INTER PARFUMS INC

Previous wording

We operate in the fragrance business, and manufacture, market and distribute a wide array of prestige fragrances and fragrance related products. We manage our business in two segments, European based operations and United States based operations. Certain prestige fragrance products are produced and marketed by our European based operations through our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext.

Current wording

We operate in the fragrance business, and manufacture, market and distribute a wide array of prestige fragrances and fragrance related products. We manage our business intwo segments, European based operations and United States based operations. Certain prestige fragrance products are produced and marketed by our European based operations through our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext.

Previous wording

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 70% and 74% of net sales for the three months ended March 31, 2024 and 2023, respectively. We have built a portfolio of prestige brands, which includeBoucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, RochasandVan Cleef & Arpels, whose products are distributed in over 120 countries around the world. Our exclusive and worldwide license for the production and distribution of Lacoste brand perfumes and cosmetics became effective in January 2024.

Current wording

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 68% and 69% of net sales for thesix months ended June 30, 2024 and 2023, respectively. We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, Rochas and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world. Our exclusive and worldwide license for the production and distribution of Lacoste brand perfumes and cosmetics became effective in January 2024.

Previous wording

Through our United States based operations, we also market fragrance and fragrance related products. United States based operations represented 30% and 26% of net sales for the three months ended March 31, 2024 and 2023, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of theAbercrombie & Fitch, Anna Sui, Donna Karan, DKNY, Emanual Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la RentaandRoberto Cavalli brands.

Current wording

Through our United States based operations, we also market fragrance and fragrance related products. United States based operations represented 32% and 31% of net sales for thethree months ended June 30, 2024 and 2023, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan, DKNY, Emanual Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta and Roberto Cavalli brands.

Previous wording

Substantially all of our prestige fragrance brands are licensed from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses. With respect to the Company’s largest brands, we license theMontblanc,Coach,Jimmy Choo, GUESS, Donna Karan/DKNYandFerragamo brand names.

Current wording

Substantially all of our prestige fragrance brands are licensed from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses. With respect to the Company’s largest brands, we license the Montblanc, Jimmy Choo, Coach, GUESS, Donna Karan/DKNY, Lacoste, and Ferragamo brand names.

Previous wording

We grow our business in two distinct ways. First, we grow by adding new brands to our portfolio, through new licenses, or other arrangements or outright acquisitions of brands. Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as phasing out underperforming products, so we can devote greater resources to those products with greater potential. The economics of developing, producing, launching and supporting products influence our sales and operating performance each year. The introduction of new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.

Current wording

We grow our business intwo distinct ways. First, we grow by adding new brands to our portfolio, through new licenses, or other arrangements or outright acquisitions of brands. Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as phasing out underperforming products, so we can devote greater resources to those products with greater potential. The economics of developing, producing, launching and supporting products influence our sales and operating performance each year. The introduction of new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.

Previous wording

Our business is not capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components from our suppliers. These components are received and stored directly at our third-party fillers or received at one of our distribution centers. For those components received at one of our distribution centers, based upon production needs, the components are subsequently sent to one of several third party fillers, which manufacture the finished product for us and then deliver them to one of our distribution centers.

Current wording

Our business is not capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components from our suppliers. These components are received and stored directly at our third-party fillers or received atone of our distribution centers. For those components received atone of our distribution centers, based upon production needs, the components are subsequently sent toone of several third party fillers, which manufacture the finished product for us and then deliver them toone of our distribution centers.

Previous wording

As with any global business, many aspects of our operations are subject to influences outside our control. We believe we have a strong brand portfolio with global reach and potential. As part of our strategy, we plan to continue to make investments behind fast-growing markets and channels to grow market share.

Current wording

As with any global business, many aspects of our operations are subject to influences outside our control. We believe we have a strong and well diversified brand portfolio with global reach and potential. As part of our strategy, we plan to continue to make investments behind fast-growing markets and channels to grow market share.

Previous wording

Net sales for the three months ended March 31, 2024 increased 4% from the three months ended March 31, 2023. At comparable foreign currency exchange rates, net sales increased 3% from the first quarter of 2023. The average dollar/euro exchange rate for the current first quarter was 1.09 compared to 1.07 in the first quarter of 2023.

Current wording

Net sales for thethree months ended June 30, 2024 increased 10.7% from thethree months ended June 30, 2023. At comparable foreign currency exchange rates, net sales increased 11.1% from the second quarter of 2023. The average dollar/euro exchange rate for the current second quarter was 1.08 compared to 1.09 in the second quarter of 2023, while the average dollar/euro exchange rate was 1.08 for both the six months ended June 30, 2024 and 2023. Net sales for thesix months ended June 30, 2024 increased 7.3% as compared to thesix months ended June 30, 2023.

Previous wording

The current first quarter saw modest sales growth, as compared to the corresponding period of the prior year, largely due to the exceptional performance of both European and United States based operations in 2023.

Current wording

Continuing the trend from the first quarter 2024, the current second quarter saw modest sales growth, as compared to the corresponding period of the prior year, largely due to the exceptional performance of both European and United States based operations in 2023 where net sales grew 26% compared to 2022.

Previous wording

For European based operations, Coach grew sales by 5% while Montblanc and Jimmy Choo saw decreases in sales of 5% and 23%, respectively, as compared to the corresponding period of the prior year. This was largely driven by the substantial increases in sales of Montblanc and Jimmy Choo in the first quarter of 2023 of 28% and 63%, respectively, as compared to the first quarter of 2022. During the first quarter of 2024, we began selling the Lacoste brand, which added $20 million in sales.

Current wording

For European based operations, Jimmy Choo grew sales by 31% while Montblanc and Coach saw decreases in sales of 3% and 5%, respectively, as compared to the corresponding period of the prior year. This was largely driven by the substantial increases in sales of Montblanc and Coach in the second quarter of 2023 of 16% and 28%, respectively, as compared to the second quarter of 2022. During the first quarter of 2024, we began selling the Lacoste brand, which added $39.5 million in sales during the first half of the year.

Previous wording

Sales by our United States based operations had a strong start growing 18% off a high 2023 base when first quarter sales had expanded 19%. This increase was driven by the addition and extension of Roberto Cavalli to our portfolio and double-digit growth for GUESS and Donna Karan/DKNY, following successful brand extensions and continued brand expansion.

Current wording

Sales by our United States based operations grew a modest 7.9% in the second quarter of 2024 off a high 2023 base when second quarter sales had expanded 42%. The addition and extension of Roberto Cavalli contributed to the continued growth in United States based operations. For the first half of 2024, we saw growth of 8% and 14% for GUESS and Donna Karan/DKNY, respectively, following successful and continued brand expansions.

Previous wording

During the first quarter of 2024, we debuted MontblancLegend Blue,which contributed to the continued brand strength as our largest brand. Additionally, during the first quarter of 2024, we debuted the Donna KaranCashmere Collection, which helped the brand to see double digit growth. Many of our mid-sized brands, including Van Cleef & Arpels, Kate Spade and MCM, also achieved double digit sales gains. Additionally, we introduced brand extensions within established lines for Abercrombie & Fitch and Anna Sui.

Current wording

During the second quarter of 2024, we debuted Montblanc Collection and Jimmy Choo I Want Choo Le Parfum, which contributed to the continued brand strength of ourtwo largest brands. Additionally, during the second quarter of 2024, we debuted Coach Dreams Moonlight and Lacoste Original which helped drive continued success of established and new brands for our portfolio. We also debuted MCMCrush in the second quarter of 2024 helping MCM realize double digit growth from prior year. Many of our mid-sized brands, including Karl Lagerfeld and Rochas, also achieved double digit sales gains. Additionally, we introduced brand extensions within established lines for Ferragamo and Guess. For Ferragamo we enriched the Signorina line with the launch of Signorina Unica. In the second quarter we launched Guess Iconic and Guess Amore helping to growone of our largest brands.

Previous wording

While our first quarter grew more moderately than the first quarter of 2023, we are confident in our future as we look forward to executing our plans for the remainder of 2024. Our brands are in high demand in a robust environment for the fragrance industry, and we have many exciting developments planned for the Company. We have a large number of brand extensions across many of our brands launching throughout the year, including a new flanker for theI Want Choo line planned for the second quarter of 2024, plus the first launch of an Interparfums developed blockbuster fragrance for Lacoste, later in the year. Additionally, there is a new flanker for Roberto CavalliSignatureand a new DKNY blockbuster fragrance planned for the second half of 2024. In sum, 2024 has all the earmarks of another superb year as the growth catalysts currently far outweigh the headwinds.

Current wording

The second quarter growth was in line with expectations, and we are confident in our future as we look forward to executing our plans for the remainder of 2024. Our brands are in high demand in a robust environment for the fragrance industry, and we have many exciting developments planned for the Company. We have a large number of brand extensions across many of our brands launching throughout the year, plus the upcoming international expansion of Lacoste Original. Additionally, there is a new flanker for Roberto CavalliSignatureand a new DKNY blockbuster fragrance, DKNY 24/7, that launched in select markets at the end of the second quarter and will see full scale distribution in September 2024. In sum,2024 has all the earmarks of another superb year as the growth catalysts currently far outweigh the headwinds.

Previous wording

First quarter sales in Western Europe rose 10%, followed by Asia/Pacific and Central and South America where comparable quarter sales in both regions increased 13% and 31%, respectively. Our sales in North America decreased slightly by 3% as the first quarter of 2023 saw large increases due to the new product launches previously discussed. While our sales in North America saw minimal decreases, the region is still strong and is our largest region across the Company. Additionally, our travel retail business is continuing to show signs of renewed life. Eastern Europe was adversely impacted by sourcing constraints in certain countries which resulted in sales shifting from the first quarter into the second quarter of 2024.

Current wording

In the first half of 2024, second quarter sales in our largest market, North America, rose 5%, followed by Western Europe and Asia/Pacific where comparable half year sales in both regions increased 11% and 6%, respectively. Our sales in Central and South America and the Middle East and Africa were also robust, up 26% and 8%, respectively. Additionally, our travel retail business is continuing to show signs of renewed life. Eastern Europe was adversely impacted by sourcing constraints in the first quarter, which showed signs of improvement during the second quarter 2024.

Previous wording

Generally, we do not bill customers for shipping and handling costs, and such costs, which aggregated $2.5 million and $3.9 million for the three months ended March 31, 2024 and 2023, respectively, are included in selling, general and administrative expenses in the consolidated statements of income. As such, our Company’s gross profit may not be comparable to other companies, which may include these expenses as a component of cost of goods sold. The improvement in shipping and handling costs in the first quarter of 2024 as compared to corresponding period in 2023 was a direct benefit of lower transportation costs seen globally.

Current wording

Generally, we do not bill customers for shipping and handling costs, and such costs, which aggregated $2.5 millionand $5.0 million for thethree and six months ended June 30, 2024, respectively, as compared to $3.6 million and $7.5 million for the corresponding periods of the prior year, are included in selling, general and administrative expenses in the consolidated statements of income. As such, our Company’s gross profit may not be comparable to other companies, which may include these expenses as a component of cost of goods sold. The improvement in shipping and handling costs in the first half of 2024 as compared to corresponding period in 2023 was a direct benefit of lower transportation costs seen globally.

Previous wording

The Company’s selling, general and administrative expenses as a percentage of net sales was 41.5% for the three months ended March 31, 2024 as compared to 36.1% for the three months ended March 31, 2023. The increase was largely driven by increased spending on promotional and advertising activities in the first quarter of 2024 as compared to the prior year period. Additionally, starting in 2024, the Company began to amortize the cost of the Lacoste license which represented $1.6 million during the first quarter. These costs will be incurred quarterly over the remaining life of the license.

Current wording

The Company’s selling, general and administrative expenses as a percentage of net sales was 45.6% and 43.6% for thethree andsix months ended June 30, 2024 as compared to 43.1% and 39.6% for thethree andsix months ended June 30, 2023. The increase was largely driven by increased spending on promotional and advertising activities in both the second quarter and first half of 2024 as compared to the prior year periods. Additionally, starting in 2024, the Company began to amortize the cost of the Lacoste license which represented $3.2 million during the first half of the year. These costs will be incurred at approximately $1.6 million quarterly over the remaining life of the license.

Previous wording

For European based operations, selling, general and administrative expenses increased 16.9% for the three months ended March 31, 2024, as compared to the corresponding period of the prior year, and represented 39.1% and 33.6% of net sales in the 2024 and 2023 periods, respectively. As discussed above, this increase is driven by increased promotion and advertising spending as well as the impact of the amortization of the Lacoste license. For United States based operations, selling, general and administrative expenses increased 24.5% for the three months ended March 31, 2024, as compared to the corresponding period of the prior year, and represented 46.0% and 43.5% of net sales in the 2024 and 2023 periods, respectively. As discussed in more detail below, these fluctuations are primarily from variations in promotion and advertising expenditures.

Current wording

For European based operations, selling, general and administrative expenses increased 21.2%and 19.2% for thethree and six months ended June 30, 2024 as compared to the corresponding period of the prior year, and represented 47.8% and 43.4% of net sales for thethree and six months ended June 30, 2024, respectively, as compared to 45.1% and 38.9% for thethree and six months ended June 30, 2023, respectively. As discussed above, this increase is driven by increased promotion and advertising spending as well as the impact of the amortization of the Lacoste license. For United States based operations, selling, general and administrative expenses increased 8.2%and 15.4% for thethree andsix months ended June 30, 2024, as compared to the corresponding period of the prior year, and represented 39.8% and 42.5% of net sales for thethree andsix months ended June 30, 2024, respectively, as compared to 39.7% and 41.3% for thethree andsix months ended June 30, 2024, respectively. The increase was largely driven by continued investment in infrastructure and headcount to support the growth of the business.

Previous wording

Promotion and advertising included in selling, general and administrative expenses aggregated $48.3 million and $35.2 million in the first quarters of 2024 and 2023, respectively, and represented 14.9% and 11.3% of net sales in the 2024 and 2023 periods, respectively. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness. We believe that our promotion and advertising efforts have a beneficial effect on sales. Historically, the Company incurred the majority of our promotional and advertising expenditures in the second half of the year. Beginning in 2024, the Company implemented a strategy to increase spending in the first half of the year to better support and drive business growth throughout the year. Additionally, as the first quarter of 2024 saw a lighter innovation program than prior years, the Company focused on increasing promotional and advertising spending to support the continued success of our existing brands and to support the initial launch of our new brands, Lacoste and Roberto Cavalli. We also continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience. Long term, we continue to anticipate that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales.

Current wording

Promotion and advertising included in selling, general and administrative expenses aggregated $66.4 million and $114.7 million for thethree andsix months ended June 30, 2024, respectively, as compared to $54.6 million and $89.8 million for the corresponding periods of the year and represented 19.4% and 17.2% of net salesfor thethree andsix months ended June 30, 2024, respectively, as compared to 17.7% and 14.5% for the corresponding periods of the prior year.. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness. We believe that our promotion and advertising efforts have a beneficial effect on sales. Historically, the Company incurred the majority of our promotional and advertising expenditures in the second half of the year. Beginning in 2024, the Company implemented a strategy to increase spending in the first half of the year to better support and drive business growth throughout the year. Additionally, as the second quarter of 2024 saw a lighter innovation program than prior years, the Company focused on increasing promotional and advertising spending to support the continued success of our existing brands and to support the initial launch of our new brands, Lacoste and Roberto Cavalli. We also continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience. Long term, we continue to anticipate that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales.

Previous wording

Royalty expense included in selling, general and administrative expenses aggregated $27.2 million for the three months ended March 31, 2024, as compared to $24.1 million for the corresponding periods of the prior year. Royalty expense represented 8.4% and 7.7% of net sales for the three months ended March 31, 2024 and 2023, respectively. This increase was primarily driven by unfavorable brand mix.

Current wording

Royalty expense included in selling, general and administrative expenses aggregated $27.0 million and $54.2 million for thethree and six months ended June 30, 2024, respectively, as compared to $24.0 million and $48.1 million for the corresponding periods of the prior year. Royalty expense represented 7.9% and 8.1% of net sales for thethree and six months ended June 30, 2024, respectively, as compared to 7.8% and 7.7% of net sales for the corresponding periods of the prior year. This increase was primarily driven by unfavorable brand mix.

Previous wording

As a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our operating margins aggregated 21.0% and 29.0% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

As a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our operating margins aggregated 18.9% and 19.9% for thethree and six months ended June 30, 2024, respectively, as compared to 17.8% and 23.4% for the corresponding periods of the prior year.

Previous wording

Interest expense is primarily related to the financing of brand and licensing acquisitions. In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a $54.1 million (€50 million) four-year loan agreement. The loan agreement bears interest at EURIBOR-1 month rates plus a margin of 0.825%. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. Additionally, in April 2021, we completed the acquisition of the headquarters of Interparfums SA. The acquisition was financed by a 10-year approximately $129.7 million (€120 million) bank loan which bears interest at one-month Euribor plus 0.75%. Approximately $86.5 million (€80 million) of the variable rate debt was swapped for fixed interest rate debt with a maximum interest rate of 2% per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1%. Long-term debt including current maturities aggregated $145.0 million and $157.5 million as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Interest expense is primarily related to the financing of brand and licensing acquisitions. In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a $53.5 million (€50 million)four-year loan agreement. The loan agreement bears interest at EURIBOR-1 month rates plus a margin of 0.825%. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. Additionally, in April 2021, we completed the acquisition of the headquarters of Interparfums SA. The acquisition was financed by a 10-year approximately $128.5 million (€120 million) bank loan which bears interest atone-month Euribor plus 0.75%. Approximately $85.6 million (€80 million) of the variable rate debt was swapped for fixed interest rate debt with a maximum interest rate of 2% per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1%. Long-term debt including current maturities aggregated $137.2 million and $157.5 million as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Greater than 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in the three months ended March 31, 2024 and 2023.

Current wording

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Greater than 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in thethree and six months ended June 30, 2024 and 2023.

Previous wording

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments. As of March 31, 2024, short-term investments include approximately $10.4 million of marketable equity securities of other companies in the luxury goods sector. In the first quarter of 2023, the Company sold marketable securities which generated a gain of $3.1 million. The Company purchased additional marketable securities throughout 2023 and in the first quarter of 2024, which generated unrealized gain of $0.9 million during the first quarter of 2024.

Current wording

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments. As of June 30, 2024, short-term investments include approximately $8.8 million of marketable equity securities of other companies in the luxury goods sector. In the first quarter of 2023, the Company sold marketable securities which generated a gain of $3.1 million. The Company purchased additional marketable securities throughout 2023 and in the first half of 2024, resulting in an unrealized loss of $0.6 million for the first half of 2024.

Previous wording

Our consolidated effective tax rate was 23.9% and 23.4% for the three months ended March 31, 2024 and 2023, respectively. The effective tax rate for European based operations was 25% for both the three months ended March 31, 2024 and 2023. The effective tax rate for United States based operations was 17.7% for the three months ended March 31, 2024, as compared to 12.7% for the corresponding period of the prior year. Our effective tax rate differs from the 21% statutory rate due to benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income, slightly offset by state and local taxes. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where we operate.

Current wording

Our consolidated effective tax rate was 23.9% and 23.4% for thesix months ended June 30, 2024 and 2023, respectively. The effective tax rate for European based operations was 25.0% for both thesix months ended June 30, 2024 and 2023, while the effective tax rate for United States based operations was 19.9% for thesix months ended June 30, 2024, as compared to 17.4% for the corresponding period of the prior year. Our effective tax rate for United States based operations differs from the 21% statutory rate in the United States as it is a blended rate across multiple jurisdictions and takes into account benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income, slightly offset by state and local taxes. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where we operate.

Previous wording

Net income attributable to Inter Parfums, Inc. was $41.0 million for the three months ended March 31, 2024 as compared to $54.1 million for the corresponding period of the prior year.

Current wording

Net income attributable to Inter Parfums, Inc. was $36.8 millionand $77.9 million for thethree and six months ended June 30, 2024, respectively, as compared to $35.0 million and $89.0 million for the corresponding periods of the prior year.

Previous wording

Net income attributable to European based operations was $44.9 million and $60.6 million for the three months ended March 31, 2024 and 2023, respectively, while net income attributable to United States based operations was $9.5 million and $10.3 million for the three months ended March 31, 2024 and 2023, respectively. The significant fluctuations in net income for both European based operations and United States based operations are directly related to the previous discussions pertaining to changes in sales, gross margin, and selling, general and administrative expenses.

Current wording

Net income attributable to European based operations was $33.2 millionand $78.1 million for thethree and six months ended June 30, 2024, respectively, as compared to $27.0 million and $87.5 million for the corresponding periods of the prior year, while net income attributable to United States based operations was $15.2 millionand $24.8 million for thethree and six months ended June 30, 2024, respectively, as compared to $15.6 million and $25.9 million for the corresponding periods of the prior year. The significant fluctuations in net income for both European based operations and United States based operations are directly related to the previous discussions pertaining to changes in sales, gross margin, and selling, general and administrative expenses.

Previous wording

The noncontrolling interest arises from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European based operations and aggregated 27.3% and 27.8% of European based operations net income for the three months ended March 31, 2024 and 2023, respectively. Net profit margins attributable to Inter Parfums, Inc. as of March 31, 2024 and 2023 aggregated 12.7% and 17.3%, respectively.

Current wording

The noncontrolling interest arises from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European based operations and aggregated 28% of European based operations net income for both thesix months ended June 30, 2024 and 2023. Net profit margins attributable to Inter Parfums, Inc. as of June 30, 2024 and 2023 aggregated 11.7% and 14.3%, respectively.

Previous wording

Our conservative financial tradition has enabled us to amass significant cash balances. As of March 31, 2024, we had $97 million in cash, cash equivalents and short-term investments, most of which are held in euro by our European based operations and is readily convertible into U.S. dollars. We have not had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term investments.

Current wording

Our conservative financial tradition has enabled us to amass significant cash balances. As of June 30, 2024, we had $77 million in cash, cash equivalents and short-term investments, most of which are held in euro by our European based operations and is readily convertible into U.S. dollars. We have not had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term investments.

Previous wording

As of March 31, 2024, working capital aggregated $530 million and we had a working capital ratio of 2.8 to 1. Approximately 79% of the Company’s total assets are held by European based operations, and approximately $248 million of trademarks, licenses and other intangible assets are also held by European based operations.

Current wording

As of June 30, 2024, working capital aggregated $525 million. Approximately 75% of the Company’s total assets are held by European based operations, and approximately $244 million of trademarks, licenses and other intangible assets are also held by European based operations.

Previous wording

The Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee. In July 2023, we entered into a global licensing agreement for the creation, development and distribution of fragrances and fragrance-related products under the Roberto Cavalli brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect in July 2023, and we began shipping products in February 2024.

Current wording

The Company hopes to continue to benefit from its strong financial position to potentially acquireone or more brands, either on a proprietary basis or as a licensee. Discussions have been underway since 2023 with a view to renewing the Van Cleef & Arpels license agreement. The license is to be renewed for an additional 9-year term, beginning January 1, 2025. In July 2023, we entered into a global licensing agreement for the creation, development and distribution of fragrances and fragrance-related products under the Roberto Cavalli brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect in July 2023, and we began shipping products in February 2024.

Previous wording

Cash used in operating activities aggregated $52.0 million and $7.4 million for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, working capital items used $111.7 million in cash from operating activities, as compared to $84.8 million in the 2023 period. Although from a cash flow perspective, accounts receivable is up 20% from year end 2023, the balance is reasonable based on first quarter 2024 record sales levels and seasonality of the business. Although day’s sales outstanding was 73 days, up from 71 days in the corresponding period of the prior year, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels as of March 31, 2024 increased 9% from year end 2023 in support of our overall sales growth. Since 2021, we have strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold.

Current wording

Cash used in operating activities aggregated $26.5 million for thesix months ended June 30, 2024 and cash provided by operating activities aggregated $6.8 million for thesix months ended June 30, 2023. For thesix months ended June 30, 2024, working capital items used $140.2 million in cash from operating activities, as compared to $115.4 million in the 2023 period. Although from a cash flow perspective accounts receivables are up 24% from year end 2023, the balance is reasonable based on second quarter 2024 record sales levels and seasonality of the business. Although day’s sales outstanding was 72 days, up from 65 days in the corresponding period of the prior year, we are down from 73 days at the end of the first quarter of 2024, are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels as of June 30, 2024 increased 19% from year end 2023 in support of our overall sales growth as well as the building up of inventory related to the inclusion of the Lacoste and Roberto Cavalli licenses which require large inventory needs to support the launches of these brands. Additionally, as we are working to manage down our inventory levels, we have seen increased conversion of raw materials into finished goods resulting in finished goods making up 60% of our inventory levels at June 30, 2024 as compared to 52% at June 30, 2023. Since 2021, we have strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold.

Previous wording

Cash flows used in financing activities in the first quarter of 2024 reflect issuances and repayments of debt and payment of dividends to stockholders.

Current wording

Cash flows used in financing activities in the first half of 2024 reflect issuances and repayments of debt and payment of dividends to stockholders.

Previous wording

Our short-term financing requirements are expected to be met by available cash on hand at March 31, 2024, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2024 consist of a $25.0 million unsecured revolving line of credit provided by a domestic commercial bank and approximately $8 million in credit lines provided by a consortium of international financial institutions. There was $8.3 million of short-term borrowings outstanding pursuant to these facilities as of March 31, 2024 and $18.0 million outstanding as of March 31, 2023.

Current wording

Our short-term financing requirements are expected to be met by available cash on hand at June 30, 2024, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2024 consist of a $25 million unsecured revolving line of credit provided by a domestic commercial bank and approximately $8 million in credit lines provided by a consortium of international financial institutions. There was $18.5 million of short-term borrowings outstanding pursuant to these facilities as of June 30, 2024 and $5 million outstanding as of June 30, 2023.

Previous wording

Inflation rates in the U.S. and foreign countries in which we operate did impact operating results for the three months ended March 31, 2024, as they resulted in slightly higher costs of inventory and were not fully offset by price increases we passed onto our respective customers or operating efficiencies.

Current wording

Inflation rates in the United States and foreign countries in which we operate did impact operating results for thesix months ended June 30, 2024, as they resulted in slightly higher costs of inventory and were not fully offset by price increases we passed onto our respective customers or operating efficiencies.