Greetings, and welcome to the Inter Parfums Inc. Fourth Quarter 2011 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Russell Greenberg, Executive Vice President and Chief Financial Officer for Inter Parfums Inc. Thank you. Mr. Greenberg, you maybe begin.

Thank you, operator. Good morning, and welcome to our 2011 fourth quarter and year-end conference call. Following the financial review, I will turn the call over to Jean Madar, Chairman and CEO of Inter Parfums, who will discuss recent developments, some of our plans for 2012 and give you a peek into 2013 as well. Before proceeding further, I want to remind listeners that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. These factors include, but are not limited to, the risks and uncertainties discussed under the headings Forward-looking Statements and Risk Factors in Inter Parfums' annual report on Form 10-K and the reports we file from time to time with the Securities and Exchange Commission. Inter Parfums does not intend to and undertakes no duty to update the information discussed. When we refer to our European-based operations, we are primarily talking about sales of Prestige Fragrances conducted through our 74% owned French subsidiary, Inter Parfums SA. This business includes distribution companies owned or controlled by our French subsidiary, such as InterParfums Luxury Brands, which took over U.S. distribution of our European-based Prestige Fragrances in 2011. It also includes our distribution subsidiaries covering Germany, Italy, the United Kingdom and Spain. When we discuss our United States operations, we are generally referring to sales of specialty retail, mass-market products and more recently, designer fragrances like Betsey Johnson and Anna Sui. These products are generally sold in namesake stores domestically and for some brands, in department and specialty stores like Macy's and Sephora in the United States. In addition, certain products developed and produced by our U.S. operations are sold through travel retail and department and specialty stores around the globe…

Thank you, Russ and good morning, everyone. We appreciate your participation in today's conference call. Moving on to our plans for 2012 and recent developments. Our group expectation for 2012 for our European-based product line has less to do with new product launches and more to do with building upon the strength of our brand and worldwide distribution network. We look forward to robust performance for Jimmy Choo in its second year on the market. In addition, Burberry Body will enjoy the full year of sales in 2012, supported by still a very aggressive marketing campaign. For Montblanc, the rollout of Legend, our new men's fragrance will continue its sales just starting this month in the U.S. and distribution is planned for 1,200 doors. We do have a few new products coming to market this year, including the first new women's scent for Montblanc. And for Lanvin, we have decided to launch a new women's fragrance in 2013. The most recent addition to our well-prestige portfolio was concluded in late 2011 with Repetto when we entered into a 13-year worldwide license agreement. This company was created in 1947 by Rose Repetto, at the request of her son, a famous dancer and choreographer. Repetto is a legendary man in the world of dance. The brand has gone well beyond dance and it now includes a must-have shoe collection. Among many other locations, you can find Repetto shoes at Saks Fifth Avenue. Repetto has expanded into handbags and high-end accessories and has embarked on an ambitious plan of international expansion with 27 new stores to be opened next year and this year and 27 points of sale last year and 22 new points of sale this year, focusing mainly on Europe. The brand is now branching out into Asia, notably South Korea…

[ Operator Instructions] Our first question is coming from the line of Linda Bolton-Weiser with Caris & Company.

Can you just comment -- does the formation of the distribution joint venture have some sort of effect on the receivables and inventories because the cash flow statement does sort of show a negative impact from increases in receivables and inventory. So I'm suspecting that it has to do with bebe. So can you discuss that? And then secondly, Estée Lauder had mentioned that in the U.K., their shipments into retailers have fallen off quite a bit in the December quarter, even though consumption really didn't, and they said that retailers were kind of afraid of slowing in the future and so that affected the ordering and the inventory in the channel kind of contracted. Are you sensing anything like that in the U.K. even if consumption or demand is still remaining strong? Are you kind sensing anything like that going on? So I'll just leave it -- start with those 2.

Okay. I'll take the first one, and I'll let Jean take the second. With respect to the inventory and any loss, certainly, the fact that we have our own U.S. distribution subsidiary that does carry inventory and carries the receivables from sales directly to the retailers, the increase -- that did cause somewhat of an increase in the AR and the inventory. However, clearly, the largest or the most significant reason for the increase is respective to the increase in sales that we've experienced in connection with the 3 major product launches that we had throughout the year in 2011. When you look at that inventory and you see that sale, even just for the fourth quarter, we're up almost 70%. Clearly, we feel that the inventory build that we have is what is necessary in order to continue the future sales trends with respect to our business. The AR is a little bit -- to me, a little bit less of a problem if you actually calculate day sales, we continue to see improvement, we actually are down from what was 98 days in 2009 to 83 days in 2010 and 84 days in 2011. So I think that the AR actually performed exceptionally well when you take into consideration the growth in the business. Jean?

Well, regarding the U.K., and what you mentioned for Estée Lauder, we have not seen this at all. Our products performed very, very well in the last quarter of December 2011, which is a key quarter in the world, especially in U.K. When I look at the sales that we had at Harrods, Selfridges, Debenhams, [indiscernible] and as I mentioned, almost 90% of the distribution because like the effect of -- just for your information, Jimmy Choo was ranked the best launch in the U.K. from [indiscernible] Jimmy Choo was ranked #3 in the market for 2011, which is quite an accomplish -- in U.K., which is quite an accomplishment. To give you a perspective, we have sold through, in U.K. 550,000 bottles from the launch of Jimmy Choo [indiscernible]. So Jimmy Choo is the #3, the #1 is Chanel Coco Mademoiselle, and #2 is Chanel No5. So we are very pleased actually with our sales in U.K. Linda, another question?

Oh, sure. I mean, can you just talk about, in terms of the next major Burberry launch, you might not be able to say too much, but are your -- is your planning a little bit in limbo because of the status of the situation? Or can you say, for sure, that the next major launch will be kind of in early 2013? Is there any chance it will be late in 2012 if you can get the situation resolved with Burberry or can you shed any light on the timing of the next major launch?

I can try. You have to understand that Burberry is such an important brand in the market and for Inter Parfums, that we do not stop at all our preparation of the new products. Of course, we are working on the new major launch which will happen in 2013. I think during my speech, I was clear on where we are with our conversations with Burberry. We are continuing this conversation. I don't think there will be -- whatever happens, I don't think it will have an impact for the potential launch of the [indiscernible].

No. As a matter of fact, the timetable was pretty much as laid out by Jean that by the time we get to the middle of this year, we'll have a little bit more of a foothold of exactly where we are in connection with Burberry. But plans for the launch for 2013 are in progress.

[indiscernible] I'm sure of the continuity of the plan.

[Operator Instructions] Our next question is coming from the line of Joe Altobello with Oppenheimer.

Just a few quick ones. I guess, first, Jean, you mentioned the 3 possible outcomes regarding Burberry and this is probably a difficult question to touch on, but what's your order of preference in terms of how this plays out?

It's difficult to answer. But again, honestly, I think we are fine with the 3 options. I will say that, of course, because we have spent so much time with Burberry, we would love to continue. But again, we are ready for the 3 alternatives. But what I can -- if I may add something related to the discussion, I would like to say that our conversations with Burberry are both productive and constructive, we often meet in a very friendly atmosphere. They ignore the fight, they ignore -- we are just evaluating what is the best prospects [ph] and of course we have to take into account our what is good for Inter Parfums and what is good for Burberry. But honestly, as I said to Burberry and as I said to our shareholders, the 3 options are okay for Inter Parfums.

Okay, that's helpful. I guess, if they were to try to extricate themselves from the license, obviously, you'd get a large chunk of money, but you'll also have a lot of overhead stranded. I mean, how quickly could you -- I guess downside for business to get rid of that stranded overhead?

Maybe Russ will answer the first part of the question regarding the money and the amount of cash which we will...

Well, I mean clearly, as Jean mentioned in his remarks, if they buyout the license is the avenue that is taken, that number, at least a minimum number is going to be the greater of the approximately $250 million, which, as far as we know, is a possible event as well. But when you take that influx of cash and you also take into consideration the different versions or transfer of the inventory and the conversion of the accounts receivable into cash, our estimate is that we would probably end up with somewhere close, even after taxes, to $300-or-so million, which is almost $10 a share. Clearly, the key there would be how we could deploy that money and turn it into a useful and profitable business for us. With respect to overhead and things of that sort, this is an evaluation that we are in process of doing. We're already evaluating different alternatives. There are a significant amount of variable expenses. There are some tricks that can be converted to some ledger [ph]. It becomes a relatively difficult process to actually quantify, and we're really not prepared to do that today. But as Jean said, just before that -- either way the outcome goes, Inter Parfums is comfortable with any 1 of the 3 different alternatives.

And we are absolutely prepared for the 3 alternatives.

Okay. Just one last one, if I could. In terms of the sales guidance for 2012, I guess you assume the euro-dollar exchange rate about $1.31, it implies high single-digit local currency growth. Given you had 3 major launches in 2011, how comfortable are you with that high single-digit global currency growth outlook?

We're comfortable with the guidance that we have right now. As we move into the first quarter, we see that our sales are actually a little bit ahead of our target. We have not seen any drop-off. First quarter is a little bit of an easier comparison coming off the first quarter of 2011. But at this point in time, we've clearly taken the path of leaving the guidance where it is, we will reevaluate it once we -- as we move past into announcing and seeing the final results for the first quarter.

Joseph, if I may, I'll give some information about what's going on in the market for the first 2 months. In Europe, in Paris, France and the U.S., business is really better than our internal projection. So we are quite happy for the first 2.5 months of the quarter.

[Operator Instructions] Our next question is coming from the line of Eric Hollowaty with Stephens.

Yes. Just to revisit the launch schedule from 2012, Russ or Jean Madar, could you just recap, I think that really, the 2 headline launches you have coming are both for Montblanc, one is a rollout of Legend in the U.S., if I heard that correctly and the other is a women's scent coming later in the year. Could you just provide any more specificity around maybe what range of months we might see those happening?

The U.S. distribution for Montblanc Legend is happening right now. It is hitting the market. We have transferred the inventory to InterParfums Luxury Brands, our U.S. distribution sub. And we are beginning -- seeing the very beginning of shipments of Montblanc Legend. The exact date, I think the women's scent is a third quarter item.

A third quarter item, but again 2013 -- 2012, or going to 2011, we've had the new Burberry launch, we've had the Montblanc launch. That, of course, is more modest in terms of new products. But let's not forget that we still have a lot of work to do to keep the sales up. On the Burberry Body, we have invested a very high amount of money in 2011. And so we are continuing our rollout and our promotional activity in local markets and duty-free. We have, also, the Jimmy Choo fragrance, which is always really surprising us in terms of sales beating projections every month, as I mentioned in the U.K. Also in the U.S., we have started the rollout of Jimmy Choo in the U.S., which was exclusive last year at Saks and it's now at Macy's and will be in other department stores. So even if there is no -- even if there is not a lot of new products, we still have a lot of work to do. We have a very important trademark in our portfolio.

Right, of course. That's actually a great segue to my second question, which was, is the advertising and promotion in the range of 20% to 21%, maybe towards the higher end of that? Do you think that's probably the new normal for the short term at least?

That's certainly for the short term. We really do want to keep the momentum for Burberry Body moving in the right direction. So it's certainly for our commitment plans through at least the first half of 2012, or to continue to spend at a much more aggressive manner than we have to soar up.

Okay. Great. And Russ, any indication you can give us on what a reasonable tax rate for 2012 might be to use?

Yes. If you read through the MD&A, you're going to see that there's a lot of different things that affected the tax rate this year. But we clearly have an increase in the tax rate that was enacted by the French government. Going forward though, I'm pretty comfortable with that 34%, maybe 34.5% because we are seeing a benefit with our operations that we had through Inter Parfums Swiss and Inter Parfums Singapore that bring, the overall French effective tax rate back down a little bit. So to the extent that we are continuing to see growth in the Asian market and with respect to growth in the brands that we own, where we can take advantage of our subsidiary, I think that 34% to 35% was probably going to be the norm.

Our next question is coming from the line of Alex Fuhrman with Piper Jaffray.

Great. It sounds like we've been hearing more and more over the last couple of quarters about the new men's launches, and now you have this launch into some top doors here, the Gap Soul[ph] fragrance coming up. Can you talk a little bit about how men have been receiving product globally across the range of price points and maybe, over the past few months, if you have a sensitivity to the range of price points as they differ between men and women?

Men's scents, as you know, is growing faster than the women's scents even though it is smaller. With Burberry, we haven't always been over performing with the men's fragrance, and with Gap -- for Gap, and Banana Republic, it's also the case.

Yes, I think with Gap and Banana Republic, most of the scents -- the new Established 1969 is coming out in versions for both men and women. Jean stressed, and I think historically, men's fragrance represents 40% of the market versus 60% for the women's side. We really haven't seen any significant trend change in connection with that. A lot of it really does depend on the individual brand itself. I hope that helps.

Now, that is helpful. And then it sounds like South America was your fastest growing market in the quarter. To what extent was that driven by comp versus distribution growth? And really, if you could talk about how big the distribution opportunity might be in South America and maybe has there been any difference in what price point that consumer has been gravitating in those markets?

In South America, we have one major market, which is Brazil, which has been growing at a fast pace for us. And we have also old countries of Central America [indiscernible] the tax rate. The good thing is if you take a brand like Montblanc for instance, Montblanc has a very high recognition in Central and South America. And we are leveraging that to accelerate the growth. I think we went over the percentage of growth of this part of the world. And I can tell you that in the first 2.5 months of this year, it's continuing at the high rate also.

Yes, South America, as I mentioned in the remarks, was up 48% in 2011. And I think that -- I agree with Jean 100%, a lot of it is with respect to Brazil in that the markets have really opened up over the last couple of years in that particular country in South America.

Our next question is a follow-up from Linda Bolton-Weiser with Caris & Company.

I was wondering if you could take a stab at telling us roughly what the distribution joint venture formation added to sales and to operating cost in 2011.

The distribution joint venture -- in rough numbers, we pretty much -- North American sales were up 40%. When you look just at the United States, we're probably up almost $40 million alone, just from the differential of what price we would have sold products to our former distribution joint venture -- former distribution partner versus handling the distribution ourselves. I mentioned in the remarks that approximately 250 basis points on the gross margin was directly a result of having the distribution done 100% internally. And then of course, at the same time, it is also accounted for a significant portion, we didn't quantify it, but it clearly accounted for a significant portion of the increase in the SG&A expenses.

There are no further questions at this time. I'll now turn the floor back over to management for any closing remarks.

Thank you. And again, thank you, everybody for your participation on this call, whether you are live on the call or listening via our webcast. And as always, if anybody does have any additional follow-ups or questions, I am available by phone. Have a great day, and thank you, once again, for being here today.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.