UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q


(
MARK ONE )





x
            Quarterly
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934 for the quarterly period ended June 30,
  2009.





OR





 ̈
            Transition
      Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934 for the transition period from ___________to
  ________.





Commission
File No. 0-16469





INTER
PARFUMS, INC.


(Exact
name of registrant as specified in its charter)





Delaware
              13-3275609(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)





551 Fifth Avenue, New York, New
      York
                    10176(Address
      of Principal Executive Offices)
                    (Zip
      Code)





(212) 983-2640


(Registrants
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days: Yes xNo  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈ No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company”  in Rule 12b-2 of the Exchange Act).





Large
      accelerated Filer  ̈
            Accelerated
      filer xNon-accelerated
      filer  ̈
      (Do not check if a smaller reporting company)
            Smaller
      reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes  ̈ No
x





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





At August
7, 2009, there were 30,060,839 shares of common stock, par value $.001 per
share, outstanding.









INTER
PARFUMS, INC. AND SUBSIDIARIES





INDEX





Page NumberPart I.
                Financial Information
                1Item 1.
                Financial
      StatementsConsolidated
      Balance Sheets as of June 30, 2009 (unaudited) and December 31,
      2008
                2Consolidated
      Statements of Income for the Three and Six Month Periods Ended June 30,
      2009 (unaudited) and June 30, 2008 (unaudited)
                3Consolidated
      Statements of Changes in Equity for the Six Months Ended June 30, 2009
      (unaudited) and June 30, 2008 (unaudited)
                4Consolidated
      Statements of Cash Flows for the Six Months Ended June 30, 2009
      (unaudited) and June 30, 2008 (unaudited)
                5Notes
      to Consolidated Financial Statements
                6Item 2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                15Item 3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                27Item 4.
                Controls
      and Procedures
                28Part II.
                Other Information
                29Item 2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                29Item 4.
                Submission
      of Matters to a Vote of Security Holders
                29Item 6.
                Exhibits
                30Signatures
                30





INTER
PARFUMS, INC. AND SUBSIDIARIES





Part
I. Financial Information





Item
1. Financial Statements





In our opinion, the accompanying
unaudited consolidated financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly our financial
position, results of operations and cash flows for the interim periods
presented.  We have condensed such financial statements in accordance
with the rules and regulations of the Securities and Exchange
Commission.  Therefore, such financial statements do not include all
disclosures required by accounting principles generally accepted in the United
States of America.  These financial statements should be read in
conjunction with our audited financial statements for the year ended
December 31, 2008 included in our annual report filed on Form
10-K.





The results of operations for the six
months ended June 30, 2009 are not necessarily indicative of the results to be
expected for the entire fiscal year.


Page
1


INTER
PARFUMS, INC. AND SUBSIDIARIES





CONSOLIDATED
BALANCE SHEETS


(In
thousands except share and per share data)





June 30,
                    2009
                  
                  
                  December 31,
                    2008(unaudited)ASSETSCurrent
      assets:Cash and cash
      equivalents
                  
                  $
                  34,045
                  
                  
                  $
                  42,404Accounts receivable,
      net
                  
                  
                  109,148
                  
                  
                  
                  120,507Inventories
                  
                  
                  116,953
                  
                  
                  
                  123,633Receivables,
other
                  
                  
                  4,353
                  
                  
                  
                  2,904Other current
    assets
                  
                  
                  12,400
                  
                  
                  
                  10,034Income tax
    receivable
                  
                  
                  517
                  
                  
                  
                  1,631Deferred tax
    assets
                  
                  
                  4,062
                  
                  
                  
                  3,388Total current
    assets
                  
                  
                  281,478
                  
                  
                  
                  304,501Equipment
      and leasehold improvements, net
                  
                  
                  8,928
                  
                  
                  
                  7,670Goodwill
                  
                  
                  5,553
                  
                  
                  
                  5,470Trademarks,
      licenses and other intangible assets, net
                  
                  
                  103,264
                  
                  
                  
                  104,922Other
      assets
                  
                  
                  972
                  
                  
                  
                  2,574Total
      assets
                  
                  $
                  400,195
                  
                  
                  $
                  425,137LIABILITIES
      AND EQUITYCurrent
      liabilities:Loans payable –
    banks
                  
                  $
                  10,489
                  
                  
                  $
                  13,981Current portion of long-term
      debt
                  
                  
                  11,403
                  
                  
                  
                  13,352Accounts payable -
      trade
                  
                  
                  48,856
                  
                  
                  
                  66,236Accrued expenses
                  
                  
                  27,294
                  
                  
                  
                  35,368Income taxes
    payable
                  
                  
                  783
                  
                  
                  
                  442Dividends payable
                  
                  
                  992
                  
                  
                  
                  996Total current
      liabilities
                  
                  
                  99,817
                  
                  
                  
                  130,375Long-term
      debt, less current portion
                  
                  
                  22,371
                  
                  
                  
                  27,691Deferred
      tax liability
                  
                  
                  11,379
                  
                  
                  
                  11,562Equity:Inter
      Parfums, Inc. shareholders’ equity:Preferred
      stock, $.001 par; authorized 1,000,000 shares; none issuedCommon
      stock, $.001 par; authorized 100,000,000 shares; outstanding 30,060,839
      and 30,168,939 shares at June 30, 2009 and December 31, 2008,
      respectively
                  
                  
                  30
                  
                  
                  
                  30Additional
      paid-in capital
                  
                  
                  42,187
                  
                  
                  
                  41,950Retained
      earnings
                  
                  
                  175,808
                  
                  
                  
                  168,025Accumulated
      other comprehensive income
                  
                  
                  27,935
                  
                  
                  
                  25,515Treasury
      stock, at cost, 10,074,479 and 9,966,379 common shares at June 30, 2009
      and December 31, 2008, respectively
                  
                  
                  (31,950
                  )
                  
                  
                  (31,319
                  )Total Inter Parfums, Inc.
      shareholders’ equity
                  
                  
                  214,010
                  
                  
                  
                  204,201Noncontrolling
      interest
                  
                  
                  52,618
                  
                  
                  
                  51,308Total equity
                  
                  
                  266,628
                  
                  
                  
                  255,509Total
      liabilities and equity
                  
                  $
                  400,195
                  
                  
                  $
                  425,137





See
notes to consolidated financial statements.


Page
2


INTER
PARFUMS, INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF INCOME


(In
thousands except per share data)


(Unaudited)





Three Months Ended
                    June 30,
                  
                  
                  Six Months Ended
                    June 30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Net
      sales
                  
                  $
                  88,604
                  
                  
                  $
                  99,078
                  
                  
                  $
                  179,013
                  
                  
                  $
                  222,241Cost
      of sales
                  
                  
                  38,403
                  
                  
                  
                  43,104
                  
                  
                  
                  75,247
                  
                  
                  
                  92,179Gross
      margin
                  
                  
                  50,201
                  
                  
                  
                  55,974
                  
                  
                  
                  103,766
                  
                  
                  
                  130,062Selling,
      general and administrative
                  
                  
                  43,380
                  
                  
                  
                  49,142
                  
                  
                  
                  86,643
                  
                  
                  
                  104,085Income
      from operations
                  
                  
                  6,821
                  
                  
                  
                  6,832
                  
                  
                  
                  17,123
                  
                  
                  
                  25,977Other
      expenses (income):Interest expense
                  
                  
                  397
                  
                  
                  
                  376
                  
                  
                  
                  1,709
                  
                  
                  
                  1,447(Gain) loss on foreign
      currency
                  
                  
                  (2,563
                  )
                  
                  
                  (181
                  )
                  
                  
                  (3,942
                  )
                  
                  
                  186Interest income
                  
                  
                  (101
                  )
                  
                  
                  (551
                  )
                  
                  
                  (609
                  )
                  
                  
                  (1,165
                  )(2,267
                  )
                  
                  
                  (356
                  )
                  
                  
                  (2,842
                  )
                  
                  
                  468Income
      before income taxes
                  
                  
                  9,088
                  
                  
                  
                  7,188
                  
                  
                  
                  19,965
                  
                  
                  
                  25,509Income
      taxes
                  
                  
                  3,335
                  
                  
                  
                  2,698
                  
                  
                  
                  6,956
                  
                  
                  
                  9,882Net
      income
                  
                  
                  5,753
                  
                  
                  
                  4,490
                  
                  
                  
                  13,009
                  
                  
                  
                  15,627Less:  Net
      income attributable to the noncontrolling interest
                  
                  
                  1,527
                  
                  
                  
                  718
                  
                  
                  
                  3,355
                  
                  
                  
                  3,147Net
      income attributable toInter
      Parfums, Inc.
                  
                  $
                  4,226
                  
                  
                  $
                  3,772
                  
                  
                  $
                  9,654
                  
                  
                  $
                  12,480Earnings
      per share:Net
      income attributable to Inter Parfums, Inc. common
      shareholders:Basic
                  
                  $
                  0.14
                  
                  
                  $
                  0.12
                  
                  
                  $
                  0.32
                  
                  
                  $
                  0.41Diluted
                  
                  $
                  0.14
                  
                  
                  $
                  0.12
                  
                  
                  $
                  0.32
                  
                  
                  $
                  0.40Weighted
      average number of shares outstanding:Basic
                  
                  
                  30,064
                  
                  
                  
                  30,627
                  
                  
                  
                  30,115
                  
                  
                  
                  30,674Diluted
                  
                  
                  30,064
                  
                  
                  
                  30,914
                  
                  
                  
                  30,115
                  
                  
                  
                  30,861Dividends
      declared per share
                  
                  $
                  0.033
                  
                  
                  $
                  0.033
                  
                  
                  $
                  0.066
                  
                  
                  $
                  0.066





See
notes to consolidated financial statements.


Page
3


INTER
PARFUMS, INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY


(In
thousands)





Inter Parfums, Inc. shareholdersAccumulatedAdditional
                    
                    
                    
                    
                    
                    otherCommon
                    
                    
                    paid-in
                    
                    
                    Retained
                    
                    
                    comprehensive
                    
                    
                    Treasury
                    
                    
                    Noncontrollingstock
                    
                    
                    Capital
                    
                    
                    earnings
                    
                    
                    income
                    
                    
                    stock
                    
                    
                    interest
                    
                    
                    TotalBalance
      – January 1, 2008
                    
                    $
                    31
                    
                    
                    $
                    40,023
                    
                    
                    $
                    147,995
                    
                    
                    $
                    30,955
                    
                    
                    $
                    (26,344
                    )
                    
                    $
                    53,925
                    
                    
                    $
                    246,585Comprehensive
      income:Net
      income
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    12,480
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    3,147
                    
                    
                    
                    15,627Foreign
      currency translation adjustment
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    11,698
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    11,698Net
      derivative instrument gain, net of tax
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (140
                    )
                    
                    
                    —
                    
                    
                    
                    (46
                    )
                    
                    
                    (186
                    )Purchase
      of subsidiary shares from noncontrolling interests
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (8,732
                    )
                    
                    
                    (8,732
                    )Sale
      of subsidiary shares to noncontrolling interests
                    
                    
                    —
                    
                    
                    
                    197
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,579
                    
                    
                    
                    1,776Foreign
      currency translation adjustment
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    3,621
                    
                    
                    
                    3,621Dividends
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (2,054
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,735
                    )
                    
                    
                    (3,789
                    )Purchased
      treasury stock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (2,206
                    )
                    
                    
                    —
                    
                    
                    
                    (2,206
                    )Shares
      issued upon exercise of stock options
                    
                    
                    —
                    
                    
                    
                    212
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    212Stock
      compensation
                    
                    
                    —
                    
                    
                    
                    217
                    
                    
                    
                    187
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    70
                    
                    
                    
                    474Balance
      – June 30, 2008
                    
                    $
                    31
                    
                    
                    $
                    40,649
                    
                    
                    $
                    158,608
                    
                    
                    $
                    42,513
                    
                    
                    $
                    (28,550
                    )
                    
                    $
                    51,829
                    
                    
                    $
                    265,080Balance
      – January 1, 2009
                    
                    $
                    30
                    
                    
                    $
                    41,950
                    
                    
                    $
                    168,025
                    
                    
                    $
                    25,515
                    
                    
                    $
                    (31,319
                    )
                    
                    $
                    51,308
                    
                    
                    $
                    255,509Comprehensive
      income:Net
      income
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    9,654
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    3,355
                    
                    
                    
                    13,009Foreign
      currency translation adjustment
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4,202
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4,202Net
      derivative instrument gain, net of tax
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,782
                    )
                    
                    
                    —
                    
                    
                    
                    (567
                    )
                    
                    
                    (2,349
                    )Purchase
      of subsidiary shares from noncontrolling interests
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (55
                    )
                    
                    
                    (55
                    )Sale
      of subsidiary shares to noncontrolling interests
                    
                    
                    
                    
                    
                    
                    (17
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    238
                    
                    
                    
                    221Dividends
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,986
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,716
                    )
                    
                    
                    (3,702
                    )Purchased
      treasury stock
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (631
                    )
                    
                    
                    —
                    
                    
                    
                    (631
                    )Stock
      compensation
                    
                    
                    —
                    
                    
                    
                    254
                    
                    
                    
                    115
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    55
                    
                    
                    
                    424Balance
      – June 30, 2009
                    
                    $
                    30
                    
                    
                    $
                    42,187
                    
                    
                    $
                    175,808
                    
                    
                    $
                    27,935
                    
                    
                    $
                    (31,950
                    )
                    
                    $
                    52,618
                    
                    
                    $
                    266,628





See
notes to consolidated financial statements.


Page
4


INTER
PARFUMS, INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)





Six months ended
                            June 30,2009
                          
                          
                          2008Cash
      flows from operating activities:Net income
                          
                          $
                          13,009
                          
                          
                          $
                          15,627Adjustments to reconcile net
      income to net cash provided by (used in) operating
    activities:Depreciation and
      amortization
                          
                          
                          5,108
                          
                          
                          
                          5,111Provision (benefit) for doubtful
      accounts
                          
                          
                          703
                          
                          
                          
                          (69
                          )Noncash stock
      compensation
                          
                          
                          508
                          
                          
                          
                          591Deferred tax expense
      (benefit)
                          
                          
                          (987
                          )
                          
                          
                          294Change in fair value of
      derivatives
                          
                          
                          (702
                          )
                          
                          
                          —Changes in:Accounts
    receivable
                          
                          
                          11,900
                          
                          
                          
                          4,826Inventories
                          
                          
                          7,858
                          
                          
                          
                          (39,518
                          )Other assets
                          
                          
                          (4,643
                          )
                          
                          
                          430Accounts payable and accrued
      expenses
                          
                          
                          (25,680
                          )
                          
                          
                          (395
                          )Income taxes payable,
      net
                          
                          
                          2,507
                          
                          
                          
                          (2,967
                          )Net cash provided by (used in)
      operating activities
                          
                          
                          9,581
                          
                          
                          
                          (16,070
                          )Cash
      flows from investing activities:Purchases of short-term
      investments
                          
                          
                          —
                          
                          
                          
                          (5,337
                          )Purchases of equipment and
      leasehold improvements
                          
                          
                          (2,809
                          )
                          
                          
                          (1,860
                          )Payment for intangible assets
      acquired
                          
                          
                          (328
                          )
                          
                          
                          (701
                          )Payment for purchase of
      subsidiary shares from noncontrolling interest
                          
                          
                          (55
                          )
                          
                          
                          (18,493
                          )Proceeds from sale of subsidiary
      shares to noncontrolling interest
                          
                          
                          221
                          
                          
                          
                          1,776Net cash used in investing
      activities
                          
                          
                          (2,971
                          )
                          
                          
                          (24,615
                          )Cash
      flows from financing activities:Proceeds (repayments) of loans
      payable – bank, net
                          
                          
                          (3,409
                          )
                          
                          
                          3,937Repayment of long-term
      debt
                          
                          
                          (7,452
                          )
                          
                          
                          (8,423
                          )Proceeds from exercise of
      options
                          
                          
                          —
                          
                          
                          
                          212Dividends paid
                          
                          
                          (1,986
                          )
                          
                          
                          (2,054
                          )Dividends paid to noncontrolling
      interest
                          
                          
                          (1,716
                          )
                          
                          
                          (1,735
                          )Purchase of treasury
      stock
                          
                          
                          (631
                          )
                          
                          
                          (2,206
                          )Net cash used in financing
      activities
                          
                          
                          (15,194
                          )
                          
                          
                          (10,269
                          )Effect
      of exchange rate changes on cash
                          
                          
                          225
                          
                          
                          
                          4,614Net
      decrease in cash and cash equivalents
                          
                          
                          (8,359
                          )
                          
                          
                          (46,340
                          )Cash
      and cash equivalents - beginning of period
                          
                          
                          42,404
                          
                          
                          
                          90,034Cash
      and cash equivalents - end of period
                          
                          $
                          34,045
                          
                          
                          $
                          43,694Supplemental
      disclosure of cash flow information:Cash paid for:Interest
                          
                          $
                          1,545
                          
                          
                          $
                          1,915Income taxes
                          
                          
                          6,166
                          
                          
                          
                          9,478





See
notes to consolidated financial statements


Page
5


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





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, 2008. 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.





2.
            New Accounting
      Pronouncements:





In
December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160 established
requirements for ownership interest in subsidiaries held by parties other than
the Company (sometimes called “minority interests”) be clearly identified,
presented and disclosed in the consolidated statement of financial position
within equity, but separate from the parent’s equity. All
changes in the parent’s ownership
interest are required to be accounted for consistently as equity transactions
and any noncontrolling equity investments in deconsolidated subsidiaries must be
measured initially at fair value. SFAS 160 is effective, on a prospective basis,
for fiscal years beginning after December 15, 2008. The adoption by the Company
of SFAS 160 did not have a material impact on its consolidated financial
statements. However as required by SFAS 160, presentation and disclosure
requirements of SFAS 160 were retrospectively applied to the Company's
consolidated financial statements.




In May
2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 165,
“Subsequent Events” (“SFAS No. 165”). SFAS No. 165 provides guidance on
management’s assessment of subsequent events and incorporates this guidance into
accounting literature. SFAS No. 165 is effective prospectively for interim and
annual periods ending after June 15, 2009.





In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)” (“SFAS No. 167”). SFAS No. 167 amends the consolidation guidance
applicable to variable interest entities and affects the overall consolidation
analysis under FASB Interpretation No. 46(R). SFAS No. 167 is effective for
fiscal years beginning after November 15, 2009. We do not believe that the
adoption of SFAS 167 will have a material impact on our consolidated financial
statements.





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
FASB Statement No. 162” (“SFAS No. 168”). SFAS No. 168 stipulates the FASB
Accounting Standards Codification is the source of authoritative U.S. GAAP
recognized by the FASB to be applied by nongovernmental entities. SFAS No. 168
is effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The implementation of this standard will not
have a material impact on our consolidated financial statements.





There are
no other new accounting pronouncements issued but not yet adopted that would
have a material effect on our consolidated financial statements.





3.
            Inventories:





Inventories consist of the
following:





(In thousands)
                  
                  June 30,
                      2009
                  
                  
                  December 31,
                      2008Raw
      materials and component parts
                  
                  $
                  26,522
                  
                  
                  $
                  37,248Finished
      goods
                  
                  
                  90,431
                  
                  
                  
                  86,385$
                  116,953
                  
                  
                  $
                  123,633




Page
6


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





4.
            Fair Value
      Measurement:





The
carrying amount of cash and cash equivalents, short-term investments, accounts
receivable, other receivables, accounts payable and accrued expenses
approximates fair value due to the short terms to maturity of these instruments.
The carrying amount of loans payable 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 quotes obtained from financial
institutions.




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.




(In thousands)
                  
                  
                  
                  
                  FairValueMeasurementsatJune30,2009Quoted Prices in
                  
                  
                  Significant Other
                  
                  
                  SignificantActive Markets for
                  
                  
                  Observable
                  
                  
                  UnobservableIdentical Assets
                  
                  
                  Inputs
                  
                  
                  InputsTotal
                  
                  
                  (Level1)
                  
                  
                  (Level2)
                  
                  
                  (Level3)Assets:Money
      market funds
                  
                  $
                  20,125
                  
                  
                  $
                  20,125
                  
                  
                  $
                  —
                  
                  
                  $
                  —Foreign
      currency forward exchange contracts accounted for
      using hedge accounting
                  
                  
                  5,185
                  
                  
                  
                  —
                  
                  
                  
                  5,185
                  
                  
                  
                  —Foreign
      currency forward exchange  contracts not accounted for
      using hedge accounting
                  
                  
                  3,411
                  
                  
                  
                  —
                  
                  
                  
                  3,411
                  
                  
                  
                  —$
                  28,721
                  
                  
                  $
                  20,125
                  
                  
                  $
                  8,596
                  
                  
                  $
                  —Liabilities:Interest
      rate swaps
                  
                  $
                  936
                  
                  
                  $
                  —
                  
                  
                  $
                  936
                  
                  
                  $
                  —




(In thousands)
                    
                    
                    
                    
                    Fair Value Measurements at December 31, 2008Quoted Prices in
                    
                    
                    Significant Other
                    
                    
                    SignificantActive Markets for
                    
                    
                    Observable
                    
                    
                    UnobservableIdentical Assets
                    
                    
                    Inputs
                    
                    
                    InputsTotal
                    
                    
                    (Level1)
                    
                    
                    (Level2)
                    
                    
                    (Level3)Assets:Money
      market funds
                    
                    $
                    19,816
                    
                    
                    $
                    19,816
                    
                    
                    $
                    —
                    
                    
                    $
                    —Foreign
      currency forward exchange contracts accounted for using hedge
      accounting
                    
                    
                    8,162
                    
                    
                    
                    —
                    
                    
                    
                    8,162
                    
                    
                    
                    —$
                    27,978
                    
                    
                    $
                    19,816
                    
                    
                    $
                    8,162
                    
                    
                    $
                    —Liabilities:Foreign
      currency forward exchange contracts not accounted for using hedge
      accounting
                    
                    $
                    1,429
                    
                    
                    $
                    —
                    
                    
                    $
                    1,429
                    
                    
                    $
                    —Interest
      rate swaps
                    
                    
                    811
                    
                    
                    
                    —
                    
                    
                    
                    811
                    
                    
                    
                    —$
                    2,240
                    
                    
                    $
                    —
                    
                    
                    $
                    2,240
                    
                    
                    $
                    —


Page
7


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





The
following tables present gains and losses in derivatives designated as hedges
and the location of those gains and losses in the financial statements (in
thousands):




Derivatives in
                    Statement 133 Net
                    Investment
                    Hedging
                    Relationship
                  
                  Amount of Gain
                    (Loss) Recognized in
                    OCI on Derivative
                    (Effective Portion)
                  
                  Location of Gain
                    (Loss) Reclassified
                    from Accumulated
                    OCI into Income
                    (Effective Portion)
                  
                  Amount of Gain (Loss)
                    Reclassified from
                    Accumulated OCI into
                    Income (Effective
                    Portion)
                  
                  Location of Gain
                    (Loss) Recognized in
                    Income on Derivative
                    (Effective Portion)
                  
                  Amount of Gain (Loss)
                    Recognized in Income
                    on Derivative (Effective
                    Portion) (A)Six months ended
                    June 30,
                  
                  
                  
                  Six months ended
                    June 30,
                  
                  
                  
                  Six months ended
                    June 30,2009
                  
                  
                  2008
                  
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  
                  2009
                  
                  
                  2008Foreign
      exchange contracts
                  
                  $
                  (438
                  )
                  
                  
                  —
                  
                  Gain
      (loss) on foreign currency
                  
                  $
                  3,191
                  
                  
                  
                  —
                  
                  Gain
      (loss) on foreign currency
                  
                  $
                  702
                  
                  
                  
                  —





(A) The
amount of gain (loss) recognized in income represents $702 related to the amount
excluded from the assessment of  hedge effectiveness.




Derivatives in
                    Statement 133 Net
                    Investment
                    Hedging
                    Relationship
                  
                  Amount of Gain
                    (Loss) Recognizedin
                    OCI onDerivative
                    (Effective Portion)
                  
                  Location of Gain
                    (Loss)Reclassified
                    fromAccumulated
                    OCI intoIncome
                    (EffectivePortion)
                  
                  Amount of Gain(Loss)
                    Reclassifiedfrom
                    AccumulatedOCI into
                    Income(Effective
                    Portion)
                  
                  Location of Gain
                    (Loss) Recognized in
                    Income on Derivative
                    (Effective Portion)
                  
                  Amount of Gain(Loss)
                    Recognized inIncome
                    onDerivative (Effective
                    Portion) (A)Three months ended
                    June 30,
                  
                  
                  
                  Three months ended
                    June 30,
                  
                  
                  
                  Three months ended
                    June 30,2009
                  
                  
                  2008
                  
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  
                  2009
                  
                  
                  2008Foreign
      exchange contracts
                  
                  $
                  3,417
                  
                  
                  
                  —
                  
                  Gain
      (loss) on foreign currency
                  
                  $
                  2,129
                  
                  
                  
                  —
                  
                  Gain
      (loss) on foreign currency
                  
                  $
                  (94
                  )
                  
                  
                  —





(A) The
amount of gain (loss) recognized in income represents ($94) related to the
amount excluded from the assessment of  hedge effectiveness.




The
following tables present gains and losses in derivatives not designated as
hedges and the location of those gains and losses in the financial statements
(in thousands):




Derivatives not Designated
                          asHedging Instruments
                          underStatement 133
                        
                        Location of Gain (Loss)
                          Recognized in Income on
                          Derivative
                        
                        Six months
                          endedJune 30,
                          2009
                        
                        
                        Six months
                          ended June30,
                          2008Interest
      rate swaps
                        
                        Interest
      (expense)
                        
                        $
                        (105
                        )
                        
                        $
                        371Foreign
      exchange contracts
                        
                        Gain
      (loss) on foreign currency
                        
                        $
                        24
                        
                        
                        $
                        332


Page
8


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





Derivatives not Designated as
                          Hedging Instruments under
                          Statement 133
                        
                        Location of Gain (Loss)
                          Recognized in Income on
                          Derivative
                        
                        Three months
                          ended June 30,
                          2009
                        
                        
                        Three months
                          ended June 30,
                          2008Interest
      rate swaps
                        
                        Interest
      (expense)
                        
                        $
                        122
                        
                        
                        $
                        629Foreign
      exchange contracts
                        
                        Gain
      (loss) on foreign currency
                        
                        $
                        7
                        
                        
                        $
                        68




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 accrued expenses on the
accompanying balance sheet as of June 30, 2009. The valuation of foreign
currency forward exchange contracts accounted for using hedge accounting and not
accounted for using hedge accounting resulted in assets which are included in
other current assets on the accompanying balance sheet as of June 30, 2009.
Generally, increases or decreases in the fair value of derivative instruments
will be recognized as gains or losses in earnings in the period of change. If
the derivative instrument is designated and qualifies as a cash flow hedge, the
changes in fair value of the derivative instrument will be recorded as a
separate component of shareholders’ equity.




The
Company enters into foreign currency forward exchange contracts to hedge
exposure related to receivables denominated in a foreign currency and 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 as defined by
SFAS No. 133 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 or when the underlying forecasted transaction occurs, 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. As of
June 30, 2009, cash-flow hedges were highly effective, in all material
respects.




As a
result of the dramatic strengthening of the U.S. dollar, during our fourth
quarter ended December 31, 2008, we entered into foreign currency forward
exchange contracts to hedge approximately 80% of our 2009 sales expected to be
invoiced in U.S. dollars. At June 30, 2009, we had foreign currency contracts in
the form of forward exchange contracts in the amount of approximately U.S.
$40.2 million, GB pounds 2.9 million, and Japanese yen 72.8 million
which all have maturities of less than one year.





5.
            Goodwill and Other
      Intangible Assets:





The
Company reviews goodwill and trademarks with indefinite lives for impairment at
least annually, and whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. The following table presents our
assets and liabilities that are measured at fair value on a nonrecurring basis
and are categorized using the fair value hierarchy.


Page
9


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





(In thousands)
                      
                      
                      
                      
                      FairValueMeasurementsatJune30,2009Quoted Prices in
                      
                      
                      Significant Other
                      
                      
                      SignificantActive Markets for
                      
                      
                      Observable
                      
                      
                      UnobservableIdentical Assets
                      
                      
                      Inputs
                      
                      
                      InputsTotal
                      
                      
                      (Level 1)
                      
                      
                      (Level 2)
                      
                      
                      (Level 3)Description:Trademark
      - Nickel
                      
                      $
                      2,741
                      
                      
                      $
                      —
                      
                      
                      $
                      —
                      
                      
                      $
                      2,741Goodwill
                      
                      $
                      5,553
                      
                      
                      $
                      —
                      
                      
                      $
                      —
                      
                      
                      $
                      5,553





The
goodwill and trademarks referred to above, relates to our Nickel skin care
business which is primarily a component of our European operations. Nickel brand
product sales continue to perform below our expectation, as a result, we have
been reviewing goodwill and trademarks with indefinite lives relating to Nickel
for impairment on a quarterly basis. We have measured fair value of goodwill as
a multiple of sales applied to the average of 2007 and 2008 actual sales and
projected sales for 2009. The sales multiple was based on a third party
financial institution study of sales multiples for all transactions in the skin
care, perfume and cosmetic sectors since 2001. There was no change to the
carrying amount of the goodwill during the three month period ended June 30,
2009 other than for the effect of foreign currency translation rates. For
indefinite-lived intangible assets, if the carrying value of an indefinite-lived
intangible asset exceeds its fair value, as generally estimated using discounted
future net cash flow projections and discounted terminal values, the carrying
value of the asset is reduced to its fair value. During the three month period
ended June 30, 2009, an impairment charge relating to the Nickel trademark in
the amount of $0.26 million was recorded.





6.
            Shareholders’
      Equity:





As of
December 31, 2008, the Company’s board of directors authorized the repurchase of
up to 1,031,863 shares of the Company’s common stock. During the six month
period ended June 30, 2009, the Company repurchased 108,100 shares of its
common stock at an average price of $5.84 per common share.




7.
            Share-Based
      Payments:





The
Company maintains a stock option program 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
during the six month periods ended June 30, 2009 and 2008 aggregated $0.05
million and $0.02 million, respectively. Compensation cost is recognized on a
straight-line basis over the requisite service period for the entire award. It
is generally the Company’s 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, 2009:


Page
10




INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements




Number of Shares
                    
                    
                    Weighted Average Grant
                      Date Fair ValueNonvested
      options – beginning of year
                    
                    
                    490,263
                    
                    
                    $
                    3.81Nonvested
      options granted
                    
                    
                    4,000
                    
                    
                    $
                    1.92Nonvested
      options vested or forfeited
                    
                    
                    (18,990
                    )
                    
                    $
                    3.73Nonvested
      options – end of year
                    
                    
                    475,273
                    
                    
                    $
                    3.79




Share-based
payment expense decreased income before income taxes by $0.24 million and $0.51
million for the three and six month periods ended June 30, 2009, respectively,
as compared to $0.28 million and $0.59 million for the corresponding periods of
the prior year.  Share-based payment expense decreased income
attributable to Inter Parfums, Inc. by $0.13 million and $0.29 million for the
three and six month periods ended June 30, 2009, respectively, as compared to
$0.16 million and $0.33 million for the corresponding periods of the prior
year.





The
following table summarizes stock option information as of June 30,
2009:




Number of Shares
                  
                  
                  Weighted Average
                      Exercise PriceOutstanding
      at January 1, 2009
                  
                  
                  1,138,375
                  
                  
                  $
                  11.23Granted
                  
                  
                  4,000
                  
                  
                  
                  6.15Forfeited
      or expired
                  
                  
                  (57,000
                  )
                  
                  
                  15.02Outstanding
      at June 30, 2009
                  
                  
                  1,085,375
                  
                  
                  $
                  11.01Options
      exercisable at June 30, 2009
                  
                  
                  610,103
                  
                  
                  $
                  10.75Options
      available for future grants
                  
                  
                  1,266,369





As of
June 30, 2009, the weighted average remaining contractual life of options
outstanding is 2.63 years (1.29 years for options exercisable), the aggregate
intrinsic value of options outstanding and options exercisable is $0.04 million
and unrecognized compensation cost related to stock options outstanding on Inter
Parfums, Inc. stock aggregated $1.5 million. The amount of unrecognized
compensation cost related to stock options outstanding of our majority-owned
subsidiary, Inter Parfums S.A., was €0.2 million. Options under Inter Parfums,
S.A. plans vest over a four-year period and no options were granted by Inter
Parfums, S.A. during the six month periods ended June 30, 2009 and
2008.




Cash
proceeds, tax benefits and intrinsic value related to stock options exercised
during the six month periods ended June 30, 2009 and June 30, 2008 were as
follows:




(In thousands)
                        
                        June 30,
                            2009
                        
                        
                        June 30,
                            2008Cash
      proceeds from stock options exercised
                        
                        $
                        —
                        
                        
                        $
                        212Tax
      benefits
                        
                        
                        —
                        
                        
                        
                        —Intrinsic
      value of stock options exercised
                        
                        
                        —
                        
                        
                        
                        136





No tax
benefit was realized or recognized from stock options exercised as valuation
reserves were allocated to those potential benefits.


Page
11


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





The
weighted average fair values of the options granted by Inter Parfums, Inc.
during the six months ended June 30, 2009 and 2008 were $1.92 and $3.69 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, 2009 and
2008 are set forth in the following table:




June 30,
                    2009
                
                
                June 30,
                    2008Weighted-average
      expected stock-price volatility
                
                
                46
                %
                
                
                39
                %Weighted-average
      expected option life
                
                3.75
      years
                
                
                4.5
      yearsWeighted-average
      risk-free interest rate
                
                
                1.74
                %
                
                
                2.7
                %Weighted-average
      dividend yield
                
                
                2.20
                %
                
                
                1.20
                %





Expected
volatility is estimated based on historic volatility of the Company’s common
stock. The Company uses the simplified method in developing its estimate of the
expected term of the option as historic data regarding employee exercise
behavior is incomplete for the new vesting parameters recently instituted by the
Company. 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 in place at the time of stock-based award
grant would continue with no anticipated increases.




8.
            Earnings Per
      Share:





Basic
earnings per share is computed using the weighted average number of shares
outstanding during each period. Diluted earnings per share is computed using the
weighted average number of shares outstanding during each period, plus the
incremental shares outstanding assuming the exercise of dilutive stock options
and warrants using the treasury stock method.




The
following table sets forth the computation of basic and diluted earnings per
share:





(In thousands)
                        
                        Three months ended
                          June 30,
                        
                        
                        Six months ended
                          June 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Numerator:Net
      income attributable to Inter Parfums, Inc.
                        
                        $
                        4,226
                        
                        
                        $
                        3,772
                        
                        
                        $
                        9,654
                        
                        
                        $
                        12,480Effect
      of dilutive securities of consolidated subsidiary
                        
                        
                        (8
                        )
                        
                        
                        (10
                        )
                        
                        
                        (18
                        )
                        
                        
                        (87
                        )$
                        4,218
                        
                        
                        $
                        3,762
                        
                        
                        $
                        9,636
                        
                        
                        $
                        12,393Denominator:Weighted
      average shares
                        
                        
                        30,064
                        
                        
                        
                        30,627
                        
                        
                        
                        30,115
                        
                        
                        
                        30,674Effect
      of dilutive securities:Stock
      options and warrants
                        
                        
                        —
                        
                        
                        
                        287
                        
                        
                        
                        —
                        
                        
                        
                        18730,064
                        
                        
                        
                        30,914
                        
                        
                        
                        30,115
                        
                        
                        
                        30,861




Page
12


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





Not
included in the above computations is the effect of antidilutive potential
common shares which consist of outstanding options to purchase 1.1 million
shares of common stock for both the three and six month periods ended June 30,
2009, and 33,000 and 404,000 shares of common stock for the three and six month
periods ended June 30, 2008, respectively, as well as outstanding warrants to
purchase 300,000 shares of common stock for both the three and six month periods
ended June 30, 2009 and 150,000 shares of common stock for both the three and
six month periods ended June 30, 2008.





9.
            Comprehensive
      Income:





(In thousands)
                        
                        Three months ended
                          June 30,
                        
                        
                        Six months ended
                          June 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Comprehensive
      income:Net
      income
                        
                        $
                        5,753
                        
                        
                        $
                        4,490
                        
                        
                        $
                        13,009
                        
                        
                        $
                        15,627Other
      comprehensive income, net of tax:Foreign
      currency translation adjustment
                        
                        
                        13,853
                        
                        
                        
                        (607
                        )
                        
                        
                        4,202
                        
                        
                        
                        11,698Change
      in fair value of derivatives
                        
                        
                        2,155
                        
                        
                        
                        —
                        
                        
                        
                        (771
                        )
                        
                        
                        (186
                        )Net
      gains reclassified into earningsfrom
      equity
                        
                        
                        (1,054
                        )
                        
                        
                        —
                        
                        
                        
                        (1,578
                        )
                        
                        
                        —Comprehensive
      income:
                        
                        
                        20,707
                        
                        
                        
                        3,883
                        
                        
                        
                        14,862
                        
                        
                        
                        27,139Less
      comprehensive income (loss) attributable to the noncontrolling
      interest
                        
                        
                        1,751
                        
                        
                        
                        (718
                        )
                        
                        
                        2,788
                        
                        
                        
                        3,101Comprehensive
      income attributable to Inter Parfums, Inc.
                        
                        $
                        18,956
                        
                        
                        $
                        3,165
                        
                        
                        $
                        12,074
                        
                        
                        $
                        24,038





10.
            Net Income
      Attributable to Inter Parfums, Inc. and Transfers From the Noncontrolling
      Interest:





(In thousands)
                        
                        Three months ended
                          June 30,
                        
                        
                        Six months ended
                          June 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Net
      income attributable to Inter Parfums, Inc.
                        
                        $
                        4,226
                        
                        
                        $
                        3,772
                        
                        
                        $
                        9,654
                        
                        
                        $
                        12,480Increase
      (decrease) in Inter Parfums, Inc.’s additional paid-in capital for
      subsidiary share transactions
                        
                        
                        (10
                        )
                        
                        
                        173
                        
                        
                        
                        (17
                        )
                        
                        
                        197Change
      from net income attributable to Inter Parfums, Inc. and transfers from
      noncontrolling interest
                        
                        $
                        4,216
                        
                        
                        $
                        3,945
                        
                        
                        $
                        9,637
                        
                        
                        $
                        12,677


Page
13


INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





11.
            Segment and Geographic
      Areas:





We
manufacture and distribute one product line, fragrances and fragrance related
products and we manage our business in two segments, European based operations
and United States based operations. The European assets are primarily located,
and operations are primarily conducted, in France. European operations primarily
represent the sale of prestige brand name fragrances and United States
operations primarily represent the sale of specialty retail and mass market
fragrances. Information on the Company’s operations by geographical areas is as
follows:





(In thousands)
                                      
                                      Three months ended
                                        June 30,
                                      
                                      
                                      Six months ended
                                        June 30,2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
                                      
                                      
                                      2008Net
      sales:United
      States
                                      
                                      $
                                      9,236
                                      
                                      
                                      $
                                      15,218
                                      
                                      
                                      $
                                      17,609
                                      
                                      
                                      $
                                      27,753Europe
                                      
                                      
                                      79,368
                                      
                                      
                                      
                                      84,876
                                      
                                      
                                      
                                      161,404
                                      
                                      
                                      
                                      195,504Eliminations
      of intercompany sales
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (1,016
                                      )
                                      
                                      
                                      —
                                      
                                      
                                      
                                      (1,016
                                      )$
                                      88,604
                                      
                                      
                                      $
                                      99,078
                                      
                                      
                                      $
                                      179,013
                                      
                                      
                                      $
                                      222,241Net
      income (loss) attributable to Inter Parfums, Inc.:United
      States
                                      
                                      $
                                      (578
                                      )
                                      
                                      $
                                      669
                                      
                                      
                                      $
                                      (1,345
                                      )
                                      
                                      $
                                      223Europe
                                      
                                      
                                      4,792
                                      
                                      
                                      
                                      3,143
                                      
                                      
                                      
                                      10,972
                                      
                                      
                                      
                                      12,272Eliminations
      of intercompany profits
                                      
                                      
                                      12
                                      
                                      
                                      
                                      (40
                                      )
                                      
                                      
                                      27
                                      
                                      
                                      
                                      (15
                                      )$
                                      4,226
                                      
                                      
                                      $
                                      3,772
                                      
                                      
                                      $
                                      9,654
                                      
                                      
                                      $
                                      12,480June
      30,
                                      
                                      
                                      December
      31,2009
                                      
                                      
                                      2008Total
      Assets:United
      States
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      48,179
                                      
                                      
                                      $
                                      56,320Europe
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      361,846
                                      
                                      
                                      
                                      380,058Eliminations
      of investment in subsidiary
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (9,830
                                      )
                                      
                                      
                                      (11,241
                                      )$
                                      400,195
                                      
                                      
                                      $
                                      425,137





12.
            Subsequent
      Events:





We evaluated subsequent events through
August 10, 2009, the date this Quarterly report was filed with the Securities
and Exchange Commission.




Page
14




INTER
PARFUMS, INC. AND SUBSIDIARIES





Item 2:
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





Forward
Looking Information





Statements
in this report which are not historical in nature are forward-looking
statements. Although we believe that our plans, intentions and expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that such plans, intentions or expectations will be achieved. In some
cases you can identify forward-looking statements by forward-looking words such
as "anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will" and "would" or similar words. You should not rely on
forward-looking statements because actual events or results may differ
materially from those indicated by these forward-looking statements as a result
of a number of important factors. These factors include, but are not limited to,
the risks and uncertainties discussed under the headings “Forward Looking
Statements” and "Risk Factors" in Inter Parfums' annual report on Form 10-K for
the fiscal year ended December 31, 2008 and the reports Inter Parfums files from
time to time with the Securities and Exchange Commission. Inter Parfums does not
intend to and undertakes no duty to update the information contained in this
report.




Overview





We
operate in the fragrance business, and manufacture, market and distribute a wide
array of fragrances and fragrance related products. We manage our business in
two segments, European based operations and United States based operations. Our
prestige fragrance products are produced and marketed by our European operations
through our 75% owned subsidiary in Paris, Inter Parfums, S.A., which is also a
publicly traded company as 25% of Inter Parfums, S.A. shares trade on the
Euronext. Prestige cosmetics and prestige skin care products represent less than
3% of consolidated net sales.





We
produce and distribute our prestige products primarily under license agreements
with brand owners and European based prestige product sales represented 90% and
88% of net sales for the six months ended June 30, 2009 and 2008, respectively.
We have built a portfolio of brands, which include Burberry, Lanvin, Van Cleef &
Arpels, Paul Smith, S.T. Dupont, Quiksilver/Roxy and Nickel whose products are
distributed in over 120 countries around the world. Burberry is our most
significant license; sales of Burberry products represented 58% and 60% of net
sales for the six months ended June 30, 2009 and 2008,
respectively.





Our
specialty retail and mass-market fragrance and fragrance related products are
marketed through our United States operations and represented 10% and 12% of net
sales for the six months ended June 30, 2009 and 2008, respectively. These
products are sold under trademarks owned by us or pursuant to license or other
agreements with the owners of the Gap, Banana Republic, New York &
Company, Brooks Brothers, bebeandJordache
trademarks.





Historically,
seasonality has not been a major factor for our Company. However, with the
commencement of operations in 2007 of our four majority-owned European
distribution subsidiaries and direct to retailer shipments of our specialty
retail product lines, sales are more concentrated in the second half of the
year.


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15





INTER
PARFUMS, INC. AND SUBSIDIARIES





We grow
our business in two distinct ways. First, we grow by adding new brands to our
portfolio, either through new licenses or out-right acquisitions of brands.
Second, we grow through the introduction of new products and supporting new and
established products through advertising, merchandising and sampling as well as
phasing out existing products that no longer meet the needs of our
consumers. The economics of developing, producing, launching and supporting
products influence our sales and operating performance each year.  Our
introduction of new products may have some cannibalizing effect on sales of
existing products, which we take into account in our business
planning.





Our
business is not capital intensive, and it is important to note that we do not
own manufacturing facilities. We act as a general contractor and source our
needed components from our suppliers. These components are received at one of
our distribution centers and then, based upon production needs, the components
are sent to one of several third party fillers which manufacture the finished
good for us and ship it back to our distribution center.





As with
any business, many aspects of our operations are subject to influences outside
our control.  These factors include the effect of the current
financial crisis and therefore the potential for further deterioration in
consumer spending and consumer debt levels, as well as the continued
availability of favorable credit sources and capital market conditions in
general. The recent economic challenges and uncertainties in a number of
countries where we do business, including the United States, have impacted our
business. This financial crisis is global in scale and has negatively
affected consumer demand, which is having an adverse impact on our distributors
and our retail customers. These events have led distributors and retailers to
carry less inventory than usual and have resulted in changes in their ordering
patterns for the products that we sell.  The impact of this financial
crisis has been challenging for us thus far this year and is expected to
continue to be challenging for the remainder of 2009.




We have
reviewed our plans and have taken actions to mitigate the impact of these
conditions. We have adjusted, and we are continuing to adjust our
advertising and promotional budgets to align our spending with anticipated
sales. In addition, we have implemented cost saving initiatives to right size
our staff in an effort to maintain long-term profitable growth. As part of
our strategy, we plan to continue to make investments behind fast-growing
markets and channels to grow market share. While our business strategies
are designed to strengthen our Company over the long-term, we believe the
uncertainty about future market conditions, consumer spending patterns and the
financial strength of some of our customers, combined with the fact that
distributors and retailers are carrying less inventory, will negatively affect
our net sales and operating results.





In
addition to the ongoing global financial crisis, our reported net sales in
comparison to the corresponding periods of the prior year have been negatively
impacted by changes in foreign currency exchange rates caused by the
strengthening of the U.S. dollar since the fourth quarter of 2008. If the
current exchange rates persist or the U.S. dollar continues to strengthen, there
will be a continuing adverse impact on our net sales in 2009.





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16


INTER
PARFUMS, INC. AND SUBSIDIARIES





Recent
Important Events





bebe
Stores, Inc.





In July
2008, we entered into an exclusive six year worldwide agreement with bebe
Stores, Inc. under which we will design, manufacture and supply fragrance, bath
and body products and color cosmetics for company-owned bebe stores in the
United States and Canada as well as select specialty and department stores
worldwide.





Gap
and Banana Republic International





In April
2008, we expanded our current relationship with Gap Inc. with the signing of a
licensing agreement for international distribution of personal care products
through Gap and Banana Republic stores as well as select specialty and
department stores outside the United States, including duty-free and other
travel related retailers. The agreement is effective through December 31,
2011.





Discussion
of Critical Accounting Policies





We make
estimates and assumptions in the preparation of our financial statements in
conformity with accounting principles generally accepted in the United States of
America. Actual results could differ significantly from those estimates under
different assumptions and conditions. We believe the following discussion
addresses our most critical accounting policies, which are those that are most
important to the portrayal of our financial condition and results of operations.
These accounting policies generally require our management’s most difficult and
subjective judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain.





The
judgments used by management in applying critical accounting policies could
be affected by a further and prolonged general deterioration in the economic
environment, which could negatively influence future financial results and
availability of continued financing. Specifically, subsequent evaluations of our
accounts receivables, inventories, and deferred tax assets in light of the
factors then prevailing, could result in significant changes in our allowance
and reserve accounts in future periods which in turn could generate significant
additional charges. Similarly, the valuation of certain intangible assets could
be negatively impacted by prolonged and severely depressed market conditions
thus leading to the recognition of impairment losses. The following is a brief
discussion of the more critical accounting policies that we employ.





Revenue
Recognition





We sell
our products to department stores, perfumeries, specialty retailers, mass-market
retailers, supermarkets and domestic and international wholesalers and
distributors. Sales of such products by our domestic subsidiaries are
denominated in U.S. dollars and sales of such products by our foreign
subsidiaries are primarily denominated in either Euros or U.S. dollars. Accounts
receivable reflect the granting of credit to these customers. We generally grant
credit based upon our analysis of the customer’s financial position as well as
previously established buying patterns. We recognize revenues when merchandise
is shipped and the risk of loss passes to the customer. Net sales are comprised
of gross revenues less returns, trade discounts and
allowances.


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17


INTER
PARFUMS, INC. AND SUBSIDIARIES





Sales
Returns





Generally,
we do not permit customers to return their unsold products. However, on a
case-by-case basis we occasionally allow customer returns. We regularly review
and revise, as deemed necessary, our estimate of reserves for future sales
returns based primarily upon historic trends and relevant current data. We
record estimated reserves for sales returns as a reduction of sales, cost of
sales and accounts receivable. Returned products are recorded as inventories and
are valued based upon estimated realizable value. The physical condition and
marketability of returned products are the major factors we consider in
estimating realizable value. Actual returns, as well as estimated realizable
values of returned products, may differ significantly, either favorably or
unfavorably, from our estimates, if factors such as economic conditions,
inventory levels or competitive conditions differ from our
expectations.





Promotional
Allowances





We have
various performance-based arrangements with certain retailers. These
arrangements primarily allow customers to take deductions against amounts owed
to us for product purchases. The costs that our Company incurs for
performance-based arrangements, shelf replacement costs and slotting fees are
netted against revenues on our Company’s consolidated statement of income.
Estimated accruals for promotions and advertising programs are recorded in the
period in which the related revenue is recognized. We review and revise the
estimated accruals for the projected costs for these promotions. Actual costs
incurred may differ significantly, either favorably or unfavorably, from
estimates if factors such as the level and success of the retailers’ programs or
other conditions differ from our expectations.





Inventories





Inventories
are stated at the lower of cost or market value. Cost is principally determined
by the first-in, first-out method. We record adjustments to the cost of
inventories based upon our sales forecast and the physical condition of the
inventories. These adjustments are estimates, which could vary significantly,
either favorably or unfavorably, from actual requirements if future economic
conditions or competitive conditions differ from our expectations.





Equipment
and Other Long-Lived Assets





Equipment,
which includes tools and molds, is recorded at cost and is depreciated on a
straight-line basis over the estimated useful lives of such assets. Changes in
circumstances such as technological advances, changes to our business model or
changes in our capital spending strategy can result in the actual useful lives
differing from our estimates. In those cases where we determine that the useful
life of equipment should be shortened, we would depreciate the net book value in
excess of the salvage value, over its revised remaining useful life, thereby
increasing depreciation expense. Factors such as changes in the planned use of
equipment, or market acceptance of products, could result in shortened useful
lives.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





We
evaluate goodwill and indefinite-lived intangible assets for impairment on an
annual basis during the fourth quarter, or when events occur or circumstances
change that would more likely than not reduce the fair value of the reporting
unit below its carrying value or indicating that the carrying value of an
indefinite-lived intangible asset may not be recoverable.  Impairment
of goodwill is evaluated using a two step process. The first step involves a
comparison of the estimated fair value of the reporting unit to the carrying
value of that unit. If the carrying value of the reporting unit exceeds the fair
value of the reporting unit, the second step of the process involves comparison
of the implied fair value of goodwill (based on industry purchase and sale
transaction data) with its carrying value. If the carrying value of the
reporting unit’s goodwill exceeds the implied fair value of that goodwill, an
impairment loss is recognized as an amount equal to the excess. For
indefinite-lived intangible assets, the evaluation requires a comparison of the
estimated fair value of the asset to the carrying value of the asset. If the
carrying value of an indefinite-lived intangible asset exceeds its fair value,
as generally estimated using discounted future net cash flow projections and
discounted terminal values, the carrying value of the asset would be reduced to
its fair value.





The fair
values used in our evaluation are estimated based upon discounted future cash
flow projections. The cash flow projections are based upon a number of
assumptions, including risk-adjusted discount rates, future sales levels and
future cost of goods and operating expense levels, as well as economic
conditions, changes to our business model or changes in consumer acceptance of
our products which are more subjective in nature. We believe that the
assumptions that we have made in projecting future cash flows for the
evaluations described above are reasonable. However, if future actual results do
not meet our expectations, we may be required to record an impairment charge,
the amount of which could be material to our results of operations.





Intangible
assets subject to amortization are evaluated for impairment testing whenever
events or changes in circumstances indicate that the carrying amount of an
amortizable intangible asset may not be recoverable. If impairment indicators
exist for an amortizable intangible asset, the undiscounted future cash flows
associated with the expected service potential of the asset are compared to the
carrying value of the asset. If our projection of undiscounted future cash flows
is in excess of the carrying value of the intangible asset, no impairment charge
is recorded. If our projection of undiscounted future cash flows is less than
the carrying value of the intangible asset, an impairment charge would be
recorded to reduce the intangible asset to its fair value. The cash flow
projections are based upon a number of assumptions, including future sales
levels and future cost of goods and operating expense levels, as well as
economic conditions, changes to our business model or changes in consumer
acceptance of our products which are more subjective in nature. In those cases
where we determine that the useful life of long-lived assets should be
shortened, we would depreciate the net book value in excess of the salvage value
(after testing for impairment as described above), over the revised remaining
useful life of such asset thereby increasing amortization expense.





Derivatives





We
account for derivative financial instruments in accordance with SFAS
No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as
amended, which establish accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities.  This statement also requires the
recognition of all derivative instruments as either assets or liabilities on the
balance sheet and that they be measured at fair value.


Page
19





INTER
PARFUMS, INC. AND SUBSIDIARIES





We
currently use derivative financial instruments to hedge certain anticipated
transactions and interest rates, as well as receivables denominated in foreign
currencies.  We do not utilize derivatives for trading or speculative
purposes.  Hedge effectiveness is documented, assessed and monitored by
employees who are qualified to make such assessments and monitor the
instruments.  Variables that are external to us such as social, political
and economic risks may have an impact on our hedging program and the results
thereof.





Income
Taxes





Deferred
income taxes are recognized for the tax consequences of temporary differences by
applying enacted statutory tax rates applicable to future years to the
difference between the financial statement carrying amounts and the tax bases of
existing assets and liabilities. Tax benefits recognized are reduced by a
valuation allowance where it is more likely than not that the benefits may not
be realized.





Results
of Operations





Three
and Six Months Ended June 30, 2009 as Compared to the Three and Six Months Ended
June 30, 2008





Net sales
                              
                              Three months ended
                                June 30,
                              
                              
                              Six months ended
                                June 30,(In millions)
                              
                              2009
                              
                              
                              %
                                Change
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              %
                                Change
                              
                              
                              2008European
      based product sales
                              
                              $
                              79.4
                              
                              
                              
                              (5
                              )%
                              
                              $
                              83.9
                              
                              
                              $
                              161.4
                              
                              
                              
                              (17
                              )%
                              
                              $
                              194.4United
      States based product sales
                              
                              
                              9.2
                              
                              
                              
                              (39
                              )%
                              
                              
                              15.2
                              
                              
                              
                              17.6
                              
                              
                              
                              (37
                              )%
                              
                              
                              27.8Total
      net sales
                              
                              $
                              88.6
                              
                              
                              
                              (11
                              )%
                              
                              $
                              99.1
                              
                              
                              $
                              179.0
                              
                              
                              
                              (19
                              )%
                              
                              $
                              222.2





Net sales for the three months ended
June 30, 2009 decreased 11% to $88.6 million, as compared to $99.1 million for
the corresponding period of the prior year. At comparable foreign currency
exchange rates, net sales decreased 3% for the period. Net sales for the six
months ended June 30, 2009 decreased 19% to $179.0 million, as compared to
$222.2 million for the corresponding period of the prior year. At comparable
foreign currency exchange rates, net sales decreased 13% for the period. The
strength of the U.S. dollar relative to the euro during the first six months of
2009 gave rise to the difference between constant dollar and reported net
sales.





European based prestige product sales
decreased 5% for the three months ended June 30, 2009 and 17% for the six months
ended June 30, 2009, as compared to the corresponding periods of the prior year.
In light of the worldwide decline in consumer spending and the corresponding
destocking of fragrance inventories by distributors and retailers, our 5%
decline in net sales for European operations and 11% decline overall is modest
and consistent if not less than many of our peers. Of that amount, the continued
strength of the U.S. dollar relative to the euro, was responsible for about 6.5%
of the decline.  As was the case in the first quarter, the second
quarter bar was set quite high last year when sales by European-based operations
were 19% ahead of the same period one year earlier with much of the gain due to
the rollout of Burberry The
Beat for women.  In local currency, Burberry fragrance sales
aggregated €35.7 million and €77.8 million for the three and six months ended
June 30, 2009, respectively, as compared to €35.8 million and €87.7 million for
the corresponding periods of the prior year. Lanvin, our second largest prestige
brand, has proven somewhat resilient to the economic downturn with year-to-date
sales running 25% ahead of last year in local currency due to the continued
strength of Eclat
d’Arpège, reorders of Jeanne Lanvin which debuted
in the fall of 2008, and the good response to Lanvin L’Homme Sport this
spring.


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20





INTER
PARFUMS, INC. AND SUBSIDIARIES





Despite the challenging economic
environment in many parts of the world, certain territories continue to perform
at satisfactory levels, notably, Western Europe, Asia and the Middle
East.





We are in
the midst of an active 2009 new product launch schedule for European-based
operations which began in January with the global rollout of the men’s version
of Burberry The Beat.
Also during the first quarter, we launched our Quiksilver signature fragrance
for men. During the second quarter of 2009 we introduced an ST Dupont fragrance
for women and a Lanvin L’Homme
Sport line, with tennis star, Rafael Nadal as its spokesperson. Paul
Smith Man is scheduled
to debut in August and a limited edition, high-end women’s fragrance line for
the Van Cleef & Arpels brand called Collection Extraordinaire is
set for launch later in 2009.





With
respect to our United States specialty retail and mass-market products, net
sales for the three and six months ended June 30, 2009 declined to $9.2 million
and $17.6 million, respectively, as compared to $15.2 million and $27.8 million
for the corresponding periods of the prior year. In 2008, we expanded our
relationship with Gap Inc. with the signing of a licensing agreement for
international distribution of personal care products through Gap and Banana
Republic stores as well as select specialty and department stores outside the
United States, including duty-free and other travel related retailers. In early
2008, United States specialty retail product sales were climbing as a steady
domestic business combined with a new and vibrant international business to
drive sales growth. However, beginning in the fourth quarter of 2008, United
States specialty retail product sales came under pressure. Our United States
operations continue to feel the effects of the global financial crisis discussed
above.





In April
2009, Close, a new Gap fragrance was launched at approximately 550 Gap stores
and roughly 175 Gap Body stores nationwide. International distribution is in
process and is expected to reach 5,000 doors in the second half of 2009. In
August 2009, new fragrances for men and women will be launched at Banana
Republic stores in North America with international distribution to follow
shortly thereafter.





New
product introductions are also in the works for our other specialty retail
partners. In November 2008, we shipped the Brooks Brothers New York collection for men
and women to Brooks Brothers U.S. stores and international distribution is
scheduled later in 2009. In addition, a new fragrance introduction for the fall
of 2009, called Black
Fleece is in the works. In July 2008, we entered into an exclusive six
year worldwide agreement with bebe Stores, Inc. under which we design,
manufacture and supply fragrance, bath and body products and color cosmetics for
company-owned bebe stores in the United States and Canada as well as select
specialty and department stores worldwide. Our signature bebe fragrance will be
unveiled at 212 bebe stores in the U.S. in August, and over 300 Dillard stores
in September followed by worldwide distribution beginning late in the third
quarter of 2009. We also have plans to introduce a new fragrance for New York
& Company in the second half of 2009. We anticipate that these new
activities together with existing distribution should stem the sales decline for
our U.S. operations.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Sales of
our mass-market fragrance products have been in a decline for several years. The
current global economic crisis has affected both our domestic and international
customers. Credit availability has been curtailed and has resulted in continued
sales declines. We have no plans to discontinue sales to this market, which
aggregated approximately $3.7 million and $7.4 million for the three and six
months ended June 30, 2009, respectively, as compared to $4.9 million and $9.8
million for the corresponding periods of the prior year.





In
addition, we are actively pursuing other new business opportunities. However, we
cannot assure you that any new licenses, acquisitions or specialty retail
agreements will be consummated.





Gross margin
                        
                        Three months ended
                          June 30,
                        
                        
                        Six months ended
                          June 30,(In millions)
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Net
      sales
                        
                        $
                        88.6
                        
                        
                        $
                        99.1
                        
                        
                        $
                        179.0
                        
                        
                        $
                        222.2Cost
      of sales
                        
                        
                        38.4
                        
                        
                        
                        43.1
                        
                        
                        
                        75.2
                        
                        
                        
                        92.2Gross
      margin
                        
                        $
                        50.2
                        
                        
                        $
                        56.0
                        
                        
                        $
                        103.8
                        
                        
                        $
                        130.0Gross
      margin as a percent of net sales
                        
                        
                        57
                        %
                        
                        
                        57
                        %
                        
                        
                        58
                        %
                        
                        
                        59
                        %





Gross
profit margin was 57% and 58% for the three and six month periods ended
June 30, 2009, respectively, as compared to 57% and 59% for the
corresponding periods of the prior year. We expected a small increase
(approximately 50 basis points) in gross margin during the three and six months
ended June 30, 2009 as a result of the effect that a strong U.S. dollar relative
to the euro has on our European based product sales to United States customers.
Sales to these customers are denominated in dollars while our costs are incurred
in euro. However, the benefits resulting from the strong U.S. dollar was
mitigated by gross margin declines resulting from product sales mix within
individual lines of Company products resulting in fairly consistent gross
margins for all periods presented.





Generally,
we do not bill customers for shipping and handling costs and such costs, which
aggregated $1.1 million and $2.4 million for the three and six month periods
ended June 30, 2009, respectively, as compared to $1.6 million and $3.2
million for the corresponding periods of the prior year, are included in
selling, general and administrative expenses in the consolidated statements of
income. As such, our Company’s gross profit may not be comparable to other
companies which may include these expenses as a component of cost of goods
sold.





Selling, general and administrative
                        expenses
                      
                      Three months ended
                        June 30,
                      
                      
                      Six months ended
                        June 30,(In millions)
                      
                      2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Selling,
      general and administrative expenses
                      
                      $
                      43.4
                      
                      
                      $
                      49.1
                      
                      
                      $
                      86.6
                      
                      
                      $
                      104.1Selling,
      general and administrative expenses as a percent of net
    sales
                      
                      
                      49
                      %
                      
                      
                      50
                      %
                      
                      
                      48
                      %
                      
                      
                      47
                      %




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INTER
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Selling, general and administrative
expenses decreased 12% and 17% for the three and six-month periods ended June
30, 2009, respectively, as compared to the corresponding periods of the prior
year. As a percentage of sales, selling, general and administrative expenses
were 49% and 48% of sales for the three and six-month periods ended June 30,
2009, respectively, as compared to 50% and 47% for the corresponding periods of
the prior year.





Promotion and advertising included in
selling, general and administrative expenses aggregated $15.0 million and $28.0
million for the three and six-month periods ended June 30, 2009, respectively,
as compared to $18.5 million and $35.1 million for the corresponding periods of
the prior year.





Promotion and advertising represented
16.9% of net sales for the three months ended June 30, 2009, as compared to
18.7% of sales for the corresponding period of the prior year. Advertising
expenditures in 2008 were high in support of the launch of Burberry, The Beatfor women. As we
anticipated lower sales volume in 2009 as compared to 2008, advertising
expenditures were curtailed slightly. Royalty expense, included in selling,
general and administrative expenses, aggregated $7.9 million and $16.4 million
for the three and six-month periods ended June 30, 2009, respectively, as
compared to $7.9 million and $20.1 million for the corresponding periods of the
prior year.





Income
from operations was $6.8 million for both the three-month period ended
June 30, 2009 and 2008. Income from operations was $17.1 million for
the six month period ended June 30, 2009, as compared to $26.0 million for the
corresponding period of the prior year. Operating margins were 7.7% and 9.6% of
net sales for the three and six month periods ended June 30, 2009, respectively,
as compared to 6.9% and 11.7% for the corresponding periods of the prior
year.





Interest
expense aggregated $0.4 million and $1.7 million for the three and six-month
periods ended June 30, 2009, respectively, as compared to $0.4 million and $1.4
million for the corresponding periods of the prior year.We use the
credit lines available to us, as needed, to finance our working capital needs.
An €18 million and a €22 million five-year credit facility were entered into in
January 2007 and September 2007, respectively, to finance payments required for
the Van Cleef & Arpels license agreement and the acquisition of the Lanvin
trademarks.





Foreign
currency gains (losses) aggregated $2.6 million and $3.9 million for the three
and six-month periods ended June 30, 2009, respectively, as compared to $0.2
million and ($0.2) million for the corresponding periods of the prior
year.  We enter into foreign currency forward exchange contracts to
manage exposure related to certain foreign currency commitments. As a result of
the dramatic strengthening of the U.S. dollar during our fourth quarter ended
December 31, 2008, we entered into foreign currency forward exchange contracts
to hedge approximately 80% of our 2009 sales expected to be invoiced in U.S.
dollars. For the three and six month periods ended June 30, 2009, the Company
recorded a gain of $2.0 million and $3.9 million, respectively, including
amounts reclassified from Other Comprehensive Income into
earnings.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Our
effective income tax rate was 37% and 35% for the three and six-month periods
ended June 30, 2009, respectively, as compared to 38% and 39% for the
corresponding periods of the prior year. Our effective tax rate is usually
around 35%. The effective tax rate differs from statutory rates due to the
effect of state and local taxes and tax rates in foreign jurisdictions which are
slightly higher than those in the United States. The higher effective rate in
2008 resulted primarily from valuation allowances that were provided in 2008 on
deferred tax assets relating to foreign net operating loss carryforwards, as
future profitable operations from our four European based distribution
subsidiaries is not assured. Although additional valuation allowances were
provided in 2009, due to continued losses incurred by the distribution
subsidiaries, the higher effective rate was reduced by tax benefits resulting
from losses in our United States segment which carries a higher effective rate
due to state and local taxes. No significant changes in tax rates were
experienced nor were any expected in jurisdictions where we
operate.





Net
income and earnings per share





(In thousands except per share data)
                  
                  Three Months Ended
                    June 30,
                  
                  
                  Six Months Ended
                    June 30,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Net
      income
                  
                  $
                  5,753
                  
                  
                  $
                  4,490
                  
                  
                  $
                  13,009
                  
                  
                  $
                  15,627Less:   Net
      income attributable to the noncontrolling interest
                  
                  
                  1,527
                  
                  
                  
                  718
                  
                  
                  
                  3,355
                  
                  
                  
                  3,147Net
      income attributable toInter
      Parfums, Inc.
                  
                  $
                  4,226
                  
                  
                  $
                  3,772
                  
                  
                  $
                  9,654
                  
                  
                  $
                  12,480Earnings
      per share:Net
      income attributable to Inter Parfums, Inc. common
      shareholders:Basic
                  
                  $
                  0.14
                  
                  
                  $
                  0.12
                  
                  
                  $
                  0.32
                  
                  
                  $
                  0.41Diluted
                  
                  $
                  0.14
                  
                  
                  $
                  0.12
                  
                  
                  $
                  0.32
                  
                  
                  $
                  0.40Weighted
      average number of shares outstanding:Basic
                  
                  
                  30,064
                  
                  
                  
                  30,627
                  
                  
                  
                  30,115
                  
                  
                  
                  30,674Diluted
                  
                  
                  30,064
                  
                  
                  
                  30,914
                  
                  
                  
                  30,115
                  
                  
                  
                  30,861





Net
income increased 28% to $5.8 million for the three month period ended June 30,
2009, as compared to $4.5 million for the corresponding period of the prior
year. Net income decreased 17% to $13.0 million for the six-month period ended
June 30, 2009, as compared to $15.6 million for the corresponding period of the
prior year.





Net
income attributable to the noncontrolling interest aggregated 26% of net income
for the three and six month periods ended June 30, 2009, as compared to 16% and
20% for the corresponding periods of the prior year. In 2008, losses from our
51% owned European distribution subsidiaries offset profits from our other 75%
owned European subsidiaries.





Net
income attributable to Inter Parfums, Inc. increased 12% to $4.2 million for the
three month period ended June 30, 2009, as compared to $3.8 million for the
corresponding period of the prior year. Net income attributable to Inter
Parfums, Inc. decreased 23% to $9.7 million for the six-month period ended June
30, 2009, as compared to $12.5 million for the corresponding period of the prior
year. Despite the 11% decline in net sales for the three months ended June
30, 2009, net income attributable to Inter Parfums, Inc. increased 12%. As
previously mentioned, foreign currency exchange gains from our hedging
activities contributed approximately $1.2 million to net income attributable to
Inter Parfums, Inc. for such three month period.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Diluted
earnings per share were $0.14 and $0.12 for the three month periods ended
June 30, 2009 and 2008, respectively, and diluted earnings per share were
$0.32 and $0.40 for the six month periods ended June 30, 2009 and 2008,
respectively. Weighted average shares outstanding aggregated 30.1 million for
both the three and six-month periods ended June 30, 2009, respectively, as
compared to 30.6 million and 30.7 million for the corresponding periods of the
prior year. On a diluted basis, average shares outstanding were 30.1 million for
both the three and six-month periods ended June 30, 2009, as compared to
30.9 million for both the three and six-month periods ended June 30, 2008,
respectively. The decline in shares outstanding is primarily the result of
shares repurchased pursuant to Board of Directors authorizations.




Liquidity
and Capital Resources





Our
financial position remains strong. At June 30, 2009, working capital aggregated
$182 million and we had a working capital ratio in excess of 2.8 to 1. Cash and
cash equivalents aggregated $34 million.





Cash
provided by (used in) operating activities aggregated $9.6 million and ($16.1)
million for the six month periods ended June 30, 2009 and 2008, respectively.
Working capital items used $8 million in cash from operations in 2009 as
compared to a use of $38 million in 2008. As of December 31, 2007 and
continuing through June 30, 2008, we had a significant buildup of inventory to
support a very aggressive launch schedule including the women’s version of
Burberry, The Beatand
new fragrance families for each of Lanvin, Van Cleef & Arpels, ST Dupont and
Nickel. In terms of cash flows, for the six month period ended June 30, 2009,
inventories and accounts receivable decreased $11.9 million and $7.9 million
respectively.  The global economic crisis has resulted in lower sales
levels and extended payment terms to certain international distributors
prevented further declines in accounts receivables and inventories during the
period. In addition, in the 2009 period, accounts payable and accrued expenses
decreased $26 million as our vendor obligations for the year end inventory
buildup became due.





Cash
flows used in investing activities in 2009 reflects payments of approximately
$2.8 million for capital items. Our business is not capital intensive as we do
not own any manufacturing facilities. We typically spend between $2.0 million
and $3.0 million per year on tools and molds, depending on our new product
development calendar. The balance of capital expenditures is for office
fixtures, computer equipment and industrial equipment needed at our distribution
centers.  Capital expenditures in 2009 are expected to be in the range
of $3.5 million to $4.5 million, considering our 2009 launch
schedule.





Our
short-term financing requirements are expected to be met by available cash on
hand at June 30, 2009, cash generated by operations and short-term credit lines
provided by domestic and foreign banks. The principal credit facilities for 2009
consist of a $15.0 million unsecured revolving line of credit provided by a
domestic commercial bank and approximately $45.0 million in credit lines
provided by a consortium of international financial institutions. As of
June 30, 2009, short-term borrowings aggregated $10.5
million.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





In 2007,
we financed the acquisition of the worldwide rights to the Lanvin brand names
and international trademarks and the license for the Van Cleef & Arpels
brand and related trademarks by entering into five-year credit agreements. The
long-term credit facilities provide for principal and interest to be repaid in
20 quarterly installments. As of June 30, 2009, total long-term debt including
current maturities aggregated $33.8 million.





As of
December 31, 2008, the Company’s Board of Directors authorized the repurchase of
up to 1,031,863 shares of the Company’s common stock and through June 30, 2009,
the Company repurchased 108,100 shares of its common stock at an average price
of $5.84 per common share.




In
December 2008, our Board of Directors authorized a continuation of our cash
dividend of $0.133 per share, aggregating approximately $4.0 million per annum,
payable $.033 per share on a quarterly basis. Our next cash dividend for 2009
will be paid on October 15, 2009 to shareholders of record on September 30,
2009. The cash dividend for 2009 represents a small part of our cash position
and is not expected to have any significant impact on our financial
position.





We believe that funds provided by or
used in operations can be supplemented by our present cash position and
available credit facilities, so that they will provide us with sufficient
resources to meet all present and reasonably foreseeable future operating
needs.





Inflation
rates in the U.S. and foreign countries in which we operate did not have a
significant impact on operating results for the six month period ended June 30,
2009.





Contractual
Obligations





The
following table sets for a schedule of our contractual obligations as of
December 31, 2008 over the periods indicated in the table, as well as our total
contractual obligations ($ in thousands).




Payments
      due by periodContractual
      Obligations
                            
                            Total
                            
                            
                            Less
      than
                              1
      year
                            
                            
                            Years
                              2-3
                            
                            
                            Years
                              4-5
                            
                            
                            More
      than
                              5
      yearsLong-Term
      Debt (2)
                            
                            $
                            41,000
                            
                            
                            $
                            13,400
                            
                            
                            $
                            23,000
                            
                            
                            $
                            4,600Capital
      Lease ObligationsOperating
      Leases
                            
                            $
                            27,100
                            
                            
                            $
                            7,100
                            
                            
                            $
                            13,000
                            
                            
                            $
                            4,300
                            
                            
                            $
                            2,700Purchase
      obligations(1)
                            
                            $
                            1,306,500
                            
                            
                            $
                            137,700
                            
                            
                            $
                            293,400
                            
                            
                            $
                            313,900
                            
                            
                            $
                            561,500Other
      Long-Term Liabilities Reflected on the Registrant's Balance Sheet under
      GAAPTotal
                            
                            $
                            1,374,600
                            
                            
                            $
                            158,200
                            
                            
                            $
                            329,400
                            
                            
                            $
                            322,800
                            
                            
                            $
                            564,200




(1)
            Consists
      of purchase commitments for advertising and promotional items, minimum
      royalty guarantees, including fixed or minimum obligations, and estimates
      of such obligations subject to variable price provisions. Future
      advertising commitments were estimated based on planned future sales for
      the license terms that were in effect at December 31, 2008, without
      consideration for potential renewal periods and do not reflect the fact
      that our distributors share our advertising
  obligations.





(2)
            Interest
      due on the Company’s long-term debt is payable $1.10 million, $0.70
      million, $0.40 million and $0.07 million in 2009, 2010, 2011 and 2012,
      respectively.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Item
      3:
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





General





We
address certain financial exposures through a controlled program of risk
management that primarily consists of the use of derivative financial
instruments. Our French subsidiary primarily enters into foreign currency
forward exchange contracts in order to reduce the effects of fluctuating foreign
currency exchange rates.  We do not engage in the trading of foreign
currency forward exchange contracts or interest rate swaps.





Foreign
Exchange Risk Management





We
periodically enter into foreign currency forward exchange contracts to hedge
exposure related to receivables denominated in a foreign currency and to manage
risks related to future sales expected to be denominated in a foreign currency.
We enter into these exchange contracts for periods consistent with our
identified exposures. The purpose of the hedging activities is to minimize the
effect of foreign exchange rate movements on the receivables and cash flows of
Inter Parfums, S.A., our French subsidiary, whose functional currency is the
Euro. All foreign currency contracts are denominated in currencies of majorindustrialcountriesand are with largefinancial institutions,
which are ratedasstronginvestmentgrade.





All
derivative instruments are required to be reflected as either assets or
liabilities in the balance sheet measured at fair value. Generally, increases or
decreases in fair value of derivative instruments will be recognized as gains or
losses in earnings in the period of change.  If the derivative is
designated and qualifies as a cash flow hedge, the changes in fair value of the
derivative instrument will be recorded in other comprehensive
income.





Before
entering into a derivative transaction for hedging purposes, we determine that
the change in the value of the derivative will effectively offset the change in
the fair value of the hedged item from a movement in foreign currency rates.
Then, we measure the effectiveness of each hedge throughout the hedged
period.  Any hedge ineffectiveness is recognized in the income
statement.





As a
result of the dramatic strengthening of the U.S. dollar during our fourth
quarter ended December 31, 2008, we entered into foreign currency forward
exchange contracts to hedge approximately 80% of our 2009 sales expected to be
invoiced in U.S. dollars. Hedge effectiveness 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.
At June 30, 2009, we had foreign currency contracts in the form of forward
exchange contracts in the amount of approximately U.S. $40.2 million, GB
pounds 2.9 million, and Japanese yen 72.8 million which have varying
maturities of less than one year. We believe that our risk of loss as the result
of nonperformance by any of such financial institutions is
remote.


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27


INTER
PARFUMS, INC. AND SUBSIDIARIES





Interest Rate Risk
Management





We
mitigate interest rate risk by continually monitoring interest rates, and then
determining whether fixed interest rates should be swapped for floating rate
debt, or if floating rate debt should be swapped for fixed rate debt. We have
entered into two (2) interest rate swaps to reduce exposure to rising variable
interest rates. The first swap, entered into in 2004, effectively exchanged the
variable interest rate of 0.6% above the three month EURIBOR to a variable rate
based on the 12 month EURIBOR rate with a floor of 3.25% and a ceiling of 3.85%.
As of December 31, 2008, the remaining balance owed pursuant to this facility
was  €1.6 million, which has been paid in full as of June 30, 2009.
The second swap entered into in September 2007 on €22 million of debt,
effectively exchanged the variable interest rate of 0.6% above the three month
EURIBOR to a fixed rate of 4.42%. The remaining balance owed pursuant to this
facility is €14.3 million. These derivative instruments are recorded at fair
value and changes in fair value are reflected in the accompanying consolidated
statements of income.





Item
      4.
            CONTROLS
      AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





Our Chief
Executive Officer and Chief Financial Officer have reviewed and evaluated the
effectiveness of our disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rule 13a-15(e)) as of the end of the period
covered by this quarterly report on Form 10-Q (the “Evaluation
Date”).  Based on their review and evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that as of the Evaluation
Date our Company's disclosure controls and procedures were
effective.





Changes
in Internal Controls





There has
been no change in our internal control over financial reporting (as defined in
Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during the
quarterly period covered by this report on Form 10-Q that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.


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28


INTER
PARFUMS, INC. AND SUBSIDIARIES





Part
II.  Other Information





Items 1, Legal Proceedings,1A,Risk Factors, 3, Defaults Upon Senior
Securities and 5, Other
Information, are omitted as they are either not applicable or have been
included in Part
I.





Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds





The following table sets forth the
number of shares of our common stock that we repurchased during the quarter
covered by this report. The average price per common share was
$5.82.





Period
                      
                      (a)
                        Total number of
                        shares purchased
                      
                      
                      (b)
                        Average price
                        paid per share
                      
                      
                      (c)
                        Total number of shares
                        purchased as part of publicly
                        announced plans or programs
                      
                      
                      (d)
                        Maximum number of shares
                        that may yet be purchased
                        under the plans or programsApril
      2009
                      
                      
                      48,100
                      
                      
                      $
                      5.82
                      
                      
                      
                      48,100
                      1
                      
                      
                      923,763May
      2009
                      
                      
                      -0-
                      
                      
                      NA
                      
                      
                      
                      -0-
                      
                      
                      
                      923,763June
      2009
                      
                      
                      -0-
                      
                      
                      NA
                      
                      
                      
                      -0-
                      
                      
                      
                      923,763Total
                      
                      
                      48,100
                      
                      
                      $
                      5.82
                      
                      
                      
                      48,100
                      
                      
                      
                      923,763





Item 4.Submission of Matters to a Vote of
Security Holders





(a) The Annual Meeting of Stockholders
of Inter Parfums, Inc. was held on July 24, 2009 at 10:00 a.m., local time, at
the offices of the Company, 551 Fifth Avenue, New York, New York
10176.





(b) The following individuals were
nominated for election as members of the Board of Directors to hold office for a
term of one (1) year until the next annual meeting of stockholders and until
their successors are elected and qualify: Jean Madar, Philippe Benacin, Russell
Greenberg, Philippe Santi, Francois Heilbronn, Jean Levy, Robert
Bensoussan-Torres, Serge Rosinoer and Patrick Choël. The results of the voting
were as set forth below. A plurality of the votes having been cast in favor of
each of the above-named Directors, they were duly elected to serve a one (1)
year term.





Nominee
                  
                  Votes For
                  
                  
                  Votes WithheldJean
      Madar
                  
                  
                  26,515,091
                  
                  
                  
                  2,175,926Philippe
      Benacin
                  
                  
                  25,703,475
                  
                  
                  
                  2,987,542Russell
      Greenberg
                  
                  
                  25,486,998
                  
                  
                  
                  3,204,019Francois
      Heilbronn
                  
                  
                  28,303,419
                  
                  
                  
                  387,598Jean
      Levy
                  
                  
                  28,529,073
                  
                  
                  
                  161,944Robert
      Bensoussan-Torres
                  
                  
                  28,535,710
                  
                  
                  
                  155,307Philippe
      Santi
                  
                  
                  25,703,475
                  
                  
                  
                  2,987,542Serge
      Rosinoer
                  
                  
                  28,623,333
                  
                  
                  
                  67,684Patrick
      Choël
                  
                  
                  28,529,073
                  
                  
                  
                  161,944







1Plan
disclosed on January 22, 2009 for a maximum of 1,500,000
shares.


Page
29


INTER
PARFUMS, INC. AND SUBSIDIARIES





Item
6.    Exhibits.





The following documents are filed
herewith:





Exhibit
                          No.
                        
                        Description
                        
                        Sequentially
                          Numbered Page in
                          Report10.137
                        
                        Lease
      Extension Agreement between 14th
      Street Development, LLC and Nickel USA, Inc. dated June 8,
      2009
                        
                        3431.1
                        
                        Certification
      Required by Rule 13a-14 of Chief Executive Officer
                        
                        3631.2
                        
                        Certification
      Required by Rule 13a-14 of Chief Financial Officer
                        
                        3732.1
                        
                        Certification
      Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive
      Officer
                        
                        3832.1
                        
                        Certification
      Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive
      Officer
                        
                        39





SIGNATURES





Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized on the 7th
day of August 2009.





INTER
      PARFUMS, INC.By:
            /s/ Russell GreenbergExecutive
      Vice President andChief
      Financial Officer


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30