our new product development calendar.

During the six months ended June 30, 2022, approximately $24.2 million was added

to property costs relating to our new Paris corporate headquarters.

Capital expenditures also include amounts for office fixtures,

computer equipment and industrial equipment needed at our distribution centers.

Our short-term financing requirements are

expected to be met by available cash on hand at June 30, 2022, and short-term credit lines provided by domestic and foreign banks.

The principal credit facilities for 2022 consist of a $20.0 million unsecured revolving line of credit provided by a domestic commercial

bank and approximately $26 million in credit lines provided by a consortium of international financial institutions.

no short-term borrowings outstanding pursuant to these facilities as of both June 30, 2022 and 2021.

In February 2021, our Board of Directors

authorized an annual dividend of $1.00, payable quarterly.

In February 2022, our Board authorized a 100% increase in the annual

dividend to $2.00 per share.

The next quarterly cash dividend of $0.50 per share is payable on September 30, 2022, to shareholders

of record on September 15, 2022.

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 six months ended June 30, 2022.

short-term financing requirements are expected to be met by available cash on hand at September 30, 2022, and short-term credit

lines provided by domestic and foreign banks.

The principal credit facilities for 2022 consist of a $20.0 million unsecured revolving

line of credit provided by a domestic commercial bank and approximately $26 million in credit lines provided by a consortium of

international financial institutions.

There were no short-term borrowings outstanding pursuant to these facilities as of both

September 30, 2022 and 2021.

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

In February 2022, our Board authorized

a 100% increase in the annual dividend to $2.00 per share.

The next quarterly cash dividend of $0.50 per share is payable on December

30, 2022, to shareholders of record on December 15, 2022.

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.

rates in the U.S.

and foreign countries in which we operate did not have a significant impact on operating results for the nine

months ended September 30, 2022.

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 2. Management’s Discussion and Analysis