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Equity | 12 Months Ended
--- | ---
Dec. 31, 2011
Equity |
| (12) | Equity
Share-Based Payments: The Company maintains a stock option program for key employees, executives and directors. The plans, all of which have been approved by shareholder vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year term and vest over a four to five-year period. The fair value of shares vested in 2011 and 2010 aggregated $0.6 million and $0.5 million, respectively. Compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. It is generally the Company’s policy to issue new shares upon exercise of stock options. The following table sets forth information with respect to nonvested options for 2011:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested options – beginning of year |  |  | 480,843 |  |  | $ | 4.32 |
Nonvested options granted |  |  | 118,900 |  |  | $ | 4.59 |
Nonvested options vested or forfeited |  |  | (142,820 | ) |  | $ | 4.29 |
Nonvested options – end of year |  |  | 456,923 |  |  | $ | 4.40 |
Share-based payment expenses decreased income before income taxes by $1.1 million in 2011 and $0.9 million in both 2010 and 2009, decreased net income attributable to Inter Parfums, Inc. by $0.60 million, $0.55 million and $0.54 million in 2011, 2010 and 2009, respectively, and reduced diluted earnings per share by $0.02 in 2011, 2010 and 2009. The following table summarizes stock option activity and related information for the years ended December 31, 2011, 2010 and 2009 and does not include information relating to options of IPSA granted by IPSA, our majority-owned subsidiary:
|  | Year ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | Options |  |  | Weighted Average exercise price |  |  | Options |  |  | Weighted Average exercise price |  |  | Options |  |  | Weighted Average exercise price |
Shares under option - beginning of year |  |  | 807,620 |  |  | $ | 12.78 |  |  |  | 920,825 |  |  | $ | 11.32 |  |  |  | 1,138,375 |  |  | $ | 11.23 |
Options granted |  |  | 118,900 |  |  |  | 15.66 |  |  |  | 120,200 |  |  |  | 18.64 |  |  |  | 100,550 |  |  |  | 11.90 |
Options exercised |  |  | (95,625 | ) |  |  | 12.66 |  |  |  | (226,455 | ) |  |  | 10.00 |  |  |  | (243,600 | ) |  |  | 10.24 |
Options cancelled |  |  | (7,620 | ) |  |  | 14.37 |  |  |  | (6,950 | ) |  |  | 11.27 |  |  |  | (74,500 | ) |  |  | 14.20 |
Shares under options - end of year |  |  | 823,275 |  |  |  | 13.20 |  |  |  | 807,620 |  |  |  | 12.78 |  |  |  | 920,825 |  |  |  | 11.32 |
At December 31, 2011, options for 771,795 shares were available for future grant under the plans. The aggregate intrinsic value of options outstanding is $2.3 million as of December 31, 2011 and unrecognized compensation cost related to stock options outstanding on Inter Parfums, Inc. common stock aggregated $1.4 million, which will be recognized over the next five years. The amount of unrecognized compensation cost related to stock options outstanding of our majority-owned subsidiary, IPSA, was €0.7 million (approximately $0.9 million). Options under IPSA plans vest four years after grant. The weighted average fair values of options granted by Inter Parfums, Inc. during 2011, 2010 and 2009 were $4.59, $5.59 and $4.40 per share, respectively, on the date of grant using the Black-Scholes option pricing model to calculate the fair value. The assumptions used in the Black-Scholes pricing model for the years ended December 31, 2011, 2010 and 2009 are set forth in the following table:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Weighted-average expected stock-price volatility |  |  | 40 | % |  |  | 39 | % |  |  | 49 | %
Weighted-average expected option life |  |  | 4.5 years |  |  |  | 4.5 years |  |  |  | 4.5 years |
Weighted-average risk-free interest rate |  |  | 0.9 | % |  |  | 2.1 | % |  |  | 2.6 | %
Weighted-average dividend yield |  |  | 1.7 | % |  |  | 1.7 | % |  |  | 2.0 | %
Expected volatility is estimated based on historic volatility of the Company’s common stock. In 2011, the expected term of the option is estimated based on historic data. In 2010 and 2009, the Company used the simplified method as historic data regarding employee exercise behavior was incomplete. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors would increase as the earnings of the Company and its stock price continue to increase. Stock-based employee compensation determined under the fair value based method, net of related tax effects, includes compensation incurred by IPSA, our majority-owned subsidiary whose stock is publicly traded in France. No options were granted by IPSA in 2011. The weighted average fair values of the options granted by IPSA during 2010 and 2009 were €6.55 per share and €4.27 per share, respectively, on the date of grant using the Black-Scholes option pricing model. Cash proceeds, tax benefits and intrinsic value related to stock options exercised were as follows:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Cash proceeds from stock options exercised |  | $ | 1,210 |  |  | $ | 771 |  |  | $ | 956 |
Tax benefits |  | $ | — |  |  | $ | 520 |  |  | $ | 692 |
Intrinsic value of stock options exercised |  | $ | 720 |  |  | $ | 1,195 |  |  | $ | 407 |
The following table summarizes additional stock option information as of December 31, 2010:
|  |  |  |  | Options outstanding |  |  |  |
|  | Number |  |  | weighted average remaining |  |  | Options |
Exercise prices |  | outstanding |  |  | contractual life |  |  | exercisable |
$ 6.15 – $ 6.93 |  |  | 75,220 |  |  |  | 2.96 years |  |  |  | 42,860 |
$ 11.30 – $ 11.41 |  |  | 154,650 |  |  |  | 2.09 years |  |  |  | 20,588 |
$ 12.14 – $ 12.64 |  |  | 194,380 |  |  |  | 2.94 years |  |  |  | 116,635 |
$ 13.10 – $ 13.45 |  |  | 164,775 |  |  |  | 0.98 years |  |  |  | 161,399 |
$ 15.59 - $ 15.62 |  |  | 121,400 |  |  |  | 5.91 years |  |  |  | 1,200 |
$17.94 |  |  | 3,500 |  |  |  | 4.09 years |  |  |  | — |
$18.01 |  |  | 3,000 |  |  |  | 1.41 years |  |  |  | 2,400 |
$19.03 |  |  | 106,350 |  |  |  | 5.00 years |  |  |  | 21,270 |
Totals |  |  | 823,275 |  |  |  | 3.09 Years |  |  |  | 366,352 |
As of December 31, 2011, the weighted average exercise price of options exercisable was $12.45 and the weighted average remaining contractual life of options exercisable is 2.27 years. The aggregate intrinsic value of options exercisable at December 31, 2011 is $1.2 million. The Chief Executive Officer and the President each exercised 75,000 outstanding stock options of the Company’s common stock in both 2010 and 2009. The aggregate exercise prices of $1.5 million in both 2010 and 2009 were paid by them tendering to the Company in 2010 and 2009 an aggregate of 95,744 and 129,984 shares, respectively, of the Company’s common stock, previously owned by them, valued at fair market value on the dates of exercise. All shares issued pursuant to these option exercises were issued from treasury stock of the Company. In addition, the Chief Executive Officer tendered in 2010 and 2009 an additional 6,782 and 2,503 shares, respectively, for payment of certain withholding taxes resulting from his option exercises. Treasury Stock As of December 31, 2008, the Board of Directors of the Company authorized the repurchase of up to 1,031,863 shares of the Company’s common stock. During 2009, the Company repurchased 108,100 shares of its common stock at an average price of $5.84 per common share. Dividends The quarterly dividend of $2.4 million ($0.08 per share) declared in December 2011 was paid in January 2012. Furthermore, in December 2011 the Board of Directors of the Company authorized the continuation of the annual dividend of $0.32 per share. The next quarterly dividend of $0.08 per share will be paid on April 16, 2012 to shareholders of record on March 30, 2012.

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- Definition The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 4.E) -URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB TOPIC 4.C) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 3, 4, 5, 6, 7, 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Preferred Stock -URI http://asc.fasb.org/extlink&oid=6521494 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 15 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section C Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.29-31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 4 -Section 08 -Paragraph d Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(d),(e)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7, 11A -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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