INTERPARFUMS INC 10-K

Item 1. Business General Business Development Founded in 1982, we operate in the fragrance business, and manufacture, market and distribute a wide array of prestige fragrance, and fragrance related products. Our worldwide headquarters and the office of our wholly-owned United States subsidiaries, Jean Philippe Fragrances, LLC and Interparfums, USA LLC, are located at 551 Fifth Avenue, New York, New York 10176, and our telephone number is 212.983.2640. We also have wholly-owned subsidiaries in Italy, subsidiary, Interparfums Italia Srl and Hong Kong, Inter Parfums USA Hong Kong Limited. Our consolidated wholly-owned subsidiary, Inter Parfums Holdings, S.A., and its majority owned subsidiary, Interparfums SA, maintain executive offices at 10 rue de Solférino, 75007 Paris, France. Our telephone number in Paris is 331.5377.0000. Interparfums SA is the sole owner of Interparfums Luxury Brands, Inc., a Delaware corporation, for distribution of prestige brands in the United States. Interparfums SA is also the majority owner of Parfums Rochas Spain, SL, a Spanish limited liability company, which specializes in the distribution of Rochas fragrances. In addition, Interparfums SA is also the sole owner of Interparfums (Suisse) Sarl, a company formed to hold and manage certain brand names, and Interparfums Asia Pacific Pte., Ltd., an Asian sales and marketing office. Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “IPAR”. The common shares of our subsidiary, Interparfums SA, are traded on the Euronext. The Securities and Exchange Commission (“SEC”) maintains an internet site at http://www.sec.gov that contains financial reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We maintain our internet website at www.interparfumsinc.com , which is linked to the SEC internet site. You can obtain through our website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, interactive data files, current reports on Form 8-K, beneficial ownership reports (Forms 3, 4 and 5) and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as reasonably practicable after they have been electronically filed with or furnished to the SEC. The following information is qualified in its entirety by and should be read together with the more detailed information and audited financial statements, including the related notes, contained or incorporated by reference in this report. General We operate in the fragrance business and manufacture, market and distribute a wide array of fragrance and fragrance related products. We manage our business in two segments, European based operations and United States based operations. Certain prestige fragrance products are produced and marketed by our European operations through our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext. Our business is not capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components from our suppliers. These components are either received and stored directly at our third-party fillers or received at one of our distribution centers and then, based upon production needs, the components are sent to one of several third party fillers, which manufacture the finished product for us and then deliver them to one of our distribution centers. 1 Our fragrance products focus on prestige brands, each with a devoted following. By concentrating in markets where the brands are best known, we have had many successful product launches. We typically launch new fragrance families for our brands every few years, and more frequently seasonal and limited edition fragrances are introduced as well. The creation and marketing of each product family is intimately linked with the brand’s name, its past and present positioning, customer base and, more generally, the prevailing market atmosphere. Accordingly, we generally study the market for each proposed family of fragrance products for almost a full year before we introduce any new product into the market. This study is intended to define the general position of the fragrance family and more particularly its scent, bottle, packaging and appeal to the buyer. In our opinion, the unity of these four elements of the marketing mix makes for a successful product. As with any business, many aspects of our operations are subject to influences outside our control. We believe we have a strong brand portfolio with global reach and potential. As part of our strategy, we plan to continue to make investments in fast-growing markets and channels to grow market share. We discuss in greater detail risk factors relating to our business in Item 1A of this Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and the reports that we file from time to time with the SEC. European Operations We produce and distribute our fragrance products primarily under license agreements with brand owners, and fragrance product sales through our European operations represented approximately 68% of net sales for 2022. We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lanvin, Moncler, Montblanc, Rochas, S.T. Dupont and Van Cleef & Arpels , whose products are distributed in over 120 countries around the world. European operations will also become the exclusive worldwide licensee for Lacoste fragrances on January 1, 2024. United States Operations Prestige brand fragrance products are also produced and marketed through our United States operations, and represented approximately 32% of net sales for the year ended December 31, 2022. These fragrance products are sold under trademarks owned by us or pursuant to license or other agreements with the owners of brands, which include Abercrombie & Fitch, Anna Sui, Dunhill, Donna Karan, DKNY, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta and Ungaro . Recent Developments Lacoste In December 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted to Interparfums SA for the production and distribution of Lacoste brand perfumes and cosmetics. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license becomes effective in January 2024 and will last for 15 years. Dunhill In April 2022, we announced that the Dunhill fragrance license will expire on September 30, 2023 and will not be renewed. The Company will continue to produce and sell Dunhill fragrances until the license expires and will maintain the right to sell-off remaining Dunhill fragrance inventory for a limited time as is customary in the fragrance industry. 2 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. 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 brand. 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. 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 on July 1, 2022, and we are planning to launch new fragrances under these brands in 2024 . Rochas Fashion Effective January 1, 2021, we entered into a new license agreement modifying our Rochas fashion business model. The new agreement calls for a reduction in royalties to be received. As a result, in the first quarter of 2021, we took a $2.4 million impairment charge on our Rochas fashion trademark. In the fourth quarter of 2022, we again took a $6.8 million impairment charge on the Rochas fashion trademark after an independent expert concluded that the valuation of the trademark was $11.3 million. The new license also contains an option for the licensee to buy-out the Rochas fashion trademarks in June 2025 at its then fair market value. Fragrance Products General We are the owner of the Rochas brand, and the Lanvin brand name and trademark for our class of trade. In addition, we have built a portfolio of licensed prestige brands whereby we produce and distribute our prestige fragrance products under license agreements with brand owners. Under license agreements, we obtain the right to use the brand name, create new fragrances and packaging, determine positioning and distribution, and market and sell the licensed products, in exchange for the payment of royalties. Our rights under license agreements are also generally subject to certain minimum sales requirements and advertising expenditures as are customary in our industry. As a percentage of net sales, product sales for the Company’s largest brands were as follows: Year Ended December 31, 2022 2021 2020 Montblanc 18 % 19 % 21 % Jimmy Choo 18 % 18 % 16 % Coach 15 % 16 % 17 % GUESS 12 % 12 % 11 % 3 Our licenses expire on the following dates: Brand Name Expiration Date Abercrombie & Fitch Extends until either party terminates on 3 years’ notice Anna Sui December 31, 2026, plus one 5-year optional term bebe Stores June 30, 2023 Boucheron December 31, 2025, plus a 5-year optional term if certain sales targets are met Coach June 30, 2026 DKNY December 31, 2032, plus a 5-year optional term if certain sales targets are met Donna Karan December 31, 2032, plus a 5-year optional term if certain sales targets are met Dunhill September 30, 2023 Emanuel Ungaro December 31, 2031, plus a 5-year optional term if certain sales targets are met French Connection December 31, 2027, plus a 10-year optional term if certain sales targets are met Graff December 31, 2026, plus 3 optional 3-year terms if certain sales targets are met GUESS December 31, 2033 Hollister Extends until either party terminates on 3 years’ notice Kate Spade June 30, 2030 Jimmy Choo December 31, 2031 Karl Lagerfeld October 31, 2032 Lacoste* December 31, 2038 MCM December 31, 2030, plus 4 option years Moncler December 31, 2026, plus a 5-year optional term if certain conditions are met Montblanc December 31, 2030 Oscar de la Renta December 31, 2031, plus a 5-year optional term if certain sales targets are met Ferragamo December 31, 2031, plus a 5-year optional term if certain sales targets are met S.T. Dupont December 31, 2023 Van Cleef & Arpels December 31, 2024 *The Lacoste license commences on January 1, 2024. In connection with the acquisition of the Lanvin brand names and trademarks for our class of trade, we granted the seller the right to repurchase the brand names and trademarks on July 1, 2027 for €70 million (approximately $79 million) in accordance with an amendment signed in 2021. In connection with such amendment, we also granted a license to the seller to develop and sell cosmetics other than fragrances. Fragrance Portfolio Abercrombie & Fitch— In 2014, we entered into a worldwide license to create, produce and distribute new fragrances and fragrance related products under the Abercrombie & Fitch brand name. We distribute these fragrances in specialty stores, department stores and duty free shops, and in the U.S., in select Abercrombie & Fitch retail stores. Our initial men’s scent, First Instinct was launched in 2016 followed by a women’s version in 2017. Since that time, we unveiled several new fragrances most notably the Authentic and Away duos as well as brand extensions. 4 Abercrombie & Fitch Co. is a leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids. The iconic Abercrombie & Fitch brand was born in 1892 and aims to make every day feel as exceptional as the start of a long weekend. Anna Sui— In 2011, we entered into an exclusive worldwide fragrance license to create, produce and distribute fragrances and fragrance related products under the Anna Sui brand. Anna Sui is one of New York’s most accomplished fashion designers known for creating contemporary clothing inspired by vintage style that capture the brand’s very sweet feminine girly aspect, combined with a touch of hipness and rock-and-roll. Today, Anna Sui has over 50 boutiques and her collection and products are sold in 300 stores in over 30 countries, but her brand is by far most popular and well received throughout Asia. Over the past decade, we have worked in partnership with Anna Sui and her creative team to build upon the brand’s customer appeal and develop and market a family of fragrances including Fantasia , Sui Dreams and the newest scent, Sky, which was ranked as the second best perfume launch of 2021 by WWD Japan. Boucheron— In 2010, we entered into an exclusive 15-year worldwide license agreement for the creation, development and distribution of fragrances and fragrance related products under the Boucheron brand. For over a century, since becoming the first jeweler to open a boutique on Place Vendôme in 1893, Boucheron has embodied very high-end creation, luxury and French know-how. The mysterious and seductive collection of Boucheron fragrances unquestionably continues this prestigious line of creations. Boucheron’s legacy scents, Femme and Homme , and the legendary Jaipur perfume form the foundation of brand sales. Our team has enriched the portfolio with Quatre for men and women, along with several special editions, a growing collection of unique scents aptly named, La Collection , and Serpent Bohème. During 2022, we introduced a new men’s fragrance, Boucheron Singulier , as well as still another addition to our Boucheron Collection . Currently, Boucheron operates through several boutiques worldwide as well as an e-commerce site. Coach — In 2015, we entered into an exclusive 11-year worldwide license to create, produce and distribute new men’s and women’s fragrances and fragrance related products under the Coach brand name. We distribute these fragrances globally to department stores, specialty stores and duty free shops, as well as in Coach retail stores. Founded in 1941, Coach is the ultimate American leather goods brand and has always been renowned for its quality craftsmanship. Now the luxury brand that best embodies New York’s casual elegance, Coach also offers collections of ready-to-wear, lifestyle accessories and fragrances. Its contemporary approach to luxury combines authenticity and innovation, exported worldwide thanks to its thoroughly American non-conformist vision. In 2016, we launched our first Coach fragrance, a women’s signature scent, and in 2017, a men’s scent, both of which became and remain top selling prestige fragrances. Subsequent flankers and extensions have enlarged the Coach fragrance enterprise as have entirely new collections, including Coach Dreams which debuted in early 2020, and its sister scent, Dreams Sunset , which debuted in 2021. For 2022, we unveiled Coach Wild Rose , and Coach Open Road , a new fragrance for men. Coach is part of the Tapestry house of brands. Donna Karan/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, which took effect on July 1, 2022. The Donna Karan and DKNY brands, which draw from the energy and attitude of New York City, are powerhouses in fashion and fragrance. These global lifestyle brands will make excellent additions to our portfolio. 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. Upon joining our portfolio, these brands now rank among our largest. We are planning to launch new fragrances under these brands in 2024. Donna Karan and DKNY are part of the G-III house of brands. 5 Dunhill— Since 2012, we have been the exclusive fragrance licensee whereby we create, produce and distribute fragrances and fragrance related products under the Dunhill brand. Our rights under this license terminate on September 30, 2023. Emanuel Ungaro— In October 2021, we also entered into a 10-year exclusive global licensing agreement with Emanuel Ungaro for the creation, development and distribution of fragrances and fragrance-related products, under the Emanuel Ungaro brand. Founded in 1965 in Paris, the house of Emanuel Ungaro is an icon of French refinement and haute couture. Its unique style is expressed through unquestioning sensuality, purity of silhouette, flamboyant prints, and exquisite attention to details. Season after season, Emanuel Ungaro dared to be different, combining unexpected yet sensual clashes of bright colors and prints with beautiful draping. Today Ungaro fragrances uphold the same values of audacity and elegance, and the brand is best known and most prized internationally, and such presence will remain our sales focus as we continue to produce and distribute the brand’s legacy scents, notably Diva. Beginning in 2023, we plan to unveil a Diva brand extension. Graff — In 2018, we entered into an exclusive, 8-year worldwide license agreement with London-based Graff for the creation, development and distribution of fragrances under the Graff brand. The agreement has three 3-year automatic renewal options, potentially extending the license until December 31, 2035. Since Laurence Graff OBE founded the company in 1960, Graff has been dedicated to sourcing and crafting diamonds and gemstones of untold beauty and rarity and transforming them into spectacular pieces of jewelry that move the heart and stir the soul. Throughout its rich history, Graff has become the world leader for diamonds of rarity, magnitude and distinction. Each jewelry creation is designed and manufactured in Graff’s London atelier, where master craftsmen employ techniques to emphasize the beauty of each individual stone. The company remains a family business, overseen by Francois Graff, Chief Executive Officer. For Graff, a six-scent collection for women, Lesedi La Rona , debuted exclusively at Harrods beginning in March 2020, which we further extended through 2020 as a result of the mandatory store closings throughout that year. In 2021, a select market rollout began in the Middle East, with limited luxury distribution to only the most exclusive, upmarket retail outlets. In 2021 and 2022, we added two new scents to the Lesedi La Rona collection. GUESS — In 2018, we entered into an exclusive, 15-year worldwide license agreement with GUESS, Inc. for the creation, development and distribution of fragrances under the GUESS brand. Established in 1981, GUESS began as a jeans company and has since successfully grown into a global lifestyle brand. GUESS, Inc. designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, denim, handbags, watches, footwear and other related consumer products. GUESS products are distributed through branded GUESS stores as well as better department and specialty stores around the world. We began selling GUESS legacy scents in 2018. In 2019 the GUESS brand quickly became the largest within our U.S. operations, with legacy fragrances dominating the sales mix. In 2019, we began shipments of 1981 Los Angeles and Seductive Noir , both flankers of established scents, which accelerated brand growth. Nearly three years in the making, our first new blockbuster scent, Bella Vita , debuted for the GUESS brand both domestically and internationally in 2021. In addition, Effect, a new men’s grooming line and fragrance collection was launched in 2021. Uomo , a new men’s fragrance for GUESS, came to market in 2022 with a flanker debuting in 2023. Hollister— In 2014, we entered into a worldwide license to create, produce and distribute new fragrances and fragrance related products under the Hollister brand name. We distribute these fragrances in specialty stores, department stores and duty free shops, as well as select Hollister retail stores in the U.S. In 2016 we launched our first men’s and women’s fragrance duo, Wave which led to flankers and extensions as did subsequent fragrance families Festival and Canyon Escape . We have a new pillar debuting in 2023, Feelin’ Good . 6 The quintessential apparel brand of the global teen consumer, Hollister celebrates the liberating spirit of the endless summer inside everyone. Inspired by California’s laidback attitude, Hollister’s clothes are designed to be lived in and made your own, for wherever life takes you. Jimmy Choo— In 2009, we entered into an exclusive 12-year worldwide license agreement for the creation, development and distribution of fragrances and fragrance related products under the Jimmy Choo brand, and in 2017, we extended the license agreement which now runs through December 31, 2031. Jimmy Choo encompasses a complete luxury accessories brand. Women’s shoes remain the core of the product offering, alongside handbags, small leather goods, scarves, eyewear, belts, fragrance and men’s shoes. Jimmy Choo has a global store network encompassing more than 200 stores and is present in the most prestigious department and specialty stores worldwide. Jimmy Choo is part of the Capri Holdings Limited luxury fashion group. Our initial Jimmy Choo fragrance was launched in 2011, a signature scent for women. In the decade that followed, Jimmy Choo has grown to become our second largest brand with new pillars and flankers debuting regularly, both for men and women. Our newest women’s fragrance pillar, I Want Choo, was launched in 2021 and for 2022, two flankers debuted, Jimmy Choo Man Aqua and I Want Choo Forever . For 2023, Jimmy Choo Rose Passion is scheduled to be unveiled. Karl Lagerfeld— In 2012, we entered into a 20-year worldwide license agreement with Karl Lagerfeld B.V., the internationally renowned haute couture fashion house, to create, produce and distribute fragrances under the Karl Lagerfeld brand. Under the creative direction of the late Karl Lagerfeld, one of the world’s most influential and iconic designers, the Lagerfeld Portfolio represents a modern approach to distribution, an innovative digital strategy and a global 360 degree vision that reflects the designer’s own style and soul. Karl Lagerfeld created the first fragrance that bears his name in 1978, and that legacy has expanded to include several growing multi-scent collections, Les Parfums Matières and more recently, Karl Cities, a new collection featuring entries for New York, Paris, Hamburg, Tokyo and Vienna was unveiled. Kate Spade— In 2019, we entered into an exclusive, 11-year worldwide license agreement with Kate Spade to create, produce and distribute new perfumes and fragrance related products under the Kate Spade brand which we distribute globally to department and specialty stores and duty free shops, as well as in Kate Spade retail stores. Our first original scent, Kate Spade New York , debuted in January 2021 and for 2022, we added a flanker to our line, Kate Spade Sparkle . Kate Spade Cherie debuted in early 2023. Since its launch in 1993 with a collection of six essential handbags, Kate Spade has always stood for optimistic femininity. Today, the brand is a global life and style house with handbags, ready-to-wear, jewelry, footwear, gifts, home décor and more. Polished ease, thoughtful details and a modern, sophisticated use of color—Kate Spade’s founding principles define a unique style synonymous with joy. Under the vision of its creative director, the brand continues to celebrate confident women with a youthful spirit. Kate Spade is part of the Tapestry house of brands. Lanvin— In 2007, we acquired the worldwide rights to the Lanvin brand names and international trademarks listed in Class 3, our class of trade. A synonym of luxury and elegance, the Lanvin fashion house, founded in 1889 by Jeanne Lanvin, expanded into fragrances in the 1920s. Lanvin fragrances occupy an important position in the selective distribution market in France, Eastern Europe and Asia, and we have several lines currently in distribution, including Éclat d’Arpège , Lanvin L’Homme , Jeanne Lanvin, Modern Princess and A Girl in Capri . The Éclat d’Arpège line accounts for almost 50% of brand sales. Les Fleurs de Lanvin, a new floral fragrance collection, was released during the second half of 2021. For 2022, we unveiled a new extension to our Éclat d’Arpège line, Mon Éclat . 7 MCM— In 2019, we entered into an exclusive, 10-year worldwide license agreement with German luxury fashion house MCM for the creation, development and distribution of fragrances and fragrance related products under the MCM brand. The agreement has a 4-year automatic renewal option, potentially extending the license until December 31, 2034. MCM is a luxury lifestyle goods and fashion house founded in 1976 with an attitude defined by the cultural Zeitgeist and its German heritage with a focus on functional innovation, including the use of cutting-edge techniques. Today, through its association with music, art, travel and technology, MCM embodies the bold, rebellious and aspirational. Always with an eye on the disruptive, the driving force behind MCM centers on revolutionizing classic design with futuristic materials. MCM’s millennial and Gen Z audience is genderless, ageless, empowered and unconstrained by rules and boundaries. Following through on our plan to develop extraordinary fragrances that capture the creative spirit of MCM, our first new fragrance, MCM , was released during the first quarter of 2021 to great, and somewhat unexpected success. We released a flanker in 2022, along with a limited edition called Graffiti . Our distribution strategy encompasses MCM stores, high-end department stores and prestige beauty retailers, with a geographic focus on Asia, the Americas and Europe. Our first ever men’s scent for the brand is debuting in 2023. Moncler— In June 2020, we entered into an exclusive, 5-year worldwide license agreement with a potential 5-year extension with Moncler for the creation, development and distribution of fragrances under the Moncler brand. Moncler was founded at Monestier-de-Clermont, Grenoble, France, in 1952 and is currently headquartered in Italy. Over the years, the brand has combined style with constant technological research assisted by experts in activities linked to the world of the mountain. The Moncler outerwear collections marry the extreme demands of nature with those of city life. Our first fragrance for the Moncler brand has a revolutionary LED design, and the flask-shaped bottles of Moncler Pour Femme and Moncler Pour Homme forge a powerful bond with the House Moncler’s alpine roots and pioneering spirit. This playful and unique innovation enables its owner to write a personalized note that scrolls in red letters on the screen of the mirror bottle. Our first fragrance was pre-launched in 250 select outlets in the second half of 2021, and was met with an excellent response. The rollout to approximately 3,000 doors took place during 2022. Moncler will also launch a new collection in Q1 2023. Montblanc— In 2010, we entered into an exclusive license agreement to create, develop and distribute fragrances and fragrance related products under the Montblanc brand. In 2015, we extended the agreement which now runs through December 31, 2025. Montblanc has achieved a world-renowned position in the luxury segment and has become a purveyor of exclusive products, which reflect today’s exacting demands for timeless design, tradition and master craftsmanship. Through its leadership positions in writing instruments, watches and leather goods, promising growth outlook in women’s jewelry, international retail footprint through its network of more than 600 boutiques, high standards of product design and quality, Montblanc has grown to be our largest fragrance brand. In 2011, we launched our first new Montblanc fragrance, Legend, which quickly became our best-selling men’s line and has given rise to a plethora of flankers including Legend Night and Legend Spirit. In 2014, we launched our second men’s line, Emblem and like its predecessor, Emblem gave rise to brand extensions. In 2019, we unveiled Montblanc Explorer , which has added flankers, most recently Montblanc Explorer Ultra Blue . The Legend continues, as in 2022, we introduced a new flanker, Montblanc Legend Red . For 2023, extensions for the Montblanc signature scent for women and Explorer line for men are in the pipeline. 8 Oscar de la Renta— In 2013, we entered into an exclusive worldwide license to create, produce and distribute fragrances and fragrance related products under the Oscar de la Renta brand. In 2019, the agreement was extended through December 31, 2031, with an additional five-year option potentially extending the agreement through December 31, 2036. After taking over distribution of the brand’s legacy fragrances in 2014, we introduced Extraordinary the following year. Oscar de la Renta Bella Blanca debuted in 2018, followed by Bella Rosa and Bella Essence and soon to join them, Bella Bouquet . Debuting in 2021 was an entirely new fragrance pillar, Alibi which welcomed a sister scent in 2022, Alibi Eau de Toilette . Oscar de la Renta is one of the world’s leading luxury goods firms. The New York-based company was established in 1965, and encompasses a full line of women’s accessories, bridal, children’s wear, fragrance, beauty and home goods, in addition to its internationally renowned signature women’s ready to wear collection. Oscar de la Renta products are sold globally in fine department and specialty stores, www.oscardelarenta.com and through wholesale channels. Rochas — In 2015, we acquired the Rochas brand from The Procter & Gamble Company. Founded by Marcel Rochas in 1925, the brand began as a fashion house and expanded into perfumery in the 1950s under Hélène Rochas’ direction. Our first new fragrance for Rochas, Mademoiselle Rochas , had a successful launch in 2017 in its traditional markets of France and Spain. Over the next few years, we debuted flankers for legacy scents Eau de Rochas and Mademoiselle Rochas, plus others, and in 2018 we launched our first new men’s line, Rochas Moustache . Byzance debuted in early 2020 and Rochas Girl in 2021, and the first flanker for both came to market in 2022 as well as one for L’Homme Rochas. Flankers for many of these pillars debuted in 2022 with more to come in 2023. Ferragamo— In October 2021, we closed on a transaction agreement with Salvatore Ferragamo S.p.A., whereby an exclusive and worldwide 10-year license was granted for the production and distribution of Ferragamo brand perfumes, with a 5-year optional term if certain conditions are met. Salvatore Ferragamo S.p.A. is the parent company of the Salvatore Ferragamo Group, one of the world’s leaders in the luxury industry and whose origins date back to 1927. Named after its founder, the brand still represents and lives by the original values of Salvatore Ferragamo. The uniqueness and exclusivity of its creations, along with the perfect blend of style, creativity and innovation enriched by the quality and superior craftsmanship of the ‘Made in Italy’ tradition, have always been the hallmarks of the Salvatore Ferragamo’s products notably shoes, leather goods, apparel, silk products and other accessories for men and women. The current fragrance lineup includes Storie di Seta, a collection of four refined, luminous olfactory works of art. Each fragrance is made with rare, sustainable raw materials, and can be worn alone or in combination, creating a personalized multifaceted scent. The genderless collection is comprised of four fragrances in four colors. Four exclusive motifs drawn from the House’s textile heritage adorn each flacon. Established scents in the Ferragamo portfolio include Ferragamo , a collection of fragrances for men, Signoria , a collection of fragrances for women, the Tuscan Creations series, the Amo series and the Uomo series. New flankers are in the works for 2023 and 2024 with a major new pillar in the works for 2025. S.T. Dupont— In 1997, we signed an exclusive worldwide license agreement with S.T. Dupont for the creation, manufacture and distribution of S.T. Dupont fragrances. The license agreement had been renewed several times and is now renewed annually, without any material changes in terms and conditions. S.T. Dupont is a French luxury goods house founded in 1872, which is known for its fine writing instruments, lighters and leather goods. S.T. Dupont fragrances include S.T. Dupont pour Femme , S.T. Dupont pour Homme, Pure and S.T. Dupont Collection. Van Cleef & Arpels— In 2018, we renewed its license agreement for an additional six years with Van Cleef & Arpels for the creation, development, and distribution of fragrance products through December 2024. Our initial 12-year license agreement with Van Cleef & Arpels was signed in 2006. 9 Van Cleef & Arpels fragrances in current distribution include: First and Collection Extraordinaire. Sales of the Collection Extraordinaire line have experienced continued growth since its debut. We continue to introduce new additions to the Van Cleef & Arpels Collection Extraordinaire assortment annually, including Oud Blanc , in 2020 and Rêve de Matiere in 2021. Patchouli Blanc is the new addition to the Collection Extraordinaire , released in 2022 with further additions coming in 2023. Founded in 1896, Van Cleef & Arpels is a French luxury jewelry company owned by Richemont Holdings Limited. Business Strategy Focus on prestige beauty brands . Prestige beauty brands are expected to contribute significantly to our growth. We focus on developing and launching quality fragrances utilizing internationally renowned brand names. By identifying and concentrating in the most receptive market segments and territories where our brands are known, and executing highly targeted launches that capture the essence of the brand, we have had a history of successful launches. Certain fashion designers and other licensors choose us as a partner, because our Company’s size enables us to work more closely with them in the product development process as well as our successful track record. Grow portfolio brands through new product development and marketing . We grow through the creation of fragrance family extensions within the existing brands in our portfolio. We regularly create a new family of fragrances for each brand in our portfolio. We frequently introduce seasonal and limited edition fragrances as well. With new introductions, we leverage our ability and experience to gauge trends in the market and further leverage the brand name into different product families in order to maximize sales and profit potential. We have had success in introducing new fragrance families (sub-brands, flanker brands or flankers) within our brand franchises. Furthermore, we promote the performance of our prestige fragrance operations through knowledge of the market, detailed analysis of the image and potential of each brand name, and a highly professional approach to international distribution channels. Continue to add new brands to our portfolio, through new licenses or acquisitions. Prestige brands are the core of our business, and we intend to add new prestige beauty brands to our portfolio. Over the past 35 years, we have built our portfolio of well-known prestige brands through acquisitions and new license agreements. We intend to further build on our success in prestige fragrances and pursue new licenses and acquire new brands to strengthen our position in the prestige beauty market. To that end, in 2020, we signed a new license for the Moncler brand. We also acquired a minority interest in Divabox, which owns the Origines-parfums online platform. As a website of reference for all selective fragrance brands, Origines-parfums is a key French player in the online beauty market recognized for its customer relationship expertise. This acquisition enhances the introduction of dedicated fragrance lines and products designed to address a specific consumer demand for this distribution channel and accelerate our digital development. During 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. In 2021, we also 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 exclusive license became effective in July 2022. During 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted to Interparfums SA for the production and distribution of Lacoste brand perfumes and cosmetics. As of December 31, 2022, we had cash, cash equivalents and short-term investments of approximately $256 million, which we believe should assist us in entering new brand licenses or outright acquisitions. We identify prestige brands that can be developed and marketed into a full and varied product families and, with our technical knowledge and practical experience gained over time, take licensed brand names through all phases of concept, development, manufacturing, marketing and distribution. Expand existing portfolio into new categories . We selectively broaden our product offering beyond the fragrance category and offer other fragrance related products and personal care products under some of our existing brands. We believe such product offerings meet customer needs, generate trial and further strengthen customer loyalty. 10 Continue to build global distribution footprint . Our business is a global business, and we intend to continue to build our global distribution footprint. In order to adapt to changes in the environment and our business, in addition to our arrangements with third party distributors globally, we are operating distribution subsidiaries or divisions in the major markets of the United States, France, Italy and Spain for distribution of prestige fragrances. We may look into future joint arrangements or acquire distribution companies within other key markets to distribute certain of our prestige brands. While building a global distribution footprint is part of our long-term strategy, we may need to make certain decisions based on the short-term needs of the business. We believe that in certain markets, vertical integration of our distribution network may be one of the keys to future growth of our Company, and ownership of such distribution should enable us to better serve our customers’ needs in local markets and adapt more quickly as situations may determine. Production and Supply The stages of the development and production process for all fragrances are as follows: ● Simultaneous discussions with perfume designers and creators (includes analysis of esthetic and olfactory trends, target clientele and market communication approach) ● Concept choice ● Produce mock-ups for final acceptance of bottles and packaging ● Receive bids from component suppliers (glass makers, plastic processors, printers, etc.) and packaging companies ● Choose suppliers ● Schedule production and packaging ● Issue component purchase orders ● Follow quality control procedures for incoming components; and ● Follow packaging and inventory control procedures. Suppliers who assist us with product development include, but are not limited to : ● Independent perfumery design companies (Aesthete, Carré Basset, PI Design, Cent Degres) ● Perfumers (IFF, Givaudan, Firmenich, Robertet, Takasago, Mane) who create a fragrance consistent with our expectations and, that of the fragrance designers and creators ● Fillers (Voyant, CPFPI, Omega Packaging, Societe de Diffusion de Produits de Parfumerie, TSM Brands, ICR, Cosmint, Tatra, Arcade Beauty) ● Bottle manufacturers (Pochet du Courval, Verescence, Verreries Brosse, Bormioli Luigi, Stoelzle Masnières, Heinz), caps (Qualipac, ALBEA, RPC, Codiplas, LF Beauty, Texen Group, S.A.R.L. J3P SBG Packaging Group), Pumps (Silgan Dispensing Systems Thomaston Corp, Aptar, Rexam) or boxes (Autajon, Diamond Packaging, TPC Printing) ● Logistics (Bansard and Bolloré Logistics for storage, order preparation and shipment) 11 Suppliers’ accounts for our European operations are primarily settled in euro and for our United States operations, suppliers’ accounts are primarily settled in U.S. dollars. For our European operations components for our prestige fragrances are purchased from many suppliers around the world and are primarily manufactured in France. For United States operations, components for our prestige fragrances are sourced from many suppliers around the world and are primarily manufactured in the United States and Italy. Additionally, we occasionally utilize third party manufacturers in China and Turkey. Environmental, Social & Governance Both our U.S. operations and our European operations are good corporate citizens and take our responsibilities seriously. We comply with all applicable laws, rules and regulations in general, and in particular with regard to chemicals and hazardous materials. Throughout our supply chain, from procurement of components to distribution of finished products, we act responsibly and monitor and comply with all legal requirements. While we do not own our manufacturing facilities, we set a high bar with our industrial partners by placing an emphasis on quality, the use of good manufacturing practices and innovation, and encouraging them to build strong ESG programs of their own. Like many of our industry competitors, we are applying a multifunctional and comprehensive approach in addressing the issues of corporate, environmental and social responsibility and transparency, building off the UN Sustainable Development Goals. Our European Operations have led the way on this initiative, but our US operations are actively catching up. European Operations Interparfums SA, our European operations with their headquarters in Paris, has made further progress in the areas of environmental, social, and corporate governance (ESG) based on the results of the 2022 campaign of the rating agency Gaïa Research 1 which ranks the top performing companies in this area. Campaign for Fiscal Year 2020 for Fiscal 2019 2021 for Fiscal 2020 2022 for Fiscal Year 2021 ESG Rating 69/100 76/100 81/100 This score is calculated on the basis of 140 criteria divided into 4 pillars: Environmental, Social, Governance and External Stakeholders. Interparfums SA applies a comprehensive approach in addressing the issues of corporate, environmental and social responsibility and transparency. It has developed from one year to the next its corporate social responsibility (“CSR”) policy, implemented by its Operational and Support Departments by involving all personnel, and has identified issues to be addressed in three key areas: its responsibilities toward operational stakeholders, staff and the company. Social and societal values have been an important component of Interparfums SA’s development for a number of years, exemplified notably by an attractive policy of employee benefits and solid relations with its partners. In October 2022, Interparfums SA announced that it had retained the services of Muriel Buiatti, as its CSR Project Manager to assist the CSR Executive Committee in achieving its goals. A graduate of the French Engineering School, Ecole Polytechnique, Ms. Buiatti exercised various responsibilities, including research and development, at L’Oréal for 13 years. After completing her Master’s Degree in Sustainable Development, she founded Commenterre, which specializes in helping companies address their CSR issues. 1 Gaïa Research, a member of the EthiFinance Group is an extra-financial rating agency specializing in rating the ESG performance of small and midsize companies and mid-cap companies listed on European markets. 12 To support its strategy, at the beginning of 2021 and at the initiative of management, Interparfums SA created an CSR Executive Committee, consisting of members of the Operations & Supply Chain, Human Resources, Legal Affairs and Communications teams, tasked with formalizing the company’s CSR strategy focusing on the following priorities, aligned with the UN Sustainable Development Goals: - reinforce its status as a responsible employer, by notably creating a “Responsible Employer Charter” and strengthening the employee training plan; - reduce its environmental footprint, notably by adopting environmentally optimized design specifications to reduce packaging and the introduction of recycled and recyclable materials for each product developed; - strengthen its sustainable development approach by formalizing a code of business conduct and ethics that is enforceable against operational stakeholders. Environmental Interparfums SA does not own its own manufacturing facilities, having chosen to support its industrial partners by placing an emphasis on quality, the use of good manufacturing practices and innovation. The construction of a high quality environmentally certified warehouse in 2011 and sourcing in Europe more than 80% of its needs highlight the efforts undertaken in recent years. In addition, reflecting the stakes in terms of protecting the planet, Interparfums SA now intends to also exercise an increasingly active role in contributing to the environment. As part of its CSR strategy, Interparfums SA has partnered with EcoVadis to assess the CSR performance of its supply chain and suppliers. EcoVadis operates a global platform to assess corporate social responsibility and share performance data using their assessment method based on international CSR standards. In 2022, 119 suppliers were evaluated or were in the process of being evaluated, representing over 68% of Interparfums SA’s procurement activity. As part of a continuous improvement process, Interparfums SA’s objective will be to monitor and encourage the CSR performance of its suppliers in four major areas: the environment, social and human rights, ethics and responsible procurement. EcoVadis assessment results: Number of suppliers evaluated Average EcoVadis score Average Environmental score Average Labor and Human Rights score Average Ethics score Average Sustainable Procurement score 91 66.7 69.5 66.9 60.7 65.3 In addition, in 2022, Interparfums SA has calculated its total carbon footprint in accordance with international standards, and namely the Green House Gas Protocol (GHG Protocol) for the conversion of all emission sources into tons of CO 2 equivalent and the Base Carbone ® , a public database of emission factors made available by the French Agency for Ecological Transition (ADEME). 2021 Carbon footprint: 174,930 tCO2e - 2021 Carbon intensity: 312 KgCO2e per € thousand of revenue (in the low range of our industry) 13 In tons CO 2 equivalent 2021 Weight Scope 1 (gas and fuel energy consumption) 226 0,1 % Scope 2 (electricity consumption) 29 0,0 % Scope 3 (other indirect emissions) 174,675 99,9 % Total 174,930 100,0 % This first measurement is a crucial step before determining a low carbon trajectory in accordance with the European green deal regulation which aims to be climate-neutral by 2050. Moreover, Interparfums SA complies with IS 22716, International Standards for Good Manufacturing Practices, with all aspects of the manufacturing process, including receiving of raw materials and packaging materials, production and quality control. In this regulatory environment, regular audit campaigns are carried out for all packaging plants by the quality department based on the ISO 22716 standard in place. The ultimate purpose of these audits is to ensure that packaging service providers maintain a good level of traceability for their activities. All plant activities were reviewed: receiving process for raw materials and packaging materials, manufacturing, packaging and quality controls. These reports demonstrated that Interparfums SA’s subcontractors comply with ISO 22716 Good Manufacturing Practices and in particular, traceability requirements for all perfume production operations. It is also in compliance with the EU directive entitled Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”), which governs and regulates the safe use of chemicals. Although not a manufacturer, per se, Interparfums SA has taken the initiative and monitors its suppliers for compliance with REACH, and has commitments from each of them concerning “Substances of Very High Concern” as listed in appendix XIV of REACH. No supplier of Interparfums SA has advised it of any such hazardous materials in any of its products to date. Interparfums SA monitors the outsourcing of the entire production process of its manufacturing partners with expertise and accountable leadership in their respective areas. These include producers of juice, glass, caps and cardboard boxes and packaging companies. We take environmental issues into account at each of these phases, and in particular regarding the choice of materials used for components, waste management and reducing the carbon footprint. Moreover, all the alcohol used by Interparfums SA is from vegetal origin (essentially from beets). 14 Proposing environmentally and socially responsible packaging 2021 2022 Target Year Monitor: Monitor the EcoVadis scores of our suppliers Average score 65/100 Average score 66.7/100 Average score >70/100 2025 Increase: Increase the PCR glass part of our packaging 47 % 46 % 60 % 2025 Initiating a low-carbon trajectory Reduce: Reduce scope 1, 2, 3 greenhouse gases emission intensity -3%/year Neutrality 2040 Contribute Define the appropriate regenerative agriculture program One 5 years program defined Sustainability & The Environment At every stage of the purchasing process, Interparfums SA seeks to determine the precise needs and considers the requirement of limiting sources of unnecessary costs and a waste of resources: - reducing waste, in particular at the phases of production, consumption and the end of the product life; - recycling flawed production, notably at the production phase; - repairing palettes to increase their lifespan. Interparfums SA regularly monitors energy and water consumption indicators to assess possibilities for improving energy efficiencies in the area of lighting, heating and air-conditioning for the entire warehousing site, for example by adjusting ventilation flows and using a program that reduces heating and ventilation over weekends. With this objective, measures are planned to automatically turn off lights in the warehouse when employees are taking outside breaks and maintain the warehouse temperature at 11°C (51°Fahrenheit). These energy savings initiatives include measures providing for managing the hours for reloading the electric forklifts during non-peak hours during the night, requiring low consumption for a maximum of 280,000 kW instead of 600,000 kW during the day. Monthly reports on electricity consumption are prepared, allowing the company to analyze the causes for overconsumption, when applicable, in order to take corrective actions as applicable. The measurement of energy consumption highlighted stable levels for electricity and gas over the last four years, whereas water consumption has on average declined marginally. Finally, in the spirit of contributing to protecting the environment, the company has installed parking places at the logistic site for bicycles and electric recharging stations for cars. By strategically locating its warehouse at the crossroads for its subcontractors, Interparfums SA has reduced distances for shipments of finished products. Measures undertaken in collaboration with the warehouse and trade goods shipping manager, within the framework of the improvement and optimization of shipments between production sites and the logistics platform have contributed to reducing the number of back-and-forth trips for trucks. 15 In the area of transport to distributors, Interparfums SA uses road transport for France and Europe and maritime transport for the Americas, Asia and the Middle East. Use of air transport is very limited and reserved only for urgent situations where no other solutions are available. Certain promotional materials manufactured in Asia are shipped directly to American distributors without being imported and stored in France. In addition, in 2018 Interparfums SA put into service a new warehouse located in Singapore to promote the use of short channels within the Asia Pacific region. This warehouse makes it possible to maintain a permanent inventory in this region and, in this way, encourages the use of maritime transport for goods shipped from France to Asia. Measures to prevent environmental risks and pollution involve firstly the choice of techniques and materials. To reduce the impacts of its activities, a water-soluble solution in part biodegradable that does not harm the environment is used in the coloring of some of its bottles. For the remainder of the product lines, the coating process provides for the gradual elimination of solvent-based coatings and the progressive adoption of hydro-coating for all the company’s products, in compliance with the law of 2005 for reducing emissions of Volatile Organic Compounds (VOC) in the air. In addition, certain sub-contractors for glass making have electrostatic air filters to reduce dust and smoke emissions in addition to wastewater recycling. Interparfums SA has, in addition, eliminated thermosetting plastics from its line of bath and body care products in favor of recyclable plastic. To balance product quality and aesthetics with environmental considerations, Interparfums SA takes care to reduce packaging volumes and select the appropriate materials at each stage of production to ensure optimal conditions for their recycling or disposal. The manufacture of recyclable glass bottles includes a system for the recovery, crushing and remolding the waste. Indicators in place since 2013 for tracking wastage have improved Interparfums SA’s ability to monitor wastage rates by glass bottle decorators. Its first objective is to apply a continuous improvement approach and reduce rates of wastage over the long term. The second objective is to succeed in reducing this wastage and reintroduce bottles back into the manufacturing cycle. In addition, Interparfums SA has adopted procedures for recovering waste from subcontractors originating from surplus production or components of discontinued products. The recovered waste is then sorted for the purpose of their elimination. Interparfums SA has also revised the bulk and secondary packaging (product boxes and perfume sets) in order to optimize the palletizing process, reduce the purchase of cardboard packaging materials and reduce volumes transported by decreasing the amount of empty space. The company henceforth requires a minimum number of palettes per truck. Finally, cardboard packaging materials for testers are 100% recyclable. Social Donations and sponsorship initiatives: - Interparfums SA contributes to volunteer-sector organizations intervening in the areas of solidarity, childhood, combating exclusion and promoting health, by providing financial assistance to support their projects and initiatives. - Since 2018, through the Givaudan Foundation, - Interparfums provided support to five schools for the management of their libraries. 16 - In 2021, the program for the installation of school libraries continued in Sulawesi with a new library in Moramo (South East Sulawesi), benefiting 1,040 children and 66 school teachers, and providing a total of 5,180 books. - In 2021, €136,000 of charitable initiatives and donations were made by Interparfums SA. - Educational establishments: - As part of its desire to share its experience and train future generations, Interparfums SA is a regular contributor, particularly in the fields of marketing and finance, at different leading schools (business schools, Sciences Po, École supérieure de parfumerie). - Interparfums SA also regularly welcomes and trains interns at Interparfums SA offices as well as work-study contract beneficiaries. Assisting Local Economies - Production facilities of Interparfums SA’s subcontractors as well as warehousing facilities for finished products are located primarily in the Haute Normandie region of France. These activities contribute to developing the local economy. - Interparfums SA provides support for patchouli-producing communities in Indonesia. Sustainable Development Goals In line with Interparfums SA’s Corporate Social Responsibility strategy, the main goals set by Interparfums SA are presented in the following table. Social Initiatives Current Situation Expected performance Deadline Attracting, supporting and developing all talents Attract: Write a Responsible Employer Charter Share the Responsible Employer Charter 2023 Develop: Strengthen training 50% of the employees 70% of the employees 2025 Develop : CSR training for employees - 80% in 2 years 2023 Diversify: Raising employee awareness about disabilities Once a year Once a year Governance - Interparfums SA only engages in recognized ethical practices. - It has adopted the Middlenext Corporate Governance Code since 2010, which was revised in September 2016 and September 2021 to ensure effective governance. - Board of Directors – Interparfums SA has a Board of Directors consisting of 11 members, with 5 members being independent. It also intends to set up a committee of shareholders. 17 ○ Director Ethics - in accordance with the new Middlenext Code Recommendation 2 reinforcing the management of conflicts of interest, each Director declares before each meeting any potential conflicts of interest and, on an annual basis, any actual or potential conflicts of interest between their obligations to Interparfums SA and their private interests, in particular with respect to their other offices and functions. ○ In any event, the members of the Board shall refrain from participating in the proceedings and voting on any matter in which they would be in a situation of real or potential conflict of interest. - Existence of a CSR Executive Committee - Audit committee consisting of 5 independent directors. United States Operations In the U.S. we are also a good corporate citizen. Like our French subsidiary, Interparfums USA also retained Muriel Buiatti to advise and guide us on our path to become a better corporate citizen, as we attempt to increase our efforts in ESG. Also, like our French subsidiary, we are also not a true manufacturer, but we regularly monitor our subcontractors, suppliers and fillers for their compliance. In addition, our subcontractors and fillers are subject to inspection and audit from our various licensors for compliance with all aspects of law. Environmental In connection with a new product launch in 2023, Hollister Feelin’ Good , this new fragrance highlights our ESG efforts we made in 2022: ● Glass containing 10% PCR (post-consumer recycled) glass, and is 100% recyclable. ● Our folding cartons meet the requirements of SFI, the Sustainable Forestry Initiative, and are 100% recyclable. ● Liners are 100% recyclable. ● All components sourced from North/South America – closer supply chain for Hollister brand fragrances and are filled and warehoused in the United States. In addition, all folding cartons for all licensed brands in United States operations now consist of FSC, the Forest Stewardship Council, or SFI certified paper. We are also making efforts to regionally source components to filling and warehousing locations where practicable in order to lessen shipping and thereby lower energy costs. For 2023 most giftsets will be reduced in format and size, and we have eliminated plastic from the following branded gift sets completely, Abercrombie & Fitch, Donna Karan, DKNY, Hollister, MCM and Oscar de la Renta. Our largest filler in the United States has been awarded Bronze status in 2022 from EcoVadis. One of our largest pump manufacturers is the recipient of a 2021 Gold Medal from EcoVadis for Sustainability and a 2020 Bronze Medal from EcoVadis for its corporate social responsibility rating, and a large glass bottle manufacturer was awarded gold metals from EcoVadis for its corporate social responsibility rating two years in a row. In addition in 2021, a large glass bottle manufacturer that we utilize received an “A” rating for leadership in corporate sustainability by CDP, a global environmental non-profit group, ranking ‘A’ for tackling water security and ‘A-’ for leading effort against climate change. In our U.S. operations, we do not use any banned ingredients or components and use sustainable ingredients where practicable. Some componentry (glass/folding cartons) is also recyclable where practicable. For example, our Abercrombie & Fitch Away fragrance uses glass and folding cartons that are 100% recyclable, and the carton liner is 100% recyclable and biodegradable. Lastly, our product development team works with our fragrance houses – all very sustainable in their own right – to incorporate sustainably sourced ingredients in the fragrance oils used. 18 In addition to our production operations complying with applicable law, our managers, supervisors and traffic coordinators in our New Jersey distribution center undergo training in order for us to comply with Dangerous Goods Regulations. Compliance requires training and certification to deal in hazardous materials to prevent damage to the environment. The two main certifications are: International Maritime Dangerous Goods (IMDG) Dangerous Goods Training – 3 year Certification for Ocean Shipment and International Air Transport Association (IATA) Dangerous Goods Training – 2 year Certification for Global Air Shipments. Further, our distribution center in New Jersey has in-rack sprinklers to accommodate our hazardous material products. Our fragrances, Class 9 – Consumer Commodity ID8000, are registered with American Chemistry Council, Inc. (known in the chemicals industry as Chemtrec). Chemtrec has a 24/7 hazardous materials emergency communications center, which provides immediate assistance for incidents involving hazardous materials of any kind. Social & Governance We have an Ethical Code of Conduct, which governs our behavior in the following subject matters: CSR & Governance Employer Values Social Values Corporate Governance Brand Initiatives The Environment Dangerous Goods Regulations CSR & Governance Introduction ● Responsible employment, corporate citizenship and governance practices have been an integral part of our values from day one ● In our recent past, environmental practices were mainly based on Good Manufacturing Practices and U.S. sourcing. ● Today, our aim is to elevate the issue of environmental responsibility Practices recognized in the areas of responsible employment, social responsibility and governance ● Employer values: A responsible employer ○ An “Interparfums spirit” cultivating a sense of belonging #OneIP #OneTeam #OneDream ○ A proactive employee relations policy ● Social values: Long-standing practices ○ Ethical conduct ○ Close relations with our partners ● Governance values: Long-proven practices ○ Quality of profiles, balance between independent/non-independent board members ○ Following Inter Parfums, Inc. Board of Directors’ Diversity Policy Interparfums USA contributes to protecting the environment ● Application of Good Manufacturing Practices ● Audits of packaging service providers ● U.S. sourcing: 64% 19 A value chain from design to distribution ● Approximately 40.5 million bottles were shipped in 2022 throughout the globe ● Approximately 2.5 million gift sets are to be shipped per year, throughout the globe ● Working with U.S. packaging sites: ○ 6 fragrance filling and assembly sites ○ About 20 packaging component sites ● A 150,000 sq. ft. warehouse and distribution facility in Dayton, New Jersey ● Points of sale all around the world Targets ● Reinforcing our status as socially engaged and responsible employer ● Reinforcing our corporate governance practices ● Become an active contributor to protecting the environment Recent Actions Creation of working groups to integrate an “optimized eco-design” component in products over their entire lifecycle ● Use of environmentally responsible materials ● Reducing weight and size of glass, cardboard and plastics ● Strengthening relations with design houses (natural products, sourcing, traceability) Employer values Current situation: A proactive employee relations policy Long-standing fundamentals ● A family-style management culture built on fostering close relations ● An “Interparfums spirit” promoting a sense of belonging ● Ethical values based notably on respecting people ● Welcoming and sharing new ideas ● Job preservation ● Paid time off for vacation, sick days and personal days Workplace Quality of life ● Positions that encourage responsibility and autonomy ● Respecting a proper balance between business and private life ● Managing talent (appraisal interviews, training) ● A commitment to combating all forms of discrimination ● Paid sick leave benefits, including maternity leave and caring for a family member with a serious health condition A motivating compensation policy ● Compensation levels in line with market practice ● Savings plans in the form of 401K ● Available health insurance programs with multiple coverage options ● Stock option plans available for certain officers and high-level employees 20 Targets ● Formalizing employee relations practices through an employee Workplace Safety Committee Social Values Current situation: Recognized business ethics Relations with brands under license agreements ● A focus on developing genuine partnerships through close and regular relations with the management of each brand ● Developing products that respect the codes of each brand ● Dedicated Interparfums USA marketing teams Relations with customers ● Long (or very long-term) relationships with distributors ● Taking into account the specific characteristics of each market and country ● Developing products in some cases specifically adapted to demands ● Sharing projects at a very early stage Relations with industrial partners ● Long or very long-term relationships with manufacturers in the sector ● Implementing guidelines on “Good Manufacturing Practices” ● Supporting innovation ● Financial support (2020 pandemic) Targets ● Raising awareness of our partners about CSR challenges Corporate governance Current situation: Long-proven practices Board of Directors ● 10 members: 6 independent directors (60%) Audit Committee, Executive Compensation Committee and Nominating Committee ● 3 members: 3 independent directors (100%) Important Business Policies ● Prohibition on fraud, bribes, kickbacks and other benefits to suppliers and customers ● Prohibition on trading in the company’s securities on the basis of non-public material information ● Requirement of Company-wide confidentiality for non-public sensitive or proprietary information ● Prohibition on sexual harassment ● Prohibition on use of child labor and slave labor Targets ● Consolidating our existing corporate governance practices ● Strengthening alignment with Inter Parfums, Inc. Board Diversity Policy 21 Brand initiatives MCM MCM EAU DE PARFUM PACKAGING SUSTAINABILITY ● Outer packaging is 100% recyclable and Forest Stewardship Council (FSC) certified ○ FSC sets standards for responsible forest management ○ FSC is the gold standard in forest certification ● Glass bottle is made from post-industrial recycled materials ● Only environmentally friendly ink and colorants were used for the bottle and carton HOLLISTER HOLLISTER CANYON ESCAPE named “GOOD FOR VEGAN” by Sephora ● Hollister Canyon Escape For Him and Hollister Canyon Escape For Her meet the following criteria: ○ Do not contain substances of animal origin (i.e., carmine, beeswax, honey, royal jelly, marine collagen, lanolin, fish extract, musk, silk, gelatin, milk, keratin, etc.) ○ Formula has not been tested on animals ○ Do not contain raw materials that have been tested on animals since March 11, 2009 for cosmetic purposes ABERCROMBIE & FITCH ABERCROMBIE & FITCH AWAY PACKAGING SUSTAINABILITY ● Uses glass and folding cartons that are 100% recyclable ● Carton liner is 100% recyclable and biodegradable The Environment Focus of 2022 work Today, Interparfums USA is pursuing an environmental approach in the following areas ● Manufacturing of components ● The design of fragrances (juice) ● Industrial packaging Production of components ● Glass bottles: Reducing consumption of glass and systematic use of recycled glass for launches ● Packaging: Reducing consumption of cardboard, use of sustainable FSC-certified cardboard ● Gift sets: Use of FSC cardboard Design of fragrances (“juice”) ● Continue close collaboration with fragrance houses to incorporate sustainably sourced ingredients in the fragrance oils used Industrial packaging ● Continue to work in close collaboration with EcoVadis Award Winning packaging service providers ○ Our largest filler in the United States has been awarded Bronze status in 2022 from EcoVadis. One of our largest pump manufacturers is the recipient of a 2021 Gold Medal from EcoVadis for Sustainability and a 2020 Bronze Medal from EcoVadis for its corporate social responsibility rating, and a large glass bottle manufacturer was awarded gold metals from EcoVadis for its corporate social responsibility rating two years in a row. 22 EcoVadis ● A platform used by the main perfumes & cosmetics industry players ● 4 pillars: ○ The environment ○ Social & Human Rights ○ Ethics ○ Responsible sourcing Targets ● Become an active contributor to protecting the environment as well as through our business partners As we continue in our endeavors of responsible employment, corporate citizenship and governance practices, and continue to elevate the issue of environmental responsibility, we will update our policies and procedures accordingly. As such, this Ethical Code of Conduct will be updated from time to time. Marketing and Distribution Our products are distributed in over 120 countries around the world through a selective distribution network. For our international distribution, we either contract with independent distribution companies specializing in luxury goods or distribute prestige products through our distribution subsidiaries. In each country, we designate anywhere from one to three distributors on an exclusive basis for one or more of our name brands. We also distribute our products through a variety of duty free operators, such as airports and airlines and select vacation destinations. As our business is a global one, we intend to continue to build our global distribution footprint. For the distribution of brands within our European based operations, we operate through our distribution subsidiaries or divisions in the major markets of the United States, France, Italy and Spain, in addition to our arrangements with third party distributors globally. Our third party distributors vary in size depending on the number of competing brands they represent. This extensive and diverse network together with our own distribution subsidiaries provides us with a significant presence in over 120 countries around the world. Over 50% of our European based prestige fragrance net sales are denominated in U.S. dollars. We address certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. We primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates. The business of our European operations has become increasingly seasonal due to the timing of shipments by our distribution subsidiaries and divisions to their customers, which are weighted to the second half of the year. For our United States operations, we distribute products to retailers and distributors in the United States as well as internationally, including duty free and other travel-related retailers. We utilize our in-house sales team to reach our third party distributors and customers outside the United States. In addition, the business of our United States operations has become increasingly seasonal as shipments are weighted toward the second half of the year. Competition The market for prestige fragrance products is highly competitive and sensitive to changing preferences and demands. The prestige fragrance industry is highly concentrated around certain major players with resources far greater than ours. We compete with an original strategy, regular and methodical development of quality fragrances for a growing portfolio of internationally renowned brand names. 23 Inventory We purchase raw materials and component parts from suppliers based on internal estimates of anticipated need for finished goods, which enables us to meet production requirements for finished goods. We generally ship products to customers within 72 hours of the receipt of their orders. Our business is not capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components from our suppliers. These components are received at one of our distribution centers and then, based upon production needs, the components are sent to one of several third party fillers or directly to one of those third party fillers, which manufacture the finished products for us and then deliver them to one of our distribution centers. Product Liability Our United States operations maintain product liability coverage in an amount of $10.0 million, and our European operations maintain product liability coverage in an amount of €20 million (approximately $21 million). Based on our experience, we believe this coverage is adequate and covers substantially all of the exposure we may have with respect to our products. We have never been the subject of any material product liability claims. Government Regulation Under the Federal Food, Drug and Cosmetic Act, fragrance products are regulated as cosmetics, and fragrances include perfumes, colognes and aftershave. They must meet the same requirements for safety as other cosmetic ingredients. Compliance required of fragrance ingredients include being safe for consumers when they are used according to labeled directions or as consumers customarily use them. Under the Fair Packaging and Labelling Act, companies and individuals who manufacture or market cosmetics have the legal responsibility to ensure the products are safe and labelled according to the Act. Our fragrance products that are manufactured and marketed in Europe are also regulated as cosmetics and subject to EU Regulation 1223/2009, and after Brexit, the United Kingdom regulation of The UK Schedule 34 to the Product Safety and Metrology Regulation 2019. As of the date of this report, IP products are in compliance with these regulations. Trademarks The market for our products depends to a significant extent upon the value associated with our trademarks and brand names. We have licenses or other rights to use, or own, the material trademark and brand name rights used in connection with the packaging, marketing and distribution of our major products both in the United States and in other countries where such products are principally sold. Therefore, trademark and brand name protection are important to our business. Although most of the brand names we license, use or own are registered in the United States and in certain foreign countries in which we operate, we may not be successful in asserting trademark or brand name protection. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The costs required to protect our trademarks and brand names may be substantial. Under various licenses and other agreements, we have the right to use certain registered trademarks throughout the world for fragrance products. These registered trademarks include: ● Abercrombie & Fitch ● Anna Sui ● bebe ● Boucheron ● Coach 24 ● Donna Karan and DKNY ● Dunhill ● Emanuel Ungaro ● French Connection ● Graff ● GUESS ● Hollister ● Jimmy Choo ● Kate Spade ● Karl Lagerfeld ● MCM ● Moncler ● Montblanc ● Oscar de la Renta ● Ferragamo ● S.T. Dupont ● Van Cleef & Arpels In addition, we are the registered owner of several trademarks for fragrance and beauty products, including: ● Rochas ● Lanvin ● Intimate ● Aziza Human Capital General As of December 31, 2022, we had 527 full-time employees worldwide. Of these, 306 are full-time employees of our European operations and its subsidiaries, with 186 employees engaged in sales activities and 120 in administrative, production and marketing activities. Our United States operations have 175 full-time employees, and of these, 51 are engaged in sales activities and 124 in administrative, production and marketing activities. In addition, Interparfums Italia Srl, our wholly-owned subsidiary, has 46 full-time employees, with 21 engaged in sales activities and 25 in administrative, production and marketing activities. Other than for the employees of Interparfums Italia Srl, we do not have collective bargaining agreements relating to any of our employees, and we believe the collective bargaining agreement for our employees of Interparfums Italia Srl will not have a material adverse effect on our operations. We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment and, believe that our relationship with our employees is good. Goals for our employees Company-wide are - developing a team spirit and cross-functional collaboration; - maintaining a high level of expertise; - cultivating a culture that promotes our values of entrepreneurship, commitment, creativity and passion; - developing a respectful and inclusive work environment; - ensuring equal opportunity employment; - empowering employees to develop their skills and grow their careers; - promoting dialogue between employees and management; - offering quality working conditions; - preserving the health and safety of all; - maintaining a proper balance between professional and private life. 25 United States Operations Our employees are one of our most valuable assets, and fostering long-term relationships are beneficial to the continuity of our business. After experience and expertise in the respective fields of employment, we look for dedication and loyalty among our employees, as we believe having long-term staff members benefits our Company. All of our executive senior officers have been with us for more than twenty years (other than our CFO who just joined our company in September 2022), and we have several senior and upper-level staff members, who have also been with us long-term. These long-term executives and employees believe that our Company and their co-workers are an extended family and share the same values of entrepreneurship, commitment, creativity and passion. Their efforts and dedication are what allow our Company to prosper. Every year, United States operations organizes two seminars over several days for all its global sales staff. This seminar provides an opportunity to present all the Company’s brands and products and marketing strategies. The safety of our employees is of paramount importance to us. In the early stages of the COVID-19 pandemic, we experienced brief closures at all of our locations, and adapted to working remotely. Upon reopening, we implemented prevention protocols to minimize the spread of COVID-19 in our workplaces. These protocols, which remain in place, are in compliance with the Centers for Disease Control guidelines and state requirements. As part of our increasing benefits of working at our United States operations, we provide a comprehensive benefits package (medical, dental, vision, long-term disability, accidental death and dismemberment insurance and life insurance, 401-K, commuter benefits), allow Friday remote working arrangements for our employees, have shorter hours on Fridays during the summer months, offer various gifts and “goodie bags” during various times of the year, have made available food choices for purchase in our lunchroom in New York from the “Fraîche fridge,” and hold quarterly presentations showing financial results, updates on all departments, existing product lines, as well as the development and launches of new products for all of our brands for all employees and consultants worldwide of United States operations so that all are made aware of our operations, and invite comments from those in attendance at the presentations. Interparfums Italia Srl The employees of our wholly-owned Italian subsidiary, Interparfums Italia Srl, receive both benefits required under Italian law and certain additional benefits that it provides. Below are employee benefits provided as required by law. ○ Health insurance for employees and family coverage ○ Supplementary voluntary severance plan ○ Parental leave ○ Study leave ○ Training in health and safety at work ○ Paid time off ○ Implementation of Covid anti-contagion measures and protocol Interparfums Italia also provides these additional benefits for its employees: ○ Working remotely 2 days per week ○ Flexible working hours (different start and end times for employees’ workday) ○ Onboarding Process – Welcome day (includes training on Company’s history and values, meeting with all teams, a gift and dinner with the new hire’s team) 26 ○ Welfare Plan – €500 per year to each employee that can be used through a dedicated platform that encompasses a broad range of benefits and services (transportation, education, health, culture and leisure time, supplementary pension, other fringe benefits) ○ Paid time off for medical checkups - 10 hours per year ○ Restaurant voucher to cover lunch expenses (value of €8 per each day worked) ○ Mobile phone and unlimited internet connection for specific category of employees (based on role) The following additional benefits are also provided: ○ Event celebrations to actively promote and build a sense of belonging ○ New office set up including dining area to socialize and relax (free coffee, tea and biscuits) ○ Easter - Chocolate eggs gift for charity purpose (AIL - Italian Association against Leukemia Lymphoma and Myeloma) ○ Christmas – Greeting cards and gift sets baskets for charity purpose (ANT – Medical care at home for cancer patients) European Operations Interparfums SA’s employees constitute its most important contributor for creating value. For that reason, their professional fulfillment and motivation are indispensable drivers for our development. With a family-style management culture that is close to its employees, everyone is free to share their ideas in a manner that respects the company’s values. Management attaches great importance to ensuring that each employee fully understands and supports Interparfums SA’s strategy. Through weekly memos and regular information meetings on business developments and trends, employees are kept up-to-date on expectations of management and the market. The organization’s flexibility largely made up of small teams facilitates its continuous adaptation to all changes or evolving external conditions. This sharing of the “Interparfums” spirit, also entails a commitment to and understanding of its ethical values by each employee, the fulfillment of employees at work and compliance with good working conditions. This ethical commitment is formalized by a “Code of Good Conduct” to which each employee subscribes, and that is focused in particular on health, safety, discipline, risk management, preventing harassment, respecting individual freedoms, sensitive transactions, fraud and business confidentiality. In 2017, Interparfums SA adopted a Charter relating to the right to disconnect from digital devices that was accepted by each employee. Every two to three years, Interparfums SA organizes a seminar over several days for all its distributors from throughout the world. This seminar provides an opportunity to present all the company’s brands and products, meet with all distributors and involve them in Interparfums SA’s development while giving the distributors an opportunity to meet with staff with whom they work closely on a daily basis. The Human Resources Department pays particular attention to ensuring equal opportunity and non-discrimination for each recruitment. Only skills, experience, qualifications and the personality of the candidates are taken into account in the selection process for new employees. This diversity in terms of profiles, culture, age and gender constitutes a decisive strength of its teams, the company’s most important asset. 27 Women account for 72% of Interparfums’ workforce and 52% of management positions are occupied by women in 2021. Since 2019, Interparfums SA has organized an annual disability awareness raising campaign. In 2021, employees were given an opportunity to participate role-playing workshop designed to give them a first-hand perspective of a person with a disability (hearing, visual, psychological, motor). Thanks to these opportunities for exchange, employees were able to talk about their all possible impediments and share their views and experiences. Through these awareness-raising campaigns and local support from the Human Resources teams, two employees were accorded the status of employees with disabilities through a specific procedure available in France for that purpose (Reconnaissance de la Qualité de Travailleur Handicapé or RQTH). Interparfums SA also participates indirectly in promoting the employment of persons with disabilities and combating exclusion discrimination. The company has chosen to use a sheltered work enterprise to package its perfume boxes and a global communications agency called “Les Papillons de Jour” to organize the European Week for the Employment of People with Disabilities (EWPD). In 2021, the total cost for these services amounted to €974,094. In addition, Interparfums SA has adopted action plans promoting the employment of seniors and equal opportunity between men and women. Compensation and wage increases Interparfums SA has a compensation policy as well as a system of job classifications and performance evaluations applied to all employees. These procedures guarantee the principle of fairness as well as equal treatment of men and women employees. All employees benefit from a combination of fixed and variable incentive compensation benefits linked to Interparfums SA’s performance. Profit-sharing As required by French law, a statutory employee profit-sharing agreement was implemented in 2001. In April 2015, this agreement was amended to provide more advantageous terms to employees, representing an important component of compensation and motivation for all staff and reviewed every year. Savings plan and pension plan All employees of Interparfums SA benefit from a company savings plan which proposes several types of funds corresponding to the specific projects of each. Since 2017, it has adapted its plan by proposing an Interparfums stock ownership fund allowing employees to take advantage of the growth of Interparfums’ shares under favorable tax conditions. The amounts employees pay into this fund are supplemented by an important contribution by the company. In addition, a group retirement savings plan (Plan d’Epargne Retraite Collectif or PERCOL) is available to employees as a vehicle for preparing for their retirement and to which the company contributes significantly. Employees also can transfer a portion of their unused annual vacation days into the Interparfums SA retirement savings plan. Supplemental defined contribution retirement plan contract (Article 83) Management employees benefit from a supplemental defined-contribution retirement plan. Participation in this plan is mandatory. This individual plan is funded by monthly employee and employer contributions, with the breakdown of these latter contributions freely determined. Interparfums SA has decided to assist its employees in financing this supplemental retirement benefit, by assuming an important percentage of these contributions itself. 28