1. INTER PARFUMS (IPAR) (April/19/2012) Ryo-Seob (Joseph) Kim Po-Chieh Shih Jionghan Dai Varinthorn (Build) Saengpanyarak Pattharaporn (Pauline) Lertphaiboonsiri

2. Agenda  Introduction  Stock Market Prospect  Industry  Inter Parfum Business  Financial Analysis  Multiples  DCF  Recommendation

3. Introduction GICS: 30 Consumer Staple 30302010 Personal Products “Inter Parfums, Inc. is a worldwide marketer of prestige and mass- market perfumes, cosmetics, and personal care products that specializes in perfumes with a focus on licensed designer brands.” Nasdaq Small Cap - 492.53M History 1985: Formed as Jean Philippe Fragrances. Began acquisition of license and distribution channel in 1986. 1999: adopted Inter-Parfums subsidiary name Successful track record in marketing and outsourcing processes

4. Introduction Last Price$16.12EPS1.05 52 week high24.80P/E15.35Div. Yld2.00% 52 week low13.75Imp. EPS g27.6%PEG1.11 7-10 growth Graham3.5% EBIT/TangEBIT/EVTotal Greenblatt30%13%43%

5. Stock Market Prospect Source: CapitalIQ Last Price$16.12

6. External Market Drivers US Consumer Sentiment EU Consumer Sentiment Source: US and EU Consumer Sentiment Index, Thomson Reuters

7. External Market Drivers US Real Median Household IncomeEU Real Median Household Income Source: US and EU Real Median Household Income, Thomson Reuters

8. Industry Overview Chinese Luxury Purchases Men Product Segment Source: IBISWorld, InterParfums’ Annual Report

9. Industry Overview Distribution Channels Source: Datamonitor

10. Global Cosmetics Industry  Current Market Size 12 Annual Growth 07-12 Annual Growth 12-17 Source: Global Cosmetic, IBISWorld; Global Fragrances, Data Monitor

11. Global Cosmetics Industry Fragmented Market Source: Global Fragrances, Data Monitor

12. Business Structure Brands Inter Parfums Supplier Licenses Goods Retailers Final Goods -80 out of 150 suppliers -Exclusive License Agreement with 19 Brands -Most of companies are relatively small (Incentive to work with Inter Parfums) -but high-end & luxury brands (Customers care) -26 years experience in the field -Specialized in Product Development & Brand Building (Customers care) -Strong global distribution system with 11 subsidiaries around the world

13. Brand and Product lines Source: Inter Parfums http://www.interparfumsinc.com/ir_investor_presentation.html

14. Brand and Product lines BrandNumber of Products TypeStartingExpiration Burberry8License19932017 S.T. Dupont9License19972016 Paul Smith8License19982017 Van Cleef10License20062018 Lanvin9Acquisition2007- Jimmy Choo1License20092021 Montblanc8License20102020 Boucheron3License20102025 Balmain0License20112023 Repetto0License20112024 -Expansion through license agreement with new brands -> Licensed with 5 new brands in 2010 & 4 new brands in 2011 -> Managing operational risk by diversified brand portfolio -Expansion by increasing the number of product lines -> Typically one new product line every 2 years

15. Business Overview Source: Inter Parfums http://www.interparfumsinc.com/ir_investor_presentation.html

16. Revenue by Region - Sales Growth in North America and Asia shows the effect of diversification

17. Financial Analysis - Sales Lower cost of sales Interparfums Luxury Brands, Inc. as a distribution subsidiary in the US Higher SG & A More brands introduced in 2010 increased marketing expense Improving margin in the long run

18. Intangible assets 20% ~ 25% of assets Basically include trademarks and licenses Account receivable & inventories 47% of assets in 2010, 65% in 2011 Company stated that it is needed to support high sales growth Financial Analysis - Asset

19. Financial Analysis – Cash Conversion  Cash conversion cycle has been decreasing By extending their payment to suppliers

20. Financial Analysis – Cash Flow 200920102011 Operating CF84,64037,845(23,721) Investing CF(6,301)(77,279)36,737 Financing CF(23,457)(15,943)(13,797) Total Cash Flow58,063(62,919)(1,692) 2009 Decreased in sales Liquidated inventories Tightened extended payment terms 2010 Increased short-term investment Increased acquisition of intangible assets 2011 Increased inventories and account receivable Sold short-term investment

21. Financial Analysis – Cash Flow  Short term solvency Company’s ability to control their cash flow would be very critical

22. Financial Analysis - DuPont

23. Financial Analysis - Conclusion  Operating margin is likely to improve  Company’s expanding strategy may increase its financial risk in the near future  Company’s ability to utilize asset is improving

24. Competitors Perfume concentrate Parlux Fragrances Inc International Flavors & Fragrances Inc Beauty & Personal Care Products Avon Products Inc. Elizabeth Arden, Inc. Estee Lauder Companies Inc. Revlon, Inc L’Oreal Inter Parfums

25. Product Segment Source: Bloomberg

26. Competitors’ Financial Figure Company Name Market Capitalization ($mill) Gross Margin % EBIT Margin % EBITDA Margin % Net Income Margin % Interperfum 494.99 54.5% 11.0% 13.1% 5.3% Avon Products Inc. (AVP) 9,923.67 63.4% 10.3% 12.4% 4.5% Elizabeth Arden, Inc. (RDEN) 1,104.42 49.2% 7.7% 10.3% 4.4% Revlon, Inc. (REV) 928.34 64.3% 14.0% 15.9% 3.9% Parlux Fragrances Inc. (PARL) 117.36 46.4% (1.7%) (0.1%) (2.1%) Estee Lauder Companies Inc. (EL) 24,300.45 78.9% 14.7% 17.9% 8.9% International Flavors & Fragrances Inc. (IFF) 4,720.89 39.6% 17.0% 19.7% 9.6% L'Oreal SA (OR)- Listed in France 72,533.84 71.2% 16.2% 19.2% 12.0% Source: Bloomberg

27. Comparable Multiples Price range : $22.23 - $42.78 Company NameEV/EBITDAP/EP/TangBV Avon Products Inc. (AVP)8.6x19.2x15.5x Elizabeth Arden, Inc. (RDEN)10.3x21.4x4.9x Estee Lauder Companies Inc. (EL)14.5x29.8x15.8x International Flavors & Fragrances Inc. (IFF) 10.1x17.9x11.9x Revlon, Inc. (REV)9.4x17.6x- Mean10.6x21.2x12.0x Median10.1x19.2x13.7x Multiplier 80.8 1.05 3.6 Implied Share Price$27.27$22.23$42.78 Total Asse t - Debt - Good will& Intangible Asset Tangible BV

28. Financial Projections – Growth Rate Assumption  IPAR acquired four new brands in 2011, we assume that company need more time to promote its business.

29. Financial Projections – Gross Profit Margin Assumption  IPAR sell European prestige products in the U.S. directly to retailers rather than through a third party distributor, which generates higher gross margins on our product sales. (10- K_2011)

30. Financial Projections – Taxes Rate Assumption  The higher rate in 2011 is the result of a tax rate increase enacted by the French Government retroactive to 2011. The tax rate for French operations increased from 34.4% to 36.1%. (10- K_2011)

31. Financial Projections – The risk of Burberry buy back Licenses  Burberry has until July 31, 2012 to determine whether it wishes to buy out the unexpired portion of the license as of December 31, 2012 or continue the existing contract which runs through December 31, 2017. (10-K_2011)  The purchase price will be the greater of the fair market value of the unexpired term of the license or 70% of 2010 net wholesale sales of Burberry products. As of the date of this report, discussions are continuing. (10-K_2011)

32. Financial Projections – Discount Rate Discount Rate (Plus 1% Risk Premium) => 14.21% WACC => 13.21% Average Return of Equity (50% for Each) => 13.31% Return of Equity => 12.76% CAPM => 12.86%

33. Financial Projections – Scenario Type  1. Basic Scenario  2. Burberry buy back the License Scenario  3. Worst Scenario but Burberry does not buy back the License

34. Financial Projections – Scenario Type

37. Financial Projections – DCF Model in Basic Scenario $11.30 p er share to $18.13 p er share

38. Financial Projections – DCF Model in Burberry buy back Licenses Scenario $9.32 pe r share to $10.97 p er share

39. Financial Projections – DCF Model in Worst Scenario but Burberry do not buy back License $11.31 p er share to $17.67 p er share

40. Recommendation  Put IPAR in the Watch List Reason:  The result in Multiples and DCF Model are quite different.  The risk of Burberry buying back license exists.

41. Q & A Thank you for your time Feel free to ask any question