Burberry. Christian Lacroix. Lanvin. Nickel. Paul Smith ... - Interparfums

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Burberry. Christian Lacroix. Lanvin. Nickel. Paul Smith ... - Interparfums

Burberry. Christian Lacroix. Lanvin.

Nickel. Paul Smith. Quiksilver. Roxy.

S.T. Dupont. Van Cleef & Arpels.

Annual report two thousand & eight


A sustained pace of development

Letter to our shareholders 02

Key figures 04

2008 milestones and 2009 outlook 06

The products 08

The market in 2008 28

The distribution network 30

Corporate governance 32

Corporate citizenship 34

Stock market 40

Consolidated financial highlights 42

Patronage 44


PHILIPPE BENACIN & JEAN MADAR

Letter

to our

shareholders

In 2008, the Group successfully achieved another year

of sustained growth with consolidated sales of €265

million, up 9.4% at current exchange rates and 14% at

constant exchange rates over 2007. This performance

was affected by particularly adverse euro/dollar

exchange rate trends. This resulted in a negative

currency effect on sales of close to €12 million despite

a proactive hedging strategy.

Burberry fragrances continued to expand, driven by

the successful worldwide launch of the new women’s

fragrance Burberry The Beat and the strength of the

brand’s existing lines.

Lanvin fragrances significantly exceeded the year’s

initial targets through steady performances by

the Éclat d’Arpège line in the second half and the

launches of the Rumeur 2 Rose line in the spring

and the Jeanne Lanvin line in the fall.

2 Inter Parfums annual report two thousand & eight . Letter to our shareholders

Van Cleef & Arpels fragrances also achieved excellent

in response to the solid performances by the First

line and the successful launch of the new women’s

fragrance line, Féerie.

In a contracting market, launches of the Burberry The

Beat, Jeanne Lanvin and Féerie lines contributed to

good performances in France.

Western Europe (excluding France) remained stable in

light of the challenging conditions in the UK and

Spain.

The Middle East and Eastern Europe grew 30% and

28% respectively.

North America grew 11% in volume (2% in value in

light of the US dollar’s weakness) despite the severity of

the economic downturn in this region.


As in the previous year, by maintaining tight control

over all expenses, the Group considerably limited the

impact of adverse foreign exchange trends. As a result,

operating profit expanded nearly 8% resulting in an

operating margin approaching 13%. In line with its

medium-term development strategy, the Group pursued

marketing and advertising spending (+5%).

Net income exceeded €21 million with a net margin

of 8%, a particularly high level for the perfume and

cosmetics industry.

Finally, the Group continues to have a very solid

financial position with shareholders’ equity of €155

million and limited net financial debt of €4 million at

December 31, 2008.

Despite the relatively mixed picture provided by

information received on the market and reduced

visibility, we remain optimistic on the Group’s

prospects for development over the medium term.

The excellent quality of our brand portfolio and the

new product pipeline, our balanced geographical sales

mix, the quality of our business model and the

professionalism, energy and creativity of our teams

should permit us to maintain profitability at

satisfactory levels in 2009.

Philippe Benacin & Jean Madar

Inter Parfums annual report two thousand & eight . Letter to our shareholders

3


194.4

264.9

242.1

216.2

25.9

29.2

05 06 07 08 05 06 07 08 05 06 07 08 05 06 07 08

Sales (1) Income from operations (1) Net income (1) Total dividends

(in € thousands) 2004 2005 2006 2007 2008

Sales 157,426 194,442 216,235 242,123 264,864

% international 91% 92% 92% 91% 90%

Income from operations 24,207 25,913 29,182 31,812 34,259

% operating margin 15.4% 13.3% 13.5% 13.1% 12.9%

Résultat net part du groupe 15,518 16,295 18,694 20,193 21,119

% net margin 9.9% 8.4% 8.6% 8.3% 8.0%

Shareholders’ equity 82,665 98,049 115,795 134,233 155,928

Net cash 15,857 34,390 44,072 56,113 26,304

Total assets 143,398 172,078 223,401 271,544 262,064

Workforce (at December 31) 90 112 128 145 152

4 Inter Parfums annual report two thousand & eight . Key figures

34.3 21.1 4.8

31.8

18.7

20.2

16.3 3.6

4.1

4.6


69.8

Non-current

assets

161.9

Current assets

26.3

Net cash

Assets Liabilities

Balance sheet highlights (1)

The Group has a very solid financial

position with shareholders’ equity

of €155 million and limited

net financial debt of €4 million at

31 December 2008.

The decline in cash reflects primarily

an intentional policy to maintain high

inventory levels making it possible

to fill virtually all orders received.

(1) Consolidated data in € millions

155.8

Shareholders’

equity

30.0

Long term

debt

72.2

Current

liabilities

YEAR 2008

Key

figures

The gross margin as a percentage of sales (57.6% in 2008)

remains high despite adverse foreign exchange trends and provisions

for Roxy inventory write-downs.

In line with our medium-term development strategy, the Group

pursued marketing and advertising spending (+5%)

while successfully maintaining tight control of all expenses.

As a result, operating profit for 2008 expanded nearly 8%

compared to 2007 with an operating margin approaching 13%.

Growth in net income was limited by two factors:

- Increased financial expenses in connection with

the acquisition of Lanvin trademarks;

- The fair value recognition of financial instruments

(US dollar hedges for 2009 and interest rate swaps on bank debt)

for a total of €1.2 million before tax.

Inter Parfums annual report two thousand & eight . Key figures

5


2008 MILESTONES AND 2009 OUTLOOK

A sustained

pace of

development

JANUARY / MARCH

Launch of The Beat

line of Burberry

The launch of the new women’s fragrance

line Burberry The Beat was a high point of

the first quarter, with very rapid product

turnover and initial order renewals at

points-of-sale.

6 Inter Parfums annual report two thousand & eight . 2008 milestones and 2009 outlook

JUNE JULY

Creation of a new

subsidiary

On June 16, 2008, Inter Parfums

created a new wholly-owned

subsidiary in Switzerland.

At the same time, Inter Parfums

contributed its proprietary

Lanvin trademarks and brands

to this new entity. An exclusive

license agreement was concluded

between Inter Parfums Suisse and

Inter Parfums effective July 1, 2008.

Bonus share issue

On June 18, 2008, the company

proceeded with a bonus issue

on the basis of one new share for

every ten shares held.

Extension of the Paul Smith

license agreement

In December 1998, Paul Smith

and Inter Parfums signed a

12-year agreement to create and

produce perfumes and cosmetics

under the Paul Smith brand and

distribute them worldwide. In

July 2008 this agreement was

extended for an additional seven

years through December 31, 2017

on the basis of comparable terms

and conditions.

Launch of the Jeanne

Lanvin line of Lanvin

To render homage to the founder

of France’s first fashion house,

Alber Elbaz reconciled modernity

and femininity with a new

fragrance, Jeanne Lanvin, both

poetic and elegant, launched in

July 2008.


SEPTEMBER OCTOBER 2009 OUTLOOK

Signature of an agreement

with Rafael Nadal for Lanvin

On September 30, 2008,

Inter Parfums and Rafael Nadal

signed a major international

agreement to promote the

development of Lanvin fragrances.

the world’s number one tennis

player will become the standardbearer

for the Lanvin L’Homme

Sport line to be launched in the

summer of 2009.

Launch of the Féerie line

of Van Cleef & Arpels

Entirely inspired from the magical

universe of Van Cleef & Arpels, the

Féerie line, launched in September

confirms with brilliance its manifest

connection with the fine jeweler.

The same poetry, imaginary world,

and exclusive luxury. A pure object

of desire, Féérie, launched in

September 2008, conjuring up a

spectacular universe illuminated by

stars, fairy wings and enchanted

dreams.

Merger by absorption

of Nickel

On October 1, 2008, Nickel

became a wholly-owned subsidiary

of Inter Parfums through a simplified

merger procedure involving the

transfer of its assets and liabilities

to the latter (Transmission Universelle

de Patrimoine).

Multiplying growth initiatives

The company targets sales of €273 million for 2009 through

an ambitious program of launches that will boost revenue from

existing lines: Burberry The Beat Men, Lanvin L’Homme Sport,

Paul Smith Men and Van Cleef Collections Extraordinaires.

Inter Parfums annual report two thousand & eight . 2008 milestones and 2009 outlook

7


THE PRODUCTS

The creative

process

The creation and marketing of each product line are intimately linked to the brand, its history,

positioning, clientele and, more generally, its universe.

The company creates, manufactures and distributes prestige perfumes through license agreements

with leading brands in the high-end ready-to-wear, high fashion, jewelry and accessories sectors.

Inter Parfums’ success is based on long-term partnerships with brands, customers and suppliers, proven

expertise in developing and marketing products and production processes and a streamlined organization

that outsources packaging and logistics.

The product launch process is the cornerstone of the company’s successful record of growth and expansion.

For this reason, the decision to launch a new line is made very early on in the process: the cycle of market

research up to the product launch may range between 12 and 18 months.

The success of a product is based on the combination of a good dose of creativity and achieving an optimal

fit between the following key components of the marketing mix: the brand’s overall positioning, its “juice”,

the bottle, packaging, and marketing strategy.


In July 1993, Inter Parfums entered into an exclusive 10-year license agreement with Burberry Ltd.

to create and produce perfumes under the Burberry name and distribute them worldwide,

followed by an initial 3-year extension in 2000.

In October 2004, Inter Parfums signed a new agreement for 12.5 years effective July 1, 2004

with an option for an additional five years subject to mutual agreement of the parties.

Lines distributed are: Burberry (1995), Burberry Week end (1997), Burberry Touch (2000),

Burberry Brit (2003/2004), Burberry London (2006), Burberry The Beat (2008) and Burberry The Beat Men (2009).

Burberry fragrances had sales in 2008 of €169 million, up 10.5%, boosted by the successful worldwide

launch of the women’s fragrance line Burberry The Beat and solid performances by the brand’s existing lines

and represented 63.8% of total revenue.

Inter Parfums annual report two thousand & eight . Burberry products

11


Burberry The Beat

(2008)

Burberry The Beat Men

(2009)

Burberry Summer

(2007)

2008 awards

Best Fragrance for Burberry The Beat by the Cosmopolitan Beauty Award 2008

12 Inter Parfums annual report two thousand & eight . Burberry products

Burberry Brit Sheer

(2007)

Burberry London

(2006)

Burberry Brit

(2004/2003)


Burberry Baby Touch

(2002)

Burberry Touch

(2000)

Burberry Weekend

(1997)

Burberry

(1995)

Inter Parfums annual report two thousand & eight . Burberry products

13


In July 2004, Inter Parfums entered into an exclusive 15-year license agreement with the company Lanvin

to create, develop and distribute fragrances worldwide under the Lanvin name.

On July 31, 2007, Inter Parfums SA acquired the Lanvin brand names and international trademarks for

class 3 fragrance products and make-up from the Jeanne Lanvin S.A. company. On the same date,

the two companies mutually agreed to terminate the existing licensing contract signed in June 2004.

Lines distributed are: Arpège (1927), Lanvin L’Homme (1997), Éclat d’Arpège (2002), Arpège pour Homme (2005),

Rumeur (2006), Rumeur 2 Rose (2007), Jeanne Lanvin (2008) and L’Homme Sport (2008).

Lanvin fragrances had sales in 2008 of €39 million, with steady performances by the Éclat d’Arpège line and

contributions from the launch of Rumeur 2 Rose in the spring and Jeanne Lanvin in the fall (14.7% of total revenue).

Jeanne Lanvin

(2008)

Rumeur 2 Rose

(2007)

Rumeur

(2006)

14 Inter Parfums annual report two thousand & eight . Lanvin products

Arpège pour Homme

(2005)

Éclat d’Arpège

(2002)

Lanvin L’Homme

(1997)

Arpège

(1927)


At the end of September 2006, the Van Cleef & Arpels and Inter Parfums groups signed a worldwide

license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels

brand name with a 12-year term that took effect on January 1, 2007.

Lines distributed are: First (1976), Van Cleef pour Homme (1978), Tsar (1989), Van Cleef (1994),

First 1er Bouquet (2008) and Féerie (2008).

Van Cleef & Arpels had sales in 2008 of €21 million, advancing 77% in relation to 2007, boosted

by the good performance of First and the successful launch of the new women’s fragrance line,

Féerie (7.9% of total revenue).

Féérie

(2008)

Premier Bouquet

(2008)

Van Cleef

(1994)

Tsar

(1989)

Pour homme

(1978)

First

(1976)

Inter Parfums annual report two thousand & eight . Van Cleef & Arpels products

17


In December 1998, Inter Parfums entered into an exclusive 12-year license

agreement with Paul Smith to create and produce perfumes and cosmetics under

the Paul Smith name and distribute them worldwide.

In July 2008, this agreement was extended for seven years until December 31, 2017

on the basis of comparable contractual terms and conditions.

Lines distributed are: Paul Smith (2000), Paul Smith Extrême (2002),

Paul Smith London (2004), Paul Smith Story (2006) and Paul Smith Rose (2007).

Paul Smith fragrances had sales in 2008 of €13 million (5.1% of total revenue).

Paul Smith Rose

(2007)

Paul Smith Story

(2006)

Paul Smith Floral

(2005)

18 Inter Parfums annual report two thousand & eight . Paul Smith products

Paul Smith Extrême

(2002)

Paul Smith Classic

(2000)


In June 1997, Inter Parfums entered into an exclusive 11-year agreement with S.T. Dupont

to create and produce perfumes under the S.T. Dupont name and distribute them worldwide.

In April 2006, this agreement was extended for an additional three years, i.e. until June 30, 2011.

Lines distributed are: S.T. Dupont (1998), S.T. Dupont Essence Pure (2002),

S.T. Dupont Noir (2006), S.T. Dupont Blanc (2007) and S.T. Dupont Passenger (2008).

S.T. Dupont fragrances had sales in 2008 of €11.5 million (4.3% of total revenue).

S.T. Dupont Passenger

(2008)

S.T. Dupont Blanc / Noir

(2007/2006)

S.T. Dupont Essence Pure

(2002)

S.T. Dupont

(1998)

Inter Parfums annual report two thousand & eight . S.T. Dupont products

21


In March 2006, Inter Parfums concluded an exclusive 12-year worldwide license agreement

with Quiksilver Inc. for the creation, development and distribution of fragrance, sun care,

skincare and related products under the Roxy and Quiksilver brands that runs through December 31, 2017.

In September 2007, the license agreement was extended to men’s fragrances under the Quiksilver brand.

Lines distributed are: Roxy (2007), Roxy Love (2008) and Quiksilver (2009).

Roxy and Quiksilver fragrances had sales in 2008 of €7.4 million, up 12% over 2007 (2.8% of total revenue).

Quiksilver

(2009)

Roxy Love

(2008)

Roxy

(2007)

22 Inter Parfums annual report two thousand & eight . Roxy and Quiksilver products


In April 2004, Inter Parfums acquired a majority stake in Nickel, a company specialized

in skincare products for men. In June 2007, Nickel became a wholly-owned subsidiary after

Inter Parfums acquired company’s remaining shares.

Nickel had revenue in 2008 of €2.7 million (1.0% of total revenue).

Silicon Valley by Night / by Day

(2008)

Super Clean Soft

(2008)

Super Pecs

(2008)

Super Speed

(2007)

Poignées d’Amour

(1999)

Attention les Yeux

(1997)

Lendemain de Fête

(1996)

Bonne Gueule Brun

(1996)

Inter Parfums annual report two thousand & eight . Nickel products

25


Consolidated sales for fiscal 2008 totaled €264.9 million,

up 9.4% at current exchange rates and 14.2% at constant

exchange rates over 2007.

Burberry fragrances continued to expand with annual sales of nearly

€170 million, up 10.5% at current exchange rates and 16.3% at

constant exchange rates, driven by the successful worldwide launch

of the new women’s fragrance Burberry The Beat and the strength

of the brand’s existing lines.

With sales advancing 17% to €39 million, Lanvin fragrances

significantly exceeded the year’s initial targets through steady

performances by the Éclat d’Arpège line in the second half and the

launches of the Rumeur 2 Rose line in the spring and

the Jeanne Lanvin line in the fall.

Van Cleef & Arpels fragrances also achieved excellent results with

sales of €21 million, up 77% over 2007 in response to the solid

performances by the First line and the successful launch of the new

women’s fragrance line, Féerie.

Sales by brand

In € millions 2004 2005 2006 2007 2008

As a % of total sales

Burberry 118.8 131.3 143.3 152.9 169.0

75.5% 67.5% 66.3% 63.2% 63.8%

Lanvin 7.6 29.5 34.4 33.3 39.0

4.8% 15.1% 15.9% 13.8% 14.7%

Van Cleef & Arpels - - - 11.9 21.0

- - - 4.9% 7.9%

Paul Smith 14.3 14.5 17.7 18.0 13.4

9.1% 7.5% 8.2% 7.4% 5.0%

S.T. Dupont 8.9 8.8 10.1 11.1 11.5

5.7% 4.5% 4.7% 4.6% 4.3%

Roxy/Quiksilver - - - 6.6 7.4

- - - 2.7% 2.8%

Nickel 1.7 3.1 4.1 3.3 2.7

1.1% 1.6% 1.9% 1.4% 1.1%

Other 6.1 7.2 6.6 5.0 0.9

3.8% 3.8% 3.0% 2.0% 0.4%

Total 157.4 194.4 216.2 242.1 264.9


Significant

THE MARKET

international

sales

28 Inter Parfums annual report two thousand & eight . The market


France

The French spent less on perfumes and

cosmetics in 2008: sales of perfume products

and cosmetics by specialized traditional outlets,

independent shops and major stores in France

rose 2.5% to €6.56 billion, less than in 2007

(+4%) and 2006 (+5%). Growth in volumes

remained flat (0% to +1%) and in large part

price-driven. Growth of 1.5% is forecasted in

2009 in value terms on the assumption of a

macroeconomic recovery in the second half.

Price increases should be limited in response

to greater price consciousness of consumers.

Source: Precepta

International markets

In the United States, the total U.S. beauty

industry declined 3.3% in dollar sales to

US$8.4 billion. The steepest decline was

registered by fragrances (-6%), with make-up

also contracting while skincare, boosted by the

anti-aging segment, remained steady. In the

mass-market channel in the US perfumes also

contracted while make-up and skincare managed

to grow. The slowdown reflects both a contraction

in the number of users but also in frequency of

use. The study also indicated that the United

States was the market most affected by the

downturn. In contrast, Italy declined only

0.5% while sales in China registered strong

growth of 17.2%.

Source: NPD Group

Market share

In France, Inter Parfums attained roughly a 2%

share of the selective distribution market of

prestige perfumes. In certain countries such as

the United States, the United Kingdom, Russia

or China, the company estimates its market

share of total French perfume imports at between

1% and 4%.

Source: Internal estimates

Competition

In an industry highly concentrated around

major players with billions of euros in sales,

Inter Parfums pursues an unique strategy of

steadily and methodically developing a

portfolio of perfumes for selective distribution

based on internationally renowned brands.

Although Inter Parfums’ closest competitors do

not develop mass market or cosmetics products,

several large corporations have perfume divisions

with comparable strategies.

Inter Parfums annual report two thousand & eight . The market

29


AMERICA EUROPE MIDDLE

ASIA

Argentina

Greta

Brazil

Eximbiz Comercio Intl

Canada

Clarins Canada

Columbia

Grupo Wisa

United States

Procter & Gamble

Mexico

Antera

25.4%

of sales (with 18.7%

in the US)

€67.4 M

Germany

Inter Parfums

Deutschland Gmbh

Spain

Inter Espana Parfums

et Cosmétiques SL

Italy

Inter Parfums Srl

Portugal

Luso Helvetica

United Kingdom

Inter Parfums Ltd,

Kenneth Green

Russia

Kurs

Turkey

Te Ha Guzellik

42.1%

of sales (with 32.2%

in Western Europe)

€111.6 M

30 Inter Parfums annual report two thousand & eight . The distribution network

EAST

Saudi Arabia

Radwa

National Marketing

Dubai

Création Alexandre

Ghadeer Trading

Kuwait

Habchi Chalhoub

Wahran Trading

9.1%

of sales

€24.2 M

China

Eternal Optical

South Korea

Tdco Ltd

Japan

Bluebell

Singapore

and Taiwan

Luxasia

12.8%

of sales

€33.9 M


THE

Multiple

DISTRIBUTION NETWORK

and

diversified

channels

Present in more than 100 countries

with international markets accounting for more than 90% of sales

International

International distribution

is assured through:

- independent companies,

- subsidiaries of major luxury

goods corporations,

- duty-free operators (airports, airlines,

etc.), that have exclusive rights

to distribute one or more

of the company’s brands in a

specific territory.

France

The French sales team handles French

distribution directly. The network of sales

outlets breaks down as follows:

- integrated chains (Sephora,

Marionnaud, Nocibé…),

- franchise stores (Beauty

Success, Passion Beauté, …),

- department stores (Galeries

Lafayette, Printemps…),

- traditional perfumeries.

The French sales team also handles

merchandising (shelf management, product

placement in stores, sales promotion and

event planning) that is a key contributor to

the company’s development.

Inter Parfums annual report two thousand & eight . The distribution network

31


Board

CORPORATE GOVERNANCE

of Directors

and

Management

committee

Inter Parfums adopted the form of a société anonyme, the French equivalent of a joint stock company,

when it was created in 1989. It is governed by a Board of Directors and a Management Committee.

32 Inter Parfums annual report two thousand & eight . Corporate governance


Management Committee members, left to right: Philippe Santi, Jérôme Thermoz, Philippe Benacin,

Hugues de la Chevasnerie, Angèle Ory-Guénard, Axel Marot and Frédéric Garcia-Pelayo

Board of Directors Management committee

As of December 31, 2008 the composition of the Board of Directors was as follows:

Philippe Benacin

Chairman and Chief Executive Officer of

Inter Parfums (appointment renewed April 23,

2004, expiring at the close of the 2010 annual

shareholders’ meeting)

Jean Madar

Director (appointed 23 April 2004,

expiring at the close of the 2010 annual

shareholders’ meeting)

Maurice Alhadève

Independent Director (appointed by

the shareholders’ meeting of April 23, 2004,

expiring at the close of the 2010 annual

shareholders’ meeting)

Michel Dyens

Independent Director (appointed by

the shareholders’ meeting of April 23, 2004,

expiring at the close of the 2010 annual

shareholders’ meeting)

Jean Levy

Director (appointed by the shareholders’ meeting

of April 23, 2004, expiring at the close of the

2010 annual shareholders’ meeting)

Patrick Choël

Director (appointed by the shareholders’ meeting

of December 1, 2004, expiring at the close of the

2010 annual shareholders’ meeting)

Chantal Roos

Independent director (appointed by co-optation

by decision of the Board of Directors’ meeting of

November 22, 2008 subject to ratification by the

next general meeting to be held on April 24,

2009)

Catherine Bénard-Lotz

Director (holder of an employment contract

preceding the appointment by the shareholders’

meeting of April 23, 2004, expiring at the

close of the 2010 annual shareholders’ meeting)

Frédéric Garcia Pelayo

Director and Executive Vice President

(appointed by co-optation by decision of the

Board of Directors’ meeting of November 22,

2008 subject to ratification by the next general

meeting to be held on April 24, 2009)

Philippe Santi

Director and Executive Vice President

(holder of an employment contract preceding

the appointment by the shareholders’ meeting

of April 23, 2004, expiring at the close of the

2010 annual shareholders’ meeting)

The composition of the

Management Committee on

December 31, 2008 was as follows:

Philippe Benacin

Chairman and Chief

Executive Officer

Philippe Santi

Executive Vice President,

Chief Financial

& Administrative Officer

Frédéric Garcia-Pelayo

Executive Vice President,

Chief International Officer

Hugues de la Chevasnerie

Vice President, Burberry Fragrances

Angèle Ory-Guénard

Vice President, Export Sales,

Burberry Fragrances

Jérôme Thermoz

Vice President, French Distribution

Axel Marot

Vice President, Production

& Logistics

Inter Parfums annual report two thousand & eight . Corporate governance

33


Social

CORPORATE CITIZENSHIP

responsibility

Inter Parfums’ corporate values

Over the years, Inter Parfums has developed a corporate culture based on promoting creativity, teamwork, a spirit of trust

and corporate responsibility. Inter Parfums management and employees share strong values in respect to working conditions,

equal opportunity employment, respect, fighting discrimination and employee training. These values that today represent

the foundations for sustainable growth reflect the contribution of the cultural diversity and rich experience of our workforce.

Workforce at December 31 2006 2007 2008

Total workforce 128 145 152

Officers and managers 68 77 82

Supervisory staff - - 9

Non-management employees 60 68 61

Average age 36 years 36 years 37 years

Average seniority 6 years 6 years 6 years

Turnover 4.5% 4.7% 6.3%

Organization at March 1, 2009

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Ph. Benacin

PRODUCTION

& LOGISTICS

A. Marot

22 employees

The production

process combines high

quality and strict

compliance with

deadlines essential to

produce several million

units a year. A team of

22 under Axel Marot

manages sourcing,

supplier relations,

quality assurance and

cost control and

operations.

BURBERRY

FRAGRANCES

H. de La Chevasnerie

29 employees

Reflecting the volume

of business of the

brand and distinct

terms and conditions

of the license

agreement, the

Burberry Fragrances

division is specifically

devoted to marketing

and international

distribution of this

brand. It has 29

employees and is

headed by Hugues de

La Chevasnerie.

34 Inter Parfums annual report two thousand & eight . Corporate citizenship

LUXE

& FASHION

F. Garcia-Pelayo

25 employees

Frédéric Garcia-Pelayo

leads a dedicated team

of 25 professionals

responsible for product

development,

marketing and

international

distribution for the

Lanvin, Paul Smith,

Van Cleef & Arpels,

Quiksilver, Roxy, S.T.

Dupont and Christian

Lacroix brands.

Reflecting the

specificities of the

Nickel brand, its

product development

and marketing are

managed by the Luxe

& Fashion division.

FRENCH

DISTRIBUTION

J. Thermoz

47 employees

Jérôme Thermoz’s staff

of 47 handles the

company’s distribution

strategy and management,

contract

negotiations and

monitors profit margins

and advertising

expenditures in

France.

Management of the

Nickel spas is assured

by a team of 8 that are

part of the French

Distribution division.

FINANCE

& CORPORATE

AFFAIRS

Ph. Santi

27 employees

Philippe Santi heads a

staff of 27 responsible

for financial strategy

and communications,

investor relations,

accounting, budgets,

cost accounting, labor

relations, tax and legal

services, cash

management and

collection.


Inter Parfums and its subsidiaries

Commercial operations are conducted primarily through Inter Parfums SA. To pursue its international development, Inter Parfums

set up new distribution subsidiaries on January 1, 2007 in the key European markets of Germany, Spain, Italy and the

United Kingdom. These subsidiaries are 51%-owned by Inter Parfums and 49%-owned by local distributors. Inter Parfums

also created a wholly-owned subsidiary in Switzerland, Inter Parfums Suisse Sarl. This subsidiary is the owner of the Lanvin brand

name and international trademarks for class 3 products.

Inter Parfums and its parent company

Founded in 1985, the U.S. company Inter Parfums Inc. is listed on NASDAQ and has business activities in two areas:

- mass market perfumes aimed mainly at the U.S. consumer market and developed by its wholly owned U.S. subsidiary,

Jean-Philippe Fragrances LLC,

- prestige perfumes aimed at the global selective perfumes market and developed by its French subsidiary, Inter Parfums

(75% owned at December 31, 2008 via Inter Parfums Holding).

The US company develops and sells products under license agreements principally under the Gap, Banana Republic,

New York & Company, Brooks Brothers and Bebe brands.

The ownership structure of Inter Parfums Inc. broke down as follows at December 31, 2008

100%

INTER PARFUMS

SUISSE

SARL

Switzerland

PHILIPPE BENACIN

JEAN MADAR

INTER PARFUMS INC.

Nasdaq - New York

INTER PARFUMS SA

Euronext - Paris

INTER PARFUMS

LTD.

United Kingdom

FREE FLOAT

FREE FLOAT

INTER PARFUMS

SRL

consolidated financial highlights (in $ millions) 2004 2005 2006 2007 2008

Sales 236.0 273.5 321.1 389.6 446.1

Net income 15.7 15.3 17.7 23.8 23.8

Shareholders’ equity 126.5 127.8 155.3 192.7 204.2

Net cash 41.0 59.5 71.0 90.0 42.4

1 Euro = 1,3917 USD at December 31, 2008

51%

INTER PARFUMS

DEUTSCHLAND

GMBH

Germany

52%

75%

51%

48%

25%

51% 51%

INTER ESPANA

PARFUMS &

COSMÉTIQUE SL

Spain

Italy

Inter Parfums annual report two thousand & eight . Corporate citizenship

35


36 Inter Parfums annual report two thousand & eight . Corporate citizenship


Inter Parfums annual report two thousand & eight . Corporate citizenship

37


CORPORATE CITIZENSHIP

The

environment

The environment

Inter Parfums’ business focuses principally on the

creation and distribution of products. For this reason,

the entire production process is outsourced to manufacturing

partners. These include producers of juice,

glass, caps and cardboard boxes and packaging companies.

With no production activities of its own, Inter Parfums

does not own laboratories or manufacturing sites.

Even though it operates in a sector less polluting than

other industries, Inter Parfums is committed to

preserving the environment and quality of life. For this

reason, it remains involved in the production process

and coordinates with all subcontractors and suppliers

who manufacture its products and are directly

responsible for their impact on the environment.

Low energy requirements

Inter Parfums’ consumption of water and energy is

limited to normal office usage in the administrative

premises of its headquarters, that house 111 employees.

Other water and energy consumption concern the sales

offices and commercial teams in the field that represent

41 employees out of 152.

Recycling

The company constantly strives to reduce the already

low impact of its business on the environment by

investing in the treatment and recycling of the packages,

cardboard boxes and glass left once its customers have

finished using its products. With this objective, through

its participation in the “Eco Emballage” packaging

recycling program, Inter Parfums contributes to waste

management and recycling.

38 Inter Parfums annual report two thousand & eight . Corporate citizenship

The minimization

of environmental impact

To balance product quality and aesthetics with

environmental considerations, Inter Parfums takes care

to reduce packaging volumes at the source and select the

appropriate materials at each stage of production to

ensure optimal conditions for their recycling or disposal.

Accordingly, Inter Parfums selects partners using cuttingedge

design techniques with a commitment to reduce

the impact of manufacturing processes on the

environment.

The bottles of its products are made of recyclable glass

and the production process provides for a system of

recuperation, grinding and recasting of certain bottle

components, which generates savings in volume of

materials used of 20%. A biodegradable water-soluble

solution that does not harm the environment is used in

the coloring of some of its bottles. The process of coating

used for certain products is compliant with the law of

2005 destined to reduce emissions of volatile organic

compounds (VOC) in the air by the use of “hydro

coating”. This commitment to environmental

responsibility is also a criteria in selecting subcontractors.

A commitment to well-being

Even though Inter Parfums does not manufacture its

products itself, it nevertheless ensures their introduction

on the market and is consequently responsible for

ensuring their inoffensiveness to the skin and eyes.

Within this framework, it ensures that its products are

not subject to any tests on animals and maintains a

scientific watch for the development of “alternative” tests

and cell culture tests. It also ensures compliance with


national and European regulations and notably the

“Cosmetics Directive” which prohibits the use of certain

animal derivatives.

Inter Parfums has taken measures for the application of

the new European Community Regulation on chemicals

and their safe use concerning the Registration, Evaluation,

Authorization and Restriction of Chemical substances

(EC Directive 1907/2006 of December 18, 2006) or

REACH with its suppliers. All technical and

organizational measures to be applied following the

adoption of REACH have been implemented by the

company.

The pre-registration phase of REACH ended on

December 1, 2008. During this period, importers and

manufacturers of “phase-in” substances were required to

register the substances once volume exceeds one ton per

year. Pre-registration makes it possible to obtain additional

delays in connection with the registration procedure.

Inter Parfums, as a downstream user of chemical

substances is not subject to the registration requirement.

However, it has sought to maintain an active role to

ensure that the registration process proceeds effectively

and the continuous supply for the sourcing chemical

substances contained in its products.

Inter Parfums took the initiative to contact its different

subcontractors to ensure they and those further down in

the supply chain effectively comply with registration,

notification or authorization request procedures. Inter

Parfums has asked all its suppliers to provide

commitments that that they will not supply articles

containing substances listed in appendix XIV

(Substances of Very High Concern). To date, no supplier

has declared the presence in articles provided to Inter

Parfums of substances that are candidates for

authorization.

Information relating to REACH including notably risk

management measures transmitted through security data

files will be taken into account by Inter Parfums or its

suppliers as they are issued.

For information, the deadlines for the implementation

of REACH are spread over the period from June 1,

2008 to June 1, 2018.

Inter Parfums’ actions in this area exceed that of a simple

coordinator by increasing its partners’ awareness of

environmental issues and staying informed of the

business practices of its subcontractors and suppliers,

highlighting its commitment to environmental

responsibility

Inter Parfums annual report two thousand & eight . Corporate citizenship

39


Shareholder

STOCK MARKET

information

Since it was listed on the EuroNext Paris Second Market in November 1995, Inter Parfums regularly provides investors and the financial

community with information on its situation in compliance with the principles of transparency and the best practices in financial

communications. This information is provided through a variety documents and media that includes an annual report, a semi-annual

report, a letter to shareholders, press releases and financial notices, a web side www.interparfums.fr, individual and group meetings with

financial analysts, fund managers, journalists, individual shareholders and other.

Share price and trading volume data

Inter Parfums share in euros and CAC Small 90 (relative)

35

30

25

20

10

0

-10

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Dividends 2004 2005 2006 2007 2008

Dividend per share (1) €0.25 €0.28 €0.31 €0.35 €0.38

Annual increase (1) +26% +10% +15% +11% +9%

Average number of shares outstanding (2) 5.2 M 9.0 M 10.4 M 11.5 M 12.7 M

(1) In light of bonus shares (2) Excluding treasury shares

40 Inter Parfums annual report two thousand & eight . Stock market

Trading volume data in thousands

600

500

400

300

200

100

-50


Year 2008

In an environment of highly volatile

equity markets, the Inter Parfums

share showed resilience throughout

the 2008 first half, declining 18%

compared to a downturn of more

than 25% for the CAC Small 90

benchmark for mid caps.

In September 2008, marked by the

downturn in all financial markets,

this trend continued despite the

publication of good half year

performances and on October 27,

2008, the share retreated to its low

of the year of €17.

The publication of third-quarter

sales and the 2009 outlook failed to

reverse this trend and the share

ended the year at €18.05.

For the full year, the share declined

37% in consequence compared

with more than 50% for the CAC

Small 90 benchmark.

Ownership as of December 31, 2008

75% 25%

Inter Parfums Inc. Public

Inter Parfums has almost 5,400 individual

shareholders and nearly 160 institutional

shareholders (nearly half of which are not French).

Securities market information

Market: Euronext Paris

Market segment: Euronext compartiment B

IPO date: November 1995

ISIN code: FR0004024222 ITP

Indexes: MidCac, CAC Small90, SBF250

Market maker: Oddo Securities

Institutions providing financial

research on Inter Parfums

Berenberg, CA, Cheuvreux, ESN-CM CIC

Securities, Fortis Bank, Gilbert Dupont, HSBC

Securities, ID Midcaps, Natixis Securities, Oddo

Securities and Société Générale

Upcoming publications

2009 second-quarter sales

July 23, 2009

2009 first-half sales and earnings

September 7, 2009

2009 third-quarter sales

Mid-October 2009

2009 letter to shareholders

Mid-November 2009

2009 annual sales

Mid-January 2010

2009 sales and earnings

Mid-March 2010

Upcoming events

Presentation of 2009

first-half earnings

September 8, 2009

MidCaps Events trade show, Paris

September 21 & 22, 2009

Actionaria trade show, Paris

November 20 & 21, 2009

Inter Parfums annual report two thousand & eight . Stock market

41


Condensed

FINANCIAL HIGHLIGHTS

financial

statements

CONSOLIDATED INCOME STATEMENT

In € thousands, except per share data which is in units 2007 2008

Sales 242,123 264,864

Cost of sales (94,694) (112,308)

Gross margin 147,429 152,556

% of sales 60.9% 57.6%

Selling and administrative expenses (114,795) (117,731)

Income from current operations 32,634 34,825

% of sales 13.5% 13.1%

Other operating income and expenses (822) (566)

Income from operations 31,812 34,259

% of sales 13.1% 12.9%

Net financial expense (836) (2,752)

Income before income tax 30,976 31,507

% of sales 12.8% 11.9%

Income tax (11,158) (10,924)

Effective tax rate 36.0% 34.7%

Net income before minority interests 19,818 20,583

% of sales 8.2% 7.8%

Attributable to minority shareholders (375) (536)

Net income 20,193 21,119

% of sales 8.3% 8.0%

42 Inter Parfums annual report two thousand & eight . Financial highlights


Consolidated balance sheet

In € thousands 2007 2008

ASSETS

Non-current assets

Net trademarks and other intangible assets 66,291 63,361

Net property, plant, equipment 3,368 4,162

Non-current financial assets 540 478

Deferred tax assets 2,482 1,743

Total non-current assets

Current assets

72,681 69,754

Inventories and work in progress 56,346 70,794

Trade receivables and related accounts 75,610 80,054

Other receivables 6,491 11,082

Cash and cash equivalents 60,416 30,380

Total current assets 198,863 192,310

Total assets 271,544 262,064

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity

Common stock 36,301 40,176

Additional paid-in capital 1,046 265

Retained earnings 76,693 94,368

Net income for the year 20,193 21,119

Total group shareholders’ equity 134,233 155,928

Minority interests (342) (166)

Total shareholders’ equity

Non-current liabilities

133,891 155,762

Provisions for non-current commitments 546 712

Non-current borrowings 29,527 19,803

Other non-current debt - -

Deferred tax liabilities 1,734 3,636

Total non-current liabilities

Current liabilities

31,807 24,151

Trade payables and related accounts 65,195 52,866

Current borrowings 11,006 10,271

Commitments and contingencies 2,280 2,280

Short-term bank loans 4,303 4,076

Other liabilities 23,062 12,658

Total current liabilities 105,846 82,151

Total shareholders’ equity and liabilities 271,544 262,064

Inter Parfums annual report two thousand & eight . Financial highlights

43


Patron

INTER PARFUMS

of the

Ensemble

Matheus

Inter Parfums wanted to associate its name and image with

the Ensemble Matheus, led by conductor by Jean-Christophe Spinosi,

with the signature of a sponsorship agreement for 2009.

“Une leçon de Musique” concert performance, Customer convention, Évian, January 26, 2009

44 Inter Parfums annual report two thousand & eight . Photos: Enguerran Ouvray. Creation: Agence Marc Praquin


4 rond-point des Champs Élysées

75008 Paris

Tel. +33 1 53 77 00 00

www.inter-parfums.fr


Burberry. Christian Lacroix. Lanvin.

Nickel. Paul Smith. Quiksilver. Roxy.

S.T. Dupont. Van Cleef & Arpels.

Financial report two thousand & eight


A sustained pace of development

Consolidated management report 02

Consolidated financials 14

Corporate governance 42

Shareholder information 60

History of the company 72

Auditors and responsibility statements 74


Consolidated

CHAPTER ONE

management

report

Year in review 03

Consolidated financials 05

Risk factors 06

Social responsibility 08

Environmental responsibility 08

Dividends 10

Purchases by the company of its own shares 10

Group organization 11

Market share and competition 12

Post-closing events 12

2009 outlook 12

2 Two thousand eight registration document Inter Parfums. Consolidated management report


1.

YEAR IN REVIEW

1.1

The selective distribution market

The French spent less on perfumes and cosmetics

in 2008: sales of perfume products and cosmetics

by specialized traditional outlets, independent shops

and major stores in France rose 2.5% to €6.56

billion, less than in 2007 (+4%) and 2006 (+5%).

Growth in volumes remained flat (0% to +1%)

and in large part price-driven. Growth of 1.5% is

forecasted in 2009 in value terms on the assumption

of a macroeconomic recovery in the second half.

Price increases should be limited in response to

greater price consciousness of consumers.

Source: Precepta

In the United States, the total U.S. beauty industry

declined 3.3% in dollar sales to US$8.4 billion.

The steepest decline was registered by fragrances

(-6%), with make-up also contracting while skincare,

boosted by the anti-aging segment, remained steady.

In the mass-market channel in the US perfumes also

contracted while make-up and skincare managed

to grow. The slowdown reflects both a contraction

in the number of users but also in frequency of use.

The study also indicated that the United States was

the market most affected by the downturn.

In contrast, Italy declines only 0.5% while sales

in China registered strong growth of 17.2%.

Source: NPD Group

1.2

2008 milestones

2008 first quarter

Launch of The Beat line of Burberry

The worldwide launch of the new women’s fragrance

line, Burberry The Beat, was a high point of the first

quarter, with very rapid product turnover and initial

order renewals at points-of-sale.

June

Creation of a new subsidiary

On June 16, 2008, Inter Parfums created a new

wholly-owned subsidiary in Switzerland. At the same

time, Inter Parfums contributed its proprietary

Lanvin trademarks and brands to this new entity.

An exclusive license agreement was concluded

between Inter Parfums Suisse and Inter Parfums

effective July 1, 2008.

June

Bonus share issue

On June 18, 2008, the company proceeded with a

bonus issue on the basis of one new share for every

ten shares held.

July

Extension of the Paul Smith license agreement

In December 1998, Paul Smith and Inter Parfums

signed a 12-year agreement to create and produce

perfumes and cosmetics under the Paul Smith brand

and distribute them worldwide. In July 2008 this

agreement was extended for an additional seven years

through December 31, 2017 on the basis of

comparable terms and conditions.

July

Launch of the Jeanne Lanvin line of Lanvin

To render homage to the founder of France’s first

fashion house, Alber Elbaz reconciled modernity

and femininity with a new fragrance, Jeanne Lanvin,

both poetic and elegant, launched in July 2008.

September

Signature of an agreement with Rafael Nadal for Lanvin

On September 30, 2008, Inter Parfums and Rafael

Nadal signed a major international agreement

to promote the development of Lanvin fragrances.

The world’s number one tennis player will become

the standard-bearer for the Lanvin L’Homme Sport

line to be launched in the summer of 2009.

Two thousand eight registration document Inter Parfums. Consolidated management report

3


September

Launch of the Féerie line of Van Cleef & Arpels

Entirely inspired from the magical universe of

Van Cleef & Arpels, the Féerie line, launched in

September confirms with brilliance its manifest

connection with the fine jeweler. The same poetry,

imaginary world, and exclusive luxury. A pure object

of desire, Féérie, launched in September 2008,

conjuring up a spectacular universe illuminated

by stars, fairy wings and enchanted dreams.

October

Merger by absorption of Nickel

On October 1, 2008, Nickel became a wholly-owned

subsidiary of Inter Parfums through a simplified merger

1.4

Sales by brand

4 Two thousand eight registration document Inter Parfums. Consolidated management report

procedure involving the transfer of its assets and liabilities

to the latter (transmission universelle de patrimoine).

2008 represented a significant advance in the Group’s

development with major launches that included Burberry

The Beat, Jeanne Lanvin and Féerie.

1.3

Operating highlights and key figures

For another year, growth targets were met in 2008:

annual sales totaled €264.9 million, up 9.4%

at current exchange rates over 2007 and 14.2%

at constant exchange rates in a period marked by

a strong rise in the euro.

In € millions

And as % of sales

2004 2005 2006 2007 2008

Burberry 118.8 131.3 143.3 152.9 169.0

75.5% 67.5% 66.3% 63.2% 63.8%

Lanvin 7.6 29.5 34.4 33.3 39.0

4.8% 15.1% 15.9% 13.8% 14.7%

Van Cleef & Arpels - - - 11.9 21.0

- - - 4.9% 7.9%

Paul Smith 14.3 14.5 17.7 18.0 13.4

9.1% 7.5% 8.2% 7.4% 5.0%

S.T. Dupont 8.9 8.8 10.1 11.1 11.5

5.7% 4.5% 4.7% 4.6% 4.3%

Roxy - - - 6.6 7.4

- - - 2.7% 2.8%

Nickel 1.7 3.1 4.1 3.3 2.7

1.1% 1.6% 1.9% 1.4% 1.1%

Other 6.1 7.2 6.6 5.0 0.9

3.8% 3.8% 3.0% 2.0% 0.4%

Total 157.4 194.4 216.2 242.1 264.9

In 2008, the Group successfully met its objectives in

a volatile economic environment, achieving another

year of sustained growth with consolidated sales of

€264.9 million, up 9.4% at current exchange rates

and 14.2% at constant exchange rates over 2007.

- Burberry fragrances continued to expand with

annual sales of nearly €170 million, up 10.5% at

current exchange rates and 16.3% at constant

exchange rates, driven by the successful worldwide

launch of the new women’s fragrance Burberry

The Beat and the strength of the brand’s existing lines;

- With sales advancing 17% to €39 million, Lanvin

fragrances significantly exceeded the year’s initial

targets through steady performances by the Éclat

d’Arpège line in the second half and the launches of

the Rumeur 2 Rose line in the spring and the Jeanne

Lanvin line in the fall;

- Van Cleef & Arpels fragrances also achieved

excellent results with sales of €21 million, up 77%

over 2007 in response to the solid performances by

the First line and the successful launch of the new

women’s fragrance line, Féerie.


1.5

Sales by region

In € millions and % 2007 2008

North America 48.9 49.6

South America 15.3 17.8

Asia 31.6 33.9

Eastern Europe 20.5 26.3

Western Europe 83.3 85.3

Middle East 18.6 24.2

France 21.9 25.6

Other 2.1 2.2

Total 242.2 264.9

- In a contracting market, launches of the Burberry The Beat, Jeanne Lanvin and Féerie lines contributed

to good performances in France (+17%);

- Western Europe (excluding France) remained stable in light of the challenging conditions in the UK and Spain;

- The Middle East and Eastern Europe grew 30% and 28% respectively;

- North America grew 11% in volume (2% in value in light of the US dollar’s weakness) despite the severity

of the economic downturn in this region.

2.

CONSOLIDATED FINANCIALS

2.1

Income statement highlights

In € thousands 2005 2006 2007 2008

Sales 194,442 216,235 242,123 264,864

% international 92% 92% 91% 90%

Income from operations 25,913 29,182 31,812 34,259

% of sales 13.3% 13.5% 13.1% 12.9%

Net income 16,295 18,694 20,193 21,119

% of sales 8.4% 8.6% 8.3% 8.0%

The gross margin as a percentage of sales (57.6% in 2008) remains high despite adverse foreign exchange trends

and provisions for Roxy inventory write-downs.

In line with our medium-term development strategy, the Group pursued marketing and advertising spending

(+5%) while successfully maintaining tight control of all expenses: operating profit for 2008 expanded nearly

8% compared to 2007 resulting in an operating margin approaching 13%.

Growth in net income was limited by two factors:

- increased financial expenses in connection with the acquisition of Lanvin trademarks;

- the fair value recognition of financial instruments (US dollar hedges for 2009 and interest rate swaps on bank

debt) for a total of €1.2 million before tax.

2.2

Balance sheet highlights

In € millions 2007 2008

Non-current assets 72.7 69.8

Inventories 56.3 70.8

Trade receivables 75.6 80.0

Net cash 56.1 26.3

Shareholders’ equity 134.2 155.9

Borrowings 40.5 30.0

Trade payables 65.2 52.9

Two thousand eight registration document Inter Parfums. Consolidated management report

5


The Group continues to have a very solid financial

position with shareholders’ equity of €155 million

and limited net financial debt of €4 million at

December 31, 2008.

The decline in cash reflects primarily an intentional

policy to maintain high inventory levels making it

possible to fill virtually all orders received.

2.3

Cash flow statement highlights

Key changes in consolidated cash flows:

- cash flow highlights from operating activities

reflecting a proactive policy of increasing inventories

and a decline in trade payables from reduced purchases

of components in the last quarter of the year;

- cash flows from investing activities that included

in the period no major capital expenditures other

than those relating to normal operating activities;

- cash flows from financing activities including

the repayment of loans obtained in connection with

the acquisition of the Lanvin trademarks and the

Van Cleef & Arpels license as well as the payment

dividend for fiscal 2007.

Pursuant to the above, net cash at December 31, 2008

totaled €26 million.

3.

RISK FACTORS

3.1

Operating risks

License agreements

The licensing system which is typical in the perfume

and cosmetics industry consists of a brand name

company (Burberry, Paul Smith, etc.) granting

the licensee (Inter Parfums) a right to use the brand

name in exchange for royalty payments typically

indexed to sales. The associated risk pertains to the

potential non-renewal of agreements upon expiration.

In the case of Inter Parfums, several factors tend to limit

or eliminate this risk:

- length of contracts (10 years or more);

- possibility of early renewal;

- diversified portfolio of licensed brands;

- factors specific to the company (sophisticated

marketing, distribution network, corporate

organization, etc.);

- limited number of potential licensees with a similar

profile.

Market conditions

The creation and distribution of prestige perfumes

is a highly competitive sector. The positioning of

companies in the market depends on several factors

including notably historical expertise, the quality of

the products created and the distribution network.

6 Two thousand eight registration document Inter Parfums. Consolidated management report

Insurance

Inter Parfums has always carried adequate insurance

for its activities worldwide under conditions that

comply with industry standards, providing global

coverage for important risks and activities.

This coverage includes:

- property damage and business interruption;

- inventory loss or damage;

- contingent use and occupancy insurance;

- civil liability;

- directors’ and officers’ liability;

- product liability;

- transport;

- professional travel and automobile insurance;

- IT equipment loss or damages;

- specific coverage for particular events.

Inter Parfums purchases supplemental insurance

when required, either in compliance with the law

or more specifically to cover business risks or risks

arising from specific circumstances.

Insurance coverage is overseen by a specialized broker

and spread among four major European insurers.

To the best of the company’s knowledge, all risks are

insured. None of risks mentioned above are self-insured.

3.2

International business risks

Currency risks

A significant portion of the company’s sales is

in currencies other than the euro. In consequence,

the company incurs risks related to exchange rate

fluctuations for these currencies, notably the US

dollar (33.6% of sales) and a lesser extent the pound

sterling (8.0% of sales) and the Japanese yen (2.2%

of sales).

The primary objective of the company’s foreign

policy seeks is to hedge the most probable budget

exposure related primarily to cash flows from

operating activities in US dollars as well as trade

receivables in the US dollar, pound sterling and

Japanese yen. To this purpose, the company has

recourse to forward sale agreements according

to procedures that prohibit any transactions of

speculative nature.

Financial instruments used by the Group to manage

its foreign exchange exposure are described in note

3.14.3 of the consolidated financial statements.

Country risks

With sales in more than 100 markets, Inter Parfums

regularly reassesses country risks.

For the past few years, the company has incurred

no significant default on payments in countries

considered at risk.

Given our collections policies, receivables

monitoring and the quality of our distributors’

financial health, no country risk reserve allocations

were made in the financial statements for the year

ended December 31, 2008.


3.3

Employee-related risks

In light of the company’s organizational structure,

the role of personnel is decisive. To foster personnel

retention and increase the level of expertise and

service provided to customers, the company has

developed a strong corporate culture and

implemented a system of employee management

nd motivation based on a combination of tools

including variable compensation, employee

profit-sharing, stock options available to all

personnel, annual review meetings, continuing

education, etc.

The company’s rate of employee turnover and

absenteeism is very low (refer to the chapter “social

responsibility” of this document).

3.4

Trade and financial risks

Customer risks

Trade receivable collection risks are managed from

the inception of the receivable by maintaining a good

knowledge of the company’s market and customer

base and limiting the volume of orders for new

customers. In addition, this risk is further reduced

by a diversified customer base with 100 customers

accounting for 80% of sales. Balances of outstanding

trade receivables are monitored daily, and collection

procedures are immediately implemented. The rate

of default of trade receivables is 0%.

Risks of default

The risk of not meeting its financial commitments

for the company is extremely low given the ratio of

non-current debt to equity of 13% and significant net

cash resources representing 10% of total balance sheet.

Interest-rate risks on loans are covered by interest-rate

swaps.

Financial instruments by the Group to manage its

interest rate risk described in note 3.14.1 of the

consolidated financial statements.

Liquidity risk

A prudent management of liquidity risk implies

maintaining a sufficient level of liquidity and

the availability of financial resources through

the appropriate types of credit lines. Maturities for

financial assets and liabilities are presented in note

3.14.2 of the consolidated financial statements.

Equity risk

Treasury shares are held exclusively in connection with

the liquidity agreement managed by a brokerage firm.

They are recorded in the consolidated financial

statements at acquisition cost as a charge under equity.

The portfolio of marketable securities includes

primarily money market funds that do not include

an equity component. The Group does not use

hedging instruments to cover these positions.

Valuation risks

A significant share of the company’s assets consists

of intangible assets and goodwill whose value depends

in large part on future operating performances. The

valuation of intangible assets and goodwill also implies

recourse to objective judgments and complex estimates

concerning items uncertain by nature. If a change occurs

in the underlying assumptions on which this valuation

is based, a reduction in the value of shareholders’ equity

will be recorded. The impact of such adjustment would

however be extremely limited.

Risk associated with inadequate internal controls

Effective procedures applied by all Group companies

and in all areas of financial risks identified are

reassessed annually in compliance with the Financial

Security Act (Loi de Sécurité Financière).

These internal controls are reinforced in France

by the application of the Sarbanes Oxley act within

the framework of the regulatory obligations of

Inter Parfums Inc. (parent company of Inter Parfums

SA) and its listing on NASDAQ (see the chapter on

“internal control” of this registration document).

Information technology risks

Inter Parfums and its subsidiaries have an ERP

application providing integrated sales, production

and accounting management capabilities. This

system makes it possible to monitor information in

real-time and reduce the risk of data loss and errors

from multiple entries.

The company’s computer system is subject to risks

of breakdown, electrical power outages, computer

viruses and data theft. To reduce these risks, the

company has robust security systems that include

power converters, firewalls, antivirus programs, etc.

Litigation and other risks

There is currently an arbitration proceeding between

Inter Parfums and one of its distributors relating

to commercial conditions. A provision has been

recorded for this risk based on estimates and the best

assessment of its potential financial impact.

The company has had no knowledge in the last

twelve months of other governmental, judicial or

arbitration proceedings that could have a material

impact on the Group’s activity, assets and liabilities,

financial position or earnings.

Two thousand eight registration document Inter Parfums. Consolidated management report

7


4.

SOCIAL RESPONSIBILITY

Over the years, Inter Parfums has developed a

corporate culture built around creativity, teamwork.

Inter Parfums management and employees share

strong values in respect to working conditions, equal

opportunity employment and anti-discrimination

measures, respect, and employee training. These values

that today represent the foundations for sustainable

growth reflect the contribution of the cultural diversity

and rich experience of our workforce.

2006 2007 2008

Total workforce 128 145 152

Executives and management 68 77 82

Supervisory staff - - 9

Non-management staff 60 68 61

Average age (years) 36 36 37

Average seniority (years) 6 6 6

In the year under review the number of personnel

increased 5%.

4.1

Workforce by department

Number of employees as of 12/31/07 12/31/08

Executive management 2 2

Production & Logistics 22 22

Burberry Fragrances 25 27

Luxe & Fashion 22 25

France 51 49

Finance & Corporate affairs 23 27

Total 145 152

4.2

Wages and benefits

In € thousands

Total wages and benefits of which

2007 2008

Management Committee

Members - wages,

14,959 15,946

bonuses & social charges

Of which Management

Committee members

2,488 2,923

share based payment expenses 213 208

In addition, supplemental retirement benefits for

executive management of €109,000 million were

paid in 2008.

4.3

Employee representation

As required by law, elections are held every four

years to select a works’ committee and employee

representatives. The last elections, held in early 2007,

did not elect either a workers’ committee or

employee representatives.

8 Two thousand eight registration document Inter Parfums. Consolidated management report

4.4

The workweek organization

All employees of the company work on the basis

of a 35-hour workweek according to a set number

of 218 work days per year and are entitled to 9 days

of reduced working hours benefits (RTT) per year.

The rate of absenteeism in 2008 was 4.9% (2.7%

in 2007), due primarily to maternity leaves.

4.5

Employee compensation and benefits

Inter Parfums has a compensation policy, a system

of job classifications and performance evaluations

uniformly applied to all employees. These procedures

guarantee equal treatment of men and women

employees and ensure the general cohesion of personnel.

Employees of the company and its subsidiaries also

benefit from variable incentive compensation benefits

linked to the Group’s performance.

Inter Parfums also promotes employee stock ownership

through annual stock option plans available to all

employees.

4.6

Statutory employee profit-sharing

In accordance with applicable legislation, an employee

profit-sharing agreement was implemented on

December 20, 2001. The amount paid for 2008 was

€1 million (compared to €1.2 million in 2007).

4.7

Promoting the acquisition

of new skills

All Inter Parfums employees are offered training to

develop technical, management or personal skills.

Inter Parfums has also undertaken measures to ensure

that eligible employees are fully informed of their rights

to individual training benefits under French law (Droit

Individuel à la Formation).

5.

ENVIRONMENTAL

RESPONSIBILITY

Inter Parfums’ business focuses principally on

the creation and distribution of products. For this

reason, the entire production process is outsourced

to manufacturing partners. These include producers

of juice, glass, caps and cardboard boxes and

packaging companies. With no production activities

of its own, Inter Parfums does not own laboratories

or manufacturing sites.

Even though it operates in a sector less polluting

than other industries, Inter Parfums is committed

to preserving the environment and quality of life.

For this reason, it remains involved in the production

process and coordinates with all subcontractors and

suppliers who manufacture its products, intervening


at every stage in the product lifecycle, and in this

way, vectors for promoting its commitment to the

environment.

5.1

Low energy requirements

Inter Parfums’ consumption of water and energy is

limited to normal office usage for the administrative

premises of its headquarters that house 111 employees.

Other water and energy consumption concern the

sales offices and commercial teams in the field that

represent 41 employees out of 152.

5.2

Recycling

The company constantly strives to reduce the already

low impact of its business on the environment

by investing in the treatment and recycling of the

packages, cardboard boxes and glass left once its

customers have finished using its products. With

this objective, through its participation in the

“Eco Emballage” packaging recycling program,

Inter Parfums contributes to waste management

and recycling.

5.3

The minimization

of environmental impact

To balance product quality and aesthetics with

environmental considerations, Inter Parfums takes

care to reduce packaging volumes at the source and

select the appropriate materials at each stage of

production to ensure optimal conditions for their

recycling or disposal. Accordingly, Inter Parfums

selects partners using cutting-edge design techniques

for bottles and boxes, with a commitment to reduce

the impact of manufacturing processes on the

environment.

The bottles of its products are made of recyclable

glass and the production process provides for a

system of recuperation, grinding and recasting of

certain bottle components, which generates savings

in volume of materials used of 20%. A biodegradable

water-soluble solution that does not harm the

environment is used in the coloring of some of its

bottles. The process of coating used for certain

products is compliant with the law of 2005 destined

to reduce emissions of volatile organic compounds

(VOC) in the air by the use of “hydro coating”.

This commitment to environmental responsibility

is also a criteria in selecting subcontractors.

5.4

A commitment to well-being

Even though Inter Parfums does not manufacture

its products itself, it nevertheless ensures their

introduction on the market. As such it ensures

compliance with international and European

regulations concerning the design and production

of all products it distributes and is responsible

for ensuring the safety for human use of cosmetic

products it distributes. To this purpose, it conducts

tests that that include ensuring innocuous nature

for the skin and eyes. In compliance with the

European Cosmetics Directive, its products are not

subject to any tests on animals. Tests for skin

irritation are conducted on healthy voluntary adult

subjects and ocular irritantancy testing through

cell cultures.

Inter Parfums has taken measures for the application

of the new European Community Regulation on

chemicals and their safe use concerning the

Registration, Evaluation, Authorization and

Restriction of Chemical substances (EC Directive

1907/2006 of December 18, 2006) or REACH with

its suppliers. All technical and organizational

measures to be applied following the adoption of

REACH have been implemented by the company.

The pre-registration phase of REACH ended on

December 1, 2008. During this period, importers

and manufacturers of “phase-in” substances were

required to register the substances once volume

exceeds one ton per year. Pre-registration makes it

possible to obtain additional delays in connection

with the registration procedure.

Inter Parfums, as a downstream user of chemical

substances, is not subject to the registration

requirement. However, it has sought to maintain an

active role by ensuring that the registration process

proceeds effectively and that there exists a continuous

supply for the sourcing chemical substances

contained in its products.

Inter Parfums took the initiative to contact its

different subcontractors to ensure they and those

further down in the supply chain effectively comply

with registration, notification or authorization

request procedures. Inter Parfums has asked all its

suppliers to provide commitments that that they will

not supply articles containing substances listed in

appendix XIV (Substances of Very High Concern).

To date, no supplier has declared the presence in

articles provided to Inter Parfums of substances that

are candidates for authorization.

Information relating to REACH including notably

risk management measures transmitted through

security data files will be taken into account by

Inter Parfums or its suppliers as they are issued.

For information, the deadlines for the

implementation of REACH are spread over the

period from June 1, 2008 to June 1, 2018.

Inter Parfums’ actions in this area exceed that of a

simple coordinator by increasing its partners’

awareness of environmental issues and staying

informed of the business practices of its

subcontractors and suppliers, highlighting its

commitment to environmental responsibility.

Two thousand eight registration document Inter Parfums. Consolidated management report

9


6.

DIVIDENDS

Since 1998, the company has adopted a policy of distributing dividends that today represents approximately

25% of consolidated earnings, destined to reward shareholders while at the same time associating them with

the Group’s expansion. In early May 2008, a dividend of €0.38 per share was paid or €4.6 million.

Five years summary of dividends

2004 2005 2006 2007 2008

Dividend per share (1) €0.25 €0.28 €0.31 €0.35 €0.38

Annual change (1) +26% +10% +15% +11% +9%

Average number of shares (2) 5,174,465 8,974,298 10,421,965 11,480,164 12,719,676

(1) Adjusted for bonus issues. (2) Excluding treasury shares.

7.

PURCHASES BY THE COMPANY OF ITS OWN SHARES

In compliance with article 241-1 et seq. of the AMF General Regulation, the following paragraph describes

the share repurchase program that will be submitted to be submitted for authorization to the shareholders’

meeting of April 24, 2009.

7.1

Summary of the previous share repurchase program

In connection with the authorization granted by the shareholders’ meeting of April 25, 2008 and implemented

by decision of the Board of Directors’ meeting of May 21, 2008, from April 25, 2008 to February 28, 2009

Inter Parfums proceeded with the following transactions:

Situation at February 28, 2009

Percentage of own shares directly and indirectly held 0.36% of the capital

Number of shares canceled in the last 24 months None

Number of treasury shares 47,466 shares

Carrying value of treasury shares €895,335

Market value of treasury shares €709,617

Accumulated Positions open on

gross changes the document filing date

Purchases Sales Call options Forward Call Forward

purchase purchases options sales

Number of shares 101,966 78,681

Maximum maturity None None None None

Average price of the transaction 20,44 21,32

Exercise price None None None None

Amounts 2,084,185 1,677,799

The company has not had recourse

to financial derivative instruments

Shares purchased and sold have been allocated

exclusively for the purpose of market-making

activity assured by an investment service provider

in connection with a liquidity agreement and in

compliance with the conduct of business rules of the

French association of investment firms (AFEI). No

other uses were made and no shares were canceled.

None of the other uses of this authorization granted

by the shareholders meeting of April 25, 2008 were

implemented.

For the duration of this authorization, no shares were

canceled and no financial derivatives were used in

connection with its implementation.

10 Two thousand eight registration document Inter Parfums. Consolidated management report

7.2

Purpose of the new share

repurchase authorization

The shareholders meeting of April 24, 2009 is called

to renew through its ninth resolution, the

authorization granted to the Board of Directors to

purchase and sell shares of the company for the

following purposes:

- maintain an orderly market in the company’s shares

through an investment services provider within the

framework of a liquidity agreement in compliance


with the conduct of business rules of the French

association of investment firms (AFEI);

- grant employees or officers of the company and/or

the Group stock options in accordance with the

provisions of articles L.225-177 et seq. of the French

Commercial Code and/or bonus shares in accordance

with articles L.225-197-1 et seq. of the French

Commercial Code;

- remittance of shares pursuant to the exercise

of rights attached to securities conferring rights

by redemption, conversion, exchange, presentation

of warrants or any other means to grants of the

company’s shares;

- use such shares for payment or exchange in

connection with financial transactions or acquisitions

in compliance with the financial market regulations;

- cancel shares to increase the return on equity and

earnings per share and/or eliminate the impact of

dilution for shareholders from capital increases subject

to adoption of the seventeenth resolution of this

extraordinary general meeting set forth below;

- permit the company to buy and sell its own shares for

any other authorized purpose or practice admitted by

the market or which may be subsequently authorized

or admitted by applicable laws and regulations.

7.3

Maximum percentage of capital

Maximum purchase price

Extract of the ninth resolution submitted for approval

by the shareholders meeting of April 24, 2009:

Shares acquired shall be subject to the following limits:

- the maximum purchase price is €45 per share and

the minimum sale price €10 per share, excluding

execution costs;

100%

INTER PARFUMS

SUISSE

SARL

Switzerland

PHILIPPE BENACIN

JEAN MADAR

51%

INTER PARFUMS

DEUTSCHLAND

GMBH

Germany

52%

INTER PARFUMS INC.

Nasdaq - New York

75%

INTER PARFUMS SA

Euronext - Paris

51%

INTER PARFUMS

LTD

United Kingdom

- the total number of shares acquired may not exceed

5% of the capital stock outstanding on the date

of this meeting. This 5% limit applies to an amount

of capital that will be adjusted as applicable for

corporate actions affecting the capital stock after this

meeting, whereby acquisitions by the company shall

under no circumstances increase its holding, directly

and indirectly through indirect subsidiaries, to more

than 5% of the capital stock;

- pursuant to the above, by way of indication and

without taking into account shares already held by the

company, 13,351,605 shares on December 31, 2008

would represent 5% of the capital stock corresponding to

a maximum theoretical purchase price of €30,041,100.

7.4

Duration of the share

repurchase program

In compliance with the provisions of the ninth resolution

to be submitted to the shareholders meeting of April 24,

2009, the authorization to implement this share

repurchase program is granted for 18 months from the

date of this meeting or no later than October 24, 2010.

If one of the characteristics of the description of this

program is modified during the period of its duration,

the public shall be notified of this modification in

accordance with the provisions set forth in article.

L.212-13 of the AMF General Regulation.

8.

GROUP ORGANIZATION

The ownership structure of Inter Parfums Inc. broke

down as follows at December 31, 2008:

- Philippe Benacin and Jean Madar: 51.50%;

- Free float: 48.50%.

48%

FREE FLOAT

INTER ESPANA

PARFUMS &

COSMÉTIQUE SL

Spain

FREE FLOAT

25%

51% 51%

INTER PARFUMS

SRL

Italy

Two thousand eight registration document Inter Parfums. Consolidated management report

11


9.

MARKET SHARE

AND COMPETITION

Market share

In France, Inter Parfums attained roughly a 2% share

of the selective distribution market of prestige

perfumes. In certain countries such as the United

States, the United Kingdom, Russia or China, the

company estimates its market share of total French

perfume imports at between 1% and 4%.

Source: Internal estimates

Competition

In an industry highly concentrated around major players

with billions of euros in sales, Inter Parfums pursues a

unique strategy of steadily and methodically developing

a portfolio of perfumes for selective distribution based

on internationally renowned brands.

Although Inter Parfums’ closest competitors do not

develop mass market or cosmetics products, several large

corporations have perfume divisions with comparable

strategies.

10.

POST-CLOSING EVENTS

None.

12 Two thousand eight registration document Inter Parfums. Consolidated management report

11.

2009 OUTLOOK

Philippe Benacin, Chairman and Chief Executive

Officer, noted: “We met sales and earnings objectives

for 2008 despite the challenging economic conditions of

the second half. Information on the market received in

the beginning of 2009 is relatively mixed. Nevertheless,

despite reduced visibility, based on satisfactory sales for

the first quarter, we have not modified annual sales

targets of €273 million for 2009. In addition, we will

continue to pursue opportunities for external growth in

an environment now more favorable for acquisitions”.

Philippe Santi, Executive Vice President, added:

“Given the current economic and foreign exchange

environment, Inter Parfums delivered good financial

performances with among the best margins of the sector.

The quality of our business model contributed to a high

operating margin of nearly 13% in 2008. The flexibility

of this model, the quality of our brand portfolio and our

balanced geographical sales mix should permit us to

maintain profitability at satisfactory levels in 2009”.


Two thousand eight registration document Inter Parfums. Consolidated management report

13


CHAPTER TWO

Consolidated

financials

Consolidated financial statements 15

Significant accounting policies 20

Basis of presentation 24

Notes to the balance sheet 25

Note to the income statement 35

Segment reporting 37

Other information 38

14 Two thousand eight registration document Inter Parfums. Consolidated financials


Consolidated income statement

In € thousands, except per share data which is in units Notes 2007 2008

Sales 4.1 242,123 264,864

Cost of sales 4.2 (94,694) (112,308)

Gross margin 147,429 152,556

% of sales 60.9% 57.6%

Selling expenses 4.3 (106,728) (110,007)

Administrative expenses 4.4 (8,067) (7,724)

Income from current operations 32,634 34,825

% of sales 13.5% 13.1%

Other operating income and expenses 4.5 (822) (566)

Income from operations 31,812 34,259

% of sales 13.1% 12.9%

Interest income 1,682 1,246

Interest and similar expenses (2,356) (2,891)

Net finance costs (674) (1,645)

Other financial income and expenses (162) (1,107)

Net financial expense 4.6 (836) (2,752)

Income before income tax 30,976 31,507

% of sales 12.8% 11.9%

Income tax 4.7 (11,158) (10,924)

Effective tax rate 36.0% 34.7%

Net income 19,818 20,583

% of sales 8.2% 7.8%

Minority interests (375) (536)

Net income 20,193 21,119

% of sales 8.3% 8.0%

Basic earnings per share (1) 4.8 1.76 1.66

Fully diluted earnings per share (1) 4.8 1.73 1.65

(1) Not restated for bonuses issues.

Two thousand eight registration document Inter Parfums. Consolidated financials

15


Consolidated balance sheet

Assets

In € thousands Notes 2007 2008

Non-current assets

Net trademarks and other intangible assets 3.1 61,911 59,557

Goodwill 3.2 4,380 3,814

Net property, plant, equipment 3.3 3,368 4,162

Investments and other non-current assets 306 408

Non current financial securities 234 70

Deferred tax assets 3.11 2,482 1,743

Total non-current assets 72,681 69,754

Current assets

Inventories and work in progress 3.4 56,346 70,794

Trade receivables and related accounts 3.5 75,610 80,054

Current income tax assets - 969

Other receivables 3.6 6,491 10,113

Cash and cash equivalents 3.7 60,416 30,380

Total current assets 198,863 192,310

Total assets 271,544 262,064

16 Two thousand eight registration document Inter Parfums. Consolidated financials


Shareholders’ equity and liabilities

In € thousands Notes 2007 2008

Shareholders’ equity

Common stock 36,301 40,176

Additional paid-in capital 1,046 265

Retained earnings 76,693 94,368

Net income for the year 20,193 21,119

Total group shareholders’ equity 134,233 155,928

Minority interests (342) (166)

Total shareholders’ equity 3.8 133,891 155,762

Non-current liabilities

Provisions for non-current commitments 3.9 546 712

Non-current borrowings 3.10 29,439 19,803

Other non-current debt - -

Deferred tax liabilities 3.11 1,734 3,636

Total non-current liabilities 31,719 24,151

Current liabilities

Trade payables and related accounts 65,195 52,866

Current borrowings 3.10 11,094 10,271

Commitments and contingencies 3.9 2,280 2,280

Current income tax liabilities 1,981 309

Short-term bank loans 3.10 4,303 4,076

Other liabilities 3.12 21,081 12,349

Total current liabilities 105,934 82,151

Total shareholders’ equity and liabilities 271,544 262,064

Two thousand eight registration document Inter Parfums. Consolidated financials

17


Statement of changes in Shareholders’ equity

In € thousands Number Capital Paid-in Retained Total equity

of shares stock capital earnings Group Minority Total

& net share Interests

income

As of December 31, 2006 (1) 10,872,580 32,643 1,545 81,607 115,795 115,795

Bonus issue

Shares issued on

1,097,541 3,293 (2,234) (1,059) - - -

exercise of stock options 121,746 365 1,735 - 2,100 - 2,100

2007 group net income - - - 20,193 20,193 (375) 19,818

2006 dividend paid in 2007 - - - (4,162) (4,162) - (4,162)

Treasury shares (4,120) - - (82) (82) - (82)

Stock-based compensation

Remeasurement of financial

- - - 419 419 - 419

instruments at fair value - - - (43) (43) - (43)

Changes in consolidation scope - - - - - 29 29

Other changes - - - 13 13 4 17

As of December 31, 2007 (1) 12,087,747 36,301 1,046 96,886 134,233 (342) 133,891

Bonus issue

Shares issued on exercise

1,214,545 3,644 (1,671) (1,973) - - -

of stock options 77,068 231 890 - 1,121 - 1,121

2008 group net income - - - 21,119 21,119 (536) 20,583

2007 dividend paid in 2008 - - - (4,580) (4,580) - (4,580)

Treasury shares (27,755) - - (485) (485) - (485)

Stock-based compensation

Remeasurement of financial

- - - 298 298 - 298

instruments at fair value - - - 4,135 4,135 - 4,135

Changes in consolidation scope - - - - - 701 701

Other changes - - - 87 87 11 98

As of December 31, 2008 (1) 13,351,605 40,176 265 115,487 155,928 (166) 155,762

(1) Excluding treasury shares.

18 Two thousand eight registration document Inter Parfums. Consolidated financials


Statement of cash flows

In € thousands 2007 2008

Cash flows from operating activities

Net income 19,818 20,583

Depreciation, amortization and other 1,796 4,697

Capital (gains) losses on asset disposals (5) 164

Net finance costs (674) (1,645)

Tax charge of the period 11,158 10,924

Operating cash flows 32,093 34,723

Interest expense (2,418) (2,343)

Tax payments (11,199) (13,186)

Cash flow after interest expense and tax 18,476 19,194

Change in inventories and work in progress (16,047) (14,979)

Change in trade receivables and related accounts 6,585 (4,799)

Changes in other receivables (493) 2,244

Change in trade payables and related accounts 18,011 (12,329)

Change in other current liabilities (1,921) (1,582)

Change in working capital needs 6,135 (31,445)

Net cash provided by (used in) operating activities 24,611 (12,251)

Cash flows from investing activities

Acquisition of intangible assets (39,071) (782)

Acquisition of property, plants and equipment (251) (2,120)

Changes in the scope of consolidation (3,549) 701

Changes in investments and other non-current assets 13 (231)

Sales of fixed assets - -

Net cash flows provided by (used in) investing activities

Cash flows from financing activities

(42,858) (2,432)

Issuance of borrowings and new financial debt 40,000 -

Debt repayments (7,600) (11,100)

Dividends paid (4,163) (4,580)

Capital increases 2,101 1,121

Treasury shares (82) (564)

Other 32 (3)

Net cash flows from financing activities 30,288 (15,126)

Change in net cash 12,041 (29,809)

Cash and cash equivalents - beginning of year 44,072 56,113

Cash and cash equivalents - end of year 56,113 26,304

The reconciliation of net cash breaks down as follows:

In € thousands 2007 2008

Cash and cash equivalents 60,416 30,380

Short-term bank loans (4,303) (4,076)

Net cash at the end of the period 56,113 26,304

Two thousand eight registration document Inter Parfums. Consolidated financials

19


NOTES TO THE

CONSOLIDATED

FINANCIAL STATEMENTS

1.

SIGNIFICANT

ACCOUNTING POLICIES

1.1

Compliance statement

In accordance with EC regulations 1606/2002 of

July 19, 2002 on international accounting standards,

the 2008 consolidated financial statements of the

Inter Parfums Group are established in compliance

with IAS/IFRS (International Accounting

Standards/International Financial Reporting

Standards) applicable since 2005 as endorsed by

the European Union. These standards have been

consistently applied over the periods presented.

Financial information presented herein has been

based on:

- IFRS standards and interpretations whose

application was mandatory starting in 2005;

- Options retained and exemptions used by the

Group for the preparation of IFRS consolidated

financial statements.

The consolidated financial statements of

December 31, 2007 were approved by the Board

of Directors on March 3, 2009. They will be

definitive when approved by the ordinary general

meeting of April 24, 2009.

1.2

Changes in accounting standards

The following standards, amendments and

interpretations that entered into force on January 1,

2008 have been applied by the company in preparing

its consolidated financial statements:

- Amendment to IFRS 7 and IAS 39 “reclassification

of financial assets”.

The following standards, amendments and

interpretations will not be applied in the consolidated

financial statements until January 1, 2009:

- IFRS 8 “Operating segments”;

- Amendment to IAS 1 “Presentation of financial

statements”;

- Amendment to IAS 23 “Borrowing costs”;

- Amendment to IFRS 2 “Vesting conditions and

cancellations”;

- Amendments to IFRS 1 and IAS 27 “Cost of an

investment in a subsidiary, jointly controlled entity

or associate”;

- Amendments to IFRS 1 “First-time adoption of

IFRS - revision of the structure of the standard”.

20 Two thousand eight registration document Inter Parfums. Consolidated financials

The following standards, amendments and

interpretations will be applied in the consolidated

financial statements starting July 1, 2009:

- IFRS 3 and IAS 27 (revised) “Business

combinations”;

- Amendment to IAS 39 “Financial instruments:

recognition and measurement - eligible hedged items”.

The impact of these standards on financial

statements that is currently being assessed is not

expected to have a material effect on the company’s

consolidated financial statements.

Because of the company’s business, the following

standards, amendments and interpretations will not

be applied to the consolidated financial statements:

- Amendments IAS 32 and IAS 1 “Puttable

instruments”;

-IFRIC 12 “Service concessions”;

-IFRIC 13 “Customer loyalty programs”;

- IFRIC 14 and IAS 19 “The limit on a defined

benefit asset, minimum funding requirements and

their interaction”;

- IFRIC 15 “Agreements for the construction of real

estate”;

- IFRIC 16 “Hedges of a net investment”;

- IFRIC 17 “Distribution of non-cash assets to

owners”;

- IFRIC 18 “Transfers of assets from customers”.

1.3

First-time adoption of IFRS

For the first time adoption of IFRS for the financial

statements prepared on December 31, 2005 with

a transition date of January 1, 2004, Inter Parfums

chose to apply the following exemptions for

standards applicable to the company:

- fixed assets: the Group has chosen to continue

to recognize property, plant and equipment

at historical cost;

- share-based payments and equivalents: for programs

involving equity-settled share-based payment,

the Group has elected to apply IFRS 2 for grants

after November 7, 2002 and not vested before

January 1, 2005.

1.4

Basis of consolidation

On January 1, 2007, Inter Parfums SA set up new

distribution subsidiaries in four major European

markets (Italy, Germany, Spain, United Kingdom).

These subsidiaries are 51%-owned by Inter Parfums

and 49%-owned by local distributors. Because

Inter Parfums consequently exercises exclusive control

over these companies they are fully consolidated.

In the second quarter, Inter Parfums acquired

the remaining stake of Nickel held by minority

shareholders (cf. note 2.3). As a result, Nickel is now

a wholly-owned subsidiary. In effect, minority

shareholders of Nickel and Inter Parfums benefited

from a bilateral promise to purchase or sell the


minority interests that may be exercised by either of

the parties from January 1, 2007 to June 30, 2007.

On July 1, 2007, Inter Parfums Trademark and

Inter Parfums Grand Public, wholly-owned

subsidiaries of Inter Parfums, were wound up by the

transfer of their assets and liabilities (Transmission

Universelle de Patrimoine) to the Group. This had

no impact on the consolidated financial statements.

On June 16, 2008, Inter Parfums created a new

wholly-owned subsidiary in Switzerland. At the same

time, Inter Parfums contributed its proprietary

Lanvin trademarks and brands to this new entity.

On July 1, 2008 and exclusive license agreement

was concluded between Inter Parfums Suisse and

Inter Parfums. This transaction has no impact on

the financial statements included in this report.

On October 1, 2008, Nickel became a wholly-owned

subsidiary of Inter Parfums through a simplified

merger procedure involving the transfer of its assets

1.5

Translation method

and liabilities to the latter (Transmission Universelle de

Patrimoine) that had no impact on the consolidated

financial statements.

As a result, all Group subsidiaries are fully

consolidated. These include Inter Parfums

Deutschland GmbH, Inter España Parfums and

Cosmetiques S.L., Inter Parfums Srl, Inter Parfums

Ltd and Inter Parfums Suisse Sarl.

Inter Parfums SA

Inter Parfums Suisse Sarl Switzerland 100%

Inter Parfums Deutschland GmbH Germany 51%

Inter España Parfums and Cosmetiques S.L. Spain 51%

Inter Parfums Srl Italy 51%

Inter Parfums Ltd United Kingdom 51%

The financial statements of subsidiaries have

the same fiscal year as the parent company that runs

for 12 months ending on December 31.

The company’s operating currency and currency for the presentation of financial statements is the euro.

Transactions in foreign currencies are translated at the exchange rate in effect on the date of the transaction.

Foreign currency denominated payables and receivables are translated at the exchange rate in effect as

of December 31, 2008. Translation losses and gains arising from the conversion of accounts denominated

in foreign currencies on December 31, 2008 are recorded in the income statement. Hedged transactions

are translated at the negotiated exchange rate.

The main rates of exchange applied in relation to the euro are as follows:

Currency Closing exchange rate Average exchange rate

2007 2008 2007 2008

US Dollar (USD) 1.4721 1.3917 1.3704 1.4707

Pound sterling (GBP) 0.7334 0.9525 0.6843 0.7963

Swiss franc (CHF) N/A 1.4850 N/A 1.5689

(1) Average annual exchange rate calculated starting from July 1, 2008, the date of the start of operations of the Swiss subsidiary.

1.6

Use of estimates

The preparation of consolidated financial statements

requires the use of estimates and assumptions for

the valuation of certain balance sheet and income

statement bounces. These concern primarily the

valuation of intangible assets, amounts to be set aside

for provisions for contingencies, provisions for

inventory losses and expenses and deferred tax assets.

Although these estimates are based on management’s

best knowledge of current events and situations, actual

results may ultimately differ from these estimates.

1.7

Revenue recognition

Revenue includes principally wholesale sales to

distributors and agents and direct sales to retailers

for the part registered by Group subsidiaries.

Revenue from perfume and cosmetics products is

presented net of all forms of discounts and rebates.

Revenue is recognized on basis of conditions of

transfer to the buyer of the risks and rewards incident

to ownership to the buyer. Amounts invoiced at

year-end when the actual transfer of title occurs in

the following year are not recognized under revenue

of the year in progress.

1.8

Trademarks

and other intangible assets

Trademarks and other intangible fixed assets,

including trademarks under licensing contracts and

acquired trademarks are recorded at cost.

These trademarks that that constitute well-established

legally protected international brand names are

classified as indefinite life intangible assets and are

not amortized.

Two thousand eight registration document Inter Parfums. Consolidated financials

(1)

21


Finite life intangible assets such as upfront license

fees are amortized on a straight-line basis over the

duration of the license.

Rights on glass molds are classified as finite life

intangible assets and are amortized over a duration

between three and five years.

Upfront license fees are remeasured at least once a

year or whenever there is an indication of impairment

of value in use defined as the present value of

estimated future cash flows expected to arise from

the continuing use of these assets. Data used

originates from the annual and multiyear budgets

drawn up by Management. The discount rate before

tax applied for remeasurement is the weighted

average cost of capital (WACC) of 9.5% at

December 31, 2008. A provision for impairment

is recorded under income if this value is lower than

the carrying value.

Proprietary brand names are remeasured at least once

a year on the basis of the present value of estimated

future cash flows to infinity generated by these assets

and fair value net of disposal costs determined

according the method of price-to-sales in reference

to similar transactions.

The discount rate before tax applied for remeasurement

is the weighted average cost of capital (WACC)

of 9.5% at December 31, 2008 compared to 9.0%

at December 31, 2007. This ratio is determined on

the basis of the long-term interest rate of 3.9%

corresponding to the average rate for 10-year OAT

French fungible treasury bonds of the last quarter,

the rate expected by an investor in this sector and the

specific risk premium for this sector. The growth rate

to infinity adopted is 1.0% at December 31, 2008

compared with 2% for the prior period. A provision

for impairment is recorded under income if this

value is lower than the carrying value.

Under IAS 38.27b revised in 2004, costs generated

on acquisition analyzed as directly attributable costs

are included in the cost of the acquired assets.

Other intangible assets are amortized over their

useful lives and subject to impairment testing when

an indication of impairment exists.

1.9

Goodwill

Goodwill is defined as the difference between the

purchase price of shares of consolidated companies

and the Group’s share in restated net assets after

measurement of the fair value of assets and liabilities

acquired.

Positive goodwill arising from the acquisition of

Nickel has been recognized in the balance sheet.

This goodwill is tested annually or whenever there

exists an indication of potential impairment. It is

measured at market price as determined according

to the method of forecasted price-to-sales ratios

in reference to similar transactions and the value

in use determined according to the present value

22 Two thousand eight registration document Inter Parfums. Consolidated financials

of estimated future cash flows to infinity. Because

the carrying value of Nickel exceeds the higher

of the value in use or market value, an impairment

was recorded for the difference (cf. note 3.2)

and recognized in “Other operating income

and expenses”.

1.10

Property, plants and equipment

Tangible fixed assets are valued at cost (purchase

price plus related costs, excluding acquisition cost)

and depreciated over their estimated useful lives on a

straight-line basis (2 to 5 years). Tangible fixed assets

include molds for caps.

1.11

Inventories and work in progress

Inventories are valued at the lower of cost or

probable resale value. A provision for impairment

is recorded when their probable resale value is lower

than the carrying value.

Inventories of raw materials and supplies are valued

on the basis of average weighted prices.

The cost of finished products includes the cost

of materials used, production expenses and a share

of indirect costs valued at a standard rate.

At the end of every year, these standard rates are

compared with the effective rate actually obtained

based on actual data at year-end.

1.12

Non-current financial assets

Marketable securities on initial recognition are

recorded at cost and subsequently remeasured at fair

value corresponding to the market value at the end

of each period.

All Group marketable securities have been classified

as “available-for-sale financial assets” and presented

in “Cash and cash equivalents”.

In accordance with IAS 39.55, gains and losses

on “available-for-sale financial assets” are recorded

at year-end in equity., However, in accordance

with IAS 39.67, a significant or prolonged decline

in fair value below the cost value of the securities,

is recognized in profit or loss.

At December 31, 2008, losses relating to “assets held

for sale” classified under “non-current financial

assets” were recorded in the income statement.

1.13

Accounts receivable

Account receivables are recorded at face value.

A provision for impairment is recorded when

the probable recovery value is deemed to be less

than the carrying value.


1.14

Deferred tax

Timing differences between the tax base and

consolidated assets and liabilities and tax on

restatements on consolidation give rise to the

recognition of deferred taxes under the liability

method, taking the known year-end tax conditions

into account.

Potential tax credits resulting from loss carry

forwards are only recorded when their use in

the short term is deemed likely, and subject to

depreciation when appropriate, are maintained

in the balance sheet. At December 31, 2008, all

deferred tax assets relating to potential tax loss

carryforwards have been used.

1.15

Cash and cash equivalents

Cash comprises marketable securities, cash and cash

equivalents that consist of highly liquid investments

with maturities of three months or less and readily

convert to a known cash amount and are subject

to an insignificant risk of changes in value.

1.16

Treasury shares

Inter Parfums shares held by the Group are recorded

as a deduction from equity at cost. If sold, the

proceeds are recorded directly under equity net of tax.

1.17

Commitments and contingencies

Pension benefits

This reserve is maintained to honor the company’s

employee pension benefits commitments and

corresponds to the present value of the payments to

which employees are entitled, under the collective

bargaining agreement, once they retire. For the

measurement of retirement indemnities for 2008,

Inter Parfums adopted the procedure for voluntary

severance agreements introduced on July 23, 2008

extending the interprofessional agreement of January

11, 2008. This procedure provides for the systematic

the signature of a severance agreement by the

employer and the employee specifying the terms and

conditions of the termination. Because last year

method involving compulsory retirement was

applied, the impact of this change in the assumptions

used for calculation was dealt with under past service

costs. The projected unit credit was applied.

This method takes into account rights and wages

projected to term, the probability of payment as well

as the prorated amount of seniority so that

commitments correspond to the value of service

already rendered by employees.

Accordingly, the calculation of commitments for

severance benefits involves estimating the probable

present value of projected benefit obligations (PBO), i.e.

the rights of employees at the time of departure taking

into account the probability of departure and death

of the employees before term as well as the impact

of revaluations and discounts. This projected benefit

obligations is then prorated to take into account

seniority of the employees of the company on the

calculation date.

Other commitments and contingencies

Allocations are made to reserves for all clearly defined

risks and expenses when past or current events render

their occurrence likely. These reserves are revalued at

the end of every fiscal year to reflect changes in their

impact or likelihood of occurrence.

1.18

Financial instruments

Derivative financial and hedging instruments are

used by the Group to reduce exposure to interest rate

and foreign exchange risks. Such instruments are not

used for speculative purposes.

Two swaps to cover interest-rate risks in connection

with Lanvin loans of 2004 and 2007 linked to 3

month Euribor were implemented on the date the

loan agreements were concluded. In compliance with

IAS 39, the difference in the market value of this

instrument and the notional amount is recorded in

the income statement. This same principle is applied

for the associated caps and floors.

The company has recourse to forward exchange

contracts and cash flow hedges. These contracts

destined to hedge exposure of trade receivables in

foreign currencies (primarily the US dollar and

Sterling pound) have maturities of three to six

month. Currency gains and losses from these

instruments are recognized in the income statement.

In addition, hedges future sales in US dollars were

acquired at the end of 2008. These hedges cover

80% of budgeted sales in this currency for 2009.

In accordance with IAS 39, these hedges of projected

cash flows are accounted for as cash flow hedges.

Hedge accounting is applicable if the hedge is

formally defined and documented on inception of

the hedging relationship and it is demonstrated that

hedging relationship will be highly effective over the

life of the hedging instrument. At year-end, hedging

instruments corresponding to these criteria are

recognized in the balance sheet at fair value. The gain

or loss on the hedging instrument determined to

be effective shall be recognized directly in equity.

In 2009, revenue will be restated to eliminate the

impact of these hedges.

1.19

Borrowings

On initial recognition, borrowings are measured

at fair value to which are added transaction costs

directly attributable to the issuance of the liability.

At year-end, borrowings are recognized at amortized

cost according to the effective interest rate method.

Two thousand eight registration document Inter Parfums. Consolidated financials

23


1.20

Other liabilities

Other financial debt and operating liabilities are

measured at fair value on initial recognition.

This amount generally corresponds to the amount

of the invoice in the case of short-term payables.

1.21

Stocks options

IFRS 2 requires that a charge be recorded in

the income statement with a corresponding increase

to reserves representing advantages granted to

beneficiaries of stocks options. For the measurement

of these advantages, the company uses the Black &

Scholes model. This model takes into account the

characteristics of the plans (exercise price, exercise

period), market data at time of grants (risk-free rate,

share price, volatility, projected dividends) and

assumptions the behavior of beneficiaries. Changes

occurring after the grant date do not have an impact

on this initial valuation. The value of the options is

related notably to their expected lifespan that the

company considers corresponds to the holding period

provided for under tax provisions. This expense is

recognized over the duration of the vesting period.

1.22

Registration of trademarks

Under IAS 38, expenses incurred in connection with

the registration of each trademark are not capitalized

and are expensed under “research and consulting costs”.

1.23

Earnings per share

Basic earnings per share are calculated using the

weighted average number of shares outstanding during

the year and excluding treasury shares.

Fully-diluted earnings per share are calculated based

on the average number of shares outstanding, after

excluding only treasury shares destined to be held on

a long-term basis and adjusted for the effects of all

diluted potential ordinary shares.

24 Two thousand eight registration document Inter Parfums. Consolidated financials

2.

BASIS OF PRESENTATION

2.1

Presentation

of the income statement

The consolidated financial statements of the

company are presented by function. Under this

format, expenses and income are broken down

by function (cost of sales, selling expenses,

administrative expenses) and not to the nature

of the origin of expenses and income.

2.2

Presentation of the balance sheet

The balance sheet is presented based on a

classification between current and non-current

liabilities.

2.3

Segment reporting

Segment information presented in this report is based

on the segments used by management to monitor

Group operations.

2.3.1 Primary segment reporting format:

business segments

The company is organized and focused around two

profit centers: selective perfume and cosmetics. The

cosmetic sector currently accounts for less than 10%

of sales and is expected to expand in the years ended.

Details on these two sectors for which the company

possesses performance indicators are disclosed below.

2.3.2 Secondary segment reporting format:

geographical segments

The company that has a significant international

dimension analyzes sales by geographical segment.

All assets necessary for the company’s activity are

located in France.


3.

NOTES TO THE BALANCE SHEET

3.1

Trademarks and other intangible assets

3.1.1

Nature of intangible assets

In € thousands

Gross value

Indefinite life intangible assets

2007 + - 2008

Nickel trademark 2,133 - - 2,133

Lanvin trademark

Finite life intangible assets

36,323 - - 36,323

S.T. Dupont upfront license fee 1,219 - - 1,219

Burberry upfront license fee 5,000 - - 5,000

Van Cleef & Arpels upfront license fee 18,250 - - 18,250

Quiksilver license acquisition cost

Other intangible assets

490 - - 490

Rights on molds for bottles 8,002 714 - 8,716

Registration of trademarks 440 - - 440

Other 421 91 (23) 489

Total cost

Amortization and depreciation

Indefinite life intangible assets

72,278 805 (23) 73,060

S.T. Dupont upfront license fee (957) (103) - (1,060)

Burberry upfront license fee (1,126) (450) - (1,576)

Van Cleef & Arpels upfront license fee (1,521) (1,521) - (3,042)

Quiksilver license acquisition cost

Finite life intangible assets

(54) (44) - (98)

Rights on molds for bottles (5,956) (959) - (6,915)

Registration of trademarks (440) - (440)

Other (313) (82) 23 (372)

Total amortization and depreciation (10,367) (3,159) 23 (13,503)

Total net 61,911 (2,354) - 59,557

Nickel trademark

As Inter Parfums is the owner of the Nickel brand,

acquired on April 1, 2004, no amortization was

recognized in its balance sheet. The brand is tested

for impairment once a year on December 31.

Lanvin trademark

As Inter Parfums acquired ownership for the Lanvin

trademark and brand name for class 3 products in

July 2007 no amortization was recognized in its

balance sheet. The brand is tested for impairment

once a year on December 31.

S.T. Dupont upfront license fee

An upfront license fee of €869,000 paid on April 1,

1997 is amortized over 11 years. In March 2006,

an additional license fee of €350,000 was paid to

be amortized over the remaining term of the license

agreement.

Burberry upfront license fee

The upfront license fee of €3 million paid on

July 1, 2004 is amortized over the 12.5 year term of

the Burberry license agreement. In September 2006

an additional license fee of €2 million was paid

to be amortized over the remaining term of the

license agreement.

Van Cleef & Arpels license fee agreement

An upfront license fee of €18 million was paid

on January 1, 2007 and is amortized over the term

of the 12-year term of the Van Cleef & Arpels license

agreement.

Quiksilver acquisition cost

Costs incurred in connection with the acquisition

of the Quiksilver license agreement of €490,000

are amortized over its 12 year term.

Two thousand eight registration document Inter Parfums. Consolidated financials

25


Rights on molds for bottles

Rights on molds for bottles are amortized over 5 years.

Design costs are amortized over 3 years.

3.1.2 Impairment tests

Nickel trademark

An impairment test was performed on December 31,

2008, using the discounted cash flow method.

No impairment was recorded.

Lanvin trademark

An impairment test was performed on December 31,

2008, on the basis of the present value of future cash

flows discounted to infinity and the price-to-sales

ratio method. On the basis of these methods, no

provisions were recorded.

Upfront license fees

All upfront license fees were measured on December

31, 2008 using the discounted cash flow method.

No provision was recorded.

For all discounts, the weighted average cost of capital

(WACC) of 9.50% is applied.

Analysis of sensitivity

A one point fluctuation in the discount rate before tax

or in the gross right to infinity would not result in an

impairment of trademarks and other intangible assets.

3.3

Property, plant and equipment

26 Two thousand eight registration document Inter Parfums. Consolidated financials

3.2

Goodwill

Goodwill from the 100% shareholding in Nickel was

recognized in the balance sheet at December, 31 2007.

This goodwill corresponds to the initial acquisition

of a 67.57% stake in June 2004 for €6,910,000

followed by 32.43% in June 2007 for €3,518,000.

The obligation to buyout the 32.43% minority stake

recognized under liabilities in the financial statements

of December 31, 2006 was settled upon the

completion of this transaction the first half of 2007.

At December 31, 2007, the allocation of the cost

price broke down as follows:

In € thousands

Acquisition cost 10,428

Net equity purchased 2,879

Allocation to intangible assets 2,133

Allocation to deferred tax assets 969

Allocation to deferred tax liabilities (755)

Fair value of acquired assets and liabilities (5,226)

Goodwill 5,202

This goodwill is tested for impairment on

December 31, 2008 using the price-to-sales ratio

method. This test resulted in an additional

impairment of €566,000 resulting in a total

provision of €1,388,000.

In € thousands 2007 + - 2008

Fixtures, improvements, fittings 2,717 1,002 - 3,719

Office and computer equipment and furniture 1,370 58 (37) 1,391

Molds for caps 4,264 1,018 - 5,282

Other (1) 598 165 - 763

Total cost 8,949 2,243 (37) 11,155

Accumulated depreciation (1) (5,581) (1,449) 37 (6,993)

Total net 3,368 794 0 4,162

(1) Including fixed assets held under finance leases (vehicles) for a gross amount of €333,000 and an accumulated depreciation of €190,000.

3.4

Inventories and work in progress

In € thousands 2007 2008

Raw materials and components 25,004 23,570

Finished goods 35,299 52,054

Total cost 60,303 75,624

Allowance for raw materials (2,111) (1,924)

Allowance for finished goods (1,846) (2,906)

Total provisions (3,957) (4,830)

Total net 56,346 70,794


3.5

Trade receivables and related accounts

In € thousands 2007 2008

Total cost 76,936 80,766

Provisions (1,326) (712)

Total net 75,610 80,054

Maturities for trade receivables at break down as follows:

In € thousands 2007 2008

Outstanding 59,451 56,870

0 - 30 days 12,694 17,748

31 - 60 days 524 3,088

61 - 90 days 2,166 77

More than 90 days 2,101 2,983

Gross value 76,936 80,766

3.6

Other receivables

In € thousands 2007 2008

Accruals 2,896 2,090

Company current accounts - 1,306

Value-added tax 1,497 1,145

Hedging instruments 892 4,836

Other 1,206 736

Total 6,491 10,113

Hedging instruments include the market value of those implemented at the end of 2008 to hedge budgeted

sales in US dollars for 2009.

3.7

Cash and cash equivalents

In € thousands 2007 2008

Certificates of deposit 34,000 12,000

Money-market mutual funds 23,221 14,239

Bank accounts 3,195 4,141

Cash and cash equivalents 60,416 30,380

3.8

Shareholders’ equity

3.8.1 Common stock

As of December 31, 2008, Inter Parfums’ capital was composed of 13,391,980 shares full paid-up with a par

value of €3, 75.3%-held by Inter Parfums Holding.

For the period under review, capital increases result from the exercise of stock options and the capital increase

in connection with the bonus issue of June 16, 2008 on the basis of one new share for every 10 shares held.

3.8.2 Stock option plans

Managers and employees of Inter Parfums and its subsidiaries benefit regularly from stock option plans.

Two thousand eight registration document Inter Parfums. Consolidated financials

27


The characteristics of plans currently in force are as follows:

Plans Number of Number of Grant Vesting Subscription

beneficiaries options

granted at

inception

date period price

Plan 2001 55 45,700 04/27/01 4 years €17.50

Plan 2002 57 51,200 08/26/02 4 years €9.20

Plan 2003 48 34,600 26/08/03 4 years €15.10

Plan 2004 74 47,000 03/25/04 4 years €22.10

Plan 2005 85 112,700 05/26/05 4 years €20.60

Plan 2006 84 98,800 06/01/06 4 years €26.30

Plan 2008 (IP Inc.) 96 84,500 02/14/08 4 years $11.30

(1) Subscription price adjusted for bonus issues.

In the period, changes in plans issued by Inter Parfums SA break down as follows:

Plans Options Conversions Bonus Cancellations Options

outstanding in the share and the outstanding

at 12/31/07 period grants period en vie au

12/31/08

Plan 2001 39,867 (39,857) - (10) -

Plan 2002 63,745 (26,638) 6,012 - 43,119

Plan 2003 83,786 (8,711) 8,238 - 83,313

Plan 2004 118,873 (1,862) 11,906 - 128,917

Plan 2005 118,760 - 11,905 - 130,665

Plan 2006 116,402 - 11,673 - 128,075

541,433 (77,068) 49,734 (10) 514,089

At December 31, 2008, the potential number of Inter Parfums SA shares that may be created is 514,089.

In addition, all employees of the Group benefited in February 2008 from a stock option plan created by

the parent company Inter Parfums Inc. This plan was recognized in accordance with IFRIC 11 and will be

charged to Inter Parfums SA by the parent company.

Benefits granted to employees in the form of stock options recognized as additional compensation, in

accordance with IFRS 2, were calculated using the Black & Scholes model. The impact of this calculation,

including the US plan, represents an expense that is recognized over the duration of the vesting period.

This expense amounted to €524,000 for 2008 and €639,000 for 2007.

The estimation of the fair value of each stock option based on the Black & Scholes model is calculated

on the grant date on the basis of the following assumptions:

Plans Fair value Risk-free Dividend Volatility Share price

of the option interest yield rate retained

rate for the

calculation

Plan 2002 €10.96 3.00% 1.00% 35% €31.97

Plan 2003 €14.62 3.00% 1.00% 41% €44.00

Plan 2004 €12.48 4.20% 1.00% 23% €64.75

Plan 2005 €6.76 4.50% 1.00% 22% €30.25

Plan 2006 €10.37 4.60% 0.94% 25% €35.00

Plan 2008 (1) $3.96 2.72% 1.20% 39% $11.59

(1) The 2008 plan was created by the parent company Inter Parfums Inc.

For all these plans, the stock options have terms of six years.

3.8.3 Treasury shares

Within the framework of the share repurchase program authorized by the French financial market authority

(Autorité des Marchés Financiers) on April 25, 2008, 40,375 Inter Parfums shares were held by the company

as of December 31, 2008.

28 Two thousand eight registration document Inter Parfums. Consolidated financials

(1)


Changes in the period break down as follows:

In € thousands Number of shares Value

At December 31, 2007 12,620 395

Acquisitions 149,828 3,623

Bonus share grant of June 18, 2008 3,294 -

Disposals (125,367) (3,184)

At December 31, 2008 40,375 834

Management of the share repurchase program is assured by an investment services provider within the framework

of a liquidity agreement in compliance with the conduct of business rules of the French association of investment

firms (AFEI).

Purchases of shares under this program are subject to the following conditions:

- the maximum purchase price is €60 per share, excluding execution costs, and the minimum sale price €10

per share excluding execution costs;

- the total number of shares acquired may not exceed 5% of the capital stock outstanding.

3.8.4 Minority interests

Minority interests that concern the percentage not held (49%) in the European subsidiaries (Inter Parfums

Deutschland GmbH, Inter España Parfums et Cosmetiques S.L., Inter Parfums Srl et Inter Parfums Ltd) break

down as follows:

In € thousands 12/31/07 12/31/08

Reserves attributable to minority interests 33 370

Earnings attributable to minority interests (375) (536)

Minority interests (342) (166)

Minority shareholders have an irrevocable obligation and the ability to offset losses by an additional investment.

3.8.5 Information on equity

The company is not subject to specific regulatory or contractual obligations in respect to capital stock.

In compliance with the provisions of article L.225-123 of the French Commercial Code, the shareholders’

meeting of September 29, 1995 decided to create shares carrying a double voting right. These shares must be

fully paid up and recorded in the company’s share register in registered form for at least three years.

Since 1998, the company has adopted a policy of distributing dividends that today represent approximately

25% of consolidated earnings, destined to reward shareholders while at the same time associating them with

the Group’s expansion. In early May 2008, a dividend of €0.38 per share was paid or a €4.6 million.

In respect to financing, given the Group’s significant shareholders equity and low gearing, financing for

significant operations required by the Group was obtained from banks in the form of medium-term loans.

In addition to the company’s commitment with lending institutions to comply with contractual covenants,

the level of consolidated shareholders’ equity is regularly monitored to ensure the company continues to have

sufficient financial flexibility to take advantage of all potential opportunities for external growth.

3.9

Commitments and contingencies

In € thousands 2007 Increases Provisions Reversal 2008

used in of unused

the period provisions

Reserves for severance benefits 546 166 - - 712

Non-current provisions 546 166 - - 712

Other commitments and contingencies 2,280 - - - 2,280

Total non-current provisions 2,826 166 - - 2,992

For the measurement of severance benefits payable on retirement for 2008, Inter Parfums has adopted the

procedure for voluntary severance agreements introduced on July 23, 2008 extending the interprofessional

agreement of January 11, 2008.

Two thousand eight registration document Inter Parfums. Consolidated financials

29


For 2008, the following assumptions were applied:

- voluntary termination at age 65;

- a rate of 45% for employer payroll contributions for all employees;

- a 5% average annual salary increase;

- an annual rate of turnover for all employees under 55 years of age and nil above;

- the TH 00-02 mortality table for men and the TF 00-02 mortality table for women;

- a discount rate of 4.4%.

Past service costs not recognized of €607,000 were recorded under off-balance sheet items at December 31, 2008.

On the basis of these assumptions, the annual expense recorded under current income breaks down as follows:

- Cost of services rendered: €57,000

- Financial expense: €11,000

- Cost of actuarial losses: €98,000

Contingencies concerned primarily provisions for sales-related litigation with a supplier.

3.10

Borrowings and other financial debt

3.10.1 Borrowings by a maturity and rate

In € thousands Total < 1 year 1 to 5 years > 5 years

Floating-rate (Euribor 3M) 18,683 6,583 12,100 -

Fixed rate 11,238 3,594 7,644 -

Automobile leases 153 94 59 -

Bank overdrafts 4,076 4,076 - -

Total at December 31, 2008 34,150 14,347 19,803 -

In € thousands Total < 1 year 1 to 5 years > 5 years

Floating-rate (Euribor 3M) 25,656 7,556 18,100 -

Fixed rate 14,687 3,450 11,237 -

Automobile leases 189 87 102 -

Bank overdrafts 4,303 4,303 - -

Total at December 31, 2007 44,835 15,396 29,439 -

All borrowings are in euros.

3.10.2 Analysis of borrowings

Lanvin Lanvin Van Cleef &

2004 2007 Arpels

Inception date June 30, 2004 September 28, 2007 January 1, 2007

Initial amount (in € thousands) 16,000 22,000 18,000

Duration 5 years 5 years 5 years

Rate 3M Euribor +0.60% 3M Euribor +0.40% 4.1% fixed-rate

Repayment schedule

Amount payable

Quarterly Quarterly Quarterly

at December 31, 2008 (in € thousands) 1,600 16,500 11,200

3.10.3 Additional disclosures

The floating-rate portion of the Lanvin debt contracted in June 2004 was covered by a swap. This swap at

12-month Euribor at year-end with a floor of 2.10% and a cap of 3.85%.

At December 31, 2008, on the basis of a notional of €1.6 million, a loss of €32,000 in connection with this

swap was recognized in the income statement and for which group did not apply hedge accounting in accordance

with IAS 39. The market value of the swap at December 31, 2008 represented a negative amount for the

company of €2,000.

The floating-rate portion of the Lanvin debt contracted in September 2007 was also covered by a swap against

a fixed rate of 4.42%.

30 Two thousand eight registration document Inter Parfums. Consolidated financials


At December 31, 2008, on the basis of a notional amount of €16.5 million, a loss of €595,000 in connection

with this swap was recognized in the income statement and for which the Group did not apply hedge accounting

in accordance with IAS 39. The market value of the swap at December 31, 2008 represented a negative amount

for the company of €581,000.

3.10.4 Covenants

The loans obtained by the parent company are subject to the following covenant ratios:

- net debt to net equity;

- net debt to cash flow.

These ratios are calculated by the company every year.

In 2008, these covenants were fully met. The current level of these ratios is considerably below the contractual

limits. As a result, the Group has considerable financial flexibility in respect to these commitments.

3.10.5 Undrawn confirmed credit lines

The balance of undrawn confirmed credit lines was €10 million at December 31, 2007. This credit line

reached maturity in July 2008, without being drawn and was not renewed.

3.11

Deferred tax

Deferred taxes arise from timing differences between financial accounting and tax accounting. Deferred taxes

from consolidation adjustments and loss carryforwards are recovered as follows:

In € thousands 2007 Changes Changes 2008

through through

Deferred tax liabilities

reserves incomes

Timing differences between financial and tax accounting 155 - (107) 48

Acquisition cost 784 - (23) 761

Forward exchange hedges - 2,216 (194) 2,022

Market value of securities 44 (44) - -

Stocks options - 156 (156) -

Gains (losses) on treasury shares - (79) 79 -

Loan swap 15 - (15) -

Remeasurement gains (losses) 734 - - 734

Other 2 - 69 71

Total deferred tax liabilities

Deferred tax assets

1,734 2,249 (347) 3,636

Timing differences between financial and tax accounting 740 - 8 748

Loan swap - - 201 201

Inventory margin 871 - (118) 753

Recognition of loss carryforwards (1) 1,723 - (1,723) -

Other 46 - (5) 41

Total deferred tax assets before depreciation 3,380 - (1,637) 1,743

Depreciation of deferred tax (1) (898) - 898 -

Net deferred tax (1) 2,482 - (739) 1,743

(1) Tax losses recognized and depreciation at the end of 2007 concerned primarily Nickel.

Following the merger by absorption of Nickel, the tax losses were used by Inter Parfums.

3.12

Other short-term liabilities

In € thousands 2007 2008

Accrued credit notes 2,326 3,006

Current account liabilities 8,531 -

Tax and employee-related liabilities 6,587 6,072

Other debts 3,637 3,271

Total 21,081 12,349

Two thousand eight registration document Inter Parfums. Consolidated financials

31


3.13

Financial instruments

The following table presents financial instruments in the balance sheet according to the categories provided

for under IAS 39.

In € thousands Notes Carrying Fair Fair value Available- Loans Derivatives

At December 31, 2008 value value through for-sale receivables

profit

or loss

assets or payables

Non-current financial assets 478 478 - 70 408 -

Trade receivables and related accounts 3.5 80,054 80,054 - - 79,025 1,029

Other receivables 3.6 10,113 10,113 - - 5,277 4,836

Cash and cash equivalents 3.7 30,380 30,380 - - 30,380 -

Assets 121,025 121,025 - 70 115,090 5,865

Borrowings 3.10 30,074 29,923 583 - 29,491 -

Trade payables and related accounts 52,866 52,866 - - 52,866 -

Short-term bank loans 3.10 4,076 4,076 - - 4,076 -

Other liabilities 3.12 12,349 12,349 - - 12,349 -

Liabilities 99,365 99,214 583 - 96,170 -

In € thousands Notes Carrying Fair Fair Available- Loans Derivatives

At December 31, 2007 value value through for-sale receivables

profit

or loss

assets or payables

Non-current financial assets 540 540 - 234 306 -

Trade receivables and related accounts 3.5 75,610 75,610 - - 76,502 (892)

Other receivables 3.6 6,491 6,491 - - 5,595 896

Cash and cash equivalents 3.7 60,416 60,416 - - 60,416 -

Assets 143,057 143,057 - 234 142,819 4

Borrowings 3.10 40,533 38,742 (44) - 40,577 -

Trade payables and related accounts 65,195 65,195 - - 65,195 -

Short-term bank loans 3.10 4,303 4,303 - - 4,303 -

Other liabilities 3.12 21,081 21,081 - - 21,081 -

Liabilities 131,112 129,321 (44) - 131,155 -

The fair value of all current assets and liabilities (trade receivables, payables, short-term loans and debt, cash

at bank overdrafts), because of their short-term maturities, is considered identical to the carrying value. The fair

value of non-current debt is determined by estimating future cash flows, loan by loan, that are updated at year-end

on the basis of actual market rates at year-end for similar types of borrowing, as presented in the table above.

3.14

Risk management

The primary risks related to the Group’s business and organization concerning interest rate and foreign

exchange rate risks remain very limited. The potential impacts of other risks on the company’s financials

are not material.

3.14.1 Interest rate risks

The Group’s exposure to interest rate is primarily from debt. The objective of the Group’s policy is to ensure

a stable level of financial expense through the use of hedges in the form of interest rate swaps and the use of

floor and caps.

These financial instruments are not eligible for hedge accounting under IAS 39. The Group nevertheless

considers that these transactions are not speculative in nature and are necessary to effectively manage its

interest rate exposure.

32 Two thousand eight registration document Inter Parfums. Consolidated financials


Sensitivity to interest rates

The interest expense recorded in 2008 on medium-term debt represents the maximum expense in light of the

ceiling provided for under the conditions of the cap and the fixed rate swap. Excluding the impact of hedges,

a 1% increase in rates would increase in interest expense by €10,000 and 2009 while a 1% decrease would

reduce interest expense by €10,000 before hedging.

3.14.2 Liquidity risk

The net position of financial assets and liabilities by maturity is as follows:

In € thousands < 1 year 1 to 5 years > 5 years

Financial assets 26,240 70 -

Financial liabilities (10,271) (19,803) -

Net position before hedging 15,969 (19,733) -

Hedging of assets and liabilities (Swaps) 300 283 -

Net position after hedging 16,269 (19,450) -

Financial liabilities by year break down as follows:

In € thousands

At December 31, 2008 2009 2010 2011 2012 Total

Floating-rate debt - nominal 6,000 4,400 4,400 3,300 18,100

Floating-rate debt - interest 787 543 314 86 1,730

Fixed rate debt - nominal 3,594 3,744 3,900 - 11,238

Fixed rate debt - interest 406 256 100 - 762

Interest rate swaps 300 169 86 28 583

In € thousands

At December 31, 2007 2008 2009 2010 2011 2012 Total

Floating-rate debt - nominal 7,600 6,000 4,400 4,400 3,300 25,700

Floating-rate debt - interest 1,102 787 543 314 86 2,832

Fixed rate debt - nominal 3,450 3,594 3,744 3,900 - 14,688

Fixed rate debt - interest 550 406 256 100 - 1,312

Interest rate swaps (13) (10) (8) (7) (6) (44)

3.14.3 Foreign exchange risk

Net positions of the Group in the main foreign currencies are as follows:

In € thousands USD GBP YEN CAD

Assets 26,014 2,054 1,126 360

Liabilities (2,404) (187) (314) (21)

Net position before hedging 23,610 1,867 812 339

Currency hedges 1,030 (86) 14 -

Net position after hedging 24,640 1,781 826 339

In addition, because a significant portion of the Group’s sales are in foreign currencies, it incurs a risk from

exchange rate fluctuations, primarily from the US dollar (33.6% of sales) and to a lesser extent the pound sterling

(8.0% of sales) and the Japanese yen (2.2% of sales).

Two thousand eight registration document Inter Parfums. Consolidated financials

33


Sensitivity to foreign exchange risk

The Group considers that a 10% fluctuation in the

exchange rate of the US dollar in relation to the euro

represents a pertinent risk factor that may reasonably

occur within a given year. An immediate change in

the exchange rate (US dollar and pound sterling) of

10% would result in a maximum positive currency

effect of €7.2 million on sales and €5.9 million on

operating income. A 10% decrease of these same

exchange rates would have an equivalent negative

currency effect of the same amounts.

Foreign exchange risk management policy

The Group’s exchange rate risk management policy

seeks to cover budget exposures considered highly

probable related to monetary flows resulting from

US dollar sales, as well as trade receivables in the period

in US dollars, pound sterling and Japanese yens.

To this purpose, the Group has recourse to forward

exchange sales, according to procedures that prohibit

speculative trading:

- all forward currency hedging must be backed in

terms of amount at maturity by an identified

economic underlying asset,

- every identified budget exposure hedged for 80%.

At December 31, 2008, the Group had fully hedged

its positions in US dollars, pound sterling and

Japanese yen for trade receivables recorded.

The 2009 sales budget was hedged for 80%, with

additional forward currency sales planned for

midyear.

34 Two thousand eight registration document Inter Parfums. Consolidated financials

The nominal amounts of hedges open, based on

trade receivables measured at year-end are as follows:

In € thousands 2007 2008

Forward sales of US dollars 20,132, 26,026

Forward sales of pound sterling 4,297 5,010

Forward sales of Japanese yen - 745

Difference in market and carrying value - -

The amount of hedges to cover 2009 sales and

maintain the level of the gross margin amounts to

US$90 million. The impact of the revaluation of this

portfolio at December 31, 2008 was €6,436,000 on

shareholders’ equity and €570,000 on the financial

expense. These hedges were obtained at an average

rate for the US dollar of 1.264.

As a result of these hedges, sensitivity to foreign

exchange risk has been reduced to a non-material level.

3.14.4 Counterparty risk

Financial instruments used by the Group to manage

interest rate and foreign exchange risks are obtained

from counterparties with benchmark ratings.

At December 31, 2008, counterparties (according

to Standard & Poor’s) were rated AA.

Cash is deposited with financial institutions

with a rating issued by a specialized agency.

At December 31, 2008, counterparties (according

to Standard & Poor’s) were rated AA for 57%

of the portfolio and A for 43%.


4.

NOTES TO THE INCOME STATEMENT

4.1

Breakdown of consolidated sales by brand

In € thousands 2007 2008

Burberry 152,920 169,031

Lanvin 33,326 38,967

Van Cleef & Arpels 11,899 21,018

Paul Smith 18,000 13,403

S.T. Dupont 11,119 11,464

Roxy 6,560 7,379

Nickel 3,310 2,657

Christian Lacroix 3,850 1,274

Other 1,139 (329)

Total 242,123 264,864

4.2

Cost of sales

In € thousands 2007 2008

Raw materials, trade goods and packaging (103,111) (118,152)

Changes in inventory and allowances 18,436 16,069

POS advertising (5,833) (5,626)

Transportation costs (911) (1,031)

Other expenses related to the cost of sales (3,275) (3,568)

Total cost of sales (94,694) (112,308)

4.3

Selling expenses

In € thousands 2007 2008

Advertising (42,413) (44,647)

Royalties (25,664) (25,164)

Staff costs (10,855) (11,224)

Subcontracting (13,473) (14,367)

Transportation costs (3,472) (3,407)

Commissions (2,078) (2,086)

Travel expenses (1,854) (2,235)

Allowances and reversals (4,768) (2,340)

Other selling expenses (2,151) (4,537)

Total selling expenses (106,728) (110,007)

4.4

Administrative expenses

In € thousands 2007 2008

Purchases and external costs (2,664) (2,658)

Staff costs (2,487) (2,854)

Taxes and related expenses (1,288) (459)

Allowances and reversals (733) (794)

Other administrative expenses (895) (959)

Total administrative expenses (8,067) (7,724)

Two thousand eight registration document Inter Parfums. Consolidated financials

35


4.5

Other operating income and expenses

An additional goodwill impairment charge of €566,000 was recognized on the difference between the market value

of Nickel estimated at December 31, 2008 and its carrying value under “Other operating income and expenses”.

4.6

Net financial expense

In € thousands 2007 2008

Interest income 1,682 1,246

Interest and similar expenses (2,356) (2,891)

Net borrowing costs (674) (1,645)

Currency gains (losses) (158) (942)

Other financial income and expense (4) (165)

Net financial expense (836) (2,752)

Other financial income and expense includes primarily impairment charges for “held-for-sale” securities

recorded under “non-current financial assets”. This impairment charge was recorded because of the significant

decline in the fair value of these securities. The value of the securities acquired at a purchase price of

€134,000 was €70,000 at December 31, 2008.

4.7

Income taxes

4.7.1 Analysis of income taxes

In € thousands 2007 2008

Current income tax (12,315) (10,531)

Deferred tax arising from timing differences 319 115

Deferred tax arising from consolidation adjustments 838 (508)

Total income taxes (11,158) (10,924)

4.7.2 Reconciliation of the effective tax expense and theoretical tax expense

The difference between the effective tax recorded and the theoretical tax expense calculated by applying the tax

rate of 34.4% applicable for fiscal 2008 and 2007 to pretax income reflects the following.

In € thousands 2007 2008

Tax base 30,976 31,507

Theoretical tax calculated at the standard rate (10,665) (10,848)

Effect of tax rate change on deferred taxes (6) 309

Depreciation of tax assets from loss carryforwards (140) (147)

Permanent nondeductible differences (347) (238)

Income tax (11,158) (10,924)

4.8

Earnings per share

In € thousands, except number of shares and earnings per share in euros 2007 2008

Consolidated net income 20,193 21,119

Average number of shares 11,480,164 12,719,676

Basic earnings per share (1) Dilution effect of stock options:

1.76 1.66

Potential fully diluted consolidated net income 182,575 66,499

Potential fully diluted average number of shares outstanding 11,662,738 12,786,175

Diluted earnings per share (1) 1.73 1.65

(1) Not adjusted for bonus shares granted in 2007 and 2008.

36 Two thousand eight registration document Inter Parfums. Consolidated financials


5.

SEGMENT REPORTING

5.1

Primary segment information: business lines

In € thousands 2007 2008

Perfumes Cosmetics Total Perfumes Cosmetics Total

Revenue 238,813 3,310 242,123 262,207 2,657 264,864

Operating profit (loss) 33,263 (629) 32,634 35,242 (417) 34,825

Impairment

Trademarks, licenses

- (822) (822) - (566) (566)

and goodwill 59,645 6,646 66,291 57,877 5,494 63,371

Inventories 55,010 1,336 56,346 69,394 1,400 70,794

Other segment assets 147,182 1,725 148,907 126,517 1,382 127,899

Total segment assets 261,834 9,710 271,544 253,788 8,276 262,064

Segment liabilities 104,741 1,105 105,846 80,989 1,162 82,151

Segment assets and liabilities consist of operating assets (liabilities) used primarily in France.

5.2

Secondary segment information: geographical segments

Sales by geographical sector break down as follows:

In € thousands 2007 2008

North America 48,869 49,632

South America 15,289 17,785

Asia 31,621 33,911

Eastern Europe 20,486 26,294

Western Europe 83,315 85,263

France 21,953 25,638

Middle East 18,635 24,187

Other 1,955 2,154

Total 242,123 264,864

Two thousand eight registration document Inter Parfums. Consolidated financials

37


6.

OTHER INFORMATION

6.1

Off balance sheet commitments

6.1.1 Summary of balance sheet commitments

In € thousands 2007 2008

Guaranteed minima on trademark royalties 233,175 220,299

Headquarter rental payments 5,450 7,652

Guaranteed minima for warehousing and logistics 10,650 7,950

Firm component orders (inventories) 4,213 4,124

Pension liabilities - 607

Total commitments given 253,488 240,632

6.1.2 Commitments given by maturity at December 31, 2008

In € thousands Total < 1 year 1 to 5 years > 5 years

Guaranteed minima on trademark royalties 220,299 24,612 103,417 92,270

Headquarter rental payments 7,652 1,292 4,718 1,642

Guaranteed minima for warehousing and logistics 7,950 2,800 5,150 -

Total contractual obligations 235,901 28,704 113,285 93,912

Firm component orders (inventories) 4,124 4,124 - -

Pension liabilities 607 22 87 498

Total other commitments 4,731 4,146 87 498

Total commitments given 240,632 32,850 113,372 94,410

Maturities are defined on the basis of the contract terms (license agreements, leases, logistic agreements, etc.).

6.1.3 Other commitments

Commitments in respect to forward currency sales at December 31, 2008 amounted to $127,654,000,

£3,731,000 and ¥95,806,000.

Act No. 2004-391 of May 4, 2005 on lifelong vocational training and social dialogue established an individual

training benefit for employees in France (Droit Individuel à la Formation or DIF). Pursuant to this measure,

the company has provided for training benefits of the basis of 21 hours per year and per employee. The number

of training benefits vested by Group employees totaled 5,794 hours at December 31, 2008 and 401 of training

hours under this provision were used by Group employees in 2008.

In compliance with obligations under German law, Inter Parfums, under the terms of a comfort letter issued

at the end of June 2007, provided a guarantee without restrictions to ensure that its German subsidiary

Inter Parfums GmbH, to be managed and funded in order to be able at all times to honor its payment

obligations to all creditors.

At the end of July 2007, Inter Parfums acquired the Lanvin brand names and international trademarks under

class 3 for fragrance products and make-up from the Jeanne Lanvin SA Company. The Lanvin Company holds

a buy back option for the brands, which will be exercisable on July 1, 2025.

6.1.4 Commitments received

Commitments received in connection with forward currency sales at December 31, 2008 amounted

to €97,150,000 for hedges for US dollars, €5,010,000 for pound sterling and €745,000 for Japanese yen

representing total commitments of €102,905,000.

38 Two thousand eight registration document Inter Parfums. Consolidated financials


6.2

License agreements

Nature License Duration Expiration

of licence inception date date

Burberry Original July 1993 13 years and 6 months -

Renewal July 2004 12 years and 6 months December 2016

S.T. Dupont Original July 1997 11 years -

Renewal January 2006 5 years and 6 months June 2011

Paul Smith Original agreement January 1999 12 years -

Renewal July 2008 7 years December 2017

Christian Lacroix Original agreement March 1999 10 years and 10 months December 2010

Quiksilver Original April 2006 11 years and 9 months December 2017

Van Cleef & Arpels Original January 2007 12 years December 2018

The renewal of the Burberry license agreement on July 1, 2004 was accompanied by an option to extend

the license by an additional five years and an option by Burberry Ltd to acquire the license at its market value

at December 31, 2011.

6.3

Proprietary brands

Lanvin

In June 2004, Inter Parfums signed an exclusive worldwide license agreement with Lanvin effective July 1, 2004

to create, develop and distribute fragrance lines under the Lanvin brand name for 15 years.

At the end of July 2007, Inter Parfums acquired the Lanvin brand names and international trademarks for

class 3 fragrance products and make-up from the Jeanne Lanvin company.

Inter Parfums and Lanvin also mutually agreed with immediate effect to terminate the license agreement

signed in July 2004 and at the same time concluded a technical and creative assistance agreement in view of

developing new perfumes based on net sales until June 30, 2019. The Jeanne Lanvin company holds a buy

back option for the brands which will be exercisable on July 1, 2025.

Nickel

In April 2004, Inter Parfums acquired a majority stake in Nickel, a company specialized in skincare products for men.

In June 2007, Nickel became a wholly-owned subsidiary after Inter Parfums acquired the company’s remaining shares.

6.4

Insurance

Inter Parfums is named as beneficiary under a €15 million life insurance policy for Philippe Benacin.

6.5

Employee-related data

6.5.1

Employees by category

Number of employees at 12/31/2007 12/31/2008

Executive officers and management 77 82

Supervisory staff - 9

Employees 68 61

Total 145 152

Two thousand eight registration document Inter Parfums. Consolidated financials

39


6.5.2 Employees by department

Number of employees at 12/31/2007 12/31/2008

General Management 2 2

Production & Operations 22 22

Burberry Fragrances 25 27

Luxe & Fashion 22 25

France 51 49

Finance & Corporate Affairs 23 27

Total 145 152

6.5.3 Wages and benefits

In € thousands 2007 2008

Total wages and benefits 14,959 15,946

Of which Management Committee members - wages, bonuses & social charges 2,488 2,923

Of which Management Committee members - share based payment expenses 213 208

In addition supplemental retirement benefits for executive management of, €109,000 million was paid in 2008.

6.6

Information on related parties

6.6.1 Management Committee

The six members of the Management Committee exercise responsibilities in the areas of strategy,

the management and oversight. They have employment contracts and receive compensation as follows:

In € thousands 2007 2008

Wages, bonuses & social charges 2,488 2,923

Share based payment expenses 213 208

The executive officers Philippe Benacin and Jean Madar, cofounders of Inter Parfums SA are also executive

officers and majority shareholders of the parent company Inter Parfums Inc.

In 2008, in this capacity they were granted a total of 65,750 stock options by Inter Parfums Inc.

6.6.2 Board of Directors

The ten members of the Board of Directors exercise responsibilities in the areas of strategy, management

consulting, acquisitions and oversight. With the exception of directors that have employment contracts,

they are paid directors’ fees:

In € thousands 2007 2008

Directors’ fees (1) 38 35

(1) Calculated on the basis of actual board meeting attendance.

6.6.3 Relations with the parent company

The accounts of Inter Parfums and its subsidiaries, through Inter Parfums Holding, are all fully consolidated

into the accounts of Inter Parfums Inc., whose registered office is located at 551 Fifth Avenue, New York,

NY 10176 USA, United States. No material transaction exists between Inter Parfums SA and Inter Parfums Inc.

6.6.4 Relations with subsidiaries

Inter Parfums’ subsidiaries Inter Parfums Deutschland GmbH, Inter España Parfums and Cosmetiques S.L.,

Inter Parfums Srl, Inter Parfums Ltd and Inter Parfums Suisse Sarl. are fully consolidated. The main

transactions between these entities are of a commercial nature and concern the sale of products of the parent

company to subsidiaries that assure the distribution in their respective markets. These transactions also

generate cash flows between the subsidiaries and the parent company. Subsidiary sales represent approximately

15% of Group revenue.

40 Two thousand eight registration document Inter Parfums. Consolidated financials


6.7

Auditors’ fees

Total auditors’ fees expensed in the income statement relating to their engagement as statutory auditors breaks

down as follows:

In € thousands MAZARS

2007 % 2008 %

Work as statutory auditors and certification

of individual and consolidated financial statements:

Of the Issuer 195 63% 250 74%

Of fully consolidated subsidiaries 116 37% 90 26%

Other directly related assignments

Other services rendered by members of the auditor’s

- - - -

network to fully consolidated subsidiaries - - - -

Total 311 100% 340 100%

In € thousands SFECO & FIDUCIA

2007 % 2008 %

Work as statutory auditors and certification

of individual and consolidated financial statements:

Of the Issuer 84 97% 84 97%

Of fully consolidated subsidiaries - - - -

Other directly related assignments

Other services rendered by members of the auditor’s

3 3% 3 3%

network to fully consolidated subsidiaries - - -

Total 87 100% 87 100%

6.8

Post-closing events

None.

Two thousand eight registration document Inter Parfums. Consolidated financials

41


Corporate

CHAPTER THREE

governance

Board of Directors 43

Management committee 48

Compensation of executive management 48

Special report of the Board

of Directors on stock options 51

Chairman’s report on the work

of the Board and internal control 52

42 Two thousand eight registration document Inter Parfums. Corporate governance


1.

BOARD OF DIRECTORS

Inter Parfums adopted the form of a société anonyme,

the French equivalent of a joint stock company,

when it was created in 1989. It is governed by a

Board of Directors and a Management Committee.

The Board of Directors’ meeting of December 22,

2008 reviewed the AFEP-MEDEF recommendations

of October 6, 2008 on compensation of executive officers

of listed companies. It considered these recommendations

to be in line with the company’s own corporate

governance policy. This opinion was rendered public

in a press release dated December 24, 2008.

The Board of Directors also confirmed that the amended

AFEP/MEDEF corporate governance code is applied

by the company and referred to prepare the report

provided for by article L.225-37 of the French

Commercial Code starting with the period in progress.

Composition of the Board of Directors

In spring 2004, the company strengthened the Board

of Directors that until then had four members, by

appointing new board members for renewable six-year

terms to benefit from their additional expertise and

experience. On December 31, 2007 the Board of

Directors had 10 members.

The Board of Directors’ meeting of November 22,

2008 duly noted the resignation of Mrs. Marianne

Benacin and Mr. Raoul Madar as directors and

proceeded to appoint, on a temporary basis,

Mrs. Chantal Roos and Mr. Frédéric Garcia Pelayo

to serve as directors, subject to the ratification of

their appointment by the next shareholders’ meeting

to be held on April 24, 2009.

The Board ensures that at least 30% of its members

are independent directors. Directors are considered

independent when they have no relation whatsoever

with the company, group or its management that

could compromise their free exercise of judgment.

In line with recommendations applicable in France

on corporate governance of the AFEP-MEDEF report,

the board ensures the presence of independent

directors subject to the following conditions:

- the director is not an employee or corporate officer

(mandataire social) of the company nor an employee

or director of its parent company or of one of its

consolidated subsidiaries, and has not been one during

the previous five years;

- the director is not a corporate officer of a company

in which the company holds, either directly or indirectly,

a directorship, or in which a directorship is held by

an employee of the company designated as such or by

a current or former (going back five years) corporate

officer of the company;

- the director is not a supplier, investment or

commercial banker of the company or any company

included in the scope of consolidation;

- the director does not have any close family ties with

a corporate officer of the company;

- the director has not been an auditor of the company

over the past five years:

- the director has not been a director of the company

for more than 12 years; and

- the director does not have any legal ties with a

shareholder owning directly or indirectly more than

10% of the share capital or voting rights.

On the basis of these criteria, the board includes

three independent directors, Mrs. Chantal Roos,

Mr. Maurice Aladhève and Mr. Michel Dyens.

To date, the Board has three members with the status

of employees resulting from an employment contract

predating their appointment as directors.

As a general rule, members of the Board of Directors

have an in-depth or multidisciplinary experience

of the business world in international markets. They

are subject to conduct of business rules that include

notably obligations of secrecy and due diligence in

the performance of their duties ensuring the effective

work of the Board in a collegiate nature. Directors

are provided not only with information before each

meeting but also on a permanent basis concerning

all strategic and financial matters necessary to perform

their duties in the most effective manner.

The Board of Directors’ meeting of March 3, 2009

adopted a board charter reproduced in full below.

Two thousand eight registration document Inter Parfums. Corporate governance

43


BOARD CHARTER

Introduction

The purpose of this Charter is to set forth the rules

of procedure adopted by the Board of Directors

on March 3, 2009.

Applicable to all current and future directors, this

Charter is destined to supplement the provisions of

the law, regulations and the company’s bylaws, in the

interest of the company and its shareholders in order to:

- define the composition, organization, duties and

powers of the Board;

- contribute to the optimal performance of meetings

and proceedings;

- establish the rules on corporate governance within

the framework of rules requiring that the company

adopt the principles of transparency, loyalty and

performance vis-à-vis its shareholders.

This Board Charter under no circumstances replaces

the company’s bylaws but rather translate its provisions

into practice. This Charter is destined for internal

use for the purpose of ensuring the effectiveness of

the work of the Board. As such it cannot be considered

binding on the company in respect to claims by

third parties.

1.

COMPOSITION OF THE BOARD

OF DIRECTORS

The Board of Directors includes a maximum of

18 members with at least three selected from independent

persons having no ties of interest with the company so

that they are entirely free in the exercise of their judgment.

Directors are considered independent according to

the criteria of the AFEP/MEDEF code of corporate

governance when they have no relation whatsoever

with the company, its group, or management that

could compromise the free exercise of their judgment

or where there exists no potential conflict of interest

with the company, its management or group.

2.

MISSIONS AND POWERS

OF THE BOARD OF DIRECTORS

2.1

Strategic body

The mission of the Board of Directors is to determine

the strategy of the company and ensure that this

strategy is implemented. Subject to the powers granted

to shareholders’ meetings and within the limits of the

company’s corporate purpose, the Board may address

any matter pertaining to the proper management of the

company and settle all items of business relating thereto.

44 Two thousand eight registration document Inter Parfums. Corporate governance

In addition to the attributes provided for by law

and regulations, the Board may be called to address

in particular the following matters:

- assess the environment of the company and analyze

opportunities for external growth through acquisitions;

- review projects involving material investments

or not relating to the company’s ordinary operating

activities;

- analyze major strategic projects presented to executive

management and their impact on the economic and

financial situation of the company;

- approve the annual budget submitted by executive

management;

- implement procedures for control or verification

it considers appropriate.

And in general, the Board ensures the merits of any

measure adopted for the strategic development of the

company and ensuring the solidity of the company’s

balance sheet.

2.2

Audit committee function

On March 3, 2009 the Board of Directors decided

that in light of the company’s organization and structure,

an independent audit committee would not be established

and that in consequence, in accordance with the

provisions provided for under article L.823-20

of the French Commercial Code, it would exercise

the functions of audit committee in plenary session.

In connection with a performance of the functions

of audit committee, the primary task of the Board

of Directors are to:

- ensure the pertinence and consistent application

of accounting methods adopted to prepare consolidated

and statutory financial statements;

- ensure that the process for producing financial

information is based on internal procedures for

collecting information that guarantee the quality

and exhaustive nature of this information;

- monitoring the performance of internal control and

risk management systems;

- monitoring compliance with the principles of

independence and objectivity of the auditors.

To this purpose, it may review in particular:

- draft versions of the statutory and consolidated

interim and annual financial statements, and on these

occasions submit questions to the auditors;

- the scope of consolidation used to prepares financial

statements;

- the performance of internal control systems by

evaluating the organization principles and functioning

of internal audit and by verifying the process for

identifying risks. It also reviews the audit missions

and evaluation of the internal control system carried

out by the Finance Department;


- procedures carried out by the auditors in the

performance of their missions;

- conditions for renewing the appointments of auditors

by implementing a selection process and issuing

an opinion concerning the amount of fees requested

for the performance of their missions.

3.

PROCEDURES FOR EXERCISING

GENERAL MANAGEMENT

3.1

The Chairman

of the Board of Directors

The Chairman, appointed by the Board of Directors

from among its members, organizes and manages

the work of the Board on which he reports to the

shareholders’ meeting. He ensures that management

bodies of the company are effectively run and, in

particular, that directors are able to perform their

duties. The Chairman may request any documents

or specific information to assist the Board of Directors

in connection with preparing its meetings.

The Chairman actively contributes to the performance

of the duties of directors by exercising a role of

intermediary between the latter and the main participants

in implementing the company’s strategic objectives.

3.2

General management

The Board of Directors determines the manner that

General Management is exercised, under its responsibility,

either by the Chairman of the Board of Directors,

or by a person appointed by the latter with the title

of Chief Executive Officer (Directeur Général).

The Board of Directors’ meeting of December 19, 2002

decided not to separate the functions of Chairman of

the Board of Directors from those of Chief Executive

Officer. In this respect, and subject to the powers

granted by law to general meetings and the limitations

provided for by the provisions of this Board Charter,

the Chairman of the Board of Directors exercises

the functions of Chief Executive Officer and is vested

with the broadest powers to act in all circumstances

in the name of the company with the exception of

the following strategic decisions that are submitted

for approval to the Board of Directors:

- any financial commitment (immediate or deferred)

for an amount exceeding €10 million per transaction

and having a material impact on the company’s scope

of consolidation, including mainly the acquisition or

disposal of assets or equity investments in companies;

- any decision, regardless of the amount involved,

that could potentially materially affect the strategy

of the company or materially modify the scope of its

normal activity.

On proposals by the Chief Executive Officer, the Board

of Directors may appoint one or more individuals

to assist the Chief Executive Officer with the title

of Executive Vice President (Directeur Général Délégué).

4.

FUNCTIONING OF THE BOARD

OF DIRECTORS

4.1

Calling and holding of Board meetings

Notice of meetings may be issued by any means

including orally and may be transmitted by the

Secretary of the Board within at least eight days before

each meeting.

The Board meets as often as the interests of the company

requires, and in general, at least five times the year,

with three of these meetings devoted to reviewing

the budget, strategy and the activity of the company.

Decisions by the Board are adopted on the basis

of a simple majority. In the case of split vote, the

Chairman of the meeting has the casting vote.

The Board establishes for the year according to the

proposal of the Chairman a schedule for its meetings,

with the exception of extraordinary meetings.

4.2

Participation in meetings

through videoconferencing

or telecommunications media

In accordance with applicable regulations and article

14 of the company’s bylaws, directors who participate

in Board meetings through videoconferencing or

telecommunications technology are considered

present for calculating the quorum and majority.

The Chairman ensures that videoconferencing and

telecommunications technologies used guarantee the

effective participation of all parties in the meetings.

The proceedings must be broadcast without interruption.

Measures necessary to identify each party and verify

the quorum must be assured. Failing this, the Board

meeting may be adjourned.

The attendance register and the minutes must indicate

the names of directors having participated through

videoconferencing or telecommunications means.

Remote participation using the technologies is expressly

prohibited for proceedings concerning the following

decisions:

- the approval of the company’s statutory and

consolidated financial statements;

- preparing the management report to be included

in the Group’s management report.

Two thousand eight registration document Inter Parfums. Corporate governance

45


4.3

Transmission of information

All directors are provided with an agenda for each

meeting documents and information required to make

decisions on the items of business on an informed basis.

It is the responsibility of all directors to ensure that

they possess all information they consider necessary

for the effective conduct of proceedings of the Board

and, when applicable, request this information when

they consider that it has not been made available.

Furthermore, directors are kept regularly informed,

between the meetings of all events or transactions

of a material nature for the strategic priorities

of the company.

5.

CODE OF CONDUCT

OF DIRECTORS

5.1

Obligations of discretion and secrecy

Concerning non-public information acquired

in connection with their duties, directors shall be

considered subject to a true obligation of professional

secrecy that exceeds the obligation of discretion provided

for by article L.225-37 subsection 5 of the French

Commercial Code.

In general, directors shall refrain from speaking

individually outside the collegial framework of the

Board of Directors about matters considered therein.

Outside the company, directors undertake to respect

the collegial nature on any oral or written

communication that they may issue.

5.2

Duties of independence

Directors have a duty to act in all circumstances

in the interest of the company and all shareholders.

To this purpose, they are subject to an obligation

to inform the Board of any situation involving

a conflict of interest, even a potential conflict of interest,

and must refrain from voting in the proceedings

relating thereto.

And in general, directors shall be prohibited from

engaging in transactions in the shares of the company

and/or the group if they possess privileged information.

Each party is personally responsible for assessing the

privileged nature of information in their possession,

and, in consequence, to authorize or prohibit any use

or transmission of such information, and to engage

in any transactions in the company’s shares.

And in any case, directors undertake to comply with

its obligation to refrain from any dealings in the

company’s shares for a period of 15 days prior to:

- the publication of the press release on annual results;

- the publication of the press release on half-year results.

46 Two thousand eight registration document Inter Parfums. Corporate governance

5.3

Obligations of the due diligence

Directors must devote to their duties the necessary

time and attention. To this purpose, they will limit

the appointments that they hold to a reasonable

number to ensure their regular participation in the

meetings of the Board.

Directors have an obligation to obtain and request

within the appropriate delays from the Chairman

information necessary to effectively participate in

the items of business to be addressed by the Board

of Directors’ meetings.

5.4

Obligation to report dealings

in the company’s shares

Directors and persons with whom they have close

relations must report to the AMF the purchase, sale,

subscription or exchange of shares of the Company

when the amount exceeds €5,000 for the calendar

year progress.

To this purpose, they will send their declaration

to the AMF by electronic means within five trading

days following the transactions and send at the same

time a copy of the declaration to the Secretary of the

Board of Directors of the company.

6.

COMPENSATION

6.1

Directors’ fees

The Board of Directors freely sets the amount of fees

for attendance subject to the limit allocated by the

general meeting. It allocates this amount equally

among each of the members in proportion to the

number of Board meetings each member participated

in during the prior year.

By express waiver of the Directors concerned, directors’

fees are allocated exclusively to directors selected from

outside the company.

6.2

Compensation of directors

for special assignments

The Board of Directors may entrust one of its members

with a mission, for which it determines the conditions

and terms that are subject to approval by the Board,

except by the Board member designated for this mission.

The Board will determine notably the duration of the

mission as well as the procedures of payment of the

amount and the reimbursement of expenses incurred

in the performance of this mission. The Chairman

is responsible for ensuring that this mission is properly

carried out according to the conditions approved

by the Board to whom it regularly reports thereon.


Composition of the board and profiles

As of December 31, 2008 the composition of the Board

of Directors was as follows:

Philippe Benacin, Chairman and Chief Executive

Officer of Inter Parfums (appointment renewed

April 23, 2004, expiring at the close of the 2010

annual shareholders’ meeting).

Philippe Benacin, 50, a graduate of the ESSEC business

school and cofounder of the company with his partner

Jean Madar, has served as Chairman and Chief Executive

Officer of Inter Parfums SA since its creation in 1989.

Other appointments: Chairman of the Board of

Directors of Inter Parfums Holding, President and

Vice Chairman of the Board of Inter Parfums Inc.

(United States).

Jean Madar, Director (appointed April 23, 2004, expiring

at the close of the 2010 annual shareholders’ meeting).

Jean Madar, 48 a graduate of the ESSEC business school,

is the cofounder of the company with his partner

Philippe Benacin.

Other appointments: Chief Executive Officer of

Inter Parfums Holding , Chief Executive Officer and

Chairman of the Board of Inter Parfums Inc.

(United States).

Maurice Alhadève, Independent Director (appointed

by the shareholders’ meeting of April 23, 2004, expiring

at the close of the 2010 annual shareholders’ meeting).

Other appointments: none.

Patrick Choël, Director (appointed by the shareholders’

meeting of December 1, 2004, expiring at the close

of the 2010 annual shareholders’ meeting).

Other appointments: Director of Inter Parfums Inc.

(United States), Director of Parfums Christian Dior,

Director of Guerlain, Director of Modelabs.

Michel Dyens, Independent Director (appointed by

the shareholders meeting of April 23, 2004, expiring

at the close of the 2010 annual shareholders’ meeting).

Other appointments: Director of Direct Panel,

Chairman of Michel Dyens & Co.

Frédéric Garcia-Pelayo, Director and Executive Vice

President (holder of an employment contract preceding

the appointments - Appointed by co-optation by

decision of the Board of Directors’ meeting of

November 22, 2008 subject to ratification by the

next general meeting to be held on April 24, 2009,

replacing Mr. Raoul Madar, resigning, whose

appointment expires at the close of the 2010 annual

shareholders’ meeting).

Frédéric Garcia Pelayo, 51, EPSCI international

exchange program graduate of the ESSEC Business

School, has been Vice President for Export Sales

Directeur Export of Inter Parfums since 1994 and

Executive Vice President since 2004.

Other appointments: none.

Jean Levy, Director (appointed by the shareholders’

meeting of April 23, 2004, expiring at the close

of the 2010 annual shareholders’ meeting).

Other appointments: Director of Inter Parfums Inc.

(United States), Director of Price Minister SA,

Director of Axcess Groupe SA, Director of Mont

Blanc SAS.

Chantal Roos, Independent Director

(Appointed by co-optation by decision of the Board

of Directors’ meeting of November 22, 2008 subject

to ratification by the next general meeting to be held

on April 24, 2009, replacing Mrs. Marianne Benacin,

resigning, whose appointment expires at the close

of the 2010 annual shareholders’ meeting).

Chantal Roos was Vice President for International

Marketing and subsequently Executive Vice President

with Yves Saint Laurent Parfums and President of Beauté

Prestige International, a subsidiary of the Shiseido

group she created in 1990 to launch the Issey Miyake

and Jean-Paul Gaultier fragrances.

She joined the Gucci group in 2000 as President

of the Yves Saint Laurent Beauté division, becoming

subsequently in 2007, Strategic Adviser to the

Chairman and Chief Executive Officer. In 2008, she

launched her own company specialized in the creation

and development of fragrance and cosmetic brands.

Other appointments: none.

Philippe Santi, Director and Executive Vice President

(holder of an employment contract preceding the

appointment by the shareholders’ meeting of April 23,

2004, expiring at the close of the 2010 annual

shareholders’ meeting).

Philippe Santi, 47, graduate of the École Supérieur

de Commerce of Reims and a public accountant has

served as the Chief Financial and Administrative

Officer of Inter Parfums SA since 1995 and Executive

Vice President since 2004.

Other appointments: Director of the parent company

Inter Parfums Inc.

Catherine Bénard-Lotz, Director (holder of an

employment contract preceding the appointment by

the shareholders’ meeting of April 23, 2004, expiring

at the close of the 2010 annual shareholders’ meeting).

Other appointments: none.

Absence of condemnations

To the best of the Company’s knowledge, in the last

five years none of the members of the Board of

Directors have been:

- convicted for fraud or penalties for infractions

rendered by statutory or regulatory authorities;

- involved in a bankruptcy, receivership or liquidation

proceeding as a director or officer;

- disqualified from serving as a director or officer

or participating in the management of the operations

of an issuer.

Absence of potential conflicts of interest

To the best of the Company’s knowledge, there exist

no potential conflicts of interest between the duties

towards the company and the personal interests

and/or other duties of one of the members of the board.

Two thousand eight registration document Inter Parfums. Corporate governance

47


Absence of service contracts with board members

To the best of the Company’s knowledge, none of

the board members is bound by service agreements

with the company or one of its subsidiaries providing

for the grant of benefits under its terms.

2.

MANAGEMENT COMMITTEE

Mission

The purpose of the Management Committee, led by

the Chairman and Chief Executive Officer, is to address

operational issues related to the development of the

company.

Composition as of December 31, 2008

Philippe Benacin, Chairman and Chief Executive

Officer.

Philippe Santi, Executive Vice President,

Chief Financial and Administrative Officer.

Frédéric Garcia-Pelayo, Executive Vice President,

Chief International Officer.

Hugues de la Chevasnerie, Vice President, Burberry

Fragrances.

Angèle Ory-Guénard, Vice President, Export Sales -

Burberry Fragrances.

Jérôme Thermoz, Vice President, French Distribution.

Axel Marot, Vice President Burberry Fragrances.

The Management Committee met six times in 2008

(six times in 2007). and discussed the following items

of business:

February: 2007 closing, 2008 first-quarter sales

forecasts, review of launches by brand, organization

of the French team, external growth project;

April: 2008 first-quarter sales, second-quarter forecast,

marketing projects, status of Spanish partnership,

external growth projects;

June: 2008 second-quarter sales, 2008 first-half earnings

forecasts, analysis of gross margins, new premises, 2009

launches, preparation of 2009 distributor seminar;

July: 2008 first-half sales, situation of European

subsidiaries, review of brand launches, new premises;

September: summary of 2008 first-half results, 2008

third-quarter sales, 2008 full-year forecasts, marketing

projects, growth projects, 2009 budget, foreign

exchange hedging project;

November: budget 2009, 2008 sales forecasts,

marketing review by brand, warehousing study,

French team, summary of foreign exchange hedges.

48 Two thousand eight registration document Inter Parfums. Corporate governance

3.

COMPENSATION

OF EXECUTIVE MANAGEMENT

In connection with the preparation of this registration

document, the Board of Directors has analyzed

the different components of executive compensation

and benefits in light of the principles set forth in the

AFEP-MEDEF recommendations of October 6, 2008.

It reviewed the procedures in place for determining

cash compensation and benefits and benefits of all kinds

granted to corporate officers that are presented below

in detail.

In general, the Board of Directors sets the compensation

policy for officers both in reference to market practice

in comparable sectors and the size of the company in

notably in respect to sales and the number personnel.

Compensation of officers for 2008

Compensation of officers consists of both fixed and

variable components. Fixed compensation takes into

account the level of responsibilities, experience and

performance. Variable compensation is determined

in relation to the company’s achievement of overall

performance objectives and events related to each

fiscal year.

One half of variable compensation is determined

in accordance with net sales, operating income and

net profit, and half in relation to qualitative criteria

of performance. This latter criteria is evaluated

in respect to the contribution of corporate officers

to achieving the objectives of the company and

results actually obtained.

On this basis, compensation paid to executives

as officers or salaried employees in connection with

employment contracts concluded prior to becoming

officers is disclosed below.


Total compensation Total compensation Total compensation

paid for 2006 paid for 2007 paid for 2008

Philippe Benacin (1)

Chairman and Chief Executive Officer

Net fixed compensation €144,000 €153,600 €176,640

Net variable compensation €117,600 €115,200 €114,400

Benefits in-kind €65,440 €68,100 €70,800

Supplemental executive retirement plans

Philippe Santi

€7,500 €7,720 €7,990

(2)

Director - Executive Vice President

Net fixed compensation €144,000 €153,600 €176,640

Net variable compensation €125,600 €141,600 €124,800

Supplemental executive retirement plans

Frédéric Garcia-Pelayo

€7,500 €7,720 €7,990

(3)

Executive Vice President

Net fixed compensation €144,000 €153,600 €176,640

Net variable compensation €125,600 €141,600 €124,800

Benefits in-kind - - €5,130

Supplemental executive retirement plans

Catherine Bénard-Lotz

€7,500 €7,720 €7,990

(4)

Director

Net fixed compensation €61,400 €65,300 €74,400

Net variable compensation €31,700 €42 ,400 €31,200

Supplemental executive retirement plans

Jean Madar

€6,500 €7,720 €7,990

(5)

Director

Gross fixed compensation $400,000 $400,000 $400,000

Gross Bonus - $100,000 -

(1) Philippe Benacin does not have an employment contract with the company. He exercises his functions as Chairman and Chief Executive

Officer pursuant to his appointment as a corporate officer by the Board of Directors.

(2) Compensation paid to Philippe Santi as a salaried employee with the position of Director of Finance and Corporate Affairs under

the terms of an employment contract predating his appointment as Executive Vice President (Directeur Général Délégué) and Director

of the Company that remained in force. Philippe Santi receives no compensation of any nature in connection with his appointment

as an officer of the company.

(3) Compensation paid to Frédéric Garcia Pelayo as a salaried employee with the position of Chief International Officer under the terms

of an employment contract predating his appointment as Executive Vice President (Directeur Général Délégué) and Director of the Company

that remained in force. Frédéric Garcia Pelayo receives no compensation of any nature in connection with his appointment as an officer

of the company.

(4) Compensation paid to Catherine Bénard-Lotz as a salaried employee with the position of Chief Legal Officer under the terms of an

employment contract predating her appointment as Director of the Company that remained in force. Catherine Bénard-Lotz receives

no compensation of any nature in connection with her appointment as a company director.

(5) Compensation paid to Jean Madar by the parent company of the Group, Inter Parfums Inc. (United States) as the Chief Executive

Officer of this company. Jean Madar receives no compensation of any nature from Inter Parfums SA.

Two thousand eight registration document Inter Parfums. Corporate governance

49


Directors’ fees for 2008

Directors’ fees are allocated to the Board of Directors by the shareholders’ meeting for fiscal 2008 for a set amount

per meeting attended of €2,500. The sixth resolution of the ordinary shareholders’ meeting of April 25, 2008,

set the total amount for directors’ fees at €60,000.

On this basis, for fiscal 2008 a total of €35,500 was paid to four outside directors for their attendance at meetings.

The other directors expressly waived their rights to receive directors’ fees.

Directors’ fees in 2007 Directors’ fees in 2008

Philippe Benacin (Chairman) NA NA

Philippe Santi (Executive Vice President) NA NA

Maurice Alhadève €10,000 €10,000

Marianne Benacin NA NA

Catherine Bénard-Lotz NA NA

Patrick Choël €10,000 €10,000

Michel Dyens €10,000 ¤ €7,500

Jean Levy €7,500 €7,500

Raoul Madar NA NA

Jean Madar NA NA

NA: Not Applicable.

Stock options and other compensation

- Stock-options

Rules for the grant of stock options to officers are based on the level of responsibilities and the performance

of the company’s share. The quantity of stock options granted to officers may vary from one year to another

according to the performance of the company over this period.

- Benefits in-kind

Philippe Benacin received benefits in-kind for the costs of a company car and housing benefits representing

a total amount of €70,800.

Frédéric Garcia-Pelayo received benefits in-kind for the costs of a company car for an amount of €5,130.

- Executive retirement plans

Executive officers benefit from a supplemental retirement plan in the form of a defined contribution annuity fund.

The benefits of this plan were subsequently extended to senior executives of the company. This contribution

to a private defined contribution pension fund is paid in part by the beneficiaries and in part by the employer

for an amount equal four times French Social Security ceiling. The annual contribution per beneficiary is

approximately €8,000. The supplemental retirement plan is part of the overall compensation policy adopted

by the company for senior executives and managers.

- Other types of benefits

No executives benefit from forms of remuneration, indemnities or benefits owed or which could be owed resulting

from the assumption, termination or change of functions of corporate officer of the company or subsequent

to these events.

50 Two thousand eight registration document Inter Parfums. Corporate governance


4.

SPECIAL REPORT OF THE BOARD

OF DIRECTORS ON STOCK OPTIONS

In compliance with article L.225-184 of the French Commercial Code, this report is produced by the Board

of Directors to inform the combined shareholders’ meeting of April 24, 2009 of transactions carried out in fiscal

2008 by virtue of the provisions under articles L.225-177 to L.225-186 of said code.

Options granted to and exercised by each corporate officer of the company in 2008, in connection

the appointments they held.

No stock option plans were established in 2008 by Inter Parfums SA.

No option was exercised in 2008 under the IP Inc. plans.

Number of shares Subscription Expiration

granted/exercised (1) price date

IP Inc. options granted during the period to officers (plan of February 14, 2008) (1)

Philippe Benacin 13,875 $11.30 02/14/2014

Jean Madar 13,875 $11.30 02/14/2014

Philippe Santi 12,750 $11.30 02/14/2014

Frédéric Garcia-Pelayo 12,750 $11.30 02/14/2014

Catherine Bénard-Lotz 4,725 $11.30 02/14/2014

IP Inc. options granted during the period to officers (plan of December 31, 2008)

Philippe Benacin 19,000 $6.93 12/31/2014

Jean Madar 19,000 $6.93 12/31/2014

IPSA options exercised in the period by officers (2)

Philippe Benacin

Plan of August 26, 2002

Philippe Santi

6,067 €9.20 08/26/2009

Plan of August 26, 2002 10,356 €9.20 08/26/2009

(1) Number and subscription price adjusted for the grant of new IP Inc. bonus shares (2 for 3) of May 30, 2008.

(2) Number and subscription price adjusted for the grant of new bonus shares (1 for 10) of June 16, 2008.

Stock options granted to the 10 highest paid employees of the company that are not officers and exercised

by the 10 employees of the company had exercised the greatest number of options in 2008

Number of shares Subscription Expiration

granted/exercised (1) Stock options granted to the 10 highest paid employees

price date

(1)

Plan of February 2008 (IP Inc.) 49,425 $11.30 02/14/2014

Options exercised by the 10 employees exercising the greatest number (2)

Plan of April 27, 2001 31,631 €17.50 04/26/2008

Plan of August 26, 2002 8,598 €9.20 08/26/2009

Plan of August 26, 2003 4,393 €15.10 08/26/2009

Plan of March 25, 2004 1,862 €22.10 03/25/2010

Total 46,484 - -

(1) Number and subscription price adjusted for the grant of new IP Inc. bonus shares (2 for 3) of May 30, 2008.

(2) Number and subscription price adjusted for the grant of new bonus shares (1 for 10) of June 16, 2008.

Two thousand eight registration document Inter Parfums. Corporate governance

51


5.

CHAIRMAN’S REPORT ON

THE WORK OF THE BOARD

AND INTERNAL CONTROL

Pursuant to the provisions of paragraph 6, article

L.225-37, of the French Commercial Code the

Chairman of the Board of Directors hereby reports

on the:

- terms and conditions governing the preparation and

organization of the Board’s work;

- internal control procedures implemented by the

company;

- limitations that the may have been imposed on the

powers of the Chief Executive Officer by the Board

of Directors.

This report has been produced on the basis of work

undertaken by the Finance and Corporate Affairs

Department, with the different operating departments

of the company and exchanges with the statutory

auditors in connection with internal audits conducted

at the company’s initiative.

Concerning the corporate governance code, in compliance

with the law of July 3, 2008 introducing various

measures to be adopted by companies governed by

Community law, this report also contains a presentation

of corporate governance procedures relating to the

AFEP/MEDEF code for listed companies of December

2008, to which the company has decided to voluntarily

refer. Provisions not applicable or that cannot be

implemented by the company are also specified in

this report.

This report was submitted for approval to the Board

of Directors on March 3, 2009.

5.1

Preparation and organization

of the Board’s work

5.1.1

Composition and operation

of the Board of Directors

Under the company’s bylaws, the Board of Directors

may have three to eighteen members.

At December 31, 2008, corporate governance of

the company was overseen by a Board that included

10 directors three of which qualified as independent

directors. Detailed information on the composition

of the Board of Directors is disclosed in the registration

document (annual report) in the section on directors

and officers.

Directors are appointed for six-year terms whereas

the AFEP/MEDEF guidelines recommend maximum

terms of four years. However, the Board considers

that this point does not constitute an obstacle to

good corporate governance practices by the company

provided that the Board ensures at the time of the

52 Two thousand eight registration document Inter Parfums. Corporate governance

renewal and/or appointment of new directors a

balanced composition of the board contributing to its

effectiveness and preserving the quality of proceedings.

The Board may meet as often as the interests of the

company requires and at least five times a year at the

request of the Chairman and according to a calendar

jointly established in the second half of the preceding

year. This calendar may be modified at the request

of directors or when justified by unforeseen events.

The Chairman represents the Board of Directors.

He organizes the work of the Board and reports on

this work to the general meeting. The work of the Board

is carried out in a collegial framework and in a manner

consistent with the principles of ethical conduct in

compliance with laws, regulations and recommendations.

Accordingly, the Chairman of the Board of Directors

ensures directors are provided with information in

advance and on a regular basis, that constitutes an

essential condition for the performance of their duties.

The Board has not deemed it necessary to date to form

special committees in part because of the nature

of the organization of the company and its business

model, and in part because of the extensive in-depth

experience directors have in respect to the world of

business and the international markets of competitors.

This type of organization contributes to flexible decisionmaking

processes.

In compliance with the new provisions of L.823-20

of the French Commercial Code, the Board of Directors

decided on March 3, 2009 not to create an independent

audit committee but rather to exercise the functions

of audit committee in plenary session on condition

that this includes participation of independent directors.

Today, there exist no formal procedure for evaluating

the Board’s operations and work. However an informal

practice has been adopted based on internal discussions

of the quality of the composition of the Board of

Directors, directors’ compensation, the frequency

of meetings and the transmission of information

to Board members. The discussions have highlighted

a favorable assessment concerning the Board of Directors’

operating procedures and the need to maintain the

frequency of meetings devoted to discussions on strategic

issues. To ensure the optimal performance of the

Board in a manner that complies with the principles

of good corporate governance, the Board is considering,

in respect to the AFEP/MEDEF recommendations

of December 2008, to undertake an initial evaluation

on implementing a method for evaluating the operations

of the Board and the quality of its work.

5.1.2

Powers and missions of the Board of Directors

In line with the option adopted by the Board of Directors

on December 29, 2002, in light of the company’s

structure and the active participation of the founder

in its development, the Board decided not to separate

the functions of Chairman of the Board of Directors

with that of Chief Executive Officer (Directeur Général).

In consequence Philippe Benacin, who exercises

the functions of Chairman of the Board of Directors,

also serves as the Chief Executive Officer of the company.


As such he is vested with all powers in respect to

third parties to act under all circumstances in the

name of the company and within the limitations

expressly provided by law granted to Board of Directors

or shareholders meetings, and in compliance with

the general and strategic orientations defined by the

Board of Directors. Decisions having a material

impact on the scope of consolidation or that could

materially affect the company’s strategy must be

submitted to the Board of Directors for approval.

This limitation is stipulated in the Board Charter.

In compliance with article 15 of the bylaws, the Board

of Directors determines the strategic objectives of the

company and ensures their implementation, within

the scope of the corporate charter and subject to

those powers expressly granted by law to shareholders’

meetings. It performs all controls and verifications

it considers appropriate. Each director receives all

information necessary to the performance of his or

her duties and may request any documents considered

necessary.

In the period ended December 31, 2008, the Board

of Directors met eight times. The average rate of

attendance of directors was 69%. In general, meetings

were held at the company’s headquarters in Paris.

In the period under review, the Board of Directors

addressed the following items of business:

- review of the parent company statutory and

consolidated financial statements for the fiscal year

ended December 31, 2007 and the interim financial

statements;

- review of the fiscal year 2008 budget and outlook

- authorizations concerning agreements in accordance

with L.225-38 et seq. of the French Commercial Code;

- analysis of financial information disclosed by the

company to shareholders and the market;

- analysis of the major strategic, economic and financial

priorities of the company;

- review of external growth projects;

- adoption of the AFEP/MEDEF recommendations

of October 2008.

Auditors attend all Board of Directors’ meetings held

to consider the company’s accounts or any other matters

regarding which they may provide Board members

an informed opinion. Their participation in meetings

is requested by letter or any other means provided

for under the bylaws.

5.1.3

Charter of the Board of Directors

On March 3, 2009, the Board of Directors adopted

a Board Charter defining the operating rules for

the Board and the organization of its work to which

it is subject by virtue of provisions of the law and the

company’s bylaws. The main provisions of this charter

are as follows:

- the composition, role, organization and operating

procedures of the Board;

- the functions of audit committee exercised by the

Board of Directors;

- the rules of conduct applicable to Board of Directors;

- compensation of directors;

- rules governing transactions involving the company’s

shares in accordance with the provisions of the French

Monetary and Financial code and the AMF General

Regulation.

This Charter is destined to regularly evolve as new

regulations and recommendations are introduced

and in response to proposals by directors to ensure

the optimal effectiveness of the Board’s work.

5.1.4

Transmission of information to directors

In accordance with the provisions of the bylaws,

directors are provided with all relevant documents

and information to effectively perform their duties.

Before each Board meeting, directors receive:

- a meeting agenda established by the Chairman

in coordination with general management and, when

applicable, directors proposing items to be discussed;

- an information file concerning issues to be addressed

under the agenda requiring particular analysis for

the purpose of an informed discussion, during which

directors may ask relevant questions to ensure their

adequate understanding of the matters addressed;

- and, when useful, press releases that have been

published by the company as well as significant press

articles and reports of financial analysts.

In addition to information provided in connection

with Board meetings, directors are regularly provided

with all significant information concerning the company.

They may request any explanation or the issuance

of additional information, and in general, formulate

any requests for access to information they may

consider useful.

5.1.5

Directors’ fees

Directors’ fees are allocated exclusively to outside

officers of the Board of Directors. The total amount

granted by the general meeting is freely allocated

by the Board of Directors.

The Board has decided to allocate this total amount

to each director on the basis of their record of attendance

at Board meetings.

5.1.6

Participation in shareholders meetings

Under the terms of article 19 of the company’s

bylaws all shareholders have a right to participate

in general meetings, personally or through a proxy,

regardless of the number of shares they hold, upon

simple justification of their identity and ownership

of the shares.

Two thousand eight registration document Inter Parfums. Corporate governance

53


5.1.7

Disclosure of information provided for under

article L.225-100-3 of the French Commercial Code

To the best of the company’s knowledge there exist

no items, and notably those relating to the structure

of the share capital that could have a potential impact

in the event of a public offering. The structure of the

share capital as well as the equity interest that have been

brought to the company’s attention and any other

information relating thereto are described in chapters

3 and 8 of the section on shareholder information of

this registration document. Similarly, rules concerning

the appointment and revocation of members of the Board

of Directors are subject to the rules of common law.

5.2

Internal control

5.2.1

Internal control procedures

Definition

The company’s internal control procedures have

in large part been based on the guidelines established

by article 404 of the Sarbanes Oxley Act that applies

to the parent company because it is listed on a New York

Stock Exchange. The principles determined therein

are in part provided for under the AMF guidelines

of January 2007 completed by the guidelines for small

and mid caps of January 9, 2008.

In consequence, in compliance with the both SOX

and AMF guidelines, internal control constitutes a set

of procedures defined and implemented by the company

under its responsibility to ensure:

- compliance with laws and regulations;

- the application of instructions and priorities set

by general management;

- the effective application of internal processes notably

concerning the protection of corporate assets;

- the reliability of financial information.

This system covers all practices, procedures and actions

adapted to the specific references of the company which:

- contribute to the effective management of its activities

and operations and the efficient use of resources, and;

- enable it to properly take into account de material

financial, operational or compliance risk.

In consequence, the company’s system of internal

control complies with the guidelines recommended

both by the Sarbanes Oxley Act and the AMF.

These cover the organization and principle of control,

risk assessment processes, activities of control,

formalization of control procedures, oversight of

the internal control system.

The primary objective of internal control is to manage

and prevent risks resulting from the activity of the

company and risks of material errors or fraud,

particularly in accounting and financial areas.

However, no system of internal control can provide

an absolute guarantee of achieving these objectives.

54 Two thousand eight registration document Inter Parfums. Corporate governance

The probability of achieving such objectives is subject

to limits inherent in any system of internal control,

related notably to uncertainties concerning the external

environment, the exercise of judgment or problems

that may arise in response to human error or simple

error, and the need to perform cost-benefit analysis

before implementing any controls.

Components of the internal control system

The effectiveness of the procedures is based on the

following key factors:

- the responsibility of participants in preparing,

implementing and ensuring the optimal management

of internal control procedures;

- establishing formalized procedures and compliance

with guidelines within the company;

- separation of line management functions from

control functions.

The internal control organization and environment

To ensure the optimal management of the image of

its brands and the maximum degree of transparency

vis-à-vis customers in respect to its organization and

to increase its performance, the company is organized

around two major business divisions, one dedicated

exclusively to the Burberry brand, the Burberry

Fragrance Division, and the other to brands referred

collectively as the Luxe & Fashion Division, whose

operations are supported by the resources and expertise

of the different functional and operating departments

of the company. This organization is based on five

operating and functional departments:

- Production & Logistics;

- Burberry Fragrances, Marketing & Export Sales;

- Luxe & Fashion, Marketing & Export Sales;

- French Sales;

- Finance and Corporate Affairs.

Each of these departments contributes at its own

level of responsibility to achieving the objectives set

by general management.

This organization has demonstrated its flexibility,

strength and effectiveness based on achieving real

synergies with the operating and functional departments.

It is also based on an objective to promote the convergence

of the resources of the different divisions involved

and the principle of a decentralized organization

combining the advantages of flexibility and the delegation

of responsibilities necessary for ensuring the optimal

and coherent application of the strategic objectives

set by general management.

The internal control policy defined is adapted to this

organizational model. The general architecture of the

system is based on a clear separation of roles between

persons exercising operational functions and those

that validate and control these functions.

On this basis, the system of internal control is organized

around the following operating and functional activities,

considered to have an impact on assets and/or results:

- key operating processes in the management of

production, sales to distributors and the management

of the company image;


- processes and managing resources, and notably cash

and currency hedges, human resources, committed fixed

costs and overhead, monitoring capital expenditures

and tax obligations, monitoring the settlement of

trade receivables;

- the processing and communication of accounting

and financial information.

Risk management responsibilities are exercised at

every level of the company. For each department

concerned, the company has defined the missions,

organization, contribution to critical decisions, criteria

for measuring their performance and their relations

with other departments. To this purpose, they must

possess the knowledge and information necessary

to establish, operate and oversee the internal control

procedures in relation to the objectives that have been

set for them. An in-depth analysis of the separation

of operational and control functions was undertaken

to address the objectives of control.

The efficiency of the organization is furthermore based

on a human resources policy that ensures profiles

effectively match the corresponding responsibilities,

while integrating the key values behind the company’s

success: prudence, pragmatism, responsiveness, high

standards, transparency and loyalty. Contributing

to the expertise and know-how of a team of men and

women sharing a common culture of commitment to

integrity and high standards that distinguish the company

thus constitutes an important part of internal control.

Finally, awareness and understanding of the importance

of internal control are enhanced by the formalizing

a number of internal procedures considered essential

for effective operations of the company in a secure

environment. To this purpose, a guide of internal

procedures has been produced detailing the main

operating and financial processes covering notably sales/

customers, sourcing/suppliers, inventory, IT systems

and personnel/payroll. This manual also provides

detailed information about procedures for expense

requests and bank accounts signature authorizations.

In addition, the company has developed an information

technology charter for all personnel to ensure that

information technology resources are operated in a security

environment for the company’s computer network.

Key participants in internal control procedures

Along with all staff that contribute to the process

of internal control, the following parties in particular

actively contribute to its oversight and implementation:

- General Management

This includes the Chairman and Chief Executive

Officer, assisted by two Executive Vice Presidents.

They define the major strategic priorities to achieve

the commercial and financial objectives of the company.

This is done by providing clearly defined internal

procedures and an internal control system for which

they are directly responsible. They define the general

principles and ensure the implementation of the

different components of internal control.

- The Board of Directors

In connection with information provided to the Board,

its members review all the main characteristics of the

internal control procedures and system. The Board

may exercise its authority to request verifications

and controls it considers appropriate to ensure the

transparency, effectiveness and security of the internal

control environment.

- The Finance Department

The Finance Department exercises responsibility over

cash management, management control, consolidation

and accounting, legal affairs, human resources,

audit and internal control, financial communications

and investor relations, as well as IT activities. The

responsibilities are exercised and/or delegated in such

a manner that each of the areas concerned assure

the consistency of financial and accounting data in

connection with the following tasks:

- preparing and monitoring accounting and financial

information;

- producing statutory and consolidated interim and

annual financial statements of the Group in compliance

with market standards and applicable regulations;

- the budget process and forecasts and the implementation

of monthly management reporting procedures and

analysis of variances between actual results and budget;

- producing financial communications information;

- implementing and monitoring accounting and

management procedures and guidelines;

- overseeing accounting and management information

systems;

- management of uncollected trade receivables;

- control of disbursements and use of bank

authorizations.

The Finance Department also supports operating

departments and management by establishing operating

procedures, defining and promoting the use of tools,

procedures and good practices essential for application

by the latter of the objectives defined by General

Management.

Identifying, evaluating, managing

and managing monitoring risks

The sustainable development of the company’s business

and the achievement of its objectives depends on an effective

understanding of the risks. For this reason, the company

has launched a process of mapping general risks, establishing

a hierarchy of the main risks to which it considers it is

exposed, according to their seriousness, probability, frequency

and degree of control. These risks are presented in chapter 3

of the management report. This process highlighted

measures to be implemented to limit the likelihood of the

occurrence of such risks as well as their consequences.

Since 2004, the company has applied a risk mapping

approach, followed by the implementation of a selfassessment

of internal procedures to strengthen the

understanding and the adoption of internal control

processes in force. This regular review of risks makes

it possible to measure progress in implementing

programmed actions, changes since the previous

assessment of risks and take into account new risks

that may be identified through this process.

Two thousand eight registration document Inter Parfums. Corporate governance

55


This process of self-evaluation is undertaken annually

with the assistance of a well-known outside independent

audit firm. This involves identifying key assets of the

company, analyzing potential risks, existing or emerging,

by type of task assigned to each department concerned

and meetings with the operating departments concerned.

The audit consists of conducting a general overview

of the organization of internal control to obtain

a description of the internal control system by sending

managers a sample of tasks selected according to the

degree of risk they generate for the company when

they have an impact on the company’s financial

statements. The company produces a self-assessment

questionnaire to measure the application of internal

controls on the basis of voluntary statements. If processes

and the associated controls are not formalized or are

considered insufficient a remediation plan is implemented

by the manager concerned to complete the existing

system of internal controls.

Implementation of this audit plan is carried out under

the responsibility of the Finance Department and covers

the following key processes:

- purchasing/management of trade payables: this process

is formalized by procedures based, on the one hand,

on the separation of the functions for placing orders

and for authorizing orders, acceptance, the recording

of the transactions in the accounts and payment of

suppliers, and on the other hand a process of monitoring

and reconciling purchase orders, receiving slips invoices

(quantity, price, terms of payment) supplemented by

a procedure for preventing dual recognition/payment

of supplier invoices. Eventually anomalies are analyzed

and monitored;

- sales/trade receivables management/collection: this

process ensures that all deliveries made and/or services

rendered are invoiced within the specified period and

invoices are properly recorded in the trade receivables

accounts. It also determines procedures for issuing

credits which must be justified and controlled before

being booked. This process in addition contributes

to properly identifying doubtful trade receivables

and anticipating risks of default;

- payment of royalties to licensors: this process involves

detailed analysis of methods for processing information

for sales representing a component for the calculation

of these royalties in order to prevent errors that could

compromise the reliability of the financial information

of the company;

- cash management: this evaluation makes it possible

to ensure that bank accounts are reconciled on a regular

basis with information received from the banks

and reviewed periodically in order to document the

reconciliations and explain eventual variances;

- preparing financial and accounting information:

the review of the fair presentation and consistency

of account closing procedures to ensure a reliable

consolidation consistent with data collected and submitted

to the Finance Department;

- information systems management: this process ensures

the development and maintenance of computer

applications and the network, the logical and physical

56 Two thousand eight registration document Inter Parfums. Corporate governance

security of the information system, including a backup

plan to guarantee continuity and the resumption of

activity in the event of an incident.

On completion of this self-assessment process, the Finance

Department transmits the results of this work to the

different departments concerned and reports to General

Management to which it provides an executive summary

along with a detailed report indicating control issues

and highlighting eventual dysfunctions or potential

dysfunctions that could result from inadequate controls.

This report is accompanied by a plan of recommended

actions to correct the dysfunctions identified within

a reasonable timeframe.

The test of internal control procedures conducted in

2008 resulted in the performance of 72 controls focusing

on 65 areas of risk covering the following processes:

Number of controls

Sales 12

Purchasing 9

Inventory 7

Royalties 4

Marketing/Advertising 2

Payroll 6

Taxes and equivalent 6

Fixed assets 5

Cash management 7

Information systems 6

Account cut-off processes 8

5.2.2

Internal control procedures relating

to accounting and financial information

Accounting and financial controls are destined to ensure:

- compliance with accounting regulations and the

correct application of account cut-all processes;

- application of instructions and guidelines set by

General Management relating to this information;

- the quality of information provided to prepare

published financial statements and their reliability

before their publication;

- effective management of risks of error, fraud and

irregularities in financial statements.

Process of managing the accounting

and financial organization

- Functional organization

Internal control procedures applicable to accounting

and financial data are prepared in implemented under

the responsibility of the Finance Department and the

oversight of General Management in the following

areas: financial communications, accounting,

consolidation, management control, cash management

and information systems.

- Relations with statutory auditors

In connection with the half yearly and annual closings

of the accounts, the statutory auditors organized

their work by undertaking:

- a prior review of procedures and internal control tests;


- a meeting prior to the approval of the accounts

to define the program of reviews and the calendar

and organization of their work;

- an audit of the financial statements prepared

by the Finance Department;

- a meeting presenting a summary of their work

to General Management.

On the basis of this organization and mission, the

statutory auditors certify the fair presentation of the

consolidated and parent company financial statements.

- Application of accounting standards

The accounting department has a process for identifying

and processing changes in accounting standards and

the approval of the resulting procedures for accounting

treatment. Similarly, there exist procedures to ensure

the accounting department is informed of changes

in commercial practices and financial transactions of

an exceptional nature that could affect the methodology

or procedures for recording transactions. The scope

of accounting management is constantly updated.

- Organization and security of information systems

The company uses an ERP application that integrates

sales management, financial accounting, subsidiary

accounts and cost accounting capabilities.

The organization and operating of the entire

information are subject to measures that limit the

conditions of access to the system, the validation

of processing and closing procedures, conservation

of data, and verification of entries. Accordingly, in

order to ensure continuity in processing of accounting

data systems of, backup systems and a continuity

plan have been implemented in the event of a sudden

dysfunction in order to provide immediate backup.

In addition, all data is backed up daily and a copy

kept in a secure location. In terms of conservation

and protection of data, a procedure for secure access

to accounting and financial data has been developed

involving the designation of individual and personal

rights assigned to specific persons accompanied

by passwords.

Preparing accounting and financial information

- Operating process for producing the accounting

information

Processes in the early phase of accounting production

are based on procedures rules for validation, authorization

and recognition. Accordingly, to ensure the quality

and consistency of accounting information, at every

operational level, reconciliations are performed on a

periodic basis between the management data necessary

to produce published accounting and financial

information and the corresponding internal accounting

data as follows:

- Marketing & Creation: comparing the budget with

actual in relation to expenses associated with design

and creation costs and advertising campaigns (France

and Export);

- Production & Logistics: ensuring the effective

management of production costs as approved by

General Management and that quantities of components

ordered are in line with those used in production

and the monitoring of inventories of components

and finished products;

- Export & France: monitoring sales activity, the

contribution to the company for advertising expenses

by distributors and the corresponding margins;

- Finance Department: calculating provisions for

advertising costs, royalties and fees and the control

of subsidiaries in terms of reporting and budgets.

Meetings are organized to coordinate activity with

the different departments concerned in order to

ensure the exhaustive nature of information provided

to prepare the accounts.

- Process for account closings and the production

of consolidated financial statements

Account cut-off procedures are subject to precise

instructions in respect to the closing process, indicating

information to be entered, restatements required,

the timetable of activity as well as the planning for

precise tasks for each party participating this process.

The procedure for producing financial data for the

consolidated balance sheet and income statement

falls under the framework of IFRS.

Validation procedures are adopted for verifications

concerning the following tasks:

- the proper application of accounting standards

and principles;

- consistency management and accounting information;

- consistency between information on statutory and

consolidated accounts;

- validation of the debt equity of the group;

- the exhaustive nature of information concerning

deferred taxes including possible tax loss carryforwards;

- the valuation of financial instruments and in

particular foreign-exchange hedges;

- estimates of the fair value of intangible fixed assets

through annual impairment tests.

- Financial communications

The Finance Department, in coordination with

the General Management, prepares the financial

communications plan on the basis of all consistent

information necessary to clearly present the company’s

the strategy, performances and outlook.

The financial communications process is subject

to a clearly defined reporting schedule for information

destined for financial markets and market authorities.

This calendar ensures that communications complies

with the requirements of applicable laws and regulations

relating to financial disclosures both concerning

the nature of information to be disclosed, the required

deadlines, compliant with the principle of equal access

to information by all shareholders.

5.2.3

Forecasted trends for 2009

The company assures permanent oversight of

organizational changes to anticipate, adapt and optimize

Two thousand eight registration document Inter Parfums. Corporate governance

57


internal control procedures in real time. Its internal

control procedures are also designed to respond to

both regulatory requirements and future issues facing

the company.

In early 2009, the company reinforced procedures

for monitoring trade receivables and cash positions

of the European distribution subsidiaries. These consist

of monthly analysis of the aged trial balance for trade

receivables by the Credit Manager for the purpose

of identifying actions to be taken by local finance

departments. A daily ledger of bank account activity

for these structures will also be maintained to optimize

management (daily and forecasted) of Group cash.

To ensure the company is able to continue to operate

in the event of an unanticipated event, a business

continuity plan will be implemented in 2009, under

the responsibility of the Information Technology

department. This plan will consist in the virtualization

of servers and maintaining computer applications located

at two distinct servers. This plan will improve the

computer performances, take into account ecological

concerns by reducing energy and implement a fault

tolerance system to restore normal operations in a few

minutes.

In line with this approach of regularly strengthening

its internal control system, the company will continue

to set new priorities with the following objectives:

- ensuring continuous improvement in the formalization

of procedures;

- reinforcing the degree of controls for operating an

administrative entities in connection with the application

of remediation plans;

- extending tests to new internal control processes;

- the quality and fair presentation of financial

information, rigorous and effective management of major

risk regulatory requirements.

58 Two thousand eight registration document Inter Parfums. Corporate governance


Two thousand eight registration document Inter Parfums. Corporate governance

59


CHAPTER FOUR

Shareholder

information

Statutory information 61

Capital stock 63

Resolutions submitted to the combined

shareholders’ meeting of April 24, 2009 66

60 Two thousand eight registration document Inter Parfums. Shareholder information


1.

STATUTORY INFORMATION

1.

The company

1.1

General information

Corporate name: Inter Parfums

Registered office:

4, rond-point des Champs Elysées 75008 Paris, France

Date of incorporation: April 5, 1989

Date of expiration: April 5, 2088

Legal form: Corporation (société anonyme) with

a Board of Directors governed by the provisions

of Livre II of the French Commercial Code and

Companies Act No. 67-236 of March 23, 1967.

Corporate charter: The company’s business purpose

in France and all other countries includes:

- the purchase, sale, manufacture, import and export

of all products related to perfumes and cosmetics;

- the use of license agreements;

- providing all services related to the above-mentioned

activities;

- the company’s participation by all means, directly

or indirectly, in all transactions that may relate to its

business purpose through the creation of new companies,

the contribution, subscription or purchase of company

shares or rights, mergers or other, through the creation,

acquisition, rental or lease management of all rights

to conduct business or establishments, and through

the acquisition, operation or disposal of all procedures

and patents related to these activities;

- and, generally, all commercial, industrial, financial,

civil, securities and real estate transactions that relate

directly or indirectly to the company’s business purpose

or to any similar and related activities.

Fiscal year: January 1 - December 31

Siret number: 350 219 382 00032

Activity code: 46.45 Z Wholesale perfume

and beauty products.

1.2

Share account registration

At the option of their owners, shares in France are

registered in a standard personal account (compte

nominatif pur), an administered personal account

(compte nominatif administré) or to the bearer

identifiable at an authorized intermediary. Euro

Emetteurs Finances handles share services and

management exclusively for personal accounts.

Questions may be addressed to the registered office.

2.

Main legal provisions and bylaws

2.1

Shareholders’ meetings (article 19 of the bylaws)

All shareholders have the right to participate in

shareholders’ meetings or to be represented, regardless

of the number of shares owned, provided the shares

are fully paid up and registered in the shareholder’s

name for at least five days prior to the shareholders’

meeting or presentation of a certificate filed by an

approved intermediary at the sites mentioned in the

Meeting notice confirming that the shares are not

available up until the date of the Meeting.

All shareholders may be represented by a spouse

or another shareholder. All shareholders may vote

by correspondence using a proxy statement that complies

with legal provisions and is obtainable by returning

the Meeting notice.

2.2

Special shareholder disclosure obligations

(article 20 of the bylaws)

In accordance with the provisions of L.233-7 of the

French Commercial Code, all shareholders, natural

persons or legal entities, acting alone or in concert,

who cross thresholds in either direction in respect

to the number of shares owed representing more than

one twentieth, one tenth, three twentieths, one fifth,

one quarter, one third, one half, two thirds, eighteen

twentieths or nineteen twentieths of the capital or

voting rights; must notify the company by certified

mail with return receipt of the number of shares and

voting rights within five trading days. If this requirement

Two thousand eight registration document Inter Parfums. Shareholder information

61


is not met, the provisions of article L.233-14 of the

French Commercial Code shall apply.

Under article L.233-7 subsection VII of the French

Commercial Code, said shareholders must also state

their intentions with regard to share ownership for

the next 12 months whenever the thresholds of one

tenth or one fifth of the capital or voting rights have

been crossed.

2.3

Appropriation and distribution of earnings

(article 24 of the bylaws)

If the financial statements approved by the shareholders’

meeting show a distributable profit as defined by law,

the shareholders’ meeting decides whether to make

appropriations to one or more retained earnings or

reserve accounts under its control, to carry it forward

or to distribute it. The shareholders’ meeting may

grant shareholders the choice of receiving a dividend

in cash or in shares for all or part of the dividend

or interim dividends to be distributed, subject to the

applicable legal provisions.

Following the approval of the financial statements

by the shareholders, any losses that should occur are

62 Two thousand eight registration document Inter Parfums. Shareholder information

carried forward to be offset against future earnings

until these losses have been fully utilized.

2.4

Double voting rights (article 11 of the bylaws)

In accordance with the provisions of article L.225-123

of the French Commercial Code, the extraordinary

shareholders’ meeting of September 29, 1995 created

shares with double voting rights. These shares must

be fully paid-up and recorded in the company’s share

register as registered shares for at least three years.

2.5

Documents on display

The bylaws, minutes and other company documents

are available at Inter Parfums’ registered office.

2.6

Legal jurisdiction

In the event of litigation, the courts having jurisdiction

are those of the registered office in cases where

the company is a defendant. They are designated

according to the nature of the litigation, barring any

contrary provisions of the new Civil Procedure Code.


2.

CAPITAL STOCK

1.

Five-year history of capital stock transactions

Year Transaction type Number Shares Total Capital stock

of shares created shares (in euros)

2004 Exercise of 1997 stock options 4,039 4,039 4,276,237 12,828,711

Exercise of 1998 stock options 41,297 41,297 4,317,534 12,952,602

Exercise of 1999 stock options 127,017 127,017 4,444,551 13,333,653

Bonus issue 4,282,535 4,282,535 8,727,086 26,181,258

2005 Exercise of 1998 stock options 11,402 11,402 8,738,488 26,215,464

Exercise of 1999 stock options 29,590 29,590 8,768,078 26,304,234

Exercise of 2000 stock options 57,118 57,118 8,825,196 26,475,588

Exercise of 2001 stock options 33,575 33,575 8,858,771 26,576,313

Bonus issue 875,888 875,888 9,734,659 29,203,977

2006 Exercise of 1999 stock options 28,758 28,758 9,763,417 29,290,251

Exercise of 2000 stock options 39,559 39,559 9,802,976 29,408,928

Exercise of 2001 stock options 43,795 43,795 9,846,771 29,540,313

Exercise of 2002 stock options 55,486 55,486 9,902,257 29,706,771

Exercise of 2003 stock options 484 484 9,902,741 29,708,223

Exercise of 2004 stock options 704 704 9,903,445 29,710,335

Exercise of 2005 stock options 363 363 9,903,808 29,711,424

Exercise of 2006 stock options 330 330 9,904,138 29,712,414

Bonus issue 976,942 976,942 10,881,080 32,643,240

2007 Exercise of 2000 stock options 33,028 33,028 10,914,108 32,742,324

Exercise of 2001 stock options 29,039 29,039 10,943,147 32,829,441

Exercise of 2002 stock options 22,878 22,878 10,966,025 32,898,075

Exercise of 2003 stock options 7,809 7,809 10,973,834 32,921,502

Exercise of 2004 stock options 4,429 4,429 10,978,263 32,934,789

Exercise of 2005 stock options 24,563 24,563 11,002,826 33,008,478

Bonus issue 1,097,541 1,097,541 12,100,367 36,301,101

2008 Exercise of 2001 stock options 39,857 39,857 12,140,224 36,420,672

Exercise of 2002 stock options 26,638 26,638 12,166,862 36,500,586

Exercise of 2003 stock options 8,711 8,711 12,175,573 36,526,719

Exercise of 2004 stock options 1,862 1,862 12,177,435 36,532,305

Bonus issue 1,214,545 1,214,545 13,391,980 40,175,940

As of December 31, 2008, Inter Parfums’ capital was composed of 13,391,980 shares with a par value of €3.

2.

Authorized capital

2.1

Previous authorizations

The shareholders’ meeting of April 20, 2007 authorized

the Board of Directors to increase the capital stock

by issuing ordinary shares with or without shareholders’

preemptive rights for maximum nominal amounts

respectively of €5 million. These authorizations were

granted for 26 months from the date of the shareholders’

meeting of April 20, 2007, replacing the authorizations

previously granted by the shareholders’ meeting

of April 22, 2005 with the same purpose. To date,

the Board of Directors has not made use of these

authorizations.

This shareholders’ meeting also authorized the Board

of Directors to increase the capital by an amount

not exceeding €15 million through the capitalization

of earnings, addition paid-in capital and reserves.

The Board of Directors made use of this authorization:

- pursuant to its decisions of May 25, 2008 and June 15,

2007 to increase the capital stock by €3,292,623

through the creation of 1,097,541 bonus shares on

the basis of one new share for every ten shares held;

- pursuant to its decisions of May 21, 2008 and June 13,

2008 to increase the capital stock by €3,643,635

through the creation of 1,214,545 bonus shares on

the basis of one new share for every ten shares held.

The maximum amount of present or future capital

increases that may result from all issuances authorized

by the shareholders’ meeting of April 20, 2008 is

€25,500,000 that includes the €500,000 authorized

in connection with the capital increase reserved for

employees proposed in the resolution that was rejected

by this meeting.

Two thousand eight registration document Inter Parfums. Shareholder information

63


2.2

New authorizations

The eleventh resolution submitted to the combined

shareholders’ meeting of April 24, 2009 proposes that

the Board of Directors authorizes a capital increase

through the capitalization of earnings, reserves and

additional paid in capital subject to a maximum

amount of €20,000,000.

The twelfth and thirteen resolutions submitted to

the shareholders’ meeting provide for the grant of

new authorities to the Board of Directors to increase

the capital stock by issuing ordinary shares, maintaining

the preemptive rights of existing shareholders and

a second entailing the waiver of preemptive rights

for maximum nominal amounts of €10,000,000

respectively. In connection with these authorizations,

A survey of shareholder ownership identified 5,550

shareholders at February 28, 2009. Excluding Inter

Parfums Holding, ownership breaks down as follows:

- 100 French investors and mutual funds owning

10.5% of the capital stock compared with 120 in

2007 owning 10.7%;

- 75 foreign investors, located mainly in the U.K.,

Switzerland, the U.S. and Luxembourg, who own

it is proposed that shareholders authorize the Board

of Directors by the fourteenth resolution to increase

the number of shares in the event of excess demand

pursuant to these rights issues. These authorizations

would be granted for 26 months from the date of

shareholders meeting of April 24, 2009, replacing

and superseding the authorizations previously granted

by the shareholders meeting of April 20, 2007 for

the same purpose.

The maximum amount of present or future capital

increases that may result from the total amount

of these share issues subject to the approval of the

shareholders meeting of April 24, 2009 would represent

a total nominal amount of €40,500,000 that would

include the amount of €500,000 in connection with

the capital increase reserved for employees described

in the sixteenth resolution submitted to shareholders.

2.3

Breakdown of option holders as of December 31, 2008

Plan 02 Plan 03 Plan 04 Plan 05 Plan 06

Management committee members 7,331 29,283 43,342 36,752 38,333

Employees 35,788 54,030 85,575 93,913 89,742

Total 43,119 83,313 128,917 130,665 128,075

3.

Ownership of Inter Parfums capital stock and voting rights

3.1

Situation at February 28, 2009

Shares % of Voting % of voting

held capital rights rights

Inter Parfums Holding SA 10,056,891 75.08% 19,470,598 85.47%

French investors 1,407,173 10.51% 1,407,173 6.18%

Foreign investors 940,878 7.02% 940,878 4.13%

Individuals 941,506 7.03% 960,947 4.22%

Treasury shares 47,466 0.36% -

Total 13,393,914 100.00% 22,779,596 100.00%

64 Two thousand eight registration document Inter Parfums. Shareholder information

7.0% of the capital stock compared with 50 in 2007

with 5.3%;

- 5,375 individuals owning 7.0% of the capital stock

compared with 5,890 in 2007 owning 8.6%.

To the Company’s knowledge, there are no other

shareholders that possess directly, indirectly or together,

5% or more of the capital or voting rights.

3.2

Changes in Inter Parfums Holding’s ownership over four years

At 31 December 2005 2006 2007 2008

Inter Parfums Holding 72.71% 71.56% 72.02% 75.32%

Free float and employees 27.29% 28.44% 27.98% 24.68%

Total 100.00% 100.00% 100.00% 100.00%


4.

Breakdown of Inter Parfums Holding’s capital stock as of December 31, 2008

Inter Parfums Holding, whose sole equity holding is Inter Parfums, is itself wholly owned by Inter Parfums Inc.,

listed on NASDAQ in the United States with approximately 1,300 shareholders. As of December 31, 2008

it had the following ownership structure:

- Philippe Benacin and Jean Madar: 51.50%;

- Free float: 48.50%.

5.

Dividend

Since 1998, the company has adopted a policy of distributing dividends that today represents approximately 25%

of consolidated earnings, destined to reward shareholders while at the same time associating them with the Group’s

expansion. In early May 2008, a dividend of €0.38 per share was paid or a total amount of €4.6 million.

6.

Shareholders’ agreements

No shareholders’ agreements exist at the level of Inter Parfums Holding.

7.

Special shareholder disclosure obligations

In compliance with article L.233-7 of the French Commercial Code, all shareholders acquiring a number

of shares that increases above or below certain statutory reporting thresholds are required to notify the French

Financial Market Authority (Autorité des Marchés Financiers). If such modifications are not made in accordance

with the applicable legal provisions, the company will apply the provisions of article L.233-14 relating to

the cancellation of voting rights. In 2008, the company was not informed of any changes in share ownership

involving the crossing of these statutory thresholds.

8.

Key stock market data

In number of shares and euros 2004 2005 2006 2007 2008

Shares outstanding as of December 31 8,727,086 9,734,659 10,881,080 12,100,367 13,391,980

Market capitalization as of December 31 €233 M €334 M €386 M €380 M €242 M

High (1) 67.30 35.10 41.88 38.00 31.55

Low (1) 25.15 26.65 31.52 25.82 17.00

Average (1) 29.12 31.20 35.25 34.04 23.63

Year-end (1) 26.79 34.29 35.43 31.32 18.05

Average daily volume (1) 4,570 8,093 7,785 11,204 6,220

Earnings per share (1) 3.00 1.82 1.79 1.76 1.66

Dividend per share (1) 0.37 0.37 0.38 0.38 0.38

Average number of shares outstanding 5,174,465 8,968,569 10,421,965 11,480,164 12,719,676

(1) Historical data (not restated for bonus share issues undertaken each year).

9.

Share price

In an environment of highly volatile equity markets, the Inter Parfums share showed resilience throughout

the 2008 first half, declining 18% compared to a downturn of more than 25% for the CAC Small 90 benchmark

for mid caps.

In September 2008, marked by the downturn in all financial markets, this trend continued despite the publication

of good half year performances and on October 27, 2008, the share retreated to its low of the year of €17.

The publication of third-quarter sales and the 2009 outlook failed to reverse this trend and the share ended

the year at €18.05.

For the full year, the share declined 37% in consequence compared with more than 50% for the CAC Small

90 benchmark.

Two thousand eight registration document Inter Parfums. Shareholder information

65


3.

RESOLUTIONS SUBMITTED

TO THE COMBINED

SHAREHOLDERS’ MEETING

OF APRIL 24, 2009

Ordinary resolutions

First resolution

Review and approval of the parent company financial

statements for the period ended December 31, 2008

and the grant of discharge to Directors

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary general

meetings, after reviewing the Board of Directors’ report

and the Auditors’ report on the financial statements

for the period ended December 31, 2008, approve

the annual financial statements, as presented showing

a net income of €20,611,635. They also approve the

transaction described in the accounts and summarized

in these reports.

They furthermore approve the total amount of disallowed

deductions under article 39-4 of the French General

Tax Code of €59,567 for 2008.

The shareholders consequently grant discharge for

the period ended December 31, 2008 to all directors

for their management.

Second resolution

Review and approval of the consolidated financial

statements for the period ended December 31, 2008

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary general

meetings, after reviewing the report of the Board of

Directors and the Auditors’ report on the consolidated

financial statements of the Group for the period

ended December 31, 2008, approve the financial

statements as presented showing an IFRS net income

of €21,119,000. They also approve the transactions

described in the accounts and summarized in

these reports.

Third resolution

Internal control and corporate governance -

Report of the Chairman and the auditors

The shareholders duly note the presentation of the

Chairman’ report on the conditions of preparation

and organization of the work of the Board of Directors

and internal control and risk management procedures

implemented by the company, prepared in compliance

with the provisions of articles L.225-37, subsection 6 and

L.225-68 subsection 7 of the French Commercial Code.

66 Two thousand eight registration document Inter Parfums. Shareholder information

Fourth resolution

Approval of the appropriation of net income

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary general

meetings, approving the proposal Board of Directors,

decide to appropriate net income of the period of

€20,611,635 as follows:

Net income of the period in euros ¤20,611,635

Appropriation to the legal reserve ¤387,484

Retained earnings ¤15,150,541

Dividend (1) ¤5,073,610

Total appropriation ¤20,611,635

(1) According to a price of €0.38 per share, and taking into account

the number of treasury shares held at December 31, 2008 that will

be adjusted on the on the basis of the actual price on the dividend

payment date and stock options exercised by beneficiaries.

Shareholders accordingly set, for all qualifying shares

comprising the capital stock a dividend of €0.38 per

share. This amount shall be allocated among shareholders

eligible for the full amount to the 40% tax allowance

provided for under article 158.3.2 of the French

General Tax Code for qualifying shareholders, except

where the fixed 18% withholding tax is applied

in accordance with article 117 quater of this Code.

The dividend payment date is April 30, 2009.

If on the dividend payment date the company holds

treasury shares, the amount corresponding to dividends

not distributed for said shares will be allocated to

retained earnings:

As required by law the shareholders duly note that

dividends for the last three periods were as follows:

Year Number Dividend Tax Total

of shares allowance distribution

2007 12,100,367 €0.38 40% €0.23

2006 10,881,080 €0.38 40% €0.23

2005 9,734,659 €0.37 40% €0.22

Fifth resolution

Approval of regulated agreements under articles

L.225-38 et seq. of the French Commercial Code

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary general

meetings and after reviewing the Auditors’ special

report on related-party agreements governed by articles

L.225-38 et seq. of the French Commercial Code,

approve each of these agreements described in this report.

Sixth resolution

Ratification of the provisional appointment

of a director by the Board of Directors

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary general

meetings, ratify the appointment as director of

Mrs. Chantal Roos, as a provisional measure by the

Board of Directors on November 22, 2008, to replace

Mrs. Marianne Benacin.


In consequence, Mrs. Chantal Roos shall serve

as director for the remainder of her predecessor’s

appointment, i.e. until the close of the general meeting

called to approve the financial statements for the period

ending December 31, 2009.

Seventh resolution

Ratification of the provisional appointment

of a Director by the Board of Directors

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary general

meetings, ratify the appointment as director of

Mr. Frédéric Garcia-Pelayo, as a provisional measure

by the Board of Directors of November 22, 2008,

to replace Mr. Raoul Madar.

In consequence, Mr. Frédéric Garcia-Pelayo shall

serve as director for remainder of his predecessor’s

appointment, i.e. until the close of the general meeting

called to approve the financial statements for the period

ending December 31, 2009.

Eighth resolution

Setting of directors’ fees

The shareholders, in accordance with the conditions

of quorum and majority applicable to ordinary general

meetings, after having reviewed the Board of Directors’

report, set annual directors fees for the year in progress

at €60,000 and grant full power to the Board of

Directors to determine the criteria for allocating

these fees among board members within the limit

of this amount and the date of their payment.

Ninth resolution

Renewal of the authorization for the company

to purchase and sell its own shares on the market

within the framework of article L.225-209

of the French Commercial Code

The shareholders, in accordance with the conditions

of quorum and majority that apply at ordinary meetings

and after reviewing the report of the Board of Directors

and in accordance with the provisions of article

L.225-209 of the French Commercial Code et seq.

and the provisions of articles 241-1 to 241-6 of the AMF

General Regulation, grant the Board of Directors

the authority, which it may further delegate, to acquire

shares of the company, according to the terms and

conditions set forth below.

The purpose of this authorization is to permit the

company to purchase and sell its own shares for uses

provided for by law. On this basis, the shareholders

decide that this share repurchase program may be used

for the following purposes:

- maintain an orderly market in the company’s shares

through an investment services provider within the

framework of a liquidity agreement in compliance

with the conduct of business rules of the French

association of investment firms (AFEI);

- grant employees or officers of the company and/or

the Group stock options (articles L.225-177 et seq.

of the French Commercial Code) and/or bonus shares

(articles L.225-197-1 et seq. of the French

Commercial Code);

- remittance of shares pursuant to the exercise of rights

attached to securities conferring rights by redemption,

conversion, exchange, presentation of warrants or any

other means to grants of the company’s shares;

- use such shares for payment or exchange in connection

with financial transactions or acquisitions in compliance

with the financial market regulations;

- cancel shares to increase the return on equity and

earnings per share and/or eliminate the impact of dilution

for shareholders from capital increases subject to adoption

of the seventeenth resolution of this extraordinary

general meeting authorizing this cancellation;

- permit the company to buy and sell its own shares

for any other authorized purpose or practice admitted

by the market or which may be subsequently authorized

or admitted by applicable laws and regulations.

Shares acquired shall be subject to the following

limits:

- the maximum purchase price is €45 per share,

excluding execution costs;

- the total number of shares acquired may not exceed

5% of the capital stock outstanding. This 5% limit

applies to an amount of capital that will be adjusted

as applicable for corporate actions affecting the capital

stock after this meeting, whereby acquisitions by

the company shall under no circumstances increase

its holding, directly and indirectly through subsidiaries,

to more than 5% of the capital stock;

- pursuant to the above, and by way of indication

without taking into account shares already held by

the company, 13,351,605 shares held by the company

at December 31, 2008 would represent 5% of the

capital stock corresponding to a maximum theoretical

purchase price of €30,041,000.

The Board of Directors may adjust the above-mentioned

prices pursuant to modifications in the par value of

the share, the capitalization of retained earnings and

bonus issues, stock splits or reverse splits, repayment

or reduction of capital, distribution of retained earnings

or other assets and any other transactions involving

the company’s capital stock, to reflect the impact

of these transactions on the share’s value.

In accordance with applicable regulations, said shares

may be purchased, held, sold or transferred, according

to the case, through one or more transactions, at any

time the Board of Directors so chooses including when

tender offers are in effect subject to applicable regulations,

by any means, on or off market, and notably through

block trades.

Shares held by the Company must, in compliance

with the law, be maintained in registered form.

In addition said shares that will not confer preemptive

rights or entitlement to dividends shall be deprived

of voting rights.

The shareholders grant all powers to the Board of

Directors that may in turn delegate such authority to:

Two thousand eight registration document Inter Parfums. Shareholder information

67


- place all stock orders on or off the market;

- sign any agreements notably with a view to maintaining

registers of purchases and sales;

- submit all declarations to the Autorité des Marchés

Financiers (AMF) or any other such entity, carry out

all formalities and, in general, make all necessary

arrangements.

The shareholders decide that this authorization:

- shall take effect from the date of the Board of

Directors’ meeting that decides to implement this

decision that will automatically result in the expiration

of the previous authorization granted under the seventh

resolution of the shareholders’ meeting of April 25, 2008;

- will expire after a period of 18 months from the date

of this meeting.

The Board of Directors will notify the general meeting

of all transactions carried out under this resolution.

Tenth resolution

Powers

All powers are granted to the bearer of copies or extracts

of the minutes of this shareholders’ meeting ruling in

accordance with the conditions of quorum and majority

that apply at ordinary general meetings to perform

all legal formalities relating to the above resolutions.

Extraordinary resolutions

Eleventh resolution

Authority granted to the Board of Directors to issue

shares through the capitalization of additional paid-in

capital, reserves or profit

The extraordinary shareholders’ meeting, in accordance

with the conditions of quorum and majority applicable

to ordinary shareholders meetings, after having reviewed

the Board of Directors’ report and ruling in accordance

with the provisions of articles L.225-129 - L.225-129-6

and L.225-130 of the French Commercial Code, grants

authority to the said Board to increase the capital,

in one or more transactions, by an amount not to exceed

€20 million through the successive or simultaneous

capitalization of all or part of the additional paid-in

capital, reserves or profits. This capital increase may

be carried out by the creation and allotment of bonus

shares or, when applicable, by a combination of these

two methods.

The shareholders decide that the rights resulting from

fractional amounts shall not be negotiable and that

the corresponding shares will be sold with the proceeds

from such sale to be allocated to holders of rights no

later than 30 days after the registration in their name

of the whole number of shares allotted to them.

The shareholders grant full authority to the Board

of Directors, which the latter may further delegate as

provided for by law, for the purpose of implementing

this resolution and notably to:

- determine the procedures and conditions for

transactions thus authorized, and notably the amount

68 Two thousand eight registration document Inter Parfums. Shareholder information

and nature of reserves and additional paid in capital,

the number of new shares to be issued or the amount

by which the nominal value of existing shares comprising

the capital stock will be increased, establish the date

of record as of which new shares will carry rights

or the date from which the increase in the nominal

value will take effect;

- perform all formalities to record the completion of

the capital increase and amend the bylaws in consequence

and undertake all formalities in regards to disclosure

requirements;

- and, in general, take all measures and perform all

formalities required to ensure the completion of the

capital increase and amend the bylaws in consequence.

The shareholders duly note that this authorization

replaces and supersedes, for the unused portion, the

authorization granted by the shareholders’ meeting

of April 27, 2007 and implemented for a total amount

of €6,936,258 by the respective decisions of the Board

of Directors of June 12, 2007 and June 13, 2008.

This authorization is granted by the shareholders

for 26 months.

Twelfth resolution

Authority granted to the Board of Directors to increase

the capital stock by issuing ordinary shares with or

without shareholders’ preemptive rights (€10 million)

The shareholders, in accordance with the conditions

of quorum and majority that apply at extraordinary

shareholders meetings, after having reviewed the

Board of Directors’ report, and in compliance with

the provisions of articles L.225-129-2 of the French

Commercial Code:

- vest the Board of Directors with the authority to

increase the capital through one or more transactions

in amounts and at such times it chooses, to issue new

ordinary shares paid for in cash or by offsetting debt

due and payable, with or without additional paid-in

capital;

- grant the authorization provided for under this

resolution for 26 months or until June 24, 2011 on

which date it shall be considered to have lapsed if not

used by the Board of Directors and duly note that this

authorization cancels from this date onwards the previous

authorization granted by the thirteenth resolution

shareholders’ meeting on April 20, 2007 with this same

purpose, i.e. authorizations to issue stock without

prejudice to shareholders’ preemptive rights;

- decide that the nominal value of capital increases

authorized under this authorization may not exceed

€10 million, where this amount is included in

the maximum for capital increases authorized under

the fifteenth resolution. This amount may be increased

as necessary, by the nominal amount of additional

securities that must be issued to preserve, as required

by law the rights of holders of securities conferring

rights to equity securities of the company;

- decide that shareholders qualify in proportion to

the number of shares they hold for preemptive rights

to subscribe to new shares issued under this authorization


on the basis of exact rights (à titre irréductible).

In addition, the Board of Directors may grant

shareholders the right to subscribe to excess shares

without trading rights (à titre réductible) over and

above the shares they were entitled to by exercising

their exact rights, in proportion to said rights and

within the limit of their demand;

- decide that the Board of Directors shall set the issue

price of the ordinary shares according to procedures

established by applicable laws and regulations;

- duly note that, if subscriptions for new shares

on the basis of exact rights, and as the case may be,

for excess shares, should fail to account for the entire

issue, the Board of Directors may in the order it shall

determine, have recourse to one and/or another of

the following possibilities:

- reduce the number of securities issued, in accordance

with the law, to the number of applications received,

provided that such applications are for at least three

quarters of the intended amount;

- freely distribute all or part of the shares issued but

not subscribed;

- offer to the public all or part of the shares issued

but not subscribed.

- hereby note that the Board of Directors may

automatically and in all cases limit the stock issue

decided to the amount of shares subscribed when shares

not subscribed represents less than 3% of the issue;

- decide that the Board of Directors shall be granted

the authority, which the latter may further delegate

in accordance with the law, to implement this resolution

and notably to:

- decide to proceed with the capital increase;

- decide the amount of the capital increase as well

as the amount of additional paid-in capital that may

be requested;

- set the number of new shares to be issued, the date

from which new shares shall be entitled to dividends

including retroactively and the procedures of payment;

- set the conditions for exercising rights associated

with the shares, and notably those concerning the

sale or trading of subscription rights of shares issued;

- conclude all agreements, notably with credit

institutions, to ensure that any issue carried out by

virtue of this authorization is properly carried out;

- receive subscription requests for new shares and

the corresponding payments;

- record completion of the capital increases that

may be carried out through the issue of new shares,

perform all resulting formalities, amending the articles

of incorporation and bylaws in consequence;

- request that the new shares be admitted for trading

in a regulated market;

- charge all costs to paid-in capital as deemed

appropriate and notably costs, rights and fees incurred

in connection with the issue and appropriate from

this amount funds necessary to raise the legal reserve

to one tenth the new capital after each issue;

- and in general, define all terms and conditions

and proceed with all useful measures and formalities

necessary for the issue.

Thirteenth resolution

Authority granted to the Board of Directors to increase

the capital stock by issuing ordinary shares suspending

shareholders’ preemptive rights (€10 million)

The shareholders, in accordance with the conditions

of quorum and majority applicable to extraordinary

shareholders meetings, and after reviewing the report

of the Board of Directors and the special report of

the Auditors and in compliance with the provisions

of articles L.225-129-2, L.225-135, L.225-136 et seq.

of the French Commercial Code:

- vest the Board of Directors with the authority to

increase the capital through one or more transactions

in amounts and at such times it chooses, by issuing

in France new ordinary shares paid for in cash or

by offsetting debt due and payable, with or without

additional paid-in capital;

- grant the authorization provided for under this

resolution for 26 months or until June 24, 2011 on

which date it shall be considered to have lapsed if not

used by the Board of Directors,

- duly note that this authorization cancels from

this date onwards the previous authorization granted

by the thirteenth resolution of shareholders’ meeting

on April 20, 2007, not used to date and with the same

purpose, i.e. authorization to issue stock entailing

the cancellation of shareholders’ preemptive rights;

- decide that the nominal value of capital increases

authorized under this authorization may not exceed

€10 million, where this amount is included in

the maximum for capital increases authorized

under the fifteenth resolution. This amount may

be increased as necessary, by the nominal amount

of additional securities that must be issued to

preserve, as required by law the rights of holders

of securities conferring rights to equity securities

of the company;

- cancel shareholders’ preemptive rights to subscribe

for shares to be issued in accordance with applicable

laws and regulations and grant full authority to the Board

of Directors to provide for a preferential subscription

period and set said period according to the duration

provided for by article L.225-135 of the French

Commercial Code. This preemptive right does not

give rise to the creation of negotiable rights and may

be exercised, as the Board of Directors considers

appropriate, in proportion to the exact number of

shares owned by each shareholder (à titre irréductible)

or by application for excess shares without trading

rights (à titre réductible);

- decide that the Board of Directors shall set the issue

price of the ordinary shares according to procedures

established by applicable laws and regulations, and

notably the provisions of article L.225-136 of the French

Commercial Code;

- decide that if subscriptions for new shares, including

those of existing shareholders fail to account for the entire

issue the Board of Directors may reduce the amount

of the issue in accordance with the law in force on

the date of the transaction;

Two thousand eight registration document Inter Parfums. Shareholder information

69


- decide that the Board of Directors shall be granted

the authority, which the latter may further delegate

in accordance with the law, to implement this resolution

and notably, for each capital increase concerned to:

- decide to proceed with the capital increase;

- decide the amount of the capital increase as well

as the amount of additional paid-in capital that may

be requested;

- set the number of new shares to be issued, the date

from which new shares shall be entitled to dividends

including retroactively and the procedures of payment;

- conclude all agreements, notably with credit

institutions, to ensure that any issue carried out by

virtue of this authorization is properly carried out;

- receive subscription requests for new shares and

the corresponding payments;

- record completion of the capital increases that

may be carried out through the issue of new shares,

perform all resulting formalities, amending the articles

of incorporation and bylaws in consequence;

- request that the new shares be admitted for trading

in a regulated market;

- charge all costs to paid-in capital as deemed

appropriate and notably costs, rights and fees incurred

in connection with the issue and appropriate from

this amount funds necessary to raise the legal reserve

to one tenth the new capital after each issue;

- and in general, define all terms and conditions

and proceed with all useful measures and formalities

necessary for the issue of shares.

Fourteenth resolution

Authority granted to the Board of Directors to increase

the number of shares to meet excess demand

in response to capital increases with or without

shareholders’ preemptive rights

The shareholders, in accordance with the conditions

of quorum and majority applicable to extraordinary

shareholders meetings, and after reviewing the report

of the Board of Directors and the special report of the

Auditors and in accordance with provisions of article

L.225-135-1 of the French Commercial Code:

- decide that the Board of Directors shall be authorized

with the possibility of further delegating to any person

so authorized by law, to increase the number of shares

to be issued in connection with a capital increase

maintaining or suspending shareholders’ preemptive

rights in accordance with the preceding twelfth and

thirteenth resolutions, within the limit of the percentage

of the initial issue which shall be determined in

accordance with applicable laws and regulations, it

being specified that “overallotted” shares will be issued

at the same price as shares of the initial offering;

- decide that the nominal amount of the capital increase

decided by virtue of this resolution shall be subject

to the limits, when applicable of the aggregate nominal

amount set above by point three of the twelfth and

thirteenth resolutions;

- grant the authorization provided for under this

resolution for 26 months from the date of this meeting,

or until June 24, 2011, on which date the authorization

shall be considered to have lapsed if not used by the

Board of Directors;

70 Two thousand eight registration document Inter Parfums. Shareholder information

- duly note that this authorization cancels as of today

and replaces the previous authorization granted by

the thirteenth resolutions of the shareholders’ meeting

of April 20, 2007, unused to date and destined for

the same purpose.

Fifteenth resolution

Maximum aggregate amount of capital increases

conferring present or future rights from authorizations

The shareholders by virtue of the preceding resolutions,

in accordance with the conditions of quorum and

majority applicable to extraordinary shareholders’

meetings and after reviewing the Board of Directors’

report, set in accordance with article L.225-129-2 of

the French Commercial Code, a maximum amount

of €40,500,000 for present or future capital increases

by virtue of the authorizations granted to the Board

of Directors under the eleventh, twelfth, thirteenth,

fourteenth and sixteenth resolutions, not including

the consequences of adjustments that might be made,

in compliance with the law pursuant to issuance of

securities conferring future rights to capital, it being

specified within this limit:

- the capitalization of reserves covered by the twelfth

resolution may not result in a capital increase of more

than €20 million;

- share issues maintaining the preemptive rights of

shareholders covered by the thirteenth resolution,

after taking into account the number of shares issued,

when applicable, in application of the fourteenth

resolution, may not result in a capital increase of more

than €10,000,000;

- issues entailing the cancellation of shareholders’

preemptive rights covered by the thirteenth resolution,

after taking into account the increase in the number

of shares issued by virtue of the fourteenth resolution,

may not result in a capital increase of more than

€10,000,000;

- employee share issues covered by the sixteenth

resolution may not result in a capital increase of

more than €500,000.

All these amounts that remain subject to the maximum

authorized capital increase do not take into account

the consequences of adjustments that might be made,

in compliance with the law pursuant to issuance of

securities conferring future rights to capital.

Sixteenth resolution

Authority granted to the Board of Directors to proceed

with capital increases reserved for employees

in accordance with article L.225-129 -6 of the French

Commercial Code and entailing the cancellation

of shareholders’ preemptive rights

The shareholders by virtue of the preceding resolutions,

in accordance with the conditions of quorum and

majority applicable to extraordinary shareholders’

meetings and after reviewing the Board of Directors’

report and the Auditors’ report in accordance with

articles L.225-129-2, L.225-129-6, L.225-138 and

L.225-138-1 of the French Commercial Code and

articles L.3332-18 et seq. of the French Labor Code:


- grant authority to the Board of Directors Board

of Directors, which the latter may further delegate

as permitted by law, at its sole discretion, to increase

the capital, in one or more transactions in amounts

and at times of its choosing to issue common stock

reserved for employees of the company or affiliated

companies in accordance with applicable laws belonging

to a company savings plan;

- waive in favor of employees entitled to benefit from

capital increases that may be decided by virtue of this

authorization, the preemptive rights of shareholders

to new shares that shall be issued;

- limit the maximum nominal amount of capital

increases under this authorization to €500,000,

it being specified that:

- this amount may be increased as necessary by

the nominal amount of additional securities that must

be issued to preserve, as required by law the rights

of holders of securities conferring access to equity

securities of the company and;

- the nominal amount of capital increases

permitted under this authorization is independent

and distinct and as such not included under the

limits provided for under the thirteenth, fourteenth

and seventeenth resolutions of the shareholders’

meeting of April 20, 2007;

- grant full authority to the Board of Directors within

the above limits and conditions for the purpose of

implementing the authority hereby granted, including

notably to:

- determine the list of grantees benefiting from

the cancellation of preemptive subscription rights,

the number of shares to be granted to each qualifying

employee and the issue price, subject to the limits

imposed by article L.225-138-1 of the French

Commercial Code and L.443-5 of the French Labor

Code, that may not exceed the average price of the

20 trading days preceding the decision setting the

beginning of the subscription period, nor less than

20% this average (or 30% when the waiting period

provided for by the plan in accordance with article

L.443-6 of the French Labor Code is greater than

or equal to 10 years);

- determine the dates and procedures for the capital

increase(s);

- receive applications for shares and determine the

procedures for their payment;

- produce a supplemental report describing the final

terms of the offering, and in general, take all measures

and undertake all formalities required for the issue,

the listing of the securities and custodial and related

services for securities covered by this authorization,

and amend the articles of bylaws in consequence.

- grant the authorization provided for under this

resolution for 26 months from the date of this meeting.

Seventeenth resolution

Authority granted to the Board of Directors to reduce

the capital by the cancellation of treasury shares

The shareholders, in accordance with the conditions

of quorum and majority that apply at extraordinary

shareholders meetings, and after reviewing the report

of the Board of Directors and the special report of

the Auditors and the seventh resolution of the ordinary

general meeting of this day authorizing the company

to purchase its own shares.

- authorize the Board of Directors to cancel, at its own

discretion, through one or more transactions, at amounts

and times of its choosing, treasury shares acquired

within the framework of article L.225-209 of the French

Commercial Code, not to exceed 5% of the common

stock outstanding and by period of 24 months, reducing

the authorized capital in due proportion, in accordance

with applicable laws and regulations;

- this authorization is for eighteen months from

this meeting and replaces the previous authorization

by the shareholders’ meeting of April 24, 2008,

that was not used;

- grant full authority to the Board of Directors,

with the possibility of further delegating to any person

so authorized by law, through one or more transactions,

to reduce the capital, to notably determine the final

amount of the capital reduction and the terms and

procedures and record the completion of the capital

reduction, amending in consequence the bylaws,

performing all necessary formalities, and notably

filings with all bodies and in general doing everything

necessary.

Tenth resolution

Powers

All powers are granted to the bearer of copies or extracts

of the minutes of this shareholders’ meeting ruling in

accordance with the conditions of quorum and majority

that apply at extraordinary general meetings to perform

all legal formalities relating to the above resolutions.

Two thousand eight registration document Inter Parfums. Shareholder information

71


History

CHAPTER FIVE

of the

company

72 Two thousand eight registration document Inter Parfums. History of the company


1982

Creation of Inter Parfums SA in France by Philippe Benacin and Jean Madar

1985

Creation of Inter Parfums Inc. in the United States, parent company of Inter Parfums SA.

1988

Beginning of the selective perfume activity with the signature of a license agreement license for the Régine’s brand

Initial public offering of Inter Parfums Inc on NASDAQ in New York

1993

Signature of a license agreement to create and produce perfumes under the Burberry name

and distribute them worldwide

1994

Listing of Inter Parfums SA on the over-the-counter market of the Paris stock exchange

Acquisition of the Molyneux and Weil brands

1995

Transfer of the company from the over-the-counter market to the Second Market of Paris stock exchange

with a rights issue

1997

Signature of a license agreement to create and produce perfumes under the S.T. Dupont name and distribute

them worldwide

1998

Signature of a license agreement to create and produce perfumes under the Paul Smith

and distribute them worldwide

1999

Signature of a license agreement to create and produce perfumes under the Christian Lacroix

and distribute them worldwide

2000

Extension of the Burberry license agreement

2004

Signature of a new Burberry license agreement

2006

Extension of the S.T. Dupont license agreement

Signature of a license agreement for the Quiksilver and Roxy brands

2007

Signature of a license agreement to create and produce perfumes under the Van Cleef & Arpels brand

and distribute them worldwide

2008

Extension of the Paul Smith license agreement

Two thousand eight registration document Inter Parfums. History of the company

73


Auditors

CHAPTER SIX

and

responsibility

statements

Auditors 75

Responsibility statement for the registration document 75

74 Two thousand eight registration document Inter Parfums. Auditors and responsibility statements


Auditors

The statutory auditors having issued reports on the parent company and consolidated financial statements are:

Mazars SFECO & Fiducia Audit

61, rue Henri Regnault 50, rue de Picpus

92400 Courbevoie 75012 Paris

represented by Denis Grison represented by Gilbert Métoudi

appointed by the AGM of December 1, 2004 appointed by the AGM of May 19, 1995

reappointed by the AGM of April 20, 2007 reappointed by the AGM of April 20, 2007

expiration date: 2013 AGM expiration date: 2013 AGM

The alternate auditors are respectively:

Mr Guillaume Potel Mr Serge Azan

61, rue Henri Regnault 16, rue Daubigny

92400 Courbevoie 75017 Paris

appointed by the AGM of December 1, 2004 appointed by the AGM of May 19, 1995

reappointed by the AGM of April 20, 2007 reappointed by the AGM of April 20, 2007

expiration date: 2013 AGM expiration date: 2013 AGM

Auditors’ fees are described in section 6.7 of the notes to the consolidated financial statements.

Responsibility statement for the registration document

I hereby certify that, to my knowledge and after all due diligence, the information contained in this

registration document is true and accurate and contains no omissions likely to affect the import thereof.

I declare that, to the best of my knowledge, the financial statements have been prepared in accordance with

the applicable financial reporting standards and give a true and fair view of the assets and liabilities, financial

position and results of the operations of the company and that the management report included this

Registration Document faithfully presents business trends, the results and financial position of the company

and the description of the main risks and uncertainties.

I have obtained a completion of work letter from the statutory auditors in which they indicate that they have

verified the information concerning the financial situation and accounts presented in this registration

document and read the entire registration document.

Philippe Benacin

Chairman and Chief Executive Officer

Responsibility for financial information

Philippe Santi

Executive Vice President & Chief Financial and Administrative Officer

Two thousand eight registration document Inter Parfums. Auditors and responsibility statements

75


To receive information or be added to the company’s

financial communications mailing list contact:

Investor Relations department

Karine Marty

Telephone: +33 8 00 47 47 47

Fax: +33 1 40 74 08 42

Via the website: www.inter-parfums.fr

76 Two thousand eight registration document Inter Parfums by Agence Marc Praquin

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