UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported):

December 31, 2012

 

Inter Parfums, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware		0-16469		13-3275609
(State or other jurisdiction of incorporation or organization)		Commission File Number		(I.R.S. EmployerIdentification No.)

 

551 Fifth Avenue, New York, New York 10176

(Address of Principal Executive Offices)

 

212. 983.2640

(Registrant's Telephone number, including area code)

 

________________________________________________________________________________

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2 below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting Material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.01 Completion of Acquisition or Disposition of Assets

 

In December 2011, Inter Parfums, Inc. ( the “Company”) and Burberry began discussions regarding the potential establishment of a new operating structure for the Burberry fragrance and beauty business. On July 16, 2012, while discussions were still underway, Burberry exercised its option to buy out the license rights effective December 31, 2012. The exit payment of €181 million (approximately $237 million at current exchange rates) was made by Burberry to the Company on December 21, 2012.

 

Item 7.01 Regulation FD Disclosure

 

As previously disclosed, on October 11, 2012 the Company and Burberry entered into a transition agreement in order to facilitate a smooth transition. The transition agreement provides for an extension of certain license rights and obligations for an additional three month period ending on March 31, 2013. The Company will continue to operate certain aspects of the business for the brand including product development, testing, and distribution.

 

Item 9.01 Financial Statements and Exhibits

 

(b) Pro-forma Financial Statements

 

The following unaudited Pro Forma Consolidated Financial Statements of the Company for the year ended December 31, 2011 and as of and for the nine months ended September 30, 2012 are attached hereto:

 

Description	Page Number
Pro Forma Consolidated Balance Sheet as of September 30, 2012	F-1
Pro Forma Consolidated Statement of Income for the Nine Months Ended September 30, 2012	F-2
Pro Forma Consolidated Statement of Income for the Year Ended December 31, 2011	F-3

 

 

Forward Looking Statements

 

Statements in this report which are not historical in nature are forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. In some cases you can identify forward-looking statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. You should not rely on forward-looking statements because actual events or results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to, the risks and uncertainties discussed under the headings “Forward Looking Statements” and "Risk Factors" in Inter Parfums' annual report on Form 10-K for the fiscal year ended December 31, 2011 and the reports Inter Parfums files from time to time with the Securities and Exchange Commission. We do not intend to and undertake no duty to update the information contained in this press release.

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused and authorized this report to be signed on its behalf by the undersigned.

 

Dated: January 4, 2013	Inter Parfums, Inc.
	By:	/s/ Russell Greenberg
		Russell Greenberg,
		Executive Vice President and Chief Financial Officer

 

 

INTER PARFUMS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED BALANCE SHEET

September 30, 2012

(In thousands except share and per share data)

(Unaudited)

  

ASSETS

 

		As				Pro Forma
		Reported				Adjustments				Pro Forma
Current assets:
Cash and cash equivalents		$	25,851			$	253,557	(a)		$	279,408
Accounts receivable, net			167,207								167,207
Inventories			161,058				(19,395	)(b)			141,663
Receivables, other			1,726								1,726
Other current assets			6,376								6,376
Income tax receivable			677								677
Deferred tax assets			9,641								9,641
Total current assets			372,536				234,162				606,698
Equipment and leasehold improvements, net			15,911				(7,033	)(c)			8,878
Goodwill			2,761								2,761
Trademarks licenses and other intangible assets, net			103,162				(7,645	)(d)			95,517
Other assets			2,176								2,176
Total Assets		$	496,546			$	219,484			$	716,030
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable - banks		$	1,385							$	1,385
Accounts payable - trade			69,644								69,644
Accrued expenses			49,860				13,518	(e)			63,378
Income taxes payable			8,670				77,114	(f)			85,784
Dividends payable			2,446								2,446
Total current liabilities			132,005				90,632				222,637
Deferred tax liability			5,605				(2,760	)(g)			2,845
Equity:
Inter Parfums, Inc. shareholders' equity:
Common stock, $.001 par; authorized
100,000,000 shares; outstanding 30,576,426
at September 30, 2012			31								31
Additional paid-in capital			52,408								52,408
Retained earnings			252,471				96,418	(h)			348,889
Accumulated other comprehensive income			7,854								7,854
Treasury stock, at cost, 10,009,492
shares at September 30, 2012 and			(34,151	)							(34,151	)
Total Inter Parfums, Inc. shareholders' equity			278,613				96,418				375,031
Noncontrolling interest			80,323				35,194	(h)			115,517
Total Equity			358,936				131,612				490,548
Total Liabilities and equity		$	496,546			$	219,484			$	716,030

 

 

INTER PARFUMS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF INCOME

Nine Months Ended September 30, 2012

(In thousands except per share data)

(Unaudited)

 

		As				Pro Forma
		Reported				Adjustments				Pro Forma
Net sales		$	477,187			$	(213,233	)(a)		$	263,954
Cost of sales			181,535				(66,200	)(a)			115,335
Gross margin			295,652				(147,033	)			148,619
Selling, general and administrative			229,190				(108,791	)(a)			120,399
Income from operations			66,462				(38,242	)			28,220
Other expenses (income):
Interest			1,195				(584	)(a)			611
(Gain) loss on foreign currency			2,584				(1,160	)(a)			1,424
Interest income			(887	)			251	(a)			(636	)
			2,892				(1,493	)			1,399
Income before income taxes			63,570				(36,749	)			26,821
Income taxes			22,658				(12,890	)(b)			9,768
Net income			40,912				(23,859	)			17,053
Less: Net income attributable to the
noncontrolling interest			9,389				(6,323	)(c)			3,066
Net income attributable to Inter Parfums, Inc.		$	31,523			$	(17,536	)		$	13,987
Earnings per share:
Net income attributable to Inter Parfums, Inc.
common shareholders’:
Basic		$	1.03			$	(0.57	)		$	0.46
Diluted		$	1.03			$	(0.57	)		$	0.46

 

 

INTER PARFUMS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF INCOME

Year Ended December 31, 2011

(In thousands except per share data)

(Unaudited)

 

		As				Pro Forma
		Reported				Adjustments				Pro Forma
Net sales		$	615,220			$	(307,681	)(a)		$	307,539
Cost of sales			228,446				(90,651	)(a)			137,795
Gross margin			386,774				(217,030	)			169,744
Selling, general and administrative			318,998				(175,286	)(a)			143,712
Impairment of goodwill			837								837
Income from operations			66,939				(41,744	)			25,195
Other expenses (income):
Interest			2,197				(838	)(a)			1,359
(Gain) loss on foreign currency			(1,546	)			666	(a)			(880	)
Interest income			(1,105	)			586	(a)			(519	)
			(454	)			414				(40	)
Income before income taxes			67,393				(42,158	)			25,235
Income taxes			24,444				(15,219	)(b)			9,225
Net income			42,949				(26,939	)			16,010
Less: Net income attributable to the
noncontrolling interest			10,646				(7,065	)(c)			3,581
Net income attributable to Inter Parfums, Inc.		$	32,303			$	(19,874	)		$	12,429
Earnings per share:
Net income attributable to Inter Parfums, Inc.
common shareholders’:
Basic		$	1.06			$	(0.65	)		$	0.41
Diluted		$	1.05			$	(0.65	)		$	0.40

 

  

INTER PARFUMS, INC. AND SUBSIDIARIES

 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

1. Basis of Presentation

 

In December 2011, the Company and Burberry began discussions regarding the potential establishment of a new operating structure for the Burberry fragrance and beauty business. On July 16, 2012, while discussions were still underway, Burberry exercised its option to buy out the license rights effective December 31, 2012. On July 26, 2012, discussions with Burberry on the creation of a new operating model were discontinued as we were unable to agree on final terms. On October 11, 2012 the Company and Burberry entered into a transition agreement in order to facilitate a smooth transition. The transition agreement provides for an extension of certain license rights and obligations for an additional three months period ending on March 31, 2013. The Company will continue to operate certain aspects of the business for the brand including product development, testing, and distribution. The transition agreement also provides for non-exclusivity for manufacturing, a cap on sales of Burberry products, a reduced advertising requirement and no minimum royalty amounts.

 

The exit payment of €181 million (approximately $237 million at current exchange rates) was made by Burberry to the Company on December 21, 2012. The Company has determined that the buy out of the license was consummated as of December 31, 2012 and therefore the effect of the transition agreement will be recorded at that date. The resulting gain has not been included in the consolidated statements of income since it is nonrecurring.

 

The unaudited pro forma consolidated financial statements have been prepared by management of the Company based upon the historical financial statements of the Company and include pro forma adjustments to account for Burberry’s buy out of its license. Pro forma consolidated balance sheet adjustments are translated to U.S. dollars at the rate of exchange on September 30, 2012, and pro forma consolidated income statement adjustments are translated at average rates of exchange prevailing during the respective periods.

 

The historical financial information of the Company has been derived from the historical consolidated financial statements of the Company included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. The unaudited pro forma balance sheet was prepared as if the buy out occurred as of September 30, 2012. The unaudited pro forma consolidated statements of income for the year ended December 31, 2011 and the nine months ended September 30, 2012, were prepared as if the buy out occurred as of the 1st day of each presented period. The pro forma adjustments are based on factually supportable available information.

 

The unaudited pro forma statements presented have been provided for illustrative purposes only and do not purport to represent what the financial position or results of operations of the Company would have been had the buy out of the license rights occurred on the dates noted above, or to project the results of operations or financial position of the Company for any future periods. In the opinion of management, all necessary adjustments to the unaudited pro forma financial information have been made.

 

 

2. Adjustments to the Unaudited Pro Forma Consolidated Balance Sheet

 

(a)

To record the cash received from Burberry representing the exit payment of $234 million as well as the estimated net cash proceeds of $19.5 million resulting from the execution of the transition agreement (i.e. $22.1 million for the sale of inventories and other tangible assets less $2.6 million in other negotiated settlements). No adjustments have been made for accounts receivable aggregating approximately $89 million and accounts payable and accrued expenses aggregating approximately $55 million all relating to the Burberry brand as of September 30, 2012, as they are expected to be collected and paid for in the ordinary course of business. In addition, no adjustment has been made for additional inventories aggregating approximately $72 million related to the Burberry brand as of September 30, 2012, as the inventories are expected to be sold in the ordinary course of business.

  

(b)

To eliminate the net book value of inventories expected to be sold to Burberry, assuming the transaction occurred on September 30, 2012.

 

(c)

To eliminate the net book value of equipment expected to be sold to Burberry or written-off, assuming the transaction occurred on September 30, 2012.

 

(d)

To eliminate the net book value of the licenses, assuming the transaction occurred on September 30, 2012.

 

(e)

To record liability for employee profit sharing resulting from gain on buy out as required pursuant to the laws of France.

 

(f)

To record the tax liability as a result or the effect of (a), (c) and (e) above.

 

(g)

To eliminate the tax liability as a result of effect of (d) above.

 

(h)

To record the estimated pro forma gain on the transaction including the portion of the gain allocable to the noncontrolling interest. The actual gain on the transaction is subject to adjustments.

 

3. Adjustments to the Unaudited Pro Forma Consolidated Statements of Income

 

(a)

To eliminate the revenues and expenses which are directly related to Burberry brand activities.

 

(b)

To adjust provision for income taxes applying intra-period allocation rules for income taxes.

 

(c)

To allocate the net income effect of pro forma adjustments which are attributable to the noncontrolling interest.