8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 9, 2005

Enesco Group, Inc.

(Exact name of registrant as specified in its charter)

Illinois	001-09267	04-1864170
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

225 Windsor Drive, Itasca, IL	60143
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (630) 875-5300

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
Exhibit Index
Press Release

Item 2.02   Results of Operations and Financial Condition.

On August 9, 2005, Enesco Group, Inc. (the “Company”) issued a press release regarding its second quarter 2005 earnings.
The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01   Financial Statements and Exhibits.

(c)   Exhibits

99.1 Press Release, dated August 9, 2005, regarding the Company’s second quarter 2005 earnings.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Enesco Group, Inc.

(Registrant)

Date August 9, 2005	By:	/s/ Anthony G. Testolin
		Anthony G. Testolin
		Chief Accounting Officer

Exhibit Index

Exhibit 99.1 Press Release, dated August 9, 2005, regarding the Company’s second quarter 2005 earnings.

EX-99.1

	For Immediate Release Investor Contact:           Leigh Parrish Financial Dynamics 212-850-5651 lparrish@fd-us.com
	Media Contact:          Donna Shaults Enesco Group, Inc. 630-875-5464 dshaults@enesco.com

Enesco Group, Inc. Reports Second Quarter 2005 Financial Results

ITASCA, Ill. — August 9, 2005—Enesco Group, Inc. (NYSE: ENC), a leader in the giftware, and home and garden décor industries, today announced financial results for the second quarter ended June 30, 2005.

Second Quarter 2005 Summary

• Revenue decreased to $49.2 million compared to $61.7 million in 2Q 2004 primarily due to the continued sales decline in collectibles and the planned shift to the third quarter for procurement and ship dates for seasonal products.

• Gross margin decreased by $16.0 million primarily due to the sales volume decline, the $7.7 million non-cash loss on the Precious Moments license termination, and increased closeout sales.

• SG&A expenses increased by $3.4 million to $32.5 million primarily due to the accelerated depreciation of the Enterprise Resource Planning (ERP) system, bank penalty fees associated with our current lender and SG&A expenses of Dartington Crystal, acquired in July 2004.

• Net loss increased by $20.9 million to $22.0 million, $1.50 per diluted share, primarily due to reduction in gross margin, higher SG&A expenses, and higher interest and tax expense.

Commenting on second quarter results, Cynthia Passmore-McLaughlin, President and CEO, stated, “Our performance was impacted by the Company’s initiatives to fix our operating model and improve cash flow. During the second quarter, we terminated the Precious Moments license agreement, further reducing our dependence on collectibles. We also converted our warehouse management and distribution system to an upgraded version of our legacy I.T. system and stabilized the remaining portions of our current ERP system that relate to order management and financials. Lastly, we reduced salary costs and headcount in the U.S. and U.K. Our revenues were lower on a year-over-year basis due to the planned shift primarily to the third quarter of our ordering and shipping of seasonal and Christmas products, and the continued softness of the collectible product category. While our top line was impacted this quarter, we expect to improve our cash flow by now handling our seasonal products on a ‘make to order’ basis and spreading the shipments to retailers and payments to our vendors from June through October.”

More detailed information is set forth in Enesco’s Form 10-Q for the quarter ended June 30, 2005, which was filed August 9, 2005.

Conference Call
A conference call will be broadcast live on Wednesday, August 10, at 8:00 a.m. CT (9:00 a.m. Eastern). Investors interested in participating on the live call can do so by calling 1-877-271-7222, and ask for the Enesco Second Quarter Earnings call. Investors also may listen to the live call via a Webcast at http://www.enesco.com and click on “Investor Relations,” or by logging on to http://www.streetevents.com.

To listen to the Webcast, your computer must have RealPlayer installed. This Webcast will be available online for 90 days following the live conference call. If you do not have RealPlayer, go to http://www.streetevents.com prior to the call, to download RealPlayer for free.

For a phone replay, call 1-800-642-1687, Passcode: 8593955. The phone replay will be available for one week following the conference call.

About Enesco Group, Inc.
Enesco Group, Inc. is a world leader in the giftware, and home and garden décor industries. Serving more than 40,000 customers globally, Enesco distributes products to a wide variety of specialty card and gift retailers, home décor boutiques as well as mass-market chains and direct mail retailers. Internationally, Enesco serves markets operating in Europe, Canada, Australia, Mexico, and Asia. With subsidiaries located in Europe and Canada, and a business unit in Hong Kong, Enesco’s international distribution network is a leader in the industry. The Company’s product lines include some of the world’s most recognizable brands, including Heartwood Creek, Jim Shore, Walt Disney Company, Walt Disney Classics Collection, Pooh & Friends, Nickelodeon, Bratz, Halcyon Days, Lilliput Lane and Border Fine Arts, among others. Further information is available on the Company’s web site at www.enesco.com.

This press release contains forward-looking statements, which reflect management’s current assumptions and beliefs and are based on information currently available to management. The Company has tried to identify such forward-looking statements by use of such words as “expects,” “intends,” “anticipates,” “could,” “estimates,” “plans,” and “believes,” and similar expressions, but these words are not the exclusive means of identifying such statements. Such statements are subject to various risks, uncertainties and other factors, which could cause actual results to vary materially from those anticipated, estimated, expected or projected. Important factors that may cause actual future events or results to differ materially and adversely from those described in the forward-looking statements include, but are not limited to: the Company’s success in developing new products and consumer reaction to the Company’s new products; the Company’s ability to secure, maintain and renew popular licenses, particularly our Cherished Teddies, Heartwood Creek and Disney licenses; the Company’s ability to grow revenues in mass and niche market channels; the Company’s ability to comply with covenants contained in its credit facility; the Company’s ability to obtain a new global senior credit facility; the Company’s ability to effectively transition to the legacy information system; changes in general economic conditions, as well as specific market conditions; fluctuations in demand for our products; manufacturing lead times; the timing of orders and shipments and our ability to predict customer demands; inventory levels and purchase commitments exceeding requirements based upon incorrect forecasts; collection of accounts receivable; changes in the regulations and procedures affecting the importation of goods into the United States; changes in foreign exchange rates; price and product competition in the giftware industry; variations in sales channels, product costs or mix of products sold; and, possible future terrorist attacks, epidemics, or acts of war. In addition, the Company operates in a continually changing business environment and does not intend to update or revise the forward-looking statements contained herein, which speak only as of the date hereof. Additional information regarding forward-looking statement risk factors is contained in the Company’s reports and filings with the Securities and Exchange Commission. In light of these risks and uncertainties, the forward-looking statements contained herein may not occur and actual results could differ materially from those set forth herein. Accordingly, you should not rely on these forward-looking statements as a prediction of actual future results.

# # #

ENESCO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Second Quarter Ended June 30, 2005 and 2004
(In thousands, except per share amounts)

	2005			2004
Net revenues	$	49,159		$	61,695
Cost of sales		30,180			34,466
Cost of sales — loss on license termination		7,713			—
Gross profit		11,266			27,229
Gross profit %		22.9	%		44.1	%
Selling, general and administrative expense		32,511			29,100
Operating loss		(21,245	)		(1,871	)
Interest expense		(456	)		(189	)
Interest income		38			143
Other income (expense), net		(20	)		(53	)
Loss before income taxes		(21,683	)		(1,970	)
Income tax benefit (expense)		(353	)		818
Net loss	$	(22,036	)	$	(1,152	)
Loss per share basic and diluted:
Net loss	$	(1.50	)	$	(0.08	)
Average basic and diluted shares outstanding		14,700			14,238

ENESCO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)

	2005			2004
Net revenues	$	109,243		$	114,018
Cost of sales		67,661			64,480
Cost of sales — loss on license termination		7,713			—
Gross profit		33,869			49,538
Gross profit %		31.0	%		43.4	%
Selling, general and administrative expense		67,793			58,956
Operating loss		(33,924	)		(9,418	)
Interest expense		(855	)		(274	)
Interest income		158			255
Other income (expense), net		(199	)		(43	)
Loss before income taxes		(34,820	)		(9,480	)
Income tax benefit (expense)		(2,432	)		3,926
Net loss	$	(37,252	)	$	(5,554	)
Loss per share basic and diluted:
Net loss		($2.54	)		($0.39	)
Average basic and diluted shares outstanding		14,653			14,204

ENESCO GROUP, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS
	June 30,		December 31,
	2005		2004
Current Assets:
Cash and equivalents	$	4,571	$	14,646
Accounts receivable, net		56,424		70,526
Inventories		57,612		65,371
Prepaid expenses		4,129		3,310
Property held for sale		761		—
Deferred income taxes		686		920
Total current assets		124,183		154,773
Property, plant and equipment, net		16,712		22,509
Other assets		15,805		16,601
Total assets	$	156,700	$	193,883
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Notes and loans payable	$	35,062	$	26,354
Accounts payable		15,471		18,680
Income taxes payable		7,488		6,405
Deferred gain on sale of fixed assets		1,711		1,711
Accrued Expenses		19,448		21,628
Total current liabilities		79,180		74,778
Long-term liabilities		7,519		9,838
Total shareholders’ equity		70,001		109,267
Total liabilities and shareholders’ equity	$	156,700	$	193,883

ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
(In thousands)

	2005			2004
Operating Activities:
Net loss	$	(37,252	)	$	(5,554	)
Adjustments to reconcile net loss to net cash used by operating activities		19,683			(16,378	)
Net cash used by operating activities		(17,569	)		(21,932	)
Investing Activities:
Purchase of property, plant and equipment		(1,204	)		(2,524	)
Acquisition, net of cash acquired		—			(7,413	)
Proceeds from sales of property, plant and equipment		6			56
Net cash used by investing activities		(1,198	)		(9,881	)
Financing Activities:
Issuance of notes and loans payable		8,797			29,950
Exercise of stock options		322			266
Net cash provided by financing activities		9,119			30,216
Effect of exchange rate changes on cash and cash equivalents		(427	)		97
Increase/(decrease) in cash and cash equivalents		(10,075	)		(1,500	)
Cash and cash equivalents, beginning of period		14,646			10,645
Cash and cash equivalents, end of period	$	4,571		$	9,145