Boucheron. Burberry. Jimmy Choo. Lanvin. Montblanc. Nickel ... · The distribution network 34...

Boucheron. Burberry. Jimmy Choo.Lanvin. Montblanc. Nickel. Paul Smith.S.T. Dupont. Van Cleef & Arpels.

Annual report two thousand & ten

Letter to our shareholders 02

Operating highlights and key figures 04

2010 milestones and 2011 outlook 06

The products 08

The market 32

The distribution network 34

International teams 36

Corporate governance 38

Corporate responsibility and the environment 40

Stock market 46

Financial highlights 48

Group organization 50

2010 registration document 53

A record year

2 Interparfums annual report two thousand & ten. Letter to our shareholders

JEAN MADAR & PHILIPPE BENACIN

Letter to our shareholders

3Interparfums annual report two thousand & ten. Letter to our shareholders

Dear shareholders,

We significantly exceeded our targets for 2010 with annual sales €306 million in amarket for perfumes and cosmetics that continued to gain momentum over the period.Bolstered by this trend, there was a strong improvement in the operating margin thatended the year at 13.8% and the net margin at nearly 9%.

However, this period was above all marked by an acceleration in the pace of the Group'sdevelopment that included:

- The signature of three exclusive worldwide licenses with the Jimmy Choo, Montblancand Boucheron brands, all from very different universes, has considerably strengthenedthe Group's portfolio:

- Jimmy Choo, a British luxury brand with a sophisticated universe that combinesglamour and seduction;

- Montblanc, a world-renowned luxury brand with international stature built on a tradition of master craftsmanship and the high quality of its products;

- Boucheron, an ultra-luxury jewellery brand, with a reputation as a trendsetterthrough its baroque-style, lunar and mysterious designs.

- The creation of two distribution subsidiaries in the US and Singapore representing animportant operational step in our development involving the deployment of significantresources. These entities are responsible for spearheading the development of all the Groupbrands in North America and Asia, two major markets for the Group.

- And finally, the eagerly awaited development of a new women's fragrance line underthe Burberry brand, with creation initiated early in the year for a worldwide launchprogrammed for fall 2011. Supported by a wide reaching communications plan, thismajor line will contribute to further strengthening the brand's growth momentum.

At the same time, the company is actively preparing two important women's fragranceline launches under the Van Cleef & Arpels and Lanvin brands planned for 2012 that willrepresent decisive creative breaks with previous lines.

On the strength of these key factors for the Group's future development, combined witha series of recruitments further reinforcing our organization by the addition of new talent,we are extremely confident in the growth prospects for our business over the coming years.

Sincere regards to all,

Jean Madar & Philippe Benacin

4 Interparfums annual report two thousand & ten. Key figures

(In € thousands) 2006 2007 2008 2009 2010

Sales 216,235 242,123 264,864 259,165 305,696International (%) 92% 91% 90% 90% 91%

Operating profit 29,182 31,812 34,259 33,683 42,216Net margin (%) 13.5% 13.1% 12.9% 13.0% 13.8%

Net income 18,694 20,193 21,119 22,647 26,807Net margin (%) 8.6% 8.3% 8.0% 8.7% 8.8%

Shareholders' equity (attributable to the parent) 115,795 134,233 154,436 169,939 191,884

Net cash (2) 44,072 56,113 26,304 66,201 57,668

Total assets 223,401 271,544 260,572 253,674 296,957

Workforce (at December 31) 128 145 152 171 180

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

07

259.2

264.9

242.1

42.2

31.8

34.3

33.7

305.7

08 09 10 07 08 09 10

26.8

20.2

21.1

22.6

07 08 09 10

6.3

4.6

4.8

5.1

07 08 09 10

5Interparfums annual report two thousand & ten. Key figures

YEAR 2010

KeyfiguresDespite marginally negative currency effects, the gross margin

as a percentage of sales exceeded 61%, gaining more than 2 pointsfrom higher sales prices in selected markets, lower costs for certain

components and a positive product mix effect.

Robust growth in operating profit (+25%) was accompanied by an increase in the operating margin from 13% to 13.8%. Thisperformance was driven by a sustained strategy of marketing and

advertising expenses targeted by country and brand combinedwith tight control over all costs.

With a reduction in net interest expense, a one-off charge linked to currency effects and a lower tax rate, net income was€26.8 million, up 18% and resulting in a net margin of 8.8%.

Balance sheet highlights (1)

The Group's already excellent position was furtherstrengthened at December 31, 2010 with:

- Shareholders' equity of nearly €192 million (64% of the total balance sheet);

- Net cash (including certificates of deposits) of €57.7 millions;

- Low net debt of €12 million.

Despite increased inventory levels linked to both stronggrowth in sales and launches in early 2011, operatingcash flow amounted to €27 million in 2010.

(1) Consolidated data in €millions.(2) Including certificates of deposits with maturities exceeding three months.

87.3Non-current

assets

152.0Current

assets

57.7Net cash (2)

192.0Shareholders’equity

12.1Long-termdebt

92.9Currentliabilities

Assets Liabilities

6 Interparfums annual report two thousand & ten. 2010 milestones and 2011 outlook

2010 MILESTONES AND 2011 OUTLOOK

Arecord yearMARCH JUNEJANUARY

Launch of the Burberry Sport line The launch of the new women's and men'sfragrance line, Burberry Sport reflectingcapturing the energy, attitude and vibrancyof the Burberry Sport ready-to-wear collection.

Launch of the Oriens line of VanCleef & ArpelsOriens celebrates the splendour and mysteryof the Orient with an opulent and elegantcomposition inspired from the collectionsof the Van Cleef & Arpels high jewelleryhouse.

Creation of Interparfums LuxuryBrands in the USInterparfums Luxury Brands, a wholly-owned subsidiary of the French parent Interparfums SA, will directly coordinatethe development and marketing of Burberry(fragrances and make-up), Lanvin, Montblancand Jimmy Choo brands in the US market.

Montblanc license agreement On January 22, 2010, Interparfums SA and MontblancInternational GmbH signed a 10 ½ year license agreementto create, produce and distributeperfumes and ancillary productsunder the Montblanc brandwith an inception date of July 1, 2010.

Bonus share issueOn June 20, 2010, the company proceededwith its 11th consecutive bonus issue on thebasis of one new share for every ten sharesheld.

Creation of Interparfums SingaporeA wholly-owned subsidiary of Interparfums SA, Interparfums Singaporewill coordinate marketing and sales operationsfor the entire Asian region.

JULY

Launch of the first range of the Burberry Beauty make-up lineInterparfums launches the first range ofthe Burberry Beauty make-up line. Withmore than 100 references, 60 exclusivecounters opened worldwide in 2010 and2011, this area of development is expectedto provide increased global visibility forthe Burberry brand.

7Interparfums annual report two thousand & ten. 2010 milestones and 2011 outlook

SEPTEMBER

Launch of the Midnight In Paris line of Van Cleef & ArpelsDirectly inspired by the eponymous watch fromits exclusive collection, Midnight in Paris combineselegance and masculinity to convey the history of a starry night scene from the heart of the Cityof Light.

Launch of the Marry Me ! line of LanvinMarry Me ! The perfume of an encounter, the firstdays of passion, a hope of true love.

Launch of the Miss Dupont line of S.T. DupontCelebrating the enchantment of beauty, S.T. Dupontlaunches a new fragrance dedicated exclusively towomen.

Launch of the Paul Smith 2 line of Paul SmithPaul Smith Man 2 offers men a new way to dressthemselves with an aroma capturing the unique PaulSmith playful sense of fun and formality.

Launch of the Nickel Bio line of NickelNickel Bio, a three-step skincare range for men …and for women! A concentrated organic energizerfor restoring skin vitality and tone day after day.

DECEMBER

Signature of a fragrance license agreement with BoucheronOn December 17, Boucheron and Interparfums signed a 15-year worldwidelicense agreement commencing on January 1, 2011 for the creation,development and distribution of fragrances under the Boucheron brand.

One-year extension of the license agreement with BurberryOn December 21, Interparfums and Burberry extended by one year certainterms of their fragrance license including the length of the agreementto December 31, 2017. Burberry’s right to buy the license was moreovermoved from December 31, 2011 to December 31, 2012, and the optionrequiring the consent of both parties to extend the license five yearsbeyond 2017 is now exercisable at December 31, 2015.

2011 OUTLOOK

Continuing growthContinued growth in 2011 will be supported by several major initiatives:

- Fragrance line launches under the Burberry, Jimmy Choo, Paul Smith and Montblanc brands;

- Thirty additional counters to be opened in department storesaccompanied by the rollout of new references for the BurberryBeauty make-up line;

- Integration into the portfolio of existing lines of the Boucheron brand;- A good performance by Montblanc fragrances in the 2011 second-half;- The start of the operational phase in the working relationship between

the US subsidiary Interparfums Luxury Brands and Clarins in theUnited States.

On the strength of this positive momentum, the company has raisedits guidance for 2011 sales to approximately €350 million or growthof more than 15% over 2010.

THE PRODUCTS

The creativeprocessA perfume, is first and foremost an olfactory creation, a delicate and subtle balance of multiple aromas… but a perfume is also the reflection of a brand identity…

For that reason that the development of a fragrance line and, since 2010, make-up, must systematically take into account the unique universe, defining qualities, origins and history of each brand.

This is the core know-how of the company that today develops perfume and cosmetic lines through license agreements with leading brands in the high-end, ready-to-wear, high-fashion, jewellery and accessories sector in close collaboration with the creative and marketing teams of each of these brands.

However, this expertise is also based on an ability to transpose the defining qualities of the brand in the universe of perfumery to achieve the optimal fit of the key components that make up the product including the name, the “juice” the bottle, packaging and the marketing strategy.

This process also reflects a fine-tuned business model deployed since the company's creation, based on long-term partnerships with customers, suppliers and packaging specialists, proven expertise in developing and marketing products and a streamlined organization that outsources packaging and logistics.

11Interparfums annual report two thousand & ten. Burberry products

In July 1993, Interparfums entered into an exclusive 10-year license, agreement with Burberry Ltd. to create and produce perfumes under the Burberry name and distribute them worldwide, followed by an initial 3-year extension in 2000.

In October 2004, Interparfums signed a new agreement for 12.5 years effective July 1, 2004 with an option for an additional five years subject to mutual agreement of the parties.

In December 2010, Interparfums and Burberry extended by one year the length of the agreement to December 31, 2017, Burberry’s right to buy the license was advanced from December 31, 2011 to December 31, 2012 and the date from which the option requiring the consent of both parties to extend the license five years beyond 2017 becomes exercisable to December 31, 2015.

Lines distributed: Burberry (1995), Burberry Week end (1997), Burberry Touch (2000), Burberry Brit (2003/2004), Burberry London (2006),Burberry The Beat (2008), Burberry The Beat Men (2009), Burberry Sport (2010) and a new make-up line, Burberry Beauty (2010).

Burberry fragrances had sales of €184.7 million in 2010. Burberry fragrances had another year of growth driven by the good performances of top-selling lines (Burberry Brit and Burberry London), the launch of Burberry Sportand Burberry Beauty, the make-up line rolled out in summer 2010 in addition to significant gains by its well-established lines (Burberry, Burberry Weekend and Burberry Touch).

12 Interparfums annual report two thousand & ten. Burberry products

2010/2011 awards

Best men's fragrance for Burberry Sport for Men in Serbia (Cosmo Beauty Award).Best fragrance for women in the Sports category for Burberry Sport for Women in Singapore (L’Officiel First Beaute Awards).Best women's fragrance for Burberry Sport for Women in India (Elle Beauty Awards).Best women's fragrance in the Sports category for Burberry Sport for Women in Malaysia (L’Officiel Beaute Awards).Best women's fragrance in the Sports category for Burberry Sport for Women in Malaysia (The CLEO Beauty Hall of Fame 2010)).Best men's fragrance for Burberry The Beat in France (Cosmetique magazine).2010 Oscar for men's perfumes in the selected distribution segment for Burberry The Beat for Men (Cosmétique Magazine).

Burberry Sport(2010)

Burberry The Beat(2008)

Burberry London(2006)

Burberry Sport Ice(2011)

Burberry Brit(2004/2003)

Burberry Brit Sheer(2007)


Burberry Touch(2000)

Burberry Weekend(1997)

Burberry(1995)

Burberry Baby Touch(2002)


Skin

Sheer foundation Sheer powder

Beauty brushSheer compact foundation

Glow

Light glow Warm glow

Eyes

Sheer eye shadow Effortless mascara

Eye definer

Lips

Lip cover Lip definer

Lip glow

16 Interparfums annual report two thousand & ten. Lanvin products

In July 2004, Interparfums entered into an exclusive 15-year license agreement with the company Lanvin to create, develop and distribute fragrances worldwide under the Lanvin name.

At the end of July 2007, Interparfums SA acquired the Lanvin brand names and international trademarks for class 3 fragrance products and make-up from the Jeanne Lanvin S.A. company. On the same date, the two companies mutually agreed to terminate the existing licensing contract signed in June 2004.

Lines distributed: Arpège (1927), Lanvin L’Homme (1997), Éclat d’Arpège (2002), Arpège pour Homme (2005), Rumeur (2006), Rumeur 2 Rose (2007), Jeanne Lanvin (2008), Lanvin L’Homme Sport (2009) and Marry Me ! (2010).

Lanvin fragrance had sales of more than €50 million in 2010. Lanvin fragrances had strong growth (+31%) based on performances by two now solidly established lines (Éclat d’Arpège and Jeanne Lanvin) and the launch of the Marry Me! line (€7 million).

Rumeur 2 Rose(2007)

Marry Me !(2010)

Lanvin l’Homme Sport(2009)

Jeanne Lanvin(2008)

Éclat d’Arpège(2002)

Arpège(1927)

2010/2011 awards

Best fragrance of the year for Éclat d’Arpège in Taiwan (SaSa Taïwan Fragrance).Most inspiring beauty ad for Marry Me ! in Singapore (Her World Beauty Awards 2011).

19Interparfums annual report two thousand & ten. Van Cleef & Arpels products

At the end of September 2006, the Van Cleef & Arpels and Interparfums groups signed a worldwide license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels brand name with a 12-year term that took effect on January 1, 2007.

Lines distributed: First (1976), Van Cleef pour Homme (1978), Tsar (1989), Van Cleef (1994), First 1er Bouquet (2008), Féerie (2008), Collection Extraordinaire (2009), Oriens (2010) and Midnight in Paris (2010).

Van Cleef & Arpels fragrances had sales of nearly €26 million in 2010. The renewal of the range (Féerie in fall 2008, Collection Extraordinaire in fall 2009, Oriens in spring 2010 and Midnight in Paris in fall 2010) and its successful repositioning in the exclusive high-end segment has translated into significant growth for Van Cleef & Arpels fragrances.

First(1976)

Féérie(2008)

Midnight in Paris(2010)

Oriens(2010)

Collection Extraordinaire(2009)

Tsar(1989)

2010/2011 awards

Best perfume set for Collection Extraordinaire in Singapore (Her World Beauty Awards 2011).Most beautiful design of the year for Oriens in Sweden (Cosmopolitan Beauty Awards 2011).

20 Interparfums annual report two thousand & ten. S.T. Dupont products

In June 1997, Interparfums entered into an exclusive 11-year agreement with S.T. Dupont to create and produce perfumes under the S.T. Dupont name and distribute them worldwide.

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

Lines distributed: S.T. Dupont (1998), S.T. Dupont Essence Pure (2002), L’eau de S.T. Dupont (2004), S.T. Dupont Noir (2006), S.T. Dupont Blanc (2007), S.T. Dupont Passenger (2008), S.T. Dupont Rose (2009), S.T. Dupont Intense (2009), Miss Dupont (2010) and S.T. Dupont Passenger Cruise (2011).

S.T. Dupont fragrances had sales of €15.8 million in 2010 (5.2% of total revenue) with growth of 37%.

S.T. Dupont Passenger(2008)

S.T. Dupont Passenger Cruise(2011)

S.T. Dupont Intense(2009)

S.T. Dupont Blanc / Noir(2007/2006/2008)

S.T. Dupont Essence Pure(2002)

Miss Dupont(2010)

23Interparfums annual report two thousand & ten. Paul Smith products

In December 1998, Interparfums entered into an exclusive 12-year license agreement with Paul Smith to create and produce perfumes and cosmetics under the Paul Smith name and distribute them worldwide.

In July 2008, this agreement was extended for seven years until December 31, 2017 on the basis of comparable contractual terms and conditions.

Lines distributed: Paul Smith (2000), Paul Smith Extrême (2002), Paul Smith London (2004), Paul Smith Story (2006), Paul Smith Rose (2007), Paul Smith Man (2009) and Paul Smith Man 2 (2010).

Paul Smith fragrances had sales of more than €14 million in 2010. Continued gains by the Paul Smith, Paul Smith Extrême, Paul Smith Rose lines and the launch of Paul Smith Man 2 enabled the brand to maintain its solid position in the UK market.

Paul Smith Man 2(2010)

Paul Smith Rose(2007)

Paul Smith Classic(2000)

Paul Smith Extrême(2002)

Paul Smith Man(2009)

24 Interparfums annual report two thousand & ten. Montblanc products

In early January 2010, Montblanc and Interparfums signed a 10 ½ year license agreement to create, produce and distribute perfumes and ancillary products under the Montblanc brand with a commencement date of July 1, 2010.

Lines distributed: Présence (2001), Présence d’une Femme (2002), Individuel (2004), Femme Individuelle (2004), Starwalker (2005), Femme de Montblanc (2006) and Homme Exceptionnel (2006).

Montblanc fragrances’ integration in the portfolio as of July 1, 2010 generated additional sales of €7 million.

Starwalker(2005)

Legend(2011)

Homme Exceptionnel(2006)

Femme de Montblanc(2006)

Femme Individuelle, Individuel(2004)

Présence(2001)

Présence d’une Femme(2002)

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

In June 2007, Nickel became a wholly-owned subsidiary after Interparfums acquired the company's remaining shares.

Nickel products generated sales in 2010 of €2.2 million. The brand's skin care product range added an innovative new range of organic moisturizing products, Nickel Bio.

Le Grand bluff(2009)

Nickel Bio(2010)

Maxymum(2009)

Silicon Valley by Night / by Day(2008)

Super Speed(2007)

Super Clean Soft(2008)

27Interparfums annual report two thousand & ten. Nickel products

Lendemain de Fête(1996)

In early October 2009, the Jimmy Choo and Interparfums groups signed a 12-year worldwide license agreement commencing on January 1, 2010 for the creation, development and distribution of fragrances under the Jimmy Choo brand.

The first fragrance of the brand, Jimmy Choo, was launched in January 2011.

Jimmy Choo(2011)

Interparfums annual report two thousand & ten. Jimmy Choo products28

Sales by brand

In € millions 2006 2007 2008 2009 2010 And as a % of total sales

Burberry 143.3 152.9 169.0 166.2 184.8 66.3% 63.2% 63.8% 64.1% 60.4%

Lanvin 34.4 33.3 39.0 40.6 53.0 15.9% 13.8% 14.7% 15.7% 17.3%

Van Cleef & Arpels - 11.9 21.0 20.2 25.9 - 4.9% 7.9% 7.8% 8.5%

S.T. Dupont 10.1 11.1 11.5 11.5 15.8 4.7% 4.6% 4.3% 4.4% 5.2%

Paul Smith 17.7 18.0 13.4 12.8 14.9 8.2% 7.4% 5.0% 4.9% 4.9%

Montblanc - - - - 7.0 - - - - 2.3%

Nickel 4.1 3.3 2.7 2.3 2.2 1.9% 1.4% 1.1% 1.0% 0.7%

Jimmy Choo - - - - 0.6 - - - - 0.2%

Others 6.6 11.6 8.3 5.6 1.5 3.0% 4.7% 3.2% 2.1% 0.5%

Total 216.2 242.1 264.9 259.2 305.7

In 2010, against the backdrop of a buoyant market for perfumes and cosmetics, Interparfums added market share and exceeded year-end targets, after several upward revisions already. Consolidated sales for the year totalled

€305.7 million, up 17.9% at current exchange rates and 18.3% at constant exchange rates over 2009.

Burberry fragrances had another year of growth driven by the good performances of top-selling lines (Burberry Brit

and Burberry London), the launch of Burberry Sport and BurberryBeauty, the make-up line introduced in summer 2010, in addition

to significant gains by its well-established lines (Burberry, Burberry Weekend and Burberry Touch).

Lanvin fragrances’ strong growth (+31%) considerably exceeded expectations at the start of the year based on its now

solidly-established lines (Éclat d’Arpège and Jeanne Lanvin) and the launch of the Marry Me! line (€7 million). For the year, the

brand had total sales of more than €50.

The renewal of the range (Féerie in fall 2008, Collection Extraordinaire in fall 2009, Oriens in spring 2010 and

Midnight in Paris in fall 2010) and its successful repositioning in the exclusive high-end segment has translated

into significant growth for Van Cleef & Arpels fragrances with sales of nearly €26 million in the period (+29%).


On December 21, Interparfums and Burberry extended by oneyear certain terms of their fragrance license including the lengthof the agreement to December 31, 2017. Burberry’s right to buy

the license was moreover moved from December 31, 2011 toDecember 31, 2012, and the option requiring the consent of both

parties to extend the license five years beyond 2017 is now exercisable at December 31, 2015.

32 Interparfums annual report two thousand & ten. The selective market in 2010

THE SELECTIVE MARKET IN 2010

Significant internationalsales

33Interparfums annual report two thousand & ten. The selective market in 2010

MarketFollowing a year of flat growth in 2008 and a 1% decline in 2009, the French prestigebeauty market (cosmetics, fragrances and skincare) was back on track in 2010 with growthof 3% over the previous year's figures to reach€2.84 billion.

Fragrances, 65% of this market, performed less well than hoped with growth of only 2%over 2009. This growth was driven by higherprices (up on average 2.7%) while volumes declined 0.6% Women's fragrances accountedfor two out of every three sold with sales inperfumeries in 2010 of €1.203 billion, up 2.5%.Sales of men's fragrances in 2010 were up 3.6%to €638 million.

Skincare (€573 million, +2%) was boosted by the performance of the anti-aging segment(+8%) and the existence two parallel productranges in the market (an attractively priced rangeof around €50 and higher end products at pricepoints of about €150) that contributed to a highergrowth in volume (+3%) than in value (+2.1%).

It was make-up, the smallest of the three marketsegments, that provided the strongest momentumin the period, with sales growth of 5% to€416 million driven notably by numerouslaunches of new lipsticks (+8%) and nail varnishes (+42%).

Source: NPD Group

Market shareIn France, Interparfums attained roughly a 2%share of the selective distribution market ofprestige perfumes. In certain countries such asthe United States, the United Kingdom, Russiaor China, the company estimates its market shareof total French perfume imports at between 1%and 4%.

Source: Internal estimates

CompetitionInterparfums operates in a sector dominated byten major historic players in the cosmetics marketthat have fragrance divisions built around a brandwith billions of euros in sales. There exist aroundten midsize players like Interparfums also operatingin this segment with sales ranging between €200million and €2 billion.

While Interparfums has also developed a brandportfolio in the luxury universe, it has adopted a markedly different approach with a businessmodel based on methodical long-term developmentfocused on creation and building customer loyaltyrather than volume and advertising.

34 Interparfums annual report two thousand & ten. The distribution network

AMERICA ASIAEUROPE MIDDLEEASTArgentina

Greta

BrazilEximbiz Comercio Intl

CanadaClarins Canada

ColumbiaGrupo Wisa

United StatesInterparfums Luxury Brands,I.D. Beauty

MexicoAntera

ChinaEternal Optical

South KoreaTdco Ltd

JapanBluebell

Singaporeand TaiwanInterparfums Singapore,Luxasia

GermanyInterparfums DeutschlandGmbh, Heinemann Duty Free

SpainInter España Parfumset Cosmétiques SL

ItalyInterparfums Srl

PortugalLuso Helvetica, Lojas Francas de Portugal

United KingdomInterparfums Ltd,Kenneth Green

RussiaKurs

TurkeyTe Ha Guzellik

Saudi ArabiaNational Marketing

U.A.E.Allied,Création Alexandre,Ghadeer Trading

KuwaitHabchi Chalhoub,Wahran Trading

35Interparfums annual report two thousand & ten. The distribution network

THE DISTRIBUTION NETWORK

Multiple anddiversifiedchannelsPresent in more than 100 countries with international

markets accounting for more than 91% of sales.

InternationalInternational distribution

is assured through:- independent companies;

- subsidiaries of major luxury goods corporations;

- duty-free operators (airports, airlines,etc.), that have exclusive rights

to distribute one or more of the company’s brands in a specific territory.

The new markets have confirmed their role as

powerful growth drivers onstrong gains in Asia (+27%)

and the Middle East (+16%)while in Eastern Europe (+61%)

and South America (+42%)market conditions are gradually

returning to normal.

At the same time, momentumfor sales remained positive inWestern Europe (+14%) and

North America (+9% excludingtransfer of the US inventory).

FranceThe team that handles French distributioncovers a network of sales outlets that includes:

- Integrated chains (Sephora, Marionnaud, Nocibé, etc.);

- Franchise stores (Beauty Success, Passion Beauté, etc.);

- Department stores (Galeries Lafayette, Printemps, etc.);

- Traditional perfumeries.

The French sales team also handles merchandising (shelf management, productplacement in stores, sales promotion andevent planning) that is a key contributor

to the company’s development.

2010 sales by region

Africa 0.9% (€2.6m)

Middle East10.9% (€33.3m)

Asia 15.6% (€47.7m)

South America8.1% (€24.8m)

North America14.0% (€42.9m)

Eastern Europe 9.7% (€29.6m)

Western Europe 31.7% (€96.9m)

France 9.1% (€27.9m)

36 Interparfums annual report two thousand & ten. International teams

37Interparfums annual report two thousand & ten. International teams

UNITED STATES AND ASIA

Internationalteams

In the United StatesTo cover a market accounting for 15% of

Group sales, in March 2010 Interparfums decidedto create a dedicated distribution subsidiary

for the US, Interparfums Luxury Brands.

A wholly-owned subsidiary of InterparfumsSA,Interparfums Luxury Brands will lead the

development and marketing of Boucheron,Burberry, Jimmy Choo, Lanvin, Montblanc and

Van Cleef & Arpels brands in the US market.

Based in New York, it is supported by a team of 10 employees and an alliance with Clarins

USA providing for the sharing of commercial,logistics and administrative resources.

“I have acquired a good knowledge of thismarket, having coordinated operations there

from Paris for Burberry fragrances over the pastfew years, and have a first hand knowledge

of the country where I have lived in the past.Spearheading the deployment of our brands

in this market represents for my team and mea very exciting challenge”.

Stanislas ArchambaultManaging Director

Interparfums Luxury Brands

In AsiaTo improve coverage of Asian markets that offer significant growth potential,

in June 2010 Interparfums decided to create a distribution subsidiary for this region,

Interparfums Singapore.

A wholly-owned subsidiary of InterparfumsSA,this entity staffed by a team of nine will

coordinate the development of operations inthe region for all the Group’s brands.

“For several years I have managed the commercial development of Burberry

fragrances from Paris with the support of salesoffice in Singapore. With a real subsidiary

and a stronger local presence, we now have theresources to pursue our ambitions for this region”.

Renaud BoissonManaging Director

Interparfums Singapore

38 Interparfums annual report two thousand & ten. Corporate governance

CORPORATE GOVERNANCE

Boardof DirectorsandManagementcommitteeInterparfums adopted the form of a société anonyme, the French equivalent of a joint stock company, when it was created in 1989. It is governed by a Board of Directors and a Management Committee.

39Interparfums annual report two thousand & ten. Corporate governance

As of December 31, 2010 the composition of the Board of Directors was as follows:

Philippe BenacinChairman and Chief Executive Officer of Interparfums (appointment renewed April 23, 2010, expiring at the close of the 2014 annual shareholders' meeting)

Jean MadarDirector (appointment renewed April 23, 2010,expiring at the close of the 2014 annual shareholders' meeting)

Maurice AlhadèveIndependent director (appointment renewed April 23, 2010, expiring at the close of the 2014 annual shareholders' meeting)

Michel DyensIndependent director (appointment renewed April 23, 2010, expiring at the close of the 2014 annual shareholders' meeting)

Jean LevyDirector (appointment renewed April 23, 2010,expiring at the close of the 2014 annual shareholders' meeting)

Patrick ChoëlDirector (appointment renewed April 23, 2010,expiring at the close of the 2014 annual shareholders' meeting)

Chantal RoosIndependent director (appointment renewed April 23, 2010, expiring at the close of the 2014 annual shareholders' meeting)

Catherine Bénard-LotzDirector (holder of an employment contractprior to being nominated to the Board, term of office renewed on April 23, 2010 and expiring at the close of the 2014 annualshareholders’ meeting)

Philippe SantiDirector and Executive Vice President (holder of an employment contract before appointments, term of office renewed on April 23, 2010 and expiring at the close of the 2014 annual shareholders’ meeting)

Frédéric Garcia PelayoDirector and Executive Vice President(holder of an employment contract before appointments, term of office renewed on April 23, 2010 and expiring at the close of the 2014 annual shareholders’ meeting)

Management committee members (left to right): Frédéric Garcia-Pelayo, Hugues de la Chevasnerie, Jérôme Thermoz, Angèle Ory-Guénard, Philippe Benacin, Axel Marot and Philippe Santi.

The composition of the Management Committee on December 31, 2010 was as follows:

Philippe BenacinChairman and Chief Executive Officer

Philippe SantiExecutive Vice President,Chief Financial and Administrative Officer

Frédéric Garcia-PelayoExecutive Vice President andChief International Officer

Hugues de la ChevasnerieVice President, Burberry Fragrances

Angèle Ory-GuénardVice President, Export Sales,Burberry Fragrances

Jérôme ThermozVice President, French Distribution

Axel MarotVice President, Production & Logistics

Board of Directors Management committee

40 Interparfums annual report two thousand & ten. Corporate citizenship

CORPORATE CITIZENSHIP

Social responsibilityWorkforce at December 31 2008 2009 2010

Total workforce 152 171 180

Officers and managers 82 84 89Supervisory staff 9 9 9Non-management employees 61 78 82

Average age 37 years 37 years 35 yearsAverage seniority 6 years 6 years 6 years

Over the years, Interparfums has developed a corporate culture based on promoting creativity, teamwork, a spirit of trust and corporate responsibility. Interparfums management and employees share strong values in respect to working conditions,equal opportunity employment, respect, fighting discrimination and employee training. These values that today represent thefoundations for sustainable growth reflect the contribution of the cultural diversity and rich experience of our workforce.

“Great Place to Work” Awards

For its first participation in the Great Place to Work Awards (9th edition) Interparfums was distinguished by the SpecialAward for Inspiration and ranked 10th in France’s Best Workplaces list for “Companies with less than 500 employees”.

This award recognizes the company’s distinct corporate culture marked by a strong sense of belonging, shared ethicalvalues and solidarity and accountability among all employees.

This award is granted on the basis of an in-depth study of the company according to five criteria (credibility, respect,fairness, pride and camaraderie) and an anonymous questionnaire sent to all employees.

41Interparfums annual report two thousand & ten. Corporate citizenship

Management structure and organization at December 31, 2010

The production process combineshigh quality andstrict compliancewith deadlines essentialfor producing severalmillion units a year.A team of 25 underAxel Marot managessourcing, supplierrelations, qualityassurance and costcontrol and operations.

Reflecting the volumeof business of the brandand distinct termsand conditions of thelicense agreement, theBurberry Fragrancesdivision is specificallydevoted to marketingand international distribution of thisbrand. It has 34employees and is headed by Hugues de La Chevasnerie.

Frédéric Garcia-Pelayoleads a dedicated teamof 24 professionalsresponsible for productdevelopment, marketingand international distribution for theBoucheron, JimmyChoo, Lanvin,Montblanc, Paul Smith,Van Cleef & Arpels andS.T. Dupont brands.

Reflecting the specificities of theNickel brand, its product developmentand marketing aremanaged by the Luxe& Fashion division.

Jérôme Thermoz’s staff of 65 handles the company’s distribution strategyand management andmonitors profit marginsand advertising expenditures in France.

Management of theNickel spas is assuredby a team of 8 that are part of the FrenchDistribution division.

Philippe Santi heads astaff of 30 responsiblefor financial strategyand communications,investor relations,accounting, budgets,cost accounting,labour relations, taxand legal services, cash management and collection.

PRODUCTION & LOGISTICS

A. Marot25 employees

BURBERRYFRAGRANCES

H. de La Chevasnerie34 employees

LUXE& FASHION

F. Garcia-Pelayo24 employees

FRENCHDISTRIBUTION

J. Thermoz65 employees

FINANCE& CORPORATEAFFAIRS

P. Santi30 personnes

GENERAL MANAGEMENTP. Benacin


CORPORATE CITIZENSHIP

TheenvironnementInterparfums’ business focuses principally on the creationand distribution of products. For this reason, the entireproduction process is outsourced to manufacturing partners.These include producers of juice, glass, caps and cardboardboxes and packaging companies. With no productionactivities of its own, Interparfums does not own laboratoriesor manufacturing sites.

Even though it operates in a sector less polluting than other industries, Interparfums is committed to preservingthe environment and quality of life. For this reason, itremains involved in the production process and coordinateswith all subcontractors and suppliers who manufacture its products and are directly responsible for their impact on the environment.

Optimized utility consumptionInterparfums’ consumption of water and energy is limitedto normal office usage in the administrative premises of its headquarters that house 125 employees. Other waterand energy consumption concerns the sales offices andcommercial teams in the field that represent 55 employeesout of 180.

In connection with a search for new logistics solutions the company has been exploring the option of changingwarehouse facilities. On this basis it entered into agreementwith its lesser for the construction of a HQE certified warehouseeffective as of June 1, 2011. This certification representsnotably improved insulation, a lighting system with presence-detectors, Ecolabel finishing materials, centralized technicalmanagement for energy controls, rainwater recovery, high-performance waste sorting installations, etc.

RecyclingTo balance product quality and esthetics with environmentalconsiderations, Interparfums takes care to reduce packagingvolumes at the source and select the appropriate materialsat each stage of production to ensure optimal conditionsfor their recycling or disposal.

The bottles of its products are made of recyclable glass andthe production process provides for a system of recuperation,grinding and recasting of certain bottle components, whichgenerates savings in volume of materials used of 20%.

In addition, Interparfums ensures that its subcontractorsalso have waste sorting and recycling systems. The companyhas for example implemented with its suppliers of perfumesets a system for the retrieval of collection bins.

Finally, Interparfums invests in measures required for thetreatment and recycling of the packages, cardboard boxesand glass left once its customers have finished using itsproducts. With this objective, through its participation in the “Eco Emballage” packaging recycling program, Interparfums contributes to waste management and recycling.

Minimizing environmental impactsInterparfums strives to reduce the already low impact of its business on the environment. Accordingly, Interparfums selects partners using cutting-edge designtechniques with a commitment to reduce the impact of manufacturing processes on the environment.

A biodegradable water-soluble solution that does not harmthe environment is used in the colouring of some of itsbottles. The coating process provides for the eliminationof solvent-based coatings and the progressive adoption of hydro-coating for the remaining lines, in compliancewith the law of 2005 for reducing emissions of VolatileOrganic Compounds (VOC) in the air. In addition, sub-contractors for glass making have electrostatic air filters toreduce dust and smoke emissions in addition to wastewaterrecycling and emission control monitoring systems.

Reducing CO2 rates (-4.5%), water consumption per pump(-23.4%), and the number of components are importantfactors in choosing sprayer pumps for Interparfums products.

Interparfums has eliminated thermosetting plastics from its line of bath and body care products in favour of recyclable plastic.

This commitment to environmental responsibility, reducingenergy consumption and recycling are also key criteria inthe selection of subcontractors.

Interparfums is also currently exploring options to sourceFSC and PEFC certified cardboard stock for product boxesthat comply with sustainable forest management standards.

Furthermore, an ongoing priority of Interparfums' logistics and transportation management is to limit its carbon footprint. In this way, promotional materialsmanufactured in Asia are shipped directly to Asian distributors without being imported and stored in France.In addition, Interparfums ensures that its logistics serviceprovider optimizes transportation management throughtrucks with full loads to limit overall time on the road.Finally, by establishing a warehouse strategically locatedat the crossroads for its subcontractors, Interparfums hasreduced distances for raw material shipments.


Interparfums' sourcing strategy also integrates environmental priorities and CO2 emission reductiongoals. In this way, 70% of Interparfums' production originates from France and 10% from nearby countries.On this basis, only 20% of its supplies are sourced fromfar off destinations. Similarly, to reduce the transfer ofcomponents, Interparfums is gradually moving towardsthe integration of different production phases by suppliers(for example glass design and plastic processing).

Launch of an organic BIO rangeIn October 2010, Interparfums launched under the Nickelbrand a line of EcoCert Greenlife and COSMEBIO certified organic cosmetics. This “Nickel Bio” skincareline meets all requirements for the percentage of naturalingredients (minimum 99.1%) and those originating fromorganic farming (minimum 21.7%). In addition, compliancewith the Ecocert charter, formulations for these productsuse a very low quantity of synthetic preservatives (<1%).

Regulatory and environmental issuesEven though Interparfums does not manufacture its products itself, it nevertheless ensures their introductionon the market. As such it is responsible for ensuring thesafety for human use of cosmetic products it distributes.To this purpose, it conducts tests that include ensuringinnocuous nature for the skin and eyes. Tests for skin irritation are conducted on healthy voluntary adult subjectsand ocular irritantancy testing through cell cultures.Within this framework, in accordance with the EuropeanCosmetics Directive it also ensures its products are notsubject to any tests on animals in addition to compliancewith all other relevant European and international regulationsconcerning the design and production of all products itdistributes.

Interparfums has taken measures for the application ofthe new European Community Regulation on chemicalsand their safe use concerning the Registration, Evaluation,Authorization and Restriction of Chemical substances(EC Directive 1907/2006 of December 18, 2006) orREACH with its suppliers. All technical and organizationalmeasures to be applied following the adoption of REACHhave been implemented by the company.

The pre-registration phase of REACH ended on December 1, 2008. During this period, importers andmanufacturers of “phase-in” substances were required toregister the substances once volume exceeded one ton peryear. Pre-registration makes it possible to obtain additionaldelays in connection with the registration procedure.

Interparfums, as a downstream user of chemical substances,is not subject to the registration requirement. However, it has sought to maintain an active role by ensuring thatthe registration process proceeds effectively and that thereexists a continuous supply for sourcing chemical substancescontained in its products.

Interparfums took the initiative to contact its differentsubcontractors to ensure they and those further down the supply chain effectively comply with registration,notification or authorization request procedures. Interparfums has asked all its suppliers to provide commitments that they will not supply articles containingsubstances listed in appendix XIV (Substances of VeryHigh Concern). To date, no supplier has declared the presence in articles provided to Interparfums of substancesthat are candidates for authorization.

Information relating to REACH including notably riskmanagement measures transmitted through security datafiles will be taken into account by Interparfums or itssuppliers as they are issued.

For information, the deadlines for the implementation of REACH are spread over the period from June 1, 2008to June 1, 2018.

Interparfums’ actions in this area as a responsible corporatecitizen thus exceed that of a simple coordinator as it pursuesmeasures focussed on increasing its partners’ awareness of environmental issues and staying informed of the business practices of its subcontractors and suppliers,highlighting its commitment to preserving the environment.

46 Interparfums annual report two thousand & ten. Stock market

STOCK MARKET

ShareholderinformationSince it was listed on the Euronext Paris Second Market in November 1995, Interparfums regularly provides investors and the financial community with information on its situation in compliance with the principles of transparency and the best practices in financial communications. This information is provided through a variety of documents and media that includes an annual report, a semi-annual report, a letter to shareholders, press releasesand financial notices, a website www.interparfums.fr, individual and group meetings with financial analysts, fundmanagers, journalists, individual shareholders and others.

Dividends

Dividend for fiscal year 2006 2007 2008 2009paid in 2007 2008 2009 2010

Dividend per share €0.38 €0.38 €0.38 €0.39

Dividend adjusted for bonus share issues €0.24 €0.26 €0.29 €0.35

Annual change for the adjusted dividend +13% +10% +10% +23%

Share price and trading volume data

2000 2002 2004 2006 2008 2009 2010 20112001 2003 2005 2007

60035

50030

Trading volume data in thousandsInterparfums shares in euros and SBF 250

40025

30020

20010

1000

0-10

47Interparfums annual report two thousand & ten. Stock market

Interparfums annual share performance

In early 2010, the Interparfumsshare price largely tracked the performance of the Paris Mid Capindex.

Following the publication of 2010 results on March 10, theshare price's upward momentumconsiderably outperformed theCAC Small 90, gaining 40% fromthis date versus 10% for the index.

After the announcements for sales(2nd and 3rd quarter) and earnings(1st half ) and raised guidance for 2010 full-year sales, the shareprice rose to a new record of €26-€27 starting in mid-Octoberresulting in a market capitalizationapproaching €500 million.

Ending the year at €27.35, the sharegained 82% for the twelve monthperiod (and taking into accountthe bonus share issue in June 2010).

Trading volume remained at satisfactory levels with an averagedaily volume of 10,000 shares, up60% on the prior year's average.

Ownership as of December 31, 2010

Interparfums has more than 9,350 individualshareholders and 410 institutional shareholders(with foreign investors representing more thanone third).

Institutions providing financial research on Interparfums

CA Cheuvreux, CM-CIC Securities, Exane Bnp Paribas, Gilbert Dupont, HSBCSecurities, ID Midcaps, Natixis Securities,Oddo Securities.

Upcoming publications

2011 second-quarter salesJuly 26, 2011

2011 first-half sales and earningsMid-September 2011

2011 third-quarter salesEnd of October 2011

2011 letter to shareholdersMid-November 2011

2011 annual salesEnd of January 2012

2011 annual resultsMid-March 2012

Upcoming events

Presentation of 2011 first-half earningsMid-September 2011

Mid Cap trade show, ParisSeptember 22 & 23, 2011

Actionaria trade show, ParisNovember 18 & 19, 2011

Securities market information

Market: NYSE Euronext ParisMarket segment: Compartment B (Mid Caps)IPO date: November 1995ISIN code: FR0004024222 ITPIndexes: CAC Small 90, SBF250Market maker: Oddo Midcap

74% 26%

Interparfums Inc. Free float

48 Interparfums annual report two thousand & ten. Group organization

GROUP ORGANIZATION

Subsidiariesand parentcompanyInterparfums and its subsidiaries

Commercial operations are conducted largelythrough Interparfums SA. To pursue its internationaldevelopment, Interparfums set up four new subsidiarieson January 1, 2007 in the key European markets in partnership with its local distributors. Germany(51%), United Kingdom (51%), Italy (71%) andSpain (100%).Interparfums also created a wholly-owned subsidiary in Switzerland, Interparfums SuisseSarl. This subsidiary is the owner of the Lanvin brandname and international trademarks for class 3 products.

In 2010, Interparfums SA further strengthened its presence in markets and major regions by creatingwholly-owned distribution subsidiaries in Singapore(Interparfums Singapore) and the United States(Interparfums Luxury Brands) respectively.

Interparfums and its parent company

Founded in 1985, the US. company Interparfums Inc.is listed on Nasdaq and has business activities in two areas:

- Mass market perfumes aimed mainly at the U.S.consumer market and developed by its wholly ownedU.S. subsidiary, Jean-Philippe Fragrances LLC;

- Prestige perfumes aimed at the global selective perfumes market and developed by its French subsidiary,Interparfums (75% owned at December 31, 2010via Interparfums Holding).

The US company develops and sells products under license agreements principally under the Gap,Banana Republic, New York & Company, BrooksBrothers, Nine West, Bebe and Betset Johnson.

Consolidated financial highlights(In US$ millions) 2006 2007 2008 2009 2010

Sales 321.1 389.6 446.1 409.5 460.4

Net income 17.7 23.8 23.8 22.4 26.6

Shareholders’ equity 155.3 192.7 204.2 228.7 235.0

Net cash 71.0 90.0 42.4 100.5 37.5

1 Euro = 1.3362 USD at December 31, 2010

49Interparfums annual report two thousand & ten. Group organization

Ownership structure at December 31, 2010

INTERPARFUMS

SINGAPORE

Singapore

INTERPARFUMS

LUXURY

BRANDS

United States

INTER ESPAÑA

PARFUMS &

COSMETIQUES SL

Spain

INTERPARFUMS

DEUTSCHLAND

GMBH

Germany

INTERPARFUMS

SRL

Italy

PHILIPPE BENACINJEAN MADAR

INTERPARFUMS INC.Nasdaq - New York

INTERPARFUMS

LTD.

United Kingdom

INTERPARFUMS SA

Eurolist - Euronext Paris

FREE FLOAT

FREE FLOAT

48%

INTERPARFUMS

SUISSE SARL

Switzerland

100% 51% 51% 71% 100% 100% 100%

26%

52%

74%

50 Interparfums annual report two thousand & ten. Financial highlights

FINANCIAL HIGHLIGHTS

CondensedfinancialstatementsCONSOLIDATED INCOME STATEMENT

In € thousands 2009 2010

Sales 259,199 305,696

Cost of sales (106,958) (118,931)Gross margin 152,241 186,765

% of sales 58.7% 61.1%

Selling and administrative expenses (116,973) (144,549)Current operating income 35,268 42,216

% of sales 13.6% 13.8%

Other operating income and expenses (1,585) -Income from operations 33,683 42,216

% of sales 13.0% 13.8%

Net financial income 1,081 (2,278)

Income before income tax 34,764 39,938

% of sales 13.4% 13.1%

Income tax (11,972) (13,287)Effective tax rate 34.4% 33.3%

Net income before non-controlling interests 22,792 26,651

% of sales 8.8% 8.7%

Attributable to non-controlling shareholders 145 (156)Net income 22,647 26,807

% of sales 8.7% 8.8%

51Interparfums annual report two thousand & ten. Financial highlights

CONSOLIDATED BALANCE SHEET


ASSETS

Non-current assets Net trademarks and other intangible assets 59,068 73,427Net property, plant, equipment 5,515 7,066Non-current financial assets 886 1,690Deferred tax assets 2,620 5,109

Total non-current assets 68,089 87,292

Current assets Inventories and work in progress 45,110 66,813Trade receivables and related accounts 66,033 74,399Other receivables 7,480 6,838Cash, cash equivalents and current financial assets 66,873 61,615

Total current assets 185,496 209,665

Total assets 253,585 296,957

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity Common stock 48,671 53,780Additional paid-in capital & reserves 98,532 110,912Net income for the year 22,647 26,807Equity attributable to parent company shareholders 169,850 191,499

Non-controlling interests 109 385Total shareholders’ equity 169,959 191,884

Non-current liabilities Provisions for non-current commitments 1,131 2,280Non-current borrowings 11,896 3,443Deferred tax liabilities 2,185 1,510Total non-current liabilities 15,212 7,233

Current liabilities Trade payables and related accounts 41,809 53,320Current borrowings 8,647 8,627Commitments and contingencies 1,063 412Short-term bank loans 672 3,947Other liabilities 16,223 25,676Total current liabilities 68,414 97,840

Total shareholders’ equity and liabilities 253,585 296,957

52 Interparfums annual report two thousand & ten

53Two thousand ten registration document Interparfums

INTERPARFUMS

Registrationdocument

This original French language version of the registrationdocument (Document de référence) was filed with the Frenchfinancial market authority (Autorité des Marchés Financiers

or AMF) on April 6, 2011 in compliance with article 212-13 of the AMF General Regulation. It may be used

in connection with a financial transaction only ifaccompanied by a memorandum approved by the AMF.

The original French language version of this document wasprepared by the issuer and is binding on its signatories.

Consolidated management reportConsolidated financialsCorporate governance

Shareholder informationHistory of the company

Auditors and responsibility statements

54

68

100

122

138

140

1_EN_2011 18/05/11 15:37 Page53

CHAPTER ONE

ConsolidatedmanagementreportOrganization of the company 55Operating highlights and key figures 57Consolidated financials 58Risk factors 59Social responsibility 61Environmental responsibility 62Dividends 64Purchases by the company of its own shares 65Group organization 66

Market share and competition 67

Post-closing events 672011 outlook 67

54 Two thousand ten registration document Interparfums. Consolidated management report

1_EN_2011 18/05/11 15:37 Page54

1. ORGANIZATION OF THE COMPANY

1.1 Business overviewThe company creates, manufactures and distributesprestige perfumes through license agreements withleading brands in the high-end ready-to-wear, highfashion, jewellery and accessories sectors. Thisbusiness model is based on obtaining rights grantedby a brand name company to Interparfums to use its brand name in exchange for royalty paymentstypically indexed to sales (see the list of licences innote 6.2 of the consolidated financial statements).

The product design cycle of between 12 and 18months is assured by the company’s marketing anddevelopment teams in partnership with the licensor.

In this business model Interparfums outsources theentire production process to manufacturing partnersensuring optimal expertise in their respective areas.These include producers of juice, glass, caps andcardboard boxes and packaging companies.

The company distributes its products worldwide (see note 5.2 of the consolidated financial statements)through wholly-owned distribution subsidiaries orjoint ventures, independent companies, subsidiariesof major luxury good corporations and duty free operators.

Product promotion and advertising are assured byInterparfums’ marketing departments.

1.2 Market environmentFollowing a year of flat growth in 2008 and a 1%decline in 2009, the French prestige beauty market(cosmetics, fragrances and skincare) was back on trackin 2010 with growth of 3% over the previous year’sfigures to reach €2.84 billion. Fragrances, 65% of this market, performed less well than hoped withgrowth of only 2% over 2009. This growth wasdriven by higher prices (up on average 2.7%) whilevolumes declined 0.6%. Women’s fragrancesaccounted for two out of every three sold with sales in perfumeries in 2010 of €1.203 billion, up 2.5%.Sales of men’s fragrances in 2010 were up +3.6% to€638 million.

Skincare (€573 million, +2%) was boosted by theperformance of the anti-aging segment (+8%) and theexistence two parallel product ranges in the market(an attractively priced range of around €50 andhigher end products at price points of about €150)that contributed to a higher growth in volume (+3%)than in value (+2.1%).

It was make-up, the smallest of the three marketsegments, that provided the strongest momentum inthe period, with sales growth of 5% to €416 milliondriven notably by numerous launches of new lipsticks(+8%) and nail varnishes (+42%).

Source: NPD Group.

55Two thousand ten registration document Interparfums. Consolidated management report

1_EN_2011 18/05/11 15:37 Page55

1.3 2010 milestones

January

Montblanc license agreement

On January 22, 2010, Interparfums and MontblancInternational signed a 10 ½ year license agreement tocreate, produce and distribute perfumes and ancillaryproducts under the Montblanc brand with aninception date of July 1, 2010.

March

Launch of the Burberry Sport line

The launch of the new women’s and men’s fragranceline, Burberry Sport capturing the energy, attitude andvibrancy of the Burberry Sport ready-to-wear collection.

Launch of the Oriens line of Van Cleef & Arpels

Oriens celebrates the splendour and mystery of theOrient with an opulent and elegant compositioninspired from the collections of the Van Cleef & Arpels high jewellery house.

Creation of Interparfums Luxury Brands in the US

Interparfums Luxury Brands, a wholly-ownedsubsidiary of the French parent Interparfums SA, willdirectly coordinate the development and marketing of Burberry (fragrances and make-up), Lanvin,Montblanc, Jimmy Choo and Van Cleef & Arpelsbrands in the US market.

June

Bonus share issue

On June 20, 2010, the company proceeded with its11th consecutive bonus issue on the basis of one newshare for every ten shares held.

Creation of Interparfums Singapore

A wholly-owned subsidiary of Interparfums,Interparfums Singapore will coordinate marketingand sales operations for the entire Asian region.

July

Launch of the first range of the Burberry Beauty make-up line

Interparfums launches the first range of the BurberryBeauty make-up line. With more than 100 references,60 exclusive counters opened worldwide in 2010 and2011, this area of development is expected to provideincreased global visibility for the Burberry brand.

September

Launch of the Midnight In Paris line of Van Cleef & Arpels

Directly inspired by the eponymous watch from its exclusive collection, Midnight in Paris combineselegance and masculinity to convey the history of astarry night scene from the heart of the City of Light!

Launch of the Marry Me ! line of Lanvin

Marry me ! The perfume of an encounter, the firstdays of passion, a hope of true love.

Launch of the Miss Dupont line of S.T. Dupont

Celebrating the enchantment of beauty, S.T. Dupontlaunches a new fragrance dedicated exclusively to women.

Launch of the Paul Smith Man 2 line of Paul Smith

Paul Smith Man 2 offers men a new way to dressthemselves with an aroma capturing the unique Paul Smith playful sense of fun and formality.

Launch of the Nickel Bio line of Nickel

Nickel Bio, a three-step skincare range for men… and for women! A concentrated organic energizer for restoring skin vitality and tone day after day.

December

Signature of a fragrance license agreement with Boucheron

On December 17, Boucheron and Interparfumssigned a 15-year worldwide license agreementcommencing on January 1, 2011 for the creation,development and distribution of fragrances under the Boucheron brand.

One-year extension of the license agreement with Burberry

On December 21, Interparfums and Burberryextended by one year certain terms of their fragrancelicense, including the length of the agreement to December 31, 2017. Burberry’s right to buy thelicense was moreover moved from December 31, 2011to December 31, 2012, and the option requiring theconsent of both parties to extend the license five yearsbeyond 2017 is now exercisable at December 31, 2015.


1_EN_2011 18/05/11 15:37 Page56

Burberry fragrances had another year of growthdriven by the good performances of top-selling lines(Burberry Brit and Burberry London), the launch ofBurberry Sport and Burberry Beauty, the make-up lineintroduced in summer 2010, in addition tosignificant gains by its well-established lines(Burberry, Burberry Weekend and Burberry Touch).

Lanvin fragrances’ strong growth (+31%) considerablyexceeded expectations at the start of the year based on its now solidly-established lines (Éclat d’Arpègeand Jeanne Lanvin) and the launch of the Marry Me !line (€7 million). For the year, the brand had totalsales of more than €50 million.

The renewal of the range (Féerie in fall 2008,Collection Extraordinaire in fall 2009, Oriens in spring 2010 and Midnight in Paris in fall 2010) andits successful repositioning in the exclusive high-endsegment has translated into significant growth for Van Cleef & Arpels fragrances with sales of nearly€26 million in the period (+29%).



2.OPERATING HIGHLIGHTS AND KEY FIGURES

In 2010, against the backdrop of a buoyant market for perfumes and cosmetics, Interparfums added marketshare and exceeded year-end targets, after several upward revisions already. Consolidated sales for the yeartotalled €305.7 million, up 17.9% at current exchange rates and 18.3% at constant exchange rates over 2009.

2.1Sales by brandIn € millions 2006 2007 2008 2009 2010And as % of sales

Burberry 143.3 152.9 169.0 166.2 184.8 66.3% 63.2% 63.8% 64.1% 60.4%

Lanvin 34.4 33.3 39.0 40.6 53.0 15.9% 13.8% 14.7% 15.7% 17.3%

Van Cleef & Arpels - 11.9 21.0 20.2 25.9 - 4.9% 7.9% 7.8% 8.5%

S.T. Dupont 10.1 11.1 11.5 11.5 15.8 4.7% 4.6% 4.3% 4.4% 5.2%

Paul Smith 17.7 18.0 13.4 12.8 14.9 8.2% 7.4% 5.0% 4.9% 4.9%

Montblanc - - - - 7.0 - - - - 2.3%

Nickel 4.1 3.3 2.7 2.3 2.2 1.9% 1.4% 1.1% 1% 0.7%

Jimmy Choo - - - - 0.6 - - - - 0.2%

Other 6.6 11.6 8.3 5.6 1.5 3.0% 4.7% 3.2% 2.1% 0.5%

Total 216.2 242.1 264.9 259.2 305.7

1_EN_2011 18/05/11 15:37 Page57

2.2 Sales by regionIn € millions 2009 2010

North America 43.8 42.9South America 17.5 24.8Asia 37.5 47.7Eastern Europe 18.4 29.7Western Europe 85.1 96.9France 26.4 27.8Middle East 28.7 33.3Other 1.8 2.6

Total 259.2 305.7

The new markets have confirmed their role as powerful growth drivers on strong gains in Asia (+27%) and the Middle East (+16%) while in Eastern Europe (+61%) and South America (+42%) market conditions aregradually returning to normal. At the same time, momentum for sales remained positive in Western Europe(+14%) and North America (+9% excluding transfer of the US inventory).

3. CONSOLIDATED FINANCIALS

3.1 Income statement highlightsIn € thousands 2007 2008 2009 2010

Sales 242,123 264,864 259,199 305,696International (%) 91% 90% 90% 91%

Income from operations 31,812 34,259 33,683 42,216% of sales 13.1% 12.9% 13.0% 13.8%

Net income 20,193 21,119 22,647 26,807% of sales 8.3% 8.0% 8.7% 8.8%

Despite marginally negative currency effects, the gross margin as a percentage of sales exceeded 61%, gainingmore than 2 points from higher sales prices in selected markets, lower costs for certain components and a positiveproduct mix effect.

Robust growth in operating profit (+25%) was accompanied by an increase in the operating margin from 13%to 13.8%. This performance was driven by a sustained strategy of marketing and advertising expenses targetedby country and brand combined with tight control over all costs.

With a reduction in net interest expense, a one-off charge linked to currency effects and a lower tax rate, net income was €26.8 million, up 18% and resulting in a net margin of 8.8%.

3.2 Balance sheet highlightsIn € millions 2009 2010

Non-current assets 68.1 87.3Inventory 45.1 66.8Trade receivables 66.0 74.4Cash + certificates of deposit with maturities >3 months 66.2 57.7Total Group shareholders’ equity 169.9 191.5Borrowings 20.5 12.1Trade payables 41.8 53.3


1_EN_2011 18/05/11 15:37 Page58

The Group’s already excellent position was furtherstrengthened at December 31, 2010 with:

- Shareholders’ equity of nearly €192 million (64% of the total balance sheet);

- Cash of €57.7 million (including certificates ofdeposit with maturities exceeding three months);

- Low net debt of €12 million.

Despite increased inventory levels linked to bothstrong growth in sales and launches in early 2011,operating cash flow amounted to €27 million in 2010.

3.3 Cash flow statement highlightsKey changes in consolidated cash flows:

- Operating cash flow trends reflecting increasedinventories for launches scheduled in 2011, growth intrade receivables from strong sales in the last quarteraccompanied by a rise in trade payables in connectionwith major production lines launched at year end;

- Cash flows from investing activities with €16 millionin upfront license fees for the Boucheron andMontblanc license agreements fully financed fromown funds and certificates of deposits with maturitiesof nearly €36 million;

- Cash flows from financing activities including the repayment of loans obtained for the acquisition of the Lanvin trademarks and the Van Cleef & Arpelslicense agreement for €.8.2 million, a dividendpayment of €6.3 million for fiscal 2009, capitalincreases generated by the exercise of stock options as well as reductions in capital from the €3.5 millionshare buyback.

On this basis, net cash (€21.9 million) plus certificatesof deposit with maturities of more than three months(€35.8 million) amounted to €57.7 million at December 31, 2010.

4. RISK FACTORS

After performing a review of risks that couldpotentially have a material adverse effect on itsbusiness, financial position or results (or its ability tomeet its targets), the Company considers that theredo not exist other risks than those presented below.

The risk mapping procedure launched in 2004 and regularly updated since, has made it possible to classify risks into four categories: operating risks, risks related to international operations, environmentaland employee-related risks and risks related to financialmarket conditions.

4.1 Operating risks

4.1.1 License agreements

The licensing system which is typical in the perfumeand cosmetics industry consists of a brand namecompany (Burberry, Paul Smith, etc.) granting thelicensee (Interparfums) a right to use the brand namein exchange for royalty payments in general indexedto sales. The associated risk pertains to the potentialnon-renewal of agreements upon expiration.

In the case of Interparfums, several factors tend to limit or eliminate this risk:

- Length of contracts (10 years or more);

- Possibility of early renewal;

- Diversified portfolio of licensed brands;

- Factors specific to the company (sophisticatedmarketing, distribution network, corporateorganization, etc.);

- Limited number of potential licensees with a similar profile;

- Ongoing efforts to add new licenses in order tolimit the weight of existing brands in the portfolio.

Furthermore, the company is the owner of two brandnames and international trademarks for class 3 products(Lanvin and Nickel) that are not subject to a risk of nonrenewal, thus reducing the overall risk of thenonrenewal of license agreements.

4.1.2 Market conditions

The creation and distribution of prestige perfumes isa highly competitive sector. The quality of its productportfolio, internal market studies and privilegedrelations with distributor partners maintained in eachof the countries through regular visits, productpresentations supported by marketing plans all reducethe risk of a loss of market share.

4.1.3 Sourcing and production

Sourcing of raw materials for the plants is assured byInterparfums’ Production Department. Planning forthe launch of production lines is regularly updatedand monitored with component suppliers combinedwith recourse to multiple suppliers selected by thecompany, limit the risk of supply chain disruptions.

Production risks result from the possibility ofmanufacturing partners being unable to manufactureproducts on time for their distribution. To reduce this risk, the company has implemented well inadvance in the production cycle, in partnership withmanufacturers, production plans. These measures are supplemented by the availability of multiplemolds and manufacturing installations as well asproduction sites.


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4.1.4 Insurance

Interparfums has always carried adequate insurancefor its activities worldwide under conditions thatcomply with industry standards, providing globalcoverage for important risks and activities.

This coverage includes:

- Property damage and business interruption;

- Inventory loss or damage;

- Contingent use and occupancy insurance;

- Civil liability;

- Directors’ and officers’ liability;

- Product liability;

- Transport;

- Professional travel and automobile insurance;

- IT equipment loss or damages;

- Specific risks linked to particular events.

Interparfums purchases supplemental insurance whenrequired, either in compliance with the law or morespecifically to cover business risks or risks arising fromspecific circumstances.

Insurance coverage is overseen by a specialized brokerand spread among four major European insurers.

In addition, Interparfums is the named beneficiaryfor a life insurance policy for its Chairman and Chief Executive.

To the best of the company’s knowledge, all risks are insured. None of the risks mentioned above are self-insured.

4.2 International business risks

4.2.1 Currency risks

A significant portion of the company’s sales is incurrencies other than the euro. In consequence, the company incurs risks related to exchange ratefluctuations for these currencies, notably the US dollar (35.2% of sales) and a lesser extent thepound sterling (6.8% of sales) and the Japanese yen(2.3% of sales).

The primary objective of the company’s foreignpolicy is to hedge the most probable budget exposurerelated primarily to cash flows from operatingactivities in US dollars as well as trade receivables in the US dollar, pound sterling and Japanese yen. To this purpose, the company has recourse to forwardsale agreements according to procedures that prohibitany transactions of speculative nature.

Financial instruments used by the Group to manageits foreign exchange exposure are described in note3.14.3 of the consolidated financial statements.

4.2.2 Country risks

With sales in more than 100 markets, Interparfumsregularly reassesses country risks.

For the past few years, the company has incurred nosignificant default on payments in countries consideredat risk.

Given our collections policies, receivables monitoring and the quality of our distributors’financial health, no country risk reserve allocationswere made in the financial statements for the yearended December 31, 2010.

4.3 Employee-related risksIn light of the company’s organizational structure, the role of personnel is decisive. To foster personnelretention and increase the level of expertise andservice provided to customers, the company hasdeveloped a strong corporate culture and implementeda system of employee management and motivationbased on a combination of tools including variablecompensation, employee profit-sharing, stock optionsavailable to all personnel, annual review meetings,continuing education, etc.

The company’s rate of employee turnover andabsenteeism is very low (refer to the chapter “Social responsibility” of this document).

4.4 Trade and financial risks

4.4.1 Customer risks

Trade receivable collection risks are managed from the inception of the receivable by maintaining a goodknowledge of the company’s market and customerbase and limiting the volume of orders for newcustomers. In addition, this risk is further reduced by a diversified customer base with 100 customersaccounting for 80% of sales. Balances of outstandingtrade receivables are monitored daily, and collectionprocedures are immediately implemented.

4.4.2 Risks of default

The risk of the company not meeting its financialcommitments is extremely low given its significantnet cash resources representing 19% of total balancesheet at December 31, 2010.

Interest rate risks on loans are covered by interest rate swaps.

Financial instruments by the Group to manage itsinterest rate risk are described in note 3.14.1 of theconsolidated financial statements.


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4.4.3 Liquidity risk and covenants

A prudent management of liquidity risk impliesmaintaining a sufficient level of liquidity and theavailability of financial resources through theappropriate types of credit lines. After performing a specific review of its liquidity risk, the companyconsiders that is has the resources to honour its futurepayment obligations. Maturities for financial assetsand liabilities are presented in note 3.14.2 of theconsolidated financial statements.

Loans obtained by the company are subject toobligations under covenants. These ratios arecalculated every year to verify compliance with thesecontractual obligations. A breach of these ratios couldrender these loan facilities subject to an obligation of immediate prepayment.

Covenants in force are described in note 3.10.4 of the consolidated financial statements.

4.4.4 Equity risk

Treasury shares are held exclusively in connectionwith the liquidity agreement managed by a brokeragefirm. They are recorded in the consolidated financialstatements at acquisition cost as a charge undershareholders’ equity.

The portfolio of marketable securities includesprimarily money market funds that do not include anequity component. The Group does not use hedginginstruments to cover these positions.

4.4.5 Valuation risks

A significant share of the company’s assets consists of intangible assets and goodwill whose value dependsin large part on future operating performances. The valuation of intangible assets and goodwill alsoimplies recourse to objective judgments and complexestimates concerning items uncertain by nature. If a change occurs in the underlying assumptions on which this valuation is based, a reduction in the value of shareholders’ equity will be recorded. The impact of such adjustment would however beextremely limited.

4.4.6 Risk associated with inadequate internal controls

Effective procedures applied by all Group companiesand in all areas of financial risks identified are reassessedannually in compliance with the Financial SecurityAct (Loi de Sécurité Financière).

These internal controls are reinforced in France byapplication of the Sarbanes Oxley act within theframework of the regulatory obligations of InterparfumsInc. (parent company of Interparfums SA) and itslisting on NASDAQ (see the chapter on “Internalcontrol” of this registration document).

4.4.7 Information technology risks

Interparfums and its subsidiaries have an ERP applicationproviding integrated sales, production and accountingmanagement capabilities. This system makes it possible to monitor information in real-time and reduce the risk of data loss and errors from multiple entries.

The company’s computer system is subject to risks ofbreakdown, electrical power outages, computer virusesand data theft. To reduce such risks, the company hasrobust security systems (power converters, firewalls,antivirus programs, etc.) and has implementedbusiness continuity and IT recovery plans. These planswill contribute to improved computer performancesand include a fault tolerance system for restoringnormal operations in a few minutes.

4.4.8 Litigation and other risks

These risks are managed by regularly monitoring legaland regulatory developments and by taking measures to avoid exposure to potential criminal liability andrisks related to commercial law and intellectual propertyrights. The company’s legal department also manageslitigation and disputes in close collaboration withoutside legal counsel and attorneys, as well as drawingup and reviewing the main contracts of the company.

Provisions for contingencies concern primarilycontract-related disputes.

There are no other legal, judicial or arbitrationproceedings (including any that are pending orthreatened of which the company is aware), whichmay have or have had during the 12 months, a material effect on the financial position orprofitability of the company and/or group.

5. SOCIAL RESPONSIBILITY

Over the years, Interparfums has developed acorporate culture based on promoting creativity,teamwork, a spirit of trust and corporate responsibility.

Interparfums management and employees sharestrong values in respect to working conditions, equal opportunity employment, respect, fightingdiscrimination and employee training. These valuesthat today represent the foundations for sustainablegrowth reflect the contribution of the culturaldiversity and rich experience of our workforce.

2008 2009 2010

Total workforce 152 171 180Officers and managers 82 84 89Supervisory staff 9 9 9Non-management employees 61 78 82Average age 37 years 37 years 35 yearsAverage seniority 6 years 6 years 6 years

In the year under review the number of personnelincreased 5.3%.


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5.1 Workforce by departmentNumber of employees at 12/31/2009 12/31/2010

General Management 2 2Production & Logistics 24 25Burberry Fragrances 31 34Luxe & Fashion 24 24France 59 65Finance & Corporate Affairs 31 30

Total 171 180

5.2 Wages and benefitsIn € thousands 2009 2010

Total wages and benefits (including profit sharing and social charges) 18,428 22,086

of which Management Committee members- wages, bonuses & social charges 3,027 3,887- share based payment expenses 135 82

In addition €122,000 million in supplementalretirement benefits for executive management werepaid in 2010.

5.3 Employee representationAs required by law, elections are held every four years to select a works’ committee and employeerepresentatives. The last elections, held in early 2011resulted in the formation of single body of employeedelegates (Délégation Unique du Personnel) comprisedof four salaried management employees and two non-management employees.

5.4 The workweek organizationAll employees of the company work on the basis of a 35-hour workweek according to a fixed numberof 218 work days per year and are entitled to 9 daysof reduced working hours benefits (RTT) per year.The rate of absenteeism in 2010 was 3.6% (4.2% in 2009), due primarily to maternity leaves.

5.5 Employee compensation and benefitsInterparfums has a compensation policy, a system of job classifications and performance evaluationsuniformly applied to all employees. These proceduresguarantee equal treatment of men and womenemployees and ensure the general cohesion ofpersonnel. Employees of the company and its

subsidiaries also benefit from variable incentivecompensation benefits linked to the Group’sperformance.

Interparfums also promotes employee stockownership through annual stock option plansavailable to all employees.

5.6 Statutory employee profit-sharingIn accordance with applicable legislation, anemployee profit-sharing agreement was implementedon December 20, 2001. The amount paid for 2010was €2 million (compared to €1.3 million in 2009).

5.7 Promoting the acquisition of new skillsAll Interparfums employees are offered training todevelop technical, management or personal skills.

Employees also regularly exercise their rights toindividual training benefits provided for underFrench law (Droit Individuel à la Formation).

6. ENVIRONMENTAL RESPONSIBILITY

Interparfums’ business focuses principally on thecreation and distribution of products. For this reason,the entire production process is outsourced tomanufacturing partners. These include producers ofjuice, glass, caps and cardboard boxes and packagingcompanies. With no production activities of its own,Interparfums does not own laboratories ormanufacturing sites.

Even though it operates in a sector less polluting than other industries, Interparfums is committed to preserving the environment and quality of life. For this reason, it remains involved in the productionprocess and coordinates with all subcontractors andsuppliers who manufacture its products and in thisway directly contribute to further promoting itsenvironmental priorities.

6.1 Optimized utility consumptionInterparfums’ consumption of water and energy islimited to normal office usage in the administrativepremises of its headquarters that house 125 employees.Other water and energy consumption concerns thesales offices and commercial teams in the field thatrepresent 55 employees out of 180.

In connection with a search for new logisticssolutions, the company decided to change warehousefacilities. On this basis it entered into an agreementwith its lessor for the construction of a HQE certifiedwarehouse that will become operational in the


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summer 2011. This certification represents notably improved insulation, a lighting system with presence-detectors, Ecolabel finishing materials,centralized technical management for energy controls, rainwater recovery, high-performance waste sorting installations, etc.

6.2 RecyclingTo balance product quality and esthetics withenvironmental considerations, Interparfums takescare to reduce packaging volumes at the source and select the appropriate materials at each stage of production to ensure optimal conditions for their recycling or disposal.

The bottles of its products are made of recyclableglass and the production process provides for a systemof recuperation, grinding and recasting of certainbottle components, which generates savings involume of materials used of 20%.

In addition, Interparfums ensures that itssubcontractors also have waste sorting and recyclingsystems. The company has for example implementedwith its suppliers of perfume sets a system for theretrieval of collection bins.

Finally, Interparfums invests in measures required for the treatment and recycling of the packages,cardboard boxes and glass left once its customers havefinished using its products. With this objective,through its participation in the “Eco Emballage”packaging recycling program, Interparfumscontributes to waste management and recycling.

6.3 Minimising environmental impactsInterparfums strives to reduce the already low impactof its business on the environment. Accordingly,Interparfums selects partners using cutting-edgedesign techniques with a commitment to reduce theimpact of manufacturing processes on the environment.

A biodegradable water-soluble solution that does not harm the environment is used in the colouring of some of its bottles. The coating process providesfor the elimination of solvent-based coatings and the progressive adoption of hydro-coating for the remaining lines, in compliance with the law of 2005 for reducing emissions of Volatile OrganicCompounds (VOC) in the air. In addition, sub-contractors for glass making have electrostatic air filters to reduce dust and smoke emissions inaddition to for wastewater recycling and emissioncontrol monitoring systems.

Reducing CO2 rates (-4.5%), water consumption per pump (-23.4), and the number of componentsare important factors in choosing sprayer pumps for Interparfums products.

Interparfums has eliminated thermosetting plasticsfrom its line of bath and body care products in favourof recyclable plastic.

This commitment to environmental responsibility,reducing energy consumption and recycling are alsokey criteria in the selection of subcontractors.

Interparfums is also currently exploring options to source FSC and PEFC certified cardboard stock for product boxes that comply with sustainable forestmanagement standards.

Furthermore, an ongoing priority of Interparfums’logistics and transportation management is to limit itscarbon footprint. In this way, promotional materialsmanufactured in Asia are shipped directly to Asiandistributors without being imported and stored inFrance. In addition, Interparfums ensures that itslogistics service provider optimizes transportationmanagement through trucks with full loads to limitoverall time on the road. Finally, by establishing awarehouse strategically located at the crossroads for itssubcontractors, Interparfums has reduced distancesfor raw material shipments.

Interparfums’ sourcing strategy also integratesenvironmental priorities and CO2 emission reductiongoals. In this way, 70% of Interparfums’ productionoriginates from France and 10% from nearbycountries. On this basis, only 20% of its supplies aresourced from far off destinations. Similarly, to reducethe transfer of components, Interparfums is graduallymoving towards the integration of different productionphases by suppliers (for example glass design andplastic processing).

6.4 Launch of an organic Bio rangeIn October 2010, Interparfums launched under the Nickel brand a line of EcoCert Greenlife andCosmebio certified organic cosmetics. This “NickelBio” skincare line meets all requirements for thepercentage of natural ingredients (minimum 99.1%)and those originating from organic farming(minimum 21.7%). In addition, in compliance withthe Ecocert charter, formulations for these productsuse a very low quantity of synthetic preservatives (<1%).

6.5 Regulatory and environmental issuesEven though Interparfums does not manufacture its products itself, it nevertheless ensures theirintroduction on the market. As such it is responsiblefor ensuring the safety for human use of cosmeticproducts it distributes. To this purpose, it conductstests that include ensuring innocuousness for the skinand eyes. Tests for skin irritation are conducted on healthy voluntary adult subjects and ocularirritantancy testing through cell cultures. Within this framework, in accordance with the EuropeanCosmetics Directive it also ensures its products arenot subject to any tests on animals in addition tocompliance with all other relevant European andinternational regulations concerning the design and production of all products it distributes.


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7. DIVIDENDS

Since 1998, the company has adopted a policy of distributing dividends that today represents approximately30% of consolidated earnings, making it possible to reward shareholders a with a high return while at the sametime associating them with the Group’s expansion. In early May 2010, a dividend of €0.39 per share was paidor a total amount of €6.3 million.

Dividends

Dividend for fiscal year: 2006 2007 2008 2009Paid in: 2007 2008 2009 2010

Dividend per share €0.38 €0.38 €0.38 €0.39 Dividend adjusted for bonus share issues €0.24 €0.26 €0.29 €0.35 Annual change for the adjusted dividend +13% +10% +10% +23%

Interparfums has taken measures for the applicationof the new European Community Regulation onchemicals and their safe use concerning theRegistration, Evaluation, Authorization andRestriction of Chemical substances (EC Directive1907/2006 of December 18, 2006) or REACH with its suppliers. All technical and organizationalmeasures to be applied following the adoption ofREACH have been implemented by the company.

The pre-registration phase of REACH ended onDecember 1, 2008. During this period, importersand manufacturers of “phase-in” substances wererequired to register the substances once volumeexceeded one ton per year. Pre-registration makes itpossible to obtain additional delays in connectionwith the registration procedure.

Interparfums, as a downstream user of chemicalsubstances, is not subject to the registrationrequirement. However, it has sought to maintain anactive role by ensuring that the registration processproceeds effectively and that there exists a continuoussupply for sourcing chemical substances contained in its products.

Interparfums took the initiative to contact itsdifferent subcontractors to ensure they and thosefurther down the supply chain effectively complywith registration, notification or authorization requestprocedures. Interparfums has asked all its suppliers to provide commitments that they will not supplyarticles containing substances listed in appendix XIV(Substances of Very High Concern). To date, nosupplier has declared the presence in articles providedto Interparfums of substances that are candidates forauthorization.

Information relating to REACH including notablyrisk management measures transmitted throughsecurity data files will be taken into account byInterparfums or its suppliers as they are issued.

For information, the deadlines for theimplementation of REACH are spread over the period from June 1, 2008 to June 1, 2018.

Interparfums’ actions in this area as a responsiblecorporate citizen thus exceed that of a simplecoordinator, by pursuing measures to increase awarenessby its partners of environmental issues and stayinginformed of the business practices of its subcontractorsand suppliers to preserve the environment.


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8. PURCHASES BY THE COMPANY OF ITS OWN SHARES

In compliance with article 241-1 et seq. of the AMF General Regulation, this paragraph describes the sharerepurchase program that will be submitted for authorization to the shareholders’ meeting of April 29, 2011.

8.1 Summary of the previous share repurchase programIn connection with the authorization granted by the shareholders’ meeting of April 23, 2010 and implementedby decision of the Board of Directors’ on April 17, 2010, Interparfums proceeded with the following transactionsfrom April 24, 2010 to February 28, 2011:

Situation at February 28, 2011

Percentage of own shares directly and indirectly held 0.19% of the capitalNumber of shares cancelled in the last 24 months 157,150 sharesNumber of treasury shares 33,864 sharesCarrying value of treasury shares €862,535Market value of treasury shares €847,615

Accumulated gross changes Purchases Cancellations Sales

Number of shares 341,071 (157,150) (175,798)Average price of the transaction 23.45 22.30 25.07Amounts 7,999,547 (3,503,799) (4,406,695)

Shares purchased and sold have been allocated exclusively for the purpose of market-making activity assured by an investment service provider in connection with a liquidity agreement and in compliance with the conductof business rules of the French association of investment firms (AFEI).

In the course of the share repurchase program 157,150 shares for a value of €3.5 million were cancelled.

For the duration of this repurchase authorization, no financial derivatives were used in connection with itsimplementation.

None of the other uses of this share repurchase authorization granted by the shareholders meeting of April 23, 2010 were implemented.

8.2 Purpose of the new share repurchase authorizationThe shareholders meeting of April 29, 2011 is calledto renew through its sixth resolution the authorizationgranted to the Board of Directors to purchase and sellshares of the company for the following purposes:

- Maintain an orderly market in the company’s sharesthrough an investment services provider within theframework of a liquidity agreement in compliancewith the conduct of business rules of the Frenchassociation of investment firms (AFEI);

- Grant employees or officers of the company and/orthe Group stock options (articles L.225-177 et seq. ofthe French Commercial Code) and/or bonus shares(articles L.225-197-1 et seq. of the FrenchCommercial Code);

- Remittance of shares pursuant to the exercise of rights attached to securities conferring rights by redemption, conversion, exchange, presentation of warrants or any other means to grants of thecompany’s shares;

- Use such shares for payment or exchange inconnection with financial transactions or acquisitionsin compliance with the financial market regulations;

- Cancel shares to increase the return on equity and earnings per share and/or eliminate the impact of dilution for shareholders from capital increasessubject to adoption of the twenty-fourth resolution of this extraordinary general meeting authorizing this cancellation;

- Permit the company to buy and sell its own shares for any other authorized purpose or practice admittedby the market or which may be subsequently authorizedor admitted by applicable laws and regulations.

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INTERPARFUMS

SINGAPORE

Singapore

INTERPARFUMS

LUXURY BRANDS

United States

INTER ESPAÑA

PARFUMS &

COSMETIQUES SL

Spain

INTERPARFUMS

DEUTSCHLAND

GMBH

Germany


8.3 Maximum percentage of capitalMaximum purchase priceExcerpt of the sixth resolution submitted for approvalby the shareholders meeting of April 29, 2011:

“Shares acquired shall be subject to the following limits:

- The maximum purchase price is €40 per share,excluding execution costs;

- The total number of shares acquired may not exceed5% of the capital stock outstanding at any time. This5% limit applies to an amount of capital that will beadjusted as applicable for corporate actions affecting thecapital stock after this meeting, whereby acquisitions bythe company shall under no circumstances increase itsholding, directly and indirectly through subsidiaries, to more than 5% of the capital stock;

- Pursuant to the above, by way of indication andwithout taking into account shares already held by thecompany, 17,926,195 shares on December 31, 2010would represent 5% of the capital stock corresponding toa maximum theoretical purchase price of €35,852,390on the basis of a maximum purchase price of €40 per share”.

8.4 Duration of the share repurchase programIn compliance with the provisions of the sixthresolution to be submitted to the shareholdersmeeting of April 29, 2011, the authorization toimplement this share repurchase program is grantedfor 18 months from the date of this meeting or nolater than October 29, 2012.

If one of the characteristics of the description of thisprogram is modified during the period of its duration,the public shall be notified of this modification inaccordance with the provisions set forth in articleL.212-13 of the AMF General Regulation.

INTERPARFUMS

SRL

Italy

PHILIPPE BENACINJEAN MADAR

INTERPARFUMS INC.Nasdaq - New York

INTERPARFUMS

LTD.

United Kingdom

INTERPARFUMSSAEurolist - Euronext Paris

PUBLIC

PUBLIC

48%

74%

51%

INTERPARFUMS

SUISSE SARL

Switzerland

100% 51% 100% 100% 100%71%

26%

52%

9. GROUP ORGANIZATION

The shareholder structure of Interparfums Inc. at December 31, 2010 was as follows:

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10. MARKET SHARE AND COMPETITION

Market share

In France, Interparfums attained roughly a 2% share of the selective distribution market of prestigeperfumes. In certain countries such as the UnitedStates, the United Kingdom, Russia or China, thecompany estimates its market share of total Frenchperfume imports at between 1% and 4%.

Source: Internal estimates.

Competition

Interparfums operates in a sector dominated by ten major historic players in the cosmetics marketthat have fragrance divisions built around a brandportfolio with billions of euros in sales. There existaround ten midsize players like Interparfums alsooperating in this segment with sales ranging between€200 million and €2 billion.

While Interparfums has also developed a brandportfolio in the luxury universe, it has adopted amarkedly different approach with a business modelbased on methodical long-term development focusedon creation and building customer loyalty rather thanvolume and advertising.

11. POST-CLOSING EVENTS

None.

12. 2011 OUTLOOK

Continued growth in 2011 will be supported by several major initiatives expected to contribute to revenue of approximately €350 million:

- The worldwide launch of the Burberry women’sfragrance line as well other fragrance lines includingunder the Jimmy Choo, Paul Smith and Montblancbrands;

- Thirty additional counters to be opened indepartment stores accompanied by the rollout of newreferences for the Burberry Beauty make-up line;

- The start of the operational phase in the workingrelationship between the US subsidiary InterparfumsLuxury Brands and Clarins in the United States.

Philippe Benacin, Chairman and CEO declared:“Interparfums is well equipped to pursue itsdevelopment: a brand portfolio of exceptional qualityrecently reinforced, an effective distribution network, anefficient internal organization and a sustained programof creative and coherent launches. 2011 will include anumber of important initiatives for the Jimmy Chooand Montblanc brands in the first six months and theBurberry brand in the second half. Combined with thestrong momentum at the start of this new period, theseinitiatives should contribute to sales of approximately€350 million or growth of more than 14% over theprior year”.

Philippe Santi, Executive Vice President, added: “The strong growth in earnings accompanied by thesignificant improvement in our operating margin in2010 once again confirms the validity of our businessmodel. Furthermore, despite a substantial increase in media budgets in 2011 to support sales and newlaunches, margins should remain high this year as well”.

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CHAPTER TWO

ConsolidatedfinancialsConsolidated financial statements 69Significant accounting policies 75Principles of presentation 79Notes to the balance sheet 80Notes to the income statement 91Segment information 93Other information 94

68 Two thousand ten registration document Interparfums. Consolidated financials

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Consolidated income statement

In € thousands (except per share data which is in units) Notes 2009 2010

Sales 4.1 259,199 305,696

Cost of sales 4.2 (106,958) (118,931)

Gross margin 152,241 186,765

% of sales 58.7% 61.1%

Selling expenses 4.3 (107,199) (133,073)Administrative expenses 4.4 (9,774) (11,476)

Current operating income 35,268 42,216

% of sales 13.6% 13.8%

Other operating income and expenses 4.5 (1,585) -

Income from operations 33,683 42,216

% of sales 13.0% 13.8%

Interest income 403 521Interest and similar expenses (1,579) (1,270)

Net finance costs (1,176) (749)

Other financial income 10,835 4,309Other financial expense (8,578) (5,838)

Net financial income/(expense) 4.6 1,081 (2,278)

Income before income tax 34,764 39,938

% of sales 13.4% 13.1%

Income tax 4.7 (11,972) (13,287)Effective tax rate 34.4% 33.3%

Net income before non-controlling interests 22,792 26,651

% of sales 8.8% 8.7%

Attributable to non-controlling shareholders 145 (156)

Net income attributable to equity holders of the parent 22,647 26,807

% of sales 8.7% 8.8%

Basic earnings per share 4.8 1.44 1.57Fully diluted earnings per share 4.8 1.44 1.56

(1) Restated for bonuses issues.

69Two thousand ten registration document Interparfums. Consolidated financials

(1)

(1)

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Consolidated statement of comprehensive income and expenseIn € thousands 2009 2010

Available-for-sale assets - 328Currency hedges (6,436) -

Gross income/(expense) recognized directly in equity (6,436) 328

Deferred tax 2,216 (113)

Net income/(expense) recognized directly in equity (4,220) 215

Consolidated net profit for the period 22,792 26,651

Total recognized income and expense for the period 18,572 26,866

Attributable to non-controlling shareholders 145 (156)

Attributable to equity holders of the parent 18,427 27,022


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Consolidated balance sheet

Assets

In € thousands Notes 2009 2010

Non-current assets

Net trademarks and other intangible assets 3.1 56,455 70,814Goodwill, net 3.2 2,613 2,613Net property, plant, equipment 3.3 5,515 7,066Long-term investments 816 1,292Other non-current financial assets 70 398Deferred tax assets 3.11 2,620 5,109

Total non-current assets 68,089 87,292

Current assets

Inventory and work in progress 3.4 45,110 66,813Trade receivables and related accounts 3.5 66,033 74,399Other receivables 3.6 7,480 6,838Current financial assets 3.7 - 35,785Cash and cash equivalents 3.7 66,873 25,830

Total current assets 185,496 209,665

Total assets 253,585 296,957

Shareholders’ equity and liabilities

In € thousands Notes 2009 2010

Shareholders’ equity

Common stock 48,671 53,780Additional paid-in capital 1,205 408Retained earnings 97,327 110,504Net income for the year 22,647 26,807

Equity attributable to parent company shareholders 169,850 191,499

Non-controlling interests 109 385

Total shareholders’ equity 3.8 169,959 191,884

Non-current liabilities

Provisions for non-current commitments 3.9 1,131 2,280Non-current borrowings 3.10 11,896 3,443Deferred tax liabilities 3.11 2,185 1,510

Total non-current liabilities 15,212 7,233

Current liabilities

Trade payables and related accounts 41,809 53,320Current borrowings 3.10 8,647 8,627Short-term bank loans 3.10 672 3,947Provisions for contingencies and expenses 3.9 1,063 412Current income tax assets 1,100 5,858Other liabilities 3.12 15,123 25,676

Total current liabilities 68,414 97,840

Total shareholders’ equity and liabilities 253,585 296,957


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Statement of changes in shareholders’ equity

In € thousands Number Common Paid-in Retained Total equity of shares stock capital earnings Group Non- Total & net share controlling income interests

As of December 31, 2008 (1) 13,351,605 40,176 265 113,995 154,436 (166) 154,270

Bonus share issue 2,678,942 8,037 (286) (7,751) - - -Shares issued on exercise of stock options 152,591 458 1,226 - 1,684 - 1,6842009 net income - - - 22,647 22,647 145 22,7922008 dividend paid in 2009 - - - (5,061) (5,061) - (5,061)Treasury shares 3,177 - - 162 162 - 162Stock based compensation - - - 208 208 - 208Remeasurement of financial instruments at fair value - - - (4,220) (4,220) - (4,220)Changes in scope of consolidation - - - - - 135 135Other changes - - - (6) (6) (5) (11)

As of December 31, 2009 (1) 16,186,315 48,671 1,205 119,974 169,850 109 169,959

Bonus share issue 1,638,298 4,915 (3,650) (1,265) - - -Shares issued on exercise of stock options 221,534 665 3,248 3,913 - 3,913Capital decrease (157,150) (471) (395) (2,629) (3,495) (3,495)2010 net income - - - 26,807 26,807 (156) 26,6512009 dividend paid in 2010 - - - (6,338) (6,338) - (6,338)Treasury shares 13,432 - - 267 267 - 267Stock based compensation - - - 152 152 - 152Remeasurement of financial instruments at fair value - - - 215 215 - 215Changes in scope of consolidation - - - (497) (497) 497 -Effect of exchange rate fluctuations - - - 548 548 (7) 541Other changes - - - 77 77 (58) 19

As of December 31, 2010 (1) 17,902,429 53,780 408 137,311 191,499 385 191,884

(1) Excluding treasury shares.


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Statement of cash flowsIn € thousands 2009 2010

Cash flows from operating activities Net income before non-controlling interests 22,792 26,651Depreciation, amortization and other 4,621 16,736Net finance costs 1,176 749Tax charge of the period 11,972 13,287

Operating cash flows 40,561 57,423

Interest expense (1,759) (1,571)Tax payments (9,304) (11,044)

Cash flow after interest expense and tax 29,498 44,808

Change in inventory and work in progress 24,598 (28,442)Change in trade receivables and related accounts 14,485 (10,290)Change in other receivables (1,241) (1,350)Change in trade payables and related accounts (11,057) 11,511Change in other current liabilities 19 10,721

Change in working capital needs 29,804 (17,850)

Net cash flows provided by (used in) operating activities 56,302 26,958

Cash flows from investing activities Net acquisitions of intangible assets (614) (17,438)Net acquisitions of property, plants and equipment (2,876) (3,851)Net acquisitions of marketable securities (+3 months) - (35,785)Changes in scope of consolidation 135 -Changes in investments and other non-current assets (408) (476)

Net cash flows provided by (used in) investing activities (3,763) (57,550)

Cash flow from financing activities Issuance of borrowings and new financial debt - -Debt repayments (9,470) (8,200)Dividends paid (5,061) (6,338)Capital increases 1,684 3,913Capital decrease through the repurchase of shares - (3,495)Treasury shares 205 394

Net cash flows provided by (used in) financing activities (12,642) (13,726)

Change in net cash 39,897 (44,318)

Cash and cash equivalents - beginning of year 26,304 66,201

Cash and cash equivalents - end of year 66,201 21,883

The reconciliation of net cash breaks down as follows:


Cash and cash equivalents 66,873 25,830Short-term bank loans (672) (3,947)

Net cash at the end of the period 66,201 21,883

Certificates of deposit > 3 months - 35,785

Net cash and current financial assets 66,201 57,668


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NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

Annual highlights

January

Montblanc license agreement

On January 22, 2010, Interparfums and MontblancInternational signed a 10 ½ year license agreement tocreate, produce and distribute perfumes and ancillaryproducts under the Montblanc brand with aninception date of July 1, 2010.

March

Launch of the Burberry Sport line

The launch of the new women’s and men’s fragranceline, Burberry Sport capturing the energy, attitude andvibrancy of the Burberry Sport ready-to-wear collection.

Launch of the Oriens line of Van Cleef & Arpels

Oriens celebrates the splendour and mystery of the Orient with an opulent and elegant compositioninspired from the collections of the Van Cleef & Arpels high jewellery house.

Creation of Interparfums Luxury Brands in the US

Interparfums Luxury Brands, a wholly-ownedsubsidiary of the French parent Interparfums SA, willdirectly coordinate the development and marketing ofBurberry (fragrances and make-up), Lanvin, Montblanc,Jimmy Choo and Van Cleef & Arpels brands in theUS market.

June

Bonus share issue

On June 20, 2010, the company proceeded with its11th consecutive bonus issue on the basis of one newshare for every ten shares held.

Creation of Interparfums Singapore

A wholly-owned subsidiary of Interparfums,Interparfums Singapore will coordinate marketingand sales operations for the entire Asian region.

July

Launch of the first range of the Burberry Beauty make-up line

Interparfums launches the first range of the BurberryBeauty make-up line. With more than 100 references,60 exclusive counters opened worldwide in 2010 and2011, this area of development is expected to provideincreased global visibility for the Burberry brand.

September

Launch of the Midnight In Paris line of Van Cleef & Arpels

Directly inspired by the eponymous watch from itsexclusive collection, Midnight in Paris combineselegance and masculinity to convey the history of astarry night scene from the heart of the City of Light!

Launch of the Marry Me ! line of Lanvin

Marry me ! The perfume of an encounter, the firstdays of passion, a hope of true love.

Launch of the Miss Dupont line of S.T. Dupont

Celebrating the enchantment of beauty, S.T. Dupontlaunches a new fragrance dedicated exclusively to women.

Launch of the Paul Smith Man 2 line of Paul Smith

Paul Smith Man 2 offers men a new way to dressthemselves with an aroma capturing the unique Paul Smith playful sense of fun and formality.

Launch of the Nickel Bio line of Nickel

Nickel Bio, a three-step skincare range for men… and for women! A concentrated organic energizer for restoring skin vitality and tone day after day.

December

Signature of a fragrance license agreement with Boucheron

On December 17, Boucheron and Interparfumssigned a 15-year worldwide license agreementcommencing on January 1, 2011 for the creation,development and distribution of fragrances under the Boucheron brand.

One-year extension of the license agreement with Burberry

On December 21, Interparfums and Burberryextended by one year certain terms of their fragrancelicense, including the length of the agreement to December 31, 2017. Burberry’s right to buy thelicense was moreover moved from December 31, 2011to December 31, 2012, and the option requiring theconsent of both parties to extend the license five yearsbeyond 2017 is now exercisable at December 31, 2015.


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1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Compliance statementIn accordance with EC regulations 1606/2002 ofJuly 19, 2002 on international accounting standards,the 2010 consolidated financial statements of theInterparfums are established in compliance withIAS/IFRS (International Accounting Standards/International Financial Reporting Standards) applicablesince 2005 as endorsed by the European Union.

Financial information presented herein has beenbased on:

- IFRS standards and interpretations whoseapplication was mandatory starting in 2005;

- Options retained and exemptions used by theGroup for the preparation of IFRS consolidatedfinancial statements.

The consolidated financial statements ofDecember 31, 2010 were approved by the Board ofDirectors on March 7, 2011. They will be definitivewhen approved by the ordinary general meeting ofApril 29, 2011.

1.2 Changes in accounting standardsThe following standards, amendments and interpretationsthat entered into force on January 1, 2009 have beenapplied by the company in preparing its consolidatedfinancial statements:

- IFRS 8 “Operating segments”;

- Amendment to IAS 1 “Presentation of financialstatements”;

- Amendment to IAS 23 “Borrowing costs”;

- Amendment to IAS 38 “Intangible assets”;

- Amendment to IFRS 2 “Vesting conditions and cancellations”;

- Amendments to IFRS 1 and IAS 27 “Cost of aninvestment in a subsidiary, jointly controlled entity or associate”;

- Amendment to IFRS 1 “First-time adoption ofIFRS - Revision of the structure of the standard”applied in advance;

- Amendment to IFRS 7 and IAS 39 “reclassificationof financial assets” (entered into force on July 1, 2008).

The following standards, amendments and interpretationsthat entered into force on July 1, 2009 have beenapplied by the company in preparing its consolidatedfinancial statements:

- IFRS 3 and IAS 27 revised “Business combinations”;

- Amendment to IAS 39 “Financial instruments:recognition and measurement - eligible hedged items”.

These standards, amendments and interpretations didnot have a material effect on the company’s consolidatedfinancial statements.

The following standards, amendments and interpretationsthat entered into force on January 1, 2009 will be appliedby the company in preparing its 2011 consolidatedfinancial statements:

- Revised IAS 24 - Related party disclosures.

Because of the company’s business, the followingstandards, amendments and interpretations are not or will not be applied to the consolidated financialstatements:

- Amendment to IAS 32 “Classification of rightsissues”;

- Amendments IAS 32 and IAS 1 “Puttable financialinstruments”;

- IFRIC 9 and IAS 39 “Embedded derivatives”;

- IFRIC 12 “Service concessions”;

- IFRIC 13 “Customer loyalty programs”;

- IFRIC 14 and IAS 19 “The limit on a definedbenefit asset, minimum funding requirements andtheir interaction”;

- IFRIC 15 “Agreements for the construction of real estate”;

- IFRIC 16 “Hedges of a net investment in a foreignoperation”;

- IFRIC 17 “Distribution of non-cash assets toowners”;

- IFRIC 18 “Transfers of assets from customers”;

- IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”.

1.3 First-time adoption of IFRSFor the first time adoption of IFRS for the financialstatements prepared on December 31, 2005 with a transition date of January 1, 2004, as authorizedunder IFRS 1, Interparfums chose to apply thefollowing exemptions for standards applicable to the company:

- Fixed assets: the Group has chosen to continue torecognize property, plant and equipment at historicalcost;

- Share-based payments and equivalents: for programsinvolving equity-settled share-based payment, theGroup has elected to apply IFRS 2 for grants after November 7, 2002 and not vested before January 1, 2005.


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Interparfums SA Ownership interest (%) Controlling interest (%)

Interparfums Suisse Sarl Switzerland 100% 100%Interparfums Deutschland GmbH Germany 51% 51%Inter España Parfums et Cosmetiques SL Spain 100% 100%Interparfums Srl Italy 71% 71%Interparfums Ltd. United Kingdom 51% 51%Interparfums Luxury Brands United States 100% 100%Interparfums Singapore Singapore 100% 100%

Subsidiaries’ financial statements are prepared on the basis of the same accounting period as the parent company.The fiscal year covers the 12 month period ending on December 31.

1.5 Translation methodThe company’s operating currency and currency for the presentation of financial statements is the euro.

Transactions in foreign currencies are translated at the exchange rate in effect on the date of the transaction.Foreign currency denominated payables and receivables are translated at the exchange rate in effect as ofDecember 31, 2010. Translation losses and gains arising from the conversion of accounts denominated inforeign currencies on December 31, 2010 are recorded in the income statement. Hedged transactions aretranslated at the negotiated exchange rate.

The main exchange rates applied for the translation of subsidiary accounts in relation to the euro are as follows:

Currency Closing exchange rate Average exchange rate 2009 2010 2009 2010

US dollar (USD) 1.4406 1.3362 1.3948 1.3093Pound sterling (GBP) 0.8881 0.86075 0.8909 0.8578Singapore dollar (SGD) - 1.7136 - 1.7540Swiss franc (CHF) 1.4836 1.2504 1.5100 1.3803

(1) Average annual exchange calculated from the start of operations for the US (May 31, 2010) and Singapore (June 15, 2010) subsidiaries.

1.6 Use of estimatesThe preparation of consolidated financial statementsrequires the use of estimates and assumptions for the valuation of certain balance sheet and incomestatement balances. These concern primarily thevaluation of intangible assets, amounts to be set aside for provisions for contingencies and expenses,provisions for inventory losses and deferred tax assets.Although these estimates are based on management’sbest knowledge of current events and situations,actual results may ultimately differ from these estimates.

1.7 Revenue recognitionRevenue includes principally wholesale sales todistributors and agents and direct sales to retailers for the part registered by Group subsidiaries.

Revenue from perfume and cosmetics products ispresented net of all forms of discounts and rebates.

Revenue is recognized on basis of conditions oftransfer to the buyer of the risks and rewards incidentto ownership. Amounts invoiced at year-end whenthe actual transfer of title occurs in the following yearare not recognized under revenue of the year in progress.


(1)

(1)

1.4 Basis of consolidationIn March and June 2010, Interparfums created twowholly-owned distribution subsidiaries in the UnitedStates and Singapore respectively, “InterparfumsLuxury brands” and “Interparfums Singapore”.

In October 2010, Interparfums acquired the remaining 49% share of its Spanish subsidiary “Inter España Parfums et Cosmetiques SL”, now in consequence wholly-owned.

In October 2010, Interparfums also acquired an additional 20% stake in its Italian subsidiary“Interparfums Srl”, henceforth 71%-held.

All Group subsidiaries are fully consolidated. Theseinclude Interparfums Deutschland GmbH, Inter España Parfums et Cosmetiques SL, Interparfums Srl,Interparfums Ltd., Interparfums Suisse Sarl, InterparfumsLuxury Brands and Interparfums Singapore.

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1.8 Trademarks, other intangible assets and goodwill

Trademarks and other intangible assets

Trademarks and other intangible fixed assets,including trademarks under licensing contracts and acquired trademarks are recorded at cost.

These trademarks that constitute well-establishedlegally protected international brand names areclassified as indefinite life intangible assets and are not amortized.

Finite life intangible assets such as upfront license fees are amortized on a straight-line basis over theduration of the license.

Rights on glass melds are classified as finite lifeintangible assets and amortized over a period ofbetween three and five years.

Licenses and upfront license fees are remeasured atleast once a year or whenever there is an indication of impairment of value in use defined as the presentvalue of estimated future cash flows expected to arisefrom the continuing use of these assets. Data usedoriginates from the annual and multiyear budgets for duration of the license agreements drawn up by Management.

Proprietary brand names are remeasured at least oncea year by comparing the net carrying value and therecoverable amount defined as the higher of value in use on the basis of the present value of estimatedfuture cash flows derived from five year budgetsdiscounted infinity and the fair value net of disposalcosts according the method of price-to-sales inreference to similar transactions.

The discount rate before tax applied for remeasurementis the weighted average cost of capital (WACC) of7.44% at December 31, 2009 compared to 7.84% at December 31, 2009. This ratio is determined onthe basis of the long-term interest rate of 3.36%corresponding to the average rate for 10-year OATFrench fungible treasury bonds of the last quarter, the rate expected by an investor in this sector and thespecific risk premium for this sector. The growth rateto infinity (perpetuity growth rate) adopted is 1.5%at December 31, 2010 compared with 0.9% for theprior period.

A provision for impairment is recorded under incomeif this value is lower than the carrying value.

Under IAS 38.27b revised in 2004, costs generatedon acquisition analyzed as directly attributable costsare included in the cost of the acquired assets.

Other intangible assets are amortized over their useful lives and subject to impairment testing whenan indication of impairment exists.

Goodwill

Goodwill is defined as the difference between thepurchase price of shares of consolidated companies andthe Group’s share in restated net assets after measurementof the fair value of assets and liabilities acquired.

Positive goodwill arising from the acquisition ofNickel has been recognized in the balance sheet.

This goodwill is tested annually or whenever thereexists an indication of potential impairment. When the net carrying value of this goodwill exceedsthe higher of the value in use or market value, animpairment is recorded for the difference. Value inuse is based on the present value of future cash flowsthat will be generated by these assets while marketvalue is determined in reference to recent comparabletransactions or valuations performed by independentvaluers in view of their disposal.

1.9 Property, plant and equipmentTangible fixed assets are valued at cost (purchase price plus related costs, excluding acquisition cost)and depreciated over their estimated useful lives on a straight-line basis (2 to 5 years). Tangible fixedassets include molds for caps.

1.10 Inventory and work in progressInventories are valued at the lower of cost or probableresale value. A provision for impairment is recordedwhen their probable resale value is lower than thecarrying value.

Inventories of raw materials and supplies are valuedon the basis of average weighted prices.

The cost of finished products includes the cost of materials used, production expenses and a share of indirect costs valued at a standard rate.

At the end of every year, these standard rates arecompared with the effective rate actually obtainedbased on actual data at year-end.

In accordance with the amendment to IAS 38“Intangible assets”, expenditure on advertising andpromotional activities is recognized when received or produced in the case of goods or when rendered in the case of services.

1.11 Non-current financial assetsMarketable securities on initial recognition arerecorded at cost and subsequently remeasured at fairvalue corresponding to the market value at the end of each period.

All Group marketable securities have been classifiedas “available-for-sale financial assets” and presented in “Cash and cash equivalents”.

In accordance with IAS 39.55, gains and losses on “available-for-sale financial assets” are recorded at year-end in equity. However, in accordance withIAS 39.67, a significant or prolonged decline in fairvalue below the cost value of the securities is recognizedin profit or loss.


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1.12 Accounts receivableAccount receivables are recorded at face value. A provision for impairment is recorded on a case-by-case basis when the probable recovery value is deemed to be less than the carrying value.

1.13 Deferred taxTiming differences between tax base and consolidatedassets and liabilities and tax on restatements onconsolidation give rise to the recognition of deferredtaxes under the liability method, taking the knownyear-end tax conditions into account.

Potential tax credits resulting from loss carry forwardsare only recorded when their use in the short term isdeemed likely, and subject to depreciation whenappropriate, are maintained in the balance sheet.

1.14 Current financial assetsCurrent financial assets consist of investments in the form of certificates of deposits with maturities of more than three months.

1.15 Cash and cash equivalentsThe line item “Cash and cash equivalents” includesmarketable securities, cash and cash equivalents thatconsist of highly liquid investments with maturities of three months or less and readily convert to a knowncash amount and are subject to an insignificant risk of changes in value.

1.16 Treasury sharesInterparfums shares held by the Group are recordedas a deduction from equity at cost.

If sold, the proceeds are recorded directly underequity net of tax.

1.17 Provisions for contingencies and expenses

Retirement severance benefits

This reserve is maintained to honour the company’semployee pension benefit commitments andcorresponds to the present value of the payments towhich employees are entitled, under the collectivebargaining agreement, once they retire. For themeasurement of retirement indemnities for 2010,Interparfums adopted the procedure for negotiatedtermination agreements introduced on July 23, 2008extending the interprofessional agreement of

January 11, 2008. This procedure provides for the systematic signature of a severance agreement by the employer and the employee specifying theterms and conditions of the termination. Because lastyear method involving compulsory retirement wasapplied, the impact of this change in the assumptionsused for calculation was dealt with under past servicecosts. The projected unit credit was applied. Thismethod takes into account rights and wages projectedto term, the probability of payment as well as theprorated amount of seniority so that commitmentscorrespond to the value of service already rendered by employees.

Accordingly, the calculation of commitments forseverance benefits involves estimating the probablepresent value of projected benefit obligations (PBO),i.e. the rights of employees at the time of departuretaking into account the probability of departure anddeath of the employees before term as well as theimpact of revaluations and discounts. This projectedbenefit obligations is then prorated to take intoaccount seniority of the employees of the company on the calculation date.

Other contingencies and commitments

A provision is recognized when the company has apresent obligation (legal or constructive) as a result of a past event when it is probable that an outflow orresources embodying economic benefits will be requiredto settle an obligation and a reliable estimate can bemade of the amount of the obligation.

1.18 Financial instrumentsDerivative financial and hedging instruments are usedby the Group to reduce exposure to interest rate andforeign exchange risks. Such instruments are not usedfor speculative purposes.

A swap to cover interest-rate risks in connection withLanvin loan of 2007 linked to 3 month Euribor wasimplemented on the date the loan agreement wasconcluded. In compliance with IAS 39, the differencein the market value of this instrument and thenotional amount is recorded in the income statement.

The company has recourse to forward exchangecontracts and cash flow hedges put into place at thetime receivables are recognized. These contracts havematurities of three to six months destined accordingto the maturities of the corresponding receivables inforeign currencies (primarily the US dollar andSterling pound). Currency gains and losses from theseinstruments are recognized in the income statement.

In addition hedges have been put into place to coverfuture sales in US dollars. These hedges providedcover for approximately 80% of sales in 2009 in thiscurrency and 65% of sales in the 2010 fourth quarter.In accordance with IAS 39, these hedges of projectedcash flows were accounted for as cash flow hedges.Hedge accounting is applicable if the hedge isformally defined and documented on inception of the hedging relationship and it is demonstrated that


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hedging relationship will be highly effective over the life of the hedging instrument. At year-end,hedging instruments corresponding to these criteriaare recognized in the balance sheet at fair value. The gain or loss on the hedging instrument determinedto be effective shall be recognized directly in equity.In 2009 and 2010, revenue was restated to eliminatethe impact of these hedges.

1.19 BorrowingsOn initial recognition, borrowings are measured atfair value to which are added transaction costs directlyattributable to the issuance of the liability.

At year-end, borrowings are recognized at amortizedcost according to the effective interest rate method.

1.20 Other liabilitiesOther financial debt and operating liabilities are measured at fair value on initial recognition. This amount generally corresponds to the amount of the invoice in the case of short-term payables.

1.21 Stocks optionsIFRS 2 requires that a charge be recorded in theincome statement with a corresponding increase to provisions representing advantages granted tobeneficiaries of stocks options. For the measurementof these advantages, the company uses the Black & Scholes model. This model takes into account the characteristics of the plans (exercise price, exerciseperiod), market data at time of grants (risk-free rate,share price, volatility, projected dividends) andassumptions with respect to the behavior of beneficiaries.Changes occurring after the grant date do not have an impact on this initial valuation. The value of theoptions is related notably to their expected lifespanthat the company considers corresponds to theholding period provided for under tax provisions.This expense is recognized over the duration of the vesting period.

1.22 Registration of trademarksUnder IAS 38, expenses incurred in connection with the registration of each trademark are notcapitalized and are expensed under “research and consulting costs”.

1.23 Earnings per shareBasic earnings per share are calculated using theweighted average number of shares outstandingduring the year and excluding treasury shares.

Fully-diluted earnings per share are calculated basedon the average number of shares outstanding in theperiod, after excluding only treasury shares destinedto be held on a long-term basis and adjusted for theeffects of all diluted potential ordinary shares.

To ensure the comparability of information, basic and diluted earnings per share of the prior year aresystematically recalculated to take into account bonusshare grants in the year in progress.

2. PRINCIPLES OF PRESENTATION

2.1 Presentation of the income statementThe consolidated financial statements of the companyare presented by function. Under this format, expensesand income are broken down by function (cost ofsales, selling expenses, administrative expenses) andnot according to the nature of the origin of expensesand income.

2.2 Presentation of the balance sheetThe balance sheet is presented based on a classificationbetween current and non-current liabilities.

2.3 Segment reportingSegment information presented in this report is basedon the segments used by management to monitorGroup operations.

2.3.1 Business lines

The company is organized and focused around twoprofit centres: “Perfumes” and “Skincare and Beauty”.

In the 2010 first half, Interparfums launched its firstmake-up lines under the Burberry brand. The resultsof this business are monitored by the company’sGeneral Management as part of the already existing“Cosmetics” division. For this reason, the resultingnew division including both these businesses is nowpresented under the heading “Skincare and Beauty”.

Details on these two sectors for which the companypossesses performance indicators are in consequencedisclosed below.

2.3.2 Geographical segments

The company that has a significant internationaldimension and analyses sales by geographicalsegment. All assets necessary for the company’sactivity are located in France.


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3. NOTES TO THE BALANCE SHEET

3.1 Trademarks and other intangible assets

3.1.1 Nature of intangible assets

In € thousands 2009 + - 2010

Gross value

Indefinite life intangible assets Nickel trademark 2,133 - - 2,133Lanvin trademark 36,323 - - 36,323

Finite life intangible assets S.T. Dupont upfront license fee 1,219 - - 1,219Burberry upfront license fee 5,000 - - 5,000Van Cleef & Arpels upfront license fee 18,250 - - 18,250Montblanc upfront license fee - 1,000 - 1,000Boucheron upfront license fee - 15,000 - 15,000Quiksilver acquisition cost 490 - (490) -

Other intangible assets Rights on molds for bottles 9,270 769 (1,411) 8,628Registration of trademarks 440 - - 440Other 549 669 - 1,218

Total cost 73,674 17,438 (1,901) 89,211

Amortization and depreciation

Indefinite life intangible assets Nickel trademark (384) - - (384)

Finite life intangible assets S.T. Dupont upfront license fee (1,124) (63) - (1,187)Burberry upfront license fee (2,026) (450) - (2,476)Van Cleef & Arpels upfront license fee (4,563) (1,521) - (6,084)Montblanc upfront license fee - (48) - (48)Quiksilver acquisition cost (273) (217) 490 -

Other intangible assets Rights on molds for bottles (7,978) (688) 1,392 (7,274)Registration of trademarks (440) - - (440)Other (431) (73) - (504)

Total amortization and depreciation (17,219) (3,060) 1,882 (18,397)

Total 56,455 14,378 (19) 70,814


Nickel trademark

As Interparfums is the owner of the Nickel brand,acquired on April 1, 2004, no amortization wasrecognized in its balance sheet. The brand is tested for impairment once a year on December 31.

Lanvin trademark

As Interparfums acquired ownership for the Lanvintrademark and brand name for class 3 products(perfumes) in July 2007 no amortization wasrecognized in its balance sheet. The brand is tested for impairment once a year on December 31.

S.T. Dupont upfront license fee

An upfront license fee of €869,000 paid on April 1, 1997is amortized over the 11-year term of the S.T. Dupontlicense agreement. In March 2006, an additionallicense fee of €350,000 was paid to be amortized overthe remaining term of the license agreement.

Burberry upfront license fee

The upfront license fee of €3 million paid on July 1, 2004is amortized over the 12.5 year term of the Burberrylicense agreement. In September 2006 an additionallicense fee of €2 million was paid to be amortizedover the remaining term of the license agreement.

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3.3 Property, plant and equipment

In € thousands 2009 + - 2010

Fixtures, improvements, fittings 5,672 2,268 (237) 7,703Office and computer equipment and furniture 1,496 407 (87) 1,816Molds for bottles and caps 6,113 901 (763) 6,251Other (1) 668 277 (75) 870

Total cost 13,949 3,853 (1,162) 16,640

Accumulated depreciation and impairment (1) (8,434) (1,426) 286 (9,574)

Total 5,515 2,427 (876) 7,066

(1) Including fixed assets held under finance leases (vehicles) for a gross amount of €352,000 and an accumulated depreciation of €159,000.

Van Cleef & Arpels upfront license fee

An upfront license fee of €18 million paid on January 1, 2007 is amortized over the 12-year term of the Van Cleef & Arpels license agreement.

Montblanc upfront license fee

The upfront license fee of €1 million paid on June 30, 2010 is amortized over the 10 ½ year term of the Montblanc license agreement.

Boucheron upfront license fee

The upfront license fee of €15 million paid on December 17, 2010 is amortized over the 15 year term of the Boucheron license agreement.

Quiksilver acquisition cost

Because this license agreement was terminated beforeterm on June 30, 2010, an accelerated amortizationexpense was recognized to coincide with this date.

Rights on molds for bottles

Rights on molds for bottles are amortized over 5 years. Design costs are amortized over 3 years.

3.1.2 Impairment tests

Nickel trademark

Following a valuation on December 31, 2010 based on the method of discounting future royaltypayments to infinity, no additional provision forimpairment was recorded in the period.

Lanvin trademark

An impairment test was performed on December 31, 2010,on the basis of the present value of future cash flowsdiscounted to infinity and the price-to-sales ratiomethod. On the basis of these methods, no provisionswere recorded.

Upfront license fees

All upfront license fees were measured on December 31, 2010 using the discounted cash flow method. No provision was recorded.

For all discounts, the weighted average cost of capital(WACC) of 7.44% is applied.

Analysis of sensitivity

A one point fluctuation in the discount rate beforetax or the perpetuity growth rate would result in therecognition of a non-material impairment charge fortrademarks and other intangible assets.

3.2 GoodwillGoodwill from the 100% shareholding in Nickel has been recognized in the balance sheet sinceDecember 31, 2007. This goodwill corresponds tothe initial acquisition of a 67.57% stake in June 2004for €6,910,000 followed by 32.43% in June 2007 for €3,518,000.

This goodwill is tested for impairment each year.These tests in previous periods have resulted in therecognition of a total provision for impairment of€2,589,000. No additional impairment charge wasrecognized 2010. On that basis, goodwill net ofimpairment charges amounted to €2,613,000.

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3.4 Inventory and work in progressIn € thousands 2009 2010

Raw materials and components 16,538 26,176Finished goods 32,487 44,830

Total cost 49,025 71,006

Allowances for raw materials (1,29) (917)Allowances for finished goods (3,786) (3,276)

Total provisions (3,915) (4,193)

Net total 45,110 66,813

The rise in inventories in the period reflects mainly €7 million for the build up of stock for new licenses, €7 million for new lines and €8 million in response to growth by the existing lines.

3.5 Trade receivables and related accountsIn € thousands 2009 2010

Gross amount 67,251 77,540Provisions (1,218) (3,141)

Net total 66,033 74,399

Increased provisions for impairment of trade receivables result primarily from the suspension of payment by oneof our distributors for an amount payable at December 31 within less than 90 days.

The aged trial balance for trade receivables breaks down as follows:


Not due 50,545 62,9620-90 days 14,767 13,8829-180 days 687 277181-360 days 816 54More than 360 days 436 365

Gross amount 67,251 77,540

3.6 Other receivablesIn € thousands 2009 2010

Accruals 1,130 1,485Company current accounts 528 32Value-added tax 1,093 2,622Hedging instruments 3,912 799Other 817 1,900

Total 7,480 6,838

3.7 Current financial assets, cash and cash equivalents

3.7.1 Current financial assets

Current financial assets consist of investments in the form of certificates of deposits with maturities of morethan three months for €35,785,000.


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3.7.2 Cash and cash equivalents


Certificates of deposit (less than 3 months) 44,629 18,991Money-market mutual funds 16,823 3,103Bank accounts 5,421 3,736

Cash and cash equivalents 66,873 25,830

Current financial assets (certificates of deposits > three months) - 35,785

Cash, cash equivalents and current financial assets 66,873 61,615

In 2010, to optimise financial results, the companydecided to invest certificates of deposits withmaturities of between three and six months. Theseinstruments are classified as current financial assets (cf. note 3.7.1). The decrease in certificates of depositswith maturities of less than three months reflectsmainly the switch to longer maturities.

3.8 Shareholders’ equity

3.8.1 Common stock

As of December 31, 2010, Interparfums’ capital wascomprised of 17,926,195 shares fully paid-up with a par value of €3, 74.15%-held by InterparfumsHolding.

For the period under review, capital increases resultfrom the exercise of stock options and the capitalincrease in connection with the bonus issue ofJune 20, 2010 on the basis of one new share for every five shares held.

The decreases in capital in 2010 resulted from sharesrepurchased by the company with the cancellation of 157,150 shares.

3.8.2 Stock option plans

The managers and employees of Interparfums and itssubsidiaries benefit regularly from stock option plans.

Rules for the grant of stock options to executiveofficers are based on the level of responsibilitiesexercised and the performance of the company. The quantity of stock options granted to officers may vary from one year to another according to the performance of the company over the period.

On December 17, 2009 and October 8, 2010, theBoard of Directors decided with respect to the grantoptions to executive officers on those dates that theirexercise will be contingent on criteria of internalperformance based on the company’s sales. Underthose terms, the number of options exercisable isbased on the average rate of actual growth forcompany sales in relation to the target of averagegrowth for sales. This objective is set by the Board ofDirectors for the 4-year tax holding period that applyto the stock option plans established by this Board.

The Board of Directors has decided that these officersmust retain 10% of the shares resulting from theexercise of stock options for the duration of theirterms of office in accordance with the provision ofarticle L.225-185 of the French Commercial Code.

In October 2010, a new plan was established for114,700 stock options at a price of €22.95 for whichall employees were eligible. These options are subjectto a holding period of 4 years.

The characteristics of plans currently in force are as follows:

Plans Number of Number of Grant Vesting Exercice beneficiaries options granted date period price at the inception

Plan 2004 74 47,000 03/25/04 4 years €18.40Plan 2005 85 112,700 05/26/05 4 years €15.65Plan 2006 84 98,800 06/01/06 4 years €19.90Plan 2008 (IP Inc.) 96 84,500 02/14/08 4 years $11.30Plan 2009 135 87,000 12/17/09 4 years €16.00Plan 2010 143 114,700 10/08/10 4 years €22.95

(1) Subscription price adjusted for bonus issues.

(1)

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

Plans Options Conversions Grants Bonus Cancellations Options outstanding in the in the share in the outstanding at period period grants period at 12/31/2009 12/31/2010

Plan 2004 153,736 (148,464) - - (5,272) -Plan 2005 154,296 (68,347) - 14,347 (353) 99,943Plan 2006 152,436 (4,723) - 15,234 - 162,947Plan 2009 87,000 - - 8,690 (1,090) 94,600Plan 2010 - - 114,700 - - 114,700 547,468 (221,534) 114,700 38,271 (6,715) 472,190

At December 31, 2010, the potential number of Interparfums SA shares that may be created was 472,190.

In February 2008, all employees of the Group benefited from a stock option plan created by the parentcompany Interparfums Inc. This plan was recognized in accordance with IFRIC 11 and will be charged to Interparfums SA by the parent company.

Benefits granted to employees in the form of stock options recognized as additional compensation, inaccordance with IFRS 2, were calculated using the Black & Scholes model. The impact of this calculation,including the US plan, represents an expense spread over the duration of the vesting period. This expenseamounted to €311,000 for 2010 and €397,000 for 2009.

The estimation of the fair value of each stock option based on the Black & Scholes, model is calculated on the grant date on the basis of the following assumptions:

Plans Fair value Risk-free Dividend Volatility Share price of the options interest yield rate retained for rate the calculation

Plan 2004 €12.48 4.20% 1.00% 23% €64.75Plan 2005 €6.76 4.50% 1.00% 22% €30.25 Plan 2006 €10.37 4.60% 0.94% 25% €35.00 Plan 2008 (1) $3.96 2.72% 1.20% 39% $11.59Plan 2009 €4.27 3.56% 2.67% 30% €17.60 Plan 2010 €6.55 2.81% 1.81% 30% €22.95

(1) 2008 plan has been issued by the parent company Interparfums Inc.

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

3.8.3 Treasury shares

Within the framework of the share repurchase program authorized by the General Meeting on April 23, 2010,23,766 Interparfums shares were held by the company as of December 31, 2010.

Changes in the period break down as follows:

In € thousands Number of shares Book value

At December 31, 2009 37,198 648Acquisitions 326,896 7,517Bonus issue of June 20, 2010 2,483 -Cancellations (157,150) (3,504)Sales (185,661) (4,036)

At December 31, 2010 23,766 625

Management of the share repurchase program is assured by an investment services provider within theframework of a liquidity agreement in compliance with the conduct of business rules of the French associationof investment firms (AFEI).

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

- The maximum purchase price is €40 per share, excluding execution costs;- The total number of shares acquired may not exceed 5% of the company’s capital stock.

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3.8.4 Non-controlling interests

Non-controlling interests concern the percentages not held in European subsidiaries (InterparfumsDeutschland GmbH: 49%; Interparfums Srl: 29%;Interparfums Ltd.: 49%) that break down as follows:

In € thousands 12/31/2009 12/31/2010

Reserves attributable to non-controlling interests (36) 541Earnings attributable to non-controlling interests 145 (156)

Non-controlling interests 109 385

Non-controlling shareholders have an irrevocableobligation and the ability to offset losses by anadditional investment.

3.8.5 Information on equity

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

In compliance with the provisions of article L.225-123 of the French Commercial Code, the shareholders’ meeting of September 29, 1995decided to create shares carrying a double votingright. These shares must be fully paid up andrecorded in the company’s share register in registeredform for at least three years.

Since 1998, the company has adopted a policy ofdistributing dividends that today represents morethan 30% of consolidated earnings to rewardshareholders while at the same time associating them with the Group’s expansion. In early May 2010,a dividend of €0.39 per share was paid or a totalamount of €6.3 million.

Given the Group’s significant shareholders equity and low gearing, the Group is able to secure financingfrom banks in the form of medium-term loans.

In addition to the company’s commitment withlending institutions to comply with contractualcovenants, the level of consolidated shareholders’equity is regularly monitored to ensure the companycontinues to have sufficient financial flexibility totake advantage of all potential opportunities forexternal growth.

3.9 Provisions for contingencies and expenses

In € thousands 2009 Increases Provisions Provisions 2010 used in reversal of the period unused provisions

Provisions for retirement severance payments 1,131 217 - - 1,348Accruals for tax - 932 - - 932

Total provisions for contingencies and expenses> 1 year 1,131 1,149 - - 2,280

Provisions for contingencies 1,063 300 (300) (651) 412

Total provisions for contingencies and expenses< 1 year 2,194 1,449 (300) (651) 2,692

Since 2008, for the measurement of retirementseverance benefits, Interparfums has adopted theprocedure for negotiated terminations introduced on July 23, 2008 extending the interprofessionalagreement of January 11, 2008.

For 2010, the following assumptions were applied:

- A negotiated termination at age 65;- A rate of 48% for employer payroll contributionsfor all employees;- A 5% average annual salary increase;- A 5% annual rate of turnover for all employeesunder 55 years of age and nil above;- The TH 00-02 mortality table for men and the TF 00-02 mortality table for women; and- A discount rate for the IBOXX corporate bondindex of 4.68%.

Past service costs not recognized of €564,000 were recorded under off-balance sheet items at December 31, 2010.

On the basis of these assumptions, the annualexpense of €217,000 recorded under current incomebreaks down as follows:

- Service costs: €175,000;- Financial expense: €60,000;- Amortization of past service costs: €22,000;- Actuarial gains or losses: €40,000.

Provisions for contingencies relate to the favourablesettlement in the 2010 first half of sales-related disputes.

Allowances for provisions for contingenciesrepresented primarily accruals for tax.

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3.10 Borrowings

3.10.1 Borrowings by maturity and rate

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

Floating-rate (3M Euribor) 7,949 4,603 3,346 -Fixed rate 3,900 3,900 - -Automobile leases 221 124 97 -Bank overdrafts 3,947 3,947 - -

Total at December 31, 2010 16,017 12,574 3,443 -

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

Floating-rate (3M Euribor) 12,622 4,811 7,811 -Fixed rate 7,643 3,744 3,899 -Automobile leases 278 92 186 -Bank overdrafts 672 672 - -

Total at December 31, 2009 21,215 9,319 11,896 -

All borrowings are in euros.

3.10.2 Analysis of borrowings

Lanvin Van Cleef & Arpels

Inception date September 28, 2007 January 1, 2007Initial amount (in € thousands) 22,000 18,000Duration 5 years 5 yearsRate Floating Rate Fixed rate 3M Euribor +0.40% 4.1%Repayment schedule quarterly quarterlyAmount payable at 12/31/2010 (in € thousands) 7,700 3,900

3.10.3 Additional disclosures

The floating-rate portion of the Lanvin debtcontracted in September 2007 was covered by a 4.42% fixed rate swap.

At December 31, 2010, on the basis of a notionalamount of €7.7 million, a gain of €273,000 inconnection with this swap was recognized in theincome statement and for which the Group did notapply hedge accounting in accordance with IAS 39.The market value of the swap at December 31, 2010represented a negative amount for the company of€249,000.

3.10.4 Covenants

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

- Net debt to net equity;- Net debt to cash flow.

These ratios are calculated by the company every year.

In 2010, these covenants were fully met. The current level of these ratios is considerably below the contractual limits. As a result, the Group hasconsiderable financial flexibility in respect to thesecommitments.

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3.11 Deferred taxDeferred taxes arise mainly from timing differences between financial accounting and tax accounting. Deferred taxes from consolidation adjustments and loss carryforwards are recovered as follows:

In € thousands 2009 Changes Changes 2010 through through reserves income

Deferred tax liabilities Timing differences between financial and tax accounting 8 - (2) 6Acquisition cost 694 - (82) 612Forward exchange hedges 707 - (707) -Stocks options - 80 (80) -Gains (losses) on treasury shares - 127 (127) -Market value of securities - 56 - 56Remeasurement gains (losses) 734 - - 734Other 42 - 60 102

Total deferred tax liabilities 2,185 263 (938) 1,510

Deferred tax assetsTiming differences between financial and tax accounting 924 - 439 1,363Forward exchange hedges - - 17 17Loan swap 180 - (94) 86Recognition of loss carryforwards 512 - 749 1,261Inventory margin 689 - 2,006 2,695Advertising and promotional costs 753 - 176 929Market value of securities 46 (56) 10 -Other 28 - (9) 19

Total deferred tax assets before depreciation 3,132 (56) 3,294 6,370

Depreciation of deferred tax assets (512) - (749) (1,261)

Net deferred tax assets 2,620 (56) 2,545 5,109

Total net deferred tax (435) 319 (3,483) (3,599)

3.12 Other short-term liabilitiesIn € thousands 2009 2010

Accrued credit notes 2,884 9,876Tax and employee-related liabilities 8,362 10,645Other debts 3,877 5,155

Total 15,123 25,676

The increase in accrued credit notes results mainly from the transfer in progress of inventory of the former USdistributor to the new US subsidiary created in 2010.


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3.13 Financial instruments

3.13.1 Breakdown of financial assets and liabilities by category

The following table presents financial instruments in the balance sheet according to the categories provided for under IAS 39.

In € thousands Notes Carrying Fair Fair value Available Loans & DerivativesAt December 31, 2010 value value through for sale receivable profit or loss assets or payables

Other non-current financial assets 1,690 1,690 - 398 1,292 -Trade receivables and related accounts 3.5 74,399 74,399 - - 74,399 -Other receivables 3.6 6,838 6,838 - - 6,039 799Current financial assets 3.7 35,785 35,785 - - 35,785 -Cash and cash equivalents 3.7 25,830 25,830 - - 25,830 -

Assets 144,542 144,542 - 398 143,345 799

Borrowings 3.10 12,070 12,019 249 - 11,821 -Trade payables and related accounts 53,320 53,320 - - 53,320 -Short-term bank loans 3.10 3,947 3,947 - - 3,947 -Other liabilities 3.12 25,676 25,676 - - 25,708 (32)

Liabilities 95,013 94,962 249 - 94,796 (32)

In € thousands Notes Carrying Fair Fair value Available Loans & DerivativesAt December 31, 2009 value value through for sale receivable profit or loss assets or payables

Other non-current financial assets 886 886 - 70 816 -Trade receivables and related accounts 3.5 66,033 66,033 - - 66,033 -Other receivables 3.6 7,480 7,480 - - 3,568 3,912Cash and cash equivalents 3.7 66,873 66,873 - - 66,873 -

Assets 141,272 141,272 - 70 137,290 3,912

Borrowings 3.10 20,543 20,391 522 - 20,021 -Trade payables and related accounts 41,809 41,809 - - 41,809 -Short-term bank loans 3.10 672 672 - - 672 -Other liabilities 3.12 15,123 15,123 - - 15,123 -

Liabilities 78,147 77,995 522 - 77,625 -


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3.13.2 Breakdown according to the method for measuring financial assets and liabilities

Financial instruments are broken down according to different levels of fair value defined by the amendment to IFRS 7.

In € thousands Carrying Fair Quoted Internal Prices not value value prices model based based on (level 1) on directly observable observable market data market inputs (level 3)At December 31, 2010 (level 2)

Other non-current financial assets 1,690 1,690 398 1,292 -Trade receivables and related accounts 74,399 74,399 - 74,399 -Other receivables 6,838 6,838 - 6,838 -Current financial assets 35,785 35,785 - 35,785 -Cash and cash equivalents 25,830 25,830 - 25,830 -

Assets 144,542 144,542 398 144,144 -

Borrowings 12,070 12,019 - 12,070 -Trade payables and related accounts 53,320 53,320 - 53,320 -Short-term bank loans 3,947 3,947 - 3,947 -Other liabilities 25,676 25,676 25,676 -

Liabilities 95,013 94,962 - 95,013 -

In € thousands Carrying Fair Quoted Internal Prices not value value prices model based based on (level 1) on directly observable observable market data market inputs (level 3)At December 31, 2009 (level 2)

Other non-current financial assets 886 886 70 816 -Trade receivables and related accounts 66,033 66,033 - 66,033 -Other receivables 7,480 7,480 - 7,480 -Cash and cash equivalents 66,873 66,873 - 66,873 -

Assets 141,272 141,272 70 141,202 -

Borrowings 20,543 20,391 - 20,543 -Trade payables and related accounts 41,809 41,809 - 41,809 -Short-term bank loans 672 672 - 672 -Other liabilities 15,123 15,123 15,123 -

Liabilities 78,147 77,995 - 78,147 -


3.14 Risk managementThe primary risks related to the Group’s business and organization result from interest rate and foreignexchange rate exposures that are hedged usingderivative financial instruments. The potentialimpacts of other risks on the company’s financials are not material.

3.14.1 Interest rate risks

The Group’s interest rate exposure is relatedprincipally to debt. The objective of the Group’spolicy is to ensure a stable level of financial expensethrough the use of hedges in the form of fixed rateswaps and the use of floor and caps.

These financial instruments are not eligible for hedgeaccounting under IAS 39. The Group neverthelessconsiders that these transactions are not speculative in nature and are necessary to effectively manage itsinterest rate exposure.

Sensitivity to interest rates

The interest expense recorded in 2010 on medium-term debt represents the maximum expense in light of the ceiling provided for under the conditions forthe fixed rate swap.

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3.14.2 Liquidity risk

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

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

Financial assets 61,615 398 -Financial liabilities (12,371) (3,397) -

Net position before hedging 49,244 (2,999) -

Hedging of assets and liabilities (swaps) (203) (46) -

Net position after hedging 49,041 (3,045) -

Financial liabilities by year break down as follows:

In € thousandsAt December 31, 2010 2011 2012 Total

Floating-rate debt - nominal 4,400 3,300 7,700Floating-rate debt - interest 314 86 400Fixed rate debt - nominal 3,900 - 3,900Fixed rate debt - interest 100 - 100Interest rate swaps 203 46 249

In € thousandsAt December 31, 2009 2010 2011 2012 Total

Floating-rate debt - nominal 4,400 4,400 3,300 12,100Floating-rate debt - interest 543 314 86 943Fixed rate debt - nominal 3,744 3,900 - 7,643Fixed rate debt - interest 256 100 - 356Interest rate swaps 411 102 8 522

3.14.3 Foreign exchange risk

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

In € thousands USD GBP YEN CAD

Assets 29,091 6,884 1,135 98Liabilities (2,922) (453) (595) -

Net position before hedging 26,169 6,431 540 98

Effects of currency hedges 845 (30) - -

Net position after hedging 27,014 6,401 540 98


In addition, because a significant portion of Groupsales is in foreign currencies, it incurs a risk fromexchange rate fluctuations, primarily from the US dollar (35.2% of sales) and to a lesser extent the pound sterling (6.8% of sales) and the Japaneseyen (2.3% of sales).

Foreign exchange risk management policy

The Group’s exchange rate risk management policyseeks to cover budget exposures considered highlyprobable related to monetary flows resulting from US dollar sales, as well as trade receivables in theperiod in US dollars and pound sterling.

To this purpose, the Group has recourse to forwardexchange sales, according to procedures that prohibitspeculative trading. On that basis, all forwardcurrency hedging must be backed in terms of amountat maturity by an identified economic underlyingasset or an identified budget exposure.

At December 31, 2010, the Group had hedged allreceivables in US dollars and more than 90% inpound sterling for booked trade receivables.

Sensitivity to foreign exchange risk

The Group considers that a 10% fluctuation in theexchange rate of the US dollar in relation to the eurorepresents a pertinent risk factor that may reasonablyoccur within a given year. An immediate upswing inthe exchange rate (US dollar and pound sterling) of10% would result in a maximum positive currencyeffect of €12.5 million on sales and €10.2 million on operating income. A 10% decrease of these sameexchange rates would have an equivalent negativecurrency effect for the same amounts.

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4. NOTES TO THE INCOME STATEMENT

4.1 Breakdown of consolidated sales by brandIn € thousands 2009 2010

Burberry 166,242 184,790Lanvin 40,634 53,033Van Cleef & Arpels 20,158 25,917S.T. Dupont 11,512 15,756Paul Smith 12,789 14,921Montblanc - 7,001Nickel 2,305 2,230Jimmy Choo - 589Other 5,559 1,459

Total 259,199 305,696

4.2 Cost of salesIn € thousands 2009 2010

Raw materials, trade goods and packaging (76,123) (132,021)Changes in inventory and allowances (22,171) 24,366POS advertising (4,395) (5,955)Staff costs (2,127) (2,566)Subcontracting (1,395) (1,656)Transportation costs (490) (844)Other expenses related to the cost of sales (257) (255)

Total cost of sales (106,958) (118,931)

4.3 Selling expensesIn € thousands 2009 2010

Advertising (39,359) (52,137)Royalties (25,000) (30,541)Staff costs (12,755) (15,354)Subcontracting (14,820) (17,339)Transportation costs (3,002) (3,580)Commissions (1,746) (2,425)Travel expenses (1,951) (2,872)Allowances and reversals (5,080) (4,345)Other selling expenses (3,486) (4,480)

Total selling expenses (107,199) (133,073)

3.14.4 Counterparty risk

Financial instruments used by the Group to manageinterest rate and foreign exchange risks are obtainedfrom counterparties with benchmark ratings. At December 31, 2010, counterparties (according to Standard & Poor’s) were rated A.

Cash is deposited with financial institutions with a rating issued by a specialized agency. At December 31, 2010, 86% of counterparties(according to Standard & Poor’s) were rated A.

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4.4 Administrative expensesIn € thousands 2009 2010

Purchases and external costs (2,777) (2,840)Staff costs (3,546) (4,166)Tax and related expenses (367) (784)Allowances and reversals (1,344) (2,318)Other administrative expenses (1,740) (1,368)

Total administrative expenses (9,774) (11,476)

4.5 Other operating income and expensesAn additional goodwill impairment charge of €1,201,000 was recognized on the difference between the marketvalue of Nickel’s business estimated and its carrying value under “Other operating income and expenses” at December 31, 2009. At December 31, 2010, this same comparison did not generate any impairment.

4.6 Net financial expenseIn € thousands 2009 2010

Interest income 403 521Interest and similar expenses (1,579) (1,270)

Net finance costs (1,176) (749)

Currency losses (8,264) (5,583)Currency gains 10,566 4,013

Net currency gains (losses) 2,302 (1,570)

Other financial income and expenses (45) 41

Net financial income/(expense) 1,081 (2,278)

4.7 Income taxes

4.7.1 Analysis of income taxes


Current income tax-France (10,901) (15,958)Current income tax-Foreign operations (552) (814)

Total current income tax (11,453) (16,772)

Deferred tax-France (519) 3,118Deferred tax-Foreign operations - 367

Total deferred tax (519) 3,485

Total income taxes (11,972) (13,287)


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4.7.2 Reconciliation of the effective tax expense and theoretical tax expense

The difference between the effective tax recorded and the theoretical tax expense calculated by applying the taxrate of 34.4% applicable for fiscal 2010 and 2009 to pre-tax income reflects the following.


Tax base 34,764 39,938

Theoretical tax calculated at the parent company rate (11,969) (13,751)Effect of tax rate differences 615 620Recognized tax income not previously capitalized 100 61Deferred tax not recognized on losses of the period (58) (810)Permanent non-deductible differences (660) 593

Income tax (11,972) (13,287)

4.8 Earnings per shareIn € thousands, except number of shares and earnings per share in euros 2009 2010

Consolidated net income 22,647 26,807Average number of shares 15,673,362 17,089,880

Basic earnings per share (1) 1.44 1.57

Dilutive effect of stock options: Potential fully diluted consolidated net income - 72,533Potential fully diluted average number of shares outstanding 15,673,362 17,162,413

Diluted earnings per share (1) 1.44 1.56

(1) Adjusted for bonus shares granted in 2009 and 2010.

5. SEGMENT INFORMATION

5.1 Business linesIn € thousands 2009 2010

Perfumes Skincare Total Perfumes Skincare Total and Beauty and Beauty

Sales 255,889 3,310 259,199 301,401 4,295 305,696Income from operations 36,089 (821) 35,268 46,423 (4,207) 42,216Impairment - (1,585) (1,585) - - -

Trademarks, licenses and goodwill 57,222 1,846 59,068 71,616 1,811 73,427Inventory 44,415 695 45,110 63,732 3,081 66,813Other segment assets 149,007 400 149,407 156,023 694 156,717

Total segment assets 250,644 2,941 253,585 291,371 5,586 296,957

Segment liabilities 68,293 1,21 68,414 96,314 1,526 97,840

At December 31, 2010, the “Skincare and Beauty” business division, including the new make-up lines launchedin the first half, showed a loss reflecting significant advertising investments in connection with these launches.

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


(1)

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5.2 Geographical segmentsSales by geographical sector break down as follows:


North America 43,766 42,870South America 17,452 24,801Asia 37,448 47,679Eastern Europe 18,420 29,639Western Europe 85,135 96,920France 26,466 27,819Middle East 28,672 33,346Other 1,840 2,622

Total 259,199 305,696

6. OTHER INFORMATION

6.1 Off-balance sheet commitmentsThe following presentation of off-balance sheet commitments is based on the AMF recommendation n°2010-14 of December 6, 2010.

6.1.1 Summary of off-balance sheet commitments


Off-balance sheet commitments in connection with the company’s operating activities 217,264 270,517Off-balance sheet commitments in connection with the company’s financing activities - 335Other off-balance sheet commitments 585 564

Total commitments given 217,849 271,416

6.1.2 Off-balance sheet commitments in connection with the company’s operating activities

In € thousands Main characteristics 2009 2010

Guaranteed minima on trademark royalties Guaranteed minima on royalties 203,087 247,475 regardless of sales achieved for each of the trademarks in the period

Headquarters rental payments Rental payments due over the remainder 6,113 4,791 of the lease period (3, 6 or 9 years)

Guaranteed minima Contractual minima for remuneration 5,150 11,970for warehousing and logistics of warehouses regardless of sales volume for the period

Firm component orders (inventories) Inventories of components on stock 2,914 6,281 with suppliers the company undertakes to purchase based on ongoing production release needs

Total commitments given in connection with operating activities 217,264 270,517


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6.1.3 Off-balance sheet commitments in connection with the company’s financing activities


Bank guarantees Security for the payment of the deposit guarantee - 335 for a new warehousing facility due on the inception date of the lease, expected in June 2011 Total commitments given in connection with financing activities - 335

Commitments in respect to forward currency sales at December 31, 2010 amounted to $38,857,000 and £5,500,000.

In compliance with obligations under German law, under the terms of a comfort letter issued at the end of June 2007, Interparfums provided a guarantee without restrictions to ensure that its German subsidiaryInterparfums GmbH, is managed and funded to honour at all times its payment obligations to all creditors.

6.1.4 Other off-balance sheet commitments


Pension liabilities The portion of past service costs deferred 585 564 as an off-balance sheet item pursuant to application of the closing of 07/23/2008 and amortized over 28 years

Total other commitments given 585 564

Act No. 2004-391 of May 4, 2005 on lifelong vocational training and social dialogue established an individualtraining benefit for employees in France (Droit Individuel à la Formation or DIF). Pursuant to this measure, thecompany has provides for training benefits of the basis of 21 hours per year and per employee. The number oftraining benefits vested by Group employees totalled 7,461 hours at December 31, 2010 and 1,307 of traininghours under this provision were used by Group employees in the year.

6.1.5 Commitments given by maturity at December 31, 2010

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

Guaranteed minima on trademark royalties 247,475 26,725 124,000 96,750Headquarters rental payments 4,791 1,293 2,871 627Guaranteed minima for warehousing and logistics 11,970 2,790 1,080 8,100Firm component orders (inventories) 6,281 6,281 - -Commitments given in connection with operating activities 270,517 37,089 127,951 105,477

Bank guarantees 335 335 - -Commitments given in connection with financing activities 335 335 - -

Pension liabilities 564 22 87 455Other commitments given 564 22 87 455

Total commitments given 271,416 37,446 128,038 105,932

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

6.1.6 Commitments received

Commitments received in connection with forward currency sales at December 31, 2010 amounted to€29,924,000 for US dollar hedges and €6,360,000 for pound sterling hedges representing total commitmentsof €36,284,000.


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6.2 License agreements Nature of License Duration Expiration date license inception date

Burberry Original July 1993 13 years and 6 months - Renewal July 2004 13 years and 6 months December 2017

S.T. Dupont Original July 1997 11 years - Renewal January 2006 5 years and 6 months June 2011

Paul Smith Original January 1999 12 years - Renewal July 2008 7 years December 2017

Christian Lacroix Original March 1999 10 years and 10 months Before term April 2010

Quiksilver Original April 2006 11 years and 9 months Before term June 2010

Van Cleef & Arpels Original January 2007 12 years December 2018

Jimmy Choo Original January 2010 12 years December 2021

MontBlanc Original July 2010 10 years and 6 months December 2020

Boucheron Original January 2011 15 years December 2025


The renewal of the Burberry license agreement onJuly 1, 2004 for an initial term of 12 ½ years or until December 31, 2016, was accompanied by an option to extend the license by an additional five years(exercisable at December 31, 2014) and an option by Burberry Ltd. to acquire the license at its marketvalue at December 31, 2011.

On December 21, 2010 Burberry and Interparfumsextended by one year certain terms of their fragrancelicense, including the length of the agreement toDecember 31, 2017. Burberry’s right to buy thelicense was moreover moved from December 31, 2011to December 31, 2012, and the option requiring theconsent of both parties to extend the license five yearsbeyond 2017 is now exercisable at December 31, 2015.

On September 1, 2009 Quiksilver and Interparfumsdecided by mutual agreement to terminate theircollaboration on June 30, 2010 before the stipulatedexpiration date. This measure had no financial impact on either of the parties.

Christian Lacroix and Interparfums decided bymutual agreement to terminate their collaborationbefore the stipulated expiration date, effective as ofApril 2, 2010. This measure had no financial impacton either of the parties.

6.3 Proprietary brandsLanvin

In June 2004, Interparfums signed an exclusiveworldwide license agreement with Lanvin effectiveJuly 1, 2004 to create, develop and distributefragrance lines under the Lanvin brand name for 15 years.

At the end of July 2007, Interparfums acquired the Lanvin brand names and international trademarks for class 3 fragrance products and make-up from the Jeanne Lanvin company.

Interparfums and Lanvin also mutually agreed withimmediate effect to terminate the license agreementsigned in July 2004 and at the same time concluded a technical and creative assistance agreement in viewof developing new perfumes based on net sales untilJune 30, 2019. The Jeanne Lanvin company holds a buy back option for the brands which will beexercisable on July 1, 2025.

Nickel

In April 2004, Interparfums acquired a majority stakein Nickel, a company specialized in skincare productsfor men. In June 2007, Nickel became a wholly-ownedsubsidiary after Interparfums acquired the company’sremaining shares.

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6.4 InsuranceInterparfums is named as beneficiary under a €15 millionlife insurance policy for Philippe Benacin.

6.5 Employee-related data

6.5.1 Employees by category

Number of employees at 12/31/2009 12/31/2010

Executive officers and management 84 89Supervisory staff 9 9Employees 78 82

Total 171 180

6.5.2 Employees by department

Number of employees at 12/31/2009 12/31/2010

General Management 2 2Production & Operations 24 25Burberry Fragrances 31 34Luxe & Fashion 24 24France 59 65Finance & Corporate Affairs 31 30

Total 171 180

6.5.3 Wages and benefits


Staff costs 11,328 13,262Social charges 5,460 6,142Profit-sharing 1,243 2,370Stock option costs 397 312

Total wages and benefits 18,428 22,086

In addition €122,000 million in supplementalretirement benefits for executive management werepaid in 2010.

6.6 Information on related parties

6.6.1 Management Committee

The seven members of the Management Committeeexercise responsibilities in the areas of strategy, themanagement and oversight. They have employmentcontracts and receive compensation as follows:


Wages, bonuses & social charges 3,027 3,887Share based payment expenses 135 82

The executive officers Philippe Benacin and JeanMadar, cofounders of Interparfums SA are alsoexecutive officers and majority shareholders of theparent company Interparfums Inc.

6.6.2 Board of Directors

The ten members of the Board of Directors exerciseresponsibilities in the areas of strategy, managementconsulting, acquisitions and oversight. Only outsidedirectors are paid directors’ fees that break down asfollows:


Directors’ fees (1) 45 68

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

6.6.3 Relations with the parent company

The accounts of Interparfums and its subsidiaries,through Interparfums Holding, are fully consolidatedinto the accounts of Interparfums Inc., whose registeredoffice is located at 551 Fifth Avenue, New York, NY 10176,United-States. No material transaction exists betweenInterparfums SA and Interparfums Inc.

6.6.4 Relations with subsidiaries

The financial statements of it subsidiariesInterparfums Deutschland GmbH, Inter EspañaParfums et Cosmetiques SL, Interparfums Srl,Interparfums Ltd., Interparfums Suisse Sarl,Interparfums Luxury Brands et InterparfumsSingapore Pte are fully consolidated by Interparfums SA.The main transactions between these entities are of a commercial nature and concern the sale of productsof the parent company to subsidiaries that assure the distribution in their respective markets. Thesetransactions also generate cash flows between thesubsidiaries and the parent company. Subsidiary salesrepresent approximately 15% of Group revenue.


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6.7 Auditors’ feesTotal auditors’ fees expensed in the income statement relating to their engagement as statutory auditors breakdown as follows:

In € thousands Mazars 2009 |% 2010 |%

Work as statutory auditors and certification of individual and consolidated financial statements:Of the Issuer 250 75% 258 73%Of fully consolidated subsidiaries 83 26% 79 22%Other directly related assignments - - 16 5%

Other services rendered by members of the auditor’s network to fully consolidated subsidiaries - - - -

Total 333 100% 353 100%

In € thousands SFECO & Fiducia 2009 |% 2010 |%

Work as statutory auditors and certification of individual and consolidated financial statements:Of the Issuer 87 97% 102 97%Of fully consolidated subsidiaries - - - -Other directly related assignments 3 3% 3 3%

Other services rendered by members of the auditor’s network to fully consolidated subsidiaries - - - -

Total 90 100% 105 100%

6.8 Post-closing eventsNone.


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CHAPTER THREE

CorporategovernanceBoard of Directors 101

Charter of the Board of Directors 104

Management committee 108

Compensation of executive officers 108

Special report of the Board of Directors on stock options 111

Chairman’s report on Board practices and internal control 113

100 Two thousand ten registration document Interparfums. Corporate Governance

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101Two thousand ten registration document Interparfums. Corporate Governance

1.BOARD OF DIRECTORS

Interparfums adopted the form of a société anonyme,the French equivalent of a joint stock company, when it was created in 1989. It is governed by aBoard of Directors and a Management Committee.

On March 8, 2010, the Board of Directors of thecompany decided to refer to the Middlenext code of December 2009 designed for Small and Mid Caps,after reviewing the points requiring special attention(“points de vigilance”) set forth therein, duly notingthe main issues relating to effective corporategovernance.

Composition of the Board of Directors

To strengthen the Board of Directors of initially fourmembers by drawing on an expanded range ofexpertise and experience, new members originatingfrom the luxury industry sector were appointed in2004. On December 31, 2010 the Board of Directorshad 10 members.

When the terms of office of the directors were up for renewal, the General Meeting of April 23, 2010decided to set terms of office of four years to complywith recommendations of the Middlenext Code. Thisdecision seeks to reconcile the objective of assuringthe independence of the directors by preventing termsthat are too long, and their commitment to thecompany by preventing terms that are too short.

The Board ensures that at least 30% of its membersare independent directors. A director is considered to be independent according to the criteria of theMiddlenext Code when there exists no materialfinancial, contractual or family relationship that

could compromise their free exercise of judgmentwhereby the director may not:- Be a current employee or corporate officer(mandataire social) of the company or a company ofits group or have been so within the past three years;- Be a significant customer or supplier of thecompany or its group, or for which the company orits group represents a significant part of its business;- Be the main shareholder of the company;- Be related by close family ties to a corporate officeror a main shareholder;- Have been an auditor of the company within theprevious three years.

On the basis of these criteria, the Board includesthree independent directors, Chantal Roos, Maurice Aladhève and Michel Dyens.

To date, the Board has three members having thestatus of employee resulting from an employmentcontracts predating their appointment as directors.

As a general rule, members of the Board of Directorshave an in-depth or multidisciplinary experience ofthe business world in international markets. They aresubject to conduct of business rules, specified in theBoard Charter (Règlement Intérieur) that includesnotably obligations of secrecy and due diligence inthe performance of their duties ensuring the effectivecollegial work of the Board. Directors are providednot only with information before each meeting butalso on a permanent basis concerning all strategic and financial matters necessary to perform theirduties in the most effective manner.

The Board Charter adopted on March 3, 2009 hasbeen revised to incorporate the recommendations of the Middlenext Code of December 2009 and isreproduced below in full.

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Composition of the Board and profiles

As of December 31, 2010 the composition of the Board of Directors was as follows:

Philippe Benacin, Chairman and Chief ExecutiveOfficer of Interparfums.

Date of 1st appointment: January 3, 1989.

Date of last renewal: Annual General Meeting of April 23, 2010.

Professional address: 4 rond-point des ChampsElysées, 75008 Paris, France.

Philippe Benacin, 52, a graduate of the ESSECbusiness school and cofounder of the company withhis partner Jean Madar, has served as Chairman andChief Executive Officer of Interparfums SA since itscreation in 1989.

Other appointments: Chairman of the Board ofDirectors of Interparfums Holding, President andVice Chairman of the Board of Interparfums Inc.(United States).

Jean Madar, Director.

Date of 1st appointment: December 23, 1993.


Professional address: 4 rond-point des ChampsElysées, 75008 Paris, France.

Jean Madar, 50, a graduate of the ESSEC businessschool, is the cofounder of the company with hispartner Philippe Benacin.

Other appointments: Chief Executive Officer of Interparfums Holding, Chief Executive Officerand Chairman of the Board of Interparfums Inc.(United States).

Maurice Alhadève, Independent director.

Date of 1st appointment: Annual General Meeting of April 23, 2004.


Professional address: 16 rue de Molitor 75016 Paris,France.

Other appointments: none.

Patrick Choël, Director.

Date of 1st appointment: General Meeting of December 1, 2004.


Professional address: 7 rue de Talleyrand 75007 Paris,France.

Other appointments: Director of Interparfums Inc.(United States), Director of Parfums Christian Dior,Director of Guerlain, Director of Modelabs.

Michel Dyens, Independent director.



Professional address: Michel Dyens & Co, 17 avenue Montaigne, 75008 Paris, France.

Other appointments: Chairman of Michel Dyens & Co.,Managing Partner of Varenne Entreprises.

Previous appointments: Director of Direct Panel.

Frédéric Garcia-Pelayo, Director and Executive Vice President.


Date of last renewal: Annual General Meetingof April 23, 2010.

Professional address: 4 rond-point des Champs Elysées,75008 Paris, France.

Frédéric Garcia Pelayo, 52, EPSCI internationalexchange program graduate of the ESSEC BusinessSchool, has been Vice President for Export Sales ofInterparfums since 1994 and Executive Vice Presidentsince 2004.


Jean Levy, Director.



Professional address: 17 rue de Margueritte, 75017 Paris, France.

Other appointments: Director of Interparfums Inc.(United States), Director of Axcess Groupe SA,Director of Rallye SA.

Previous appointments: Director of Price MinisterSA, Director of MoM SAS.

Chantal Roos, Independent director.



Professional address: CREA, 168 avenue Charles de Gaulle, 92200 Neuilly sur seine, France.

Other appointments: Managing Partner of CREA.

Previous appointments: Chairman and ChiefExecutive Officer of Yves Saint Laurent Beauté.


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Philippe Santi, Director and Executive Vice President.




Philippe Santi, 49, graduate of the Ecole Supérieur de Commerce of Reims and a public accountant hasserved as the Chief Financial and AdministrativeOfficer of Interparfums SA since 1995 and asExecutive Vice President since 2004.

Other appointments: Director of the parent companyInterparfums Inc.

Catherine Bénard-Lotz, Director.




Catherine Bénard-Lotz, with an advanced degree inbusiness law from the University of a Paris, has servedas Interparfums’ Chief Legal Officer since 1994.


Absence of condemnations

To the best of the Company’s knowledge, in the lastfive years none of the members of the Board ofDirectors have been:

- Convicted for fraud or penalties for infractionsrendered by statutory or regulatory authorities;- Been a party in a bankruptcy, receivership orliquidation proceeding as a director or officer;- Disqualified from serving as a director or officer or participating in the management of the operationsof an issuer.

Absence of potential conflicts of interest

To the best of the Company’s knowledge, there exist no potential conflicts of interest between the dutiestowards the company and the personal interests and/orother duties of one of the members of the board.

Absence of service contracts with Board members

To the best of the Company’s knowledge, none of the Board members is bound by service agreementswith the company or one of its subsidiaries providingfor the grant of benefits under its terms.


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2.CHARTER OF THE BOARD OF DIRECTORS

This Charter or ‘Rules of Procedure’ (RèglementIntérieur), previously entitled “Charter of the Board of Directors” adopted by the Board on March 3, 2009, was updated by the Board on March 8, 2010, in order to take into account the provisions of the Middlenext Code ofDecember 2009 to which the Board has opted to refer instead of the AFEP/MEDEF Codepreviously used.

The full text of the Middlenext Code is attached to this Charter.

Applicable to all current and future directors, and in line with the Middlenext Code, this Charter is destined to supplement the provisions of the law, regulations and the company’s bylaws, in the interest of the company and its shareholders in order to specify:

- The composition of the Board/criteria of independencefor members;

- The role the Board in the performance of its dutiesand powers;

- Board procedures (meetings, discussions, informationprovided to members);

- Board procedures (meetings, discussions, informationprovided to members);

- The duties of Board members (code of conduct:loyalty, confidentiality, abstention, etc.).

1. Composition of the Board of DirectorsThe Board of Directors includes a maximum of 18 members with at least three selected fromindependent persons having no ties of interest with the company so that they are entirely free in the exercise of their judgment.

A director is considered to be independent accordingto the criteria of the Middlenext Code when thereexists no material financial, contractual or familyrelationship that could compromise his or her freeexercise of judgment whereby the director may not:

- Be a current employee or corporate officer(mandataire social) of the company or a company ofits group or have been so within the past three years;

- Be a significant customer or supplier of thecompany or its group, or for which the company orits group represents a significant part of its business;

- Be the main shareholder of the company;

- Be related by close family ties to a corporate officeror a main shareholder;

- Have been an auditor of the company within theprevious three years.

The Board may consider that one of its members,even though fulfilling the above criteria, should notbe considered as independent, in light of his or herparticular situation or that of the company, withrespect to its shareholder structure or for any otherreason. Conversely, the Board may also consider that one of its members not fulfilling these criteria to be independent.

2. Role of the Board of Directors

2.1 Strategic body

The mission of the Board of Directors is to determinethe strategy of the company and ensure that thisstrategy is implemented. Subject to the powersgranted to shareholders’ meetings and within thelimits of the company’s corporate purpose, the Boardmay address any matter pertaining to the propermanagement of the company and settle all items of business relating thereto.

In addition to the attributes provided for by law and regulations, the Board may be called to addressand grant its approval for, in particular, the followingmatters:

- Assessing the environment of the company andanalysing opportunities for external growth throughacquisitions;

- The creation of a company or acquiring controllinginterest in all forms in any company or undertakingoutside the Group;

- Reviewing projects involving material investmentsor not relating to the company’s ordinary operatingactivities;

- Analysing major strategic projects presented toexecutive management and their impact on theeconomic and financial situation of the company;

- Analysing the annual budget submitted by executivemanagement;

- Implementing procedures for control or verificationit considers appropriate.

And in general, the Board ensures the merits of anymeasure adopted for the strategic development of thecompany and the solidity of the company’s balance sheet.

2.2 Audit committee function

On March 3, 2009 the Board of Directors decidedthat in light of the company’s organization andstructure, an independent audit committee would notbe established and that in consequence, in accordancewith the provisions provided for under article L.823-20of the French Commercial Code, it would exercisethe functions of audit committee in plenary session.

In connection with the performance of the functionsof audit committee, the primary tasks of the Board ofDirectors are to:


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- Ensure compliance with accounting regulations andthe correct application of the principles for preparingthe company’s accounts;

- Ensure that the process for producing financialinformation is based on internal procedures for thecollection and control of information that guaranteeits quality and exhaustive nature;

- Assess the performance of internal control systemsby evaluating the organization principles andfunctioning of internal audit and by verifying theprocess for identifying risks; Review the auditmissions and evaluations of the internal controlsystem carried out by the Finance Department;

- Monitor the application of the rules of independenceand objectivity of the auditors in the performance of their duties, the conditions for the renewal of theirappointments and setting their fees.

3. Procedures for exercising general management

3.1The Chairman of the Board of Directors

The Chairman, appointed by the Board of Directorsfrom among its members, organizes and manages the work of the Board on which he reports to theshareholders’ meeting. He ensures that managementbodies of the company are effectively run and, inparticular, that directors are able to perform theirduties. The Chairman may request any documents orspecific information to assist the Board of Directorsin connection with preparing its meetings.

The Chairman actively contributes to the performanceof the duties of directors by serving as an intermediarybetween the latter and the main parties involved inimplementing the company’s strategic objectives.

3.2General Management

The Board of Directors determines the manner thatGeneral Management is exercised, under itsresponsibility, either by the Chairman of the Board ofDirectors, or by a person appointed by the latter withthe title of Chief Executive Officer (Directeur général).

The Board of Directors’ meeting of December 19, 2002decided not to separate the functions of Chairman ofthe Board of Directors from those of Chief ExecutiveOfficer. In this respect, and subject to the powersgranted by law to general meetings and the limitationsprovided for by the provisions of the Charter, the Chairman of the Board of Directors exercises the functions of Chief Executive Officer and is vestedwith the broadest powers to act in all circumstancesin the name of the company with the exception of the following strategic decisions that are submittedfor approval to the Board of Directors:

- Any financial commitment (immediate or deferred)for an amount exceeding €10 million per transaction

and having a material impact on the company’s scopeof consolidation, including mainly the acquisition ordisposal of assets or equity investments in companies;

- Any decision, regardless of the amount involved,that could potentially materially affect the strategy of the company or materially modify the scope of itsnormal activity.

On proposals by the Chief Executive Officer, the Board of Directors may appoint one or moreindividuals to assist the Chief Executive Officer with the title of Executive Vice President (DirecteurGénéral Délégué).

4. Functioning of the Board of Directors

4.1Calling and holding of Board meetings

Notice of meetings may be issued by any meansincluding orally and may be transmitted by theSecretary of the Board within at least eight daysbefore each meeting.

The Board meets as often as the interests of the company require, and in general, at least fivetimes a year, with three of these meetings devoted to reviewing the budget, strategy and the activity of the company. Decisions by the Board are adoptedon the basis of a simple majority. In the case of split vote, the Chairman of the meeting has thecasting vote.

The Board establishes for the year according to theproposal of the Chairman a schedule for its meetings,with the exception of extraordinary meetings.

4.2Participation in meetings through videoconferencing or telecommunications media

In accordance with applicable regulations and article14 of the company’s bylaws, directors who participatein Board meetings through videoconferencing ortelecommunications technology are consideredpresent for calculating the quorum and majority.

The Chairman ensures that videoconferencing andtelecommunications technologies used guarantee theeffective participation of all parties in the meetings.The proceedings must be broadcast withoutinterruption. Measures necessary to identify eachparty and verify the quorum must be assured. Failingthis, the Board meeting may be adjourned.

The attendance register and the minutes must indicatethe names of directors having participated throughvideoconferencing or telecommunications means.

Remote participation using the technologies isexpressly prohibited for proceedings concerning the following decisions:

- The approval of the company’s statutory and consolidated financial statements;


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- Preparing the management report to be included in the Group’s management report.

4.3Transmission of information to directors

All directors are provided with the documents andinformation required to make decisions on the itemsof business on the agenda on an informed basis.

It is the responsibility of all directors to ensure thatthey possess all information they consider necessaryfor the effective conduct of proceedings of the Boardand, when applicable, request this information whenthey consider that it has not been made available.

Furthermore, directors are kept regularly informed,between the meetings of all events or transactions of a material nature for the strategic priorities of thecompany and provided with all relevant informationwhen warranted by events concerning the company.

4.4Evaluation of the work of the Board

Once a year, the Chairman of the Board invites the Board members to express their views on thefunctioning of the Board and on the preparation of its work for the purpose of:

- Preparing a report on the Board’s work;

- Examining the composition of the Board;

- Ensuring the quality and effective conduct of discussions on matters of importance.

The discussions are recorded in the minutes of the meeting.

5. Code of conduct of Directors

5.1Obligations of discretion and secrecy

Concerning non-public information acquired inconnection with their duties, directors shall be consideredsubject to a true obligation of professional secrecythat exceeds the obligation of discretion provided for by article L.225-37 subsection 5 of the FrenchCommercial Code.

In general, directors shall refrain from speakingindividually outside the collegial framework of theBoard of Directors about matters considered therein.Outside the company, directors undertake to respectthe collegial nature on any oral or writtencommunication that they may issue.

5.2Duties of independence

Directors have a duty to act in all circumstances in the interest of the company and all shareholders. To this purpose, they are subject to an obligationof informing the Board of any situation involving

a conflict of interest, even a potential conflict of interest, and must refrain from voting in theproceedings relating thereto, and if necessary, resign. Absence of information thereon constitutesconfirmation of that no conflict of interest exists.

And in general, directors shall be prohibited from engaging in transactions in the shares of thecompany and/or the Group if they possess privilegedinformation. Each party is personally responsible for assessing the privileged nature of information in his or her possession, and, in consequence, to authorize or prohibit any use or transmission ofsuch information, and to engage in any transactionsin the company’s shares.

And in any case, directors undertake to comply withtheir obligation to refrain from any dealings in thecompany’s shares for a period of 15 days prior to:

- The publication of the interim consolidated orannual results, according to the calendar available to the Director;

- The publication of quarterly, interim and annual sales,according to the calendar available to the Director.

5.3Obligations of due diligence

At the time they assume their appointment, everyBoard member duly notes the obligations resultingtherefrom and notably those relating to legal rulesgoverning holding multiple appointments and beforeaccepting, signs the Board Charter. To this purpose, it is recommended that a Director, when exercisingthe function of “executive officer”, does not acceptmore than three appointments as a director of a listedcompany, including companies outside of his or herown group.

The Directors must devote to their duties the necessarytime and attention. To this purpose, they will limit the appointments that they hold to a reasonablenumber to ensure their regular participation in themeetings of the Board.

Directors have an obligation to obtain and requestwithin the appropriate delays from the Chairmaninformation necessary to effectively participate in the items of business to be addressed by the Board of Directors’ meetings.

5.4Obligation to report dealings in the company’s shares

Directors and persons with whom they have closerelations must report to the AMF the purchase, sale,subscription or exchange of shares of the Companywhen the amount exceeds €5,000 for the calendaryear in progress.

To this purpose, they will send their declaration tothe AMF by electronic means within five trading daysfollowing the transactions and send at the same timea copy of the declaration to the Secretary of the Boardof Directors of the company.


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6. Compensation

6.1Directors’ fees

The Board of Directors freely sets the amount of feesfor attendance for which the general meeting fixes the annual amount. It allocates this amount equallyamong members on basis of their attendance and the amount of time they devote to their duties.

By express waiver of the Directors concerned, directors’fees are allocated exclusively to directors selected fromoutside the company.

6.2Compensation of directors for special assignments

The Board of Directors may entrust one of itsmembers with a mission, for which it determines

the conditions and terms that are subject to approvalby the Board, except by the Board member designatedfor this mission. The Board will determine notablythe amount of compensation, the duration of themission as well as the procedures for payment and the reimbursement of expenses incurred in theperformance of this mission. The Chairman isresponsible for ensuring that this mission is properlycarried out according to the conditions approved by the Board to whom it regularly reports thereon.

7.Modification the board charterThis Charter may be adapted or modified by decisionof the Board of Directors.

Every new member of the Board of Directors shall be provided with a copy of this Charter as well as the company’s bylaws (statuts).


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3. MANAGEMENT COMMITTEE

Mission

The purpose of the Management Committee, led bythe Chairman and Chief Executive Officer, is toaddress operational issues related to the developmentof the company.

Composition as of December 31, 2010

Philippe Benacin,Chairman and Chief ExecutiveOfficer.

Philippe Santi, Executive Vice President, Chief Financial and Administrative Officer.

Frédéric Garcia-Pelayo, Executive Vice President,Chief International Officer.

Hugues de la Chevasnerie, Vice President, BurberryFragrances.

Angèle Ory-Guénard, Vice President, Export Sales - Burberry Fragrances.

Jérôme Thermoz, Vice President, French Distribution.

Axel Marot, Vice President, Production & Logistics.

The Management Committee met five times in 2010(five times in 2009) and discussed the following itemsof business:

February: Montblanc and Jimmy Choo launchpreparations, creation of subsidiaries in New York andSingapore, 2010 budget update, 2010-2011 launches,SAP deployment;

April: first quarter sales, second-quarter forecasts,New York and Singapore subsidiaries, 2010-2011launches, Burberry Beauty launch, distribution, SAP,new storage warehouse;

July: 2010 first quarter sales, projected 2010 first-halfsales, 2010 first-half earnings forecast, developmentsin progress, new licenses, Montblanc integration,promotional plan & perfume sets, SAP;

September: summary of 2010 first-half results, 2011budget, 2011 and 2012 launches, New York andSingapore subsidiaries, surveillance of parallelmarkets, 2010 stock option plans;

December: 2011 budget, Boucheron and Burberrylicenses, 2011 and 2012 launches, SAP, review of firstmonth of operations of New York and Singaporesubsidiaries.

4.COMPENSATION OF EXECUTIVE OFFICERS

In connection with the preparation of this registrationdocument, the Board of Directors has analyzed thedifferent components of compensation and benefitsfor corporate officers in light of the principles setforth in the Middlenext Code recommendations ofDecember 2009. It reviewed the procedures in placefor determining cash compensation and benefits of allkinds granted to corporate officers that are presentedbelow in detail.

In general, the Board of Directors sets the compensationpolicy for officers both in reference to market practicein comparable sectors and the size of the companynotably in respect to sales and the number personnel.


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Compensation of officers for fiscal 2010

Compensation of officers consists of both fixed and variable components. Fixed compensation takes intoaccount the level of responsibilities, experience and performance. Variable compensation is determined inrelation to the company’s achievement of overall performance objectives and events related to each fiscal year.

One half of variable compensation is determined in accordance with net sales, operating income and net profit,and half in relation to qualitative criteria of performance. This latter criteria is evaluated in respect to thecontribution of corporate officers to achieving the objectives of the company and results actually obtained.

On this basis, compensation paid to executives as officers or salaried employees in connection with employmentcontracts concluded prior to becoming officers is disclosed below.

Fiscal 2009 Fiscal 2010

Compensation Compensation Compensation Compensation due for paid in due for paid in the year the year the year the year

Philippe Benacin (1)

Chairman and Chief Executive Officer Net fixed compensation €199,680 €199,680 €208,320 €208,320Net variable compensation €163,200 €105,600 €222,400 €190,400Benefits in-kind and net housing allowances €70,800 €70,800 €134,800 €134,800Supplemental executive retirement plans €8,230 €8,230 €8,300 €8,300

Philippe Santi (2)Director - Executive Vice President Net fixed compensation €199,680 €199,680 €208,320 €208,320Net variable compensation €172,800 €124,800 €214,400 €190,400Supplemental executive retirement plans €8,230 €8,230 €8,300 €8,300

Frédéric Garcia-Pelayo (3)

Director - Executive Vice President Net fixed compensation €199,680 €199,680 €208,320 €208,320Net variable compensation €172,800 €124,800 €214,400 €190,400Benefits in-kind €6,840 €6,840 €6,840 €6,840Supplemental executive retirement plans €8,230 €8,230 €8,300 €8,300

Catherine Bénard-Lotz (4)Director Net fixed compensation €82,560 €82,560 €89,040 €89,040Net variable compensation €47,200 €32,800 €66,000 €52,400Supplemental executive retirement plans €8,230 €8,230 €8,300 €8,300

Jean Madar (5)Director Gross fixed compensation $380,000 $380,000 $380,000 $380,000Gross bonus - - - -

(1) Philippe Benacin does not have an employment contract with the company. He exercises his functions as Chairman and Chief ExecutiveOfficer pursuant to his appointment as a corporate officer by the Board of Directors.(2) Compensation paid to Philippe Santi as a salaried employee with the position of Chief Financial and Administrative Officer under the terms of an employment contract predating his appointment as Executive Vice President (Directeur Général Délégué) and Director of the Company that remained in force. Philippe Santi receives no compensation of any nature in connection with his appointment as an officer of the company.(3) Compensation paid to Frédéric Garcia Pelayo as a salaried employee with the position of Chief International Officer under the terms ofan employment contract predating his appointment as Executive Vice President (Directeur Général Délégué) and Director of the Companythat remained in force. Frédéric Garcia Pelayo receives no compensation of any nature in connection with his appointment as an officer of the company.(4) Compensation paid to Catherine Bénard-Lotz as a salaried employee with the position of Chief Legal Officer under the terms of an employment contract predating her appointment as Director of the Company that remained in force. Catherine Bénard-Lotz receivesno compensation of any nature in connection with her appointment as a company director.(5) Compensation paid to Jean Madar by the parent company of the Group, Interparfums Inc. (United States) as the Chief ExecutiveOfficer of this company. Jean Madar receives no compensation of any nature from Interparfums SA.


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Directors’ fees for 2010

Directors’ fees are allocated to the Board of Directors by the shareholders’ meeting for fiscal 2010 for a setamount per meeting attended of €2,500. The eighth resolution of the shareholders’ meeting of April 23, 2010set the total amount of directors’ attendance fees for the year at €90,000.

On this basis, for fiscal 2010 a total of €67,500 was paid to the five non-salaried directors for their attendanceat meetings. The other directors expressly waived their rights to receive attendance fees.

Directors Directors’ fees Directors’ fees paid in 2009 paid in 2010

Philippe Benacin (Chairman) - -Frédéric Garcia-Pelayo (Executive VP) - -Philippe Santi (Executive VP) - -Maurice Alhadève €12,500 €17,500Catherine Bénard-Lotz - -Patrick Choël €10,000 €15,000Michel Dyens €5,000 €10,000Jean Levy €7,500 €12,500Jean Madar - -Chantal Roos €10,000 €15,500

Stock options and other compensation

- Stock-options

Rules for the grant of stock options to officers are based on the level of responsibilities and the performance of the company’s share. The quantity of stock options granted to officers may vary from one year to anotheraccording to the performance of the company over this period.

On December 17, 2009 and October 8, 2010, the Board of Directors decided to grant options to corporateofficers on those dates whose exercise will be contingent on criteria of internal performance based on thecompany’s sales. Under those terms, the number of options exercisable is based on the average rate of actualgrowth for the company’s sales relative to the rate of attainment of the target for average growth. This objectiveis set by the Board of Directors for the 4-year tax holding period that applies to the stock option plansestablished by this Board.

The Board of Directors has decided that these officers must retain 10% of the shares resulting from the exerciseof stock options for the duration of their terms of office in accordance with the provision of article L.225-185of the French commercial code.

- Benefits in-kind

Philippe Benacin receives benefits in-kind for the costs of a company car and housing benefits representing a total amount of €62,800.

Frédéric Garcia-Pelayo receives benefits in-kind for the costs of a company car for an amount of €6,840.

- Executive retirement plans

Executive officers benefit from a supplemental retirement plan in the form of a defined contribution annuityfund. The benefits of this defined benefit plan were subsequently extended to senior managers of the company.This contribution to a private defined contribution pension fund is paid in part by the beneficiaries and in partby the employer for an amount equal four times French Social Security ceiling. The annual contribution perbeneficiary is approximately €8,300. The supplemental retirement plan is part of the overall compensationpolicy adopted by the company for senior executives and managers.

- Other types of benefits

No executives benefit from forms of remuneration, indemnities or benefits owed or which could be owedresulting from the assumption, termination or change of functions of corporate officer of the company or subsequent to these events.


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5.SPECIAL REPORT OF THE BOARD OF DIRECTORS ON STOCK OPTIONS

In compliance with article L.225-184 of the French Commercial Code, this report is produced by the Boardof Directors to inform the combined shareholders’ meeting of April 29, 2011 of transactions carried out infiscal 2010 by virtue of the provisions under articles L.225-177 to L.225-186 of said code.

Options granted on inception by InterparfumsSA under plans in force to each corporate officer in connection with appointments held

Plan 2005 Plan 2006 Plan 2009 Plan 2010

Grant date 05/26/05 06/01/06 12/17/09 10/08/10Expiration date 05/26/11 06/01/12 12/17/15 10/08/16Subscription price 27.50 31.80 17.60 22.95Adjusted subscription price (1) 15.65 19.90 16.00 22.95

Options granted at inception

Philippe Benacin 10,000 10,000 6,000 7,000Jean Madar 10,000 10,000 6,000 7,000Philippe Santi 6,000 6,000 6,000 7,000Frédéric Garcia-Pelayo 6,000 10,000 6,000 7,000Catherine Bénard-Lotz 2,000 2,000 2,500 3,000

Options outstanding at December 31, 2010 (1)

Philippe Benacin 19,327 17,570 6,600 7,000Jean Madar 19,327 17,570 6,600 7,000Philippe Santi 5,582 10,543 6,600 7,000Frédéric Garcia-Pelayo 11,597 17,570 6,600 7,000Catherine Bénard-Lotz 0 3,515 2,750 3,000

(1) Adjusted for bonus share grants.

Options granted on inception by Interparfums Inc. under plans in force to each corporate officer in connection with appointments held

Plan 2006 Plan 2007 Plan 2008-1 Plan 2008-2 Plan 2009 Plan 2010

Grant date 12/14/06 12/26/07 02/13/08 12/30/08 12/30/09 12/30/10Subscription price $19.65 $18.87 $16.95 $6.93 $12.14 $19.03Adjusted subscription price (1) $13.10 $12.58 $11.30 $6.93 $12.14 $19.03

Options granted at inception

Philippe Benacin 40,000 19,000 9,250 19,000 19,000 19,000Jean Madar 40,000 19,000 9,250 19,000 19,000 19,000Philippe Santi 5,000 0 8,500 0 3,000 3,000Frédéric Garcia-Pelayo 5,000 0 8,500 0 3,000 3,000

Options outstanding at December 31, 2010

Philippe Benacin 60,000 28,500 13,875 19,000 19,000 19,000Jean Madar 60,000 28,500 13,875 19,000 19,000 19,000Philippe Santi 7,500 0 12,750 0 3,000 3,000Frédéric Garcia-Pelayo 7,500 0 12,750 0 3,000 3,000

(1) Adjusted for bonus share grants.


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Valuation of options granted

In fiscal 2009 In fiscal 2010

IPSA Options Black & Value of Options Black & Value of Granted Scholes options Granted Scholes options valuation valuation

Philippe Benacin 6,000 €4.27 €25,620 7,000 €6.55 €45,850Jean Madar 6,000 €4.27 €25,620 7,000 €6.55 €45,850Philippe Santi 6,000 €4.27 €25,620 7,000 €6.55 €45,850Frédéric Garcia-Pelayo 6,000 €4.27 €25,620 7,000 €6.55 €45,850Catherine Bénard-Lotz 2,500 €4.27 €10,675 3,000 €6.55 €19,650

Total €113,155 €203,050

IP Inc.

Philippe Benacin 19,000 $4.50 $85,500 19,000 $5.62 $106,780Jean Madar 19,000 $4.50 $85,500 19,000 $5.62 $106,780Philippe Santi 3,000 $4.50 $13,500 3,000 $5.62 $16,860Frédéric Garcia-Pelayo 3,000 $4.50 $13,500 3,000 $5.62 $16,860

Total $198,000 $247,280

Options exercised by each corporate officer of the company in 2010 received in connection with appointments held

Number of shares Subscription Expiration granted/exercised price date

IP Inc. options exercised in the period by officers

Philippe Benacin 75,000 $9.97 04/19/2010Jean Madar 75,000 $9.97 04/19/2010Philippe Santi 11,250 $9.97 04/19/2010

IPSA options exercised in the period by officers (1)

Philippe Benacin Plan of March 25, 2004 24,598 €18.40 03/25/2010

Jean Madar Plan of March 25, 2004 24,598 €18.40 03/25/2010

Philippe Santi Plan of March 25, 2004 12,652 €18.40 03/25/2010Plan of March 26, 2005 6,015 €15.65 05/26/2011

Frédéric Garcia-Pelayo Plan of March 25, 2004 12,652 €18.40 03/25/2010

Catherine Bénard-Lotz Plan of March 25, 2004 3,867 €18.40 03/25/2010Plan of May 26, 2005 3,867 €15.65 05/26/2011

(1) Number and subscription price adjusted for the grant of new bonus shares (1 for 10) of June 20, 2010.

Stock options granted to the company’s 10 highest paid non-officer employees and options exercised by the 10 employees of the company having exercised the greatest number in 2010

Number of shares Subscription Expiration granted/exercised price date

IPSA options granted to the 10 highest paid employees

Plan of October 8, 2010 29,000 €22.95 10/08/2016

Options exercised by the 10 employees exercising the greatest number (1)

Plan of March 25, 2004 33,973 €18.40 03/25/2010Plan of May 26, 2005 33,049 €15.65 05/26/2011

Total 67,022 -

(1) Number and subscription price adjusted for the grant of new bonus shares (1 for 10) of June 20, 2010.


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6. CHAIRMAN’S REPORT ON BOARD PRACTICES AND INTERNAL CONTROL

Pursuant to the provisions of article L.225-37, of the French Commercial Code the Chairman of the Board of Directors hereby reports on the:

- Terms and conditions governing the preparationand organization of the Board’s work;

- Internal control and risk management proceduresimplemented by the company.

This report has been produced on the basis of workundertaken by the Finance and Corporate AffairsDepartment, in collaboration with the operatingdepartments of the company and exchanges with the statutory auditors.

This report was submitted for approval to the Boardof Directors on March 7, 2011.

6.1 Preparation and organization of the board’s work

6.1.1The company’s corporate governance code

For the development of its corporate governancepolicy and notably the report of the Chairmanprovided for by article L.225-37 of the FrenchCommercial Code, on March 8, the Board ofDirectors decided to refer to the code of corporategovernance of December 2009 for Small and MidCaps developed by Middlenext and approved by theAMF as the code of reference. Board members alsoduly noted the points requiring special attention setforth therein highlighting the main questions thatmust be raised to ensure effective governance.

6.1.2Composition of the Board of Directors

Under the company’s bylaws, the Board of Directorsmay have three to eighteen members.

At December 31, 2010, corporate governance of the company was overseen by a Board that includedten directors three of which qualified as independentdirectors. In addition to their financial and managerialexpertise, their knowledge of the luxury sectorcontributes to the quality and professionalism of theBoard’s discussions. Detailed information on thecomposition of the Board of Directors and theirappointments is disclosed in Section 1 registrationdocument (annual report) on corporate governance.

Following the adoption of the twenty fifth resolutionof the General Meeting of April 23, 2010 that votedto reduce the terms of Directors when their appointmentswere renewed at this meeting, Directors are appointedfor terms of office of four years.

6.1.3Charter of the Board of Directors

The Board of Directors adopted a Charter defining theoperating rules of the Board and the terms of a code of conduct for directors that supplement the provisionsprovided for by the law and the company’s bylaws. The main provisions of this charter are as follows:

- The composition, role, organization and operatingprocedures of the Board;

- The functions of audit committee exercised by the Board of Directors in plenary session;

- The rules of conduct applicable to members of the Board of Directors;

- Compensation of Directors;

- Rules governing transactions involving thecompany’s shares in accordance with the provisions of the French Monetary and Financial code and theAMF General Regulation.

This Board Charter is destined to regularly evolve totake account into the application of new regulationsand recommendations in force and in response toproposals by directors in order to ensure the optimaleffectiveness of the Board’s work. Modifications weremade to this Charter by the Board on March 8, 2010.

The full text of this Board Charter is published in the registration document of the company.

6.1.4Board practices

6.1.4.1. Meetings

The Board may meet as often as the interests of the company require and at least five times a year at the request of the Chairman and according to a calendar jointly established that may be modified at the request of directors or when justified byunforeseen events.

The Chairman represents the Board of Directors. He organises the work of the Board and reports onthis work to the General Meeting. The work of theBoard is carried out in a collegial framework and in a manner that complies with the laws, regulations and recommendations. Accordingly, the Chairman of the Board of Directors ensures directors areprovided with information in advance and on aregular basis, that constitutes an essential conditionfor the performance of their duties.

6.1.4.2. Evaluation of the Board’s work

In accordance with the fifteenth recommendation of the Middlenext Code of corporate governance thatis included in the Board charter, on March 7, 2011,for the first time members evaluated Board practicesand the preparation of its work through aquestionnaire sent to each Director on notably:

- The missions assigned to the Board;

- The functioning and composition of the Board;

- The meetings and quality of the discussions;

- Directors’ access to information.


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For fiscal 2010, the functioning of the Board wasconsidered overall satisfactory. Directors emphasizedthe quality and exhaustive nature of discussions of themeetings and the freedom of expression that prevailedin the exchanges. Suggestions for improvements for a limited number of points were also taken intoconsideration for the coming year.

6.1.4.3. Powers and missions of the Board of Directors

In line with the option adopted by the Board ofDirectors on December 29, 2002, in light of thecompany’s structure and the active participation ofthe founder in its development, the Board decidednot to separate the functions of Chairman of theBoard of Directors with that of Chief ExecutiveOfficer (Directeur Général). In consequence PhilippeBenacin, who exercises the functions of Chairman of the Board of Directors, also serves as the ChiefExecutive Officer of the company. As such he isvested with all powers in respect to third parties to actunder all circumstances in the name of the companyand within the limitations expressly provided by law granted to the Board of Directors or shareholdersmeetings, and in compliance with the general andstrategic orientations defined by the Board of Directors.

Decisions having a material impact on the scope of consolidation or that could materially affect thecompany’s strategy must be submitted to the Board of Directors for approval or subject to a delegation of authority for this purpose by the Board. This limitation is specified in the Board Charter.

The Board of Directors determines strategic prioritiesof the company and ensures that they are implemented.Subject to the powers granted to shareholders’meetings and within the limits of the company’scharter, the Board considers any matter relating to the proper management of the company.

It issues decisions concerning the holding of multipleappointments or the separation of the appointmentsof Chief Executive Officer (Directeur Général) andChairman of the Board, appoints corporate officers,imposes possible limits on the authorities of the ChiefExecutive Officer, approves the draft report of theChairman, performs controls and verifications itconsiders appropriate, in respect to managementcontrol and the fair presentation of accounts, reviews and approves the financial statements, and ensures the quality of financial informationprovided to shareholders and the market.

In the period ended December 31, 2010, the Board of Directors met 11 times and addressed the followingitems of business:

- Review of the parent company statutory andconsolidated financial statements for the fiscal yearended December 31, 2009 and the interim financialstatements and the notice of the Annual GeneralMeeting;

- Review of the fiscal year 2010 budget and outlook;

- Capital increase through the capitalization of reserves;

- Setting the Chairman’s remuneration;

- Authorizations concerning agreements inaccordance with Articles L.225-39 et seq.of the French Commercial Code;

- Analysis of financial information disclosed by the company to shareholders and the market;

- Analysis of the major strategic, economic and financial priorities of the company;

- Analysis of the proposal to extend by one yearcertain contractual terms of the Burberry licenseagreement, and notably the term of the licenseagreement and the exercise of the option by Burberryto buy the license agreement;

- Examination and authorization of external growthprojects, notably license agreements for brands;

- Approval of the change of the information systemand the construction of a new warehouse;

- Grants of new stock options to salaried personnel as well as corporate officers.

Auditors attend Board of Directors’ meetings held to consider the company’s accounts or any othermatters regarding which they may provide Boardmembers an informed opinion.

The Board has not deemed it necessary to date toform special committees, and notably a nominatingor remuneration committee, in part because of thenature of the organization of the company and itsbusiness model, and in part because of the extensivein-depth experience directors have in respect to theworld of business and the international markets ofcompetitors. This type of organization contributes to flexible decision-making processes. With thisobjective, the Board decided to apply the exemptionprovided for under the provisions of Article L.823-20of the French Commercial Code for exercising theaudit committee functions when operating in aplenary session. On that basis, in 2010 the Board ofDirectors reviewed the following points following theaudit of the financial statements for the fiscal yearended December 31, 2009:

- Review of the valuation tests for the company’s assets;

- Review of the accounting treatment for currencyhedges;

- Review of the separate financial statements ofsubsidiaries;

- Review of litigation;

- Summary of the self-assessment tests of internalcontrol procedures.

The Board of Directors improved the audit functioncommittee capabilities in the period by appointingtwo members to the Board on November 15, 2011with responsibility for leading discussions withrespect to monitoring the preparation of accountingand financial information: Patrick Choël, Director,serves as the Chair and Maurice Alhadève,Independent Director.


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6.1.4.4. Transmission of information to directors

Directors are provided with all relevant documentsand information to effectively perform their duties.Before each Board meeting, directors receive:

- A meeting agenda established by the Chairman incoordination with General Management and, whenapplicable, directors proposing items to be discussed;

- An information file concerning issues to be addressedunder the agenda requiring particular analysis for thepurpose of an informed discussion, during whichdirectors may ask relevant questions to ensure theiradequate understanding of the matters addressed;

- And, when useful, press releases that have beenpublished by the company as well as significant press articles and reports of financial analysts.

In addition to information provided in connectionwith Board meetings, directors are regularly providedwith all significant information concerning thecompany. They may request any explanation or theissuance of additional information, and in general,formulate any requests for access to information theymay consider useful.

6.1.5Directors’ fees

Directors’ fees are allocated exclusively to outsidenon-executive officers of the Board of Directors,namely, Chantal Roos, Jean Levy, Patrick Choël,Maurice Alhadève and Michel Dyens. The totalamount granted by the General Meeting is freelyallocated by the Board of Directors to each memberon the basis of their rate of attendance.

6.1.6Participation in shareholders meetings

Under the terms of article 19 of the company’s bylaws all shareholders have a right to participate in General Meetings, personally or through a proxy,regardless of the number of shares they hold, uponsimple justification of their identity and ownership of the shares.

6.1.7Disclosures provided for under article L.225-100-3 of the French Commercial Code

To the best of the company’s knowledge there exist no items, and notably those relating to the structureof the share capital that could have a potential impactin the event of a public offering. The structure of the share capital as well as the equity interest thathave been brought to the company’s attention andany other information relating thereto are describedin chapter 2 of the section on shareholder informationof this registration document. Similarly, rules concerningthe appointment and revocation of members of the Board of Directors are subject to the rules ofcommon law.

6.2Internal control and risk management procedures

6.2.1Definition

The company’s internal control procedures have inlarge part been based on the guidelines establishedby article 404 of the Sarbanes Oxley Act that appliesto the US parent company because it is listed on aNew York Stock Exchange. The principles determinedtherein are in part provided for under the AMFguidelines of January 2007 completed by the guidelinesfor Small and Mid Caps of January 9, 2008 andupdated on June 14, 2010.

The internal control and risk management systemconstitutes a set of procedures defined andimplemented by the company under the responsibilityof General Management for the purpose of ensuring:

- Compliance with laws and regulations as well as theframework defined by the company’s internal values;

- The application of instructions and priorities set by general management;

- The effective application of internal processesnotably concerning the protection of corporate assets;

- The reliability of financial information.

And, more generally, it contributes to the effectivemanagement of its activities and operations and theefficient use of resources.

The aim of this system is to prevent and manage risksresulting from the activity of the company and risksof errors or fraud, particularly in areas relating to theprotection of the company’s assets as well asaccounting and finance.

However, no system of internal control can providean absolute guarantee of achieving these objectives.The probability of achieving such objectives is subjectto limits inherent in any system of internal control,related notably to uncertainties concerning theexternal environment, the exercise of judgment orproblems that may arise in response to human erroror simple error, and the need to perform cost-benefitanalysis before implementing any controls.

6.2.2Components of the internal control system

The Company’s internal control system is based on the following principles:

- Clearly define responsibilities in preparing,implementing and ensuring the management of internal control procedures;

- Identifying, analysing and handling risks;

- Ad hoc assessments conducted on a periodic basis of the effectiveness of internal controls.


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6.2.2.1. The internal control environment

Organization of the company

The company is organized around two divisions. The operating division encompasses the departmentsfor Export Sales and French Sales, Marketing andProduction and Development whereas the divisionincluding the support functions is placed under the management of Finance and Corporate Affairs.

The line management departments, assisted by thetechnical expertise provided by the support functions,coordinate the implementation of objectives andachieving the operating results set by GeneralManagement. To this purpose, they participate in the internal control procedures when key operatingprocesses associated with sales to distributors and the management of the company’s image have animpact on assets and/or results.

Integrated into the framework of internal control, the departments for support functions cover allprocesses relating to the management of resources(cash management, human resources, compliancewith tax obligations, settlement of trade payables and receivables, the processing and communication of accounting and financial information, monitoringlegal and regulatory developments, etc.). They alsohave a role in defining and communicating policiesand information about good practices for theCompany’s activity and ensure their effective applicationin compliance with applicable laws and regulations,maintaining a safe environment and the reliability of financial information.

This organization has demonstrated its strength andrelevance based of the achievement of real synergieswith the operating and functional departments. It is also based on an objective of promoting theconvergence of the resources of the different divisionsinvolved and the principle of a decentralizedorganization combining the advantages of flexibilityand the delegation of responsibilities necessary forensuring the optimal and coherent application of the strategic objectives set by general management.

The Company also consolidates seven foreignsubsidiaries and, to this purpose, applies to them the Group’s internal procedures relating to thepreparation and processing of accounting andfinancial information.

Key components of the internal control system

These features are based on rules and procedures as well as initiatives undertaken to raise awarenessamong management bodies and staff about theinternal control and risk management principlesadopted within the Company. These rules andprocedures make it possible to ensure that theinstructions of General Management are concretelyimplemented at the level of the operating and supportfunction activities.

The internal procedures manual

This tool formalizes a certain number of internalprocedures considered essential for the effective

operations of the company in a secure environment.This manual details the main operating and financialprocesses covering notably sales/customers,sourcing/suppliers, inventory, cash management/budget,accounting procedures, IT systems and personnel/payroll.This manual also describes the procedure for expenserequests and bank accounts signature authorizations.

Code of good conduct

A priority for managing human resources is to ensurethat profiles effectively match the correspondingresponsibilities while adhering to the key values:prudence, pragmatism, responsiveness, highstandards, transparency and loyalty. Contributing to the expertise and know-how of a team of men and women sharing a common culture ofcommitment to integrity and high standards thatdistinguish the Company thus constitutes animportant part of internal control. These values areset forth in a Code of Good conduct that providesguidelines on professional conduct to be adopted,notably in the areas of compliance with laws andregulations, preventing conflicts of interest andfinancial transparency in order to prevent situationsof fraud. This Code is signed by the recipient andremitted to all new employees who join the Company.

Self-assessment questionnaire

This questionnaire has been drafted according toprinciples of internal control that are consistent withthe Company’s activities. It is reviewed annually byline management both for operating and supportfunction departments. This questionnaire covers notably:

- Corporate governance practices: the internal controlenvironment reflecting the general tone set byGeneral Management, the level of awareness of theBoard of Directors and the Management Committeeconcerning priorities for control, procedures andmethods and the organization of the Company aswell as the resulting actions;

- The analysis of risk: this covers the identificationand analysis of major risks incurred in implementingobjectives set by the Company to subsequentlydetermine the risk management approach to beadopted;

- Information and communication systems: thesesystems permit the identification, input and exchangeof information according to the conditions thatenable management and staff concerned to exercisetheir responsibilities.

Information System Charter

This document defines the rights and obligations ofemployees, users of the information system, to ensurethat the information technology resources are used ina secure environment complying with the proceduresof internal control. It is signed by all users and madeavailable to all new employees who undertake tocomply with its provisions.


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6.2.2.2. Key participants in internal control procedures

The Board of Directors

In connection with information provided to theBoard, its members review all the main characteristicsof the internal control procedures and system andmore particularly examine them in accordance withtheir audit committee functions exercised in plenarysession. The Board may exercise its authority torequest verifications and controls it considersappropriate to ensure the transparency, effectivenessand security of the internal control environment.

General Management

This includes the Chairman and Chief ExecutiveOfficer, assisted by two Executive Vice Presidents.They define the major strategic priorities, approvedby the Board of Directors, to achieve the commercialand financial objectives of the company. This is doneby providing clearly defined internal procedures andan internal control system for which they are directlyresponsible. They define the general principles andensure the implementation of the differentcomponents of internal control.

Management Committee

This Committee includes management from theoperating and support function departments whoreport directly to the Chairman and Chief ExecutiveOfficer. This body focuses on strategic issues,monitoring performance and proceedings coveringimportant issues relating to the company’sorganization and projects. It ensures that the policyfor internal control is effectively implemented andmonitors the work carried out for this purpose as wellas the corresponding action plans. Each ManagementCommittee member is responsible for ensuring thatthe common rules and principles comprising theframework of the internal control system are appliedand understood in the departments under his or herresponsibility.

The Finance and Corporate Affairs Department

Placed under the authority of General Management,this department is responsible for implementing theinternal control to prevent and manage risks resultingfrom the Company’s activities, and notably accountingand financial risks, including errors or fraud. To thispurpose, it must ensure that the ongoing controlsimplemented are necessary and adequate and arecorrectly applied and effective in safeguarding theCompany’s assets against all potential incidents. TheFinance Department also provides technical supportto operating departments by establishing operatingprocedures, defining and promoting the use of tools,procedures and good practices essential for effectiveapplication by the latter of the objectives defined by General Management. In addition, it centralizesand consolidates financial and accountinginformation for all Group entities. It furthermoreensures the consistent nature of this information in relation to the budget approved by GeneralManagement and the Board of Directors and that such information is adequately supported.

It is also responsible for ensuring that GeneralManagement and the operating departments areaware of legal issues. To this purpose, it monitors legaland regulatory developments and takes measures toavoid exposure to potential criminal risks and risksrelated to commercial law and intellectual propertyrights. It is also responsible for managing litigationand disputes in close collaboration with outside legalcounsel and attorneys, as well as drawing up andreviewing the main contracts of the Company.

Internal Audit

In light of the company’s size and organization and in order to maintain the current flexibility of theorganization of its internal control, a full-fledgedinternal audit department has not been established.In contrast, the Internal Control Manager, performs,with the consent of General Management, ad hocinternal audits on a periodic basis, drawing on thework carried out by an independent external auditfirm. The purposes of these missions are determinedon the basis of the frequency of previous audits and the context in which the line management andsupport departments operate with respect to controlsand risks.

6.2.2.3. Internal control procedures

Internal control procedures, established by theFinance Department and approved by GeneralManagement, are designed to secure the differentprocesses used to achieve the objectives set by the Company. To this purpose, controls performed at every level of responsibility, are based primarily on the application of standards and procedures. These procedures are organized around the followingkey areas identified as representing potential risks:

Operating processes

- Sales/trade receivables management/collection: thisprocess ensures that all deliveries made and/or servicesrendered are invoiced within the specified period andinvoices are properly recorded in the trade receivablesaccounts. It also determines procedures for issuingcredits which must be justified and controlled beforebeing booked. This procedure makes it possible toidentify potential doubtful trade receivables andanticipate risks of default.

- Purchasing/management of trade payables: thisprocess is formalized by procedures based, on the onehand, on the separation of the functions for placingorders and for authorizing orders, acceptance, therecording of the transactions in the accounts andpayment of suppliers, and on the other hand aprocess for monitoring and reconciling purchaseorders, receiving slips and invoices (quantity, price,terms of payment) supplemented by a procedure forpreventing dual recognition/payment of supplierinvoices. Eventually anomalies are analyzed andmonitored;

Accounting and financial processes

- Cash management: controls in place are destined toensure that bank accounts are reconciled on a regularbasis with information received from the banks and


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reviewed periodically in order to document andexplain eventual variances; The Company has alsoimplemented a system for hedging foreign exchangerisk related notably to transactions conducted in USdollars. The amount of hedges as well as the exchangerate targets are the subject of regular discussionsbetween the Finance Department and GeneralManagement and are reported to the Board ofDirectors;

- Budget process: control, in this context, consists ofensuring that annual budget is established accordingto the instructions of General Management and thatactual performances are monitored through regularreporting tools based on data obtained from theoperating departments with the primary objective ofanalysing actual performances in relation to forecastand prior periods. This review of “forecasts versusactual” makes it possible to identify potentialinconsistencies, errors or omissions and make theappropriate management decisions to correct thecorresponding data (revenue, operating expenses, etc.).

- Preparing financial and accounting information: the review of the fair presentation and consistency of account closing procedures to ensure a reliableconsolidation consistent with data collected andsubmitted to the Finance Department;

- Information systems management: this process isdestined to ensure the development and maintenanceof computer applications and the network, the logicaland physical security of the information system,providing for a backup plan to guaranteeconfidentiality of information and ensure the securityof systems and applications for the continuity and the resumption of activity in the event of an incident.

6.2.2.4. Identifying, analysing and managing risks

Risk management constitutes an integral part of the internal control process.

Risk management responsibilities are exercised atevery reporting level of the Company. Staff, linemanagement and support function managementactively intervene as participants with a direct stake in an approach focused on internal controls of theprocesses they supervise, within the framework ofmissions defined by General Management, theirorganization and contributions to critical decisions.To this purpose, they possess the knowledge andinformation necessary to establish, operate andoversee the internal control procedures in relation to the objectives that have been set for them. An in-depth analysis of the separation of operationaland control tasks was undertaken to effectivelyaddress the objectives of control.

The mapping of Group risks launched in 2004 andregularly updated since, has made it possible toclassify risks into four categories: operating risks, risksrelated to international operations, environmentaland employee-related risks and risks related to thefinancial environment that are presented in detail in Chapter 3 of the management report. As thecompany’s activity and organization evolves, this risk mapping is regularly updated.

This mapping constitutes a basis for analysis for the purpose of verifying the validity of the measuresadopted to improve and strengthen internal controlprocedures. This makes it possible to identify riskareas, and for each of these areas, the risks that couldhave a potential financial impact. Risks thus identifiedare then evaluated to determine their potential impactand likelihood of occurrence. Each risk identified andevaluated is monitored to ensure that all proceduresdestined to reduce its scope are correctly implemented.

6.2.2.5. Activities of control

These controls are carried out within the frameworkof the plan for the self-assessment of internalprocedures to contribute to a better understandingand the appropriation of internal control procedures,ensure their correct application and, if necessary,improve procedures currently in force. These periodicreviews make it possible to measure progress inimplementing programmed actions, changes since theprevious self-assessment and adopt new proceduresthat may be identified as necessary through this process.

This process of self-assessment is undertaken annuallywith the assistance of an outside independent auditfirm. This involves identifying key assets of thecompany, analysing potential risks, existing or emerging,by type of task assigned to each department concernedand meetings with the operating departments concerned.

If processes and the associated controls are notformalized or are considered insufficient, a remediationplan or corrective actions are implemented andmonitored by the manager concerned.

On completion of this self-assessment process, the Finance Department submits executivesummaries on this work to the General Managementand the Board of Directors. It also reports the resultsof this self-assessment to the Management Committeeso its members can ensure that management of the divisions are aware of the results of the work andthe issues at stake in implementing remediation plansin response to the dysfunctions identified or thosethat could result from inadequate controls.

The test of internal control procedures conducted in 2010 resulted in the performance of 80 controlsfocusing on 67 areas of risk relating notably to salesand purchasing activity, license royalties, advertisingexpenses, inventory, cash management, closing activities,payroll management and information systems.

This self-assessment did not identify any incidentsconsidered material or that could potentially called to question the effectiveness of internal controlprocedures, even if certain weaknesses were identified,indicating the need for reinforcing upstream theformalized application of certain procedures. An effective remediation plan was immediately drawnwhose implementation will be regularly monitored by the Management Committee.

This work also concerns the organization of informationsystems department, the evaluation of general ITcontrols, the management of operations, projects andsecurity and the policy for ensuring the availabilityand continuity of service of systems. This audit


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identified weaknesses at the level of securitymanagement followed by a remediation plan that was immediately implemented.

The review of information systems highlighted in2009 and 2010 highlighted a need to evaluate thelevel of security for the company’s information systemin response to both external (internet) and internalthreats. To this purpose, intrusion tests wereperformed on:

- The company’s new corporate website;

- Infrastructure accessible via the Internet;

- The Internet network of companies hostingcompany data.

These intrusion tests indicated and overall satisfactorylevel of security even though certain improvementsare still required notably with respect to access toapplications for managing human resources, placingorders and access to the internal network. Measureswere immediately adopted to strengthen the level of security.

6.2.3Internal control procedures relating to accounting and financial information

6.2.3.1. Process for managing the accounting and financial organization

Organization

Internal control procedures applicable to accountingand financial data are prepared and implementedunder the responsibility of the Finance Departmentand the oversight of General Management in the following areas: financial communications,accounting, consolidation, management control, cash management, information systems andcompliance with laws and regulations. To achieve this objective, it is supported by the managers of thedifferent teams of the Finance Department (Finance,Accounting, Management Control, Consolidation,Human Resources, Cash Management, InformationSystems and Legal Affairs).

Relations with statutory auditors

In connection with the half yearly and annualclosings of the accounts, the statutory auditorsorganize their work by undertaking:

- A prior review of procedures and internal control tests;

- A meeting prior to the approval of the accounts to define the program of reviews and the calendar and organization of their work;

- An audit of the financial statements prepared by the Finance Department;

- A meeting presenting a summary of their work to General Management.

On this basis, the statutory auditors certify the fairpresentation of the separate parent company andconsolidated financial statements.

Application of accounting standards

The accounting department has a process foridentifying and processing changes in accountingstandards and the approval of the resulting proceduresfor accounting treatment. Similarly, there existprocedures to ensure the accounting department isinformed of changes in Group practices that couldaffect the methodology or procedures for recordingtransactions. The scope of accounting management is constantly updated.

Organization and security of information systems

The company uses an ERP application that integratessales management, financial accounting, subsidiaryaccounts and cost accounting capabilities. Theorganization and operating of the entire informationsystem is subject to measures that limit the conditionsof access to the system, the validation of processingand closing procedures, conservation of data, andverification of entries.

To ensure continuity in processing accounting data,backup systems and a continuity plan have beenimplemented in the event of a sudden dysfunction. In addition, all data is backed up daily and a copykept in a secure location. In terms of conservationand protection of data, a procedure for secure accessto accounting and financial data has been developedinvolving the designation of individual and personalrights assigned to specific persons accompanied by passwords.

In 2009, a Business Continuity Planning (BCP) was implemented involving the use of virtualizationtechnology on internal servers in order to ensureefficient backup system in the event of anyequipment failure. In 2010 and early 2011, an IT recovery plan was deployed to strengthen thesemeasures to secure the information system,duplicating computer data at an external “dormantsite“as a precaution in the event of malfunctions.

In response to needs resulting from its growth, the company decided to revamp its informationsystem by deploying the SAP enterprise applicationthat will cover virtually all the operating andfunctional processes of its business (finance, sales,inventory and production planning). This softwarepackage will be operational in the second quarter of2011 as soon as all the test phases have demonstratedto be fully satisfactory. The objectives of this projectare as follows:

- Systematize internal procedures;

- Shorten the logistics cycle for improved customerservice;

- Strict monitoring of flows for the sourcing,inventories and real-time access to physical inventory;

- Reinforce the decision-making processes and costaccounting for optimized management accounting;

- Ensure compliance with the rules of traceability and security through the harmonization ofinformation processing tools.


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6.2.3.2. Preparing accounting and financialinformation

Operating process for producing the accounting information

Internal control processes at this level have beenimplemented through the following measures basedon previously defined procedures and approvalmechanisms:

- A planned program for account closings subsequentlycommunicated to operating departments;

- Close collaboration between the different managersof the support function and operating departments;

- Analysis of the relevance of information reportedparticularly concerning sales, orders and theexamination of margins;

- A detailed review of the accounts by GeneralManagement in view of their approval before the finalclosing.

Meetings are organized to coordinate activity with the different departments concerned in order toensure the exhaustive nature of information providedto prepare the accounts.

Process for account closings and the production of consolidated financial statements

Account cut-off procedures are subject to preciseinstructions provided by the Finance Department in respect to the closing process, indicatinginformation to be entered, restatements required, the timetable of activity as well as the planning forprecise tasks for each party participating in thisprocess. These procedures are accompanied by aprocess for validating key items of the consolidationprocess and notably the reconciliation of separatefinancial statements with restated financial statementsincluded in consolidation, the consistency ofmanagement data and accounting, the identificationand analysis of changes in consolidated net equity.

Procedures for producing interim and annualfinancial consolidated financial statements are basedon IFRS guidelines.

At the level of subsidiaries, local managementprovides detailed reporting that includes financialstatements, audited by local outside auditors, andanalysis of business performances. This information is in turn subject to in-depth analysis by GeneralManagement with the technical support of theFinance Department.

Financial communications

The financial communications process is subject to aclearly defined reporting schedule for informationdestined for financial markets and market authorities.This schedule ensures that communications complieswith the requirements of applicable laws andregulations relating to financial disclosures bothconcerning the nature of information to be disclosed,the required deadlines and compliance with theprinciple of equal access to information by allshareholders.

6.2.4Forecasted trends for 2011

The company assures permanent oversight of allorganizational changes to anticipate, adapt andoptimize internal control procedures in real time and to facilitate the appropriation of these proceduresby operational teams. Its internal control proceduresare also designed to respond to both regulatoryrequirements and future issues facing the company.

Initiatives carried out in 2009 were pursued andfurther developed in 2010 by strengthening the systemfor monitoring trade receivables and cash positions of subsidiaries and extending the security procedure to other applications of the information system.

In 2010, the company launched a major project torevamp its ERP system by selecting a SAP enterpriseapplication solution that should contribute tocreating a stronger internal control and riskmanagement system through the rationalization andsystematization of operating and support functionprocesses.

Priorities for the Company for the year include the:

- Deployment of the SAP enterprise applicationsystem;

- Adaptation of the internal control and riskmanagement system to the SAP new informationsystem;

- Ongoing deployment of the IT Recovery Plan in line with an overall Business Continuity Plan.


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CHAPTER FOUR

ShareholderinformationStatutory information 123

Capital stock 125

Annual General Meeting: Resolutions submitted to the extraordinary and ordinary shareholders’ meeting of April 29, 2011 130

122 Two thousand ten registration document Interparfums. Shareholder information

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123Two thousand ten registration document Interparfums. Shareholder information

1.STATUTORY INFORMATION

1. The company

1.1General information

Corporate name: Interparfums

Registered office:4 rond-point des Champs Elysées, 75008 Paris,FranceTel.: +33 (0)1 53 77 00 00Date of incorporation: April 5, 1989Date of expiration: April 5, 2088.

Legal form: Corporation (société anonyme) with a Board of Directors governed by the provisionsof Livre II of the French Commercial Code andCompanies Act No. 67-236 of March 23, 1967.

Corporate charter: The company’s business purposein France and all other countries includes:

- The purchase, sale, manufacture, import and exportof all products related to perfumes and cosmetics;

- The use of license agreements;

- Providing all services related to the above-mentionedactivities;

- The company’s participation by all means, directlyor indirectly, in all transactions that may relate to itsbusiness purpose through the creation of new companies,the contribution, subscription or purchase of companyshares or rights, mergers or other, through the creation,acquisition, rental or lease management of all rightsto conduct business or establishments, and throughthe acquisition, operation or disposal of all proceduresand patents related to these activities;

- And, generally, all commercial, industrial, financial,civil, securities and real estate transactions that relatedirectly or indirectly to the company’s businesspurpose or to any similar and related activities.

Fiscal year: January 1 - December 31Siret No.: 350 219 382 00032Trade register No (RCS): 1989 B 04913Place of registration: Registrar of the CommercialCourt of ParisActivity code: 46.45 Z Wholesale perfume and beauty products.

1.2Share account registration

At the option of their owners, shares in France areregistered in a standard personal account (comptenominatif pur), an administered personal account(compte nominatif adiministré) or to the beareridentifiable at an authorized intermediary. EuroEmetteurs Finances handles share services andmanagement exclusively for personal accounts.Questions may be addressed to the registered office.

2.Main legal provisions and bylaws

2.1Shareholders’ meetings (article 19 of the bylaws)

All shareholders have the right to participate inshareholders’ meetings or to be represented, regardlessof the number of shares owned, provided the sharesare fully paid up and registered in the shareholder’sname for at least three days prior to the shareholders’meeting upon presentation of a certificate filed by anapproved intermediary at the sites mentioned in theMeeting notice, confirming that the shares are notavailable up until the date of the Meeting.

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All shareholders may be represented by a spouse oranother shareholder. All shareholders may vote bycorrespondence using a proxy statement that complieswith legal provisions and is obtainable by returningthe Meeting notice.

2.2Special shareholder disclosure obligations (article 20 of the bylaws)

In accordance with the provisions of L.233-7 of theFrench Commercial Code (Code de Commerce), allshareholders, natural persons or legal entities, actingalone or in concert, who cross thresholds in eitherdirection in respect to the number of shares ownedrepresenting more than one twentieth, one tenth,three twentieths, one fifth, one quarter, one third, one half, two thirds, eighteen twentieths or nineteentwentieths of the capital or voting rights of theCompany they hold, must notify the Company byregistered mail with return receipt of the number ofshares and voting rights they hold within five tradingdays. The disclosure requirement referred to in thepreceding paragraph is also mandatory within thesame time limits whenever the percentage of capitalor voting rights held falls below one of the thresholdsmentioned above.

Under article L.233-7 subsection VII of the FrenchCommercial Code, said shareholders must also statetheir intentions with regard to share ownership forthe next twelve months whenever the thresholds ofone tenth or one fifth of the capital or voting rightshave been crossed.

2.3Appropriation and distribution of earnings (article 24 of the bylaws)

If the financial statements approved by theshareholders’ meeting show a distributable profit asdefined by law, the shareholders’ meeting decideswhether to make appropriations to one or moreretained earnings or reserve accounts under itscontrol, to carry it forward or to distribute it. The shareholders’ meeting may grant shareholders the choice of receiving a dividend in cash or in sharesfor all or part of the dividend or interim dividends to be distributed, subject to the applicable legalprovisions.

Following the approval of the financial statements bythe shareholders, any losses that may occur are carriedforward to be offset against future earnings until theselosses have been fully utilized.

2.4Double voting rights (article 11 of the bylaws)

In accordance with the provisions of article L.225-123of the French Commercial Code, the extraordinaryshareholders’ meeting of September 29, 1995 createdshares with double voting rights. These shares mustbe fully paid up and recorded in the company’s shareregister in registered form for at least three years.

2.5Documents on display

The bylaws, minutes and other company documentsare available at Interparfums’ registered office.

2.6Legal jurisdiction

In the event of litigation, the courts havingjurisdiction are those of the registered office in caseswhere the company is a defendant. They aredesignated according to the nature of the litigation,barring any contrary provisions of the new CivilProcedure Code.


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2. CAPITAL STOCK

1. Five-year history of capital stock transactions

Year Transaction type Number Shares Total Share capital of shares created shares (in €)

2006 Exercise of 1999 stock options 28,758 28,758 9,763,417 29,290,251 Exercise of 2000 stock options 39,559 39,559 9,802,976 29,408,928 Exercise of 2001 stock options 43,795 43,795 9,846,771 29,540,313 Exercise of 2002 stock options 55,486 55,486 9,902,257 29,706,771 Exercise of 2003 stock option 484 484 9,902,741 29,708,223 Exercise of 2004 stock options 704 704 9,903,445 29,710,335 Exercise of 2005 stock options 363 363 9,903,808 29,711,424 Exercise of 2006 stock options 330 330 9,904,138 29,712,414 Bonus share issue 976,942 976,942 10,881,080 32,643,240

2007 Exercise of 2000 stock options 33,028 33,028 10,914,108 32,742,324 Exercise of 2001 stock options 29,039 29,039 10,943,147 32,829,441 Exercise of 2002 stock options 22,878 22,878 10,966,025 32,898,075 Exercise of 2003 stock option 7,809 7,809 10,973,834 32,921,502 Exercise of 2004 stock options 4,429 4,429 10,978,263 32,934,789 Exercise of 2005 stock options 24,563 24,563 11,002,826 33,008,478 Bonus share issue 1,097,541 1,097,541 12,100,367 36,301,101

2008 Exercise of 2001 stock options 39,857 39,857 12,140,224 36,420,672 Exercise of 2002 stock options 26,638 26,638 12,166,862 36,500,586 Exercise of 2003 stock option 8,711 8,711 12,175,573 36,526,719 Exercise of 2004 stock options 1,862 1,862 12,177,435 36,532,305 Bonus share issue 1,214,545 1,214,545 13,391,980 40,175,940

2009 Exercise of 2002 stock options 51,368 51,368 13,443,348 40,330,044 Exercise of 2003 stock options 99,828 99,828 13,543,176 40,629,528 Exercise of 2004 stock options 987 987 13,544,163 40,632,489 Exercise of 2005 stock options 408 408 13,544,571 40,633,713 Bonus share issue 2,678,942 2,678,942 16,223,513 48,670,539

2010 Exercise of 2004 stock options 148,464 148,464 16,371,977 49,115,931 Exercise of 2005 stock options 68,347 68,347 16,440,324 49,320,972 Exercise of 2006 stock options 4,723 4,723 16,445,047 49,335,141 Capital decrease (157,150) (157,150) 16,287,897 48,863,691 Bonus share issue 1,638,298 1,638,298 17,926,195 53,778,585

As of December 31, 2010, Interparfums’ capital was composed of 17,926,195 shares with a par value of €3.


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2.2Breakdown of option holders as of December 31, 2010

Plan 05 Plan 06 Plan 09 Plan 10

Management committee members 47,302 55,876 30,800 33,000Employees 52,641 107,071 63,800 81,700

Total 99,943 162,947 94,600 114,700

3.Ownership of Interparfums capital stock and voting rights

3.1Situation at February 28, 2011

Shares % of Voting % of voting held capital rights rights

Interparfums Holding SA 13,275,084 73.81% 25,701,177 84.41%French investors 1,662,981 9.25% 1,662,981 5.46%Foreign investors 1,647,256 9.16% 1,647,256 5.41%Individuals 1,365,663 7.59% 1,436,263 4.72%Treasury shares 33,864 0.19% - -

Total 17,984,858 100.00% 30,447,677 100.00%

A survey of shareholder ownership identified 9,760 shareholders at February 28, 2011. Excluding Interparfums Holding, ownership breaks down as follows:

- 260 French investors and mutual funds owning 9.3% of the capital stock compared with 115 in 2009 owning 11.2%;

- 150 foreign investors, located mainly in the U.K., Switzerland, the U.S. and Luxembourg, who own 9.2% of the capital stock compared with 90 in 2009 with 5.9%;

- 9,350 individual investors owning 7.6% of the capital stock compared with 5,525 in 2009 owning 8.2%.

To the Company’s knowledge, there are no other shareholders that possess directly, indirectly or together, 5% or more of the capital or voting rights.

Three independent directors serve on the Board of Directors providing a mechanism for preventing an abusiveexercise of control of the company.


2. Authorized capital

2.1Previous authorizations

The shareholders’ meeting of April 23, 2010authorized the Board of Directors to increase thecapital stock by issuing ordinary shares with orwithout shareholders’ pre-emptive rights for maximumnominal amounts respectively of €25 million. These authorizations were granted for 26 monthsfrom the date of the shareholders meeting of April 23, 2010, replacing and superseding theauthorizations previously granted by the shareholdersmeeting of April 24, 2009 for the same purpose. To date, the Board of Directors has not made use of these authorizations.

The shareholders’ meeting of April 24, 2009 alsoauthorized the Board of Directors to increase thecapital by an amount not exceeding €20 millionthrough the capitalization of earnings, additionalpaid-in capital and reserves. The Board of Directorsmade use of this authorization.

Pursuant to its decisions of June 12, 2009 and June 15, 2010 to increase the capital stock by€12,951,720 through the creation of 4,317,240bonus shares on the basis of one new share for every ten shares held.

The maximum amount of present or future capitalincreases that may result from all issuances authorizedby the shareholders’ meeting of April 23, 2010 is€75,500,000 that includes the €500,000 authorizedin connection with the capital increase reserved foremployees proposed in the resolution that wasrejected by this meeting.

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3.2Changes in Interparfums Holding’s ownership over four years

At December 31 2007 2008 2009 2010

Interparfums Holding 72.02% 75.32% 74.56% 74.15%Free float and employees 27.98% 24.68% 25.44% 25.85%

Total 100.00% 100.00% 100.00% 100.00%

4. Breakdown of Interparfums Holding’s capital stock as of December 31, 2010Interparfums Holding, whose sole equity holding is Interparfums, is itself wholly owned by Interparfums Inc.,listed on NASDAQ in the United States with approximately 2,300 shareholders. As of December 31, 2010 ithad the following ownership structure:

- Philippe Benacin and Jean Madar 48.30%;- Free float 51.70%.

5. DividendSince 1998, the company has adopted a policy of distributing dividends that today represent approximately 30%of consolidated earnings, destined to reward shareholders while at the same time associating them with the Group’sexpansion. In early May 2010, a dividend of €0.39 per share was paid or a total amount of €6.3 million.

6. Shareholders’ agreementsNo shareholders’ agreements exist at the level of Interparfums Holding.

7. Special shareholder disclosure obligationsIn compliance with article L.233-7 of the French Commercial Code, all shareholders acquiring a number of shares that increases above or below certain statutory disclosure thresholds are required to notify the Frenchfinancial market authority (Autorité des Marchés Financiers) within five trading days. If such notifications are not made in accordance with the applicable legal provisions, the company will apply the provisions of articleL.233-14 relating to the cancellation of voting rights. In 2010, the company was not informed of any changesin share ownership involving the crossing of these statutory thresholds.


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8. Key stock market data

In number of shares and euros 2006 2007 2008 2009 2010

Shares outstanding as of December 31 10,881,080 12,100,367 13,391,980 16,223,513 17,926,195Market capitalization as of December 31 386m 380m 242m 292m 490mHigh (1) 41.88 38.00 31.55 20.49 27.84Low (1) 31.52 25.82 17.00 13.06 17.19Average (1) 35.25 34.04 23.63 16.67 23.05Year-end closing price (1) 35.43 31.32 18.05 18.01 27.35Average daily volume (1) 7,785 11,204 6,220 6,022 10,146Earnings per share (1) 1.79 1.76 1.66 1.52 1.57Dividend per share (1) 0.38 0.38 0.38 0.39 0.48Average number of shares outstanding (2) 10,421,965 11,480,164 12,719,676 14,880,583 17,089,880

(1) Historical data (not restated for bonus share issues undertaken each year).(2) Excluding treasury shares.

9. Share priceIn early 2010, the Interparfums share price largely tracked the performance of the Paris Mid Cap index.

Following the publication of 2009 results on March 10, 2010, the share price’s upward momentumconsiderably outperformed the CacMid100, gaining 40% from this date versus 10% for the index.

After the announcements for sales (2nd and 3rd quarter) and earnings (1st half ) and raised guidance for 2010 full-year sales, the share price rose to a new record of €26-€27 starting in mid-October resulting in a marketcapitalization approaching €500 million.

Ending the year at €27.35, the share gained 82% for the twelve month period (taking into account the bonusshare issue in June 2010).

Trading volume remained at satisfactory levels with an average daily volume of 10,000 shares, up 60% on the prior year’s average.


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10.Share price and trading activity trends since 2008

In euros High Low Trading Trading volume value (number of (€ millions) shares)

2008 January 31.55 23.20 450,739 12,831February 27.53 23.95 295,168 7,428March 29.15 25.00 164,250 4,604April 27.97 26.89 105,044 2,881May 28.13 25.35 103,781 2,742June 26.60 22.70 77,309 1,884July 23.10 21.98 68,650 1,548August 22.98 21.85 25,937 580September 24.20 21.00 64,077 1,444October 21.81 17.00 151,693 2,981November 20.00 17.60 41,679 773December 19.20 18.00 44,008 815

2009 January 18.70 15.40 58,359 968February 15.75 14.95 62,188 961March 16.34 14.32 63,169 979April 17.20 15.29 122,492 1,999May 18.50 16.57 55,915 975June 18.93 14.27 94,351 1,416July 14.86 13.06 159,945 2,241August 15.60 14.50 111,347 1,685September 19.20 15.16 331,382 5,731October 20.49 19.35 197,296 3,895November 19.40 17.23 107,910 1,944December 18.01 17.10 171,186 2,997

2010 January 18.90 17.55 140,550 2,555February 18.22 17.19 138,609 2,463March 21.47 18.11 395,479 8,056April 24.20 21.59 299,489 6,905May 24.10 21.30 143,032 3,290June 25.15 23.35 256,451 6,119July 24.30 22.10 196,903 4,611August 23.70 22.49 112,060 2,595September 24.95 23.30 231,283 5,622October 27.23 23.79 258,428 6,741November 27.84 26.30 219,711 5,981December 27.69 25.85 245,845 6,641

2011 January 28.12 23.83 1,255,044 31,756February 26.27 24.45 446,906 11,431

Historical data (not restated for bonus share issues undertaken between 2000 and 2010).

A capital increase through a bonus share issue on the basis of one new share for ten existing shares in June 2008resulted in the automatic division of the share price from this date by 1.10.

A capital increase through a bonus share issue on the basis of one new share for five existing shares in June 2009resulted in the automatic division of the share price from this date by 1.20.

A capital increase through a bonus share issue on the basis of one new share for ten existing shares in June 2010resulted in the automatic division of the share price from this date by 1.10.


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3.ANNUAL GENERAL MEETING:RESOLUTIONS SUBMITTEDTO THE EXTRAORDINARY ANDORDINARY SHAREHOLDERS’MEETING OF APRIL 29, 2011

Ordinary resolutions

First resolution

Review and approval of the parent companyfinancial statements for the period ended December 31, 2010 and the grant of discharge to directors

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinarygeneral meetings, after reviewing the Board ofDirectors’ report, including the Chairman’s reporton internal control procedures and risk management,as well as the Auditors’ report on the financialstatements for the period ended December 31, 2010,approve the annual financial statements, as presentedshowing a net income of €30,765,789. They alsoapprove the transactions described in the accountsand summarized in these reports. In consequence, the shareholders grant discharge for the period ended December 31, 2010 to all directors for theirmanagement.

They furthermore approve the total amount ofdisallowed deductions under article 39-4 of theFrench General Tax Code of €20,412 for 2010.

Second resolution

Review and approval of the consolidated financialstatements for the period ended December 31, 2010

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinarygeneral meetings, after reviewing the report of the Board of Directors and the Auditors’ report onthe consolidated financial statements of the Group for the period ended December 31, 2010, approvethe financial statements as presented showing anIFRS net income of €26,807,000. They also approve the transactions described in the accounts andsummarized in these reports.

Third resolution

Approval of the appropriation of net income, setting the dividend

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinarygeneral meetings, approving the proposal Board of Directors, decide to appropriate net income of the period of €30,765,789 as follows:

Net income of the period €30,765,789

Appropriation to the legal reserve €510,804Retained earnings €21,661,819Dividend (1) €8,593,166

Total appropriation €30,765,789

(1) According to a price of €0.48 per share, this amount takes intoaccount the number of treasury shares held at December 31, 2010that will be adjusted in the case of a change to reflect the actualnumber of shares held on the dividend payment date and stockoptions exercised by beneficiaries.

Shareholders accordingly set, for all qualifying sharescomprising the capital stock a dividend of €0.48 pershare. This amount thus allocated among shareholdersshall qualify for the full 40% tax allowance providedfor under article 158.3.2 of the French General TaxCode to individuals with their tax residence in France.

The dividend payment date is May 6, 2011.

If on the dividend payment date the company holds treasury shares, the amount corresponding to dividends not distributed for said shares will beallocated to retained earnings:

As required by law the shareholders duly note thatdividends for the last three periods were as follows:

Year Number of shares Dividend

2009 16,223,513 €0.392008 13,391,980 €0.382007 12,100,367 €0.38

Fourth resolution

Approval of regulated agreements under articlesL.225-38 et seq. of the French Commercial Code

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinarygeneral meetings and after reviewing the Auditors’special report on related-party agreements governedby articles L.225-38 et seq. of the French CommercialCode, duly noting the information provided onagreements concluded and commitments authorizedin prior periods and in fiscal 2010, including thoseauthorized in the period in progress, approve thetransactions and agreements described in this report.

Fifth resolution

Setting of directors’ fees

The shareholders, in accordance with the conditionsof quorum and majority applicable to ordinarygeneral meetings, after having reviewed the Board of Directors’ report, set annual directors fees for the year in progress at €120,000 and grant full powerto the Board of Directors to determine the criteria for allocating these fees among board members within the limit of this amount and the date of theirpayment for the fiscal year commencing on January 1, 2011.


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Sixth resolution

Renewal of the authorization for the company to purchase and sell its own shares on the marketwithin the framework of article L.225-209 of the French Commercial Code

The shareholders, in accordance with the conditionsof quorum and majority that apply at ordinarymeetings and after reviewing the report of the Boardof Directors and in accordance with the provisions of article L.225-209 of the French Commercial Codeet seq. and the provisions of articles 241-1 to 241-6 of the AMF General Regulation, grant the Board of Directors the authority, which it may furtherdelegate, to acquire or sell shares of the company in connection with a share buyback program to be implemented and according to the terms andconditions set forth below.

The purpose of this authorization is to permit thecompany to purchase and sell its own shares for usesprovided for by law. On this basis, the shareholdersdecide that this share repurchase program may beused for the following purposes:

- Maintain an orderly market in the company’s sharesthrough an investment services provider within theframework of a liquidity agreement in compliancewith the conduct of business rules of the Frenchassociation of investment firms (AFEI);

- Grant employees or officers of the company and/orthe Group stock options (articles L.225-177 et seq.of the French Commercial Code) and/or bonus shares(articles L.225-197-1 et seq. of the FrenchCommercial Code);

- Remittance of shares pursuant to the exercise of rights attached to securities conferring rights by redemption, conversion, exchange, presentation of warrants or any other means to grants of thecompany’s shares;

- Use such shares for payment or exchange in connectionwith financial transactions or acquisitions incompliance with the financial market regulations;

- Cancel shares to increase the return on equity and earnings per share and/or eliminate the impact of dilution for shareholders from capital increasessubject to adoption of the thirteenth resolution of the extraordinary general meeting presented belowauthorising this cancellation;

- Permit the company to buy and sell its own sharesfor any other authorized purpose or practice admittedby the market or which may be subsequentlyauthorized or admitted by applicable laws andregulations.

Shares acquired shall be subject to the followinglimits:

- The maximum purchase price is €40 per share,excluding execution costs;

- The total number of shares acquired may not exceed5% of the capital stock outstanding at any time. This

5% limit applies to an amount of capital that will beadjusted as applicable for corporate actions affectingthe capital stock after this meeting, wherebyacquisitions by the company shall under nocircumstances increase its holding, directly andindirectly through subsidiaries, to more than 5% of the capital stock;

- Pursuant to the above, by way of indication and without taking into account shares already held by the company, 17,926,195 shares on December 31, 2010 would represent 5% of thecapital stock corresponding to a maximum theoreticalpurchase price of €35,852,390 on the basis of a maximum purchase price of €40 per share.

The Board of Directors may adjust the above-mentionedprices pursuant to modifications in the par value of the share, the capitalization of retained earningsand bonus issues, stock splits or reverse splits,repayment or reduction of capital, distribution of retained earnings or other assets and any othertransactions involving the company’s capital stock, to reflect the impact of these transactions on theshare’s value.

In accordance with applicable regulations, said sharesmay be purchased, held, sold or transferred, accordingto the case, through one or more transactions, at anytime the Board of Directors so chooses includingwhen tender offers are in effect subject to applicableregulations, by any means, on or off market, andnotably through block trades.

Shares purchased and held by the Company must, in compliance with the law, be maintained inregistered form. In addition said shares that will notconfer pre-emptive rights or entitlement to dividendsshall be deprived of voting rights.

The shareholders grant all powers to the Board ofDirectors that may in turn delegate such authority to:

- Place all stock orders on or off the market;

- Sign any agreements notably with a view tomaintaining registers of purchases and sales;

- Submit all declarations to the Autorité des MarchésFinanciers (AMF) or any other such entity, carry outall formalities and, in general, make all necessaryarrangements.

The shareholders decide that this authorization:

- Shall take effect from the date of the Board ofDirectors’ meeting that decides to implement thisdecision that will automatically result in theexpiration of the previous authorization grantedunder the sixteenth resolution of the shareholders’meeting of April 23, 2010;

- Will expire after a period of 18 months from thedate of this meeting.

The Board of Directors will notify the generalmeeting of all transactions carried out under thisresolution.


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Seventh resolution

Powers

All powers are granted to the bearer of copies orextracts of the minutes of this shareholders’ meetingruling in accordance with the conditions of quorumand majority that apply at ordinary general meetingsto perform all legal formalities relating to the aboveresolutions.

Extraordinary resolutions

Eighth resolution

Authority granted to the Board of Directors to issueshares through the capitalization of additional paid-in capital, reserves or profit

The extraordinary shareholders’ meeting, inaccordance with the conditions of quorum andmajority applicable to ordinary shareholdersmeetings, after having reviewed the Board ofDirectors’ report and ruling in accordance with theprovisions of articles L.225-129 to L.225-129-6 andL.225-130 of the French Commercial Code, grantsauthority to the said Board to increase the capital,through one or more tranches, by an amount not to exceed €50 million by the capitalization of all or part of the share premium, reserves or profits orthe capitalization of any other amounts permitted,followed by the issuance and grant of bonus shares or an increase in the par value of existing ordinaryshares, or, when applicable, a combination of thesetwo methods.

The shareholders decide that the rights resulting fromfractional amounts shall not be negotiable and thatthe corresponding shares will be sold with theproceeds from such sale to be allocated to holders of rights no later than 30 days after the registrationdate in their name of the whole number of sharesallotted to them.

The shareholders grant full authority to the Board of Directors, which the latter may further delegate asprovided for by law, for the purpose of implementingthis resolution and notably to:

- Determine the procedures and conditions fortransactions thus authorized, and notably the amountand nature of reserves and additional paid in capital,the number of new shares to be issued or the amountby which the nominal value of existing sharescomprising the capital stock will be increased,establish the date of record as of which new shareswill carry rights or the date from which the increasein the nominal value will take effect;

- Perform all formalities to record the completion of the capital increase and amend the bylaws inconsequence and undertake all formalities in regardsto disclosure requirements;

- And, in general, take all measures and perform all formalities required to ensure the completion of the capital increase and amend the bylaws inconsequence.

The shareholders duly note that effective from thedate of this meeting this authorization replaces andsupersedes, for the unused portion, the authorizationgranted by the shareholders’ meeting of April 24, 2009and implemented for a total amount of €12,951,720by the respective decisions of the Board of Directorsof June 12, 2009 and June 15, 2010.

This authorization is granted by the shareholders for 26 months or until June 29, 2013.

Ninth resolution

Authorization and powers granted to the Board of Directors to grant options to subscribe for or purchase shares

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders meetings, after having reviewed theBoard of Directors’ report and the special report of the Auditors:

- Authorise, in compliance with the provisions of articles L.225-177 to L.225-185 of the FrenchCommercial Code, the Board of Directors to grant,on one or more occasions, stock options conferringrights to subscribe for new shares of the Company to be issued in connection with a capital increase asprovided for by law and stock options conferringrights to purchase existing shares of the companyacquired through share repurchase programs either inaccordance with the provisions provided for by articleL.225-208 of the French Commercial Code or inconnection with a share buyback program authorizedunder the sixth resolution of this annual general meeting;

- Decide that beneficiaries shall consist of employeesand directors and officers or certain of them, of theCompany in accordance with article L.225-185subsection of the French Commercial Code or any of its affiliates as defined under article L.225-180 of the this Code whereby the Board of Directors maygrant said options to all or part of these persons;

- Decide that the number of options that may begranted to subscribe for or purchase shares on one or more occasions shall not confer rights to acquireordinary shares representing on the grant date morethan 3% of the share capital on the date of theshareholders’ meeting;

- Duly note that, in compliance with L.225-177 of the French Commercial code, no option tosubscribe for new shares or purchase existing sharesmay be granted (i) within less than twenty tradingsessions after the ex-dividend date or the ex-rightsdate in connection with a capital increase, (ii) withinten trading sessions before and after the date whenthe consolidated financial statements, or failing this,the parent company financial statements arepublished, as well as (iii) between the date when thecorporate governance bodies of the company haveknowledge of information that if rendered public,could have a material effect on the company’s shareprice and ten trading days after the disclosure of this information;


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- Decide that the subscription price of new sharesshall be set by the Board of Directors on the grantdate and may not be less than 80% the average shareprice for the last twenty trading days preceding the grant date;

- Decide that the purchase price for existing sharesthrough the exercise of stock purchase options shallbe set by the Board of Directors on the correspondinggrant date and may not be less than 80% of theaverage purchase price for the shares held by theCompany under the provisions of articles L.225-208and L.225-209 of the French Commercial Code;

- Decide that the exercise price for options asdetermined above may not be modified unless the company carries out financial or securitiestransactions provided for under article L.225-181of the French Commercial Code. In this event, and in accordance with applicable laws, the Board ofDirectors shall take all necessary measures to protectthe interests of option grantees in accordance witharticle L.228-99 of the French Commercial Code;

- Duly note that this authorization entails expresswaiver by shareholders in favour of beneficiaries of options of their pre-emptive subscription rights to subscribe for new shares to be issued as the optionsare exercised;

- Decide that options granted must be exercisedwithin eight years from their grant date;

- Decide that each option granted will confer a right to subscribe for or purchase one share of the company;

- Decide that this authorization shall be valid for 38 months from the date of this meeting or untilJune 29, 2014;

- Grant all powers to the Board of Directors toimplement the provisions of this authorization and notably to:

- Establish the list of beneficiaries of options orcategories thereof and the amounts to be grantedto each;

- Determine the terms and conditions of the options,and notably (i) the duration of the stock optionplans, (ii) the dates or periods for exercising stockoptions with the possibility to define in advance stockoption exercise dates or periods;

- Determine provisions for imposing possiblerestrictions prohibiting the immediate resale of all or part of the shares which may not exceed three yearsfollowing the exercise date;

- Provide for with respect to corporate officers, either restrictions on exercising options before theend of their term of office or an obligation to hold a specified quantity of shares in registered form untilsuch time as they no longer serve as officers;

- Limit, suspend, restrict or prohibit the exercise of options or the transfer of shares resulting from the exercise of options in the event of financialtransactions involving the exercise of a share rightduring certain periods or upon the occurrence of any

event that may have a material effect on the situationand prospects of the company;

- Decide the dates of record for the new sharesresulting from the exercise of stock options fromwhich they shall be entitled to dividends, includingretroactively;

- Record the increases in capital resulting from the exercise of options, amend the bylaws inconsequence, and as deemed appropriate, charge all costs incurred in connection with capital increasesto the corresponding share premium and appropriatefrom these amounts the funds necessary so that thelegal reserve equals one tenth the new capital aftereach issue, carry out all formalities and regulatoryfilings and in general do all else that is required;

- And in general, conclude all agreements, undertakeall filings and, take all appropriate and usefulmeasures for the transactions in question.

Tenth resolution

Authority granted to the board of directors to freelygrant existing shares or shares of the Company to be issued to employees and directors and officersof the company and/or the group or certaincategories thereof

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders’ meetings, and after reviewing the reportof the Board of Directors and the special report of the Auditors, established in accordance with articlesL.225-197-1 et seq. of the French Commercial Code:

- Authorise the Board of Directors to freely grant, onone or more occasions ordinary shares from existingor future stock to salaried employees (or certaincategories thereof ) of the company and/or directorsand officers (or certain of them) of the company and affiliated companies with the meaning of articleL.225-197-2 of the French Commercial Code, linked to performance criteria;

- Decide that the number of shares that may begranted shall not represent more than 3% of the share capital on the date of the Board of Directors’meeting, taking into account the number of shares to be issued, if necessary, in connection withadjustments made to preserve the rights of the bonusshare beneficiaries;

- Decide that shares granted to beneficiaries will bedefinitive, in accordance with the choice of the Boardof Directors with respect to all or part of the grant, (i) either at the end of a minimal vesting period oftwo years followed by a minimum holding period oftwo years, (ii) or a minimum vesting period of fouryears without a minimum holding period; The Board of Directors may choose between these two optionsthat may also be implemented alternatively orconcurrently and, in the first case, may prolong the vesting period and/or the holding period and in the second case, prolong the vesting period and/orset the duration of a holding period;

- Authorise the Board of Directors, when applicable,


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during the vesting period, to adjust the number of shares associated with capital transactions that maybe undertaken by the company in order to take intoaccount the impact of transactions on the capital and,notably determine the conditions according to whichthe number of ordinary shares granted shall be adjustedin order to maintain the rights of beneficiaries;

- Authorise the Board of Directors, either alternativelyor cumulatively, within the number of shares authorizedabove, to grant shares originating from buybacksundertaken by the company in accordance with theprovisions of articles L.225-208 and L.225-209 of the French Commercial code and/or to grant sharesissued pursuant to capital increases. In this case theBoard of Directors is authorized to increase the sharecapital by the maximum nominal amountcorresponding to the definitive number of sharesultimately granted;

- Duly note that, in respect to bonus shares to beissued, this decision entails the waiver of shareholders’pre-emptive rights to subscribe for shares that will be issued as the shares become fully vested, and anyrights attached to ordinary shares freely granted underthis authorization;

The shareholders grant full powers to the Board of Directors to:

- Establish the list of beneficiaries of share grants or categories thereof;

- Determine the criteria and conditions for sharegrants, such as, though not restricted to, seniority andany other financial condition or criteria of individualor collective performance;

- Provide for with respect to corporate officergrantees, either (i) either restrictions on transferringbonus shares before the end of their term of office or (ii) or an obligation to hold a specified quantity of bonus shares until such time as they no longerserve as officers;

- Set, for the grant of shares to be issued, the amountand nature of reserves, earnings and additional paid-in capital to be capitalized and deduct amountsrequired from reserves to pay up the nominal value of shares to be issued to beneficiaries, and increase the share capital in consequence by the nominalamount of the bonus shares;

- Fulfil or have fulfilled all measures and formalitiesto record completion of the capital increase orincreases to be undertaken under this resolution,amending the bylaws in consequence;

- And finally, conclude all agreements, draw alldocuments, complete all formalities and filings, andin general take all necessary measures, with the optionof further delegating these tasks in accordance withapplicable laws and regulations.

The Board of Directors will inform the shareholdersevery year of grants made under this authorization in compliance with applicable regulations.

This authorization is granted for 38 months from the date of this shareholders’ meeting or until June 29, 2014 and replaces and supersedes the previous

authorization granted by the combined shareholders’meeting of April 25, 2008 and unused to date.

Eleventh resolution

Authorization and grant of authority to the Board of Directors to issue redeemable stock warrants(BSAAR) in favour of employees and directors orofficers, without shareholders pre-emptive rights

The shareholders, in accordance with the conditionsof quorum and majority applicable to extraordinaryshareholders meetings, and after reviewing the reportof the Board of Directors and the special report of theAuditors and in accordance with provisions of articlesL.228-91 et seq., L.225-129 et seq. and L.225-138 ofthe French Commercial Code:

- Vest the Board of Directors with authority, whichthe latter may further delegate in accordance withapplicable laws and regulations, to issue on one ormore occasions redeemable equity warrants (BSAAR);

- Decide that the maximum nominal amount ofcapital increases that may be carried out by virtue ofthis authorization shall be €50 million, excludinghowever, as necessary, capital increases resulting fromshares that may be issued in addition, in the case ofnew corporate actions, so as to preserve the rights ofholders of securities giving access to the share capital;

- Set the duration of the authorization provided for under this resolution for 18 months from the dateof this meeting or until October 29, 2012;

- Decide, in accordance with the provisions of articleL.225-138 of the French Commercial Code to cancel shareholders pre-emptive rights of existingshareholders to the BSAAR equity warrants, reservingthis right to employees and to directors and officers ofthe Company and the Group; The Board of Directorswill establish a list of beneficiaries authorized tosubscribe for BSAAR equity warrants as well as themaximum number of such warrants to which eachbeneficiary shall be entitled to subscribe;

- Duly note that this authorization entails the waiverby existing shareholders in favour of the BSAARequity warrant holders of their pre-emptive rights to shares issued resulting from the exercise of theBSAAR equity warrants;

- Decide that the Board of Directors shall be vestedwith all powers, which the latter may further delegatein accordance with the law, to implement thisresolution and notably to:

- Set all the characteristics of the BSAAR equitywarrants, and notably their subscription price thatshall be determined, after taking into account therecommendations of an independent valuer, based onparameters affecting their value (including notablycharacteristics of the BSAAR equity warrants, andnotably the exercise price, the duration of sellingrestrictions, the exercise period, the trigger price and redemption period, interest rate, dividenddistribution policy, price and volatility of theCompany’s share) as well as the issue procedures and terms and conditions of the issue agreement;


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- Set the price for subscribing for or purchasing sharesby exercising BSAAR equity warrants whereby oneBSAAR equity warrant shall give a right to subscribefor and/or purchase one share of the Company for aprice that shall not be less than 110% of the averageclosing price of the share of the Company for the 20 trading sessions preceding the date on which the terms and conditions of the BSAAR warrants and the procedures for their issuance were set;

- Provide for an option to suspend the exercise ofrights attached to the BSAAR issued in compliancewith applicable laws and regulations;

- At its sole initiative, charge all costs incurred in connection with the capital increase to thecorresponding share premium and appropriatetherefrom the amounts necessary to fund the legalreserve;

- Set and make all adjustments to take into accountthe impact of corporate actions by the Company, andnotably in the event of a modification in the par valueof the share, capital increases through the capitalizationof reserves, bonus share grants, or any other transactioninvolving the company’s shareholders’ equity or capitaland set the procedures destined to preserve, wherenecessary, the rights of BSAAR equity warrant holders,

- Duly record completion of each capital increase andmake the corresponding amendments to the bylaws;

- Modify as deemed necessary (and subject to theBSAAR equity warrant holders’ consent) the BSAARequity warrant issuance agreement, and proceed witha new independent valuation of the consequencesresulting from this modification and notably theamount of the benefit resulting for the holders;

- And generally, enter into all agreements, in particularto ensure completion of the proposed issues andaccomplish all formalities required for the issuance,listing and servicing BSAAR warrants issued by virtueof this resolution and for the exercise of the rightsattached thereto;

- Duly note that, if the Board of Directors uses the authorization granted under this resolution, it will report to the next ordinary general meeting, as required by laws and regulations, on the uses made of authorizations granted herein.

Twelfth resolution

Authority granted to the Board of Directors to proceed with capital increases reserved foremployees participating in a company savings plan in accordance with article L.225-129-6 of the French Commercial Code and entailing thesuspension of shareholders’ pre-emptive rights in favour of employees

The shareholders by virtue of the precedingresolutions, in accordance with the conditions ofquorum and majority applicable to extraordinaryshareholders’ meetings and after reviewing the Boardof Directors’ report and the Auditors’ report inaccordance with articles L.225-129-6 and L.225-138-1

of the French Commercial Code and articles L.3332-18 et seq. of the French Labour Code:

- Grant authority to the Board of Directors, whichthe latter may further delegate as permitted by law, at its sole discretion, to increase the capital, in one or more transactions in amounts and at times of itschoosing through the issue of common stock reservedfor employees of the company or affiliated companiesin accordance with applicable laws belonging to acompany savings plan;

- Waive in favour of employees entitled to benefitfrom rights issues that may be decided by virtue of this authorization, the pre-emptive rights ofshareholders to new shares that shall be issued in consequence;

- Resolve that the maximum nominal amount ofcapital increase(s) that may be carried out by virtue of this resolution shall be €500,000, whereby thisamount may however be increased as necessary by theamount of additional securities that must be issued to preserve, as required by law the rights of holders ofsecurities, giving access to the shares of the company;

- Grant full authority to the Board of Directorswithin the above limits and conditions for thepurpose of implementing the authority herebygranted, including notably to:

- Determine the list of grantees benefiting from the suspension of pre-emptive subscription rights, the number of shares to be granted to each qualifyingemployee and the issue price subject to the limitsimposed by articles L.225-138-1 of the Frenchcommercial code and articles L.3332-19 et seq.of the French labour code;

- Determine the dates and procedures for the capitalincrease(s);

- Receive applications for shares and determine the procedures for their payment;

- Produce a supplemental report describing the finalterms of the offering, and in general, take all measuresand undertake all formalities required for the issue,the listing of the securities and custodial and relatedservices for securities covered by this authorization,and amend the articles of the bylaws in consequence;

- Grant the authorization provided for under thisresolution for 26 months from the date of this meeting.

Thirteenth resolution

Authority granted to the Board of Directors to reduce the capital through the cancellation of treasury shares

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders meetings, and after reviewing the reportof the Board of Directors and the special report of theAuditors and the sixteenth resolution of the ordinarygeneral meeting of this day authorising the companyto purchase its own shares:

- Authorise the Board of Directors to cancel, at its


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own discretion, through one or more transactions, at amounts and times of its choosing, treasury sharesacquired within the framework of article L.225-209of the French Commercial Code, not to exceed 5% ofthe common stock outstanding by 24 month period,reducing the authorized capital in due proportion;

- This authorization is for eighteen months from this meeting or until October 29, 2012, and replacesthe previous authorization by the shareholders’meeting of April 23, 2010 up to the amount not used;

- Grant full authority to the Board of Directors, withthe possibility of further delegating to any person soauthorized by law, through one or more transactions,to reduce the capital, to notably determine the finalamount of the capital reduction and the terms andprocedures and record the completion of the capitalreduction, amending in consequence the bylaws,performing all necessary formalities, and notablyfilings with all bodies and in general doing everythingnecessary.

Fourteenth resolution

Modification Article 20 of the bylaws relating to ownership disclosure thresholds

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders meetings, after having reviewed theBoard of Directors’ report, decide to modify Article20 of the bylaws for the purpose of harmonising itsprovisions with applicable laws and regulations.

In consequence, Article 20 shall be replaced in full by the following text:

“In accordance with the provisions of L.233-7 of theFrench Commercial Code (Code de Commerce), allshareholders, natural persons or legal entities, actingalone or in concert, who cross thresholds in eitherdirection in respect to the number of shares ownedrepresenting more than one twentieth, one tenth, threetwentieths, one fifth, one quarter, one third, one half,two thirds, eighteen twentieths or nineteen twentieths ofthe capital or voting rights of the Company they hold,must inform the Company by registered mail withreturn receipt of the number of shares and voting rightsthey hold within four trading days thereafter before theclose of trading. This notification must also be sent to theFrench financial market authority, the AMF, no laterthan five trading days after a threshold has been crossed.

The disclosure requirement referred to in the precedingparagraph is also mandatory within the same time limitswhenever the percentage of capital or voting rights heldfalls below one of the thresholds mentioned above.

Parties subject to the disclosure obligations set forth inthe first paragraph of this article shall indicate thenumber of shares they possess giving immediate or futureaccess to the capital of the Company as well as the voting rights attached thereto.

This notification also shall indicate the number of sharesalready issued or the voting rights that may be acquiredunder an agreement or financial instrument, withoutprejudice to financial instruments able to be settled at the sole initiative of the holder of securities already issued.

In addition, shares already issued or voting rightsinvolving any agreement or financial instrumentmentioned exclusively cash-settled and with a similareconomic effect to the holding of such shares shall also be reported.

Under article L.233-7 subsection VII of the FrenchCommercial Code, said shareholders must also disclosetheir intentions with regard to their holdings for the nextsix months whenever thresholds of more than one tenth,three twentieths, one fifth or one quarter of the capitalor voting rights have been crossed. This notification mustbe sent to the AMF no later than the fifth trading daybefore the close of trading following the day thisthreshold was crossed.

In the event of a change in intent within six monthsafter filing this notification, a new notification settingforth the justifications shall be drawn up and submittedunder the same conditions. This new notification resultsin the commencement of a new six-month period.”

Fifteenth resolution

Modification of the company name andcorresponding amendment of article 3 of the bylaws

The shareholders, in accordance with the conditionsof quorum and majority that apply at extraordinaryshareholders meetings, after having reviewed theBoard of Directors’ report, decide to modify thecorporate name of the company by eliminating thespace between the words “Inter” and “Parfums” thatshall henceforth be spelled as follows: “Interparfums”.

Pursuant to this resolution, the general meeting of theshareholders decides to modify article 3 of the bylawsas follows:

Article 3 - Company name

The name of the Company is: “Interparfums”

Sixteenth resolution

Powers

All powers are granted to the bearer of copies orextracts of the minutes of this shareholders’ meetingruling in accordance with the conditions of quorumand majority that apply at extraordinary generalmeetings to perform all legal formalities relating tothe above resolutions.


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CHAPTER FIVE

Historyof thecompany

138 Two thousand ten registration document Interparfums. History of the company

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1982

Creation of Inter Parfums SA in France by Philippe Benacin and Jean Madar.

1985

Creation of Interparfums Inc. in the United States, parent company of Inter Parfums SA.

1988

Beginning of the selective perfume activity with the signature of a license agreement for the Régine’s brand.

Initial public offering of Interparfums Inc. on NASDAQ in New York.

1993

Signature of a license agreement to create and produce perfumes under the Burberry name and distribute them worldwide.

1994

Listing of Inter Parfums SA on the over-the-counter market of the Paris stock exchange.

Acquisition of the Molyneux and Weil brands.

1995

Transfer of the company from the over-the-counter market to the Second Market of Paris stock exchange with a rights issue.

1997

Signature of a license agreement to create and produce perfumes under the S.T. Dupont name and distribute them worldwide.

1998

Signature of a license agreement to create and produce perfumes under the Paul Smith and distribute them worldwide.

1999

Signature of a license agreement to create and produce perfumes under the Christian Lacroix and distribute them worldwide.

2000

Extension of the license agreement for the Burberry brand.

2004

Signature of a new Burberry license agreement for the Burberry brand.

2006

Extension of the S.T. Dupont license agreement.

Signature of a license agreement for the Quiksilver and Roxy brands.

2007

Signature of a license agreement to create and produce perfumes under the Van Cleef & Arpels brand and distribute them worldwide.

2008

Extension of the Paul Smith license agreement.

2009

Signature of a license agreement to create and produce perfumes under the Jimmy Choo brand and distribute them worldwide.

2010

Signature of a license agreement to create and produce perfumes under the Montblanc brand and distribute them worldwide.

Extension of the license agreement for the Burberry brand.

Signature of a worldwide license agreement to create and manage new and existing fragrances under the Boucheron brand.

139Two thousand ten registration document Interparfums. History of the company

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CHAPTER SIX

Auditors andresponsibilitystatementsAuditors 141

Responsibility statement for the registration document 141

140 Two thousand ten registration document Interparfums. Auditors and responsibility statements

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AuditorsThe statutory auditors having issued reports on the parent company and consolidated financial statements are:

Mazars SFECO & Fiducia Audit

61 rue Henri Renault 50 rue de Pipes92400 Courbevoie 75012 Parisrepresented by Simon Beillevaire represented by Gilbert Methodicappointed by the AGM of December 1, 2004 appointed by the AGM of May 19, 1995reappointed by the AGM of April 20, 2007 reappointed by the AGM of April 20, 2007expiration date: 2013 AGM expiration date: 2013 AGM

The alternate auditors are respectively:

Mr. Guillaume Patel Mr. Serge Azan

61 rue Henri Renault 16 rue Daubigny92400 Courbevoie 75017 Parisappointed by the AGM of December 1, 2004 appointed by the AGM of May 19, 1995reappointed by the AGM of April 20, 2007 reappointed by the AGM of April 20, 2007expiration date: 2013 AGM expiration date: 2013 AGM

Auditors’ fees are described in section 6.7 of the notes to the consolidated financial statements.

Responsibility statement for the registration documentI hereby certify that, to my knowledge and after all due diligence, the information contained in this registrationdocument is true and accurate and contains no omissions likely to affect the import thereof.

I declare that, to the best of my knowledge, the financial statements have been prepared in accordance with the applicable financial reporting standards and give a true and fair view of the assets and liabilities, financialposition and results of the operations of the Company and consolidated companies and that the managementreport included this registration document faithfully presents business trends, the results and financial positionof the company and the description of the main risks and uncertainties.

The statutory auditors’ report on the original French language version of the consolidated and separate financialstatements for the fiscal year ended 2010 for which they issued unqualified opinions without reservations arepresented in the French version of the registration document filed with the AMF on page 47 and page 67.

I have obtained a completion of work letter from the statutory auditors in which they indicate that they haveverified the information concerning the financial situation and accounts presented in this registration documentand read the entire registration document.

The statutory auditors have also issued reports on the historical financial information for 2009 and 2008,included on respectively pages 43 and 62 of the French language original of the registration document(Document de référence) filed with the AMF on April 1, 2010 and pages 85 and 104 of the 2009 registrationdocument filed with the AMF on April 1, 2009, without qualified opinions or comments.

Philippe BenacinChairman and Chief Executive Officer

Executive officer responsible for financial information

Philippe SantiChief Financial and Administrative [email protected] (33)1 53 77 00 00

141Two thousand ten registration document Interparfums. Auditors and responsibility statements

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Two thousand ten registration document Interparfums.142

NOTES

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143Two thousand ten registration document Interparfums

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To receive information or be added to the company’s financial communications mailing list contact the Investor Relations department (attention: Karine Marty):

Telephone: +33 800 47 47 47Fax: +33 1 40 74 08 42Via the website: www.interparfums.fr

This annual report is printed on 100% recyclable and biodegradable coated paper, manufactured from ECF (Elemental Chlorine Free) bleached pulp in a European factory certified ISO 9001 (for its quality management), ISO 14001 (for its environmental management), CoC PEFC (for the use of paper from sustainably managed forests) and is EMAS-accredited (for its environmental performance).

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