x
|
Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30,
2010.
|
¨
|
Transition
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from ___________to
________.
|
Delaware
|
13-3275609
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
551
Fifth Avenue, New York, New
York 10176
|
(Address
of Principal Executive
Offices) (Zip
Code)
|
(212)
983-2640
|
(Registrants
telephone number, including area
code)
|
Large
accelerated Filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
(Do not check if a smaller reporting company)
|
Smaller
reporting company ¨
|
Page Number
|
|
Part
I. Financial Information
|
1
|
Item
1. Financial Statements
|
|
Consolidated
Balance Sheets as of September 30, 2010 (unaudited) and December 31,
2009
|
2
|
Consolidated
Statements of Income for the Three and Nine Months Ended September 30,
2010 (unaudited) and September 30, 2009 (unaudited)
|
3
|
Consolidated
Statements of Changes in Equity for the Nine Months Ended September 30,
2010 (unaudited) and September 30, 2009 (unaudited)
|
4
|
Consolidated
Statements of Cash Flows for the Nine Months Ended September 30, 2010
(unaudited) and September 30, 2009 (unaudited)
|
5
|
Notes
to Consolidated Financial Statements
|
6
|
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
|
15
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
28
|
Item
4. Controls and Procedures
|
30
|
Part
II. Other Information
|
30
|
Item
6. Exhibits
|
30
|
Signatures
|
31
|
September 30,
2010
|
December 31,
2009
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 48,670 | $ | 100,467 | ||||
Short-term
investments
|
61,996 | — | ||||||
Accounts
receivable, net
|
113,816 | 101,334 | ||||||
Inventories
|
106,273 | 85,428 | ||||||
Receivables,
other
|
1,411 | 3,229 | ||||||
Other
current assets
|
8,003 | 8,090 | ||||||
Income
tax receivable
|
45 | — | ||||||
Deferred
tax assets
|
5,651 | 4,088 | ||||||
Total
current assets
|
345,865 | 302,636 | ||||||
Equipment
and leasehold improvements, net
|
9,545 | 9,191 | ||||||
Goodwill
|
3,729 | 3,927 | ||||||
Trademarks,
licenses and other intangible assets, net
|
94,272 | 101,799 | ||||||
Other
assets
|
1,457 | 1,535 | ||||||
Total
assets
|
$ | 454,868 | $ | 419,088 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Loans
payable – banks
|
$ | 6,548 | $ | 5,021 | ||||
Current
portion of long-term debt
|
11,273 | 11,732 | ||||||
Accounts
payable – trade
|
57,987 | 48,138 | ||||||
Accrued
expenses
|
56,932 | 37,440 | ||||||
Income
taxes payable
|
6,236 | 1,646 | ||||||
Dividends
payable
|
1,979 | 996 | ||||||
Total
current liabilities
|
140,955 | 104,973 | ||||||
Long-term
debt, less current portion
|
8,174 | 17,862 | ||||||
Deferred
tax liability
|
7,337 | 8,840 | ||||||
Equity:
|
||||||||
Inter
Parfums, Inc. shareholders’ equity:
|
||||||||
Preferred
stock, $.001 par; authorized 1,000,000 shares; none issued
|
||||||||
Common
stock, $.001 par; authorized 100,000,000 shares; outstanding 30,445,881
and 30,171,952 shares at September 30, 2010 and December 31, 2009,
respectively
|
30 | 30 | ||||||
Additional
paid-in capital
|
48,674 | 45,126 | ||||||
Retained
earnings
|
201,121 | 186,611 | ||||||
Accumulated
other comprehensive income
|
18,306 | 30,000 | ||||||
Treasury
stock, at cost, 10,009,492 and 10,056,966 common shares at September 30,
2010 and December 31, 2009, respectively
|
(34,151 | ) | (33,043 | ) | ||||
Total
Inter Parfums, Inc. shareholders’ equity
|
233,980 | 228,724 | ||||||
Noncontrolling
interest
|
64,422 | 58,689 | ||||||
Total
equity
|
298,402 | 287,413 | ||||||
Total
liabilities and equity
|
$ | 454,868 | $ | 419,088 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales
|
$ | 120,853 | $ | 117,542 | $ | 347,991 | $ | 296,555 | ||||||||
Cost
of sales
|
49,578 | 50,462 | 140,271 | 125,709 | ||||||||||||
Gross
margin
|
71,275 | 67,080 | 207,720 | 170,846 | ||||||||||||
Selling,
general and administrative expenses
|
54,692 | 53,169 | 163,630 | 139,812 | ||||||||||||
Income
from operations
|
16,583 | 13,911 | 44,090 | 31,034 | ||||||||||||
Other
expenses (income):
|
||||||||||||||||
Interest
expense
|
529 | 482 | 1,627 | 2,192 | ||||||||||||
(Gain)
loss on foreign currency
|
(461 | ) | (854 | ) | 2,435 | (4,796 | ) | |||||||||
Interest
income
|
(382 | ) | (135 | ) | (977 | ) | (745 | ) | ||||||||
(314 | ) | (507 | ) | 3,085 | (3,349 | ) | ||||||||||
Income
before income taxes
|
16,897 | 14,418 | 41,005 | 34,383 | ||||||||||||
Income
taxes
|
5,488 | 4,807 | 13,663 | 11,763 | ||||||||||||
Net
income
|
11,409 | 9,611 | 27,342 | 22,620 | ||||||||||||
Less: Net
income attributable to the noncontrolling interest
|
2,961 | 2,349 | 6,988 | 5,704 | ||||||||||||
Net
income attributable to Inter Parfums, Inc.
|
$ | 8,448 | $ | 7,262 | $ | 20,354 | $ | 16,916 | ||||||||
Earnings
per share:
|
||||||||||||||||
Net
income attributable to Inter Parfums, Inc. common
shareholders:
|
||||||||||||||||
Basic
|
$ | 0.28 | $ | 0.24 | $ | 0.67 | $ | 0.56 | ||||||||
Diluted
|
$ | 0.28 | $ | 0.24 | $ | 0.67 | $ | 0.56 | ||||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||
Basic
|
30,443 | 30,061 | 30,332 | 30,097 | ||||||||||||
Diluted
|
30,564 | 30,065 | 30,441 | 30,098 | ||||||||||||
Dividends
declared per share
|
$ | 0.065 | $ | 0.033 | $ | 0.195 | $ | 0.099 |
Inter Parfums, Inc. shareholders
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
other
|
|||||||||||||||||||||||||||
Common
|
paid-in
|
Retained
|
comprehensive
|
Treasury
|
Noncontrolling
|
|||||||||||||||||||||||
stock
|
Capital
|
earnings
|
income
|
stock
|
interest
|
Total
|
||||||||||||||||||||||
Balance
– January 1, 2009
|
$ | 30 | $ | 41,950 | $ | 168,025 | $ | 25,515 | $ | (31,319 | ) | $ | 51,308 | $ | 255,509 | |||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
— | — | 16,916 | — | — | 5,704 | 22,620 | |||||||||||||||||||||
Foreign
currency translation adjustment
|
— | — | — | 13,251 | — | — | 13,251 | |||||||||||||||||||||
Net
derivative instrument (loss), net of tax
|
— | — | — | (3,164 | ) | — | (1,084 | ) | (4,248 | ) | ||||||||||||||||||
Sale
of subsidiary shares to noncontrolling interests
|
— | (53 | ) | — | — | — | 2,677 | 2,624 | ||||||||||||||||||||
Dividends
|
— | — | (2,979 | ) | — | — | (1,716 | ) | (4,695 | ) | ||||||||||||||||||
Purchased
treasury stock
|
— | — | — | — | (631 | ) | — | (631 | ) | |||||||||||||||||||
Shares
issued upon exercise of stock options
|
— | 200 | — | — | — | — | 200 | |||||||||||||||||||||
Stock
compensation
|
— | 381 | 149 | — | — | 79 | 609 | |||||||||||||||||||||
Balance
– September 30, 2009
|
$ | 30 | $ | 42,478 | $ | 182,111 | $ | 35,602 | $ | (31,950 | ) | $ | 56,968 | $ | 285,239 | |||||||||||||
Balance
– January 1, 2010
|
$ | 30 | $ | 45,126 | $ | 186,611 | $ | 30,000 | $ | (33,043 | ) | $ | 58,689 | $ | 287,413 | |||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
— | — | 20,354 | — | — | 6,988 | 27,342 | |||||||||||||||||||||
Foreign
currency translation adjustment
|
— | — | — | (12,423 | ) | — | — | (12,423 | ) | |||||||||||||||||||
Net
derivative instrument gain, net of tax
|
— | — | — | 729 | — | 285 | 1,014 | |||||||||||||||||||||
Shares
issued upon exercise of stock options and warrants
|
— | 3,654 | — | — | 493 | — | 4,147 | |||||||||||||||||||||
Purchase
of subsidiary shares from noncontrolling interests
|
— | (1,662 | ) | — | — | — | (2,933 | ) | (4,595 | ) | ||||||||||||||||||
Sale
of subsidiary shares to noncontrolling interests
|
— | 1,108 | — | — | — | 3,385 | 4,493 | |||||||||||||||||||||
Dividends
|
— | — | (5,922 | ) | — | — | (2,049 | ) | (7,971 | ) | ||||||||||||||||||
Shares
received as proceeds of option exercise
|
— | — | — | — | (1,601 | ) | — | (1,601 | ) | |||||||||||||||||||
Stock
compensation
|
— | 448 | 78 | — | — | 57 | 583 | |||||||||||||||||||||
Balance
– September 30, 2010
|
$ | 30 | $ | 48,674 | $ | 201,121 | $ | 18,306 | $ | (34,151 | ) | $ | 64,422 | $ | 298,402 |
Nine months ended
September 30,
|
||||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 27,342 | $ | 22,620 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
6,790 | 7,758 | ||||||
Provision
for doubtful accounts
|
(116 | ) | 947 | |||||
Noncash
stock compensation
|
623 | 724 | ||||||
Deferred
tax (benefit)
|
(2,664 | ) | (2,385 | ) | ||||
Change
in fair value of derivatives
|
(201 | ) | (713 | ) | ||||
Changes
in:
|
||||||||
Accounts
receivable
|
(16,399 | ) | (1,880 | ) | ||||
Inventories
|
(23,577 | ) | 30,891 | |||||
Other
assets
|
2,872 | (4,694 | ) | |||||
Accounts
payable and accrued expenses
|
32,770 | (24,530 | ) | |||||
Income
taxes payable, net
|
3,857 | 4,851 | ||||||
Net
cash provided by operating activities
|
31,297 | 33,589 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of equipment and leasehold improvements
|
(3,235 | ) | (3,758 | ) | ||||
Purchases
of short-term investments
|
(67,629 | ) | — | |||||
Maturities
of short-term investments
|
7,891 | — | ||||||
Payment
for intangible assets acquired
|
(1,987 | ) | (622 | ) | ||||
Payment
for acquisition of noncontrolling interests
|
(4,595 | ) | — | |||||
Proceeds
from sale of stock of subsidiary
|
4,493 | 2,608 | ||||||
Net
cash used in investing activities
|
(65,062 | ) | (1,772 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
(repayments) of loans payable – banks, net
|
1,483 | (4,025 | ) | |||||
Repayment
of long-term debt
|
(8,015 | ) | (10,360 | ) | ||||
Proceeds
from exercise of options and warrants
|
2,652 | 200 | ||||||
Dividends
paid
|
(4,939 | ) | (2,979 | ) | ||||
Dividends
paid to noncontrolling interest
|
(2,049 | ) | (1,716 | ) | ||||
Purchase
of treasury stock
|
(106 | ) | (631 | ) | ||||
Net
cash used in financing activities
|
(10,974 | ) | (19,511 | ) | ||||
Effect
of exchange rate changes on cash
|
(7,058 | ) | 3,000 | |||||
Net
increase (decrease) in cash and cash equivalents
|
(51,797 | ) | 15,306 | |||||
Cash
and cash equivalents - beginning of period
|
100,467 | 42,404 | ||||||
Cash
and cash equivalents - end of period
|
$ | 48,670 | $ | 57,710 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid for:
|
||||||||
Interest
|
$ | 1,671 | $ | 2,000 | ||||
Income
taxes
|
10,296 | 9,746 |
1.
|
Significant Accounting
Policies:
|
2.
|
New Accounting
Pronouncements - adopted:
|
3.
|
Inventories:
|
(In thousands)
|
September 30,
2010
|
December 31,
2009
|
||||||
Raw
materials and component parts
|
$ | 38,990 | $ | 29,052 | ||||
Finished
goods
|
67,283 | 56,376 | ||||||
$ | 106,273 | $ | 85,428 |
4.
|
Fair Value
Measurement:
|
(In thousands)
|
Fair Value Measurements at September 30, 2010
|
|||||||||||||||
Quoted Prices in
|
Significant Other
|
Significant
|
||||||||||||||
Active Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Short-term
investments
|
$ | 61,996 | $ | — | $ | 61,996 | $ | — | ||||||||
Foreign
currency forward
|
||||||||||||||||
exchange
contracts
|
||||||||||||||||
accounted
for using
|
||||||||||||||||
hedge
accounting
|
1,291 | — | 1,291 | — | ||||||||||||
Foreign
currency forward
|
||||||||||||||||
exchange
contracts
|
||||||||||||||||
not
accounted for using
|
||||||||||||||||
hedge
accounting
|
2,899 | — | 2,899 | — | ||||||||||||
$ | 66,186 | $ | — | $ | 66,186 | $ | — | |||||||||
Liabilities:
|
||||||||||||||||
Interest
rate swaps
|
$ | 441 | $ | — | $ | 441 | $ | — |
(In thousands)
|
Fair Value Measurements at December 31, 2009
|
|||||||||||||||
Quoted Prices in
|
Significant Other
|
Significant
|
||||||||||||||
Active Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Foreign
currency forward
|
||||||||||||||||
exchange
contracts
|
||||||||||||||||
not
accounted for using
|
||||||||||||||||
hedge
accounting
|
$ | 5,620 | $ | — | $ | 5,620 | $ | — | ||||||||
Liabilities:
|
||||||||||||||||
Interest
rate swaps
|
$ | 752 | $ | — | $ | 752 | $ | — |
Derivatives
Designated as
Hedging
Instuments
|
Amount of Gain
(Loss) Recognized in
OCI on Derivative
(Effective Portion)
|
Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
|
Location of Gain
(Loss) Recognized in
Income on Derivative
(Effective Portion)
|
Amount of Gain (Loss)
Recognized in Income
on Derivative (Effective
Portion) (A)
|
|||||||||||||||||||||
Nine months ended
September 30,
|
Nine months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||||||||||
Foreign
exchange contracts
|
$ | 1,291 | 1,857 |
Gain
(loss) on foreign currency
|
$ | — | 4,725 |
Gain
(loss) on foreign currency
|
$ | (2,725 | ) | 713 |
Three
months ended
September
30,
|
Three
months ended
September
30,
|
Three
months ended
September
30,
|
||||||||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||||||||||
Foreign
exchange contracts
|
$ | 1,291 | 2,295 |
Gain
(loss) on foreign currency
|
$ | — | 1,534 |
Gain
(loss) on foreign currency
|
$ | — | 11 |
Derivatives Not Designated
as Hedging Instruments
|
Location of Gain (Loss)
recognized in Income on
Derivative
|
Nine months ended
September 30, 2010
|
Nine months ended
September 30, 2009
|
|||||||
Interest
rate swaps
|
Interest
expense
|
$ | 262 | $ | (62 | ) | ||||
Foreign
exchange contracts
|
Gain
(loss) on foreign currency
|
$ | (85 | ) | $ | 29 |
Derivatives Not Designated
as Hedging Instruments
|
Location of Gain (Loss)
recognized in Income on
Derivative
|
Three months ended
September 30, 2010
|
Three months ended
September 30, 2009
|
|||||||
Interest
rate swaps
|
Interest
expense
|
$ | 125 | $ | 43 | |||||
Foreign
exchange contracts
|
Gain
(loss) on foreign currency
|
$ | (16 | ) | $ | 5 |
5.
|
Goodwill and Other
Intangible Assets:
|
(In thousands)
|
Fair Value Measurements at September 30, 2010
|
|||||||||||||||
Quoted Prices in
|
Significant Other
|
Significant
|
||||||||||||||
Active Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Description
|
||||||||||||||||
Trademark
- Nickel
|
$ | 2,450 | $ | — | $ | — | $ | 2,450 | ||||||||
Goodwill
|
$ | 3,729 | $ | — | $ | — | $ | 3,729 |
(In thousands)
|
Fair Value Measurements at December 31, 2009
|
|||||||||||||||
Quoted Prices in
|
Significant Other
|
Significant
|
||||||||||||||
Active Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Description
|
||||||||||||||||
Trademark
– Nickel
|
$ | 2,586 | $ | — | $ | — | $ | 2,586 | ||||||||
Goodwill
|
$ | 3,927 | $ | — | $ | — | $ | 3,927 |
6.
|
Accrued
Expenses:
|
|
Accrued expenses include
approximately $22.1 million and $9.2 million in advertising liabilities as
of September 30, 2010 and December 31, 2009,
respectively.
|
7.
|
Share-Based
Payments:
|
Number of Shares
|
Weighted Average
Grant Date Fair Value
|
|||||||
Nonvested
options – beginning of year
|
480,598 | $ | 3.92 | |||||
Nonvested
options granted
|
10,500 | $ | 5.26 | |||||
Nonvested
options vested or forfeited
|
(16,595 | ) | $ | 3.66 | ||||
Nonvested
options – end of year
|
474,503 | $ | 3.96 |
Number of
Shares
|
Weighted
Average
Exercise Price
|
|||||||
Outstanding
at January 1, 2010
|
920,825 | $ | 11.32 | |||||
Granted
|
10,500 | 14.65 | ||||||
Cancelled
|
(6,200 | ) | 11.27 | |||||
Exercised
|
(226,455 | ) | 10.00 | |||||
Outstanding
at September 30, 2010
|
698,670 | $ | 11.80 | |||||
Options
exercisable at September 30, 2010
|
224,167 | $ | 12.49 | |||||
Options
available for future grants
|
932,025 |
(In
thousands)
|
2010
|
2009
|
||||||
Cash
proceeds from stock options exercised
|
$ | 771 | $ | 55 | ||||
Tax
benefits
|
162 | 145 | ||||||
Intrinsic
value of stock options exercised
|
1,195 | 11 |
September 30,
2010
|
September 30,
2009
|
|||||||
Weighted-average
expected stock-price volatility
|
49 | % | 46 | % | ||||
Weighted-average
expected option life
|
4.18
years
|
3.75
years
|
||||||
Weighted-average
risk-free interest rate
|
2.5 | % | 1.7 | % | ||||
Weighted-average
dividend yield
|
2.0 | % | 2.2 | % |
8.
|
Shareholders’
Equity:
|
9.
|
Earnings Per
Share:
|
(In thousands)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net
income attributable to Inter Parfums, Inc.
|
$ | 8,448 | $ | 7,262 | $ | 20,354 | $ | 16,916 | ||||||||
Effect
of dilutive securities of consolidated subsidiary
|
(34 | ) | — | (51 | ) | (18 | ) | |||||||||
$ | 8,414 | $ | 7,262 | $ | 20,303 | $ | 16,898 | |||||||||
Denominator:
|
||||||||||||||||
Weighted
average shares
|
30,443 | 30,061 | 30,332 | 30,097 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Stock
options and warrants
|
121 | 4 | 109 | 1 | ||||||||||||
30,564 | 30,065 | 30,441 | 30,098 |
|
Not
included in the above computations is the effect of antidilutive potential
common shares which consist of outstanding options to purchase 13,500 and
202,500 shares of common stock for the three and nine month periods ended
September 30, 2010, and 1.0 million and 1.1 million shares of common stock
for the three and nine month periods ended September 30, 2009,
respectively, as well as outstanding warrants to purchase 300,000 shares
of common stock for both the three and nine month periods ended
September 30, 2009.
|
10.
|
Comprehensive
Income:
|
(In thousands)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Comprehensive
income:
|
||||||||||||||||
Net
income
|
$ | 11,409 | $ | 9,611 | $ | 27,342 | $ | 22,620 | ||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||
Foreign
currency translation adjustment
|
27,341 | 9,049 | (12,423 | ) | 13,251 | |||||||||||
Change
in fair value of derivatives
|
968 | (1,148 | ) | 1,014 | (1,919 | ) | ||||||||||
Net
gains reclassified into earnings from equity
|
— | (751 | ) | — | (2,329 | ) | ||||||||||
Comprehensive
income:
|
39,718 | 16,761 | 15,933 | 31,623 | ||||||||||||
Less
comprehensive income attributable to the noncontrolling
interest
|
3,198 | 1,832 | 7,273 | 4,620 | ||||||||||||
Comprehensive
income attributable to Inter Parfums, Inc.
|
$ | 36,520 | $ | 14,929 | $ | 8,660 | $ | 27,003 |
11.
|
Net Income
Attributable to Inter Parfums, Inc. and Transfers From the Noncontrolling
Interest:
|
(In thousands)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
income attributable to Inter Parfums, Inc.
|
$ | 8,448 | $ | 7,262 | $ | 20,354 | $ | 16,916 | ||||||||
Decrease
in Inter Parfums, Inc.’s additional paid-in capital for subsidiary share
transactions
|
(530 | ) | (36 | ) | (554 | ) | (53 | ) | ||||||||
Change
from net income attributable to Inter Parfums, Inc. and transfers from
noncontrolling interest
|
$ | 7,918 | $ | 7,226 | $ | 19,800 | $ | 16,863 |
12.
|
Segment and Geographic
Areas:
|
|
We
manufacture and distribute one product line, fragrances and fragrance
related products and we manage our business in two segments, European
based operations and United States based operations. The European assets
are primarily located, and operations are primarily conducted, in France.
European operations primarily represent the sale of prestige brand name
fragrances and United States operations primarily represent the sale of
specialty retail and mass market fragrances. Information on our operations
by geographical areas is as
follows:
|
(In thousands)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
sales:
|
||||||||||||||||
United
States
|
$ | 11,645 | $ | 13,541 | $ | 38,561 | $ | 31,150 | ||||||||
Europe
|
109,208 | 104,001 | 309,430 | 265,405 | ||||||||||||
Eliminations
of intercompany sales
|
— | — | — | — | ||||||||||||
$ | 120,853 | $ | 117,542 | $ | 347,991 | $ | 296,555 | |||||||||
Net
income (loss) attributable to Inter Parfums, Inc.:
|
||||||||||||||||
United
States
|
$ | (266 | ) | $ | 288 | $ | (444 | ) | $ | (1,057 | ) | |||||
Europe
|
8,714 | 6,969 | 20,776 | 17,941 | ||||||||||||
Eliminations
of intercompany profits
|
— | 5 | 22 | 32 | ||||||||||||
$ | 8,448 | $ | 7,262 | $ | 20,354 | $ | 16,916 | |||||||||
September
30,
|
December
31,
|
|||||||||||||||
|
2010
|
2009
|
||||||||||||||
Total
Assets:
|
||||||||||||||||
United
States
|
$ | 44,642 | $ | 45,580 | ||||||||||||
Europe
|
419,537 | 382,628 | ||||||||||||||
Eliminations
of investment in subsidiary
|
(9,311 | ) | (9,120 | ) | ||||||||||||
$ | 454,868 | $ | 419,088 |
13.
|
Entry into Definitive
Agreements:
|
Item
2:
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Increase (decrease)
|
||||||||
(In thousands)
|
Change
|
to impairment charge
|
||||||
Weighted
average cost of capital
|
+10 | % | $ | (246 | ) | |||
Weighted
average cost of capital
|
-10 | % | $ | 307 | ||||
Future
sales levels
|
+10 | % | $ | 244 | ||||
Future
sales levels
|
-10 | % | $ | (244 | ) |
Three months ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||
2010
|
2009
|
% Change
|
2010
|
2009
|
% Change
|
|||||||||||||||||||
($ in millions)
|
||||||||||||||||||||||||
European-based
product sales
|
$ | 109.2 | $ | 104.0 | 5.0 | % | $ | 309.4 | $ | 265.4 | 16.6 | % | ||||||||||||
United
States-based product sales
|
11.7 | 13.5 | (14.0 | )% | 38.6 | 31.2 | 23.8 | % | ||||||||||||||||
$ | 120.9 | $ | 117.5 | 2.8 | % | $ | 348.0 | $ | 296.6 | 17.3 | % |
Gross margin
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
(In millions)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Net
sales
|
$ | 120.9 | $ | 117.5 | $ | 348.0 | $ | 296.6 | ||||||||
Cost
of sales
|
49.6 | 50.4 | 140.3 | 125.7 | ||||||||||||
Gross
margin
|
$ | 71.3 | $ | 67.1 | $ | 207.7 | $ | 170.9 | ||||||||
Gross
margin as a percent of net sales
|
59 | % | 57 | % | 60 | % | 58 | % |
Selling, general and administrative
expenses
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
(In millions)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Selling,
general and administrative expenses
|
$ | 54.7 | $ | 53.2 | $ | 163.6 | $ | 139.8 | ||||||||
Selling,
general and administrative expenses as a percent of net
sales
|
45 | % | 45 | % | 47 | % | 47 | % |
(In thousands except per share data)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
income
|
$ | 11,409 | $ | 9,611 | $ | 27,342 | $ | 22,620 | ||||||||
Less: Net
income attributable to the noncontrolling interest
|
2,961 | 2,349 | 6,988 | 5,704 | ||||||||||||
Net
income attributable to Inter Parfums, Inc.
|
$ | 8,448 | $ | 7,262 | $ | 20,354 | $ | 16,916 | ||||||||
Earnings
per share:
|
||||||||||||||||
Net
income attributable to Inter Parfums, Inc. common
shareholders:
|
||||||||||||||||
Basic
|
$ | 0.28 | $ | 0.24 | $ | 0.67 | $ | 0.56 | ||||||||
Diluted
|
$ | 0.28 | $ | 0.24 | $ | 0.67 | $ | 0.56 | ||||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||
Basic
|
30,443 | 30,061 | 30,332 | 30,097 | ||||||||||||
Diluted
|
30,564 | 30,065 | 30,441 | 30,098 |
Contractual Obligations
|
Payments due by period
|
|||||||||||||||||||
Total
|
Less than
1 year
|
Years
2-3
|
Years
4-5
|
More than
5 years
|
||||||||||||||||
Long-Term
Debt (2)
|
$ | 29,600 | $ | 11,700 | $ | 17,900 | ||||||||||||||
Capital
Lease Obligations
|
||||||||||||||||||||
Operating
Leases
|
$ | 19,800 | $ | 7,500 | $ | 8,600 | $ | 2,300 | $ | 1,400 | ||||||||||
Purchase
obligations(1)
|
$ | 1,210,700 | $ | 134,700 | $ | 313,300 | $ | 327,400 | $ | 435,300 | ||||||||||
Other
Long-Term Liabilities Reflected on the Registrant's Balance Sheet under
GAAP
|
||||||||||||||||||||
Total
|
$ | 1,260,100 | $ | 153,900 | $ | 339,800 | $ | 329,700 | $ | 436,700 |
(1)
|
Consists
of purchase commitments for advertising and promotional items, minimum
royalty guarantees, including fixed or minimum obligations, and estimates
of such obligations subject to variable price provisions. Future
advertising commitments were estimated based on planned future sales for
the license terms that were in effect at December 31, 2009, without
consideration for potential renewal periods and do not reflect the fact
that our distributors share our advertising
obligations.
|
(2)
|
Interest
due on the Company’s long-term debt is payable $0.70 million, $0.40
million and $0.07 million in 2010, 2011 and 2012,
respectively.
|
Item
3:
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Item
4.
|
CONTROLS
AND PROCEDURES
|
Exhibit No.
|
Description
|
Page
Number
|
||
10.143
|
Collaboration
Agreement between Clarins U.S.A., Inc., and Interparfums Luxury Brands
Inc. (Certain
confidential information in this Exhibit 10.143 was omitted and filed
separately with the Securities and Exchange Commission with a request for
confidential treatment by Inter Parfums, Inc).
|
35
|
||
10.144
|
Contrat
de Bail Commercial et GEMFI and
Inter Parfums, S.A. - French original - (Certain confidential information
in this Exhibit 10.144 was omitted and filed separately with the
Securities and Exchange Commission with a request for confidential
treatment by Inter Parfums, Inc.).
|
52
|
||
10.144.1
|
Commercial
Lease Agreement between GEMFI and Inter Parfums, S.A. - English
translation- (Certain confidential information in this Exhibit 10.144.1
was omitted and filed separately with the Securities and Exchange
Commission with a request for confidential treatment by Inter Parfums,
Inc.).
|
98
|
||
31.1
|
Certifications
required by Rule 13a-14(a) of Chief Executive Officer
|
144
|
||
31.2
|
Certifications
required by Rule 13a-14(a) of Chief Financial Officer
|
145
|
||
32.1
|
Certification
required by Section 906 of the Sarbanes-Oxley Act of Chief Executive
Officer
|
146
|
||
32.1
|
|
Certification
required by Section 906 of the Sarbanes-Oxley Act of Chief Financial
Officer
|
147
|
INTER
PARFUMS, INC.
|
||
By:
|
/s/ Russell Greenberg
|
|
Executive
Vice President and
|
||
Chief
Financial Officer
|