Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT ON FORM 10-K
(Mark one)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995 or
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ___________ to ___________.
Commission File No. 0-16469
JEAN PHILIPPE FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3275609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
551 Fifth Avenue, New York, New York 10176
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 983-2640.
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.001 par value per share.
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes /X/ No / /
Indicate by checkmark if disclosure of delinquent filers pursuant to
Item 405 of Regulation SK is not contained herein and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10K or any other
amendment to this Form 10K. / /
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant (based on the closing price on March 25, 1996 of
$7.375): $35,916,611.
Indicate the number of shares outstanding of the registrant's $.001 par
value common stock as of the close of business on the latest practicable date
(March 25, 1996): 10,009,981.
Documents Incorporated By Reference: None.
PART I
Item 1. Business
Introduction
Jean Philippe Fragrances, Inc. was organized under the laws of the
State of Delaware in May 1985, maintains it executive offices at 551 Fifth
Avenue, New York, New York 10176 and its telephone number is 212-983-2640.
Unless the context otherwise indicates, the term "Jean Philippe" refers to the
parent company, Jean Philippe Fragrances, Inc., and the term the "Company"
refers to Jean Philippe Fragrances, Inc. and its consolidated majority-owned
direct and indirect subsidiaries, Inter Parfums Holdings, S.A. ("IP Holdings"),
Inter Parfums, S.A. ("Inter Parfums"), Inter Parfums Trademarks, S.A. (formerly
Jean Desprez, S.A.) and Inter Parfums Cosmetiques (formerly Jean Desprez,
S.A.); and the Company's wholly-owned subsidiaries, Elite Parfums, Ltd.
("Elite") and Jean Philippe Fragrances do Brasil, Ltda. ("Jean Philippe
Brasil"), a limited liability company.
The Company is a manufacturer and distributor of fragrances and
cosmetics in the following niche markets: domestic and international brand name
and licensed fragrances, alternative designer fragrances and mass market
cosmetics.
The Company is the owner of the Intimate(Registered), Parfums
Molyneux(Registered) and Parfums Weil(Registered) fragrance lines, and
Aziza(Registered), a hypo-allergenic line of eye cosmetics; is the exclusive
licensee in the United States and Puerto Rico for Cutex(Registered) nail care
(excluding nail polish remover) and lip products; and is world-wide licensee,
manufacturer and distributor of the Burberrys(Registered), Ombre
Rose(Registered) and Regine's(Registered) fragrance lines, the
Jordache(Registered) line of fragrances and cosmetics and Chaz(Registered)
fragrances for men.
Inter Parfums markets its own line of moderately priced fragrances and
certain licensed or brand name fragrances in approximately sixty (60) countries
worldwide.
The Company has in the past acquired, and may in the future seek to
acquire, one (1) or more companies or divisions of companies in the fragrance or
related business, or fragrance product lines or related products. Any and all
discussions had by management to date have been at the inquiry, pre-negotiation
level only, and no assurances can be given that: (i) management will pursue any
transaction should a company, business, division, or product line become
available; (ii) or if pursued, that any transaction will be consummated; or
(iii) if consummated, that such transaction will increase the Company's
earnings.
Products and Selection
-Alternative Designer Fragrances
The Company produces and markets several lines of fragrances which it
sells at a substantial discount from the high image, high retail cost brand name
counterparts. Prior to producing and marketing a new alternative designer
product, management of the Company looks for the existence of certain factors
with respect to a particular designer fragrance: (i) high retail cost, (ii)
substantial expenditure of advertising dollars and (iii) selective distribution.
Management is of the opinion that the presence of all three (3) factors gives a
reasonable degree of market presence for such designer fragrance. Management
then seeks to create a similar scent which, together with creative packaging and
steeply discounted prices, will create what the Company intends will be an
appealing fragrance to be sold to mass market merchandisers and drug store
chains at substantial discounts from the higher cost brand name fragrance.
The Company's alternative designer fragrances are similar in scent to
highly advertised designer fragrances that have been established in the retail
market at a high retail price. These products are produced in the United States,
and are intended to have an upscale image without a high retail price. The
Company's alternative designer fragrances, which typically sell for under $5.00
at the retail level, are substantially discounted from the high cost of designer
fragrances, which range from $30.00 to $200.00.
Some of the alternative designer fragrances currently produced and
marketed by the Company include: Fleur de Paris(Trademark),
Radiance(Trademark), Elite 2(Trademark), Flight(Trademark), Dakota(Trademark),
Memphis(Registered), Snow Silk(Registered), Duo(Trademark),
Sexation(Trademark) and Gold by Jean Philippe(Registered).
Additionally, the Company markets complementary alternative designer
fragrance products such as deodorant sticks, roll on deodorants and body sprays.
New products are intended to be developed in accordance with market feasibility
and demand. Management of the Company believes that demand for new alternative
designer fragrances may be created when participants in the designer fragrance
industry launch promotional campaigns for new products.
-Brand Name and Licensed Fragrances
The Parfums Weil and Parfums Molyneux world-wide family of trademarks
were acquired in February 1994 by Inter Parfums, and cover a variety of
moderately priced fragrance lines for distribution to perfumeries, and the
fragrance lines are distributed in over thirty (30) countries world-wide.
Parfums Molyneux, formed in 1927, has established a classic line of fragrances
including Captain and Quartz, with representation in all major markets
world-wide. Parfums Weil has enjoyed a similar history dating back to the early
1900's with its first production of a range of original perfumes presented in
exquisite Baccarat bottles. Through the years the fragrance lines were
modernized and expanded, and today include the trademarks Bambou, Antilope and
Kipling, among others. Quartz by Molyneux has achieved wide acceptance in
Central and South America. As a result, Inter Parfums will introduce a new
fragrance, Quartz for men, in 1996. During 1995, Inter Parfums launched Fluer de
Weil, a new fragrance developed by Inter Parfums following the trend of light
floral notes associated with the Weil brand. Initial results for this new
fragrance have been promising.
In March 1994 the Company acquired from Revlon Consumer Products
Corporation ("Revlon") the world-wide trademarks for the Intimate fragrance
line, and entered into a 99 year royalty free license agreement with Revlon for
the use of the trademark Chaz in connection with men's fragrances, deodorants
and body sprays.
The Intimate and Chaz brands cover a variety of moderately priced
fragrances for mass market distribution, and are currently distributed in a
number of countries throughout the world. The Intimate product line has been
available for over forty (40) years and has gained a reputation for quality and
value with women over forty (40) years of age.
In July 1993 Inter Parfums acquired the exclusive world-wide license for
Burberrys fragrances in accordance with the terms of a License Agreement entered
into among Burberrys Limited as licensor, Inter Parfums as licensee and Jean
Philippe as the guarantor of Inter Parfums obligations thereunder (the
"Burberrys License Agreement"). The Burberrys License Agreement expires on
December 31, 2003, subject to certain minimum sales requirements and royalty
payments. In 1995 Inter Parfums completely redesigned all products under the
Burberry's brand name, which achieved successful distribution in more than
twenty (20) countries around the world.
In July 1993 Inter Parfums acquired the exclusive world-wide license for
Ombre Rose fragrances as well as other fragrances to be developed by Inter
Parfums in accordance with the terms of a License Agreement entered into between
Jean-Charles Brosseau S.A. as licensor and Inter Parfums as licensee (the
"Brosseau License Agreement"). The Brosseau License Agreement is for a term of
ten (10) years, subject to certain minimum sales requirements and royalty
payments. The Ombre Rose line, with its classically designed bottle, continues
to enjoy wide acceptance in the Far East and the United States.
In addition, Inter Parfums acquired all of the then existing world-wide
distribution rights for Ombre Rose fragrances, which had previously been granted
to two (2) affiliated companies based in Miami, Florida, subject to continuing
in effect certain sub-distribution agreements outside of the United States in
accordance with their respective terms. As part of such transaction, Inter
Parfums granted exclusive distribution rights in the United States, Canada and
Puerto Rico to Fragrance Marketing Group, Inc., an affiliate of the former
distributors of Ombre Rose, for the same term of the Brosseau License Agreement,
subject to certain minimum purchase requirements. Jean Philippe has guaranteed
the obligations of Inter Parfums under such agreements.
In January 1990 the Company obtained the exclusive right to use the
trademark Jordache(Registered) from Jordache Enterprises, Inc. ("Jordache") in
connection with the manufacturing, marketing and distribution of fragrances
and cosmetics in the United States. The Company also received the license to
manufacture, market and distribute fragrances and cosmetics in various
territories abroad, which territories are to become exclusive in nature upon
the commencement of substantial bona fide sales in each such territory. The
initial term of the license was for five and a half (5-1/2) years and ended on
June 30, 1995. In addition the license agreement provides the Company with the
right to renew the license for ten (10) annual renewal terms, subject to
certain minimum sales and royalty payment requirements. In the first quarter
of both fiscal 1995 and 1996, the Company elected to renew the Jordache
license for the next annual period. Since obtaining the right to use the
Jordache trademark, the Company has created and produced, and presently
markets, a Jordache(Registered) product line, which consists of a collection
of moderately priced fragrances and cosmetics (lipstick and nail polish)
geared to the youth market.
In February 1989 the Company became the exclusive world wide distributor
for a new fragrance called Regine's, which is sold internationally in
approximately sixty (60) countries. The Regine's fragrance was developed by
Inter Parfums, the first original fragrance to be created and marketed by the
Company. Inter Parfums markets Regine's, Zoa(Trademark) and Jimmy'z (the
Regine's men's fragrance) outside the United States and Canada.
In March 1996, the Company, through its indirect, majority-held
subsidiary, Parfums Jean Desprez, S.A. and its wholly-owned subsidiary, Jean
Desprez, S.A., sold to Parlux Fragrances, Inc. all of the trademarks and related
intellectual property rights, equipment, ancillary assets and inventory of the
Bal`a Versailles and Revolution `a Versailles lines, among others. In addition,
Parfums Jean Desprez and Jean Desprez on behalf of themselves and their parent
and affiliated corporations, agreed not to create alternative designer
fragrances with similar packaging to the Bal`a Versailles and Revolution `a
Versailles, lines. The aggregate consideration paid by the purchaser was $4.95
million (which included $1.8 million of inventory at cost), payable $1.575
million in cash at closing and $3.375 million in installments over a nine (9)
month period without interest. Inter Parfums, the parent of Parfums Jean
Desprez, paid approximately $3.1 million in excess of the tangible assets of the
companies acquired, for the outstanding capital stock of Parfums Jean Desprez in
July 1994.
-International Fragrances
Inter Parfums creates, produces and markets its proprietary line of
fragrances designed to appear expensive, with attractive bottling and packaging,
but sold in the middle market. Typical proprietary fragrances sold by Inter
Parfums retail between U.S.$10.00 to $15.00.
Mass Market Cosmetics
On August 1, 1994 Jean Philippe entered into a license agreement with
Chesebrough-Pond's, Inc. for the exclusive rights to manufacture and market
Cutex(Registered) nail care (excluding nail polish remover) and lip color
products in the United States and Puerto Rico (the "Cutex License"). The Cutex
License provides for an initial term of seven (7) years together with three
(3) annual renewal periods, and either party may cancel the agreement if
certain minimum annual sales levels are not achieved. The Cutex License also
provides for the payment of royalties based upon net sales and minimum annual
royalty payments.
The Cutex License contemplates certain minimum sales levels over the
life of the agreement, which would constitute a material increase over the
Company's recent level of net sales. However, sales of Cutex products have been
substantially below that set forth in the Cutex License, and product returns
have been substantially higher than anticipated. As a result of disappointing
sales in the Cutex lip color line, the Company decided to discontinue production
of the line in October 1995. As a result, the Company has taken a nonrecurring
charge aggregating $2.2 million, before taxes, in the fourth quarter of 1995.
(See Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operation"). This charge represents a writedown of current lip
product inventory and the effect of potential customer returns or markdowns
which may be required on lip products in 1996. The discontinued lip color line
did not contribute to net sales in 1995 as customer returns exceeded new product
shipments.
Further, the Company and the licensor of Cutex have agreed to a
reduction in the minimum annual royalties payable under the Cutex License. The
Company believes that such relief along with the discontinuance of the lip color
line will enable the Company to direct all Cutex marketing efforts and resources
to building upon the core nail care business for which Cutex is famous.
In February 1996 the Company relaunched the Aziza(Registered) brand
hypo-allergenic line of eye cosmetics through mass market distribution. The new
Aziza line was completely modernized and includes thirty-six (36) of the
historically most popular and best selling mascaras, eyeliners and eyeshadows.
The Company acquired the world-wide rights to the brand name Aziza in June 1994
from Chesebrough-Pond's USA, Unilever N.V. and various affiliates of Unilever
N.V. for nominal consideration.
Also in the mass market cosmetics category, the Company has created,
produced and markets a Jordache(Registered) line of cosmetics (lipstick and
nail polish), which is geared to the youth segment of such market.
The Company's Cutex nail care, Jordache cosmetic and Aziza lines are
presently distributed in approximately 20,000 mass market outlets.
Production and Supply
A substantial portion of the Company's products are produced by the
Company either in the United States or France. Although the Company does not own
a factory or production plant, it acts as a general contractor, and supervises
each stage of production from the creation of the fragrance, design and creation
of the bottle, dispenser or container, filling of same, packing and shipping,
all as performed by various subcontractors. Management believes that its
relationships with such subcontractors are good, and that there are sufficient
alternatives should one or more subcontractors become unavailable.
Inventory
The Company purchases its raw materials and component parts from
suppliers based upon internal estimates of anticipated need for finished goods,
which enables the Company to meet its production requirements for finished
goods. The Company generally delivers customer orders within seventy-two (72)
hours of their receipt.
Sales and Marketing
The broad array of Company product lines permits the Company to market
fragrances and cosmetics to all levels of distribution -- the alternative
designer fragrances, Cutex and Jordache cosmetics at mass market, the Inter
Parfums proprietary line at the moderately priced level and the Company's brand
name and licensed designer fragrances at the high end.
The Company markets its alternative designer fragrances and personal
care products and its Cutex and Jordache product lines through in-house sales
executives to mass merchandisers, major drugstore chains, supermarket chains,
"specialty store chains" (multiple outlets of accessories, jewelry and
clothing), and wholesalers. The Company's alternative designer products are
presently being sold in approximately 18,000 retail outlets, and the Cutex,
Aziza and Jordache product lines are presently being sold in approximately
20,000 retail outlets.
In addition, the Company has established an electronic ordering system,
or Electronic Data Interface ("EDI"), which permits the Company to receive
orders for products via computer modem, as opposed to hard copy purchase orders,
from certain major retailers. Management believes that EDI facilitates the
receipt and processing of customer orders.
Mass market merchandisers and major drug chains are the most
established markets for all of Jean Philippe's product lines, and are the
traditional points of distribution for them. The ultimate market for this
business segment is the general public. Some of the mass market merchandisers,
major drug store chains and supermarket chains which are presently carrying the
Company's products include: Walmart, KMart, Walgreen's, Revco, Rite Aid, Winn
Dixie, CVS, Publix, and Thrifty Drugs.
Another market for the Company's products consists of distributors and
wholesalers, which service independent stores. Often, the trends in this
business segment mirror those of major drug store chains and mass market
retailers. The Company uses the same marketing strategy of providing quality
products coupled with flexible programs (i.e., discounts, extended payment
terms) in order to compete with other alternative fragrance companies.
During fiscal years ended December 31, 1995, 1994 and 1993, no customer
accounted for ten percent (10%) or more of sales on a consolidated basis.
Foreign Sales and Marketing
Marketing and sales of the Company's brand name and licensed designer
fragrance line are conducted through independent distributors, in-house
executives and international agents and importing companies and such products
are sold in approximately sixty (60) countries world-wide. Generally, marketing
and advertising are subject to approval of the respective licensors. Advertising
for the Company's designer fragrance lines appear in high fashion magazines and
to a lesser extent on television in France and the Middle East.
Inter Parfums maintains its own in-house sales force with executives who
are generally responsible for marketing the Inter Parfums designer fragrance
lines in specific territories. In France, the Inter Parfums designer fragrance
lines are sold in approximately 1000 perfumeries.
Inter Parfums markets its middle market proprietary fragrances to
wholesalers in France, and to distributors and importers predominantly in the
Middle East, Far East, Central America and South America through in-house sales
executives.
In October 1995 the Company commenced marketing its alternative designer
fragrance and Jordache lines through a newly formed limited liability company
organized in Brazil, Jean Philippe Brasil.
See Note "J" to the Consolidated Financial Statements for information
regarding the Company's operations by geographic areas.
Product Liability
The Company maintains product liability coverage in an amount of
$3,000,000, which it believes is adequate to cover substantially all of the
exposure it may have with respect to its products. The Company has never been
the subject of any material product liability claims.
Competition
The market for fragrances and beauty related products is highly
competitive and sensitive to changing consumer preferences and demands. At the
present time, management is aware of approximately five (5) established
companies which market similar alternative designer fragrances. The Company
believes that the quality of its fragrance products, as well as its ability to
quickly and efficiently develop and distribute new products, will enable it to
continue to effectively compete with these companies.
The market for name brand and budget color cosmetics is highly
competitive, with several major cosmetic companies marketing similar products,
many with substantial financial resources and national marketing campaigns. The
Company has experienced competitive pressures in this market, and it may be
difficult for the Company to significantly increase the market share of its
brands against this competition. However, management believes that brand
recognition of its Cutex, Aziza and Jordache lines, together with the quality
and competitive pricing of its products, should enable it to compete with these
companies.
However, especially in the area of high priced, original designer
fragrances, there are products which are better known than the products produced
for or distributed by the Company. There are also many companies which are
substantially larger and more diversified, and which have substantially greater
financial and marketing resources than the Company, as well as greater name
recognition, and the ability to develop and market products competitive with
those distributed by the Company. For these reasons, it may be particularly
difficult for the Company to successfully increase market share in the high
priced, original designer fragrance market.
Government Regulation
A fragrance is a "cosmetic" as that term is defined under the Federal
Food, Drug and Cosmetics Act ("FDC Act"), and must comply with the labeling
requirements of the FDC Act, the Fair Packaging and Labeling Act, and the
regulations thereunder. Certain of the Company's Cutex brand color cosmetic
products contain menthol, and are also classified as a "drug," as the categories
of cosmetic and drug are not mutually exclusive. Additional regulatory
requirements for such products include additional labeling requirements,
registration of manufacturer and semi-annual update of drug list.
The Company's fragrances are subject to approval of the Bureau of
Alcohol, Tobacco and Firearms as the result of the use of specially denatured
alcohol. To date the Company has not experienced any difficulties in obtaining
such approval.
Trademarks
In the United States the Company's registered trademarks include
Intimate, Aziza, Beverly, Fire by Jean Philippe(Registered), Fashion
Mood(Registered), Snow Silk(Registered) and Memphis(Registered). In addition,
the Company has various trademark applications pending. In addition, under
various license agreements the Company has the right to use the registered
trademark Cutex in the United States and Puerto Rico, and the registered
trademarks, Burberrys, Ombre Rose, Chaz, Regine's and Jordache both in the
United States and abroad.
Outside of the United States and Canada, the Company owns the following
registered trademarks: Intimate, Aziza, the Parfums Molyneux family of
trademarks, including Captain, Quartz and Lord, and the Parfums Weil family of
trademarks, including Bambou, Antilope and Kipling. See "Business-Products and
Selection".
Employees
As of March 15, 1996 Jean Philippe had eighty-three (83) full-time
domestic employees. Of these, seventeen (17) were engaged in sales activities,
and sixty-six (66) in administrative and marketing activities.
As of March 15, 1996 Inter Parfums and its foreign subsidiaries had
forty-five (45) full-time employees. Of these, fourteen (14) were engaged in
sales activities, and thirty-one (31) in administrative and marketing
activities.
The Company believes that its relationships with its employees are
satisfactory.
Item 2. Properties
The Company's domestic offices are located in approximately 12,000
square feet of office space at 551 Fifth Avenue, New York, New York. These
premises are leased for a five (5) year term ending in April 1997, at a monthly
rental of approximately $17,000, which is subject to escalations.
The offices of Inter Parfums and the Company's other French subsidiaries
are located at 4 Rond Point Des Champs Elysees, Paris, France, in approximately
6,000 square feet of leased office space pursuant to two (2) leases. The first
lease, for approximately 4,000 square feet, expires in September 1996, with an
annual rental of 775,000 French francs (or approximately $155,000) for such
period. Inter Parfums has options to renew for two (2) additional three (3) year
periods, with annual rental commencing at 800,000 French francs (approximately
$160,000). Rent is subject to escalations. The second lease, for approximately
2,000 square feet, is for a term which expires in March 1997, with annual
rentals of 410,650, 439,300 and 458,400 French francs (approximately $83,300,
$87,900 and $91,000 for the three (3) year period. Inter Parfums has options to
renew for two (2) additional three (3) year periods, with annual rental
commencing at 477,500 French francs (or approximately $95,500). Rent is subject
to escalations.
Management of the Company is of the belief that the Company's executive
office facilities are satisfactory for its present needs and those for the
foreseeable future.
On October 25, 1995, the Company took occupancy of its new 145,000
square foot distribution center at 60 Stults Road in Dayton, New Jersey. The
premises have been leased by the Company for an eight (8) year term and require
monthly rental payments of $57,000, aggregating $684,000 per annum. In
connection therewith, the Company has expended approximately $1.0 million in
equipment and improvements and incurred moving expenses of approximately $50,000
in the fourth quarter of 1995. Management of the Company is of the belief that
the Company's distribution center is satisfactory for its present needs and
those for the foreseeable future.
Item 3. Legal Proceedings
There is no material litigation pending or, to the knowledge of the
Company, threatened to which the property of the Company is subject or to which
the Company may be a party.
Item 4. Submissions Of Matters To A Vote Of Security Holders
Not applicable.
PART II
Item 5. Market For Registrant's Common Equity
And Related Stockholder Matters
The Company's Common Stock, $.001 par value per share ("Common Stock")
is traded on The Nasdaq Stock Market under the symbols "JEAN". The following
table sets forth in dollars, the range of high and low closing prices for the
past two (2) fiscal years for the Company's Common Stock.
Fiscal 1995 High Closing Price Low Closing Price
Fourth Quarter $10.50 $ 8.13
Third Quarter $11.75 $10.63
Second Quarter $10.88 $ 8.75
First Quarter $ 9.00 $ 7.31
Fiscal 1994 High Closing Price Low Closing Price
Fourth Quarter $ 9.00 $ 6.88
Third Quarter $11.00 $ 8.63
Second Quarter $11.88 $ 9.88
First Quarter $12.75 $ 9.75
As of March 1, 1996, the number of record holders (brokers and broker's
nominees, etc.) of the Company's Common Stock was 133. Management believes that
there are approximately 2400 beneficial owners of the Company's Common Stock.
Dividends
Jean Philippe has not paid cash dividends since inception and management
of the Company does not foresee Jean Philippe paying cash dividends in the
foreseeable future as earned surplus is to be retained as working capital for
anticipated growth. The revolving credit agreement with the Company's primary
institutional lender generally prohibits the payment of cash dividends in excess
of fifty (50%) percent of the Company's net income.
Item 6. Selected Financial Data
The following selected financial data have been derived from the
Company's financial statements, and should be read in conjunction with such
financial statements, including the footnotes relating thereto, referred to in
Item 8 of this Form 10-K.
Years Ended December 31
(In Thousands Except Share and Per Share Data)
--------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- -------- ------- -------
Income Statement Data:
Net sales $93,669 $75,079 $59,546 $43,688 $25,465
Cost of Sales 48,703 39,036 32,964 24,536 14,042
Selling, General and Administrative 32,990 23,773 15,814 12,479 8,229
Income before taxes and minority
interest 12,380 11,679 11,240 6,669 2,911
Net income 9,038 7,275 7,099 4,278 1,862
Net income per common and common
equivalent share $.87(1,2) $.70(1) $.70(1) $.50 $.27
Weighted average number of
common and common equivalent
shares outstanding 10,438,896 10,454,555 10,132,628 8,641,393 7,020,099
As at December 31
(In Thousands Except Share and Per Share Data)
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- -------- ------- -------
Balance Sheet Data:
Working Capital $41,363 $31,226 $31,967 $17,250 $ 7,349
Total Assets 84,001 69,451 49,909 31,807 19,684
Long Term Debt 596 862 424 -0- 313
Shareholders' equity 51,976 44,513 33,774 18,488 8,181
- -----------------------
1 Includes a net gain of $3.3 million or $.32 per share, $221,000 or $.02
per share, $645,000 or $.06 per share for the years ended December 31, 1995,
1994 and 1993, respectively, resulting from the sale of common stock of a
subsidiary.
2 Includes a nonrecurring charge, net of taxes, of $1.3 million or $.13 per
share, relating to the discontinuance of a product line.
Item 7. Management's Discussion And Analysis Of
Financial Condition And Results Of Operation
The Company's long-term business strategy of building core volume and
profitability, developing products in new categories, exploring strategic
acquisition opportunities, and pursuing expansion in international markets, has
enabled the Company to report another record year for growth in sales. However,
current year earnings excluding the gain on sale of stock of subsidiary, reflect
the obstacles encountered in bringing the newly acquired Cutex nail care and lip
color lines to the profitability levels originally anticipated. As discussed in
more detail below, current earnings reflect a nonrecurring charge of $2.2
million, before taxes, relating to the discontinuance of the Cutex lip color
line in October 1995.
1995 as Compared to 1994
Net sales increased 25% to $93.7 million, as compared to $75.1 million
in 1994. This increase reflects the Company's ability to integrate new product
lines with existing product offerings. Sales generated by the Company's domestic
operations increased 19%. Such growth is the result of the August 1994
acquisition of the Cutex nail care and lip color line, and the continued growth
in the core Alternative Designer Fragrance lines.
Net sales generated by Cutex product lines increased $5.3 million over
1994 net sales. This increase was well below original expectations as the result
of excessive product returns caused in part from the required change in the
Uniform Product Code from that of Chesebrough-Ponds and disappointing sales of
the lip color line.
In October 1995 the Company decided to discontinue production of the lip
color line and as a result, has taken a nonrecurring charge aggregating $2.2
million, before taxes, in the fourth quarter of 1995. This charge represents a
writedown of current lip product inventory and the effect of potential customer
returns or markdowns which may be required on lip products in 1996. The
discontinued lip color line did not contribute to net sales in 1995 as customer
returns exceeded new product shipments.
As a result of the issues relating to the Cutex product lines, the
Company and the licensor have agreed to a reduction of the minimum royalties
payable under the Cutex license. The Company believes that such relief along
with the discontinuance of the lip color line will enable the Company to direct
all Cutex marketing efforts and resources to building upon the core nail care
business for which Cutex is famous.
Sales by the Company's foreign subsidiaries increased 36%; at comparable
foreign currency exchange rates, sales by the Company's foreign subsidiaries
increased 22%. Such increase reflects new product introductions under the Ombre
Rose and Burberrys labels and initial sales by Jean Philippe Brasil, the
Company's recently organized Brazilian subsidiary, which commenced operations in
October 1995.
The Company continues to focus its sales efforts on development of new
product categories for sale to our expanding customer base. The February 1996
relaunch of the Aziza(Registered) hypo allergenic eye cosmetic line is well
under way.
Gross profit margin was 48% in both 1995 and 1994. Ordinarily, increased
sales of Cutex products would have enabled the Company to improve overall gross
margin. However, with the excessive customer returns experienced in 1995,
markdowns and inventory writedowns of returned products were necessary. In
addition, gross margin has been negatively impacted from incremental closeout
sales of discontinued or returned product at reduced prices. While in the
ordinary course of business the Company closes out such inventory, management
had taken an increased initiative to reduce excess inventory to improve the
Company's cash flow and in preparation of moving to our new distribution center
in Dayton NJ. The Company's business lines, excluding Cutex, generated a 46%
gross margin in both 1995 and 1994.
Selling, general and administrative expenses represented 35% of net
sales in 1995 as compared to 32% in 1994. The increase is primarily the result
of promotion and advertising expenses required for the Cutex product lines and
reflect the fact that sales of the Cutex color lines have been below original
expectations. Management is taking the steps it deems necessary to bring these
product lines to an acceptable profitability level. In addition, most licensed
product lines call for royalties to be paid based on sales volume and some
require minimum advertising expenditures.
Interest expense increased to $1.1 million in 1995 from $0.8 million in
1994. The Company uses its available credit lines, as needed, to finance its
working capital needs.
The Company realized a gain on foreign currency aggregating $197,000 in
1995 as compared to a loss of $161,000 in 1994. The Company, on occasion enters
into foreign currency forward exchange contracts as a hedge for short-term
intercompany borrowings.
The Company recognized a net gain on sale of stock of a subsidiary
aggregating $3.3 million in 1995 and $0.2 million in 1994. The 1995 gain
resulted primarily from the public offering by Inter Parfums, in France, of
308,000 shares of its common stock. The 1994 gain also resulted from the sale of
common stock by Inter Parfums. Such sales of shares has been accounted for as a
gain on sale of stock of a subsidiary and is not part of a broader corporate
reorganization contemplated by the Company. Although additional shares may be
issued in the future, the Company has no plans to spin-off its subsidiary nor to
repurchase the shares previously issued. (See Liquidity and Financial
Resources).
The Company's effective income tax rate was 26% in 1995 and 37% in 1994.
Both the 1995 and 1994 tax rates were favorably impacted as deferred taxes were
not required to be provided on the gain on sale of stock by Inter Parfums.
Excluding such gain the Company's effective tax rate was 35% in 1995 and 37% in
1994.
Net income for the year ended December 31, 1995 increased 24% to $9.0
million compared to $7.3 million for the year ended December 31, 1994. Results
for 1995 include a nonrecurring charge of $1.3 million, on an after tax basis,
relating to the discontinuance of the lip color line. Results also include a net
gain from the sale of common stock of a subsidiary of $3.3 million in 1995 and
$0.2 million in 1994. Excluding the nonrecurring charge and such gains, net
income was $7.1 million or $0.68 per share in 1995 and in 1994.
The weighted average number of shares outstanding was 10,438,896 in
1995 and 10,454,555 in 1994.
1994 as Compared to 1993
Net sales increased 26% to $75.1 million, as compared to $59.5 million
in 1993. The results for 1994 reflect the Company's success in integrating new
product lines with pre existing product offerings, and creating greater
opportunities to serve the needs of its customers. Sales generated by the
Company's domestic operations increased 12%. Such growth reflects the positive
impact of the recently acquired Cutex lip and nail product line and the negative
impact of store closings of one of the Company's larger customers.
Sales by the Company's foreign subsidiaries increased 62%; at comparable
foreign currency exchange rates, sales by the Company's foreign subsidiaries
increased 59%. Such increase reflects contributions from the Ombre Rose and
Burberrys license agreements as well as the Parfums Molyneux and Parfums Weil
fragrance lines.
In connection with the Company's recent acquisitions and license
agreements, the Company has restructured its retail sales force and has added
additional experienced salespeople. The Company's primary efforts are now
focused on capitalizing on its expanding list of customer relationships. With
efficient product development and a strong national sales force, the Company can
now offer to all of its customers, its growing collection of fragrance, personal
care and color cosmetic products.
Gross profit margin for 1994 increased to 48% of sales from 45% in 1993.
The Company's decision to purchase certain raw materials and component parts for
its domestic operations at lower domestic prices continued to benefit the
Company's gross margin throughout 1994. In addition, initial sales of Cutex
products have enabled the Company to further improve its gross margin; without
such sales gross profit margin would have been 46%.
Selling, general and administrative expenses represented 32% of net
sales in 1994 as compared to 27% and 1993. The increase is primarily the result
of expenses incurred in connection with the restructuring of the Company's sales
force and the transition of all of the Company's new product lines into its
existing domestic and international business operations. In addition, most
licensed product lines call for royalties to be paid based on sales volume and
some require minimum advertising expenditures.
Interest expense increased to $803,000 in 1994 from $619,000 in 1993.The
Company uses its available credit lines, as needed, to finance its working
capital needs.
In 1994, as a result of the decline of the U.S. dollar relative to the
French franc, the Company incurred a loss on foreign currency of $161,000 as
compared to a gain of $179,000 in 1993. The Company, on occasion enters into
foreign currency forward exchange contracts as a hedge for short-term
intercompany borrowings. No material hedge transactions were entered into during
1994.
Gain on sale of stock of subsidiary aggregated $221,000 in 1994 as
compared to a gain of $645,000 1993. The 1993 gain resulted from the issuance by
Inter Parfums of 7.65% of its common stock. In 1994, an additional 10,000 shares
were sold to enable the stock of Inter Parfums to commence trading in the
over-the-counter stock market in Paris, and 11,536 shares were issued pursuant
to the conversion terms of Inter Parfum's long-term debt. These issuances of
shares by Inter Parfums have been accounted for as a gain on sale of stock of
subsidiary; the issuances are not part of a broader corporate reorganization
contemplated by the Company. Although additional shares may be issued in the
future the Company has no plans to spin-off its subsidiary nor repurchase the
shares previously issued.
The Company's effective income tax rate increased to 37.1% in 1994 from
36.8% in 1993. Both 1994 and 1993 were favorably impacted as deferred taxes were
not required to be provided on the gain from issuance of common stock by Inter
Parfums.
Net income for the year ended December 31, 1994 was $7.3 million
compared to $7.1 million for the year ended December 31, 1993. Results for the
year include a net gain from the sale of common stock of a subsidiary of
$221,000 or $0.02 per share in 1994 and $645,000 or $0.06 per share in 1993.
Excluding such gain, net income increased 9.3% to $7.1 million or $0.68 per
share compared to $6.5 million or $0.64 per share for the year ended December
31, 1993.
The weighted average number of shares outstanding increased 3% to
10,454,555 in 1994 from 10,132,628 in 1993. This increase is primarily the
result of the issuance of common stock in connection with the February 1994
acquisition of Parfums Molyneux and Parfums Weil.
Liquidity and Financial Resources
The Company's financial position continues to show solid strength as a
result of profitable operating results. At December 31, 1995, working capital
aggregated $41.4 million and the Company had cash and cash equivalents
aggregating $14.2 million. The Company's Board of Directors has authorized the
repurchase of up to 1,000,000 shares of the Company's common stock and as of
December 31, 1995, 324,305 shares had been purchased at an average price per
share of $8.91. Through February 1996 an additional 138,000 shares were
purchased at an average price per share of $7.85.
In November 1995, the Company's majority owned subsidiary, Inter Parfums
sold to the public in France 308,000 shares of its capital stock at 130 French
francs per share. Net proceeds of such offering aggregated 36.5 million French
francs ($7.6 million U.S.). In connection with such offering, Inter Parfums
Holding ("Holding"), a wholly-owned subsidiary of the Company and direct parent
of Inter Parfums, exercised its right to convert a portion of its convertible
debt into 250,000 shares of capital stock of Inter Parfums at 80 French francs
per share.
As a result of such offering and related debt to equity conversions, the
interest of the Company in Inter Parfums, as held by Holding, was reduced from
90.64% to 76.72%.
The Company's short-term financing requirements are expected to be met
by available cash at December 31, 1995, cash generated by operations and
short-term credit lines provided by domestic and foreign banks. The principal
credit facility for 1996 is a $12.0 million unsecured revolving line of credit
provided by a domestic commercial bank. Borrowings under the domestic revolving
line of credit are due on demand and bear interest at the bank's prime lending
rate.
Management of the Company believes that funds generated from operations,
supplemented by its available credit facilities, will provide it with sufficient
resources to meet all present and reasonably foreseeable future operating needs.
Operating activities provided $2.8 million of net cash in 1995 as
compared to $2.1 million in 1994. As the Company continues to monitor and
improve its procedures with respect to collection of outstanding receivables and
closely monitor inventory levels, the Company anticipates continued improvement
in cash flow. Current inventory levels reflect the necessary quantities to
support the upcoming selling season and new product introductions.
On October 25, 1995, the Company took occupancy of its new 145,000
square foot distribution center at 60 Stults Road in Dayton NJ. The premises
have been leased by the Company for an eight year term and require monthly
rental payments of $57,000, aggregating $684,000 per annum. In connection
therewith, the Company has invested approximately $0.7 million in equipment and
improvements and expects to invest an additional $0.3 million in 1996.
Inflation rates in the U.S. and foreign countries in which the Company
operates have not had a significant impact on operating results for the year
ended December 31, 1995.
Item 8. Financial Statements and Supplementary Data
The required financial statements commence on page F-1.
Supplementary Data
Quarterly Data (Unaudited)
For the year ended December 31, 1995
(In Thousands Except Share and Per Share Data)
--------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Full Year
------- ------- ------- ------- ---------
Net sales $21,612 $22,152 $25,480 $24,425 $93,669
Cost of Sales 10,660 11,187 13,514 13,342 48,703
Net income 1,621 1,628 2,072 3,717 9,038
Net income per common and
common equivalent share $.16 $.16 $.20 $.361,2 $.871,2
Number of shares outstanding 10,429,287 10,458,483 10,561,214 10,306,599 10,438,896
Quarterly Data (Unaudited)
For the year ended December 31, 1994
(In Thousands Except Share and Per Share Data)
-----------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Full Year
------- ------- ------- ------- ---------
Net sales $14,126 $15,230 $22,109 $23,014 $75,079
Cost of Sales 7,999 8,168 11,282 11,587 39,036
Net income 1,221 1,323 2,258 2,473 7,275
Net income per common and
common equivalent share $.12(3) $.13 $.22 $.24(4) $.70(5)
Number of shares outstanding 10,373,760 10,538,411 10,470,431 10,426,054 10,454,555
Item 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure
Not applicable.
- -------------------------------
1 Includes a net gain of $3.3 million or $.32 per share resulting from the
sale of common stock of a subsidiary.
2 Includes a nonrecurring charge, net of taxes, of $1.3 million or $.13 per
share, relating to the discontinuance of a product line.
3 Includes a net gain of $113,000 or $.01 per share resulting from the sale
of common stock of a subsidiary.
4 Includes a net gain of $108,000 or $.01 per share from the sale of common
stock of a subsidiary.
5 Includes a net gain of $221,000 or $.01 per share from the sale of common
stock of a subsidiary
PART III
Item 10. Executive Officers And Directors Of Registrant
As of March 1, 1996, the executive officers and directors of the
Company were as follows:
Name Position
Jean Madar Chairman of the Board
and Director General of Inter
Parfums
Philippe Benacin Vice Chairman of the Board,
President and President of Inter
Parfums
Russell Greenberg Director, Executive Vice
President and Chief Financial
Officer
Francois Heilbronn Director
Joseph A. Caccamo Director
Bruce Elbilia Executive Vice President
Wayne C. Hamerling Executive Vice President
Terrence H. Augenbraun Executive Vice President
Jaime Resnik Executive Vice President
The directors will serve until the next annual meeting of stockholders
and thereafter until their successors shall have been elected and qualified.
With the exception of Mr. Benacin, the officers are elected annually by the
directors and serve at the discretion of the board of directors. See "Item 11.
Executive Compensation- Employment Agreement". There are no family
relationships between executive officers or directors of the Company.
The following sets forth biographical information as to the business
experience of each executive officer and director of the Company for at least
the past five (5) years.
Jean Madar
Jean Madar, age 35, a Director, has been the Chairman of the Board of
Directors (since inception), and a co-founder of the Company with Mr. Benacin.
From inception until December 1993 he was the President of the Company; in
January 1994 he became Director General of Inter Parfums; and was previously the
managing director of Inter Parfums, from September 1983 until June 1985. At
Inter Parfums, he had the responsibility of overseeing the marketing operations
of its foreign distribution, including market research analysis and actual
marketing campaigns. Mr. Madar graduated from The French Higher School of
Economic and Commercial Sciences (ESSEC) in 1983.
Philippe Benacin
Mr. Benacin, age 37, a Director, has been the Vice Chairman of the Board
since September 1991, and is a co-founder of the Company with Mr. Madar. He was
elected the Executive Vice President in September 1991, Senior Vice President in
April 1993, and President of the Company in January 1994. In addition, has been
the President of Inter Parfums for more than the past five (5) years. Mr.
Benacin graduated from The French Higher School of Economic and Commercial
Sciences (ESSEC) in 1983. Mr. Benacin filed a Form 5 in which he indicates that
he neglected to file a Form 4 disclosing the exercise of an option and the
repurchase of such shares by the Company pursuant to its stock repurchase
program.
Russell Greenberg
Mr. Greenberg, age 39, the Chief Financial Officer, was Vice-President,
Finance when he joined the Company in June 1992; became Executive Vice President
in April 1993; and was appointed to the Board of Directors in February 1995. He
is a certified public accountant licensed in the State of New York, and is a
member of the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants. Since graduating from The
Ohio State University in 1980, he has been employed in public accounting. From
July 1987 through June 1992, he was employed as a manager with Richard A. Eisner
& Company, the independent accountants of the Company.
Francois Heilbronn
Mr. Heilbronn, age 35, a Director, is a graduate of Harvard Business
School with a Master of Business Administration degree and is currently working
as a consultant for the firm of M.M. Friedrich, Heilbronn & Fiszer, of which he
is a partner. He was formerly employed by The Boston Consulting Group, Inc. from
1986 through 1991 as a management consultant. He graduated from Institut
D'Etudes Politiques De Paris in June 1983. From 1984 to 1986, he worked as a
financial analyst for Lazard Freres & Co.
Joseph A. Caccamo
Mr. Caccamo, age 40, a Director, has been a practicing attorney since
1981. From May 1987 through February 1991, he was an associate of Parker Chapin
Flattau & Klimpl, New York City, and from February 1991 through August 1991, he
was of counsel to Brandeis, Bernstein & Wasserman, New York City. In September
1991 he founded Joseph A. Caccamo Attorney at Law, P.C., which is counsel to the
Company. He is also a director of Hydron Technologies, Inc., a company primarily
engaged in the development of cosmetic/personal care products, which has its
common stock listed on The Nasdaq Stock Market.
Bruce Elbilia
Mr. Elbilia, age 36, Executive Vice President joined the Company in June
1986 as the National Sales Director, and from that time until 1994, he was in
charge of the Company's marketing efforts. In 1994 Mr. Elbilia became head of
international sales and marketing for Jean Philippe, and has expanded Jean
Philippe's export sales to South America, the Middle East and Eastern Europe.
Mr. Elbilia received a Bachelor of Business Administration degree, with a major
in International Business/Marketing from George Washington University in
Washington, D.C., which he attended from 1977-1981.
Wayne C. Hamerling
Mr. Hamerling, age 39, was Vice-President, Sales, from May 1987 through
April 1993, when he became Executive Vice President. Mr. Hamerling has over
fifteen (15) years experience in the fragrance and cosmetic business. From 1980
through 1983 he was employed by Rite Aid Drug Stores; from 1983 through 1985, he
was the Senior Buyer for Valley Fair Stores, and from 1985 through May 1987, he
was the National Sales Manager for Happy Valley Fragrances.
Terrence H. Augenbraun
Mr. Augenbraun, age 51, who became an Executive Vice President of the
Company in June 1994, is in charge of the Company's Premier Fragrances division,
which markets name brand fragrances and cosmetics, domestically. Mr. Augenbraun
has been in the fragrances and cosmetics business for more than the past five
(5) years, and from 1992 through June 1994, he was the manager of the Prince
Matchabelli Division of Chesebrough-Ponds. From 1991 to 1992 he was an Executive
Vice President of Del Labs, a cosmetics concern in charge of new product
marketing. He was formerly the Chief Operating Officer of Lasale 10, a fragrance
and cosmetic concern, from 1989 through 1991, and from 1982 through 1989, he was
the Vice President of Marketing for the cosmetics group of Chesebrough-Pond's
with $160,000,000 in sales.
Jaime Resnik
Mr. Resnik, age 35, became an Executive Vice President in July 1994, and
is in charge of operations. He joined the Company in April 1992 as Operations
Manager in charge of production and planing. From October 1988 through April
1991, Mr. Resnik was the Licensing Audit Manager for Jordache Enterprises, with
responsibility for auditing approximately thirty (30) licensees with sales in
excess of $250,000,000. From April 1991 through April 1992, Mr. Resnik was the
Director of International Licensing for Jordache Enterprises, with
responsibility for overseeing the licensing activities of approximately fifty
(50) licensees world wide. Mr. Resnik graduated with honors from the University
of Miami in 1983 with a B.A. in management.
Item 11. Executive Compensation
The following table sets forth a summary of all compensation awarded to,
earned by or paid to, the Company's Chief Executive Officer and each of the four
(4) most highly compensated executive officers of the Company whose compensation
exceeded $100,000 per annum for services rendered in all capacities to the
Company and its subsidiaries during fiscal years ended December 31, 1995,
December 31, 1994 and December 31, 1993:
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Awards
Name and Year Salary ($) Bonus ($) Other Annual Securities All Other
Principal Position Compensation($) Underlying Compensation
Options (#)
Jean Madar,(1) 1995 175,800 -0- 20,800(2) 100,000 -0-
Chairman of the Board
and Director General of 1994 133,250 -0- 905,225(3) 100,000 -0-
Inter Parfums
1993 230,800 -0- -0- 100,000 -0-
Philippe Benacin,(4) 1995 96,000 -0- 681,200(5) 100,000 -0-
Chief Executive Officer,
President and President of 1994 81,360 -0- 28,205(6) 100,000 -0-
Inter Parfums
1993 78,000 -0- 34,100(7) 100,000 -0-
Bruce Elbilia,(8) 1995 168,000 18,500 56,510(9) 9,000 -0-
Executive Vice President
1994 158,500 3,500 31,124(10) 4,000 -0-
1993 138,000 3,000 740,254(11) 6,500 -0-
- --------
(1) As of December 31, 1995, Mr. Madar held 2,768,049 restricted shares
of Common Stock, with an aggregate value of $22,490,398 based upon the closing
price of the Company's Common Stock as reported by the Nasdaq Stock Market,
National Market system, of $8.125 on December 29, 1995.
(2) Consists of lodging expenses.
(3) Consists of noncash compensation attributable to the difference
between the exercise price and the value of certain restricted shares of
Common Stock acquired upon the exercise of stock options.
(4) Mr. Benacin was elected President of the Company in
January 1994. Compensation figures for Mr. Benacin are approximate, as
he is paid in French francs, and conversion into U.S. dollars was made at the
average exchange rates prevailing during the respective periods. As of
December 31, 1995, Mr. Benacin held 2,318,049 restricted shares of Common
Stock, with an aggregate value of $18,834,148 based upon the closing price of
the Company's Common Stock as reported by the Nasdaq Stock Market, National
Market system, of $8.125 on December 29, 1995.
(5) Consists of noncash compensation of $650,000 attributable to the
difference between the exercise price and the value of certain restricted
shares of Common Stock acquired upon the exercise of stock options;
approximately $2,400 for automobile expenses and $28,800 for lodging expenses.
(6) Consists of approximately $2,170 for automobile expenses and
$26,035 for lodging expenses.
(7) Consists of approximately $8,300 for automobile expenses and
$25,800 in lodging expenses.
(8) As of December 31, 1995, Mr. Elbilia held 20,000 restricted shares
of Common Stock, with an aggregate value of $162,500 based upon the closing
price of the Company's Common Stock as reported by the Nasdaq Stock Market,
National Market system, of $8.125 on December 29, 1995.
(9) Consists of selling commissions.
(10) Consists of selling commissions.
(11) Consists of selling commissions equal to $22,159; and noncash
compensation of $718,095 attributable to the difference between the exercise
price and the value of certain restricted shares of Common Stock acquired upon
the exercise of stock options.
(SUMMARY COMPENSATION TABLE CONTINUED)
Annual Compensation Long Term Awards
Name and Year Salary ($) Bonus ($) Other Annual Securities All Other
Principal Position Compensation Underlying Compensation
($) Options (#)
Terrence H. Augenbraun,(1) 1995 165,804 28,500 100,000(2) 9,000 -0-
Executive Vice President
1994 93,876 25,000 58,333(3) 11,334 -0-
1993 NA NA NA NA NA
Wayne C. Hamerling,(4) 1995 157,004 3,500 86,974(5) 9,000 -0-
Executive Vice President
1994 155,949 3,500 66,106(6) 4,000 -0-
1993 140,639 3,000 52,784(7) 6,500 -0-
- ----------
(1) As of December 31, 1995, Mr. Augenbraun held 1,334 restricted
shares of Common Stock, with an aggregate value of $10,839 based upon the
closing price of the Company's Common Stock as reported by the Nasdaq Stock
Market, National Market system, of $8.125 on December 29, 1995.
(2) Consists of selling commissions.
(3) Consists of selling commissions.
(4) As of December 31, 1995, Mr. Hamerling held 30,000 restricted
shares of Common Stock, with an aggregate value of $243,750 based upon the
closing price of the Company's Common Stock as reported by the Nasdaq Stock
Market, National Market system, of $8.125 on December 29, 1995.
(5) Consists of selling commissions equal to $82,160 and
noncash compensation of $4,814 equal to the value of personal use of a
Company leased automobile.
(6) Consists of selling commissions equal to $62,749 and
noncash compensation of $3,357 equal to the value of personal use of a
Company leased automobile.
(7) Consists of selling commissions equal to $41,784; and
noncash compensation of $11,000 equal to the value of personal use of a
Company leased automobile.
The following table sets forth certain information relating to stock
option grants during Fiscal 1995 to the Company's Chief Executive Officer and
each of the four (4) most highly compensated executive officers of the Company
whose compensation exceeded $100,000 per annum for services rendered in all
capacities to the Company and its subsidiaries during fiscal year ended December
31, 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realized Value at
Assumed Annual Rates of Stock
Individualized Grants Price Appreciation for Option Term
- ----------------------------------------------------------------------- -----------------------------------------
Name Number of % of Total Exercise Expiration Five (5%) Ten (10%)
Securities Options/SARs or Base Date Percent Percent
Underlying Granted to Price ($) ($)
Options Employees in ($/Sh)
Granted (#) Fiscal Year
Jean Madar 50,000 15.97 $7.25 1/2/2000 100,152 221,310
Jean Madar 50,000 15.97 $8.625 12/6/2000 119,146 263,282
Philippe Benacin 50,000 15.97 $7.25 1/2/2000 100,152 221,310
Philippe Benacin 50,000 15.97 $8.625 12/6/2000 119,146 263,282
Bruce Elbilia 4,500 1.44 $7.25 1/2/2000 9,014 19,918
Bruce Elbilia 4,500 1.44 $8.625 12/6/2000 10,723 23,695
Wayne Hamerling 4,500 1.44 $7.25 1/2/2000 9,014 19,918
Wayne Hamerling 4,500 1.44 $8.625 12/6/2000 10,723 23,695
Terrence H. Augenbraun 4,500 1.44 $7.25 1/2/2000 9,014 19,918
Terrence H. Augenbraun 4,500 1.44 $8.625 12/6/2000 10,723 23,695
The following table sets forth certain information relating to option
exercises effected during Fiscal 1994, and the value of options held as of such
date by each of the four (4) most highly compensated executive officers of the
Company whose compensation exceeded $100,000 per annum for services rendered in
all capacities to the Company and its subsidiaries during fiscal year ended
December 31, 1995:
AGGREGATE OPTION EXERCISES FOR FISCAL 1995
AND YEAR END OPTION VALUES
Number of Value(1) of Unexercised
Unexercised Options In-the-Money Options
at December 31, 1995 at December 31, 1995
(#) ($)
Shares Acquired Value ($) Exercisable/ Exercisable/
on Exercise Realized(2) Unexercisable Unexercisable
Jean Madar -0- NA 595,687/-0- $629,528/$-0-
Philippe Benacin 75,000 $650,000 613,687/-0- $699,878/$-0-
Bruce Elbilia -0- NA 36,000/-0- $ 37,310/$-0-
Wayne C. Hamerling 6,000 $ 44,460 36,000/-0- $ 37,310/$-0-
Terrence H. Augenbraun -0- NA 23,000/-0- $ 19,688/$-0-
- ----------
(1) Total value of unexercised options is based upon the fair market
value of the Common Stock as reported by the Nasdaq Stock Market of $8.125 on
December 29, 1995.
(2) Value realized in dollars is based upon the difference between the
fair market value of the Common Stock on the date of exercise, and the
exercise price of the option.
Employment Agreements
As part of the acquisition by the Company of the controlling interest
in Inter Parfums in 1991, the Company entered into an employment agreement
with Philippe Benacin. The agreement provides that Mr. Benacin will be
employed as Vice Chairman of the Board and President and Chief Executive
Officer of IP Holdings and its subsidiary, Inter Parfums. The initial term
expired on September 2, 1992, and has subsequently been automatically renewed
for additional annual periods. The agreement provides for automatic annual
renewal terms, unless either party terminates the agreement upon 120 days
notice. Mr. Benacin is entitled to receive an annual salary is 600,000ff
(approximately US$ 120,000) together with 5,000ff per month (approximately
US$1,000) for lodging expenses, both of which are subject to increases in the
discretion of the Board of Directors. In addition he is to receive a
nonaccountable expense allowance of 1,200ff (approximately US$ 240) per week
and reimbursement for all out-of-pocket expenses associated with the
acquisition, operation and maintenance of an automobile. The agreement also
provides for indemnification and a covenant not to compete for one (1) year
after termination of employment.
Compensation of Directors
Mr. Caccamo receives $500 for each board meeting at which he
participates.
On January 14, 1994, the Board of Directors of the Company adopted,
subject to the approval of its stockholders, the 1994 Nonemployee Stock Option
Plan (the "1994 Plan"). The purpose of the 1994 Plan is to assist the Company
in attracting and retaining key directors who are responsible for continuing
growth and success of the Company. The 1994 Plan was approved by the
stockholders of the Company on July 8, 1994.
The 1994 Plan provides for the grant of nonqualified stock options to
nonemployee directors to purchase an aggregate of 25,000 shares of Common
Stock.
Options to purchase 1,000 shares are granted on each February 1st to
all nonemployee directors for as long as each is a nonemployee director on
such date, except for Joseph A. Caccamo, who is granted options to purchase
4,000 shares. Further, options to purchase 1,000 shares are to be granted to
persons who become nonemployee directors at the time they become nonemployee
directors. The exercise price of all options granted or to be granted under
the 1994 Plan is to be equal to the fair market value of the Company's Common
Stock on the date of grant, and the term of each option shall be for a five
(5) year period, subject to earlier termination as set forth in the 1994 Plan.
On February 1, 1996, in accordance with the terms of the 1994 Plan,
options to purchase 1,000 shares were granted on such date to Francois
Heilbronn, and 4,000 shares to nonemployee director, Joseph A. Caccamo, all at
the exercise price of $8.0625 per share, the fair market value on the date of
grant.
Item 12. Security Ownership Of Certain
Beneficial Owners And Management
The following table sets forth information, as of March 25, 1996 with
respect to the beneficial ownership of the Company's Common Stock by (a) each
person known by the Company to be the beneficial owner of more than five
percent (5%) of the Company's outstanding Common Stock, (b) the executive
officers and directors of the Company and (c) the directors and officers of
the Company as a group:
Name and Address Amount of Approximate
of Beneficial Owner Beneficial Percent of Class
Ownership(1)
Jean Madar 3,363,736(2) 31.7%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
Philippe Benacin 2,931,736(3) 27.6%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
Russell Greenberg 33,000(4) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Francois Heilbronn 8,500(5) Less than 1%
12 Rue Pierre Leroux
75007 Paris, France
- ----------
(1) All shares of Common Stock are directly held unless otherwise
stated.
(2) Consists of 2,768,049 shares held directly and options to purchase
595,687 shares of Common Stock.
(3) Consists of 2,318,049 shares held directly and options to purchase
613,687 shares of Common Stock.
(4) Consists of options to purchase shares of Common Stock.
(5) Consists of 4,500 shares held directly and options to purchase
4,000 shares of Common Stock.
(Beneficial Ownership Table Continued)
Name and Address Amount of Approximate Percent
of Beneficial Owner Beneficial of Class
Ownership
Bruce Elbilia 54,000(1) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Wayne C. Hamerling 66,000(2) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Joseph A. Caccamo 18,500(3) Less than 1%
666 Third Avenue--18th Fl.
New York, NY 10017
Terrence H. Augenbraun 24,334(4) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Jaime Resnik 20,500(5) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
FMR Corp., Fidelity Management 605,000(6) 6.0%
& Research Company and Fidelity
Low-Priced Stock Fund
82 Devonshire Street, Boston, MA 02109
All Directors and Officers 6,520,306(7) 57.2%
as a Group (9 Persons)
- ----------
(1) Consists of 18,000 shares held directly and options to purchase
36,000 shares of Common Stock.
(2) Consists of 30,000 shares held directly and options to purchase
36,000 shares of Common Stock.
(3) Consists of options to purchase shares of Common Stock.
(4) Consists of 1,334 shares held directly and options to purchase
23,000 shares of Common Stock
(5) Consists of options to purchase shares of Common Stock.
(6) Information is derived forth in a Schedule 13G dated February 14,
1996 of Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., FMR Corp. and Fidelity Low-Price Stock Fund
("Fidelity Fund"). Fidelity is a registered investment advisor to various
investment companies, including Fidelity Fund, which is listed as a beneficial
owner. Edward C. Johnson, 3rd, and members of his family are control persons
of FMR and therefore also listed as beneficial owners of the 605,000 shares of
common stock or the Company.
(7) Consists of 5,139,932 shares held directly and options to purchase
1,380,374 shares of Common Stock.
Item 13. Certain Relationships And Related Party Transactions
Transactions with French Subsidiaries
In July 1994 the Company, through its subsidiary, Inter Parfums,
acquired the outstanding capital stock of Parfums Jean Desprez, and its
wholly-owned subsidiary, Jean Desprez, S.A. for approximately $3.1
million in excess of the tangible assets of the companies acquired.
The acquisition was funded by Jean Philippe, and is being carried as
an advance to its direct French subsidiary, IP Holding, and is due and payable
on July 12, 1999, together with interest at seven percent (7%) per annum on
the unpaid principal balance, payable quarterly in arrears, to the date of
payment of the principal balance. IP Holding has in turn advanced such funds
to Inter Parfums, which are repayable to IP Holding in ten (10) years together
with interest at seven percent (7%) per annum. In addition, subject to
compliance with applicable French regulatory requirements, the advance is
convertible at the option of IP Holding into additional shares of common stock
of Inter Parfums at the rate of 86 French francs per share.
Subsequent to the closing of the sale of the Bal`a Versailles and
Revolution `a Versailles assets in March 1996 (see Item 1, "Business-Products
and Selection-Brand Name and Licensed Products"), IP Holdings intends to repay
the sum of $1.575 million to Jean Philippe Fragrances in partial satisfaction
of the aforementioned loan.
In connection with the acquisitions by Inter Parfums of the world-wide
rights under the Burberrys License Agreement and the Brosseau License
Agreement, Jean Philippe guaranteed the obligations of Inter Parfums under the
Burberrys License Agreement and the distribution agreement for Ombre Rose
fragrances.
Jean Philippe and Elite have guaranteed the obligations of IP Holdings
and Inter Parfums to Republic National Bank of New York (France).
Loans to Directors
In February 1996 the Company made a short term loan in the sum of
$400,000 to Jean Madar, the Chairman of the Board, together with interest at
the rate of five (5%) percent per annum, and the principal amount of such loan
was repaid in two (2) weeks. Interest of $770 is paid in April 1996.
On August 20, 1996 the Company made a bridge loan in the amount of
$175,000 to Russell Greenberg, the Chief Financial Officer and a Director, in
connection with the sale of his residence and purchase of a new residence,
with interest at the rate of four (4%) percent per annum. The sum of $145,000
was repaid four (4) days later. The balance of the loan is repayable $400 per
month and prepayable out of the proceeds of any sale of shares of Common Stock
of the Company by Mr. Greenberg.
Repurchase of Shares from Officers and Directors
In August 1995 Philippe Benacin, the President and a Director,
exercised a nonqualified stock option to purchase 75,000 shares at $1.33 per
share. In connection with the Company's stock repurchase program, the Company
purchased such shares at $10.00 per share, which was below the market value at
the time of the sale.
In April 1995 the Company, in connection with the Company's stock
repurchase program, purchased from Joseph A. Caccamo, the principal of the
general counsel to the Company and a Director, 1,005 shares at $8.625 per
share, the fair market value at the time of such sale.
In September 1995 Mr. Caccamo exercised nonqualified stock options to
purchase 5,000 shares at $7.75 per share and 4,000 shares at $7.6875. In
connection with the Company's stock repurchase program, the Company purchased
such shares at $10.25 per share and $10.1875 per share, respectively, which
was below the fair market value at the time of such sales.
Remuneration of Counsel
Joseph A. Caccamo, a director of the Company, is the principal of
Joseph A. Caccamo Attorney at Law, P.C., general counsel to the Company. Mr.
Caccamo's firm was paid $107,223 in legal fees and for reimbursement of
disbursements incurred on behalf of the Company during Fiscal 1995, and
presently receives a monthly retainer of $7,250 together with reimbursement
for expenses. In addition, his firm is of counsel to the law firm of Robson &
Miller, LLP, which received an aggregate of fees and disbursements equal to
$34,570 during Fiscal 1995.
On February 1, 1996 in accordance with the terms of the 1994 Plan, Mr.
Caccamo was granted an option with a term of five (5) years to purchase 4,000
shares at $8.0625 per share, the fair market value at the time of grant. In
addition, Mr. Caccamo receives $500 for each board meeting at which he
participates.
PART IV
Item 14. Exhibits, Financial Statement Schedules,
And Reports On Form 8-K
(a)(1) Financial Statements annexed hereto Page No.
Reports of Independent Auditors- F-1
Consolidated Balance Sheets as at December 31, 1995
and December 31, 1994 F-3
Consolidated Statements of Income for the Years ended
December 31, 1995, December 31, 1994 and December 31, 1993 F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years ended December 31, 1995, December 31, 1994
and December 31, 1993 F-5
Consolidated Statements of Cash Flows for the Years ended
December 31, 1995, December 31, 1994 and December 31, 1993 F-6
Notes to Financial Statements F-7
(a)(2) Financial Statement Schedules annexed hereto:
Schedule II - Valuation and Qualifying Accounts
and Reserves S-1
Schedules other than those referred to above have been
omitted as the conditions requiring their filing are not
present or the information has been presented elsewhere
in the consolidated financial statements.
(a)(3) Exhibits
The following documents heretofore filed by the Company with the
Securities and Exchange Commission (the "Commission") are hereby incorporated by
reference from the Company's Registration Statement on Form S-18, file no.
33-17139-NY:
Exhibit No. and Description
3.1 Restated Certificate of Incorporation
4.2 Common Stock Certificate Specimen
4.4 1987 Stock Option Plan
The following document heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987:
Exhibit No. and Description
3.2 By-laws, as amended
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - January 18, 1990), as follows:
Exhibit No. and Description
10.13 License Agreement between the Company and Jordache dated
January 18, 1990 (as no. 10.1 therein).
10.15 Letter of Indemnification from Jordache to the Company dated
January 18, 1990 (as no. 10.3 therein)
10.16 Letter Agreement from Jordache to the Company regarding foreign
license rights dated January 18, 1990 (as no. 10.4 therein).
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990:
Exhibit No. and Description
3.1(a) Certificate of Amendment of the Restated Certificate of Incorporation
10.20 Stock Option Agreement between the Company and Philippe Benacin dated
August 31, 1990.
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 29, 1991), as follows:
Exhibit No. and Description
10.24 Agreement and Plan or Reorganization dated July 29, 1991
among the Company, Jean Madar and Philippe Benacin (as No. 10.1 therein)
The following document heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991:
Exhibit No. and Description
10.25 Employment Agreement between the Company and Philippe Benacin
dated July 29, 1991
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Registration Statement on Form S-1
(No. 33-48811):
Exhibit No. and Description
10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992:
Exhibit No. and Description
3.1(b) Amendment to the Company's Restated Certificate of Incorporation,
as amended, dated July 31, 1992
4.9 1992 Stock Option Plan
4.10 Amendment to 1992 Stock Option Plan
4.11 1993 Stock Option Plan
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Registration Statement on Form S-3
(No. 33-63330):
Exhibit No. and Description
4.12 Form of Warrant Agreement between Bear, Stearns & Co. Inc.
and Jean Philippe Fragrances, Inc.
10.29 Form of Purchase Agreement
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1993), as follows:
Exhibit No. and Description
10.30 License Agreement dated July 15, 1993, among Burberrys Limited,
Inter Parfums, S.A. and Jean Philippe Fragrances, Inc.1
10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A. (original in French)1
10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A.(translation of French into English)1
10.33 Agreement dated July 14, 1993, between Alfin, Inc. and
Inter Parfums, S.A.1
10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe
Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc.
10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A.,
Jean Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.1
- ------------------
1Filed in excised form, as confidentiality is being sought for
certain portions thereof.
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
Exhibit No. and Description
10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Molyneux)
10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Weil)
10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc.,
Inter Parfums, S.A. and Cosmetiques et Parfums de France, S.A.
dated February 18, 1994
10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc.,
Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A.
dated February 18, 1994
10.40 Commission Agreement among Jean Philippe Fragrances, Inc.,
Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994
10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re inventory purchase)
10.42 Convention de Nantissement among Cosmetiques et Parfums de France,
S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A.,
Jean Philippe Fragrances, Inc. and Inter Parfums, S.A.
dated February 18, 1994 (re security agreement)
10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A.,
Cosmetiques et Parfums de France,S.A., Jean Philippe Fragrances, Inc.
and Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994
(re French regulatory requirements)
10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
10.45 License Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1
(dated March 14, 1994) to the Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
Exhibit No. and Description
10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux)
10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil)
10.48. English translation of exhibit no. 10.41, Convention between
Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A.
dated February 18, 1994 (re inventory purchase)
10.49. English translation of exhibit no. 10.42, Convention de Nantissement
among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums
de France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and
Inter Parfums, S.A. dated February 18, 1994 (re security agreement)
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Form 8 Amendment no. 2 (dated
March 21, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
Exhibit No. and Description
10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques
et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A.,
Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A.
dated February 18, 1994 (re French regulatory requirements)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993:
Exhibit No. and Description
3.1(c) Amendment to the Company's Restated Certificate of Incorporation,
as amended, dated July 9, 1993
3.3 Articles of Incorporation of Inter Parfums Holding, S.A.
3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of
Inter Parfums Holding, S.A.
3.4 Articles of Incorporation of Inter Parfums, S.A.
3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation
of Inter Parfums, S.A.
4.14 Warrant no. 108 registered in the name of Ladenburg, Thalmann & Co., Inc.
dated February 2, 1994
4.15 1994 Nonemployee Director Stock Option Plan
10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization
Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.)
10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport
Partiel D'Actif dated July 30, 1993 (Reorganization Agreement between
Inter Parfums, S.A. and Selective Industrie, S.A.)
10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees
dated September 30, 1993
10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated September 30, 1993
10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees
dated March 2, 1994
10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated March 2, 1994
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - May 31, 1994), as follows:
Exhibit No. and Description
10.55 License Agreement between Chesebrough-Pond's, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994 2, listed as no. 10.51 therein.
10.56 Asset Purchase Agreement between Conopco, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994, listed as no. 10.52 therein.
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1994), as follows:
Exhibit No. and Description
10.57 Revolving Credit Agreement dated July 15, 1994 among Republic National
Bank of New York, Jean Philippe Fragrances, Inc. and Elite Parfums, Ltd.,
listed as no. 10.54 therein.
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
August 8, 1994) to the Current Report on Form 8-K (date of event - July 13,
1994), as follows:
Exhibit No. and Description
10.58. Engagements de Garanties among Zanimob Enterprise Limited, Jacomo
France and Inter Parfums, S.A. dated July 12, 1994, listed as no. 10.53 therein.
10.58.1 English translation of exhibit no. 10.53, Engagements de Garanties
among Zanimob Enterprise Limited, Jacomo France and Inter Parfums, S.A.
dated July 12, 1994, listed as no. 10.53.1 therein.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994:
4.15 1994 Nonemployee Director Supplemental Stock Option Plan
10.59 Modification of Lease Agreement dated June 17, 1994 between Metropolitan
Life Insurance Company and Jean Philippe Fragrances, Inc.
_______________________
2Filed in excised form as confidential treatment has been
granted for certain provisions thereof.
The following exhibits are filed herewith:
Exhibit No. and Description
10.60 Guaranty and Security Agreement of Jean Philippe Fragrances, Inc.
and Elite Parfums, Ltd. to Republic National Bank of New York (France)
dated July 19, 1995
10.61 Lease for 60 Stults Road, South Brunswick, NJ between Forsgate
Industrial Complex, a limited partnership, and Jean Philippe Fragrances,
Inc. dated July 10, 1995
10.62 Intellectual Property Purchase Agreement between Parlux Fragrances,
Inc. and Parfums Jean Desprez, S.A. dated March 12, 1996
10.63 Inventory Purchase Agreement between Parlux Fragrances, Inc. and
Jean Desprez, S.A. dated March 12, 1996
11 Statement re: Computation of Earnings Per Share
21 List of Subsidiaries
(b) Reports on Form 8-K:
No Current Reports on Form 8-K were filed during the fourth quarter
of Fiscal 1995.
Richard A. Eisner & Company, LLP
Accountants and Consultants
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Jean Philippe Fragrances, Inc.
New York, New York
We have audited the accompanying consolidated balance sheets of Jean
Philippe Fragrances, Inc. and subsidiaries as at December 31, 1995 and December
31, 1994, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of Inter Parfums Holdings, S.A. and subsidiaries,
consolidated subsidiaries of the Company, which statements include total assets,
net sales and net income constituting 53%, 38% and 51% of the related
consolidated totals for 1995 and 47%, 36% and 13% for 1994 and 30%, 28% and 28%
for 1993. Those statements were audited by other auditors whose reports have
been furnished to us, and our opinion, insofar as it relates to the amounts for
Inter Parfums Holdings, S.A. and subsidiaries, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements enumerated above present fairly, in all
material respects, the consolidated financial position of Jean Philippe
Fragrances, Inc. and subsidiaries at December 31, 1995 and December 31, 1994,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1995 in conformity with generally
accepted accounting principles.
Our audits referred to above included Schedule II for each of the years in
the three-year period ended December 31, 1995. In our opinion, such schedule
presents fairly the information set forth therein in accordance with the
applicable accounting regulation of the Securities and Exchange Commission.
Richard A. Eisner & Company, LLP
New York, New York
March 19, 1996
With respect to accounts
for foreign subsidiaries
March 27, 1996
INDEPENDENT AUDITOR'S REPORT
INTER PARFUMS HOLDING AND SUBSIDIARIES
We have audited the consolidated balance sheets of Inter Parfums Holding and
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of income, retained earnings and cash flows for the years ended
December 31, 1995, 1994 and 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Inter Parmfums Holding and
subsidiaries as of December 31, 1995 and 1994 and the results of its operations
and its cash flows for the years ended December 31, 1995, 1994 and 1993, in
conformity with generally accepted accounting principles.
CABINET CAUVIN, ANGLEYS, SAINT-PIERRE INTERNATIONAL
Paris, France
March 27, 1996
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
December 31,
-------------------
A S S E T S 1995 1994
----------- ------- -------
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . $14,204 $ 5,275
Accounts receivable, net of allowances of $4,208
and $2,823 in 1995 and 1994, respectively
(Note F) . . . . . . . . . . . . . . . . . . . . 22,884 19,876
Inventories (Notes A and C). . . . . . . . . . . . 26,093 24,641
Receivables, other . . . . . . . . . . . . . . . . 970 1,936
Other. . . . . . . . . . . . . . . . . . . . . . . 987 1,786
Deferred tax benefit (Note K). . . . . . . . . . . 2,401 992
-------- -------
Total current assets. . . . . . . . . . . . 67,539 54,506
Equipment and leasehold improvements, net
(Notes A and D). . . . . . . . . . . . . . . . . . 1,970 1,202
Other assets. . . . . . . . . . . . . . . . . . . . . 1,314 584
Deferred tax benefit (Note K) . . . . . . . . . . . . 582 732
Trademarks and licenses, net (Notes A and E). . . . . 12,596 12,427
-------- -------
T O T A L . . . . . . . . . . . . . . . . . $84,001 $69,451
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Loans payable, banks (Note F). . . . . . . . . . . $ 9,922 $ 6,681
Current portion of long-term debt. . . . . . . . . 187
Accounts payable . . . . . . . . . . . . . . . . . 15,012 14,647
Income taxes payable . . . . . . . . . . . . . . . 1,242 1,765
-------- -------
Total current liabilities . . . . . . . . . 26,176 23,280
-------- -------
Long-term debt, less current portion (Note G) . . . . 596 862
-------- -------
Minority interest . . . . . . . . . . . . . . . . . . 5,253 796
-------- -------
Commitments (Note H)
Shareholders' equity (Note I):
Preferred stock, $.001 par value; authorized
1,000,000 shares; none issued
Common stock, $.001 par value; authorized
30,000,000 shares; outstanding 10,009,981
and 10,242,786 shares in 1995 and 1994,
respectively . . . . . . . . . . . . . . . . . . 10 10
Additional paid-in capital . . . . . . . . . . . . 20,610 20,408
Retained earnings. . . . . . . . . . . . . . . . . 32,565 23,527
Foreign currency translation adjustment. . . . . . 1,681 568
Treasury stock, at cost 810,503 and 486,198
shares in 1995 and 1994, respectively. . . . . . (2,890)
-------- -------
Total shareholders' equity. . . . . . . . . 51,976 44,513
-------- -------
T O T A L . . . . . . . . . . . . . . . . . $84,001 $69,451
======== =======
The accompanying notes are an integral part of
these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except share and per share data)
Year Ended December 31,
---------------------------------------
1995 1994 1993
-------- ------- -------
Net sales . . . . . . . . . . . . $93,669 $75,079 $59,546
Cost of sales . . . . . . . . . . 48,703 39,036 32,964
-------- -------- -------
Gross margin. . . . . . . . . . . 44,966 36,043 26,582
Selling, general and
administrative . . . . . . . . 32,990 23,773 15,814
Loss on product discontinuance. . 2,229
-------- -------- -------
Income from operations. . . . . . 9,747 12,270 10,768
-------- -------- -------
Other charges (income):
Interest . . . . . . . . . . . 1,148 803 619
(Gain) loss on foreign
currency . . . . . . . . . . (197) 161 (178)
Interest (income). . . . . . . (274) (152) (269)
(Gain) on sale of stock of
subsidiary . . . . . . . . . (3,310) (221) (644)
-------- -------- --------
(2,633) 591 (472)
-------- -------- --------
Income before income taxes. . . . 12,380 11,679 11,240
Income taxes. . . . . . . . . . . 3,188 4,330 4,137
-------- -------- -------
Income before minority interest . 9,192 7,349 7,103
Minority interest in net income
of consolidated subsidiary . . 154 74 4
-------- -------- -------
NET INCOME. . . . . . . . . . . . $ 9,038 $ 7,275 $ 7,099
======== ======== =======
Net income per share. . . . . . . $0.87 $0.70 $0.70
====== ====== =====
Weighted average number of common
and common equivalent shares
outstanding. . . . . . . . . . 10,438,896 10,454,555 10,132,628
=========== =========== ==========
The accompanying notes are an integral part of
these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands except share and per share data)
Common Stock Additional
-------------------- Paid-in Retained Translation Treasury
Shares Amount Capital Earnings Adjustments Stock Total
---------- -------- --------- -------- ----------- ------- -------
Balance - January 1, 1993. . . . . . . . . . . . . . . 9,206,201 $ 9 $ 9,365 $ 9,154 $ (40) $18,488
Issuance of common stock . . . . . . . . . . . . . . . 550,000 1 7,630 7,631
Shares issued upon exercise of stock options and
warrants. . . . . . . . . 165,750 649 649
Tax benefit from exercise of stock options . . . . . . 285 285
Net income . . . . . . . . . . . . . . . . . . . . . . 7,099 7,099
Translation adjustments. . . . . . . . . . . . . . . . (378) (378)
---------- -------- --------- -------- ----------- ------- -------
Balance - December 31, 1993. . . . . . . . . . . . . . 9,921,951 10 17,929 16,253 (418) 33,774
Issuance of common stock for acquisition . . . . . . . 200,000 2,200 2,200
Shares issued upon exercise of stock options and
warrants. . . . . . . . . 121,835 279 279
Net income . . . . . . . . . . . . . . . . . . . . . . 7,274 7,274
Translation adjustments. . . . . . . . . . . . . . . . 986 986
---------- -------- --------- -------- ----------- ------- -------
Balance - December 31, 1994. . . . . . . . . . . . . . 10,243,786 10 20,408 23,527 568 44,513
Shares issued upon exercise of stock options . . . . . 91,500 202 202
Net income . . . . . . . . . . . . . . . . . . . . . . 9,038 9,038
Translation adjustments. . . . . . . . . . . . . . . . 1,113 1,113
Purchased treasury shares. . . . . . . . . . . . . . . (324,305) $(2,890) (2,890)
---------- -------- --------- -------- ----------- ------- -------
BALANCE - DECEMBER 31, 1995. . . . . . . . . . . . . . 10,010,981 $10 $20,610 $32,565 $1,681 $(2,890) $51,976
========== ======== ========= ======== =========== ======= =======
The accompanying notes are an integral part of
these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands except share and per share data)
Year Ended December 31,
------------------------------
1995 1994 1993
-------- -------- --------
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . $ 9,038 $ 7,275 $ 7,099
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . 1,322 879 412
Gain on sale of stock of subsidiary. . . . . . . (3,311) (221) (644)
Minority interest in net income. . . . . . . . . 158 74 4
Increase (decrease) in cash from changes in:
Accounts receivable. . . . . . . . . . . . . . (2,609) (1,493) (6,500)
Inventories. . . . . . . . . . . . . . . . . . (1,043) (6,118) (5,569)
Other assets . . . . . . . . . . . . . . . . . 1,102 (3,085) 131
Deferred tax benefit . . . . . . . . . . . . . (1,223) (216)
Accounts payable . . . . . . . . . . . . . . . (75) 4,824 436
Income taxes payable . . . . . . . . . . . . . (523) 141 1,568
-------- -------- --------
Net cash provided by (used in)
operating activities . . . . . . . . . . . 2,836 2,060 (3,063)
-------- -------- --------
Cash flows from investing activities:
Purchase of equipment and leasehold improvements . . (1,244) (714) (453)
Cash portion of trademark and license acquisitions . (135) (9,144) (1,759)
Loan to officer. . . . . . . . . . . . . . . . . . . (99)
Repayment of officer loans . . . . . . . . . . . . . 315
-------- -------- --------
Net cash (used in) investing activities. . . (1,379) (9,858) (1,996)
-------- -------- --------
Cash flows from financing activities:
Increase in loan payable - bank. . . . . . . . . . . 3,085 2,173 165
Proceeds from issuance of long-term debt . . . . . . 722 708
Repayment of long-term debt. . . . . . . . . . . . . (499) (181) (111)
Proceeds from issuance of common stock . . . . . . . 7,631
Proceeds from sale of stock of subsidiary. . . . . . 7,579 194 1,157
Purchase of treasury stock . . . . . . . . . . . . . (2,890)
Proceeds from exercise of options and warrants . . . 202 279 649
-------- -------- --------
Net cash provided by financing activities. . 7,477 3,187 10,199
-------- -------- --------
Effect of exchange rate changes in cash . . . . . . . . (5) (34) (15)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . 8,929 (4,645) 5,125
Cash and cash equivalents - beginning of year . . . . . 5,275 9,920 4,795
-------- -------- --------
CASH AND CASH EQUIVALENTS - END OF YEAR . . . . . . . . $14,204 $ 5,275 $ 9,920
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . $ 1,146 $ 791 $ 635
Income taxes . . . . . . . . . . . . . . . . . . . 4,968 4,781 2,720
The accompanying notes are an integral part
of these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE A) - The Company and its Significant Accounting Policies:
[1] Business of the Company:
The Company is a manufacturer and distributor of domestic and
international brand name and licensed fragrances, alternative designer
fragrances and mass market cosmetics.
[2] Basis of preparation:
The consolidated financial statements include the accounts of Jean
Philippe Fragrances, Inc. ("JPF") and its domestic and foreign subsidiaries (the
"Company"). All material intercompany balances and transactions have been
eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
[3] Foreign currency translation:
For foreign subsidiaries that operate in a foreign currency, assets
and liabilities are translated to U.S. dollars at year-end exchange rates.
Income and expense items are translated at average rates of exchange prevailing
during the year. Gains and losses from translation adjustments are accumulated
in a separate component of shareholders' equity. In instances where the
financial statements of foreign entities are remeasured into their functional
currency (U.S. dollars), the remeasurement adjustment is recorded in operations.
[4] Cash equivalents:
All highly liquid investments purchased with a maturity of three
months or less are considered to be cash equivalents.
[5] Inventories:
Inventories are stated at the lower of cost (first-in, first-out) or
market.
[6] Equipment and leasehold improvements:
Equipment and leasehold improvements are stated at cost. Depreciation
and amortization are provided using the straight-line method and the declining
balance method over the estimated useful asset lives for equipment and the
shorter of the lease term or estimated useful asset lives for leasehold
improvements.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE A) - The Company and its Significant Accounting Policies:
(continued)
[7] Trademarks and licenses:
Trademarks are stated at cost and are amortized by the straight-line
method over twenty years. The cost of licenses acquired is being amortized by
the straight-line method over the term of the license, approximately seven to
ten years.
The Company reviews trademarks and licenses for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
[8] Revenue recognition:
Revenue is recognized upon shipment of merchandise. Allowances are
established for estimated returns.
[9] Issuance of common stock of subsidiary:
The Company's share of the proceeds in excess of the carrying amount
of the portion of the Company's investment sold is reflected as a gain in the
consolidated income statement.
[10] Per share data:
Net income per share is based on the weighted average number of
common and common equivalent shares outstanding during each year. Common
equivalent shares, which consist of unissued shares under options and warrants,
are included in the computation when the results are dilutive.
(NOTE B) - Loss on Product Discontinuance:
As a result of disppointing sales of the Cutex lip color line, the Company
decided to discontinue prodcution of the line in October 1995. As a result, the
Company has taken a nonrecurring charge aggregating $2.2 million, before taxes,
in the fourth quarter of 1995. This charge represents a writedown of current lip
product inventory and the effect of potential customer returns or markdowns of
lip products expected in 1996. The discontinued lip color line did not
contribute to net sales in 1995 as customer returns exceeded new product
shipments.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE B) - Loss on Product Discontinuance: (continued)
As a result of this issue, among others, relating to the Cutex product
lines, the Company and the licensor have agreed to a reduction of the minimum
royalties payable under the Cutex license. The Company believes that such
relief, along with the discontinuance of the lip color line, will enable the
Company to direct all Cutex marketing efforts and resources to building upon the
core nail care business for which Cutex is famous.
(NOTE C) - Inventories:
December 31,
-------------------
1995 1994
------- -------
Raw materials and component
parts. . . . . . . . . . . . . $10,982 $10,537
Finished goods. . . . . . . . . . 15,111 14,104
------- -------
T o t a l . . . . . . . $26,093 $24,641
(NOTE D) - Equipment and Leasehold Improvements:
December 31,
-------------------
1995 1994
------- -------
Equipment . . . . . . . . . . . . $3,308 $ 2,275
Leasehold improvements. . . . . . 727 405
------- -------
4,035 2,680
Less accumulated depreciation
and amortization . . . . . . . 2,065 1,478
------- -------
T o t a l . . . . . . . $1,970 $ 1,202
======= =======
(NOTE E) - Trademarks and Licenses:
December 31,
-------------------
1995 1994
------- -------
Trademarks. . . . . . . . . . . . $11,015 $10,032
Licenses. . . . . . . . . . . . . 3,246 3,008
------- -------
14,261 13,040
Less accumulated amortization . . 1,665 613
------- -------
T o t a l . . . . . . . $12,596 $12,427
======= =======
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE F) - Loans Payable - Banks:
December 31,
-------------------
1995 1994
------- -------
Borrowings under a $12,000 unsecured
revolving line of credit. Principal is
due on demand bearing interest at the
bank's prime rate or 1.75% above the
LIBOR rate. . . . . . . . . . . . . . . . $ 2,600 $ 3,000
Borrowings by the Company's foreign
subsidiaries under a $4,000 credit
facility whereby accounts receivable are
sold with recourse and accounted for as
a loan and bearing interest at 0.8%
above the PIBOR rate (5.5% at
December 31, 1995). . . . . . . . . . . . 2,530 996
Borrowings by the Company's foreign
subsidiaries under several bank
overdraft facilities bearing interest
at 1.0% above the PIBOR rate. . . . . . . 4,792 1,374
Other borrowings by the Company's
foreign subsidiaries. . . . . . . . . . . 1,311
------- -------
T o t a l. . . . . . . . . . . . . $ 9,922 $ 6,681
======= =======
(NOTE G) - Long-Term Debt:
Borrowings by the Company's foreign subsidiary of $596 is due in 2004, or
the loan may be converted into shares of the Company's foreign subsidiary at
approximately $15 per share. Interest is payable quarterly at 7% per annum.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE H) - Commitments:
[1] Leases:
The Company leases its office and warehouse facilities under operating
leases expiring through 2003. Rental expense amounted to $730 in 1995, $442 in
1994 and $362 in 1993. Minimum future rental payments are as follows:
1996. . . . . . . . . . . . $1,307
1997. . . . . . . . . . . . 1,180
1998. . . . . . . . . . . . 1,127
1999. . . . . . . . . . . . 684
2000. . . . . . . . . . . . 684
Thereafter. . . . . . . . . 1,926
------
T o t a l . . . . $6,908
======
[2] License agreements:
In January 1990, the Company entered into a license agreement with
Jordache Enterprises, Inc. ("Jordache"). In connection therewith, the Company
acquired the exclusive license to use the Jordache trademark in connection with
fragrances and cosmetics in the United States and various territories abroad.
The license, which expired June 30, 1995, permits ten annual renewals at the
Company's option, subject to certain minimum sales requirements and royalty
payments. The Company has exercised its option to renew for the year ended June
30, 1996.
On July 15, 1993, the Company entered into a license agreement with
Burberrys Limited. In connection therewith, the Company obtained the exclusive
world-wide rights for the manufacturing and distribution of Burberrys'
fragrances. The license agreement expires December 31, 2003, subject to certain
minimum sales requirements and royalty payments.
On July 16, 1993, the Company entered into an exclusive, ten-year,
world-wide license with Jean Charles Brosseau S.A. for Ombre Rose fragrances,
subject to certain minimum sales requirements and royalty payments.
On May 31, 1994 the Company entered into a license agreement with
Chesebrough-Pond's USA for the United States and Puerto Rican rights to
manufacture and market Cutex nail care and lip color products, excluding nail
polish remover. The license is for a term of ten years, including renewal
periods, and is subject to certain minimum sales and royalty payments.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE H) - Commitments:
[2] License agreements: (continued)
Minimum future royalty payments due pursuant to license agreements
are as follows:
1996. . . . . . . . . . . . $ 2,166
1997. . . . . . . . . . . . 2,156
1998. . . . . . . . . . . . 2,077
1999. . . . . . . . . . . . 2,122
2000. . . . . . . . . . . . 2,192
Thereafter. . . . . . . . . 3,590
-------
T o t a l . . . . $14,303
=======
(NOTE I) - Shareholders' Equity:
[1] Issuance of common stock of subsidiary:
In December 1993, Inter Parfums, S.A., a consolidated subsidiary of the
Company, sold 100,000 shares of its common stock at 70 French francs per share
aggregating 7 million French francs or approximately $1.2 million. The shares
were sold in a private placement transaction to unaffiliated French
institutional investors.
In 1994, 10,000 shares were sold to enable the stock of Inter Parfums,
S.A. to commence trading on the over-the-counter Paris Stock Exchange, and
11,536 shares were issued pursuant to the conversion terms of the Company's
long-term debt.
In November 1995, Inter Parfums, S.A. completed a public offering of
308,000 shares of its common stock at 130 French francs per share. Net proceeds
of such offering aggregated 36.5 million French francs or approximately $7.6
million. In connection with such offering, Inter Parfums Holdings, S.A.
("Holdings"), a wholly-owned subsidiary of the Company and direct parent of
Inter Parfums, S.A. exercised its right to convert a portion of its convertible
debt into 250,000 shares of capital stock of Inter Parfums, S.A. at 80 French
francs per share. As a result of such issuances in 1995, the percentage
ownership of Inter Parfums, S.A. was reduced from 90.64% to 76.72%.
The Company's share of the offering, sale or conversion proceeds in
excess of the carrying amount of the portion of the Company's investment sold is
reflected as a gain in the consolidated income statement. Deferred taxes have
not been provided because application of available tax savings strategies would
eliminate taxes on this transaction.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE I) - Shareholders' Equity: (continued)
[2] Stock option plans:
The Company maintains a stock option program for key employees and
executives and a separate program for nonemployee directors. The plans provide
for the granting of both nonqualified and incentive options. Options granted
under the plans are exercisable for a period of up to ten years from the date of
grant.
A summary of option transactions during the year ended December 31,
1995 is presented below:
Incentive Nonqualified
Stock Options Stock Options
Shares under option - beginning ------------- -------------
of year. . . . . . . . . . . 31,500 1,248,974
Options granted . . . . . . . . 313,150
Options exercised at prices
ranging from $3.83 to $7.75. (6,000) (10,500)
Options cancelled . . . . . . . (35,250)
------ ---------
Shares under option - end of
year (1) . . . . . . . . . . 25,500 1,516,374
====== =========
Exercise price. . . . . . . . . $3.83 to $4.22 $6.67 to $12.00
============== ===============
Options available for grant . . 162,600 177,100
======= =======
(1) All of which are exercisable.
In addition, the Company has outstanding options not pursuant to any
plan. Options for 75,000 shares were exercised during 1995 at $1.33 per share
and 1,000 remain outstanding at an exercise price of $12.00.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE J) - Geographic Areas:
Information on the Company's operations by geographical areas is as
follows:
Year Ended December 31,
------------------------------------
1995 1994 1993
-------- -------- --------
Net sales:
United States. . $ 57,382 $ 48,377 $ 43,103
Europe . . . . . 38,451 30,672 20,661
South America. . 693
Eliminations . . (2,857) (3,970) (4,218)
-------- -------- --------
T o t a l. . . $ 93,669 $ 75,079 $ 59,546
======== ======== ========
Net income:
United States. . $ 4,256 $ 6,297 $ 5,139
Europe . . . . . 4,619 1,295 1,960
South America. . 107
Eliminations . . 56 (317)
-------- -------- --------
T o t a l. . . $ 9,038 $ 7,275 $ 7,099
======== ======== ========
Total assets:
United States. . $ 50,767 $ 49,625 $ 37,362
Europe . . . . . 44,522 32,518 15,134
South America. . 900
Eliminations . . (12,188) (12,692) (2,587)
-------- -------- --------
T o t a l. . . $ 84,001 $ 69,451 $ 49,909
======== ======== ========
United States export sales were approximately $6,400, $5,700 and $5,100 for
the years ended December 31, 1995, 1994 and 1993, respectively.
(NOTE K) - Income Taxes:
The components of income before income taxes consist of the following:
Year Ended December 31,
------------------------------------
1995 1994 1993
-------- -------- --------
U.S. operations . . $ 6,802 $ 10,244 $ 8,480
Foreign operations. 5,483 1,951 2,760
Eliminations. . . . 95 (516)
-------- -------- --------
T o t a l. . . $ 12,380 $ 11,679 $ 11,240
======== ======== ========
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE K) - Income Taxes: (continued)
The provision for current and deferred income tax expense consists of the
following:
Year Ended December 31,
------------------------------------
1995 1994 1993
-------- -------- --------
Current:
Federal . . . . . $2,627 $3,434 $2,762
State and local . 618 919 746
Foreign . . . . . 316 180 915
------ ------ ------
T o t a l . . . $3,561 $4,533 $4,423
====== ====== ======
Deferred:
Federal . . . . . $ (555) $ (338) $ (175)
State and local . (143) (69) 8
Foreign . . . . . 325 204 (119)
------ ------ ------
T o t a l . . . . $ (373) $ (203) $ (286)
====== ====== ======
Deferred taxes are provided principally for valuation reserves, and certain
other expenses that are recognized in different years for financial reporting
and income tax purposes. At December 31, 1995, the deferred tax assets consists
of approximately $2,400 relating to reserves and other expenses which are not
currently deductible for tax purposes and approximately $581 relating to
available foreign net operating loss carryforwards.
Differences between the United States federal statutory income tax rate and
the effective income tax rate were as follows:
Year Ended
December 31,
---------------------
1995 1994 1993
----- ----- -----
Statutory rates. . . . . . . . 34.0% 34.0% 34.0%
State and local taxes, net of
federal benefit . . . . . . 2.5 4.8 4.4
Nontaxable gain on sale of
stock of subsidiary . . . . (9.2)
Other. . . . . . . . . . . . . (1.6) (1.7) (1.6)
----- ----- -----
Effective rates. . . . . . . . 25.7% 37.1% 36.8%
===== ===== =====
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE L) - Subsequent Event:
On March 19, 1996, the Company sold the trademarks of the Bal `a Versailles
and Revolution' a Versailles lines. The aggregate sales price was $4.95 million
which includes $1.8 million of inventory at cost.
(continued)
SCHEDULE II
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
--------------------------
(1) (2)
Balance --------------------------
at Charged to Balance
beginning Charged to other at
of costs and accounts - Deductions - end of
Description period expenses describe (A) describe (B) period
----------- ------ -------- ------------ ------------ ------
Year ended December 31, 1995:
Allowances for sales returns and doubtful
accounts . . . . . . . . . . . . . . . $2,823 $1,546 $160 (a) $4,208
====== ====== ===== ======
Year ended December 31, 1994:
Allowances for sales returns and doubtful
accounts . . . . . . . . . . . . . . . $1,202 $2,150 $529 (a) $2,823
====== ====== ===== ======
Year ended December 31, 1993:
Allowances for sales returns and doubtful
accounts . . . . . . . . . . . . . . . $1,086 $ 716 $600 (a) $1,201
====== ====== ===== ======
(a) Write off of bad debts and sales returns.
The accompanying notes are an integral part of these financial statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JEAN PHILIPPE FRAGRANCES, INC.
By: /s/ Philippe Benacin
--------------------
Philippe Benacin, President
Date: March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Jean Madar
- --------------
Jean Madar Chairman of the March 26, 1996
Board of Directors
/s/ Philippe Benacin
- --------------------
Philippe Benacin Chief Executive Officer March 27, 1996
and Director
/s/ Russell Greenberg
- --------------------- Chief Financial and March 26, 1996
Russell Greenberg Accounting Officer and
Director
/s/ Francois Heilbronn
- ---------------------- Director March 27, 1996
Francois Heilbronn
/s/ Joseph A. Caccamo
- --------------------- Director March 26, 1996
Joseph A. Caccamo
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBIT INDEX TO
REPORT ON FORM 10-K
(Mark one)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995 or
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to ______.
Commission File No. 0-16469
JEAN PHILIPPE FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3275609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
551 Fifth Avenue, New York, New York 10176
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 983-2640.
------------------------------------------------------------
The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") are hereby incorporated by reference
from the Company's Registration Statement on Form S-18, file no. 33-17139-NY:
Exhibit No. and Description
3.1 Restated Certificate of Incorporation
4.2 Common Stock Certificate Specimen
4.4 1987 Stock Option Plan
The following document heretofore filed with the Commission is incorporated
by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987:
Exhibit No. and Description
3.2 By-laws, as amended
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - January 18, 1990), as follows:
Exhibit No. and Description
10.13 License Agreement between the Company and Jordache dated
January 18, 1990 (as no. 10.1 therein).
10.15 Letter of Indemnification from Jordache to the Company
dated January 18, 1990 (as no. 10.3 therein)
10.16 Letter Agreement from Jordache to the Company regarding
foreign license rights dated January 18, 1990 (as no. 10.4
therein).
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990:
Exhibit No. and Description
3.1(a) Certificate of Amendment of the Restated Certificate of Incorporation
10.20 Stock Option Agreement between the Company and Philippe Benacin dated
August 31, 1990.
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Current Report on Form 8-K (date of
event - July 29, 1991), as follows:
Exhibit No. and Description
10.24 Agreement and Plan or Reorganization dated July 29, 1991 among the
Company, Jean Madar and Philippe Benacin (as No. 10.1 therein)
The following document heretofore filed with the Commission is incorporated
by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991:
Exhibit No. and Description
10.25 Employment Agreement between the Company and Philippe Benacin dated
July 29, 1991
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Registration Statement on Form S-1
(No. 33-48811):
Exhibit No. and Description
10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992:
Exhibit No. and Description
3.1(b) Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated July 31, 1992
4.9 1992 Stock Option Plan
4.10 Amendment to 1992 Stock Option Plan
4.11 1993 Stock Option Plan
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Registration Statement on Form S-3
(No. 33-63330):
Exhibit No. and Description
4.12 Form of Warrant Agreement between Bear, Stearns & Co. Inc. and
Jean Philippe Fragrances, Inc.
10.29 Form of Purchase Agreement
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1993), as follows:
Exhibit No. and Description
10.30 License Agreement dated July 15, 1993, among Burberrys Limited, Inter
Parfums, S.A. and Jean Philippe Fragrances, Inc.1
10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A. (original in French)1
10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A.(translation of French into English)1
10.33 Agreement dated July 14, 1993, between Alfin, Inc. and Inter Parfums,
S.A.1
10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe
Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc.
10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A.,
Jean Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.(1)
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
- --------
1 Filed in excised form, as confidentiality is being sought for certain portions
thereof.
Exhibit No. and Description
10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Molyneux)
10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Weil)
10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France, S.A. dated February 18, 1994
10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated
February 18, 1994
10.40 Commission Agreement among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Sodipe S.A. dated February 18, 1994
10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re inventory purchase)
10.42 Convention de Nantissement among Cosmetiques et Parfums de France,
S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe
Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security
agreement)
10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A.,
Cosmetiques et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and
Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 (re French
regulatory requirements)
10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
10.45 License Agreement among Jean Philippe Fragrances, Inc., Revlon Consumer
Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
March 14, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
Exhibit No. and Description
10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux)
10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil)
10.48. English translation of exhibit no. 10.41, Convention between Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated
February 18, 1994 (re inventory purchase)
10.49. English translation of exhibit no. 10.42, Convention de Nantissement
among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de
France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter
Parfums, S.A. dated February 18, 1994 (re security agreement)
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Form 8 Amendment no. 2 (dated March 21,
1994) to the Current Report on Form 8-K (date of event - February 28, 1994), as
follows:
Exhibit No. and Description
10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques
et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A.,
Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated
February 18, 1994 (re French regulatory requirements)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993:
Exhibit No. and Description
3.1(c) Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated July 9, 1993
3.3 Articles of Incorporation of Inter Parfums Holding, S.A.
3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of
Inter Parfums Holding, S.A.
3.4 Articles of Incorporation of Inter Parfums, S.A.
3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation of
Inter Parfums, S.A.
4.14 Warrant no. 108 registered in the name of Ladenburg, Thalmann & Co., Inc.
dated February 2, 1994
4.15 1994 Nonemployee Director Stock Option Plan
10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization
Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.)
10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport Partiel
D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums,
S.A. and Selective Industrie, S.A.)
10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees dated
September 30, 1993
10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated September 30, 1993
10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees dated
March 2, 1994
10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated March 2, 1994
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Current Report on Form 8-K (date of
event - May 31, 1994), as follows:
Exhibit No. and Description
10.55 License Agreement between Chesebrough-Pond's, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994(2), listed as no. 10.51 therein.
10.56 Asset Purchase Agreement between Conopco, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994, listed as no. 10.52 therein.
- ------------------
(2) Filed in excised form as confidential treatment has been granted for
certain provisions thereof.
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Current Report on Form 8-K (date of
event - July 15, 1994), as follows:
Exhibit No. and Description
10.57 Revolving Credit Agreement dated July 15, 1994 among Republic National
Bank of New York, Jean Philippe Fragrances, Inc. and Elite Parfums, Ltd.,
listed as no. 10.54 therein.
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
August 8, 1994) to the Current Report on Form 8-K (date of event - July 13,
1994), as follows:
Exhibit No. and Description
10.58. Engagements de Garanties among Zanimob Enterprise Limited, Jacomo
France and Inter Parfums, S.A. dated July 12, 1994, listed as no. 10.53
therein.
10.58.1 English translation of exhibit no. 10.53, Engagements de Garanties
among Zanimob Enterprise Limited, Jacomo France and Inter Parfums, S.A.
dated July 12, 1994, listed as no. 10.53.1 therein.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994:
4.15 1994 Nonemployee Director Supplemental Stock Option Plan
10.59 Modification of Lease Agreement dated June 17, 1994 between
Metropolitan Life Insurance Company and Jean Philippe Fragrances, Inc.
The following exhibits are filed herewith:
Exhibit No. and Description
10.60 Guaranty and Security Agreement of Jean Philippe
Fragrances, Inc. and Elite Parfums, Ltd. to Republic
National Bank of New York (France) dated July 19, 1995
10.61 Lease for 60 Stults Road, South Brunswick, NJ between
Forsgate Industrial Complex, a limited partnership, and
Jean Philippe Fragrances, Inc. dated July 10, 1995
10.62 Intellectual Property Purchase Agreement between
Parlux Fragrances, Inc. and Parfums Jean Desprez, S.A. dated
March 12, 1996
10.63 Inventory Purchase Agreement between Parlux
Fragrances, Inc. and Jean Desprez, S.A. dated March 12, 1996
11 Statement re: Computation of Earnings Per Share
21 List of Subsidiaries