-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HidaJUpwlb/cAC/me3RmVQ7Nwc95hnbAhEyOcmslX+/CXtF6fFF8w4Yx0ccnp1SG wGLJsqK1ybXjZVnbUmvKuw== 0001157523-04-010247.txt : 20041103 0001157523-04-010247.hdr.sgml : 20041103 20041103080453 ACCESSION NUMBER: 0001157523-04-010247 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041102 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041103 DATE AS OF CHANGE: 20041103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENESCO GROUP INC CENTRAL INDEX KEY: 0000093542 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 041864170 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09267 FILM NUMBER: 041114793 BUSINESS ADDRESS: STREET 1: 225 WINDSOR DR. CITY: ITASCA STATE: IL ZIP: 60143 BUSINESS PHONE: 6308755300 MAIL ADDRESS: STREET 1: 225 WINDSOR DR. CITY: ITASCA STATE: IL ZIP: 60143 FORMER COMPANY: FORMER CONFORMED NAME: STANHOME INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: STANLEY HOME PRODUCTS INC DATE OF NAME CHANGE: 19820513 8-K 1 a4757225.txt ENESCO GROUP 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) November 2, 2004 ---------------- Enesco Group, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Illinois 0-1349 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): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition." On November 2, 2004, Enesco Group, Inc. (the" Company") issued a press release regarding its third quarter 2004 earnings. The press release of the Company is attached hereto as Exhibit 99. The Company does not intend for this Item 2.02 or Exhibit 99 to be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or to be incorporated by reference into filings under the Securities Act of 1933. Item 9.01 Financial Statements and Exhibits Press release issued November 2, 2004 by the Company and furnished pursuant to Item 2.02, "Results of Operations and Financial Condition." 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. Date: November 3, 2004 By: /s/ George R. Ditomassi -------------------------- George R. Ditomassi Interim Chief Executive Officer EXHIBIT INDEX Exhibit No. Description 99 Company Press Release dated November 2, 2004 announcing third quarter 2004 earnings. EX-99 2 a4757225ex99.txt PRESS RELEASE Exhibit 99 Enesco Group, Inc. Reports Third Quarter 2004 Results ITASCA, Ill.--(BUSINESS WIRE)--Nov. 2, 2004--Enesco Group, Inc. (NYSE:ENC), a leader in the giftware, collectible and home decor industries, today reported results for the third quarter ended September 30, 2004. Third Quarter 2004 Summary -- Revenue of $84.2 million was 17% higher than 3Q'03; gross profit of $34.2 million increased by 10% from 3Q'03. -- Third quarter gross margin and operating income were impacted by costs associated with the Company's Enterprise Resource Planning (ERP) system. -- Incoming orders continue to outpace prior year levels and an encouraging customer response was seen at recent trade shows. Financial Results For the third quarter of 2004, Enesco reported total revenue of $84.2 million, an increase of $12.4 million, or 17%, compared to revenue of $71.8 million for the third quarter of 2003. The revenue increase includes $7.4 million associated with the acquisitions of the Walt Disney Classics Collection license, Gregg Gift Company and Dartington Crystal. This increase also includes a $2.8 million favorable impact from foreign currency exchange rates. The balance of the sales increase, approximately $2.2 million, came from the core business. Gross profit of $34.2 million increased by 10%, compared to $31.1 million in the prior year, and is attributed primarily to revenue increases. Gross profit as a percentage of sales declined by 2.8 points to 40.6% due to ERP-related costs and sales mix. Operating expenses for the third quarter were $32.2 million, an increase of $8.2 million from the prior year. Expenses for the quarter related to the acquisitions were $3.1 million. Foreign currency translation rate effects increased operating expenses by $0.9 million for the quarter. The balance of the increase in expenses can be primarily attributed to the continued costs associated with the ERP system implementation, Sarbanes-Oxley compliance and executive severance costs. An operating profit of $2.0 million for the third quarter of 2004 compares to $7.1 million for the same period in 2003. Enesco's net income of $1.0 million or $0.07 per diluted share this quarter compares to $4.6 million or $0.32 per diluted share during the same period last year. As of September 30, 2004, Enesco had $53.7 million of interest bearing debt outstanding, and all covenants under Enesco's revolving credit agreement were complied with or waived. However, it is expected that Enesco will be in violation of certain financial covenants as of December 31, 2004. The Company's management is currently working with its lenders, and on November 2, 2004 signed an amendment to its credit facility providing that the December 31, 2004 covenants will be amended on or before November 22, 2004. The November 2nd amendment also provided that certain other provisions of the credit facility will be further amended, including but not limited to, providing security to the lenders on or before November 15, 2004. Because the December 31, 2004 covenants have not yet been amended, Enesco has reclassified $5.8 million of long-term debt to a current liability as of September 30, 2004. There has been no demand for acceleration of any debt payments by the lenders, and Enesco continues to borrow funds under its domestic and international credit facilities to meet working capital needs. "We continue to make progress towards resolving our ERP system issues. Enesco is in a much better position today than the Company was three months ago," explained George Ditomassi, Interim CEO of Enesco. "While we do expect to incur additional costs, we have identified the major system problems and are focused on rectifying them as soon as possible." "We are pleased with the top line performance this quarter and the overwhelming positive customer response at the recent trade shows," said Cynthia Passmore-McLaughlin, President of Enesco. "The continued growing demand for Enesco's product offerings and the widespread customer loyalty we've seen is an indication of the bright future the Company has as a gift and home decor leader." Separately, Enesco received notice earlier this week that the SEC has terminated its investigation of the Company and a former officer, and no enforcement action has been recommended. A conference call will be broadcast live on Wednesday, November 3, at 10:00 a.m. Central Time (11:00 a.m. Eastern) at http://www.enesco.com and http://www.streetevents.com. An online replay also will be available approximately one hour after the call. To listen to the Webcast, your computer must have RealPlayer installed. 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 800-642-1687. Passcode: 1462497. The replay will be available for one week following the conference call. About Enesco Group, Inc. Enesco Group, Inc. is a world leader in the gift, collectible and home decor industries. Serving more than 40,000 customers globally, Enesco distributes products to a wide variety of specialty card and gift retailers, home decor boutique as well as mass-market chains and direct mail retailers. Internationally, Enesco serves markets operating in Europe, Australia, Mexico, Asia and the Pacific Rim. 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 Precious Moments, Walt Disney Classics Collection, Nickelodeon, Heartwood Creek, 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 various forward-looking statements that are based on management's current assumptions and beliefs and upon 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 licenses for Precious Moments, Cherished Teddies, Heartwood Creek and Disney; the Company's ability to grow revenues in mass and niche market channels; the Company's ability to effectively complete the implementation of the ERP 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 INCOME (UNAUDITED) Third Quarter and Nine Months Ended September 30, 2004 and 2003 (In thousands, except per share amounts) Third Quarter Nine Months --------------------------- ----------------------------- 2004 2003 % Change 2004 2003 % Change -------- -------- --------- --------- --------- --------- Net revenues $84,225 $71,766 17% $193,790 $178,789 8% Cost of sales 50,027 40,628 112,165 101,532 -------- -------- --------- --------- Gross profit 34,198 31,138 10% 81,625 77,257 6% Gross profit % 40.6% 43.4% 42.1% 43.2% Selling, distribution, general and administrative expense 32,194 24,009 34% 88,482 70,620 25% -------- -------- --------- --------- Operating profit (loss) 2,004 7,129 (6,857) 6,637 Interest expense (350) (97) (624) (641) Interest income 90 66 345 472 Other income (expense), net (548) (339) (1,148) (974) -------- -------- --------- --------- Income (loss) before income taxes 1,196 6,759 (8,284) 5,494 Income tax expense (benefit) 157 2,162 (3,769) 1,514 -------- -------- --------- --------- Net income (loss) $1,039 $4,597 $(4,515) $3,980 ======== ======== ========= ========= Earnings (loss) per share: Net income (loss): Basic $0.07 $0.33 ($0.32) $0.28 Diluted $0.07 $0.32 ($0.32) $0.28 Average basic shares outstanding 14,356 14,065 14,250 14,000 Average diluted shares outstanding 14,669 14,461 14,849 14,344 ENESCO GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS September 30, December 31, 2004 2003 ------------- ------------ Current Assets: Cash and equivalents $11,016 $10,645 Accounts receivable, net 99,167 65,190 Inventories 65,020 60,820 Other current assets 8,962 9,260 -------------------------- Total current assets 184,165 145,915 Property, plant and equipment, net 31,018 28,341 Other assets 35,589 28,212 -------------------------- Total assets $250,772 $202,468 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes and loans payable $53,684 $2,858 Accounts payable 26,729 21,723 Federal, state and foreign income taxes 1,107 7,375 Total accrued expenses 19,930 19,608 -------------------------- Total current liabilities 101,450 51,564 Total long-term liabilities 3,609 3,551 Minority interest 90 114 Total shareholders' equity 145,623 147,239 -------------------------- Total liabilities and shareholders' equity $250,772 $202,468 ========================== CONTACT: Ashton Partners Nathan Elwell, 312-553-6706 (Investor) nelwell@ashtonpartners.com or Enesco Group, Inc. Donna Shaults, 630-875-5464 (Media) dshaults@enesco.com -----END PRIVACY-ENHANCED MESSAGE-----