Good day, everyone, and welcome to Inter Parfums Incorporated third quarter 2008 conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are currently in a listen-only mode. I will now turn the conference over to Mr. Russ Greenberg, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Thank you. Good morning. And welcome to our 2008 third quarter conference call. If you have not received a copy of the press release we issued yesterday afternoon, please contact Linda Latman of The Equity Group at 212-836-9609 and she will fax or e-mail a copy to you. 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 for the fiscal year ended December 31, 2007 and the reports Inter Parfums files 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. As most of you know, when we refer to our European-based operations we are primarily talking about sales of prestige brand name fragrances, which are conducted out of France. When we discuss our United States operations, we are referring to the sales of specialty retail and mass market products. Moving onto our record third quarter financial results, as we reported yesterday, net sales rose 21% to $123.5 million from $102.3 million. At comparable foreign currency exchange rates, net sales were up 16% for the period. European-based operations achieved sales of $108.8 million, a 23% increase compared to $88.1 million in the same period last year. Sales by US-based operations rose 4% to $14.7 million from $14.2 million in the same period last year, which was when the rollout of Gap personal care products to their North American stores was underway. The comparable quarter increase is primarily…

Thank you, Russ. And good morning, everybody. We appreciate your interest in Inter Parfums and your participation on today's conference call. Burberry brand sales continued to be strong during the third quarter due in great part to the success of The Beat, the new fragrance family whose worldwide launch began in the third quarter with global rollout continuing in the second quarter. Thanks to The Beat, Burberry fragrance sales in local currency were 2.9% and 13.6% ahead of the respective period in 2007. Women’s version of The Beat is now being sold exclusively at Bloomingdale’s, started couple of weeks ago. And in February 2009, we will roll it out to 2,600 doors in the US plus thousands of doors across the globe, as I said, in the first quarter of 2009. Before moving on to our other brands, I would like to say a few words about Burberry again. Some of you may have seen Piper Jaffray’s October 7 report following the first survey of 7,000 teens and 150 parents on brand preferences and shopping patterns. I was thrilled to see that in the fragrance category Burberry took the second place, just after Victoria Secret. In prior semi-annual surveys conducted by Piper Jaffray, Burberry was in either seventh or eighth place, which quite frankly is too pretty good considering the crowded field in which we operate. Moving onto our second largest brand, Lanvin, the global launch of Jeanne Lanvin has begun following its preview in France in July. Thus far, the result has been quite good. Named for the founder of the brand, the new fragrance targets 25 to 35-year olds sandwiched between Eclat d'Arpege whose core consumer is 18 to 25-year old and Arpege, which has typically the principal 40-plus customer. Moving on to our fragrance family (inaudible), Van…

Thank you. (Operator instructions) Your first question comes from the line of Linda Bolton Weiser of Caris. Linda Bolton Weiser – Caris: Hi, how are you?

Good morning, Linda.

Good morning. Linda Bolton Weiser – Caris: Hi. So, just a question on the gross margin. I guess it was a little bit lower than we had thought, and yet the comparison on the euro versus the dollar was it was less negative or onerous than it had been in previous quarters. So I’m just wondering – I guess your 10-Q mentioned that the gift set mix was quite high and that hurt the margin. Is there anything else that you can comment on in terms of the gross margin?

Yes. As we discussed in the Q, the primary reason for the decline is, as we mentioned, the effect of the currency exchange rates, which are down I guess approximately 10% for the three months. The gift sets certainly also, as we indicated in the 10-Q, contributed to a portion of the gross margin decline. And there are probably two or three other smaller items, which is really just mix of product between our brands and mix of products between the countries that we distributed within the quarter that also plays a role with respect to our margins. But I think the most important thing is when we look to the future is exchange rates, which are not in our control. We have indicated what the effect of the exchange rates does if the dollar rises against the euro in the future, which will certainly help us. And the gift sets, in a year when you do have the number of new product launches like we do this year, it’s not atypical to have a little bit more in that kind of product sales versus normalized regular product sales. So it’s not something that I think it’s going to be reflective of future trends, but certainly it had its impact in the third quarter of 2008. Linda Bolton Weiser – Caris: So I would imagine with the euro being down versus the dollar perhaps in the fourth quarter, we might see a little bit better gross margin performance in the fourth quarter. Is that a logical assumption?

That is a logical assumption. Linda Bolton Weiser – Caris: Okay. And then just can you just comment a little on cash flow performance? By my calculation, it looks like operating and free cash flow for the year is going to be kind of neutral and perhaps even negative for the full year, and granted that’s against the strong cash performance in ’07. But – are my numbers correct, or am I miscalculating that?

No, it’s not a question of miscalculating. Clearly from operations we have used a significant amount of our cash to support the working capital. It’s very typical for receivable to be very high at the end of the third quarter. And typically at the end of the fourth quarter, they are probably at the lowest level that they are for the year. So we do expect to see the accounts receivable come down significantly at the end of the year, which will help the cash flow from operations. The second biggest line, which of course is the inventories, there you have a similar situation. It’s already down approximately $15 million to $20 million from the second quarter of 2008. At year-end we expect it to be up maybe a similar rate to our sales increase, maybe up about 20% for the year in total based upon the launch schedules in early ’09. So I think we’ll see the inventories come down a little bit as well. It’s very hard for me to predict, and we really don’t issue guidance on cash flow. But typically the strongest position we’re in is at year-end. So the use of cash that we see at the end of the nine months I think is going to be a very different picture at the end of the year. Linda Bolton Weiser – Caris: Do you anticipate repaying some debt in fourth quarter, or do you think you’ll just kind of keep some cash on your balance sheet?

We will probably – we will definitely repay some of the short-term bank debt. The long-term debt that exists on our balance sheet are all term loans. So those are all paid by the same amount. We pay up a set principal plus interest on a five-year term loan payment schedule for all the long-term debt. But with respect to the short-term debt, I do expect it to be down as we approach December 31. Linda Bolton Weiser – Caris: Great. Thank you very much.

You’re welcome.

Thank you, Linda.

Your next question comes from the line of Neely Tamminga of Piper Jaffray. Neely Tamminga – Piper Jaffray: Good morning, gentlemen. Just a quick housekeeping question. Question is first on the guidance, just to be clear, are you assuming the average Q3 exchange rate or the spot rate as of yesterday’s release?

With respect to – you’re talking about with respect to the guidance for the year? Neely Tamminga – Piper Jaffray: Yes, yes.

It’s – Neely Tamminga – Piper Jaffray: Sadly they’re very different.

That’s really not the spot rate. We’ve been asked these questions in the past. The reality is we have to use some sort of a trailing average because we cannot with any certainty predict exactly where the dollar is going to go between now and the end of the year. We know where it was for the last 41 days of the fourth quarter. We don’t know where it’s going to be for the next 49 days of the fourth quarter. We usually a blended average over the past, but because of the volatility of the dollar, we’ve had – we make some adjustments to our numbers. But based upon where we stand today, based upon the way we internally analyze where we expect the dollar to be, we are reconfirming our sales guidance at $460 million for 2008. Neely Tamminga – Piper Jaffray: Okay. Jean, help me understand a little bit in terms of what you are thinking on bebe, just it seems –

Thinking on what, I’m sorry? Neely Tamminga – Piper Jaffray: On bebe.

Okay. I’m going to try, yes. Neely Tamminga – Piper Jaffray: When will we expect to maybe have a fragrance next year? What it would be like in the first half, for the second half? I mean, obviously you guys have done a good job of being able to have a quick turnaround on some of these fragrance businesses. Just wondering how that plays out with bebe’s plans specifically. And then will we see much of a difference between the core bebe and the BEBE SPORT assortment?

Let me try to answer one by one. On the timing for the launch of fragrance, we are looking at the third quarter of 2009. So we’re looking at us shipping in August. And then we start the advertising campaign in August and September. So far, it will be shipment for third quarter. It’s a little bit longer than expected, but the product is quite complicated. And that’s why it is going to take us a little bit longer to make it. And then, yes, of course we have plans to create other fragrances after (inaudible) bebe fragrance. We are already working on the BEBE SPORT. And don’t forget that we have also for each year, we have been able to put some color cosmetics in the store. I think you would see it in – it’s in the stores now. Actually it’s in the stores now. And so we have a full line of lip gloss. And we are continuing first, second and third quarter with more lip products for the bebe. Neely Tamminga – Piper Jaffray: And I guess what’s intriguing to us on the announcement for bebe is that it’s really one of the first US retail brands that you are partnering that actively uses celebrity faces in their campaign. Will that celebrity transference into the brand be accessible to you? Or is that not at all part of the plan?

We are talking. We are talking. It’s possible. But we think that the bebe name – I mean, they are using celebrities because of – because bebe is a nice tight run. And it is the image they want to communicate. What you – we can have a celebrity (inaudible) celebrity, I don’t think it’s going to change a lot and again it’s not our decision [ph]. Neely Tamminga – Piper Jaffray: Okay. Great. I’ll get back in the queue.

As a note if I may on bebe, so if people want to know more about bebe, we (inaudible) we show to our international distributors and duty free partners the bebe concept. And it’s quite interesting especially in certain countries like the Middle East, and Central and South America. So we are going – we have decided to launch simultaneously international and domestic market for bebe. Neely Tamminga – Piper Jaffray: That’s good.

So in July – around July 2009, we will ship more on the US domestic business. Neely Tamminga – Piper Jaffray: Excellent. Great. Good luck to you, guys.

Thank you, Neely.

I answered a question you didn't ask.

Your next question comes from the line of Joe Altobello of Oppenheimer. Joe Altobello – Oppenheimer: Thanks. Good morning, guys.

Good morning. Joe Altobello – Oppenheimer: First question, in terms of the trends you’ve seen thus far in October and I guess the early part of November, have they changed dramatically since September? Are you still seeing some growth in developed countries being exacerbated, I guess, by faster growth in the developing world?

Russ, you want to –? I will give me answer.

I think that the trends that we’ve seen for the first nine months are really continuing as we go into the fourth quarter. In areas like Eastern Europe, Asia, and even South America, we still see some solid growth opportunities while there continues to be a weakness in Western Europe and in the United States. I don’t think that that has changed all of a sudden effective October 1. I think it’s going to probably continue as we move through the fourth quarter and maybe even on into 2009.

We are not expecting a strong Christmas sell-through in Western Europe, basically Germany, France, UK, and Spain, of course. Joe Altobello – Oppenheimer: I’m sorry, you are not expecting strong sell-through?

We are not expecting a strong sell-through – so – I think in our number. That’s why we – I mean, we have shipped – anyway, we have shipped an adequate level of inventory to our distributors who have also shipped an adequate level of inventory to the stores. There is not a lot of inventory out there. We expected that, especially in Western Europe and the US, the market will be a little difficult. So it’s not a surprise for us. Joe Altobello – Oppenheimer: Okay. But nothing has changed dramatically, you know, the first five weeks of this quarter it sounds like?

No, nothing other than the exchange rate of the dollar against the euro. Joe Altobello – Oppenheimer: Absolutely. Okay. And then in terms of the different price points that you guys sell at, are you seeing any major difference in trends there? Are consumers buying less expensive fragrances, for example?

No, I would say that we have –

Like we said before, our strength is a little bit across the board and the weakness is a little bit across the board. We cannot say that some price points are more resilient. And again, we’re talking about prestige. We are not talking about our mass-market division. But everybody is – all the price points are affected. Joe Altobello – Oppenheimer: Okay. And then lastly in terms of your guidance, particularly on the topline, it would imply a sales decline in the fourth quarter I think given where the dollar is at. It’s not terribly unrealistic, but it sounds like you guys are expecting to see a local currency growth even in the fourth quarter?

From a local currency standpoint, that’s correct. But again, we are very cautious and we are watching the effect of the dollar and where it’s going to go. And as I said before, at the present time, we are fine. But if something – if the dollar continues to strengthen against the euro, we’re going to have to adjust as we see fit. Joe Altobello – Oppenheimer: Got it, okay. And then lastly if I could in terms of the guidance for the tax rate for the fourth quarter, anything unusual there or should we expect something similar to what you’ve done in the first nine months of the year – or the first six months of the year, I should say?

Well, clearly the situation with respect to the 700,000 benefit from Nickel is a one-time deal. Joe Altobello – Oppenheimer: Okay.

I would assume we would get back to a more normalized tax rate as we move into the fourth quarter. Keep in mind that for the first nine months we’re rather at about 34%, which is equal to the same 33%, 34% that we had last year. Anywhere between that 33% and 34% is our normalized tax rate. So that’s kind of where I’m expecting it to be at year-end. Joe Altobello – Oppenheimer: Got it. Okay. Thanks a lot, guys.

Thank you, Joe.

Your next question comes from the line of Mimi Noel of Sidoti & Company. Mimi Noel – Sidoti & Company: Hi, Russ. Hi, Jean.

Good morning, Mimi. Mimi Noel – Sidoti & Company: Most of my questions have been answered, but just wanted to get some reassurance regarding inventory in channel. Jean mentioned that you were not assuming strong sell-through in Western Europe or the United States in the fourth quarter. Do you think your factory orders in preparation for the holiday season are in alignment with that assumption?

Thank you for asking me this question because I want to be more precise and I don’t want to be misleading. We did not ship tremendous amount of goods to our distributor. And our distributor will not ship a tremendous amount of goods for Christmas to the stores. So, what I meant is, we expected to have a weak Christmas and we build our inventory and we build our fill-in through products. Is this clearer? Mimi Noel – Sidoti & Company: Yes, that’s perfect.

Thank you very much for asking this question. Mimi Noel – Sidoti & Company: Sure. And then the last question I had, the higher interest expense in the third quarter, to what should I attribute that?

That’s for Russ.

Well, there are a couple of things. If you remember, somebody asked the question about the interest rate at the end of the second quarter when we had a several hundred thousand dollar gain on the fair value of a swap. Clearly, that reversed in the third quarter, and that’s what caused the third quarter to be a little bit higher than normal, plus our debt levels, as you can see from the balance sheet at the end of the third quarter, was a little higher than normal because of the utilization of cash for operating activities. So I would expect that the interest rates will be lower as we move into the fourth quarter. Mimi Noel – Sidoti & Company: Okay, that makes sense. That’s all I have. Thank you.

Thank you, Mimi.

Your next question comes from the line of Rommel Dionisio of Wedbush Morgan. Rommel Dionisio – Wedbush Morgan: Hi, yes, good morning. With regards to promotion and advertising, I know it was higher earlier in the year and has come down. But just looking forward, now that bebe and Brooks Brothers are going to comprise a greater percentage of the total, should we look for that 16% of sales to sort of come down over the next several quarters – specialty retail?

No, I think that the – when you factor in bebe and Brooks Brothers and the volume of sales that they represent as compared to Burberry, Van Cleef & Arpels, Lanvin and all of our – keep in mind that 80% – almost 90% of our sales are the prestige brands. So that’s 16% that we have in promotion and advertising for those prestige for our overall blend will probably hold true. Right? I don’t think you’re going to suddenly see some sort of an increase because there is some additional sales of Gap, Banana, bebe, Brooks Brothers on an international basis. Rommel Dionisio – Wedbush Morgan: Okay. Thanks, Russ. Everything else has been answered for me. Thank you.

Okay. Thank you, Rommel.

Thank you, Rommel.

Thank you, Rommel.

(Operator instructions) Your next question comes from the line of Eric Raphael [ph] of Merrill Lynch.

Hello. Eric Raphael – Merrill Lynch: How are you?

Good morning, Eric. Eric Raphael – Merrill Lynch: Good morning. You know, hold on. Am I coming through, guys?

Yes. Eric Raphael – Merrill Lynch: All right. Sorry about that. So, I’m not so good on tax accounting, and so my question is, why valuation allowances were needed when Inter Parfums generates strong consistent earnings and earnings growth, more so than most of the company I follow actually. Is that because the income offsetting carryforwards must come from the same business source, the European distribution subsidiaries?

Well, there are two factors here. When it comes to the European distribution subsidiaries, because they are newly formed entities, they don’t have a history of profitability. All right? And therefore, because there is no history of profitability, if there are losses in those operations – keep in mind, those are in different countries. So there are losses in those operations. There is no guarantee that those losses will ever be used. Right? So therefore, we have to put valuation allowances on the tax benefits of those losses. Eric Raphael – Merrill Lynch: Great. All right. Thanks for clearing that up. And congratulations as usual. It’s not an easy environment to perform in, that’s for sure.

Thank you, Eric. Appreciate it. Eric Raphael – Merrill Lynch: Bye.

Your next question is a follow-up from the line of Linda Bolton Weiser of Caris. Linda Bolton Weiser – Caris: Hi, this is like a longer term question about the Burberry franchise. I think the last couple of major launches had more than a year in between the launches. Do you think you’re going to have to start narrowing the time in between major launches to continue to grow that franchise?

Yes. I would like to say that one year is usually a good gap, a good timing for (inaudible) and for the Beat. We launched the women (inaudible). I think that some years ago, maybe three, four, five years ago, we could have – we would have preferred to wait 18 months between two launches, but the acceleration of launches is a reality in the industry. So we will stick to around – could be 12, 13, 14, 15 months for the new launches of Burberry, same thing for Lanvin, same thing for Van Cleef. Russ?

Yes. I think that Linda is on point that years ago there – we used to launch a new family for each brand between two years, sometimes even going as far as three years. And now it’s more the one to two years as opposed to the three. So I think there is an acceleration. And I think that that’s pervasive in the industry, as Jean said. Okay? Linda Bolton Weiser – Caris: Thank you.

Thank you.

Thank you. Is there one more question or not, operator?

There are no further questions. I will turn the call back to you for closing.

Okay, thank you very much. Again, thank you everybody for your participation on this call, whether you are live on the call or listening via our webcast. If anybody does have additional questions, as usual I am available by phone. Thank you and have a great day.

Ladies and gentlemen, this concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.