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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT ON FORM 10-K
(Mark one)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended 31 December 2000 or
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________________ to
_________________.
Commission File No. 0-16469
INTER PARFUMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3275609
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
551 Fifth Avenue, New York, New York 10176
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 212.983.2640.
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Securities registered pursuant to Section 12(b) of the Act: None.
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share.
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Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes /X/ No / /
Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation SK is not contained herein and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10K or any other
amendment to this Form 10K. / /
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant (based on the closing price of $10.75 on 26 March 2001:
$24,013,393.
Indicate the number of shares outstanding of the registrant's $.001 par
value common stock as of the close of business on the latest practicable date
(26 March 2001): 11,630,777
Documents Incorporated By Reference: None.
PART I
ITEM 1. BUSINESS
INTRODUCTION
We are Inter Parfums, Inc., a world-wide provider of prestige perfumes and
mass market perfumes and cosmetics. Organized under the laws of the State of
Delaware in May 1985 as Jean Philippe Fragrances, Inc., we changed our name to
Inter Parfums, Inc. on July 14, 1999, to better reflect our image as a provider
of prestige perfumes. We have also retained the brand name, Jean Philippe
Fragrances, for our mass market products.
Our worldwide headquarters and the office of our wholly-owned New York
limited liability company, Jean Philippe Fragrances, LLC, are located at 551
Fifth Avenue, New York, New York 10176 and our telephone number is 212.983.2640.
Our consolidated wholly-owned subsidiary, Inter Parfums Holdings, S.A., its
majority-owned subsidiary, Inter Parfums, S.A. and its two wholly-owned
subsidiaries, Inter Parfums Grand Public, S.A., and Inter Parfums Trademark,
S.A. maintain executive offices at 4, Rond Point des Champs Elysees, 75008
Paris, France. Our telephone number in Paris is 331.5377.0000.
Our common stock is listed on The Nasdaq Stock Market (National Market
System) and its trading symbol is "IPAR". The common shares of our subsidiary,
Inter Parfums S.A., are traded on the Paris Stock Exchange.
We operate in the fragrance and cosmetic industry, specializing in prestige
perfumes and mass market perfumes and cosmetics:
o Prestige products - For each prestige brand, owned or licensed by us, we
develop an original concept for the perfume consistent with world market
trends.
o Mass market products - In our United States operations, we design, market
and distribute inexpensive fragrances and personal care products, including
alternative designer fragrances and mass market cosmetics.
PRODUCTION AND SUPPLY
The stages of the development and production process for all fragrances are
as follows:
o Simultaneous briefing with perfume designers and creators (includes
analysis of esthetic and olfactory trends, target clientele and mass market
communication approach);
o Concept choice;
o Production of mock-ups for final acceptance of bottles and packaging;
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o Invitation of bids from component suppliers (glass makers, plastic
processors, printers, etc.) and packaging companies;
o Choice of vendor partners;
o Supply and packaging schedules;
o Issuance of component purchase orders; and
o Packaging and inventory control;
Suppliers/vendor-partners who assist the Company with product development
include:
o Independent perfumery design companies (Federico Restrepo, Fabien Barron,
Aesthete, Ateliers Dinand);
o Perfumers (IFF, Firmenich, Creations Aromatiques, Quest Wessel Fragrances)
which create a fragrance consistent with our expectations and, that of the
fragrance designers and creators;
o Contract manufacturers of components such as glassware (Saint Gobain,
Pochet, Nouvelles Verreries de Momignie), caps (MT Packaging, Codiplas,
Risdon, Newburgh) or boxes (Printor Packaging, Draeger, Dannex
Manufacturing);
o Production specialists who carry out packaging (MF Production, CCI, CEI
Bottling, IKI Manufacturing) or logistics (SAGA for storage, order
preparation and shipment).
For our prestige product lines, 80% of component and production needs are
purchased from approximately 20 suppliers out of a total of over 120 active
suppliers. The suppliers' accounts for our French operations are primarily
settled in French francs and for our United States operations, suppliers'
accounts are primarily settled in U.S. dollars.
MARKETING AND DISTRIBUTION OF PRESTIGE PRODUCTS
For our international distribution, we contract with independent
distribution companies specializing in luxury goods. In each country, we
designate anywhere from one to three distributors with the status of "exclusive
representative" for one or more of our name brands. We also distribute our
prestige products through a variety of duty-free operators, such as airports and
airlines.
In an effort to reduce our exposure to foreign currency exchange
fluctuations, approximately 35% of our prestige fragrance net sales are sold in
US dollars. We engage in a
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program of cautious hedging of foreign currencies to minimize the risk arising
from operations. As a result of our international operations, sales are not
subject to material seasonal fluctuations.
Distribution in France of our prestige products is carried out by a sales
team who oversee some 1,200 points of sale including, retail perfumers (chain
stores) such as
o Sephora
o Marionnaud
o Nocibe
o Galeries Lafayette
or specialized independent points of sale. Approximately 60% of prestige product
sales in France are made to approximately 40 customers out of a total of over
1,200 active accounts.
Our distributors vary in size depending on the number of competing brands
they represent. This extensive and diverse network provides us with a
significant presence in over 100 countries around the world. Approximately 40
customers out of a total of over 250 active accounts represent 80% of prestige
fragrance sales. No one customer represents more than 10% of sales.
FUBU MARKETING AND DISTRIBUTION
We intend to market our FUBU fragrance products to upscale catalog
companies, specialty retail stores, retail stores which sell FUBU apparel and
drug stores which sell comparable fragrance brands. We may use independent
distributors in the United States and abroad to market and sell our FUBU
fragrances.
MARKETING AND DISTRIBUTION OF MASS MARKET PRODUCTS
In the United States, mass merchandisers, drug store chains and supermarket
chains, are the target customers for our mass market products. Our current
customer list includes
o Albertson's
o Family Dollar
o Dollar General
o Dollar Tree Distributors
o Drug Emporium
o Consolidated Stores
o Pathmark
In addition, our mass market products are sold to wholesale
distributors, such as Variety Wholesalers, specialty store chains, and to
multiple locations of accessory, jewelry and clothing outlets, such as Rainbow
Shoppes.
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These products are sold through a highly efficient and dedicated in-house
sales team and reach approximately 12,000 retail outlets throughout the United
States. Our 140,000 square foot distribution center has provided us with the
opportunity and resources to better meet our customers' delivery requirements.
The entrepreneurial spirit of our management enables us, and challenges us, to
seek out and master new technologies to better serve our customers.
International distribution of our mass market product lines operate through
the use of exclusive and nonexclusive distribution agreements in such major
territories such as
o Brazil
o Mexico
o Argentina
o Chile
o Columbia
o Canada
o Russia
o Eastern Europe
THE MARKET
The perfumery market can be broken down into two types of distribution:
o Selective distribution - perfumeries and specialty sections of department
stores, who sell brand name products with a luxury image and
o Mass distribution - moderately-priced mass market products for a broad
customer base with limited purchasing power.
SELECTIVE DISTRIBUTION
During 2000, the French perfume industry, which accounts for about 30% of
the world market, reported a 7% growth rate with sales of $12 billion, as
compared to a 6% growth rate in 1999 and a 5% growth rate in 1998. (Source:
Federation des Industries de la Parfumerie)
The French domestic market for selective distribution had another good year
with sales reaching almost $1.5 billion. The increase however, was 5.4% in 2000,
as compared to 6% in 1999 and 8% in 1998.
During 2000, the French export market, which grew at a 9% rate, was
favorably impacted by the declining value of the Euro, as compared to other
currencies:
o Western Europe has seen its sales stabilize as a result of the size and
maturity of this market.
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o North America, which represents the second largest market of the perfume
and cosmetic industry, reported a 27% increase.
o Asia increased 26% in 2000, as compared to 15% in 1999.
o Latin America, recovering from its financial crisis, increase 24% in 2000,
as compared to a decrease of 12% in 1999.
o Eastern Europe, also recovering from its fiscal crisis reported a 16%
increase. (Source: Federation des Industries de la Parfumerie)
While our market share is less than 1% in France, in other countries such
as the United States, Italy, Portugal, Saudi Arabia and South Korea, the
Company's market share is reportedly between 1% and 4% of French perfumery
imports (internal source).
MASS MARKET DISTRIBUTION
Our mass market distribution consists of moderately-priced products,
including our alternative designer fragrance lines, for a broad customer base
with limited purchasing power. Our mass market products rely heavily on exports
from the United States. We have now sustained five straight quarters in which we
have been able to capitalize on the economic recoveries of certain Latin
American countries. In addition, sales growth from our wide selection of mass
market fragrances continues to exceed our expectations, as the United States
domestic market is becoming stronger. Our new Aziza line of cosmetics has also
achieved widespread acceptance and reorders with distribution in over 12,000
doors. We expect sales to continue to grow as our high volume, discount store
customers open more stores, and we continue to develop new products for them. We
are presently developing a line of health and beauty aids, including shampoos
and conditioners.
COMPETITION
The market for fragrances and beauty related products is highly competitive
and sensitive to changing mass market 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.
Our closest competitors in the prestige market typically do not have mass
market products departments. However, they may develop, market and sell prestige
cosmetics. We do not presently sell prestige cosmetics.
At the present time, we are aware of approximately five established
companies which market similar alternative designer fragrances. This market is
characterized by competition
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primarily based upon price. We feel the quality of our fragrance products,
competitive pricing, and our ability to quickly and efficiently develop and
distribute new products, will enable us to continue to effectively compete with
these companies.
The market for name brand and mass market color cosmetics is highly
competitive, with several major cosmetic companies marketing similar products.
Many of these companies have substantial financial resources and national
marketing campaigns. However, we believe that brand recognition of the Aziza
name, together with the quality and competitive pricing of our products, enables
us to compete with these companies in the mass market.
FRAGRANCE AND COSMETIC PRODUCTS
PRESTIGE PERFUMES
Since 1988 we have sought to build a portfolio of luxury brand names
through licensing agreements or through direct acquisition of existing brand
names. 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.
The creation and marketing of each product line are intimately linked with
the brand's name, its past and present positioning, customer base and, more
generally, the prevailing market atmosphere. Accordingly, we generally conduct a
market study for each proposed product line for almost a full year before we
introduce any new product into the market.
This market study is intended to define the general position of the line
and more particularly its fragrance, 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.
Overall spending on marketing and point of sale support aggregated
approximately $14.4 million in 2000 with approximately $4.2 million in point of
sale support, which is included in cost of sales and $10.2 million in other
marketing costs, included in selling expenses. Distributors of our product lines
contribute a similar amount for additional marketing support. The cost of
launching a new product (molds and tools, start-up costs and communication
costs, media, etc.) generally varies from $0.2 million to $2.0 million.
The smooth and consistent operation of our prestige perfume operations
requires a thorough knowledge of the market, detailed analysis of the image and
potential of each brand name, a "good dose" of creativity, as well as a highly
professional approach to international distribution channels. Our prestige
fragrances have an average life expectancy of five to ten years, and retail at
prices of $30 to $50.
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Our brand name portfolio, which has been steadily increasing since 1988, is
now made up essentially of six brand names, each of which has a variety of
product lines. In addition, we have planned several new product launches for
2001.
BURBERRY
(BURBERRY OF LONDON, WEEK END, BURBERRY TOUCH)
Burberry is our leading selective brand name and we are operating under the
terms of an exclusive worldwide license agreement entered into in 1993. In
February 2000, we extended the license agreement until December 31, 2006.
Burberry enjoys a very distinctive, upscale-market and classic image, with an
undeniable international cachet.
In August 2000, we launched two new Burberry perfume lines, Burberry Touch,
for men and Burberry Touch for women. These lines are designed with a style
intended to be consistent with the new, more modern and trend-setting Burberry
brand image. In the second quarter of 2001, we intend to bring a new Burberry
Touch bath line to the market.
S.T. DUPONT
(S.T. DUPONT PARIS, SIGNATURE)
In June 1997 we signed an 11-year exclusive license agreement with S.T.
Dupont for the creation, manufacture and worldwide distribution of S.T. Dupont
perfumes. Based on a strong international luxury image, the two lines launched
in September 1998 made a promising start with a strong sell through. A line of
bath products introduced during the first half of 1999 further enhanced the
image of the brand.
In March 2000 we launched a new S.T. Dupont Signature line of two new
highly selective perfumes, designed around the theme of writing for which S.T.
Dupont is famous.
PAUL SMITH
We signed a 12-year exclusive license agreement with Paul Smith in December
1998 for the creation, manufacture and worldwide distribution of Paul Smith
perfumes and cosmetics. This license represents a new avenue for growth, as it
provides us with a unique opportunity in designer perfumes, a sector from which
we have been absent until now.
Paul Smith is an internationally renowned British designer who creates
fashion with a clear identity. Paul Smith has a modern style which combines
elegance, inventiveness and a sense of humor. These images, in conjunction with
a growing audience, provide the justification for the creation of a perfume and
cosmetics line. We launched our first line of Paul Smith perfumes
internationally starting in July 2000.
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CHRISTIAN LACROIX
In March 1999, we entered into an exclusive license agreement with the
Christian Lacroix Company, a division of LVMH Moet Hennessy Louis Vuitton S.A.
("LVMH"), for the worldwide development, manufacture and distribution of
perfumes. For us, this association with a prestigious fashion label is another
key area for growth which we expect will further strengthen our position in the
prestige fragrance market. Our first Christian Lacroix line was launched in
Europe during 1999. During 2000, we launched the line in the United States, with
an exclusive distribution arrangement with Saks Fifth Avenue, and in South
America. In the first quarter of 2001, we plan to launch a lighter eau de
toilette fragrance. We also plan to develop a new line for Christian Lacroix
fragrances for 2002.
CELINE
In May 2000 we entered into an exclusive worldwide license agreement for
the development, manufacturing and distribution of fragrance lines under the
Celine brand name with Celine, a division of LVMH Moet Hennessy Louis Vuitton
S.A. We expect to launch two new fragrance lines by the third quarter of 2001.
Celine, a French luxury fashion and accessory company, and part of LVMH, is
known throughout the world for its luxury and quality products, as well as the
unique designs of Michael Kors. This agreement is an important part of Celine's
strategy to develop dynamic brand recognition and to offer a varied range of
luxury items to an international clientele. Association with this prestigious
fashion label is an important step in the development and expansion of our
prestige business. This relationship is expected to add strength to all of our
prestige brands and contribute to our continued growth.
FUBU
In June 2000 we signed an exclusive worldwide agreement with FUBU The
Collection to produce and sell men's and women's fragrances. Our agreement with
FUBU will allow us to offer a new, contemporary fragrance to consumers.
Everything about the FUBU fragrance lines we are developing, from scent to
packaging, advertising and marketing, will complement the lifestyle image of the
FUBU collections. We anticipate that the first FUBU fragrance line for men and
women will be launched either in the last quarter of 2001, or in the first
quarter of 2002.
Founded by four young men in 1992, FUBU exploded onto the young men's
fashion scene. Music, movie, television and sport stars have worn the designs
all recognizable by the FUBU logos. Today, FUBU product sales exceed $200
million, and encompass men's sportswear-formalwear, ladies, and children's
apparel, as well as footwear and accessory items. The exposure FUBU has received
has helped to create a loyal brand following from ages 5-55 in both the U.S. and
abroad. Today's FUBU customers are both men and women, living in big cities and
small towns, and encompass many diverse ethnic, racial and cultural backgrounds.
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MOLYNEUX
(QUARTZ, QUARTZ POUR HOMME, MODERN QUARTZ)
The Molyneux brand name, which we purchased in March 1994, was originally
created at the turn of the century by the fashion designer Edouard Molyneux, and
ranks among the institutional brand names of French perfumery. Molyneux enjoys a
very prominent market position in South America, especially through the "Quartz"
line for women, which was launched in 1978. The Molyneux brand provides
synergies with the Burberry brand name among duty-free operators (joint sales
areas, use of the same demonstrators, and enhanced positioning for negotiating
with duty-free operators and other customers). The Molyneux name is also well
established in France and other Western European countries. In January 2000 we
launched a totally new line, called Modern Quartz, by Molyneux, in a modernistic
package.
OTHER SELECTIVE BRAND NAMES
We also create, develop and market the following products:
o Jean Charles Brosseau's Ombre Rose lines, through February 2001, which was
sold predominantly in the United States and Japan.
o Parfums Weil, which includes "Fleur de Weil", "Secret de Venus" and
"Bambou" and which are sold predominantly in France and Europe.
o Regine's, who's "Regine's for men" line is primarily distributed in the
Middle East.
The following is a summary of the prestige brand names owned or licensed by
us:
BRAND NAME LICENSED DATE PURCHASE
OR OWNED ACQUIRED TERM PRICE
(IN MILLIONS)
Burberry Licensed July 93 13 years $0.0
S.T. Dupont Licensed July 97 11 years 1.0
Paul Smith Licensed Dec. 98 12 years 0.0
Celine Licensed May 00 11 years from January 2001, with an 0.0
additional 5-year option term
Molyneux Owned Mar. 94 N/A 4.2
Weil Owned Mar. 94 N/A 1.8
Jean Charles Brosseau Licensed July 93 Through February 2001 1.7
Regines Licensed June 88 Year to year 0.0
Christian Lacroix Licensed Mar. 99 11 years 0.0
FUBU Licensed June 00 6 1/2 years with three additional
2-year option terms.
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MASS MARKET PRODUCTS
MASS MARKET FRAGRANCES
We produce and market a complete line of alternative designer
fragrances and personal care products which sell at a substantial discount from
their high profile, high retail cost, brand name counterparts. Our alternative
designer fragrances, which are produced in the United States, are similar in
scent to highly advertised designer fragrances that are marketed at a high
retail price. These products are intended to have an upscale image without a
high retail price, and typically sell at a price below $5.00 at the mass market
retail level, substantially discounted from the high cost of designer fragrances
which typically range from $30.00 to $200.00 at prestige retail locations.
Our alternative designer fragrances encompass a complete and increasing
array of fragrances, body sprays, deodorants and perfumed creams. Product line
extensions into additional personal care products is ongoing and development of
new and innovative product lines is a continuous process.
New designer fragrances are constantly being launched in the
marketplace. Substantial expenditure of advertising dollars, selective
distribution and a high retail price create a perfect candidate for an
alternative designer fragrance. We react to demand by creating a similar scent
which, when combined with an innovative packaging design, is ready for sale to
mass market merchandisers, chain drug stores, wholesalers and international
trading companies. To this end, our strategy is to be among the first to release
these new introductions into the market.
Under the terms of a license agreement signed in 1990 with Jordache
Enterprises, we have capitalized on the strength and awareness of the Jordache
trademark. Our rights under this license agreement, which terminate on 30 June
2005, are subject to certain minimum sales requirements and the payment of
royalties. Recent new introductions in the fragrance category are directed at
and focused on the younger, trendy mass market consumer who is the core of the
Jordache franchise. New packaging, which utilizes the latest in graphic
technology, is both innovative and attractive. We expect to continue this trend
with additional line extensions under the Jordache brand name.
MASS MARKET COSMETICS
We purchased the trademark for our Aziza hypo allergenic eye cosmetics
from Unilever N.V. in 1995. After extensive market research and product
development, we launched an Aziza product line in February 1996. Aziza was the
first mass market cosmetic brand to focus solely on the eyes. The recognition of
the Aziza trade name provided us with the opportunity to introduce a new
cosmetic line with an existing loyal customer base.
During August 1999 we introduced our new Aziza II line of low priced
eyeshadow kits, mascara, colorful lip gloss and pencils, which is geared towards
the young teen market. This product line, with its low suggested retail prices,
is being distributed to mass market retailers and discount chains, including the
99 Cent and Dollar Store markets.
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Our Aziza cosmetic line is presently distributed in approximately
12,000 mass market outlets in the United States.
MASS MARKET TOILETRIES
We are developing a line of mass market toiletries consisting of
shampoo, conditioner, hand lotion and baby oil, for distribution in mass market
retailers and deep discount chains, including the 99 Cent and Dollar Store
markets. We anticipate that this line will be available for distribution in the
second quarter of 2001.
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 deliver product to
customers within 72 hours of the receipt of their orders.
PRODUCT LIABILITY
We maintain product liability coverage in an amount of $3,000,000.
Based upon 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
A fragrance is defined as a "cosmetic" under the Federal Food, Drug and
Cosmetics Act. A fragrance must comply with the labeling requirements of this
FDC Act as well as the Fair Packaging and Labeling Act and its regulations. Some
of our color cosmetic products may contain menthol and are also classified as a
"drug". Under U.S. law, a product may be classified as both a cosmetic and a
drug. Additional regulatory requirements for products which are "drugs" include
additional labeling requirements, registration of the manufacturer and the
semi-annual update of a drug list.
Our fragrances are subject to the approval of the Bureau of Alcohol,
Tobacco and Firearms as a result of the use of specially denatured alcohol. So
far we have not experienced any difficulties in obtaining the required
approvals.
TRADEMARKS
Under various license agreements we have the right to use certain
registered trademarks throughout the world. These registered trademarks include:
o Burberry
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o S.T. Dupont
o Paul Smith
o Christian Lacroix
o Celine
o Regine's
o Jordache
o FUBU
In addition, we are the registered trademark owner of:
o Intimate
o Aziza
o Parfums Molyneux, Captain, Quartz and Lord
o Parfums Weil, Bambou, Antilope and Kipling
o Beverly
o Fire
o Fleur de Paris
EMPLOYEES
As of March 1, 2001 we had 89 full-time employees world-wide. Of these,
36 are engaged in sales activities and 53 in administrative and marketing
activities.
As of March 1, 2001 we had 34 full-time United States employees. Of
these, 9 were engaged in sales activities and 25 in administrative and marketing
activities.
We believe that our relationship with our employees is good.
FORWARD LOOKING INFORMATION AND RISK FACTORS
Statements in this document which are not historical in nature are
forward-looking statements. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to be
materially different from projected results. Given these risks, uncertainties
and other factors, persons are cautioned not to place undue reliance on the
forward-looking statements.
The following is a discussion of some of the material risk factors
relating to our business:
THE SUCCESS OF OUR PRODUCTS IS DEPENDENT ON PUBLIC TASTE.
Although we believe we have the ability and experience to recognize
valuable fragrances and cosmetic products and gauge trends in the cosmetic and
fragrance market, our revenues are substantially dependent on the success of our
products, which depends upon, among other matters, pronounced and rapidly
changing public tastes, factors which are difficult to predict and over which
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we have little, if any, control. In addition, we have to develop successful
marketing, promotional and sales programs in order to sell our fragrances and
cosmetics. If we are not able to develop successful marketing, promotional and
sales programs, then such failure will have a material adverse effect on our
business, financial condition and operating results.
WE ARE DEPENDENT UPON MESSRS. JEAN MADAR AND PHILIPPE BENACIN, AND THE LOSS OF
THEIR SERVICES COULD HARM OUR BUSINESS.
Jean Madar, our Chief Executive Officer, and Philippe Benacin, our
President, are responsible for day-to-day operations as well as major decisions.
Termination of their relationships with us, whether through death, incapacity or
otherwise, could have a material adverse effect on our operations, and we cannot
assure you that qualified replacements can be found. We maintain key man
insurance on the lives of both Mr. Madar ($1 million) and Mr. Benacin ($2.8
million), however, we cannot assure you that we would be able to retain suitable
replacements for either Mr. Madar or Mr. Benacin.
WE ARE SUBJECT TO EXTREME COMPETITION IN BOTH THE PRESTIGE AND MASS MARKETS.
The market for fragrances and beauty related products is highly
competitive and sensitive to changing market preferences and demands. Many of
these companies have substantial financial resources and national marketing
campaigns.
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.
Mass market fragrances are characterized by competition primarily based
upon price. We feel the quality of our fragrance products, competitive pricing,
and our ability to quickly and efficiently develop and distribute new products,
will enable us to continue to effectively compete with these companies.
The market for name brand and mass market color cosmetics is highly
competitive, with several major cosmetic companies marketing similar products.
However, we believe that brand recognition of the Aziza name, together with the
quality and competitive pricing of our products, enables us to compete with
these companies in the mass market.
We cannot assure you that sufficient demand for our existing
fragrances and cosmetics will continue or that we will develop future fragrances
and cosmetic products that will withstand competition.
OUR RELIANCE ON THIRD PARTY MANUFACTURERS COULD HAVE A MATERIAL ADVERSE EFFECT
ON US.
We rely on outside sources to manufacture our fragrances and cosmetics.
Although we enter into agreements with these third party contractors in
anticipation of requirements based
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upon internal estimates, the failure of such third party manufacturers to
deliver either components or finished goods on a timely basis could have a
material adverse effect on or business. Although we believe there are alternate
manufactures available to supply our requirements, we cannot assure you that
current or alternative sources will be able to supply all of our demands on a
timely basis. We do not intend to develop our own manufacturing capacity. As
these are third parties over which we have little or no control, the failure of
such third parties to provide components or finished goods on a timely basis
could have a material adverse effect on our business, financial condition and
operating results.
THE INTERNATIONAL CHARACTER OF OUR BUSINESS RENDERS US SUBJECT TO
FLUCTUATION IN FOREIGN CURRENCY EXCHANGE RATES AND INTERNATIONAL TRADE TARIFFS,
BARRIERS AND OTHER RESTRICTIONS.
In an effort to reduce our exposure to foreign currency exchange
fluctuations, approximately 35% of our prestige fragrance net sales are sold in
US dollars. We engage in a program of cautious hedging of foreign currencies to
minimize the risk arising from operations. Despite such actions, fluctuations in
foreign currency exchange rates for the U.S. dollar, particularly with respect
to the Euro, could have a material adverse effect on our operating results.
Possible import, export, tariff and other trade barriers, which could be imposed
by the United States, France, Canada or other countries might also have a
material adverse effect on our business.
OUR BUSINESS IS SUBJECT TO GOVERNMENTAL REGULATION, WHICH COULD IMPACT OUR
OPERATIONS.
Fragrances and other cosmetics must comply with the labeling
requirements of the Federal Food, Drug and Cosmetics Act as well as the Fair
Packaging and Labeling Act and their regulations. Some of our color cosmetic
products may also be classified as a "drug". Additional regulatory requirements
for products which are "drugs" include additional labeling requirements,
registration of the manufacturer and the semi-annual update of a drug list.
Our fragrances are subject to the approval of the Bureau of Alcohol,
Tobacco and Firearms as a result of the use of specially denatured alcohol. So
far we have not experienced any difficulties in obtaining the required
approvals.
However, we cannot assure you that, should we develop or market
fragrances and cosmetics with different ingredients, or should existing
regulations be revised, we would not in the future experience difficulty in
obtaining such approvals.
WE MAY BE SUBJECT TO POSSIBLE LIABILITY FOR IMPROPER COMPARATIVE ADVERTISING OR
"TRADE DRESS".
Brand name manufacturers and sellers of brand name products may make
claims of improper comparative advertising or trade dress (packaging) with
respect to the likelihood of confusion between some of our mass market
fragrances, cosmetics and toiletries, and those of brand name manufacturers and
sellers. They may seek damages for loss of business or injunctive relief to seek
to have the use of the improper comparative advertising or trade dress halted.
However, we
14
believe that our displays and packaging constitute fair competitive advertising
and are not likely to cause confusion between our products and others. Further,
we have not experienced to any material degree, any of such problems to date.
ITEM 2. PROPERTIES
Our corporate headquarters and United States operations are located in
approximately 7,000 square feet of office space at 551 Fifth Avenue, New York,
New York. These premises are leased for a five year term ending October 31,
2002. Our monthly rental is approximately $19,000, which is subject to
escalations.
Our prestige fragrance operations maintain offices located at 4 Rond
Point Des Champs Elysees, Paris, France, in approximately 6,000 square feet of
leased office space pursuant to two leases. The first lease is for approximately
4,000 square feet. The second lease is for approximately 2,000 square feet. Both
of these leases expire in July 2005, unless terminated earlier by either party
on six months written notice at three year specified intervals. The annual
rentals are 833,000 French francs for the first lease and 467,000 French francs
for the second lease. Rent is subject to escalations each July 1.
In addition, we have a lease for approximately 2500 square feet of
additional office space at 18 avenue Franklin Roosevelt, Paris, France, for a
term ending April 2009, at an annual rental of approximately 588,000 French
francs per year, which is subject to escalations. We have the right to terminate
earlier at three year specified intervals.
We believe our office facilities are satisfactory for our present needs
and those for the foreseeable future.
We also occupy a 140,000 square foot distribution center at 60 Stults
Road in Dayton, New Jersey. We are leasing these premises for an eight year term
which expires October 2003 and requires monthly rental payments of approximately
$57,000. We believe that our distribution center is satisfactory for our present
needs and those for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
BROSSEAU LAWSUIT
As previously reported, Inter Parfums, S.A., is a party to litigation
with Jean Charles Brosseau, S.A. ("Brosseau"), the licensor of the Ombre Rose
trademark. The licensor has claimed damages of approximately $7.0 million and is
seeking termination of the license agreement.
15
In October 1999, Inter Parfums, S.A. received notice of a judgment in
favor of Brosseau, which awarded damages of approximately $600,000 and which
directed Inter Parfums, S.A. to turn over its license to Brosseau within six
months.
Inter Parfums, S.A. is appealing the judgment as it vigorously and
categorically denies the claims of Brosseau. The payment of the judgment has
been stayed, and Inter Parfums, S.A. was allowed to continue to operate under
the license agreement during the appeal process.
In June 2000, the president of the Court of Appeal granted a petition
filed by Brosseau regarding ongoing payments for royalties due to Brosseau. In
the same interlocutory judgment, the president of the Court of Appeal rejected
Inter Parfums, S.A.'s request for the appointment of a new judicial expert. Such
request was made to refute the findings of the judicial expert originally
appointed by the Commercial Court, which resulted in the $600,000 judgment
against Inter Parfums, S.A. As a result of these further developments, Inter
Parfums, S.A. and its special litigation counsel then considered it likely that
the judgment would be sustained and therefore, Inter Parfums, S.A. recorded a
charge against earnings in the second quarter of 2000 for $600,000 ($260,000
after taxes and minority interest), the full amount of the judgment.
In February 2001, the Court of Appeal confirmed the Brosseau claim
with respect to turning over the license. In addition, the Court named an expert
to proceed with additional investigations and required Inter Parfums, S.A. to
pay $142,000 as an advance against the damages claimed by Brosseau.
Inter Parfums, S.A. will continue its appeal as it still denies the
claims of Brosseau. We do not believe that such litigation will have any further
material adverse effect on our financial condition or operations. As of December
31, 2000, we have fully reserved the unamortized portion of the license
agreement.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our company's common stock, $.001 par value per share, is traded on
The Nasdaq Stock Market (National Market System) under the symbol "IPAR". The
following table sets forth in dollars, the range of high and low closing prices
for the past two fiscal years for our common stock, which has been adjusted to
reflect the 3:2 stock split distributed in June 2000.
-------------------- --------------------- ---------------------
Fiscal 2000 High Closing Price Low Closing Price
-------------------- --------------------- ---------------------
Fourth Quarter $ 9.50 $ 7.63
-------------------- --------------------- ---------------------
Third Quarter $ 9.00 $ 6.88
-------------------- --------------------- ---------------------
Second Quarter $ 9.44 $ 7.04
-------------------- --------------------- ---------------------
First Quarter $ 9.00 $ 6.00
-------------------- --------------------- ---------------------
Fiscal 1999 High Closing Price Low Closing Price
-------------------- --------------------- ----------------------
Fourth Quarter $ 7.00 $ 5.92
-------------------- --------------------- ----------------------
Third Quarter $ 7.09 $ 5.00
-------------------- --------------------- ----------------------
Second Quarter $ 5.67 $ 4.00
-------------------- --------------------- ----------------------
First Quarter $ 4.67 $ 3.75
-------------------- --------------------- ----------------------
As of March 1, 2001, the number of record holders, which include
brokers and broker's nominees, etc., of the company's common stock was 77. We
believe there are approximately 500 beneficial owners of the company's common
stock.
DIVIDENDS
We have not paid cash dividends since inception and we do not foresee
paying cash dividends in the foreseeable future as earned surplus is to be
retained for working capital for anticipated growth.
In addition, our Certificate of Incorporation provides for the
requirement of unanimous approval of the members of our board of directors for
the declaration or payment of dividends, if the aggregate amount of dividends to
be paid by us and our subsidiaries in any fiscal year is more than thirty
percent (30%) of our annual net income for the last completed fiscal year, as
indicated by our consolidated financial statements.
17
SALES OF UNREGISTERED SECURITIES
The following sets forth certain information as to all equity
securities, other than the grant of options, which we sold during the past year
that were not registered under the Securities Act of 1933, as amended, except as
previously reported. In each of the transactions, we sold common stock to
accredited investors, affiliates and employees, upon the exercise of outstanding
stock options which were exempt from the registration requirements of Section 5
of the Securities Act under Sections 4(2) and 4(6) of the Securities Act. Each
shareholder agreed to purchase his common stock for investment and not for
resale to the public.
From 9 November 2000 through 5 December 2000, three (3) persons,
consisting of two (2) executive officers and directors and one (1) employee
exercised outstanding stock options to purchase an aggregate of 151,125 shares
of Common Stock and we received approximately $867,000 in proceeds as a result
of such exercises.
The following sets forth certain information as to all options granted
to purchase our equity securities during the past year, which were not
registered under the Securities Act, except as previously reported. In each of
the transactions, we granted options to affiliates (executive officers and
directors), employees and two (2) consultants. The transactions were exempt
from the registration requirements of Section 5 of the Securities Act under
Sections 4(2) and 4(6) of the Securities Act. Each option holder agreed that,
if the option is exercised, the option holder would purchase his common stock
for investment and not for resale to the public.
On 3 January 2000, we granted options to purchase an aggregate of
32,775 shares for a five year period at the exercise price of $6.08 per share,
the fair market value at the time of grant, to 30 employees under our 1999 Stock
Option Plan.
On 1 February 2000, we granted options to purchase an aggregate of
10,500 shares for a five year period at the exercise price of $6.792 per share,
the fair market value at the time of grant, to four directors under our 1997
Non-Employee Director Stock Option Plan.
On 27 October 2000, we granted options to purchase an aggregate of
68,600 shares for a five year period at the exercise price of $7.625 per share,
the fair market value at the time of grant, to 35 persons (30 employees, three
executive officers and two consultants) under our 1999 Stock Option Plan.
18
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data have been derived from our
financial statements, and should be read in conjunction with those financial
statements, including the related footnotes.
YEARS ENDED DECEMBER 31
(In Thousands Except Share and Per Share Data)
- ------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
Income Statement Data:
- ------------------------------------------------------------------------------------------------------------
Net Sales $101,582 $87,140 $89,388 $91,462 $93,281
- ------------------------------------------------------------------------------------------------------------
Cost of Sales 51,873 45,325 47,417 49,388 51,355
- ------------------------------------------------------------------------------------------------------------
Selling, General and Administrative 37,509 31,965 32,944 32,334 32,416
- ------------------------------------------------------------------------------------------------------------
Income Before Taxes and Minority Interest 13,539 9,868 9,164 8,172 9,081
- ------------------------------------------------------------------------------------------------------------
Net Income 6,589(2) 4,828 4,613 4,507(1) 5,658
- ------------------------------------------------------------------------------------------------------------
Net Income per Share(3):
Basic $ 0.56 $ 0.43 $ 0.35 $ 0.32(1) $ 0.38
Diluted $ 0.51 $ 0.40 $ 0.35 $ 0.32(1) $ 0.38
- ------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding(3):
Basic 11,726,737 11,387,885 13,060,935 13,949,102 14,807,547
Diluted 13,000,432 12,155,226 13,348,208 14,095,994 14,976,695
- ------------------------------------------------------------------------------------------------------------
(1) Includes a nonrecurring charge, after taxes and minority interest, of
$0.8 million or $0.05 per diluted share, relating to the divestiture of
the Cutex license in 1997.
(2) Includes nonrecurring charges aggregating $0.6 million and a gain of
$0.6 million, all after taxes and minority interest. The charges
represent an accrual for exposure relating to pending litigation of
$0.2 million and a potential tax assessment of $0.4 million. The gain
represents a realized gain on the sale of marketable securities.
(3) Adjusted for 3:2 stock split distributed in June 2000.
AS AT DECEMBER 31
(In Thousands Except Share and Per Share Data)
2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------
Balance Sheet Data:
- --------------------------------------------------------------------------------
Working Capital $57,688 $52,402 $49,599 $44,842 $46,568
- --------------------------------------------------------------------------------
Total Assets 94,571 87,223 87,739 80,282 85,585
- --------------------------------------------------------------------------------
Long-Term Debt 1,417 1,531 200 424 485
- -------------------------------------------------------------------------------
Shareholders' Equity 55,061 52,361 53,680 50,194 53,366
- --------------------------------------------------------------------------------
19
ITEM 7 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
INTRODUCTION
We are a leading manufacturer and distributor of fragrances, cosmetics
and personal care products. Innovation and creativity are combined to produce
quality products for our customers around the world.
We operate in the fragrance and cosmetic industry, specializing in
prestige perfumes and mass market perfumes and cosmetics:
o Prestige products - for each prestige brand, owned or licensed by us, we
develop an original concept for the perfume consistent with world market
trends.
o Mass market products - in our United States operations, we design, market
and distribute inexpensive fragrances and personal care products, including
alternative designer fragrances and mass market cosmetics.
2000 COMPARED TO 1999
In fiscal year 2000, we set a new sales record. Net sales for the year
ended December 31, 2000 increased 17% to $101.6 million, as compared to $87.1
million in 1999. At comparable foreign currency exchange rates, net sales
actually rose 30% in 2000 as compared to 1999.
Our sales growth is attributable to across-the-board increases in both
our prestige and mass market product lines. However, the precipitous rise of the
US dollar in relation to the French franc has masked our true revenue growth.
Growth in net sales of prestige products, which was up approximately
17% in 2000, was fueled in part by the tremendous success of the recent launches
of our Paul Smith and "Burberry Touch" fragrance lines. Paul Smith premiered in
the United Kingdom in July and is presently being sold in over 450 U.K. doors.
Sales ran well ahead of expectations in the initial phase of the roll out.
"Burberry Touch", our newest Burberry fragrance, was launched worldwide in late
September 2000, and initial consumer reaction has been very favorable.
Additional year 2000 launches included our S.T. Dupont "Signature" line, which
continues to perform strongly in the Far East, and "Modern Quartz" by Molyneux,
which is very successful in France and South America.
In addition to expanding the geographic distribution of products we
launched in 2000, we have a large new product and brand extension pipeline in
the works. We are leveraging the popularity of "Burberry Touch" by bringing to
market a new bath line for men and women, scheduled for introduction later this
year. In March 2001, Paul Smith fragrances will be launched in Japan where this
designer has a large and loyal fashion following and over 200 standing doors. In
February 2001, we unveiled Christian Lacroix "Eau Florale" in the U.S. with
20
an exclusive at Saks Fifth Avenue's 63 stores, to be followed by European
distribution later this spring. Development is going well with Celine, our
second LVMH license, and we are on target for the initial launch of two new
Celine fragrances in the fourth quarter of 2001.
Net sales of our mass market products were up 17% for the year ended
December 31, 2000, as compared to 1999. Sales growth from our wide selection of
mass market fragrances continues to exceed our expectations. Our new Aziza line
of cosmetics has also achieved widespread acceptance. We expect sales to
continue to grow as our high volume, discount store customers open more stores,
and we continue to develop new products for them. We are presently developing a
line of health and beauty aids, including shampoos and conditioners.
Growing sales within existing product lines, new product launches and
an active new business development program are how we plan to continue to grow
our business in the year 2001 and beyond. During the year ended December 31,
2000 we signed an exclusive worldwide license agreement with Celine, a division
of LVMH Moet Hennessy Louis Vuitton S.A. Our first line of Celine fragrances is
expected to debut in October 2001. Also during fiscal 2000, we signed an
exclusive worldwide license agreement with FUBU The Collection to produce and
sell men's and women's fragrances. We anticipate that the first FUBU fragrance
line for men and women will be launched either in the last quarter of 2001, or
in the first quarter of 2002. In addition, we are actively pursuing new business
opportunities. However, we cannot assure you that any new license or
acquisitions will be consummated.
Gross profit margins increased to 49% of net sales for the year ended
December 31, 2000, as compared to 48% in 1999. Gross profit margins have
continued to increase over the past four years. Part of this improvement is the
result of the strength of the US dollar in relation to the Euro, as certain
European sales are denominated in US dollars. In addition, our prestige
fragrance lines, which have been growing at a faster rate than our mass market
lines, generate a higher gross profit margin than our mass market product lines.
Selling, general and administrative expenses increased to $37.5 million
for the year ended December 31, 2000, as compared to $32.0 million in 1999 and
represented 37% of sales in both 2000 and 1999.
In the United States, selling, general and administrative expenses
increased to $9.8 million for the year ended December 31, 2000, as compared to
$9.1 million in 1999, but declined to 31% of net sales in 2000, as compared to
34% of net sales in 1999. Our mass market sales do not require extensive
advertising and therefore, more of our selling, general and administrative
expenses are fixed rather than variable. As a result, the increase in sales has
enabled us to spread our fixed costs over a larger net sales base.
Selling, general and administrative expenses incurred by our French
subsidiary, Inter Parfums, S.A., increased to $27.7 million for the year ended
December 31, 2000, as compared to $22.8 million in 1999. As a percentage of
sales, selling, general and administrative expenses represented 39% of sales in
2000, as compared to 38% in 1999. Promotion and advertising are prerequisites
for sales of designer products. We develop a complete marketing and promotional
21
plan to support our growing portfolio of prestige fragrance brands and to build
upon each brand's awareness.
As previously reported, Inter Parfums, S.A., is a party to litigation
with Jean Charles Brosseau, S.A. ("Brosseau"), the licensor of the Ombre Rose
trademark. The licensor has claimed damages of approximately $7.0 million and is
seeking termination of the license agreement.
In October 1999, Inter Parfums, S.A. received notice of a judgment in
favor of Brosseau, which awarded damages of approximately $600,000 and which
directed Inter Parfums, S.A. to turn over its license to Brosseau within six
months.
Inter Parfums, S.A. is appealing the judgment as it vigorously and
categorically denies the claims of Brosseau. The payment of the judgment has
been stayed, and Inter Parfums, S.A. was allowed to continue to operate under
the license agreement during the appeal process.
In June 2000, the president of the Court of Appeal granted a petition
filed by Brosseau regarding ongoing payments for royalties due to Brosseau. In
the same interlocutory judgment, the president of the Court of Appeal rejected
Inter Parfums, S.A.'s request for the appointment of a new judicial expert. Such
request was made to refute the findings of the judicial expert originally
appointed by the Commercial Court, which resulted in the $600,000 judgment
against Inter Parfums, S.A. As a result of these further developments, Inter
Parfums, S.A. and its special litigation counsel then considered it likely that
the judgment would be sustained and therefore, Inter Parfums, S.A. recorded a
charge against earnings in the second quarter of 2000 for $600,000 ($260,000
after taxes and minority interest), the full amount of the judgment.
In February 2001, the Court of Appeal confirmed the Brosseau claim with
respect to turning over the license. In addition, the Court named an expert to
proceed with additional investigations and required Inter Parfums, S.A. to pay
$142,000 as an advance for damages claimed by Brosseau.
Inter Parfums, S.A. will continue its appeal as it still denies the
claims of Brosseau. We do not believe that such litigation will have any further
material adverse effect on our financial condition or operations. As of December
31, 2000, we have fully reserved the unamortized portion of the license
agreement.
During the year ended December 31, 2000 we sold marketable securities
and realized a gain of $1.4 million ($645,000 after taxes and minority
interest). On occasion, we invest excess cash in marketable securities, which
are classified as available-for-sale. These funds are available to support
current operations or to take advantage of other investment opportunities. At
December 31, 2000, we had no remaining marketable security positions.
Interest expense was $0.4 million for the year ended December 31, 2000,
as compared to $0.3 million in 1999. We use the credit lines available to us, as
needed, to finance our working capital needs.
22
We incurred a loss on foreign currency of $0.2 million for both of our
last two fiscal years. Occasionally, we enter into foreign currency forward
exchange contracts to manage exposure related to certain foreign currency
commitments.
Our effective income tax rate was 42% for the year ended December 31,
2000, as compared to 40% in 1999. The effective tax rate for the year ended
December 31, 2000 includes a $480,000 ($370,000 after minority interest) accrual
to cover the potential exposure related to tax audits of Inter Parfums, S.A.
commenced by the French Tax Authorities. If not for these accruals, the
declining tax rates in France would have caused a decline in our overall
effective tax rate.
Net income increased 36% to $6.6 million for the year ended December
31, 2000, as compared to $4.8 million in 1999. Net income for the year ended
December 31, 2000 includes charges of $630,000 and a gain of $645,000, all after
taxes and minority interest. The charges represent an accrual for exposure
relating to the Brosseau litigation of $260,000 and a potential tax assessment
of $370,000. The gain represents a realized gain on sale of marketable
securities.
After giving effect to our 3 for 2 stock split effected in June 2000,
diluted earnings per share increased 27% to $0.51 for the year ended December
31, 2000, as compared to $0.40 in 1999. Weighted average shares outstanding
aggregated 11.7 million for the year ended December 31, 2000, as compared to
11.4 million in 1999. On a diluted basis, average shares outstanding was 13.0
million for the year ended December 31, 2000, as compared to 12.2 million in
1999. Shares repurchased pursuant to our stock repurchase program, offset shares
issued upon exercise of stock options. However, the increase in our stock price
has increased the dilutive effect of outstanding stock options, thereby
increasing diluted shares outstanding.
1999 COMPARED TO 1998
Net sales for the year ended December 31, 1999 were $87.1 million, as
compared to $89.4 million in 1998. At comparable foreign currency exchange
rates, net sales for the year ended December 31, 1999 were virtually unchanged
from that of 1998.
These results were in line with management's expectations as no new
prestige fragrance launches were scheduled for 1999 and we entered the year
during a downward trend in our mass market product lines, which resulted from
the unsteady economic situation in Eastern Europe, Brazil and other Latin
American countries.
In March 1999, we entered into an exclusive license agreement with the
Christian Lacroix Company, a division of LVMH Moet Hennessy Louis Vuitton S.A.
("LVMH") and a new Christian Lacroix product line was launched in October 1999.
In addition, in the latter part of 1999, the downward trend in our mass market
product lines began to reverse. As a result, at comparable foreign currency
exchange rates, net sales increased 17% for the three months ended December 31,
1999, as compared to the corresponding period of the prior year.
23
We are also actively pursuing new license agreements to build upon the
strength of our existing portfolio.
Gross profit margins increased to 48% of net sales for the year ended
December 31, 1999, as compared to 47% in 1998. Gross profit margins have
continued to increase over the past three years. Part of the gross profit margin
improvement is the result of the strength of the US dollar relative to the Euro,
as certain European sales are denominated in US dollars. Our prestige fragrance
lines also generate a higher gross profit margin than our mass market product
lines and these gross profit margin benefits have offset the negative affect of
lower margin mass market product sales and closeout sales.
Selling, general and administrative expenses declined to $32.0 million
for the year ended December 31, 1999, as compared to $32.9 million in 1998.
Selling, general and administrative expenses represented 37% of sales in both
1999 and 1998.
In the United States, selling, general and administrative expenses
declined 20% to $9.1 million for the year ended December 31, 1999, as compared
to $11.4 million in 1998, and declined to 34% of net sales in 1999, as compared
to 37% of net sales in 1998. As a result of the weakness in domestic mass market
product sales experienced in early 1999, we instituted extraordinarily tight
controls in an effort to keep spending in line with sales.
Selling, general and administrative expenses incurred by our French
subsidiary, Inter Parfums, S.A., were $22.8 million for the year ended December
31, 1999, as compared to $21.5 million in 1998. Some savings has been achieved
in distribution and freight costs. However, a reasonable level of advertising is
necessary to support our growing portfolio of prestige fragrance brands and to
build upon each brand's awareness.
Interest expense was $0.3 million for the year ended December 31, 1999,
as compared to $0.5 million in 1998. We use the credit lines available to us, as
needed, to finance our working capital needs.
We incurred a loss on foreign currency of $0.2 million for the year
ended December 31, 1999, as compared to $0.1 million in 1998. Occasionally, we
enter into foreign currency forward exchange contracts to manage exposure
related to certain foreign currency commitments.
Our effective income tax rate was 40% for the year ended December 31,
1999, as compared to 39% in 1998. The effective tax rate for 1998 reflects the
positive effects of the tax benefit to be realized upon the closing of our
Brazilian subsidiary.
Net income increased 5% to $4.8 million for the year ended December 31,
1999, as compared to $4.6 million in 1998. Earnings per diluted share increased
to $0.40 for the year ended December 31, 1999, as compared to $0.35 in 1998.
Weighted average shares outstanding aggregated 11.4 million for the
year ended December 31, 1999, as compared to 13.1 million in 1998. On a diluted
basis, average shares
24
outstanding was 12.2 million for the year ended December 31, 1999, as compared
to 13.3 million in 1998. The declines are the result of our common stock
repurchase program.
LIQUIDITY AND FINANCED RESOURCES
Our financial position remains very strong as a result of continued
profitable operating results. At December 31, 2000, working capital aggregated
$57 million and we had a working capital ratio of almost 3 to 1. Cash and
marketable securities on hand aggregated $28 million and our net book value was
$4.72 per outstanding share as of December 31, 2000. Furthermore, we had only
$1.4 million in long-term debt.
On occasion we use a portion of our cash to make investments in
marketable equity securities classified as available-for-sale. These funds are
available to support current operations or to take advantage of other investment
opportunities. These investments are made to maximize our return on cash. As of
December 31, 2000 we had no marketable security positions.
During the year ended December 31, 2000, we continued our stock
repurchase program by acquiring 343,600 of our common shares at an average cost
of $8.19 per share. We believe that our stock price does not reflect our growth
rate, prospects for future growth, the value of our licenses and our worldwide
distribution network. In addition, the market capitalization of our 78%
ownership interest in Inter Parfums, S.A., our publicly traded Paris subsidiary,
is in excess of $150 million, which is significantly higher than that of the
company as a whole.
Our short-term financing requirements are expected to be met by
available cash at December 31, 2000, cash generated by operations and short-term
credit lines provided by domestic and foreign banks. The principal credit
facilities for 2001 are a $12.0 million unsecured revolving line of credit
provided by a domestic commercial bank and approximately $12.0 million in credit
lines provided by a consortium of international financial institutions.
During the year ended December 31, 2000 we generated $0.2 million in
cash from operating activities, as compared to $12.6 million in 1999. At
December 31, 2000 accounts receivable increased 18%, as compared to December 31,
1999, which is in line with our 17% increase in net sales. In addition,
inventories rose 30% as a result of a planned buildup to support all of the
recent new product launches and to prepare for anticipated revenue growth.
We believe that funds generated from operations, supplemented by our
present cash position and available credit facilities, will provide us with
sufficient resources to meet all present and reasonably foreseeable future
operating needs.
In January 1999, certain member countries of the European Union
established permanent fixed rates between their existing currencies and the
European Union's common currency, the Euro. The transition period for the
introduction of the Euro is scheduled to be completed by January 1, 2002.
However, we do not expect the introduction of the Euro and the phasing out of
other currencies to have a material impact on our consolidated financial
statements.
25
Inflation rates in the U.S. and foreign countries in which we operate
did not have a significant impact on operating results for the year ended
December 31, 2000.
FORWARD LOOKING STATEMENTS
Statements in this document, which are not historical in nature, are
forward-looking statements. Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to be
materially different from projected results. Given these risks, uncertainties
and other factors, persons are cautioned not to place undue reliance on the
forward-looking statements.
Such factors include effectiveness of sales and marketing efforts and
product acceptance by consumers, dependence upon management, competition,
currency fluctuation and international tariff and trade barriers, governmental
regulation and possible liability for improper comparative advertising or "Trade
Dress".
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
GENERAL
We address certain financial exposures through a controlled program of
risk management that primarily consists of the use of derivative financial
instruments. We primarily enter into foreign currency forward exchange contracts
in order to reduce the effects of fluctuating foreign currency exchange rates.
We have entered into one (1) interest rate swap in an attempt to take advantage
of low variable interest rates as compared to the fixed rate on our long term
debt. We do not engage in the trading of foreign currency forward exchange
contracts or interest rate swaps.
FOREIGN EXCHANGE RISK MANAGEMENT
We enter into forward exchange contracts to hedge receivables
denominated in foreign currencies for periods consistent with our identified
exposures. The purpose of the hedging activities is to minimize the effect of
foreign exchange rate movements on the receivables and cash flows of Inter
Parfums, S.A., our French subsidiary, whose functional currency is French
francs. All foreign currency contracts are denominated in currencies of major
industrial countries and are with large financial institutions, which are rated
as strong investment grade. Gains and losses related to qualifying hedges of
these exposures are deferred and recognized in operating income when the
underlying hedged transaction occurs.
We believe that our risk of loss as the result of nonperformance by any
of such financial institutions is remote and in any event would not be material.
The contracts have varying maturities with none exceeding one year. Costs
associated with entering into such contracts have not been material to our
financial results. At December 31, 2000, we had foreign currency contracts in
the form of forward exchange contracts in the amount of approximately $9
million.
26
The foreign currencies included in these contracts are principally the U.S.
dollar and the British pound.
INTEREST RATE RISK MANAGEMENT
We mitigate interest rate risk by continually monitoring interest
rates, and then determining whether fixed interest rates should be swapped for
floating rate debt, or if floating rate debt should be swapped for fixed rate
debt. We have entered into one (1) interest rate swap to take advantage of
declining interest rates. At December 31, 2000 we had one (1) interest rate swap
agreement outstanding to convert $1.4 million of principal fixed rate debt with
an interest rate of 4.56% to floating interest rate debt, at the EUIBOR rate,
over the life of our long term debt due in 2005. At December 31, 2000, the
EUIBOR rate was 4.9%. If interest rates were to rise 1% per annum over the
remaining term of the long term debt, then we would incur a loss of $50,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The required financial statements commence on page F-1.
SUPPLEMENTARY DATA
QUARTERLY DATA (UNAUDITED)
FOR THE YEAR ENDED 31 DECEMBER 2000
(In Thousands Except Share and Per Share Data)
- ----------------------------------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year
- ----------------------------------------------------------------------------------------------------
Net Sales $22,169 $24,277 $25,940 $29,196 $101,582
- ----------------------------------------------------------------------------------------------------
Cost of Sales 12,245 12,541 13,923 13,164 51,873
- ----------------------------------------------------------------------------------------------------
Net Income 1,422 1,508 1,635 2,024 6,589
- ----------------------------------------------------------------------------------------------------
Net Income per Share(1):
Basic $0.12 $0.13 $0.14 $0.17 $0.56
Diluted $0.11 $0.12 $0.13 $0.16 $0.51
- ----------------------------------------------------------------------------------------------------
Average Common Shares
Outstanding(1): 11,767,250 11,754,490 11,726,616 11,658,756 11,726,737
Basic 12,925,178 13,026,453 13,013,615 13,036,570 13,000,432
Diluted
- ----------------------------------------------------------------------------------------------------
(1) Adjusted for 3:2 stock split distributed in June 2000.
QUARTERLY DATA (UNAUDITED)
FOR THE YEAR ENDED 31 DECEMBER 1999
(In Thousands Except Share and Per Share Data)
- ----------------------------------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year
- ----------------------------------------------------------------------------------------------------
Net Sales $19,584 $22,192 $21,652 $23,712 $87,140
- ----------------------------------------------------------------------------------------------------
Cost of Sales 10,099 11,741 11,649 11,836 45,325
- ----------------------------------------------------------------------------------------------------
27
- ----------------------------------------------------------------------------------------------------
Net Income 1,157 1,084 1,204 1,383 4,828
- ----------------------------------------------------------------------------------------------------
Net Income per Share(1):
Basic $0.10 $0.10 $0.11 $0.12 $0.43
Diluted $0.10 $0.09 $0.10 $0.11 $0.40
- ----------------------------------------------------------------------------------------------------
Average Common Shares Outstanding(1):
Basic
Diluted 11,832,560 11,149,728 11,096,134 11,473,118 11,387,885
11,962,835 11,784,033 12,317,569 12,556,799 12,155,226
- ----------------------------------------------------------------------------------------------------
(1) Adjusted for 3:2 stock split distributed in June 2000.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
28
PART III
ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS OF REGISTRANt
As of March 15, 2001, our executive officers and directors were as
follows:
- ----------------------------------------------------------------------------------------------------------
Name Position
- ----------------------------------------------------------------------------------------------------------
Jean Madar Chairman of the Board, Chief Executive Officer of Inter Parfums, Inc. and
Director General of Inter Parfums, S.A.
- ----------------------------------------------------------------------------------------------------------
Philippe Benacin Vice Chairman of the Board, President of Inter Parfums, Inc. and
President of Inter Parfums, S.A.
- ----------------------------------------------------------------------------------------------------------
Russell Greenberg Director, Executive Vice President and Chief Financial Officer
- ----------------------------------------------------------------------------------------------------------
Francois Heilbronn Director
- ----------------------------------------------------------------------------------------------------------
Joseph A. Caccamo Director
- ----------------------------------------------------------------------------------------------------------
Jean Levy Director
- ----------------------------------------------------------------------------------------------------------
Robert Bensoussan-Torres Director
- ----------------------------------------------------------------------------------------------------------
Daniel Piette Director
- ----------------------------------------------------------------------------------------------------------
Jean Cailliau Director
- ----------------------------------------------------------------------------------------------------------
Philippe Santi Director and Director of Finance, Inter Parfums, S.A.
- ----------------------------------------------------------------------------------------------------------
Serge Rosinoer Director
- ----------------------------------------------------------------------------------------------------------
Bruce Elbilia Executive Vice President
- ----------------------------------------------------------------------------------------------------------
Wayne Hamerling Executive Vice President
- ----------------------------------------------------------------------------------------------------------
Eric de Labouchere Director of Operations, Inter Parfums, S.A.
- ----------------------------------------------------------------------------------------------------------
Frederic Garcia-Pelayo Director of Export Sales, Inter Parfums, S.A.
- ----------------------------------------------------------------------------------------------------------
The directors will serve until the next annual meeting of stockholders
and thereafter until their successors shall have been elected and qualified. LV
Capital USA, Inc. and Messrs. Jean Madar and Philippe Benacin have entered into
a Shareholders' Agreement relating to certain corporate governance issues,
including increasing the number of Board members from seven to ten, granting
two seats on the Board of directors to designees of LV Capital. LV Capital USA,
Inc. and Messrs. Jean Madar and Philippe Benacin have each agreed to vote for
each others nominees for directors. The number of members of our Board of
Directors was increased to 11 by the addition of Serge Rosinoer in December
2000 by the unanimous vote of our board.
With the exception of Mr. Benacin, the officers are elected annually by
the directors and serve at the discretion of the board of directors. There are
no family relationships between executive officers or directors of our company.
The following sets forth biographical information as to the business
experience of each executive officer and director of our company for at least
the past five years.
JEAN MADAR
Jean Madar, age 40, a Director, has been the Chairman of the Board of
Directors since the Company's inception, and is a co-founder of the Company with
Mr. Benacin. From inception until December 1993 he was the President of the
Company; in January 1994 he became Director General of Inter Parfums, S.A., the
Company's subsidiary; and in January 1997 he became Chief
29
Executive Officer of the Company. Mr. Madar was previously the managing
director of Inter Parfums, S.A., from September 1983 until June 1985. At such
subsidiary, he had the responsibility of overseeing the marketing operations of
its foreign distribution, including market research analysis and actual
marketing campaigns. Mr. Madar graduated from The French Higher School of
Economic and Commercial Sciences (ESSEC) in 1983.
PHILIPPE BENACIN
Mr. Benacin, age 42, a Director, has been the Vice Chairman of the
Board since September 1991, and is a co-founder of the Company with Mr. Madar.
He was elected the Executive Vice President in September 1991, Senior Vice
President in April 1993, and President of the Company in January 1994. In
addition, he has been the President of Inter Parfums, S.A. for more than the
past five years. Mr. Benacin graduated from The French Higher School of Economic
and Commercial Sciences (ESSEC) in 1983.
RUSSELL GREENBERG
Mr. Greenberg, age 44, the Chief Financial Officer, was Vice-President,
Finance when he joined the Company in June 1992; became Executive Vice President
in April 1993; and was appointed to the Board of Directors in February 1995. He
is a certified public accountant licensed in the State of New York, and is a
member of the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants. After graduating from The
Ohio State University in 1980, he was employed in public accounting until he
joined the Company in June 1992.
FRANCOIS HEILBRONN
Mr. Heilbronn, age 40, a Director since 1988 and a member of the audit,
stock option and executive compensation committees, is a graduate of Harvard
Business School with a Master of Business Administration degree and is currently
the managing partner of the consulting firm of M.M. Friedrich, Heilbronn &
Fiszer. He was formerly employed by The Boston Consulting Group, Inc. from 1988
through 1992 as a manager. Mr. Heilbronn graduated from Institut D' Etudes
Politiques De Paris in June 1983. From 1984 to 1986, he worked as a financial
analyst for Lazard Freres & Co.
JOSEPH A. CACCAMO
Mr. Caccamo, age 45, a Director since 1992, is an attorney with the law
firm of Becker & Poliakoff, P.A., our general counsel. A member of both the New
York and Florida bars, Mr. Caccamo has been a practicing attorney since 1981,
concentrating in the areas of corporate and securities law, and in September
1991 he became counsel to us. From August 1992 through September 1997, he was a
director of and general counsel to, Hydron Technologies, Inc., a company
primarily engaged in the development of cosmetic and personal care products.
30
JEAN LEVY
Jean Levy, age 68, a Director since August 1996 and a member of the
audit, stock option and executive compensation committees, worked for
twenty-seven years at L'Oreal, and was the President and Chief Executive Officer
of Cosmair, the exclusive United States licensee of L'Oreal, from 1983 through
June 1987. In addition, he is the former President and Chief Executive Officer
of Sanofi Beaute (France). For the more than the past five years, Mr. Levy has
been an independent advisor as well as a consultant for economic development to
local governments in France. A graduate of "l'Institut d'Etudes Politiques de
Paris," he also attended Yale Graduate School and was a recipient of a Fulbright
Scholarship. He was also a Professor at "l'Institut d'Etudes Politiques de
Paris". Mr. Levy is also a director of the following foreign public companies:
Escada Beaute Worldwide (a subsidiary of Escada Group), Rallye, S.A. and Zannier
Group. In addition, Mr. Levy is also the Chairman of the Board of Financiere
d'Or, and its subsidiary, Histoire d'Or which is in the retail jewelry business.
ROBERT BENSOUSSAN-TORRES
Robert Bensoussan-Torres, age 43, has been a Director since March 1997.
He is currently the Managing Director of Gianfranco Ferre fashion group, based
in Milano, Italy. Mr. Bensoussan-Torres was a Director of Towers Consulting
Europe, Ltd. from May 1998 to September 1999. Towers Consulting Europe, Ltd. is
a consulting company based in London, which specializes in strategic advise in
connection with mergers and acquisitions in the luxury goods business. Mr.
Bensoussan-Torres was the Chief Executive Officer of Christian Lacroix, Paris, a
subsidiary of LVMH Group, from February 1993 until May 1998. Christian Lacroix
is a French Houte Couture House and has activities in the field of apparel,
accessories and fragrances. From December 1990 through January 1993 he was based
in Munich, Germany, as the International Sales Director of The Escada Group.
DANIEL PIETTE
Mr. Piette, age 55 and a director since December 1999, is also a member
of the executive compensation committee of the Board of Directors. Mr. Piette is
the Chairman of LV Capital USA, Inc. ("LV Capital"), the US vehicle of LV
Capital SA, which is the investment arm of LVMH Moet Hennessy Louis Vuitton S.A.
("LVMH") the world's largest luxury goods conglomerate. For the past ten (10)
years, he has been a Group Executive Vice President of LVMH. Mr. Piette is also
a director of Cryo Interactive Entertainment (Paris) and a non-executive
director of Davis S. Smith Holdings PLC (London) as well as a member of the
Board of Overseers of ESSEC (Paris) and Columbia Business School (New York).
JEAN CAILLIAU
Mr. Cailliau, age 38 and a director since December 1999, is also a
member of the audit and the stock option committees of the Board of Directors.
Mr. Cailliau is the Deputy General Manager of LV Capital SA, the investment arm
of LVMH and the CEO of LV Capital USA Inc., its US vehicle. For the past eight
(8) years, Mr. Cailliau has held executive positions at LVMH.
31
He is also a Director of various European companies. Mr. Cailliau is an Engineer
in Agronomics and has an MBA (1988) from Insead.
SERGE ROSINOER
Mr. Rosinoer, age 68, was appointed to the Board of Directors in
December 2000. Mr. Rosinoer has devoted most of his career to the personal care,
cosmetics and fragrance industry. In 1978, Mr. Rosinoer joined the Clarins Group
as Vice President and Chief Operating Officer where he was largely responsible
for its rapid international expansion. As COO, then CEO since 1978, Mr. Rosinoer
oversaw the transformation of Clarins into a major force in cosmetics, skin care
and fragrance, with annual sales of 4 billion French francs and more than 4,000
employees. He retired from active duty in June of 2000, but continues to serve
on the board of directors of Clarins. Earlier in his career he was President of
Parfums Corday. He also held senior level executive positions at Max Factor,
where he had full supervision of that cosmetics giant's European production and
sales. Mr. Rosinoer has served several terms as President of the French Prestige
Cosmetics Association and currently serves as Conseiller du Commerce Exterieur
de la France.
BRUCE ELBILIA
Mr. Elbilia, age 42, Executive Vice President, joined the Company in
June 1986 as the National Sales Director, and from that time until 1994, he was
in charge of the Company's marketing efforts. In 1994 Mr. Elbilia became head of
international sales and marketing for the Company, and had expanded the
Company's export sales to South America, the Middle East and Eastern Europe. Mr.
Elbilia received a Bachelor of Business Administration degree, with a major in
International Business/Marketing from George Washington University in
Washington, D.C.
WAYNE C. HAMERLING
Mr. Hamerling, age 44, was Vice President, Sales, from May 1987 through
April 1993, when he became Executive Vice President. Mr. Hamerling has over
twenty (20) years experience in the fragrance and cosmetic business. Mr.
Hamerling, who attended Rutgers University, has also been actively involved in
marketing of our United States mass market business for the past three (3)
years, and helped develop our Aziza II line and our new health and beauty aid
line.
PHILIPPE SANTI
Philippe Santi, age 39 and a Director since December 1999, has been the
Director of Finance and the Chief Financial Officer of Inter Parfums, S.A. since
February 1995. Mr. Santi is a Certified Accountant and Statutory Auditor in
France.
32
ERIC DE LABOUCHERE
Eric de Labouchere, age 46, is the Director of Operations of Inter
Parfums, S.A. He has been employed by Inter Parfums, S.A. since October 1986 in
product development, purchasing and marketing.
FREDERIC GARCIA-PELAYO
Frederic Garcia-Pelayo, age 42, has been the Director of Export Sales
of Inter Parfums, S.A. since September 1994. Prior to September 1994,
Mr. Garcia-Pelayo was the Export Manager for Benetton Perfumes for seven (7)
years.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 and any amendments to
such forms furnished to us, and written representations from various reporting
persons furnished to us, we are not aware of any reporting person who has failed
to file the reports required to be filed under Section 16(a) of the Securities
Exchange Act of 1934 on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation awarded
to, earned by or paid to, our Chief Executive Officer and each of the four most
highly compensated executive officers of our company whose compensation exceeded
$100,000 per annum for services rendered in all capacities to our company and
its subsidiaries during fiscal years ended 31 December 2000, 31 December 1999
and 31 December 1998:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM AWARDS
- -----------------------------------------------------------------------------------------------------------------
OTHER ANNUAL SECURITIES
COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS (#)(1) COMPENSATION
- -----------------------------------------------------------------------------------------------------------------
Jean Madar, Chairman of the Board, 2000 280,000 100,000 273,000(3) -0-(3A) -0-
Chief Executive Officer of Inter 1999 280,000 48,000 765,500(4) 412,500 -0-
Parfums, Inc. and Director General 1998 280,000 -0- 53,000(5) 195,000 -0-
of Inter Parfums, S.A
- -----------------------------------------------------------------------------------------------------------------
Philippe Benacin(6), President of 2000 117,318 65,642 278,000(7) -0-(3A) -0-
Inter Parfums, Inc. and President 1999 136,000 16,000 765,500(8) 412,500
of Inter Parfums, S.A 1998 139,000 10,000 53,000(9) 195,000
- -----------------------------------------------------------------------------------------------------------------
Russell Greenberg(10), Executive 2000 245,000 13,000 69,174(11) 12,000 -0-
Vice President and Chief Financial 1999 230,000 5,000 225,819(12) 49,500 -0-
Officer 1998 228,446 3,000 2,214 23,250 -0-
- -----------------------------------------------------------------------------------------------------------------
33
- -----------------------------------------------------------------------------------------------------------------
Bruce Elbilia(13), Executive Vice 2000 178,000 10,000 24,752(14) 12,000 -0-
President 1999 160,500 5,000 262,467(15) 49,500 -0-
1998 146,045 3,000 8,776(16) 23,250 -0-
- -----------------------------------------------------------------------------------------------------------------
Wayne C. Hamerling(17), Executive 2000 176,120 10,000 111,438(18) 12,000 -0-
Vice President 1999 166,120 13,000 326,682(19) 49,500 -0-
1998 166,120 7,000 52,590(20) 23,250 -0-
- -----------------------------------------------------------------------------------------------------------------
[Footnotes to Table]
- ------------------------------------
(1) Adjusted to reflect a 3:2 stock split distributed in June 2000. Includes
options granted in 1998 as replacements for out-of-the-money or expired
options.
(2) As of 31 December 2000, Mr. Madar held 3,600,974 restricted shares of
common stock, with an aggregate value of $32,183,705 based upon the closing
price of our company's common stock as reported by the Nasdaq Stock Market,
National Market system, of $8.9375.
(3) Consists of lodging expenses of $48,000 and $225,000 realized upon exercise
of options.
(3A) Options to purchase 5,334 shares of Inter Parfums, S.A. were granted.
(4) Consists of lodging expenses of $ 48,000 and $708,500 realized upon
exercise of options.
(5) Consists of lodging expenses.
(6) Compensation figures for Mr. Benacin are approximate, as he is paid in
French francs, and conversion into U.S. dollars was made at the average
exchange rates prevailing during the respective periods. As of 31 December
2000, Mr. Benacin held 3,387,074 restricted shares of common stock, with an
aggregate value of $30,271,973 based upon the closing price of our
company's common stock as reported by the Nasdaq Stock Market, National
Market system, of $8.9375.
(7) Consists of lodging expenses of $38,000, $15,000 for automobile expenses
and $225,000 realized upon exercise of options.
(8) Consists of lodging expenses of $42,000, $15,000 for automobile expenses
and $708,500 and realized upon exercise of options.
(9) Consists of $48,000 for lodging expenses and $5,000 for automobile
expenses.
(10) As of 31 December 2000, Mr. Greenberg held 15,000 restricted shares of
common stock, with an aggregate value of $134,063 based upon the closing
price of our company's common stock as reported by the Nasdaq Stock Market,
National Market system, of $8.9375.
(11) Consists of $2,214 for automobile expenses and $67,500 realized upon
exercise of options.
(12) Consists of $2,214 for automobile expenses and $223,605 realized upon the
exercise of options.
(13) As of 31 December 2000, Mr. Elbilia held 15,000 restricted shares of common
stock, with an aggregate value of $134,063 based upon the closing price of
our company's common stock as reported by the Nasdaq Stock Market, National
Market system, of $8.9375.
(14) Consists of selling commissions.
(15) Consists of $27,985 selling commissions and $234,482 realized upon the
exercise of options.
(16) Consists of selling commissions.
(17) As of 31 December 2000, Mr. Hamerling held 15,000 restricted shares of
common stock, with an aggregate value of $134,063 based upon the closing
price of our company's common stock as reported by the Nasdaq Stock Market,
National Market system, of $8.9375.
(18) Consists of selling commissions of $54,438; non cash compensation of $4,500
equal to the value of personal use of a company leased automobile; and
$52,500 realized upon the exercise of options.
(19) Consists of selling commissions of $43,388; non cash compensation of $4,500
equal to the value of personal use of a company leased automobile; and
$278,794 realized upon the exercise of options.
(20) Consists of selling commissions of $48,090 and non cash compensation of
$4,500 equal to the value of personal use of a company leased automobile.
The following table sets forth certain information relating to stock option
grants during Fiscal 2000 to our Chief Executive Officer and each of the four
most highly compensated executive officers of the company whose compensation
exceeded $100,000 per annum for services rendered in all capacities to our
company and its subsidiaries during Fiscal 2000:
34
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
INDIVIDUALIZED GRANTS PRICE APPRECIATION FOR OPTION TERM
- ----------------------------------------------------------------------------------------------------------------------
NAME NUMBER OF % OF TOTAL EXERCISE EXPIRATION FIVE (5%) TEN (10%)
SECURITIES OPTIONS/SARS OR BASE DATE PERCENT PERCENT
UNDERLYING GRANTED TO PRICE ($) ($)
OPTIONS EMPLOYEES IN ($/SH)
GRANTED (#) FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
Jean Madar -0- NA NA NA NA NA
- ----------------------------------------------------------------------------------------------------------------------
Philippe Benacin -0- NA NA NA NA NA
- ----------------------------------------------------------------------------------------------------------------------
Russell Greenberg 12,000 11.8 7.625 26 Oct 05 25,280 55,862
- ----------------------------------------------------------------------------------------------------------------------
Bruce Elbilia 12,000 11.8 7.625 26 Oct 05 25,280 55,862
- ----------------------------------------------------------------------------------------------------------------------
Wayne Hamerling 12,000 11.8 7.625 26 Oct 05 25,280 55,862
- ----------------------------------------------------------------------------------------------------------------------
The following table sets forth certain information relating to option
exercises effected during Fiscal 2000, and the value of options held as of such
date by each of our Chief Executive Officer and the four most highly compensated
executive officers of our company whose compensation exceeded $100,000 per annum
for services rendered in all capacities to our company and its subsidiaries
during Fiscal 2000:
AGGREGATE OPTION EXERCISES FOR FISCAL 2000
AND YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE(1) OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
2000(#) DECEMBER 31, 2000($)
- ----------------------------------------------------------------------------------------------------------------------
NAME SHARES ACQUIRED VALUE ($) EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED(2) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------
Jean Madar 75,000 225,000 1,145,250/-0- 5,705,897/-0-
- ----------------------------------------------------------------------------------------------------------------------
Philippe Benacin 75,000 225,000 1,145,250/-0- 5,705,897/-0-
- ----------------------------------------------------------------------------------------------------------------------
Russell Greenberg 15,000 67,500 69,750/-0- 287,641/-0-
- ----------------------------------------------------------------------------------------------------------------------
Bruce Elbilia -0- -0- 12,000/-0- 15,750/-0-
- ----------------------------------------------------------------------------------------------------------------------
Wayne C. Hamerling 15,000 52,500 60,000/-0- 242,750/-0-
- ----------------------------------------------------------------------------------------------------------------------
(1) Total value of unexercised options is based upon the fair market value of
the common stock as reported by the Nasdaq Stock Market of $8.9375 on 31
December 31 2000.
(2) Value realized in dollars is based upon the difference between the fair
market value of the common stock on the date of exercise, and the exercise
price of the option.
35
EMPLOYMENT AGREEMENTS
As part of our acquisition in 1991 of the controlling interest in Inter
Parfums, S.A., now a subsidiary, we entered into an employment agreement with
Philippe Benacin. The agreement provides that Mr. Benacin will be employed as
Vice Chairman of the Board and President and Chief Executive Officer of Inter
Parfums Holdings and its subsidiary, Inter Parfums. The initial term expired on
September 2, 1992, and has subsequently been automatically renewed for
additional annual periods. The agreement provides for automatic annual renewal
terms, unless either party terminates the agreement upon 120 days notice. Mr.
Benacin presently receives an annual salary of 864,000ff, which is approximately
US$ 123,000, together with annual lodging expenses of approximately $38,000 and
automobile expenses of approximately $15,000, which are subject to increase in
the discretion of the Board of Directors. The agreement also provides for
indemnification and a covenant not to compete for one year after termination of
employment.
COMPENSATION OF DIRECTORS
All nonemployee directors receive $1,000 for each board meeting at which they
participate. Mr. Caccamo's board fees are paid to his law firm.
In March 1997 our Board of Directors adopted our 1997 Nonemployee Stock
Option Plan. This plan was approved by our stockholders at the annual meeting of
shareholders held in July 1997. The purpose of this plan is to assist us in
attracting and retaining key directors who are responsible for continuing the
growth and success of our company
Our 1997 Nonemployee Stock Option Plan provides for the grant of
nonqualified stock options to nonemployee directors to purchase an aggregate of
25,000 shares of common stock. Options to purchase 1,000 shares are granted on
each February 1st to all nonemployee directors for as long as each is a
nonemployee director on such date except for Joseph A. Caccamo, who is granted
options to purchase 4,000 shares. Options to purchase 2,000 shares are granted
to each nonemployee director upon his initial election or appointment to our
board.
On 19 December 2000 we granted options to purchase 2,000 shares at
$8.72 per share, the fair market value at the time of grant, to Mr. Serge
Rosinoer, for a five year period, upon his initial appointment to the Board. We
made these grants in accordance with the terms of our 1997 Nonemployee Stock
Option Plan, and our 2000 Nonemployee Stock Option Plan.
In December 2000 our Board of Directors adopted our 2000 Nonemployee
Stock Option Plan, as substantially all of the shares reserved under our 1997
Nonemployee Stock Option Plan had been allocated to outstanding options. This
plan is subject to the approval of our stockholders at the annual meeting of
shareholders to be held in 2001. The purpose of this plan is to assist us in
attracting and retaining key directors who are responsible for continuing the
growth and success of our company.
Our 2000 Nonemployee Stock Option Plan provides for the grant of
nonqualified stock options to nonemployee directors to purchase an aggregate of
30,000 shares of common stock.
36
Options to purchase 1,000 shares are granted on each February 1st to all
nonemployee directors for as long as each is a nonemployee director on such date
except for Joseph A. Caccamo, who is granted options to purchase 4,000 shares.
Options to purchase 2,000 shares are granted to each nonemployee director upon
his initial election or appointment to our board.
On 1 February 2001, options to purchase 1,000 shares were granted to
each of Francois Heilbronn, Jean Levy, Robert Bensoussan-Torres, Daniel Piette
and Jean Cailliau, and an option to purchase 4,000 shares was granted to Joseph
A. Caccamo at the exercise price of $9.75 per share under the 2000 plan. The
options held by Mr. Caccamo are held as nominee for his past and present law
firms.
Joseph A. Caccamo, a director, was a partner of Nason, Yeager, Gerson,
White & Lioce, P.A., our prior general counsel. In Fiscal 2000, we paid Mr.
Caccamo's prior firm an aggregate of $109,121 in legal fees and for
reimbursement of disbursements incurred on our behalf. Also during 2000, Mr.
Caccamo received $28,487 as the result of the exercise and sale of shares
underlying options granted in Inter Parfums, S.A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of March 15, 2001 with
respect to the beneficial ownership of our common stock by (a) each person we
know to be the beneficial owner of more than five percent of our outstanding
common stock, (b) our executive officers and directors and (c) all of our
directors and officers as a group:
NAME AND ADDRESS AMOUNT OF BENEFICIAL APPROXIMATE PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- -------------------------------------------------------------------------------
Jean Madar 4,706,974(2) 36.8%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
- -------------------------------------------------------------------------------
Philippe Benacin 4,493,074(3) 35.2%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
- -------------------------------------------------------------------------------
(1) All shares of common stock are directly held with sole voting power and
sole power to dispose, unless otherwise stated. Jean Madar, the Chairman of
the Board and Chief Executive Officer of Inter Parfums, Inc. (the
"Company"), Philippe Benacin, the Vice Chairman of the Board and President
of the Company, and LV Capital USA, Inc., an indirect subsidiary of LVMH
Moet Hennessy Louis Vuitton, S.A., have entered into a Shareholders'
Agreement dated 22 November 1999 relating to certain corporate governance
issues, including the agreement to vote for Jean Madar, Philippe Benacin
and six (6) nominees of Messrs. Madar and Benacin, and two (2) designees of
LV Capital USA, INC., as directors of the Company.
(2) Consists of 3,561,724shares held directly and options to purchase 1,145,250
shares.
(3) Consists of 3,347,824shares held directly and options to purchase 1,145,250
shares.
37
NAME AND ADDRESS AMOUNT OF BENEFICIAL APPROXIMATE PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- -------------------------------------------------------------------------------
Russell Greenberg 84,750(4) Less than 1%
c/o Inter Parfums, Inc.
551 Fifth Avenue
New York, NY 10176
- -------------------------------------------------------------------------------
Francois Heilbronn 12,225(5) Less than 1%
60 Avenue de Breteuil
75007 Paris, France
- -------------------------------------------------------------------------------
Joseph A. Caccamo, Esq. 10,000(6) Less than 1%
Becker & Poliakoff, P.A.
3111 Stirling Road
Ft. Lauderdale, FL 33312
- -------------------------------------------------------------------------------
Jean Levy 5,500(7) Less than 1%
29 rue du Colisee
75008 Paris, France
- -------------------------------------------------------------------------------
Robert Bensoussan-Torres 5,500(8) Less than 1%
48, Boulevard Raspail
75006 Paris, France
- -------------------------------------------------------------------------------
Bruce Elbilia 27,000(9) Less than 1%
c/o Inter Parfums, Inc.
551 Fifth Avenue
New York, NY 10176
- -------------------------------------------------------------------------------
Wayne C. Hamerling 75,000(10) Less than 1%
c/o Inter Parfums, Inc.
551 Fifth Avenue
New York, NY 10176
- -------------------------------------------------------------------------------
Daniel Piette 3,000(11) Less than 1%
LV Capital
30 Avenue Hoche
75008, Paris, France
- -------------------------------------------------------------------------------
Jean Cailliau 3,000(12) Less than 1%
LV Capital
30 Avenue Hoche
75008, Paris, France
- -------------------------------------------------------------------------------
- ----------------
(4) Consists of 15,000 shares held directly and 69,750 shares of common stock
underlying options.
(5) Consists of 6,725 shares held directly and 5,500 shares of common stock
underlying options.
(6) Consists of shares of common stock underlying options, which are held as
nominee for his past and present employer. Beneficial ownership of such
shares is disclaimed.
(7) Consists of shares of common stock underlying options.
(8) Consists of shares of common stock underlying options.
(9) Consists of 15,000 shares held directly and 12,000 shares of common stock
underlying options.
(10) Consists of 15,000 shares held directly and 60,000 shares of common stock
underlying options.
(11) Consists of shares of common stock underlying options. Beneficial ownership
of shares of common stock held by LV Capital USA, Inc. is disclaimed.
38
NAME AND ADDRESS AMOUNT OF BENEFICIAL APPROXIMATE PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- -------------------------------------------------------------------------------
Philippe Santi -0- NA
Inter Parfums, S.A.
4, rond point des Champs Elysees
75008, Paris France
- -------------------------------------------------------------------------------
Serge Rosinoer 2,000(13) Less than 1%
14 rue LeSueur
75116 Paris, France
- -------------------------------------------------------------------------------
Eric de Labouchere -0- NA
Inter Parfums, S.A.
4, rond point des Champs Elysees
75008, Paris France
- -------------------------------------------------------------------------------
Frederic Garcia-Pelayo -0- NA
Inter Parfums, S.A.
4, rond point des Champs Elysees
75008, Paris France
- -------------------------------------------------------------------------------
LV Capital USA, Inc.
19 E. 57th Street 2,435,700 20.9%
New York, NY 10022
- -------------------------------------------------------------------------------
Dimensional Fund Advisors, Inc. 823,800(14) 7.2%
1299 Ocean Avenue, 11th Fl.
Santa Monica, CA 90401
- -------------------------------------------------------------------------------
All Directors and Officers 11,863,723(15) 84.2%
as a Group (15 Persons)
- -------------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH FRENCH SUBSIDIARIES
In connection with the acquisitions by our subsidiary, Inter Parfums,
S.A., of the world-wide rights under the Burberry license agreement, the Paul
Smith license agreement and the Brosseau license agreement, we guaranteed the
obligations of Inter Parfums, S.A. under the
- -------------------------------------------------------------------------------
(12) Consists of shares of common stock underlying options. Beneficial ownership
of shares of common stock held by LV Capital USA, Inc. is disclaimed.
(13) Consists of shares of common stock underlying options.
(14) Information is derived forth in a Schedule 13G dated 2 February 2001 of
Dimensional Fund Advisor Inc., which may be deemed to be the beneficial
owner of the shares which are owned by its advisory clients. Dimensional
Fund Advisor disclaims beneficial ownership of all of the shares.
(15) Consists of 9,396,973 shares held directly, and options to purchase
2,466,750 shares. It also includes 2,435,700 shares held by LV Capital USA,
Inc., an affiliate of LVMH Moet Hennessy Louis Vuitton, S.A.
39
Burberry license agreement and the Paul Smith license agreement and the
distribution agreement for Ombre Rose fragrances.
REMUNERATION OF COUNSEL
Joseph A. Caccamo, a director of our company, was a partner of Nason,
Yeager, Gerson, White & Lioce, P.A., our prior general counsel. In Fiscal 2000,
we paid Mr. Caccamo's prior firm an aggregate of $109,121 in legal fees and for
reimbursement of disbursements incurred on our behalf. Also during 2000, Mr.
Caccamo received $28,487 as the result of the exercise and sale of shares
underlying options granted in Inter Parfums, S.A.
Commencing 1 February 2001, Mr. Caccamo's joined the law firm of Becker
& Poliakoff, P.A., which receives a monthly retainer of $8,000 together with
reimbursement for expenses. Mr. Caccamo's firm also receives $1,000 for each
board meeting at which he participates.
On 1 February 1, 2001 in accordance with the terms of our 2000
Nonemployee Stock Option Plan, Mr. Caccamo was granted an option with a term of
five years to purchase 4,000 shares at $9.75 per share, the fair market value at
the time of grant. He holds this option as nominee for his firm.
TRANSACTIONS WITH LVMH MOET HENNESSY LOUIS VUITTON S.A.
ACQUISITION OF COMMON STOCK AND SHAREHOLDERS' AGREEMENT
In November 1999, LV Capital, USA Inc. ("LV Capital"), a wholly-owned
subsidiary of LVMH Moet Hennessy Louis Vuitton S.A., purchased an aggregate of
1,273,800 shares of our common stock from management and employees, and
increased its beneficial ownership of our common stock to approximately 20.5% of
our outstanding shares. Further, in return for LV Capital becoming our strategic
partner, LV Capital was granted the right to buy additional shares in order to
maintain its percentage ownership upon issuance of shares to third parties,
subject to certain exceptions, and was granted demand registrations rights for
all of its shares. In addition, LV Capital has agreed to a standstill agreement,
which limits the amount of shares of common stock that LV Capital can hold to
twenty-five percent (25%) of our outstanding shares.
CELINE
In May 2000 we entered into an exclusive worldwide license agreement
with Celine, S.A., a division of LVMH Moet Hennessy Louis Vuitton S.A., for the
development, manufacturing and distribution of prestige fragrance lines under
the Celine brand name. The term of the License Agreement is for eleven (11)
years, beginning as of 1 January 2001, with an optional five (5) year renewal
term, which is subject to certain minimum sales requirements, advertising
expenditures and royalty payments.
40
In addition, Inter Parfums, S.A. began distributing Magic, Celine's
existing fragrance line, on 1 January 2001. We expect to launch two new
fragrance lines by the third quarter of this year.
CHRISTIAN LACROIX
In March 1999, we entered into an exclusive license agreement with the
Christian Lacroix Company, a division of LVMH Moet Hennessy Louis Vuitton S.A.,
for the worldwide development, manufacture and distribution of perfumes. The
license agreement has an 11 year term, and is subject to certain minimum sales
requirements, advertising expenditures and royalty payments.
41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements annexed hereto Page No.
Independent Auditors' Reports F-1
Consolidated Balance Sheets as at December 31, 2000
and December 31, 1999 F-3
Consolidated Statements of Income for the Years
ended December 31, 2000, December 31, 1999 and
December 31, 1998 F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years ended December 31, 2000, December 31, 1999
and December 1998 F-5
Consolidated Statements of Cash Flows for the Years ended
December 31, 2000, December 31, 1999 and December 31, 1998 F-6
Notes to Financial Statements F-7
(a)(2) Financial Statement Schedules annexed hereto:
Schedule II - Valuation and Qualifying Accounts
and Reserves F-18
Schedules other than those referred to above have been omitted as the
conditions requiring their filing are not present or the information
has been presented elsewhere in the consolidated financial statements.
42
(a)(3) Exhibits
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - January 18, 1990), as follows:
EXHIBIT NO. AND DESCRIPTION
10.13 License Agreement between the Company and Jordache dated January 18, 1990
(as no. 10.1 therein).
10.15 Letter of Indemnification from Jordache to the Company dated January 18,
1990 (as no. 10.3 therein)
10.16 Letter Agreement from Jordache to the Company regarding foreign license
rights dated January 18, 1990 (as no. 10.4 therein).
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 29, 1991), as follows:
EXHIBIT NO. AND DESCRIPTION
10.24 Agreement and Plan of Reorganization dated July 29, 1991 among the
Company, Jean Madar and Philippe Benacin (as No. 10.1 therein)
The following document heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991:
EXHIBIT NO. AND DESCRIPTION
10.25 Employment Agreement between the Company and Philippe Benacin dated July
29, 1991
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Registration Statement on Form S-1
(No. 33-48811):
EXHIBIT NO. AND DESCRIPTION
10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
43
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992:
EXHIBIT NO. AND DESCRIPTION
4.10 Amendment to 1992 Stock Option Plan
4.11 1993 Stock Option Plan
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1993), as follows:
EXHIBIT NO. AND DESCRIPTION
10.30 License Agreement dated July 15, 1993, among Burberrys Limited, Inter
Parfums, S.A. and Jean Philippe Fragrances, Inc.(1)
10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A.
and Inter Parfums, S.A. (original in French)(1)
10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A.
and Inter Parfums, S.A.(translation of French into English)(1)
10.33 Agreement dated July 14, 1993, between Alfin, Inc. and Inter Parfums,
S.A.(1)
10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe
Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc.
10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean
Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.(1)
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
- ---------------------
(1) Filed in excised form.
44
EXHIBIT NO. AND DESCRIPTION
10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Molyneux)
10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Weil)
10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France, S.A. dated February 18, 1994
10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18,
1994
10.40 Commission Agreement among Jean Philippe Fragrances, Inc., Inter Parfums,
S.A. and Sodipe S.A. dated February 18, 1994
10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re inventory purchase)
10.42 Convention de Nantissement among Cosmetiques et Parfums de France, S.A.,
Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe
Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security
agreement)
10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A., Cosmetiques
et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and Inter Parfums,
S.A. and Sodipe S.A. dated February 18, 1994 (re French regulatory requirements)
10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
March 14, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
EXHIBIT NO. AND DESCRIPTION
10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels de
Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux)
10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels de
Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil)
45
10.48. English translation of exhibit no. 10.41, Convention between Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18,
1994 (re inventory purchase)
10.49. English translation of exhibit no. 10.42, Convention de Nantissement
among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de
France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter
Parfums, S.A. dated February 18, 1994 (re security agreement)
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Form 8 Amendment no. 2 (dated
March 21, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
EXHIBIT NO. AND DESCRIPTION
10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques et
Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A., Jean
Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated February
18, 1994 (re French regulatory requirements)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993:
EXHIBIT NO. AND DESCRIPTION
3.3 Articles of Incorporation of Inter Parfums Holding, S.A.
3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of Inter
Parfums Holding, S.A.
3.4 Articles of Incorporation of Inter Parfums, S.A.
3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation of Inter
Parfums, S.A.
4.15 1994 Nonemployee Director Stock Option Plan
10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization
Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.)
10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport Partiel
D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums,
S.A. and Selective Industrie, S.A.)
46
10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees dated September
30, 1993
10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4, Rond
Point Des Champs Des Elysees dated September 30, 1993
10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees dated March 2,
1994
10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4, Rond
Point Des Champs Des Elysees dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994:
4.16 1994 Nonemployee Director Supplemental Stock Option Plan (Listed as no.
4.15 therein)
10.59 Modification of Lease Agreement dated June 17, 1994 between Metropolitan
Life Insurance Company and Jean Philippe Fragrances, Inc.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995:
EXHIBIT NO. AND DESCRIPTION
10.61 Lease for 60 Stults Road, South Brunswick, NJ between Forsgate Industrial
Complex, a limited partnership, and Jean Philippe Fragrances, Inc. dated July
10, 1995
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996:
EXHIBIT NO. AND DESCRIPTION
10.65 Asset Repurchase Agreement between Carson, Inc. and Jean Philippe
Fragrances, Inc. dated March 27, 1997
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997:
47
EXHIBIT NO. AND DESCRIPTION
10.67 Second Modification of Lease made as of the 30th day of April, 1997
between Metropolitan Life Insurance Company as landlord and Jean Philippe
Fragrances, Inc. as tenant.
10.68 Amendment I to License Agreement dated September 3, 1997 between Jordache
Enterprises, Inc. as Licensor and Jean Philippe Fragrances, Inc. as Licensee.
10.69 Exclusive Licence Agreement dated June 20, 1997 between S.T. Dupont, S.A.
and Inter Parfums (English translation, excised version)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998:
EXHIBIT NO. AND DESCRIPTION
3.2 Amended and Restated By-laws
4.17 1997 Nonemployee Director Stock Option Plan
4.18 1999 Stock Option Plan
10.70 Licence Agreement among Paul Smith Limited, Inter Parfums, S.A. and
Jean-Philippe Fragrances, Inc. (excised version)
10.71 Licence Agreement between Christian LaCroix, a division of Group LVMH and
Inter Parfums, S.A (English translation, excised version)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's current report on Form 8-K (date of
event - November 22, 1999):
EXHIBIT NO. AND DESCRIPTION
4.2 Shareholder's Agreement among LV Capital USA, Inc., Jean Mader and Philippe
Benacin dated November 22, 1999.
99.1 Stock Purchase Agreement among LV Capital USA, Inc., Jean Madar and
Philippe Benacin dated November 22, 1999.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999:
48
EXHIBIT NO. AND DESCRIPTION
3.1.4 Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated July 13, 1999 (listed therein as 3.1(d))
10.73 Burberry Confidential Treatment Agreement dated 8 February, 2000
10.74 Burberry Licence Amendment dated February, 2000 (filed in excised form)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's current report on Form 8-K/A no. 1
(date of event - 18 May 2000):
10.76 Celine License Agreement [in French]- excised.
10.76.1 Celine License Agreement [English translation]- excised.
The following document heretofore filed with the Commission is
incorporated by reference to the Company's current report on Form 8-K/A no. 1
(date of event - 23 June 2000):
10.77 Sublicense Agreement for FUBU Fragrances, dated June 22, 2000 -
excised.
The following document heretofore filed with the Commission is
incorporated by reference to the Company's quarterly report on Form 10-Q for the
period ending 30 June 2000:
3.1.5 Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated 12 July 2000 (listed therein as 3.1(e))
49
The following documents are filed herewith:
EXHIBIT NO. AND DESCRIPTION
3.1.1 Restated Certificate of Incorporation dated September 3, 1987
3.1.2 Amendment to the Company's Restated Certificate of Incorporation dated
July 31, 1992
3.1.3 Amendment to the Company's Restated Certificate of Incorporation dated
July 9, 1993
4.19 2000 Nonemployee Director Stock Option Plan
10.78 Revolving Credit Agreement dated June 1, 2000 between HSBC Bank USA and
Inter Parfums, Inc.
10.79 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [French
Original]
10.79.1 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [English
Translation]
10.80 Credit Lyonnais Letter Agreement dated 22 March 2001 - [French Original]
10.80.1 Credit Lyonnais Letter Agreement dated 22 March 2001 - [English
Translation]
10.81 Barclays Bank Letter Agreement dated 4 June 1998 - [French Original]
10.81.1 Barclays Bank Letter Agreement dated 4 June 1998 - [English Translation]
10.82 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July
1998 - [French Original]
10.82.1 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July
1998 - [English Translation]
10.83 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July
1998 - [French Original]
10.83.1 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July
1998 - [English Translation]
10.84 Banque Worms Letter Agreement dated 22 December 1997 - [French Original]
10.84.1 Banque Worms Letter Agreement dated 22 December 1997 - [English
Translation]
10.85 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 -
[French Original]
10.85.1 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 -
[English Translation]
21 List of Subsidiaries
(b) Reports on Form 8-K: None.
50
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Inter Parfums, Inc. and Subsidiaries
New York, New York
We have audited the accompanying consolidated balance sheets of Inter Parfums,
Inc. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of Inter Parfums
Holdings, S.A. and subsidiaries, consolidated subsidiaries of the Company, which
statements reflect total assets and net sales constituting 68% and 69% for 2000
and 66% and 69% for 1999 and net sales constituting 66% for 1998. Those
statements were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts for Inter Parfums
Holdings, S.A. and subsidiaries, is based solely on the reports of the other
auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements enumerated above present fairly, in all material respects,
the consolidated financial position of Inter Parfums, Inc. and subsidiaries as
of December 31, 2000 and 1999, and the consolidated results of their operations
and their consolidated cash flows for each of the years in the three-year period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States of America.
Our audits referred to above included Schedule II for each of the years in the
three-year period ended December 31, 2000. In our opinion, such schedule
presents fairly the information set forth therein in accordance with the
applicable accounting regulations of the Securities and Exchange Commission.
Richard A. Eisner & Company, LLP
New York, New York
February 28, 2001
With respect to accounts for foreign subsidiaries
March 19, 2001
F-1
INTER PARFUMS HOLDING, S.A. AND SUBSIDIARIES
--------------------------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the accompanying consolidated balance sheets of Inter Parfums
Holding S.A. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year ended December 31, 2000, 1999 and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements enumerated above present
fairly, in all material respects, the financial position of Inter Parfums
Holding S.A. and subsidiaries as of December 31, 2000 and 1999, and the results
of their operations and their cash flows for the years ended December 31, 2000,
1999 and 1998 in conformity with accounting principles generally accepted in the
United States.
Paris La DeFense, March 19, 2001
Cabinet Cauvin, Angleys, Saint-Pierre
International
Rene Amirkhanian
F-2
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
DECEMBER 31,
--------------------
2000 1999
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 27,599 $ 24,936
Marketable securities (Note B) 4,424
Accounts receivable, net of allowances of $2,067
and $2,095 in 2000 and 1999, respectively 30,844 26,033
Inventories (Notes A and C) 25,340 19,450
Receivables, other 497 875
Other 1,808 1,169
Deferred tax benefit (Note K) 435 858
-------- --------
Total current assets 86,523 77,745
Equipment and leasehold improvements, net (Notes A and D) 3,162 3,126
Other assets 347 508
Trademarks and licenses, net (Notes A, E and L) 4,539 5,844
-------- --------
$ 94,571 $ 87,223
======== ========
LIABILITIES
Current liabilities:
Loans payable - banks (Note F) $ 2,542 $ 787
Accounts payable 18,224 18,449
Accrued expenses 6,961 4,351
Income taxes payable 1,108 768
-------- --------
Total current liabilities 28,835 24,355
-------- --------
Deferred tax liability (Note K) 684 988
-------- --------
Long-term debt (Note G) 1,417 1,531
-------- --------
Minority interest 8,574 7,988
-------- --------
Commitments and contingencies (Notes H and L)
SHAREHOLDERS' EQUITY (Notes I and L)
Preferred stock, $.001 par value; authorized
1,000,000 shares; none issued
Common stock, $.001 par value; authorized
30,000,000 shares; outstanding 11,676,277 and
11,832,721 shares in 2000 and 1999, respectively 12 12
Additional paid-in capital 27,728 26,518
Retained earnings 58,669 52,080
Accumulated other comprehensive income (6,574) (4,290)
Treasury stock, at cost 5,736,405 and 5,392,805 shares
in 2000 and 1999, respectively (24,774) (21,959)
-------- --------
Total shareholders' equity 55,061 52,361
-------- --------
$ 94,571 $ 87,223
======== ========
SEE NOTES TO FINANCIAL STATEMENTS
F-3
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except share and per share data)
YEAR ENDED DECEMBER 31,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
Net sales $ 101,582 $ 87,140 $ 89,388
Cost of sales 51,873 45,325 47,417
------------ ------------ ------------
Gross margin 49,709 41,815 41,971
Selling, general and administrative 37,509 31,965 32,944
Litigation expense 556
------------ ------------ ------------
Income from operations 11,644 9,850 9,027
------------ ------------ ------------
Other charges (income):
Interest 363 344 471
Loss on foreign currency 185 190 139
Interest income (1,065) (687) (788)
Realized (gain) on sale of marketable securities (1,396)
Loss on sale of stock of subsidiary 18 135 41
------------ ------------ ------------
(1,895) (18) (137)
------------ ------------ ------------
Income before income taxes 13,539 9,868 9,164
Income taxes 5,631 3,978 3,598
------------ ------------ ------------
Income before minority interest 7,908 5,890 5,566
Minority interest in net income of
consolidated subsidiary 1,319 1,062 953
------------ ------------ ------------
NET INCOME $ 6,589 $ 4,828 $ 4,613
============ ============ ============
NET INCOME PER SHARE:
BASIC $ 0.56 $ 0.43 $ 0.35
DILUTED $ 0.51 $ 0.40 $ 0.35
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC 11,726,737 11,387,885 13,060,935
DILUTED 13,000,432 12,155,226 13,348,208
SEE NOTES TO FINANCIAL STATEMENTS
F-4
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands except share data)
COMMON STOCK ADDITIONAL
--------------------- PAID-IN RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME
------------ ------ ------------ ------------ ------------
BALANCE - JANUARY 1, 1998 13,294,171 $ 13 $ 20,682 $ 42,730
Comprehensive income:
Net income 4,613 $ 4,613
Foreign currency translation adjustments 1,557
------------
Total comprehensive income $ 6,170
============
Shares issued upon exercise of stock options 11,250 1 44
Purchased treasury shares (611,250) (1)
------------ ----- ------------ ------------
BALANCE - DECEMBER 31, 1998 12,694,171 13 20,726 47,343
Comprehensive income:
Net income 4,828 $ 4,828
Foreign currency translation adjustments (3,870)
Unrealized gain on marketable securities 392
------------
Total comprehensive income $ 1,350
============
Shares issued upon exercise of stock options
(including income tax benefit) 956,550 1 5,792
Purchased treasury shares (1,818,000) (2)
Dividends paid (91)
------------ ----- ------------ ------------
BALANCE - DECEMBER 31, 1999 11,832,721 12 26,518 52,080
Comprehensive income:
Net income 6,589 $ 6,589
Foreign currency translation adjustments (1,892)
Reclassification adjustment for gains realized
in net income (392)
------------
Total comprehensive income $ 4,305
============
Shares issued upon exercise of stock options
(including income tax benefit) 187,156 1,210
Purchased treasury shares (343,600)
------------ ----- ------------ ------------
BALANCE - DECEMBER 31, 2000 11,676,277 $ 12 $ 27,728 $ 58,669
============ ===== ============ ============
ACCUMULATED
OTHER
COMPREHENSIVE TREASURY
INCOME STOCK TOTAL
------------ ------------ ------------
$ (2,369) $ (10,862) $ 50,194
4,613
1,557 1,557
45
(2,727) (2,728)
------------ ------------ ------------
(812) (13,589) 53,681
4,828
(3,870) (3,870)
392 392
5,793
(8,370) (8,372)
(91)
------------ ------------ ------------
(4,290) (21,959) 52,361
6,589
(1,892) (1,892)
(392) (392)
1,210
(2,815) (2,815)
------------ ------------ ------------
$ (6,574) $ (24,774) $ 55,061
============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS
F-5
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,589 $ 4,828 $ 4,613
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,362 2,415 1,401
Realized (gain) on sale of marketable securities (1,396)
Loss on sale of stock of subsidiary 18 135 41
Minority interest in net income of consolidated subsidiary 1,319 1,062 953
Deferred tax (benefit) provision 476 (438) 165
Changes in:
Accounts receivable (6,173) (886) (272)
Inventories (6,872) 354 632
Other assets (252) (66) (144)
Accounts payable and accrued expenses 3,753 6,873 (449)
Income taxes payable 412 (1,719) 419
-------- -------- --------
Net cash provided by operating activities 236 12,558 7,359
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold improvements (1,580) (1,407) (1,604)
Cash portion of trademark and license acquisitions (337) (27)
Purchase of marketable securities (3,671) (3,792)
Proceeds from sale of marketable securities 8,325
-------- -------- --------
Net cash provided by (used in) investing activities 3,074 (5,536) (1,631)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in loans payable - banks 1,788 (2,997) 888
Proceeds from issuance of long-term debt 1,624
Proceeds from sale of stock of subsidiary 67 214 60
Purchase of treasury stock (2,815) (8,371) (2,728)
Proceeds from exercise of options and warrants 1,210 5,793 44
Dividends paid (135) (91)
-------- -------- --------
Net cash provided by (used in) financing activities 115 (3,828) (1,736)
-------- -------- --------
Effect of exchange rate changes on cash (762) (1,614) 642
-------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,663 1,580 4,634
Cash and cash equivalents - beginning of year 24,936 23,356 18,722
-------- -------- --------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 27,599 $ 24,936 $ 23,356
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 404 $ 330 $ 560
Income taxes $ 2,683 $ 4,331 $ 3,028
SEE NOTES TO FINANCIAL STATEMENTS
F-6
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
[1] BUSINESS OF THE COMPANY:
The Company is a manufacturer and distributor of prestige brand name
fragrances and mass market fragrances and cosmetics.
[2] BASIS OF PREPARATION:
The consolidated financial statements include the accounts of Inter
Parfums, Inc. and its domestic and foreign subsidiaries (the "Company")
including a subsidiary whose stock is publicly traded in France. All
material intercompany balances and transactions have been eliminated.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
[3] FOREIGN CURRENCY TRANSLATION:
For foreign subsidiaries that operate in a foreign currency, assets and
liabilities are translated to U.S. dollars at year-end exchange rates.
Income and expense items are translated at average rates of exchange
prevailing during the year. Gains and losses from translation adjustments
are accumulated in a separate component of shareholders' equity. In
instances where the financial statements of foreign entities are remeasured
into their functional currency (U.S. dollars), the remeasurement adjustment
is recorded in operations.
[4] CASH EQUIVALENTS:
All highly liquid investments purchased with a maturity of three months or
less are considered to be cash equivalents.
[5] MARKETABLE SECURITIES:
All marketable securities are classified as available-for-sale and are
available to support current operations or to take advantage of other
investment opportunities. These securities are stated at fair value based
upon market quotes. Unrealized holding gains and losses, net of deferred
taxes, are computed on the basis of specific identification and are
reported as a separate component of shareholders' equity. Realized gains
and losses, and decreases in value, judged to be other than temporary, are
included in other charges (income). The cost of securities sold is based on
the specific identification method and interest and dividend income is
recognized when earned.
[6] FINANCIAL INSTRUMENTS:
The carrying amount of accounts receivable, other receivables, accounts
payable and accrued expenses approximates fair value due to the short terms
to maturity of these instruments. The carrying amount of loans payable and
long-term debt approximates fair value as the interest rates on the
Company's indebtedness approximate current market rates.
F-7
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[6] FINANCIAL INSTRUMENTS: (CONTINUED)
The Company occasionally enters into foreign currency forward exchange
contracts to manage exposure related to certain foreign currency
commitments. Gains and losses on foreign currency transaction hedges are
recognized in income and offset the foreign exchange gains and losses on
the underlying transactions. Gains and losses of foreign currency firm
commitment hedges are deferred and included in the basis of the
transactions underlying the commitment. At December 31, 2000, the Company
had foreign currency contracts in the form of forward exchange contracts in
the amount of approximately $9,000. The currencies included in these
contracts are principally the United States dollar and the British pound.
[7] EURO CONVERSION:
In January 1999, certain member countries of the European Union established
permanent fixed rates between their existing currencies and the European
Union's common currency (the "Euro"). The transition period for the
introduction of the Euro is scheduled to phase in over a period ending
January 1, 2002. The introduction of the Euro and the phasing out of the
other currencies should not have a material impact on the presentation of
data in the Company's consolidated financial statements.
[8] INVENTORIES:
Inventories are stated at the lower of cost (first-in, first-out) or
market.
[9] EQUIPMENT AND LEASEHOLD IMPROVEMENTS:
Equipment and leasehold improvements are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are provided
using the straight-line method and the declining-balance method over the
estimated useful asset lives for equipment, which range between three and
ten years and the shorter of the lease term or estimated useful asset lives
for leasehold improvements.
[10] TRADEMARKS AND LICENSES:
Trademarks are stated at cost and are amortized by the straight-line method
over 20 years. The cost of licenses acquired is being amortized by the
straight-line method over the term of the respective licenses.
The Company reviews trademarks and licenses for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable.
[11] REVENUE RECOGNITION:
Revenue is recognized upon shipment of merchandise as sales are final upon
shipment to customers. The Company, at its discretion, permits limited
returns of merchandise and establishes allowances for estimated returns
based upon historic trends.
[12] ISSUANCE OF COMMON STOCK OF SUBSIDIARY:
The difference between the Company's share of the proceeds received by the
subsidiary and the carrying amount of the portion of the Company's
investment sold is reflected as a gain or loss in the consolidated
statements of income.
F-8
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[13] STOCK-BASED COMPENSATION:
The provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123") allow companies
to either expense the estimated fair value of employee stock options or to
follow the intrinsic value method set forth in APB Opinion 25, "Accounting
for Stock Issued to Employees" ("APB 25") but to disclose the pro forma
effects on net income had the fair value of the option been expensed. The
Company has elected to continue to apply APB 25 in accounting for its stock
option incentive plans.
[14] EARNINGS PER SHARE:
Basic earnings per share are computed using the weighted average number of
shares outstanding during each year. Diluted earnings per share are
computed using the weighted average number of shares outstanding during
each year, plus the incremental shares outstanding assuming the exercise of
dilutive stock options.
[15] RECENT ACCOUNTING PRONOUNCEMENTS:
The Financial Accounting Standards Board has issued a new standard.
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
accounting for Derivative Instruments and Hedging Activities, which becomes
effective for years beginning after June 15, 2000, requires that every
derivative instrument be recorded in the balance sheet as either an asset
or liability measured at its fair value. The statement requires that
changes in the derivative's fair value be recognized in earnings unless
specific hedge accounting criteria are met. The Company believes that the
effect of adoption of SFAS 133 will not be material to the Company's
financial statements.
NOTE B - MARKETABLE SECURITIES
Marketable securities represent equity securities classified as
available-for-sale. At December 31, 1999, such securities had a cost of $3,792
and a gross unrealized gain of $850 ($392 net of taxes of $341 and minority
interest of $117), respectively. During the year ended December 31, 2000 all
marketable securities were sold and a gain of $1,396 was realized. For the year
ended December 31, 1999, there were no sales of marketable securities and,
therefore, no gains or losses were realized.
NOTE C - INVENTORIES
DECEMBER 31,
-----------------
2000 1999
------- -------
Raw materials and component parts $ 8,775 $ 8,239
Finished goods 16,565 11,211
------- -------
$25,340 $19,450
======= =======
F-9
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE D - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
DECEMBER 31,
---------------
2000 1999
------ ------
Equipment $7,998 $6,667
Leasehold improvements 382 383
------ ------
8,380 7,050
Less accumulated depreciation and amortization 5,218 3,924
------ ------
$3,162 $3,126
====== ======
NOTE E - TRADEMARKS AND LICENSES
DECEMBER 31,
---------------
2000 1999
------ ------
Trademarks $6,628 $7,013
Licenses 2,577 2,786
------ ------
9,205 9,799
Less accumulated amortization 4,666 3,955
------ ------
$4,539 $5,844
====== ======
NOTE F - LOANS PAYABLE - BANKS
Loans payable-bank represent borrowings by the Company's foreign
subsidiaries under several bank overdraft facilities bearing interest at
0.6% above the EURIBOR rate (4.9% and 3.3% at December 31, 2000 and 1999,
respectively). Outstanding amounts totaled $2,542 and $787 at December 31,
2000 and 1999, respectively.
NOTE G - LONG-TERM DEBT
As of December 31, 2000 and 1999, long-term debt represents borrowings by a
foreign subsidiary of $1,417 and $1,531, respectively, due in 2004. The debt
agreement requires interest payable monthly at 4.56%, however, the Company
entered into a Swap agreement with the bank effectively converting the interest
to a variable rate equal to the EURIBOR rate (4.9% at December 31, 2000).
F-10
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE H - COMMITMENTS
[1] LEASES:
The Company leases its office and warehouse facilities under operating
leases expiring through 2004. Rental expense amounted to $1,263 in 2000,
$1,159 in 1999 and $1,167 in 1998. Minimum future rental payments are as
follows:
2001 $ 1,254
2002 1,133
2003 739
2004 181
----------
$ 3,307
==========
[2] LICENSE AGREEMENTS:
The Company is obligated under a number of license agreements for the use
of trademarks and rights in connection with the manufacture and sale of
its products. In connection therewith, the Company is subject to certain
minimum annual royalties as follows:
2001 $ 1,991
2002 2,362
2003 2,843
2004 4,091
2005 4,366
Thereafter 13,454
----------
$ 29,107
==========
NOTE I - SHAREHOLDERS' EQUITY
[1] COMMON STOCK SPLIT:
On April 27, 2000, the Company's Board of Directors authorized a
three-for-two stock split effected in the form of a 50% stock dividend
distributed on June 15, 2000 to shareholders of record as of June 1, 2000.
As a result of the stock split, the accompanying consolidated financial
statements reflect an increase in the number of outstanding shares of
common stock and the transfer of the par value of these additional shares
from paid-in capital. All share and per share amounts have been restated to
reflect the retroactive effect of the stock split.
[2] ISSUANCE OF COMMON STOCK OF SUBSIDIARY:
During 1999, holders of the remaining $200 of convertible debt, originally
issued in 1994 by Inter Parfums, S.A., a subsidiary of the Company,
converted their investment into 18,309 shares of capital stock of Inter
Parfums, S.A. and employees exercising stock options were issued 34,041
shares of capital stock of Inter Parfums, S.A. As a result of such
issuances, the Company's percentage ownership of Inter Parfums, S.A.
decreased from approximately 79% to 78% as of December 31, 1999.
During 2000, an additional 5,918 shares of capital stock of Inter Parfums,
S.A. were issued as a result of employees exercising stock options. At
December 31, 2000, the Company's percentage ownership of Inter Parfums,
S.A. was approximately 78%.
F-11
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE I - SHAREHOLDERS' EQUITY (CONTINUED)
[2] ISSUANCE OF COMMON STOCK OF SUBSIDIARY: (CONTINUED)
The difference between the Company's share of the issuance or conversion
proceeds and the carrying amount of the portion of the Company's investment
sold is reflected as a gain or loss in the consolidated statements of
income. Deferred taxes have not been provided because application of
available tax savings strategies would eliminate taxes on this transaction.
[3] STOCK OPTION PLANS:
The Company maintains a stock option program for key employees, executives
and directors. The plans provide for the granting of both nonqualified and
incentive options. Options granted under the plans typically vest
immediately and are exercisable for a period of five to six years.
The Company applies APB 25 in accounting for its stock option incentive
plans and accordingly recognizes compensation expense for the difference
between the fair value of the underlying common stock and the grant price
of the option at the date of grant.
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123. Had compensation cost for the Company's stock
option plans been determined based upon the fair value at the grant date,
consistent with the methodology prescribed under SFAS No. 123, the
Company's net income in 2000, 1999 and 1998 would have been approximately
$6.5, $4.2 and $4.3 million, or $0.50, $0.34 and $0.32 per diluted share,
respectively. The weighted average fair values of the options granted
during 2000, 1999 and 1998 are estimated as $1.93, $1.52 and $1.64 per
share, respectively, on the date of grant using the Black-Scholes option
pricing model with the following assumptions: dividend yield 0%, volatility
of 40%, risk-free interest rates at the date of grant, 5.88% in 2000, 5.18%
in 1999 and 5.40% in 1998, and an expected life of the option of two years.
A summary of the Company's stock option activity, and related information
follows:
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
2000 1999 1998
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- ----- --------- ----- --------- -----
Shares under option - beginning of year 2,651,325 $4.09 2,638,800 $4.37 2,513,700 $4.39
Options granted 113,875 7.12 1,099,500 3.85 562,575 4.53
Options exercised (187,125) 5.38 (956,550) 4.45 (11,250) 3.89
Options cancelled (11,125) 5.61 (130,425) 5.06 (426,225) 4.75
--------- --------- ---------
Shares under options - end of year 2,566,950 4.12 2,651,325 4.09 2,638,800 4.37
========= ========= =========
Exercise prices for options outstanding as of December 31, 2000 ranged from
$3.79 to $8.69. The weighted average remaining contractual life of those
options is three and a half years.
At December 31, 2000 options for 627,336 shares were available for future
grant under the plans.
F-12
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE I - SHAREHOLDERS' EQUITY (CONTINUED)
[4] TREASURY STOCK:
The Board of Directors of the Company has authorized a stock repurchase
program whereby the Company purchases shares of its stock to be held in
treasury. As of December 31, 2000, the Company is authorized to purchase an
additional 474,600 treasury shares.
NOTE J - GEOGRAPHIC AREAS
Information on the Company's operations by geographical areas is as follows:
YEAR ENDED DECEMBER 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
Net sales:
United States $ 31,268 $ 26,826 $ 30,068
Europe 70,434 60,414 58,875
South America 811
Eliminations (120) (100) (366)
--------- --------- ---------
$ 101,582 $ 87,140 $ 89,388
========= ========= =========
Net income:
United States $ 1,977 $ 1,140 $ 1,503
Europe 4,616 3,788 3,609
South America (4) (100) (530)
Eliminations 31
--------- --------- ---------
$ 6,589 $ 4,828 $ 4,613
========= ========= =========
Depreciation and amortization expense:
United States $ 632 $ 595 $ 531
Europe 1,730 1,819 864
South America 1 6
--------- --------- ---------
$ 2,362 $ 2,415 $ 1,401
========= ========= =========
Interest income:
United States $ 647 $ 408 $ 376
Europe 418 279 409
South America 3
--------- --------- ---------
$ 1,065 $ 687 $ 788
========= ========= =========
F-13
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE J - GEOGRAPHIC AREAS (CONTINUED)
YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
Interest expense:
United States $ 38 $ 59 $ 50
Europe 325 274 377
South America 11 44
-------- -------- --------
$ 363 $ 344 $ 471
======== ======== ========
Total assets:
United States $ 39,455 $ 39,417 $ 41,330
Europe 64,455 57,677 55,893
South America 16 619
Eliminations (9,028) (9,887) (10,103)
-------- -------- --------
$ 94,882 $ 87,223 $ 87,739
======== ======== ========
Additions to long-lived assets:
United States $ 86 $ 101 $ 455
Europe 1,494 1,643 1,165
South America 11
-------- -------- --------
$ 1,580 $ 1,744 $ 1,631
======== ======== ========
Total long-lived assets:
United States $ 1,973 $ 2,519 $ 3,012
Europe 5,728 6,451 7,686
South America 1
-------- -------- --------
$ 7,701 $ 8,970 $ 10,699
======== ======== ========
United States export sales were approximately $11,000, $9,200 and $10,000 for
the years ended December 31, 2000, 1999 and 1998, respectively. Consolidated net
sales for the year ended December 31, 2000 by region is as follows:
North America 32%
Western Europe 30%
Central and South America 12%
Middle East 9%
Asia 9%
Eastern Europe 7%
Other 1%
F-14
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE K - INCOME TAXES
The components of income before income taxes consist of the following:
YEAR ENDED DECEMBER 31,
---------------------------------
2000 1999 1998
------- ------- -------
U.S. operations $ 3,096 $ 1,750 $ 2,304
Foreign operations 10,443 8,118 6,806
Eliminations 54
------- ------- -------
$13,539 $ 9,868 $ 9,164
======= ======= =======
The provision for current and deferred income tax expense (benefit) consists of
the following:
YEAR ENDED DECEMBER 31,
---------------------------------
2000 1999 1998
------- ------- -------
Current:
Federal $ 796 $ 311 $ 344
State and local 170 142 105
Foreign 4,189 3,963 2,984
------- ------- -------
5,155 4,416 3,433
------- ------- -------
Deferred:
Federal 172 142 283
State and local (19) 16 70
Foreign 323 (596) (188)
------- ------- -------
476 (438) 165
------- ------- -------
Total income tax expense $ 5,631 $ 3,978 $ 3,598
======= ======= =======
Deferred taxes are provided principally for reserves, and certain other expenses
that are recognized in different years for financial reporting and income tax
purposes. At December 31, 2000, the deferred tax assets consist of approximately
$564 relating to accounts receivable and inventory writedowns which are not
currently deductible for tax purposes, foreign net operating loss carryforwards
and the difference between the book basis and tax basis of fixed assets. At
December 31, 2000, the deferred tax liability of $684 relates primarily to the
difference between the book basis and tax basis of intangible assets and certain
foreign production equipment.
The Company has provided a valuation allowance of $129, representing the full
amount of the deferred tax assets arising from foreign net operating loss
carryforwards. No allowance has been provided on the balance of the Company's
deferred tax assets, as management believes that it is more likely than not that
the asset will be realized in reduction of future taxable income.
F-15
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE K - INCOME TAXES (CONTINUED)
Differences between the United States federal statutory income tax rate and the
effective income tax rate were as follows:
YEAR ENDED DECEMBER 31,
-----------------------
2000 1999 1998
----- ----- -----
Statutory rates 34.0% 34.0% 34.0%
State and local taxes, net of federal benefit 0.7 1.1 1.3
Effect of foreign taxes in excess of U.S.
statutory rates 6.9 5.2 4.0
----- ----- -----
Effective rates 41.6% 40.3% 39.3%
===== ===== =====
NOTE L - OTHER MATTERS
[1] As previously reported, Inter Parfums, S.A., the Company's majority owned
French subsidiary, is a party to litigation with Jean Charles Brosseau,
S.A. ("Brosseau"), the licensor of the Ombre Rose trademark. The licensor
has claimed damages of approximately $7,000 and is seeking termination of
the license agreement.
In October 1999, Inter Parfums S.A. received notice of a judgment in favor
of Brosseau, which awarded damages of approximately $600 to Brosseau, and
which directed Inter Parfums, S.A. to turn over its license to Brosseau
within six months.
Inter Parfums, S.A. is appealing the judgment as it vigorously and
categorically denies the claims of Brosseau. The payment of the judgment
has been stayed, and Inter Parfums, S.A. was allowed to operate under the
license agreement during the appeal process.
In June 2000, the president of the Court of Appeal granted a petition filed
by Brosseau regarding ongoing payments for royalties due to Brousseau. In
the same interlocutory judgment, the president of the Court of Appeal
rejected Inter Parfums, S.A.'s request for the appointment of a new
judicial expert. Such request was made to refute the findings of the
judicial expert originally appointed by the Commercial Court, which
resulted in the $600 judgment against Inter Parfums, S.A. As a result
of these further developments, Inter Parfums, S.A. and its special
litigation counsel consider it likely that the judgment will be sustained
and therefore, in June 2000, has taken a charge against earnings for $600,
the full amount of the judgment.
In February 2001, the Court of Appeal confirmed the Brosseau claim with
respect to turning over the license. In addition, the Court named an expert
to proceed with additional investigations and required Inter Parfums, S.A.
to pay $142 as an advance for damages claimed by Brosseau.
Inter Parfums, S.A. is continuing its appeal as it still denies the claims
of Brosseau. Management does not believe that such litigation will have any
further material adverse effect on the financial condition or operations of
the Company. As of December 31, 2000 the Company has fully reserved the
unamortized portion of the license agreement.
F-16
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
NOTE L - OTHER MATTERS (CONTINUED)
[2] Inter Parfums, S.A. is the subject of tax audits commenced by the French
Tax Authorities. Assessments have been issued aggregating $2,300. Inter
Parfums, S.A. is contesting these assessments. Management and its tax
consultants believe they have sound arguments to support their position and
that the majority of these assessments will be reversed, and therefore,
will not have a material adverse effect on the financial condition or
operations of the Company. The Company has reserves of approximately $760,
which it presently believes will be its ultimate exposure.
[3] On November 22, 1999, the Chief Executive Officer and the President of the
Company entered into and closed a Stock Purchase Agreement with LV Capital,
USA Inc. ("LV Capital"), a wholly-owned subsidiary of LVMH Moet Hennessy
Louis Vuitton, S.A. ("LVMH"). In accordance with the terms of the Stock
Purchase Agreement, LV Capital purchased an aggregate of 1,273,800 shares
of Common Stock of the Company at $8.00 per share, as follows: 390,000
shares (inclusive of 75,000 shares acquired upon exercise of an outstanding
stock option) from each of the Chief Executive Officer and the President of
the Company, and an aggregate of 493,800 shares (inclusive of 318,300
shares issued upon exercise of outstanding stock options) from management
and employees. As the result of such transaction, the Company received
proceeds of approximately $4,200 as the result of the exercise of the
outstanding stock options.
In addition, in return for LV Capital becoming a strategic partner of the
Company, LV Capital is to be granted the right to maintain its percentage
ownership of the outstanding shares of Common Stock, by receiving an option
to purchase shares of the Company's common stock for cash upon issuance of
shares to any party other than LV Capital at the price paid by the
purchaser, subject to certain exceptions such as the exercise of stock
options previously granted and the grant of new stock options up to a
certain limit. LVMH was also granted demand registration rights for all
shares of common stock it holds. Finally, LV Capital has agreed to a
standstill agreement, which includes a limitation on the amount of shares
that LV Capital can hold equal to 25% of the outstanding shares of common
stock of the Company.
In March 1999 and May 2000, the Company entered into two Eleven Year
License Agreements with Christian Lacroix Company and Celine S.A.,
divisions of LVMH, respectively. Both agreements have minimum sales and
advertising requirements and require the Company to pay royalties as are
customary in the industry.
F-17
INTER PARFUMS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(in thousands except share and per share data)
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
-----------------------------
BALANCE (1) (2)
-----------------------------
AT CHARGED TO BALANCE
BEGINNING CHARGED TO OTHER AT
OF COSTS AND ACCOUNTS - DEDUCTIONS - END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 2000:
Allowances for sales returns and doubtful accounts $ 2,095 $669 $(119) (b) $ 578 (a) $ 2,067
======= ==== ========== ======= =======
Year ended December 31, 1999:
Allowances for sales returns and doubtful accounts $ 2,432 $988 $(243) (b) $ 1,082 (a) $ 2,095
======= ==== ===== ======= =======
Year ended December 31, 1998:
Allowances for sales returns and doubtful accounts $ 2,995 $1,597 $ 2,160 (a) $ 2,432
======= ====== ======= =======
(a) Write off of bad debts and sales returns.
(b) Foreign currency translation adjustment.
SEE NOTES TO FINANCIAL STATEMENTS
F-19
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Inter Parfums, Inc.
By: /s/ Jean Madar
---------------
Jean Madar, Chief Executive Officer
Date: 23 March 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------------------------------------
Chairman of the Board of Directors 23 March 2001
/s/ Jean Madar and Chief Executive Officer
- -------------------------
Jean Madar
- --------------------------------------------------------------------------------------------------------------------
Chief Financial and Accounting 23 March 2001
/s/ Russell Greenberg Officer and Director
- -------------------------
Russell Greenberg
- --------------------------------------------------------------------------------------------------------------------
/s/ Philippe Benacin Director 27 March 2001
- -------------------------
Philippe Benacin
- --------------------------------------------------------------------------------------------------------------------
Director 21 March 2001
/s/ Francois Heilbronn
- -------------------------
Francois Heilbronn
- --------------------------------------------------------------------------------------------------------------------
Director 26 March 2001
/s/ Joseph A. Caccamo
- -------------------------
Joseph A. Caccamo
- --------------------------------------------------------------------------------------------------------------------
Director 21 March 2001
/s/ Jean Levy
- -------------------------
Jean Levy
- --------------------------------------------------------------------------------------------------------------------
Director 21 March 2001
/s/ Robert Bensoussan-Torres
- -------------------------
Robert Bensoussan-Torres
- --------------------------------------------------------------------------------------------------------------------
/s/ Daniel Piette Director 27 March 2001
- ------------------------
Daniel Piette
- --------------------------------------------------------------------------------------------------------------------
/s/ Jean Cailliau Director 27 March 2001
- ------------------------
Jean Cailliau
- --------------------------------------------------------------------------------------------------------------------
/s/ Philippe Santi Director 27 March 2001
- ----------------------
Philippe Santi
- --------------------------------------------------------------------------------------------------------------------
Director __ March 2001
- ----------------------
Serge Rosinoer
- --------------------------------------------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBIT INDEX TO
REPORT ON FORM 10-K
(Mark one)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended 31 December 2000 or
// Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
--------------
Commission File No. 0-16469
INTER PARFUMS, INC.
(Exact name of registrant as specified in its charter)
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - January 18, 1990), as follows:
EXHIBIT NO. AND DESCRIPTION
10.13 License Agreement between the Company and Jordache dated January 18, 1990
(as no. 10.1 therein).
10.15 Letter of Indemnification from Jordache to the Company dated January 18,
1990 (as no. 10.3 therein)
10.16 Letter Agreement from Jordache to the Company regarding foreign license
rights dated January 18, 1990 (as no. 10.4 therein).
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 29, 1991), as follows:
EXHIBIT NO. AND DESCRIPTION
10.24 Agreement and Plan of Reorganization dated July 29, 1991 among the
Company, Jean Madar and Philippe Benacin (as No. 10.1 therein)
The following document heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991:
Exhibit No. and Description
10.25 Employment Agreement between the Company and Philippe Benacin dated July
29, 1991
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Registration Statement on Form S-1
(No. 33-48811):
EXHIBIT NO. AND DESCRIPTION
10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
2
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992:
EXHIBIT NO. AND DESCRIPTION
4.10 Amendment to 1992 Stock Option Plan
4.11 1993 Stock Option Plan
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1993), as follows:
Exhibit No. and Description
10.30 License Agreement dated July 15, 1993, among Burberrys Limited, Inter
Parfums, S.A. and Jean Philippe Fragrances, Inc.(1)
10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A.
and Inter Parfums, S.A. (original in French)(1)
10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A.
and Inter Parfums, S.A.(translation of French into English)(1)
10.33 Agreement dated July 14, 1993, between Alfin, Inc. and Inter Parfums,
S.A.1
10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe
Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc.
10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean
Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.(1)
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
EXHIBIT NO. AND DESCRIPTION
10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and
- -----------------
(1) Filed in excised form.
3
Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Molyneux)
10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Weil)
10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France, S.A. dated February 18, 1994
10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18,
1994
10.40 Commission Agreement among Jean Philippe Fragrances, Inc., Inter Parfums,
S.A. and Sodipe S.A. dated February 18, 1994
10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re inventory purchase)
10.42 Convention de Nantissement among Cosmetiques et Parfums de France, S.A.,
Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe
Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security
agreement)
10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A., Cosmetiques
et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and Inter Parfums,
S.A. and Sodipe S.A. dated February 18, 1994 (re French regulatory requirements)
10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
March 14, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
EXHIBIT NO. AND DESCRIPTION
10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels de
Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux)
10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels de
Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil)
10.48. English translation of exhibit no. 10.41, Convention between Inter
Parfums, S.A. and
4
Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re
inventory purchase)
10.49. English translation of exhibit no. 10.42, Convention de Nantissement
among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de
France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter
Parfums, S.A. dated February 18, 1994 (re security agreement)
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Form 8 Amendment no. 2 (dated
March 21, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
EXHIBIT NO. AND DESCRIPTION
10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques et
Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A., Jean
Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated February
18, 1994 (re French regulatory requirements)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993:
EXHIBIT NO. AND DESCRIPTION
3.3 Articles of Incorporation of Inter Parfums Holding, S.A.
3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of Inter
Parfums Holding, S.A.
3.4 Articles of Incorporation of Inter Parfums, S.A.
3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation of Inter
Parfums, S.A.
4.15 1994 Nonemployee Director Stock Option Plan
10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization
Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.)
10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport Partiel
D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums,
S.A. and Selective Industrie, S.A.)
10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees dated September
30, 1993
5
10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4, Rond
Point Des Champs Des Elysees dated September 30, 1993
10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees dated March 2,
1994
10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4, Rond
Point Des Champs Des Elysees dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994:
4.16 1994 Nonemployee Director Supplemental Stock Option Plan (Listed as no.
4.15 therein)
10.59 Modification of Lease Agreement dated June 17, 1994 between Metropolitan
Life Insurance Company and Jean Philippe Fragrances, Inc.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995:
EXHIBIT NO. AND DESCRIPTION
10.61 Lease for 60 Stults Road, South Brunswick, NJ between Forsgate Industrial
Complex, a limited partnership, and Jean Philippe Fragrances, Inc. dated July
10, 1995
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996:
EXHIBIT NO. AND DESCRIPTION
10.65 Asset Repurchase Agreement between Carson, Inc. and Jean Philippe
Fragrances, Inc. dated March 27, 1997
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997:
6
EXHIBIT NO. AND DESCRIPTION
10.67 Second Modification of Lease made as of the 30th day of April, 1997
between Metropolitan Life Insurance Company as landlord and Jean Philippe
Fragrances, Inc. as tenant.
10.68 Amendment I to License Agreement dated September 3, 1997 between Jordache
Enterprises, Inc. as Licensor and Jean Philippe Fragrances, Inc. as Licensee.
10.69 Exclusive Licence Agreement dated June 20, 1997 between S.T. Dupont, S.A.
and Inter Parfums (English translation, excised version)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998:
EXHIBIT NO. AND DESCRIPTION
3.2 Amended and Restated By-laws
4.17 1997 Nonemployee Director Stock Option Plan
4.18 1999 Stock Option Plan
10.70 Licence Agreement among Paul Smith Limited, Inter Parfums, S.A. and
Jean-Philippe Fragrances, Inc. (excised version)
10.71 Licence Agreement between Christian LaCroix, a division of Group LVMH and
Inter Parfums, S.A (English translation, excised version)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's current report on Form 8-K (date of
event - November 22, 1999):
Exhibit No. and Description
4.2 Shareholder's Agreement among LV Capital USA, Inc., Jean Mader and Philippe
Benacin dated November 22, 1999.
99.1 Stock Purchase Agreement among LV Capital USA, Inc., Jean Madar and
Philippe Benacin dated November 22, 1999.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999:
7
EXHIBIT NO. AND DESCRIPTION
3.1.4 Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated July 13, 1999 (listed therein as 3.1(d))
10.73 Burberry Confidential Treatment Agreement dated 8 February, 2000
10.74 Burberry Licence Amendment dated February, 2000 (filed in excised form)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's current report on Form 8-K/A no. 1
(date of event - 18 May 2000):
10.76 Celine License Agreement [in French]- excised.
10.76.1 Celine License Agreement [English translation]- excised.
The following document heretofore filed with the Commission is
incorporated by reference to the Company's current report on Form 8-K/A no. 1
(date of event - 23 June 2000):
10.77 Sublicense Agreement for FUBU Fragrances, dated June 22, 2000 -
excised.
The following document heretofore filed with the Commission is
incorporated by reference to the Company's quarterly report on Form 10-Q for the
period ending 30 June 2000:
3.1.5 Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated 12 July 2000 (listed therein as 3.1(e))
8
The following documents are filed herewith:
Exhibit No. and Description
3.1.1 Restated Certificate of Incorporation dated September 3, 1987
3.1.2 Amendment to the Company's Restated Certificate of Incorporation dated
July 31, 1992
3.1.3 Amendment to the Company's Restated Certificate of Incorporation dated
July 9, 1993
4.19 2000 Nonemployee Director Stock Option Plan
10.78 Revolving Credit Agreement dated June 1, 2000 between HSBC Bank USA and
Inter Parfums, Inc.
10.79 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [French
Original]
10.79.1 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [English
Translation]
10.80 Credit Lyonnais Letter Agreement dated 22 March 2001 - [French Original]
10.80.1 Credit Lyonnais Letter Agreement dated 22 March 2001 - [English
Translation]
10.81 Barclays Bank Letter Agreement dated 4 June 1998 - [French Original]
10.81.1 Barclays Bank Letter Agreement dated 4 June 1998 - [English Translation]
10.82 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July
1998 - [French Original]
10.82.1 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July
1998 - [English Translation]
10.83 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July
1998 - [French Original]
10.83.1 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July
1998 - [English Translation]
10.84 Banque Worms Letter Agreement dated 22 December 1997 - [French Original]
10.84.1 Banque Worms Letter Agreement dated 22 December 1997 - [English
Translation]
10.85 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 -
[French Original]
10.85.1 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 -
[English Translation]
21 List of Subsidiaries
9