INTERPARFUMS INC Commitments Disclosure
| (11) | Commitments |
Leases
The Company leases offices, warehouses and vehicles, substantially all of which are classified as operating leases. The Company currently has no material financing leases. The Company determines if an arrangement is a lease at inception. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.
In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on the lease. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date for the location in which the lease is held in determining the present value of lease payments.
As of December 31, 2025, the weighted average remaining lease term was 3.5 years and the weighted average discount rate used to determine the operating lease liability was 3.2%. Rental expense related to operating leases was $7.1 million, $6.5 million, and $5.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. Operating lease payments included in operating cash flows totaled $7.0 million, $6.1 million, and $5.3 million in 2025, 2024, and 2023, respectively. Noncash additions to operating lease assets totaled $0.8 million, $2.5 million, and $4.8 million in 2025, 2024, and 2023, respectively.
Maturities of lease liabilities subsequent to December 31, 2025 are as follows:
(In thousands)
| 2026 | $ | 6,512 | ||
| 2027 | 6,392 | |||
| 2028 | 5,727 | |||
| 2029 | 3,700 | |||
| 2030 | 128 | |||
| Thereafter | 415 | |||
| 22,874 | ||||
| Less imputed interest (based on 3.2% weighted-average discount rate) | (581 | ) | ||
| $ | 22,293 |
License Agreements
The Company is party to a number of licenses and other agreements for the use of trademarks and rights in connection with the manufacture and sale of its products expiring at various dates through 2038. In connection with certain of these license agreements, the Company is subject to minimum annual advertising commitments, minimum annual royalties and other commitments as follows:
(In thousands)
| 2026 | $ | 378,484 | ||
| 2027 | 355,078 | |||
| 2028 | 338,869 | |||
| 2029 | 320,429 | |||
| 2030 | 275,121 | |||
| Thereafter | 1,308,933 | |||
| $ | 2,976,914 |
Future advertising commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2025, without consideration for potential renewal periods. The above figures do not reflect the fact that our distributors share our advertising obligations. Royalty expense included in selling, general and administrative expenses, aggregated $121.7 million, $117.8 million and $103.8 million in 2025, 2024 and 2023, respectively, and represented 8.2%, 8.1% and 7.9% of net sales for the years ended December 31, 2025, 2024 and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 13, 2018 | |
| 2016 | Mar 13, 2017 | |
| 2015 | Mar 14, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.