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 Actof
      1934 for the quarterly period ended March 31,
  2009.





OR





 ̈
            Transition
      Report pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of1934
      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 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 May 8,
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 March 31, 2009 (unaudited) and December 31,
      2008
                
                
                2Consolidated
      Statements of Income for the Three Months Ended  March 31, 2009
      (unaudited) and March 31, 2008 (unaudited)
                
                
                3Consolidated
      Statements of Changes in Equity for the Three Months
      Ended   March 31, 2009 (unaudited) and March 31, 2008
      (unaudited)
                
                
                4Consolidated
      Statements of Cash Flows  for the Three Months
      Ended   March 31, 2009 (unaudited) and March 31, 2008
      (unaudited)
                
                
                5Notes
      to Consolidated Financial Statements
                
                
                6Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                
                
                14Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
                
                
                25Item
      4.   Controls and Procedures
                
                
                26Part
      II. Other Information
                
                
                26Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                
                
                27Item
      6. Exhibits
                
                
                27Signatures
                
                
                28





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 three
months ended March 31, 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)





March
      31,
                                              2009
                                            
                                            
                                            December
      31,
                                              2008(unaudited)ASSETSCurrent
      assets:Cash and cash
      equivalents
                                            
                                            $
                                            33,853
                                            
                                            
                                            $
                                            42,404Accounts receivable,
      net
                                            
                                            
                                            113,942
                                            
                                            
                                            
                                            120,507Inventories
                                            
                                            
                                            121,215
                                            
                                            
                                            
                                            123,633Receivables,
other
                                            
                                            
                                            2,086
                                            
                                            
                                            
                                            2,904Other current
    assets
                                            
                                            
                                            6,906
                                            
                                            
                                            
                                            10,034Income tax
    receivable
                                            
                                            
                                            1,346
                                            
                                            
                                            
                                            1,631Deferred tax
    assets
                                            
                                            
                                            3,574
                                            
                                            
                                            
                                            3,388Total current
    assets
                                            
                                            
                                            282,922
                                            
                                            
                                            
                                            304,501Equipment
      and leasehold improvements, net
                                            
                                            
                                            8,037
                                            
                                            
                                            
                                            7,670Goodwill
                                            
                                            
                                            5,238
                                            
                                            
                                            
                                            5,470Trademarks,
      licenses and other intangible assets, net
                                            
                                            
                                            99,144
                                            
                                            
                                            
                                            104,922Other
      assets
                                            
                                            
                                            896
                                            
                                            
                                            
                                            2,574Total
      assets
                                            
                                            $
                                            396,237
                                            
                                            
                                            $
                                            425,137LIABILITIES
      AND EQUITYCurrent
      liabilities:Loans payable –
    banks
                                            
                                            $
                                            11,994
                                            
                                            
                                            $
                                            13,981Current portion of long-term
      debt
                                            
                                            
                                            11,752
                                            
                                            
                                            
                                            13,352Accounts payable -
      trade
                                            
                                            
                                            60,128
                                            
                                            
                                            
                                            66,236Accrued expenses
                                            
                                            
                                            29,074
                                            
                                            
                                            
                                            35,368Income taxes
    payable
                                            
                                            
                                            557
                                            
                                            
                                            
                                            442Dividends payable
                                            
                                            
                                            996
                                            
                                            
                                            
                                            996Total current
      liabilities
                                            
                                            
                                            114,501
                                            
                                            
                                            
                                            130,375Long-term
      debt, less current portion
                                            
                                            
                                            23,751
                                            
                                            
                                            
                                            27,691Deferred
      tax liability
                                            
                                            
                                            9,568
                                            
                                            
                                            
                                            11,562Equity:Inter
      Parfums, Inc. shareholders’ equity:Preferred
      stock, $.001 par; authorized1,000,000
      shares; none issuedCommon
      stock, $.001 par; authorized 100,000,000 shares;outstanding
      30,108,939 and 30,168,939 shares atMarch
      31, 2009 and December 31, 2008, respectively
                                            
                                            
                                            30
                                            
                                            
                                            
                                            30Additional
      paid-in capital
                                            
                                            
                                            42,070
                                            
                                            
                                            
                                            41,950Retained
      earnings
                                            
                                            
                                            172,518
                                            
                                            
                                            
                                            168,025Accumulated
      other comprehensive income
                                            
                                            
                                            13,205
                                            
                                            
                                            
                                            25,515Treasury
      stock, at cost, 10,026,379 and 9,966,379 commonshares
      at March 31, 2009 and December 31, 2008, respectively
                                            
                                            
                                            (31,668
                                            )
                                            
                                            
                                            (31,319
                                            )Total Inter Parfums, Inc.
      shareholders’ equity
                                            
                                            
                                            196,155
                                            
                                            
                                            
                                            204,201Noncontrolling
      interest
                                            
                                            
                                            52,262
                                            
                                            
                                            
                                            51,308Total equity
                                            
                                            
                                            248,417
                                            
                                            
                                            
                                            255,509Total
      liabilities and equity
                                            
                                            $
                                            396,237
                                            
                                            
                                            $
                                            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
                        March
      31,2009
                      
                      
                      2008Net
      sales
                      
                      $
                      90,409
                      
                      
                      $
                      123,163Cost
      of sales
                      
                      
                      36,844
                      
                      
                      
                      49,075Gross
      margin
                      
                      
                      53,565
                      
                      
                      
                      74,088Selling,
      general and administrative expenses
                      
                      
                      43,263
                      
                      
                      
                      54,943Income
      from operations
                      
                      
                      10,302
                      
                      
                      
                      19,145Other
      expenses (income):Interest expense
                      
                      
                      1,312
                      
                      
                      
                      1,071(Gain) loss on foreign
      currency
                      
                      
                      (1,379
                      )
                      
                      
                      367Interest income
                      
                      
                      (508
                      )
                      
                      
                      (613
                      )(575
                      )
                      
                      
                      825Income
      before income taxes
                      
                      
                      10,877
                      
                      
                      
                      18,320Income
      taxes
                      
                      
                      3,621
                      
                      
                      
                      7,184Net
      income
                      
                      
                      7,256
                      
                      
                      
                      11,136Less:
      Net income attributable to the noncontrolling interest
                      
                      
                      1,828
                      
                      
                      
                      2,428Net
      income attributable to Inter Parfums, Inc.
                      
                      $
                      5,428
                      
                      
                      $
                      8,708Earnings
      per share:Net
      income attributable to Inter Parfums, Inc. common
      shareholders:Basic
                      
                      $
                      0.18
                      
                      
                      $
                      0.28Diluted
                      
                      $
                      0.18
                      
                      
                      $
                      0.28Weighted
      average number of shares outstanding:Basic
                      
                      
                      30,166
                      
                      
                      
                      30,721Diluted
                      
                      
                      30,166
                      
                      
                      
                      30,808Dividends
      declared per share
                      
                      $
                      0.033
                      
                      
                      $
                      0.033





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
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          8,708
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          2,428
                          
                          
                          
                          11,136Foreign
      currency translation adjustment
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          12,305
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          12,305Net
      derivative instrument gain, net of tax
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (140
                          )
                          
                          
                          —
                          
                          
                          
                          (46
                          )
                          
                          
                          (186
                          )Purchase
      of subsidiary shares from noncontrolling interests
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (7,758
                          )
                          
                          
                          (7,758
                          )Sale
      of subsidiary shares to noncontrolling interests
                          
                          
                          —
                          
                          
                          
                          24
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          103
                          
                          
                          
                          127Foreign
      currency translation adjustment
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          3,711
                          
                          
                          
                          3,711Dividends
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (1,027
                          )
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (1,027
                          )Purchased
      treasury stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (2,207
                          )
                          
                          
                          —
                          
                          
                          
                          (2,207
                          )Shares
      issued upon exercise of stock options
                          
                          
                          —
                          
                          
                          
                          111
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          111Stock
      compensation
                          
                          
                          —
                          
                          
                          
                          100
                          
                          
                          
                          100
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          42
                          
                          
                          
                          242Balance
      – March 31, 2008
                          
                          $
                          31
                          
                          
                          $
                          40,258
                          
                          
                          $
                          155,776
                          
                          
                          $
                          43,120
                          
                          
                          $
                          (28,551
                          )
                          
                          $
                          52,405
                          
                          
                          $
                          263,039Balance
      – January 1, 2009
                          
                          $
                          30
                          
                          
                          $
                          41,950
                          
                          
                          $
                          168,025
                          
                          
                          $
                          25,515
                          
                          
                          $
                          (31,319
                          )
                          
                          $
                          51,308
                          
                          
                          $
                          255,509Comprehensive
      income:Net
      income
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          5,428
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          1,828
                          
                          
                          
                          7,256Foreign
      currency translation adjustment
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (9,651
                          )
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (9,651
                          )Net
      derivative instrument gain, net of tax
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (2,659
                          )
                          
                          
                          —
                          
                          
                          
                          (791
                          )
                          
                          
                          (3,450
                          )Purchase
      of subsidiary shares from noncontrolling interests
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (142
                          )
                          
                          
                          (142
                          )Sale
      of subsidiary shares to noncontrolling interests
                          
                          
                          
                          
                          
                          
                          (7
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          30
                          
                          
                          
                          23Dividends
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (996
                          )
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (996
                          )Purchased
      treasury stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (349
                          )
                          
                          
                          —
                          
                          
                          
                          (349
                          )Stock
      compensation
                          
                          
                          —
                          
                          
                          
                          127
                          
                          
                          
                          61
                          
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          29
                          
                          
                          
                          217Balance
      – March 31, 2009
                          
                          $
                          30
                          
                          
                          $
                          42,070
                          
                          
                          $
                          172,518
                          
                          
                          $
                          13,205
                          
                          
                          $
                          (31,668
                          )
                          
                          $
                          52,262
                          
                          
                          $
                          248,417





See
notes to consolidated financial statements.


Page
4


INTER
PARFUMS, INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)





Three
      months ended
                            March
      31,2009
                          
                          
                          2008Cash
      flows from operating activities:Net income
                          
                          $
                          7,256
                          
                          
                          $
                          11,136Adjustments to reconcile net
      income to net cash provided by (used in) operating
    activities:Depreciation and
      amortization
                          
                          
                          2,336
                          
                          
                          
                          2,460Provision for doubtful
      accounts
                          
                          
                          15
                          
                          
                          
                          24Noncash
      stock compensation
                          
                          
                          263
                          
                          
                          
                          310Deferred tax expense
      (benefit)
                          
                          
                          (1,767
                          )
                          
                          
                          222Change in fair value of
      derivatives
                          
                          
                          (796
                          )
                          
                          
                          —Changes in:Accounts
    receivable
                          
                          
                          1,860
                          
                          
                          
                          (13,121
                          )Inventories
                          
                          
                          (1,859
                          )
                          
                          
                          (5,372
                          )Other assets
                          
                          
                          807
                          
                          
                          
                          412Accounts payable and accrued
      expenses
                          
                          
                          (8,233
                          )
                          
                          
                          (17,966
                          )Income taxes payable,
      net
                          
                          
                          1,982
                          
                          
                          
                          3,011Net cash provided by (used in)
      operating activities
                          
                          
                          1,864
                          
                          
                          
                          (18,884
                          )Cash
      flows from investing activities:Purchases of equipment and
      leasehold improvements
                          
                          
                          (1,414
                          )
                          
                          
                          (938
                          )Payment for intangible assets
      acquired
                          
                          
                          (168
                          )
                          
                          
                          (237
                          )Payment for purchase of
      subsidiary shares from noncontrolling interest
                          
                          
                          (142
                          )
                          
                          
                          (16,799
                          )Proceeds from sale of subsidiary
      shares to noncontrolling interest
                          
                          
                          23
                          
                          
                          
                          127Net cash used in investing
      activities
                          
                          
                          (1,701
                          )
                          
                          
                          (17,847
                          )Cash
      flows from financing activities:Proceeds (repayments) of loans
      payable – bank, net
                          
                          
                          (1,719
                          )
                          
                          
                          4,083Repayment of long-term
      debt
                          
                          
                          (3,665
                          )
                          
                          
                          (4,108
                          )Proceeds from exercise of
      options
                          
                          
                          —
                          
                          
                          
                          111Dividends paid
                          
                          
                          (996
                          )
                          
                          
                          (1,027
                          )Purchase of treasury
      stock
                          
                          
                          (349
                          )
                          
                          
                          (2,206
                          )Net cash used in financing
      activities
                          
                          
                          (6,729
                          )
                          
                          
                          (3,147
                          )Effect
      of exchange rate changes on cash
                          
                          
                          (1,985
                          )
                          
                          
                          4,425Net
      decrease in cash and cash equivalents
                          
                          
                          (8,551
                          )
                          
                          
                          (35,453
                          )Cash
      and cash equivalents - beginning of period
                          
                          
                          42,404
                          
                          
                          
                          90,034Cash
      and cash equivalents - end of period
                          
                          $
                          33,853
                          
                          
                          $
                          54,581Supplemental
      disclosure of cash flow information:Cash paid for:Interest
                          
                          $
                          749
                          
                          
                          $
                          1,097Income taxes
                          
                          
                          4,266
                          
                          
                          
                          3,924





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 - adopted:





In March
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS 161,
Disclosures about Derivative Instruments and Hedging Activities, as an amendment
to SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
161 requires that objectives for using derivative instruments be disclosed in
terms of underlying risk and accounting designation. The fair value of
derivative instruments and their gains and losses will need to be presented in
tabular format in order to present a more complete picture of the effects of
using derivative instruments. SFAS 161 is effective for financial statements
beginning after November 15, 2008. The adoption by the Company of SFAS 161
did not have any impact on its consolidated financial statements.





In
December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes
requirements for ownership interests 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 interests 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
December 2007, the FASB issued SFAS 141(revised 2007), “Business Combinations”
(“SFAS 141R”). SFAS 141R provides revised guidance on how acquirers recognize
and measure the consideration transferred, identifiable assets acquired,
liabilities assumed, noncontrolling interests, and goodwill acquired in a
business combination. SFAS 141R also expands required disclosures surrounding
the nature and financial effects of business combinations. SFAS 141R is
effective, on a prospective basis, for fiscal years beginning after December 15,
2008. The adoption by the Company of SFAS 141R did not have a material impact on
its consolidated financial statements. However, as required by SFAS 141R,
additional minority interests acquired in majority owned entities after adoption
of SFAS 141R, are accounted for as equity transactions.





There are
no new accounting pronouncements issued but not yet adopted that would have a
material effect on the Company’s financial statements.


Page
6





INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





3.
            Inventories:





Inventories consist of the
following:





(In
      thousands)
                  
                  March
      31,
                      2009
                  
                  
                  December
      31,
                      2008Raw
      materials and component parts
                  
                  $
                  34,022
                  
                  
                  $
                  37,248Finished
      goods
                  
                  
                  87,193
                  
                  
                  
                  86,385$
                  121,215
                  
                  
                  $
                  123,633





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 presents our financial assets and liabilities that are measured
at fair value on a recurring basis and are categorized using the fair value
hierarchy. The fair value hierarchy has three levels based on the reliability of
the inputs used to determine fair value.




Fair
      Value Measurements at March 31, 2009Quoted
      Prices in
                            
                            
                            Significant Other
                            
                            
                            SignificantActive Markets for
                            
                            
                            Observable
                            
                            
                            UnobservableIdentical
      Assets
                            
                            
                            Inputs
                            
                            
                            InputsTotal
                            
                            
                            (Level
      1)
                            
                            
                            (Level
      2)
                            
                            
                            (Level
      3)Assets:Money
      market funds
                            
                            $
                            18,949
                            
                            
                            $
                            18,949
                            
                            
                            $
                            —
                            
                            
                            $
                            —Foreign
      currency forward exchange contracts accounted for using hedge
      accounting
                            
                            
                            3,600
                            
                            
                            
                            
                            
                            
                            
                            3,600Foreign
      currency forward exchange contracts not accounted for using hedge
      accounting
                            
                            
                            81
                            
                            
                            
                            —
                            
                            
                            
                            81
                            
                            
                            
                            —$
                            22,630
                            
                            
                            $
                            18,949
                            
                            
                            $
                            3,681
                            
                            
                            $
                            —Liabilities:Interest
      rate swaps
                            
                            $
                            1,007
                            
                            
                            $
                            —
                            
                            
                            $
                            1,007
                            
                            
                            $
                            —


Page
7




INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





Fair Value Measurements at December 31, 2008Quoted
      Prices in
                              
                              
                              Significant
      Other
                              
                              
                              SignificantActive Markets for
                              
                              
                              Observable
                              
                              
                              UnobservableIdentical
      Assets
                              
                              
                              Inputs
                              
                              
                              InputsTotal
                              
                              
                              (Level
      1)
                              
                              
                              (Level
      2)
                              
                              
                              (Level
      3)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
                              
                              
                              $
                              —LiabilitiesForeign
      currency forward exchange contracts not accounted for using hedge
      accounting
                              
                              $
                              1,429
                              
                              
                              $
                              —
                              
                              
                              $
                              1,429
                              
                              
                              $
                              —Interest
      rate swaps
                              
                              
                              811
                              
                              
                              
                              —
                              
                              
                              
                              811
                              
                              
                              
                              —$
                              2,240
                              
                              
                              $
                              —
                              
                              
                              $
                              2,240
                              
                              
                              $
                              —





The
following table presents gains and losses in derivatives designated as hedges
and the location of those gains and losses in the financial
statements:




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)March
      31,
                                          
                                          
                                          
                                          March
      31,
                                          
                                          
                                          
                                          March
      31,2009
                                          
                                          
                                          2008
                                          
                                          
                                          
                                          2009
                                          
                                          
                                          2008
                                          
                                          
                                          
                                          2009
                                          
                                          
                                          2008Foreign
      exchange contracts
                                          
                                          $
                                          (3,855
                                          )
                                          
                                          
                                          —
                                          
                                          Gain
      (loss) on foreign currency
                                          
                                          $
                                          1,062
                                          
                                          
                                          
                                          —
                                          
                                          Gain
      (loss) on foreign currency
                                          
                                          $
                                          796
                                          
                                          
                                          
                                          —





(A) The
amount of gain (loss) recognized in income represents $796 related to the amount
excluded from the assessment of hedge
effectiveness.




The
following table presents gains and losses in derivatives not designated as
hedges and the location of those gains and losses in the financial
statements




Derivatives
      not Designated
                            as
      Hedging Instruments
                            under
      Statement 133
                          
                          Location
      of Gain (Loss)
                            recognized
      in Income on
                            Derivative
                          
                          March 31, 2009
                          
                          
                          March 31, 2008Interest
      rate swaps
                          
                          Interest
      expense
                          
                          $
                          (227
                          )
                          
                          $
                          (258
                          )Foreign
      exchange contracts
                          
                          Gain
      (loss) on foreign currency
                          
                          $
                          (360
                          )
                          
                          $
                          452


Page
8




INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





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 March 31, 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
either other current assets ($3.5 million) or other assets ($0.2 million) on the
accompanying balance sheet as of March 31, 2009, depending upon the maturity
dates of the contract. 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 March 31, 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 March 31, 2009, we had foreign currency contracts
in the form of forward exchange contracts in the amount of approximately U.S.
$130 million, GB pounds 2.8 million, and Japanese yen 95.8 million
which all have maturities of less than one year except for contracts for U.S. $3
million which have maturities of 13 months.





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


Fair
      Value Measurements at March 31, 2009Quoted
      Prices in
                            
                            
                            Significant Other
                            
                            
                            SignificantActive Markets for
                            
                            
                            Observable
                            
                            
                            Unobservable(In
      thousands)
                            
                            
                            
                            
                            Identical
      Assets
                            
                            
                            Inputs
                            
                            
                            InputsTotal
                            
                            
                            (Level
      1)
                            
                            
                            (Level
      2)
                            
                            
                            (Level
      3)DescriptionGoodwill
                            
                            $
                            5,238
                            
                            
                            $
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            5,238




The
goodwill relates to the Company’s Nickel skin care business which is primarily a
component of our European operations. We have measured fair value 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 March 31, 2009 other
than for the effect of foreign currency translation rates.





6.
            Shareholders’
      Equity:





In May
2008, the board of directors of the Company authorized a three-for-two stock
split effected in the form of a 50% stock dividend distributed on May 30, 2008
to shareholders of record as of May 15, 2008. As a result of the stock split,
the accompanying consolidated financial statements reflect an increase in the
number of outstanding shares of common stock and the transfer of the par value
of these additional shares from paid-in capital. All share and per share amounts
for dates and periods prior to the split have been restated to reflect the
retroactive effect of the stock split.




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 in March 2009, the
Company repurchased 60,000 shares of its common stock at an average price of
$5.82 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 three months ended March 31, 2009 and 2008 aggregated $0.04 million
and $0.01 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 three month period ended March 31, 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
                
                
                (16,780
                )
                
                $
                3.68Nonvested
      options – end of year
                
                
                477,483
                
                
                $
                3.79





Share-based
payment expense decreased income before income taxes and net income attributable
to Inter Parfums, Inc. by $0.26 million and $0.15 million and by $0.31 million
and $0.17 million for the three months ended March 31, 2009 and 2008,
respectively.





The
following table summarizes stock option information as of March 31,
2009:




Shares
                
                
                Weighted Average
      Exercise PriceOutstanding
      at January 1, 2009
                
                
                1,138,375
                
                
                $
                11.23Granted
                
                
                4,000
                
                
                
                6.15Forfeited
      or expired
                
                
                (55,900
                )
                
                
                15.10Outstanding
      at March 31, 2009
                
                
                1,086,475
                
                
                $
                11.01Options
      exercisable at March 31, 2009
                
                
                608,992
                
                
                $
                10.74Options
      available for future grants
                
                
                1,265,269





As of
March 31, 2009, the weighted average remaining contractual life of options
outstanding is 2.88 years (1.53 years for options exercisable), the aggregate
intrinsic value of options outstanding and options exercisable is $0 and
unrecognized compensation cost related to stock options outstanding on Inter
Parfums, Inc. stock aggregated $1.6 million. The amount of unrecognized
compensation cost related to stock options outstanding of our majority-owned
subsidiary, Inter Parfums S.A., was €0.3 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 three months ended March 31, 2009 and
2008.




Cash
proceeds, tax benefits and intrinsic value related to stock options exercised
during the three months ended March 31, 2009 and March 31, 2008 were as
follows:




(In
      thousands)
                  
                  March 31,
                      2009
                  
                  
                  March 31,
                      2008Cash
      proceeds from stock options exercised
                  
                  $
                  —
                  
                  
                  $
                  111Tax
      benefits
                  
                  
                  —
                  
                  
                  
                  —Intrinsic
      value of stock options exercised
                  
                  
                  —
                  
                  
                  
                  88





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 three months ended March 31, 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 March 31, 2009 and
2008 are set forth in the following table. 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.




March 31,
                    2009
                
                
                March 31,
                    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
                
                
                2.2
                %
                
                
                1.20
                %





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. All share and per share amounts
for dates and periods prior to the split have been restated to reflect the
retroactive effect of the stock split.




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





(In
      thousands)
                  
                  Three
      months ended
                    March
      31,2009
                  
                  
                  2008Numerator:Net income attributable to
      Inter Parfums, Inc.
                  
                  $
                  5,428
                  
                  
                  $
                  8,708Effect of dilutive securities
      of consolidated subsidiary
                  
                  
                  (10
                  )
                  
                  
                  (77
                  )$
                  5,418
                  
                  
                  $
                  8,631Denominator:Weighted average
      shares
                  
                  
                  30,166
                  
                  
                  
                  30,721Effect of dilutive
      securities:Stock options and
      warrants
                  
                  
                  —
                  
                  
                  
                  8730,166
                  
                  
                  
                  30,808





Not
included in the above computations is the effect of antidilutive potential
common shares which consist of outstanding options to purchase 1.1 million and
0.8 million shares of common stock for the three month periods ended March 31,
2009 and 2008, respectively, as well as outstanding warrants to purchase 300,000
and 150,000 shares of common stock for the three month periods ended
March 31, 2009 and 2008, respectively.


Page
12





INTER
PARFUMS, INC. AND SUBSIDIARIES





Notes
to Consolidated Financial Statements





9.
            Comprehensive Income
      (Loss):




(In
      thousands)
                
                Three
      months ended
                  March
      31,2009
                
                
                2008Comprehensive
      income (loss):Net income
                
                $
                7,256
                
                
                $
                11,136Other comprehensive income, net
      of tax:Foreign
      currency translation adjustment
                
                
                (9,651
                )
                
                
                12,305Change
      in fair value of derivatives
                
                
                (2,926
                )
                
                
                (186
                )Net
      gains reclassified into earnings from equity
                
                
                (524
                )
                
                
                —Comprehensive
      income (loss)
                
                
                (5,845
                )
                
                
                23,255Less comprehensive income
      attributable to the noncontrolling interest
                
                
                1,037
                
                
                
                2,382Comprehensive
      income (loss) attributable to Inter Parfums, Inc.
                
                $
                (6,882
                )
                
                $
                20,873





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




(In
      thousands)
                
                Three
      months ended
                  March
      31,2009
                
                
                2008Net
      income attributable to Inter Parfums, Inc.
                
                $
                5,428
                
                
                $
                8,708Increase
      (decrease) in Inter Parfums, Inc.’s additional paid-in capital for
      subsidiary share transactions
                
                
                (7
                )
                
                
                24Change
      from net income attributable to Inter Parfums, Inc. and transfers from
      noncontrolling interest
                
                $
                5,421
                
                
                $
                8,732





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
                    March
      31,2009
                  
                  
                  2008Net
      sales:United States
                  
                  $
                  8,373
                  
                  
                  $
                  12,535Europe
                  
                  
                  82,036
                  
                  
                  
                  110,628$
                  90,409
                  
                  
                  $
                  123,163Net
      income (loss) attributable to Inter Parfums, Inc.:United States
                  
                  $
                  (767
                  )
                  
                  $
                  (446
                  )Europe
                  
                  
                  6,180
                  
                  
                  
                  9,129Eliminations
                  
                  
                  15
                  
                  
                  
                  25$
                  5,428
                  
                  
                  $
                  8,708


Page
13


INTER
PARFUMS, INC. AND SUBSIDIARIES





Item
      2:
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OFFINANCIAL
      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 91% and
90% of net sales for the three months ended March 31, 2009 and 2008,
respectively. We have built a portfolio of brands, which include Burberry, Lanvin, Van Cleef &
Arpels, Paul Smith, S.T. Dupont, Christian Lacroix, 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 61% and 63% of net
sales for the three months ended March 31, 2009 and 2008,
respectively.





Our
specialty retail and mass-market fragrance and fragrance related products are
marketed through our United States operations and represented 9% of net sales
for the three month period ended March 31, 2009. 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 our expanding specialty retail product lines,
sales are more concentrated in the second half of the year.


Page
14





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 is expected to be
challenging for us in 2009.




We have
reviewed our plans and have taken actions to mitigate the impact of these
conditions. Advertising and promotional budgets are being adjusted to align
our spending with anticipated sales. In addition, we are implementing 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 have
been negatively impacted by changes in foreign currency exchange rates caused by
the dramatic strengthening of the U.S. dollar during 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.





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.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





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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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.





We
evaluate goodwill and indefinite-lived intangible assets for impairment on an
annual basis or if impairment indicators exist. 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. For
goodwill, the evaluation requires a comparison of the estimated fair value of
the reporting unit, to the sum of the carrying value of the assets and
liabilities of that unit. If the sum of the carrying value of the assets and
liabilities of the reporting unit exceeds the fair value of the reporting unit,
the carrying value is reduced through an adjustment to the goodwill balance,
resulting in an impairment charge.





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INTER
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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.




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.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Results
of Operations





Three
Months Ended March 31, 2009 as Compared to the Three Months Ended March 31,
2008





Net
Sales





Three
      months ended March 31,2009
                                  
                                  
                                  %
      Change
                                  
                                  
                                  2008
                                  
                                  
                                  %
      Change
                                  
                                  
                                  2007(in
      millions)European
      based product sales
                                  
                                  $
                                  82.0
                                  
                                  
                                  
                                  (26
                                  )%
                                  
                                  $
                                  110.6
                                  
                                  
                                  
                                  46
                                  %
                                  
                                  $
                                  75.6United
      States based product sales
                                  
                                  
                                  8.4
                                  
                                  
                                  
                                  (33
                                  )%
                                  
                                  
                                  12.6
                                  
                                  
                                  
                                  31
                                  %
                                  
                                  
                                  9.5Total
      net sales
                                  
                                  $
                                  90.4
                                  
                                  
                                  
                                  (27
                                  )%
                                  
                                  $
                                  123.2
                                  
                                  
                                  
                                  45
                                  %
                                  
                                  $
                                  85.1





After increasing 45% in the 2008 period
as compared to 2007, net sales for the three months ended March 31, 2009
decreased 27% to $90.4 million, as compared to $123.2 million for the
corresponding period of the prior year. At comparable foreign currency exchange
rates, net sales in 2009 decreased 21%.





European
based prestige product sales decreased 26% to $82.0 million, as compared to
$110.6 million in the corresponding period of the prior year. First quarter net
sales were impacted by several factors including the global financial crisis
which has negatively affected consumer demand. In addition, the continued
strength of the U.S. dollar relative to the euro, had the net effect of
depressing 2009 first quarter sales by about 6% as compared to last year.
Furthermore, last year’s first quarter included our largest ever global launch
for our largest licensed brand, Burberry The Beat for women resulting
in a 53% increase in Burberry fragrance sales. Burberry fragrance sales
aggregated $54.8 million in 2009, as compared to $77.8 in 2008. In 2009, aided
by reorders of the Jeanne
Lanvin fragrance and the new Lanvin L’Homme Sport line, with
tennis star, Rafael Nadal as its spokesperson, Lanvin fragrance sales were $11.4
million in 2009, as compared to $11.5 million in 2008.





Despite the challenging economic
environment in most parts of the world, certain countries continue to perform at
satisfactory levels, notably, France, Italy, China and Saudi
Arabia.





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.
We also have a new Paul Smith fragrance for men, and a Lanvin L’Homme Sport line, with
tennis star, Rafael Nadal as its spokesperson. The Quiksilver signature
fragrance for men is also in our rollout schedule, as is a limited edition,
high-end women’s fragrance for the Van Cleef & Arpels brand later in
2009.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





With
respect to our United States specialty retail and mass-market products, net
sales declined 33% for the first quarter of 2009 after increasing 31% for the
first quarter of 2008. 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 and
mass-market product net 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
and mass-market product sales came under pressure. A portion of sales by our
United States operations are direct to retailers and it was our level of sales
to these customers where we first saw the effect 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
expected to follow and 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
spring 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 bebe stores in the U.S. in August followed by worldwide distribution
later 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.





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 $3.6 million and $4.9 million for the three months
ended March 31, 2009 and 2008, respectively, and contributes to our United
States based operations.





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
      margins
                
                Three months ended March 31,(in
      millions)
                
                2009
                
                
                2008Net
      sales
                
                $
                90.4
                
                
                $
                123.2Cost
      of sales
                
                
                36.8
                
                
                
                49.1Gross
      margin
                
                $
                53.6
                
                
                $
                74.1Gross
      margin as a % of net sales
                
                
                59
                %
                
                
                60
                %





Gross
profit margin was 59% in 2009 and 60% in 2008. We expected an increase in gross
margin in the first quarter of 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, any benefits that gross margin may have
received as a result of the strong U.S. dollar was mitigated by gross margin
declines resulting from product sales mix within individual lines of Company
products.


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20


INTER
PARFUMS, INC. AND SUBSIDIARIES





Generally,
we do not bill customers for shipping and handling costs and such costs, which
aggregated $1.2 million and $1.6 million for the three month period ended March
31, 2009 and 2008, respectively, are included in selling, general and
administrative expense 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 & administrative expenses(in
      millions)
                    
                    Three months ended March 31,2009
                    
                    
                    2008Selling,
      general & administrative expenses
                    
                    $
                    43.3
                    
                    
                    $
                    54.9Selling,
      general & administrative expensesas
      a % of net sales
                    
                    
                    48
                    %
                    
                    
                    45
                    %





Selling,
general and administrative expenses decreased 21% for the three month period
ended March 31, 2009, as compared to the corresponding period of the prior year.
As a percentage of sales selling, general and administrative expenses were 48%
and 45% for the three month period ended March 31, 2009 and 2008,
respectively.





Promotion and advertising included in
selling, general and administrative expenses aggregated approximately $13.0
million (14.4% of net sales) and $16.6 million (13.5% of net sales) for the
three month period ended March 31, 2009 and 2008, respectively. Although our
2008 first quarter sales include a significant contribution from the launch of
Burberry, The Beatfor
women, the advertising expenditure requirements pursuant to our license with
Burberry does not require such spending to be incurred until our distributors
sell such product to retailers. As a result, the second quarter of 2008 bore a
significant portion of such required advertising expenditures.





Royalty expense included in selling,
general, and administrative expenses aggregated $8.5 million (9.4% of net sales)
and $12.2 million (9.9% of net sales), for the three month periods ended March
31, 2009 and 2008, respectively.





Selling,
general and administrative expenses also include approximately $2.4 million and
$3.6 million for the three month period ended March 31, 2009 and 2008,
respectively, in servicing fees related to the operations of our majority-owned
European distribution subsidiaries.





Income
from operations decreased 46% to $10.8 million for the three month period ended
March 31, 2009, as compared to $19.1 million for the corresponding period of the
prior year. Operating margins were 11.4% of net sales in the current period as
compared to 15.5% for the corresponding period of the prior year.





Interest
expense aggregated $1.3 million for the three month period ended March 31, 2009,
as compared to $1.1 million in 2008. We use the credit lines available to us, as
needed, to finance our working capital needs as well as our financing needs for
acquisitions. We entered into an €18 million and a €22 million long-term credit
facility in January and September 2007, respectively, to finance payments
required for the Van Cleef & Arpels license agreement and the acquisition of
the Lanvin trademarks. In connection with certain debt facilities, we entered
into swap transactions. These derivative instruments are recorded at fair value
and changes in fair value are reflected in the consolidated statements of
income. As a result of the continued decline in interest rates during the first
quarter of 2009, we recorded a charge to interest expense of $0.2 million
relating to the change in the fair value of interest rate
swaps.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Foreign
currency gains or (losses) aggregated $1.3 million and ($0.4) million for the
three month period ended March 31, 2009 and 2008, respectively. 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. 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. As of March 31, 2009, the Company recorded a gain of
$0.8 million relating to the change in spot-forward difference.





Our
effective income tax rate was 33% and 39% for the three month period ended
March 31, 2009 and 2008, respectively. Our effective tax rates differ 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.
Our effective tax rate is usually around 35%. The lower rate in 2009 is due to
losses in our United States segment which carries a higher effective rate due to
state and local taxes. Our high 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. No
significant changes in tax rates were experienced nor were any expected in
jurisdictions where we operate.




(in
      millions)
              
              Three
      months ended
                March
      31,2009
              
              
              2008Net
      income
              
              $
              7,256
              
              
              $
              11,136Less:
      Net income attributable to the noncontrolling interest
              
              
              1,828
              
              
              
              2,428Net
      income attributable to Inter Parfums, Inc.
              
              $
              5,428
              
              
              $
              8,708Earnings
      per share:Net
      income attributable to Inter Parfums, Inc. common
      shareholders:Basic
              
              $
              0.18
              
              
              $
              0.28Diluted
              
              $
              0.18
              
              
              $
              0.28Weighted
      average number of shares outstanding:Basic
              
              
              30,166
              
              
              
              30,721Diluted
              
              
              30,166
              
              
              
              30,808




Net
income decreased 35% to $7.3 million for the three month period ended March 31,
2009, as compared to $11.1 million for the corresponding period of the prior
year. Net income attributable to the noncontrolling interest aggregated 25% of
net income in 2009 and 22% in 2008. 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. decreased 38% to
$5.4 million for the three month period ended March 31, 2009, as compared to
$8.7 million for the corresponding period of the prior year.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





Basic and
diluted earnings per share decreased 36% to $0.18 for the three month period
ended March 31, 2009, as compared to $0.28 for the corresponding period of
the prior year.





Weighted average shares outstanding
aggregated 30.2 million for the three months ended March 31, 2009, as
compared to 30.7 million for the corresponding period of the prior year. On a
diluted basis, average shares outstanding were 30.2 million for the three months
ended March 31, 2009, as compared to 30.8 million for the corresponding
period of the prior year.





Liquidity
and Capital Resources





Our
financial position remains strong. At March 31, 2009, working capital aggregated
$168 million and we had a working capital ratio of 2.5 to 1. Cash and cash
equivalents aggregated $34 million.





Cash
provided by (used in) operating activities aggregated $1.9 million and ($18.9)
million for the three month periods ended March 31, 2009 and 2008, respectively.
As of December 31, 2007 and continuing through the period ended March 31, 2008,
we had a significant buildup of inventory to support the first quarter launch of
the women’s version of Burberry, The Beat. In addition, the
statement of cash flows as of March 31, 2008 shows that accounts payable
and accrued expenses decreased $18 million or 15% as our vendor obligations for
the inventory buildup became due. In terms of cash flows, for the three month
period ended March 31, 2009, inventories and accounts receivable were virtually
unchanged.  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 $8 million or 9% as again our vendor obligations for the year end
inventory buildup became due.





Cash
flows used in investing activities in 2009 reflects payments of approximately
$1.4 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 March 31, 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 March
31, 2009, short-term borrowings aggregated $12.0 million.


Page
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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 provides for principal and interest to be repaid in
20 quarterly installments. As of March 31, 2009, total long-term debt including
current maturities aggregated $35.5 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 in March 2009, the
Company repurchased 60,000 shares of its common stock at an average price of
$5.81 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 first cash dividend for 2009
was paid on April 15, 2009 to shareholders of record on March 31, 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 three month period ended March
31, 2009.





Contractual
Obligations





The
following table sets for a schedule of our contractual obligations 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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24





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.
As of March 31, 2009, the Company recorded a gain of $0.8 million relating to
the change in spot-forward difference. At March 31, 2009, we had foreign
currency contracts in the form of forward exchange contracts in the amount of
approximately U.S. $130 million, GB pounds 2.8 million, and Japanese
yen 95.8 million which have varying maturities of less than one year except for
contracts for U.S. $3 million which have maturities of 13 months. We believe
that our risk of loss as the result of nonperformance by any of such financial
institutions is remote.


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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%.
The remaining balance owed pursuant to this facility is €0.8 million. 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
€15.4 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.





Part
II.  Other Information





Items 1, Legal Proceedings,1A,Risk Factors, 3, Defaults Upon Senior
Securities, 4, Submission of Matters to Vote of Security Holders and
5, Other Information,
are omitted as they are either not applicable or have been included in
Part I.


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INTER
PARFUMS, INC. AND SUBSIDIARIES





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 programsJanuary
      2009
                                
                                
                                -0-
                                
                                
                                NA
                                
                                
                                
                                -0-
                                1
                                
                                
                                1,031,863February
      2009
                                
                                
                                -0-
                                
                                
                                NA
                                
                                
                                
                                -0-
                                
                                
                                
                                1,031,863March
      2009
                                
                                
                                60,000
                                
                                
                                $
                                5.82
                                
                                
                                
                                60,000
                                
                                
                                
                                971,863Total
                                
                                
                                60,000
                                
                                
                                $
                                5.82
                                
                                
                                
                                60,000
                                
                                
                                
                                971,863





Item
6.    Exhibits.





The following documents are filed
herewith:





Exhibit
      No.
                  
                  Description31.1
                  
                  Certifications
      required by Rule 13a-14(a) of Chief Executive Officer31.2
                  
                  Certifications
      required by Rule 13a-14(a) of Chief Financial Officer32.1
                  
                  Certification
      required by Section 906 of the Sarbanes-Oxley Act of Chief Executive
      Officer32.1
                  
                  Certification
      required by Section 906 of the Sarbanes-Oxley Act of Chief Financial
      Officer







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


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INTER
PARFUMS, INC. AND SUBSIDIARIES





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 8th
day of May 2009.





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


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