Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 04, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | INTER PARFUMS INC | |
Entity Central Index Key | 822,663 | |
Document Type | 10-Q | |
Trading Symbol | IPAR | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,171,908 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 116,772 | $ 161,828 |
Short-term investments | 123,805 | 94,202 |
Accounts receivable, net | 119,364 | 104,819 |
Inventories | 136,909 | 96,977 |
Receivables, other | 1,810 | 7,433 |
Other current assets | 10,246 | 6,240 |
Income tax receivable | 765 | 626 |
Total current assets | 509,671 | 472,125 |
Equipment and leasehold improvements, net | 10,370 | 10,076 |
Trademarks, licenses and other intangible assets, net | 195,596 | 183,868 |
Deferred tax assets | 8,649 | 8,090 |
Other assets | 8,184 | 8,250 |
Total assets | 732,470 | 682,409 |
Current liabilities: | ||
Current portion of long-term debt | 23,262 | 21,498 |
Accounts payable - trade | 67,456 | 49,507 |
Accrued expenses | 52,397 | 62,609 |
Income taxes payable | 3,489 | 3,331 |
Dividends payable | 5,299 | 5,293 |
Total current liabilities | 151,903 | 142,238 |
Long-term debt, less current portion | 45,881 | 53,064 |
Deferred tax liability | 4,286 | 3,449 |
Inter Parfums, Inc. shareholders' equity: | ||
Preferred stock, $.001 par; authorized 1,000,000 shares; none issued | ||
Common stock, $.001 par; authorized 100,000,000 shares; outstanding 31,171,908 and 31,138,318 shares at June 30, 2017 and December 31, 2016, respectively | 31 | 31 |
Additional paid-in capital | 64,196 | 63,103 |
Retained earnings | 412,580 | 402,714 |
Accumulated other comprehensive loss | (33,406) | (57,982) |
Treasury stock, at cost, 9,864,805 common shares at June 30, 2017 and December 31, 2016, respectively | (37,475) | (37,475) |
Total Inter Parfums, Inc. shareholders' equity | 405,926 | 370,391 |
Noncontrolling interest | 124,474 | 113,267 |
Total equity | 530,400 | 483,658 |
Total liabilities and equity | $ 732,470 | $ 682,409 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 1,000,000 | 1,000,000 |
Preferred stock, issued | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, outstanding | 31,171,908 | 31,138,318 |
Treasury stock | 9,864,805 | 9,864,805 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net sales | $ 129,136 | $ 117,157 | $ 272,194 | $ 228,679 |
Cost of sales | 45,193 | 42,729 | 98,181 | 82,933 |
Gross margin | 83,943 | 74,428 | 174,013 | 145,746 |
Selling, general and administrative expenses | 69,468 | 62,969 | 133,367 | 116,757 |
Income from operations | 14,475 | 11,459 | 40,646 | 28,989 |
Other expenses (income): | ||||
Interest expense | 727 | 693 | 999 | 1,666 |
(Gain) loss on foreign currency | 817 | (661) | 973 | 53 |
Interest income | (900) | (602) | (2,173) | (1,956) |
Other expenses (income) | 644 | (570) | (201) | (237) |
Income before income taxes | 13,831 | 12,029 | 40,847 | 29,226 |
Income taxes | 4,620 | 4,300 | 13,469 | 12,049 |
Net income | 9,211 | 7,729 | 27,378 | 17,177 |
Less: Net income attributable to the noncontrolling interest | 2,467 | 1,898 | 7,261 | 4,012 |
Net income attributable to Inter Parfums, Inc. | $ 6,744 | $ 5,831 | $ 20,117 | $ 13,165 |
Net income attributable to Inter Parfums, Inc. common shareholders: | ||||
Basic (in dollars per share) | $ 0.22 | $ 0.19 | $ 0.65 | $ 0.42 |
Diluted (in dollars per share) | $ 0.22 | $ 0.19 | $ 0.64 | $ 0.42 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 31,169 | 31,055 | 31,157 | 31,047 |
Diluted (in shares) | 31,281 | 31,160 | 31,268 | 31,137 |
Dividends declared per share | $ 0.17 | $ 0.15 | $ 0.34 | $ 0.3 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Comprehensive income (loss): | ||||
Net income | $ 9,211 | $ 7,729 | $ 27,378 | $ 17,177 |
Other comprehensive income (loss): | ||||
Net derivative instrument gain, net of tax | 279 | 621 | ||
Transfer from OCI into earnings | 22 | |||
Translation adjustments, net of tax | 27,529 | (10,779) | 33,572 | 8,113 |
Comprehensive income (loss) | 37,019 | (3,050) | 61,593 | 25,290 |
Comprehensive income (loss) attributable to the noncontrolling interests: | ||||
Net income | 2,467 | 1,898 | 7,261 | 4,012 |
Other comprehensive income (loss): | ||||
Net derivative instrument gain, net of tax | 72 | 168 | ||
Transfer from OCI into earnings | 5 | |||
Translation adjustments, net of tax | 8,003 | (2,806) | 9,466 | 2,443 |
Comprehensive income (loss) attributable to the noncontrolling interests | 10,542 | (908) | 16,900 | 6,455 |
Comprehensive income (loss) attributable to Inter Parfums, Inc. | $ 26,477 | $ (2,142) | $ 44,693 | $ 18,835 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands | Common stock [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Accumulated other comprehensive loss [Member] | Treasury stock [Member] | Noncontrolling interest [Member] | Total |
Balance, beginning at Dec. 31, 2015 | $ 31 | $ 62,030 | $ 388,434 | $ (48,091) | $ (36,817) | $ 110,800 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Shares issued upon exercise of stock options | 402 | ||||||
Sale of subsidiary shares to noncontrolling interest | (35) | 463 | |||||
Net income | 13,165 | 4,012 | $ 17,177 | ||||
Dividends | (9,315) | (4,863) | |||||
Share based compensation | 421 | ||||||
Foreign currency translation adjustment, net of tax | 5,670 | 2,443 | 8,113 | ||||
Balance, ending at Jun. 30, 2016 | 31 | 62,818 | 392,284 | (42,421) | (36,817) | 112,855 | 488,750 |
Balance, beginning at Dec. 31, 2016 | 31 | 63,103 | 402,714 | (57,982) | (37,475) | 113,267 | 483,658 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Shares issued upon exercise of stock options | 625 | ||||||
Net income | 20,117 | 7,261 | 27,378 | ||||
Dividends | (10,598) | (5,947) | |||||
Share based compensation | 468 | 347 | 254 | ||||
Foreign currency translation adjustment, net of tax | 24,106 | 9,466 | 33,572 | ||||
Transfer from other comprehensive income into earnings | 17 | 5 | |||||
Net derivative instrument gain, net of tax | 453 | 168 | |||||
Balance, ending at Jun. 30, 2017 | $ 31 | $ 64,196 | $ 412,580 | $ (33,406) | $ (37,475) | $ 124,474 | $ 530,400 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 27,378 | $ 17,177 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 4,683 | 4,705 |
Provision for doubtful accounts | 248 | 197 |
Share based compensation | 1,022 | 421 |
Deferred tax provision (benefit) | 609 | (862) |
Change in fair value of derivatives | (3,357) | 338 |
Changes in: | ||
Accounts receivable | (7,103) | (4,460) |
Inventories | (32,591) | (24,417) |
Other assets | 734 | (611) |
Accounts payable and accrued expenses | (1,925) | 3,633 |
Income taxes, net | (396) | (2,021) |
Net cash used in operating activities | (10,698) | (5,900) |
Cash flows from investing activities: | ||
Purchases of short-term investments | (25,018) | (37,119) |
Proceeds from sale of short-term investments | 4,328 | 5,576 |
Purchases of equipment and leasehold improvements | (1,419) | (2,963) |
Payment for intangible assets acquired | (402) | (370) |
Proceeds from sale of trademark | 5,886 | |
Net cash used in investing activities | (16,625) | (34,876) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (10,679) | (11,085) |
Proceeds from exercise of stock options | 625 | 402 |
Proceeds from sale of shares of subsidiary | 428 | |
Dividends paid | (10,592) | (8,691) |
Dividends paid to noncontrolling interest | (5,947) | (4,863) |
Net cash (used in) financing activities | (26,593) | (23,809) |
Effect of exchange rate changes on cash | 8,860 | 3,468 |
Net decrease in cash and cash equivalents | (45,056) | (61,117) |
Cash and cash equivalents - beginning of period | 161,828 | 176,967 |
Cash and cash equivalents - end of period | 116,772 | 115,850 |
Cash paid for: | ||
Interest | 896 | 1,100 |
Income taxes | $ 10,905 | $ 13,985 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 1. Significant Accounting Policies: The accounting policies we follow are set forth in the notes to our financial statements included in our Form 10-K, which was filed with the Securities and Exchange Commission for the year ended December 31, 2016. We also discuss such policies in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this Form 10-Q. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | 2. Recent Accounting Pronouncements: In August 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) to eliminate the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. This ASU is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted. We have evaluated the standard and determined that there will be no material impact on our consolidated financial statements. In February 2016, the FASB issued an ASU which requires lessees to recognize lease assets and lease liabilities arising from operating leases on the balance sheet. This ASU is effective for annual and interim reporting periods beginning after December 15, 2018 using a modified retrospective approach, with early adoption permitted. We are currently evaluating the standard to determine the impact of its adoption on our consolidated financial statements. In November 2015, the FASB issued an ASU that requires all deferred tax liabilities and assets to be classified as noncurrent on the balance sheet. This ASU is effective for annual and interim reporting periods beginning after December 15, 2016. In January 2017, the Company adopted the standard retrospectively, which resulted in reclassifications among accounts on the consolidated balance sheet, but had no other impact on our results of operations, financial condition or cash flows. The effect of the adoption on prior periods was a reclassification from current assets to noncurrent assets of approximately $8 million. In May 2014, the FASB issued an ASU which superseded the most current revenue recognition requirements. This new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. The new standard also includes enhanced disclosure requirements. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual periods after December 31, 2016. We have evaluated the standard and determined that there will be no material impact on our consolidated financial statements. There are no other recent accounting pronouncements issued but not yet adopted that would have a material effect on our consolidated financial statements. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. Inventories: Inventories consist of the following: (In thousands) June 30, December 31, 2016 Raw materials and component parts $ 50,015 $ 36,821 Finished goods 86,894 60,156 $ 136,909 $ 96,977 |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | 4. Fair Value Measurement: The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Fair Value Measurements at June 30, 2017 Total Quoted Prices in Significant Other Significant Assets: Short-term investments $ 123,805 $ — $ 123,805 $ — Foreign currency forward exchange contracts accounted for using hedge accounting 2,452 2,452 Foreign currency forward exchange contracts not accounted for using hedge accounting 123 — 123 — $ 126,380 $ — $ 126,380 $ — Liabilities: Interest rate swap $ 668 $ — $ 668 $ — Fair Value Measurements at December 31, 2016 Total Quoted Prices in Significant Other Significant Assets: Short-term investments $ 94,202 $ — $ 94,202 $ — Liabilities: Foreign currency forward exchange contracts accounted for using hedge accounting $ 181 $ — $ 181 $ — Foreign currency forward exchange contracts not accounted for using hedge accounting 418 — 418 — Interest rate swap 908 — 908 — $ 1,507 $ — $ 1,507 $ — The carrying amount of cash and cash equivalents including money market funds, accounts receivable, other receivables, and accounts payable and accrued expenses approximates fair value due to the short terms to maturity of these instruments. The carrying amount of loans payable approximates fair value as the interest rates on the Company’s indebtedness approximate current market rates. The fair value of the Company’s long-term debt was estimated based on the current rates offered to companies for debt with the same remaining maturities and is approximately equal to its carrying value. Foreign currency forward exchange contracts are valued based on quotations from financial institutions and the value of interest rate swaps are the discounted net present value of the swaps using third party quotes obtained from financial institutions. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 5. Derivative Financial Instruments: The Company enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Before entering into a derivative transaction for hedging purposes, it is determined that a high degree of initial effectiveness exists between the change in value of the hedged item and the change in the value of the derivative instrument from movement in exchange rates. High effectiveness means that the change in the cash flows of the derivative instrument will effectively offset the change in the cash flows of the hedged item. The effectiveness of each hedged item is measured throughout the hedged period and is based on the dollar offset methodology and excludes the portion of the fair value of the foreign currency forward exchange contract attributable to the change in spot-forward difference which is reported in current period earnings. Any hedge ineffectiveness is also recognized as a gain or loss on foreign currency in the income statement. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses accumulated in other comprehensive income are reclassified to earnings. If it is probable that the forecasted transaction will no longer occur, then any gains or losses accumulated in other comprehensive income are reclassified to current-period earnings. In connection with the May 2015 Rochas brand acquisition, $108 million of the purchase price was paid in cash on the closing date and was financed entirely through a 5-year term loan. As the payment at closing was due in dollars and we had planned to finance it with debt in euro, the Company entered into foreign currency forward contracts to secure the exchange rate for the $108 million purchase price at $1.067 per 1 euro. This derivative was designated and qualified as a cash flow hedge. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income (loss) and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying income statements. Such gains and losses were immaterial for both three month periods ended June 30, 2017 and 2016. For the six months ended June 30, 2017 and 2016, interest expense includes a gain (loss) of $0.3 million and ($0.4) million, respectively, relating to the interest rate swap. All derivative instruments are reported as either assets or liabilities on the balance sheet measured at fair value. The valuation of interest rate swaps resulted in a liability which is included in long-term debt on the accompanying balance sheets. The valuation of foreign currency forward exchange contracts at June 30, 2017, resulted in an asset and is included in other current assets on the accompanying balance sheet. At June 30, 2017, we had foreign currency contracts in the form of forward exchange contracts in the amount of approximately U.S. $50.4 million, GB £2.8 million and JPY ¥85.0 million which all have maturities of less than one year. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Accrued Expenses | 6. Accrued Expenses: Accrued expenses include approximately $14.7 million and $27.2 million in advertising liabilities as of June 30, 2017 and December 31, 2016, respectively. |
Share-Based Payments
Share-Based Payments | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share Based Payments | 7. Share Based Payments: The Company maintains stock option programs for key employees, executives and directors. The plans, all of which have been approved by shareholder vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year term and vest over a four to five-year period. The fair value of shares vested for both the six months ended June 30, 2017 and 2016 aggregated $0.05 million. Compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. It is generally our policy to issue new shares upon exercise of stock options. The following table sets forth information with respect to nonvested options for the six month period ended June 30, 2017: Number of Shares Weighted Average Grant Date Fair Value Nonvested options – beginning of period 401,440 $ 7.14 Nonvested options granted 5,000 $ 7.67 Nonvested options vested or forfeited (14,105 ) $ 6.92 Nonvested options – end of period 392,335 $ 7.15 Share based payment expense decreased income before income taxes by $0.51 million and $1.02 million for the three and six months ended June 30, 2017, respectively, as compared to $0.21 million and $0.42 million for the corresponding periods of the prior year. Share based payment expense decreased income attributable to Inter Parfums, Inc. by $0.28 million and $0.56 million for the three and six months ended June 30, 2017, respectively, as compared to $0.13 million and $0.25 million for the corresponding periods of the prior year. The following table summarizes stock option information as of June 30, 2017: Shares Weighted Average Exercise Price Outstanding at January 1, 2017 684,540 $ 26.94 Options granted 5,000 33.95 Options forfeited (7,960 ) 29.74 Options exercised (33,590 ) 18.62 Outstanding at June 30, 2017 647,990 $ 27.39 Options exercisable 255,655 $ 24.94 Options available for future grants 1,082,615 As of June 30, 2017, the weighted average remaining contractual life of options outstanding is 3.45 years (2.20 years for options exercisable), the aggregate intrinsic value of options outstanding and options exercisable is $6.0 million and $3.0 million, respectively, and unrecognized compensation cost related to stock options outstanding aggregated $2.4 million. Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the six months ended June 30, 2017 and June 30, 2016 were as follows: (In thousands) June 30, June 30, Cash proceeds from stock options exercised $ 625 $ 402 Tax benefits 135 — Intrinsic value of stock options exercised 600 233 The weighted average fair values of the options granted by Inter Parfums, Inc. during the six months ended June 30, 2017 and 2016 were $7.67 and $6.50 per share, respectively, on the date of grant using the Black-Scholes option pricing model to calculate the fair value of options granted. The assumptions used in the Black-Scholes pricing model for the periods ended June 30, 2017 and 2016 are set forth in the following table: June 30, June 30, Weighted average expected stock-price volatility 29 % 33 % Weighted average expected option life 5 years 5 years Weighted average risk-free interest rate 2.0 % 1.42 % Weighted average dividend yield 2.1 % 2.2 % Expected volatility is estimated based on historic volatility of the Company’s common stock. The expected term of the option is estimated based on historic data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors would increase as the earnings of the Company and its stock price increases. In September 2016, Interparfums SA, our 73% owned subsidiary in Paris, approved a plan to grant an aggregate of 15,100 shares of its stock to employees with no performance condition requirement, and an aggregate of 133,000 shares to officers and managers, subject to certain corporate performance conditions. The shares will be distributed in September 2019 so long as the individual is employed by Interparfums SA at the time, and in the case of officers and managers, only to the extent that the performance conditions have been met. Once distributed, the shares will be unrestricted and the employees will be permitted to trade their shares. The fair value of the grant of €22.46 per share (approximately $25.00 per share) has been determined based on the quoted share price of Interparfums SA shares as reported by the NYSE Euronext on the date of grant. The estimated number of shares to be distributed of 137,381 has been determined taking into account employee turnover. The aggregate cost of the grant of €3.1 million (approximately $3.4 million) will be recognized as compensation cost by Interparfums SA on a straight-line basis over the requisite three year service period. For the six months ended June 30, 2017, $0.6 million of compensation cost has been recognized in connection with this plan. To avoid dilution of the Company’s ownership of Interparfums SA, all shares to be distributed pursuant to this plan will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA. As of December 31, 2016, 108,348 shares have been acquired in the open market at an aggregate cost of $2.9 million, and such amount has been classified as an equity transaction on the accompanying balance sheet. No additional shares were purchased during the six months ended June 30, 2017. |
Net Income Attributable to Inte
Net Income Attributable to Inter Parfums, Inc. Common Shareholders | 6 Months Ended |
Jun. 30, 2017 | |
Earnings per share: | |
Net Income Attributable to Inter Parfums, Inc. Common Shareholders | 8. Net Income Attributable to Inter Parfums, Inc. Common Shareholders: Net income attributable to Inter Parfums, Inc. per common share (“basic EPS”) is computed by dividing net income attributable to Inter Parfums, Inc. by the weighted average number of shares outstanding. Net income attributable to Inter Parfums, Inc. per share assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding, plus the incremental shares outstanding assuming the exercise of dilutive stock options using the treasury stock method. The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows: (In thousands) Three months ended Six months ended 2017 2016 2017 2016 Numerator: Net income attributable to Inter Parfums, Inc. $ 6,744 $ 5,831 $ 20,117 $ 13,165 Denominator: Weighted average shares 31,169 31,055 31,157 31,047 Effect of dilutive securities: Stock options 112 105 111 90 Denominator for diluted earnings per share 31,281 31,160 31,268 31,137 Earnings per share: Net income attributable to Inter Parfums, Inc. common shareholders: Basic $ 0.22 $ 0.19 $ 0.65 $ 0.42 Diluted 0.22 0.19 0.64 0.42 Not included in the above computations is the effect of antidilutive potential common shares which consist of outstanding options to purchase 0.26 million shares and 0.34 million shares of common stock for the six months ended June 30, 2017 and 2016, respectively, and 0.26 million and 0.27 million shares of common stock for the three months ended June 30, 2017 and 2016, respectively. |
Segments and Geographic Areas
Segments and Geographic Areas | 6 Months Ended |
Jun. 30, 2017 | |
Segments, Geographical Areas [Abstract] | |
Segment and Geographic Areas | 9. Segment and Geographic Areas: The Company manufactures and distributes one product line, fragrances and fragrance related products. The Company manages its business in two segments, European based operations and United States based operations. The European assets are located, and operations are primarily conducted, in France. Both European operations and United States operations primarily represent the sale of prestige brand name fragrances. Information on our operations by geographical areas is as follows: (In thousands) Three months ended Six months ended 2017 2016 2017 2016 Net sales: United States $ 22,598 $ 28,561 $ 46,287 $ 47,946 Europe 106,806 88,656 226,533 180,812 Eliminations (268 ) (60 ) (626 ) (79 ) $ 129,136 $ 117,157 $ 272,194 $ 228,679 Net income attributable to Inter Parfums, Inc.: United States $ 594 $ 1,557 $ 1,466 $ 1,954 Europe 6,150 4,274 18,651 11,211 $ 6,744 $ 5,831 $ 20,117 $ 13,165 (In thousands) June 30, December 31, 2017 2016 Total Assets: United States $ 99,500 $ 89,930 Europe 642,224 602,077 Eliminations of investment in subsidiary (9,254 ) (9,598 ) $ 732,470 $ 682,409 |
Other Matters
Other Matters | 6 Months Ended |
Jun. 30, 2017 | |
Other Matters Disclosure [Abstract] | |
Other Matters | 10. Other Matters License Renewal: In May 2017, the Company, through its majority owned Paris based subsidiary, Interparfums SA, renewed its license agreement for an additional four years with Paul Smith for creation, development, and distribution of fragrance products through December 2021, without any material changes in terms and conditions. Our initial 12-year license agreement with Paul Smith was signed in 1998, and had previously been extended through December 31, 2017. Buyout of License: In December 2016, the Company reached an agreement with the Balmain brand calling for Balmain to buyout the Balmain license agreement, effective December 31, 2016, in exchange for a payment aggregating $5.9 million. As a result of the buyout, the Company recognized a gain of $4.7 million as of December 31, 2016, and received the buyout payment in May 2017. As of March 31, 2017, the three month inventory sell-off period concluded and Balmain purchased all remaining inventory aggregating $1.4 million. Settlement with French Tax Authorities: As previously reported, the French Tax Authorities examined the 2012 tax return of Interparfums SA, and in August 2015 issued a $6.9 million tax adjustment. The main issues challenged by the French Tax Authorities related to the commission rate and royalty rate paid to Interparfums Singapore Pte. and Interparfums (Suisse) SARL, respectively. Due to the subjective nature of the issues involved, in April 2016, Interparfums SA reached an agreement in principle to settle the entire matter with the French Tax Authorities. The settlement required Interparfums SA to pay a tax assessment of $1.9 million covering the issues for not only the 2012 tax year, but also covering the issues for the tax years ended 2013 through 2015. The settlement also includes an agreement as to future acceptable commission and royalty rates, which is not expected to have a significant impact on cash flow. The settlement, which was finalized by the French Tax Authorities in the first quarter of 2017, was accrued in March 2016. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: (In thousands) June 30, December 31, 2016 Raw materials and component parts $ 50,015 $ 36,821 Finished goods 86,894 60,156 $ 136,909 $ 96,977 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value, assets measured on recurring basis | The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Fair Value Measurements at June 30, 2017 Total Quoted Prices in Significant Other Significant Assets: Short-term investments $ 123,805 $ — $ 123,805 $ — Foreign currency forward exchange contracts accounted for using hedge accounting 2,452 2,452 Foreign currency forward exchange contracts not accounted for using hedge accounting 123 — 123 — $ 126,380 $ — $ 126,380 $ — Liabilities: Interest rate swap $ 668 $ — $ 668 $ — Fair Value Measurements at December 31, 2016 Total Quoted Prices in Significant Other Significant Assets: Short-term investments $ 94,202 $ — $ 94,202 $ — Liabilities: Foreign currency forward exchange contracts accounted for using hedge accounting $ 181 $ — $ 181 $ — Foreign currency forward exchange contracts not accounted for using hedge accounting 418 — 418 — Interest rate swap 908 — 908 — $ 1,507 $ — $ 1,507 $ — |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of nonvested share activity | The following table sets forth information with respect to nonvested options for the six month period ended June 30, 2017: Number of Shares Weighted Average Grant Date Fair Value Nonvested options – beginning of period 401,440 $ 7.14 Nonvested options granted 5,000 $ 7.67 Nonvested options vested or forfeited (14,105 ) $ 6.92 Nonvested options – end of period 392,335 $ 7.15 |
Schedule of stock options, activity | The following table summarizes stock option information as of June 30, 2017: Shares Weighted Average Exercise Price Outstanding at January 1, 2017 684,540 $ 26.94 Options granted 5,000 33.95 Options forfeited (7,960 ) 29.74 Options exercised (33,590 ) 18.62 Outstanding at June 30, 2017 647,990 $ 27.39 Options exercisable 255,655 $ 24.94 Options available for future grants 1,082,615 |
Schedule of cash proceeds received from share-based payment awards | Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the six months ended June 30, 2017 and June 30, 2016 were as follows: (In thousands) June 30, June 30, Cash proceeds from stock options exercised $ 625 $ 402 Tax benefits 135 — Intrinsic value of stock options exercised 600 233 |
Schedule of valuation assumptions in Black-Scholes pricing | The assumptions used in the Black-Scholes pricing model for the periods ended June 30, 2017 and 2016 are set forth in the following table: June 30, June 30, Weighted average expected stock-price volatility 29 % 33 % Weighted average expected option life 5 years 5 years Weighted average risk-free interest rate 2.0 % 1.42 % Weighted average dividend yield 2.1 % 2.2 % |
Net Income Attributable to In21
Net Income Attributable to Inter Parfums, Inc. Common Shareholders (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings per share: | |
Schedule of earnings per share, basic and diluted | The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows: (In thousands) Three months ended Six months ended 2017 2016 2017 2016 Numerator: Net income attributable to Inter Parfums, Inc. $ 6,744 $ 5,831 $ 20,117 $ 13,165 Denominator: Weighted average shares 31,169 31,055 31,157 31,047 Effect of dilutive securities: Stock options 112 105 111 90 Denominator for diluted earnings per share 31,281 31,160 31,268 31,137 Earnings per share: Net income attributable to Inter Parfums, Inc. common shareholders: Basic $ 0.22 $ 0.19 $ 0.65 $ 0.42 Diluted 0.22 0.19 0.64 0.42 |
Segments and Geographic Areas (
Segments and Geographic Areas (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segments, Geographical Areas [Abstract] | |
Schedule of information on operations by geographical areas | Information on our operations by geographical areas is as follows: (In thousands) Three months ended Six months ended 2017 2016 2017 2016 Net sales: United States $ 22,598 $ 28,561 $ 46,287 $ 47,946 Europe 106,806 88,656 226,533 180,812 Eliminations (268 ) (60 ) (626 ) (79 ) $ 129,136 $ 117,157 $ 272,194 $ 228,679 Net income attributable to Inter Parfums, Inc.: United States $ 594 $ 1,557 $ 1,466 $ 1,954 Europe 6,150 4,274 18,651 11,211 $ 6,744 $ 5,831 $ 20,117 $ 13,165 (In thousands) June 30, December 31, 2017 2016 Total Assets: United States $ 99,500 $ 89,930 Europe 642,224 602,077 Eliminations of investment in subsidiary (9,254 ) (9,598 ) $ 732,470 $ 682,409 |
Recent Accounting Pronounceme23
Recent Accounting Pronouncements (Details Narrative) $ in Thousands | Jan. 31, 2017USD ($) |
Accounting Standards Update 2015-17 [Member] | |
New accounting pronouncement or change in accounting principle, cumulative effect of change on equity or net assets | $ 8,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials and component parts | $ 50,015 | $ 36,821 |
Finished goods | 86,894 | 60,156 |
Inventories | $ 136,909 | $ 96,977 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Short-term investments | $ 123,805 | $ 94,202 |
Foreign currency forward exchange contracts not accounted for using hedge accounting | 123 | |
Foreign currency forward exchange contracts accounted for using hedge accounting | 2,452 | |
Total Assets | 126,380 | |
Liabilities: | ||
Foreign currency forward exchange contracts accounted for using hedge accounting | 181 | |
Foreign currency forward exchange contracts not accounted for using hedge accounting | 418 | |
Interest rate swap | 668 | 908 |
Total Liabilities | 1,507 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets: | ||
Short-term investments | ||
Foreign currency forward exchange contracts not accounted for using hedge accounting | ||
Foreign currency forward exchange contracts accounted for using hedge accounting | ||
Total Assets | ||
Liabilities: | ||
Foreign currency forward exchange contracts accounted for using hedge accounting | ||
Foreign currency forward exchange contracts not accounted for using hedge accounting | ||
Interest rate swap | ||
Total Liabilities | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets: | ||
Short-term investments | 123,805 | 94,202 |
Foreign currency forward exchange contracts not accounted for using hedge accounting | 123 | |
Foreign currency forward exchange contracts accounted for using hedge accounting | 2,452 | |
Total Assets | 126,380 | |
Liabilities: | ||
Foreign currency forward exchange contracts accounted for using hedge accounting | 181 | |
Foreign currency forward exchange contracts not accounted for using hedge accounting | 418 | |
Interest rate swap | 668 | 908 |
Total Liabilities | 1,507 | |
Significant Unobservable Inputs (Level 3) [Member] | ||
Assets: | ||
Short-term investments | ||
Foreign currency forward exchange contracts not accounted for using hedge accounting | ||
Foreign currency forward exchange contracts accounted for using hedge accounting | ||
Total Assets | ||
Liabilities: | ||
Foreign currency forward exchange contracts accounted for using hedge accounting | ||
Foreign currency forward exchange contracts not accounted for using hedge accounting | ||
Interest rate swap | ||
Total Liabilities |
Derivative Financial Instrume26
Derivative Financial Instruments (Details Narrative) ¥ in Thousands, £ in Thousands, $ in Thousands | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2017GBP (£) | Jun. 30, 2017JPY (¥) | Jun. 30, 2016USD ($) | |
Foreign exchange contracts [Member] | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net, total | $ 50,400 | |||
Foreign exchange contracts [Member] | Maximum [Member] | ||||
Derivative [Line Items] | ||||
Maturity period | 1 year | 1 year | 1 year | |
Foreign exchange contracts [Member] | GBP [Member] | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net, total | £ | £ 2,800 | |||
Foreign exchange contracts [Member] | JPY [Member] | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net, total | ¥ | ¥ 85,000 | |||
Interest Rate Swap [Member] | ||||
Derivative [Line Items] | ||||
Derivative, gain (loss) on derivative, net, total | $ 300 | $ (400) | ||
Rochas Brand [Member] | Trademarks [Member] | Medium-term Notes [Member] | ||||
Derivative [Line Items] | ||||
Cash paid for acquisition and financed by loan, amount | $ 108,000 | |||
Cash paid for acquisition and financed by loan, term | 5 years | 5 years | 5 years | |
Rochas Brand [Member] | Trademarks [Member] | Medium-term Notes [Member] | Foreign exchange contracts [Member] | ||||
Derivative [Line Items] | ||||
Notional amount | $ 108,000 | |||
Exchange rate (in dollars per euro) | 1.067 |
Accrued Expenses (Details Narra
Accrued Expenses (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Liabilities [Abstract] | ||
Accrued advertising liabilities | $ 14,700 | $ 27,200 |
Share-Based Payments (Details)
Share-Based Payments (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested options - beginning of period | 401,440 | |
Nonvested options granted | 5,000 | |
Nonvested options vested or forfeited | (14,105) | |
Nonvested options - end of period | 392,335 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Nonvested options - beginning of period | $ 7.14 | |
Nonvested options granted | 7.67 | $ 6.50 |
Nonvested options vested or forfeited | 6.92 | |
Nonvested options - end of period | $ 7.15 |
Share-Based Payments (Details 1
Share-Based Payments (Details 1) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding at beginning | 684,540 |
Options granted | 5,000 |
Options forfeited | (7,960) |
Options exercised | (33,590) |
Outstanding at ending | 647,990 |
Options exercisable | 255,655 |
Options available for future grants | 1,082,615 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at beginning | $ / shares | $ 26.94 |
Options granted | $ / shares | 33.95 |
Options forfeited | $ / shares | 29.74 |
Options exercised | $ / shares | 18.62 |
Outstanding at ending | $ / shares | 27.39 |
Options exercisable | $ / shares | $ 24.94 |
Share-Based Payments (Details 2
Share-Based Payments (Details 2) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Equity [Abstract] | ||
Cash proceeds from stock options exercised | $ 625 | $ 402 |
Tax benefits | 135 | |
Intrinsic value of stock options exercised | $ 600 | $ 233 |
Share-Based Payments (Details 3
Share-Based Payments (Details 3) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Equity [Abstract] | ||
Weighted average expected stock-price volatility | 29.00% | 33.00% |
Weighted average expected option life | 5 years | 5 years |
Weighted average risk-free interest rate | 2.00% | 1.42% |
Weighted average dividend yield | 2.10% | 2.20% |
Share-Based Payments (Details N
Share-Based Payments (Details Narrative) € / shares in Units, $ / shares in Units, € in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2016USD ($)shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2016EUR (€)€ / sharesshares | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)$ / shares | Jun. 30, 2016USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Allocated share-based compensation expense | $ 510 | $ 210 | $ 1,020 | $ 420 | |||
Allocated share-based compensation expense, effect on net income attributable to parent | 280 | $ 130 | $ 560 | $ 250 | |||
Weighted average remaining contractual period of options outstanding | 3 years 5 months 12 days | ||||||
Weighted average remaining contractual life of options exercisable | 2 years 2 months 12 days | ||||||
Aggregate intrinsic value of options outstanding | 6,000 | $ 6,000 | |||||
Aggregate intrinsic value of options exercisable | 3,000 | 3,000 | |||||
Unrecognized compensation cost related to stock options | $ 2,400 | $ 2,400 | |||||
Weighted average grant date fair value | $ / shares | $ 7.67 | $ 6.50 | |||||
Interparfums SA Subsidiary [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Allocated share-based compensation expense | $ 600 | ||||||
Ownership percentage | 73.00% | 73.00% | |||||
Number of shares authorized | shares | 137,381 | 137,381 | |||||
Weighted average grant date fair value | $ / shares | $ 25 | ||||||
Compensation cost | $ 3,400 | ||||||
Value of shares purchased for award | $ 2,900 | ||||||
Number of shares purchased for award | shares | 108,348 | ||||||
Interparfums SA Subsidiary [Member] | Euro [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Weighted average grant date fair value | € / shares | € 22.46 | ||||||
Compensation cost | € | € 3,100 | ||||||
Interparfums SA Subsidiary [Member] | Employees [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized | shares | 15,100 | 15,100 | |||||
Interparfums SA Subsidiary [Member] | Officers And Managers [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares authorized | shares | 133,000 | 133,000 | |||||
Equity Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expiration period | 6 years | ||||||
Fair value of shares vested | $ 50 | $ 50 | |||||
Equity Option [Member] | Maximum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 5 years | ||||||
Equity Option [Member] | Minimum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years |
Net Income Attributable to In33
Net Income Attributable to Inter Parfums, Inc. Common Shareholders (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Numerator: | ||||
Net income attributable to Inter Parfums, Inc. | $ 6,744 | $ 5,831 | $ 20,117 | $ 13,165 |
Denominator: | ||||
Weighted average shares | 31,169 | 31,055 | 31,157 | 31,047 |
Effect of dilutive securities: Stock options | 112 | 105 | 111 | 90 |
Denominator for diluted earnings per share | 31,281 | 31,160 | 31,268 | 31,137 |
Net income attributable to Inter Parfums, Inc. | ||||
Basic (in dollars per share) | $ 0.22 | $ 0.19 | $ 0.65 | $ 0.42 |
Diluted (in dollars per share) | $ 0.22 | $ 0.19 | $ 0.64 | $ 0.42 |
Net Income Attributable to In34
Net Income Attributable to Inter Parfums, Inc. Common Shareholders (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Equity Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 260,000 | 270,000 | 260,000 | 340,000 |
Segments and Geographic Areas35
Segments and Geographic Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Net sales | $ 129,136 | $ 117,157 | $ 272,194 | $ 228,679 | |
Net income attributable to Inter Parfums, Inc. | 6,744 | 5,831 | 20,117 | 13,165 | |
Total assets | 732,470 | 682,409 | 732,470 | 682,409 | $ 682,409 |
United States [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 22,598 | 28,561 | 46,287 | 47,946 | |
Net income attributable to Inter Parfums, Inc. | 594 | 1,557 | 1,466 | 1,954 | |
Total assets | 99,500 | 89,930 | 99,500 | 89,930 | |
Europe [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 106,806 | 88,656 | 226,533 | 180,812 | |
Net income attributable to Inter Parfums, Inc. | 6,150 | 4,274 | 18,651 | 11,211 | |
Total assets | 642,224 | 602,077 | 642,224 | 602,077 | |
Eliminations [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | (268) | (60) | (626) | (79) | |
Total assets | $ (9,254) | $ (9,598) | $ (9,254) | $ (9,598) |
Segments and Geographic Areas36
Segments and Geographic Areas (Details Narrative) | 6 Months Ended |
Jun. 30, 2017Segment | |
Segments And Geographic Areas Details Narrative | |
Number of operating segments | 2 |
Other Matters (Details Narrativ
Other Matters (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | ||||
Dec. 31, 2016 | Aug. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | |
Proceeds from sale of intangible assets | $ 5,900 | $ 5,886 | ||||
Gain (loss) on disposition of intangible assets | 4,700 | |||||
Inventory, net | 96,977 | 136,909 | ||||
Accrued income taxes, current | $ 3,331 | $ 3,489 | ||||
Foreign Tax Authority [Member] | ||||||
Tax adjustments, settlements, and unusual provisions | $ 6,900 | |||||
Balmain [Member] | ||||||
Inventory, net | $ 1,400 | |||||
Interparfum SA [Member] | ||||||
Accrued income taxes, current | $ 1,900 |