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: October 22, 1998
Date of Earliest Event Reported: October 22, 1998
DEPARTMENT 56, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11908 13-3684956
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation or
organization)
One Village Place, 6436 City West Parkway,
Eden Prairie, MN 55344
(Address of principal executive offices,
including zip code)
Registrant's telephone number,
including area code: (612) 944-5600
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Item 5. Other Events.
CAUTIONARY DISCLOSURE FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 CONCERNING "FORWARD-LOOKING STATEMENTS"
A. Department 56, Inc. (the "Company") has previously
disclosed on Form 8-K its expectation that net sales for
the fourth quarter of fiscal year 1998 may be lower than
those for the fourth quarter of fiscal year 1997. The
Company has also previously disclosed on Form 8-K an
expectation that, in the event 1998 fourth quarter net
sales and earnings are lower than those for the
comparable period in 1997, fourth quarter 1998 earnings
per share (EPS) would be lower than 1997 fourth quarter
EPS. The Company also noted that its fourth quarter 1998
EPS expectation would be impacted by any Company
purchases of its common stock, among other factors.
The volume and profitability of the Company's net sales
during the 1998 fourth quarter will depend in large
measure on the customer-requested ship dates and product
mix in its order backlog at the beginning of the quarter
of fiscal 1998 and in its orders received during the
quarter, as well as on available inventory, order
cancellations and returns during the quarter. This,
together with any share repurchases which the Company has
completed and may yet complete and other factors, will
affect the Company's EPS for the fourth quarter 1998.
Therefore, the Company's fourth quarter 1998 EPS may or
may not be lower than 1997 fourth quarter EPS in the
event that 1998 fourth quarter net sales are lower than
those for the comparable period in 1997.
B. The Company expects that its capital expenditures for the
full fiscal year 1998 will approximate $6.5 million, of
which approximately $4.5 million is attributable to
computing systems upgrades and efforts to achieve
substantial "Year 2000" functionality. The Company
expects that its capital expenditures for the full fiscal
year 1999 will approximate $10 million, primarily in
initiatives regarding the Company's distribution,
showroom and retail store facilities and computing
systems. In the medium term following fiscal 1999 the
Company expects that, barring any extraordinary projects,
expansion of headquarters facilities, or expansion of its
retail store initiative, its annual capital expenditures
will not exceed approximately $5 million. The
expectations regarding capital expenditures in 1999 and
beyond also assume leasing of distribution, showroom and
retail locations and that the Company's strategic and
day-to-day business are identical to its current
business.
The Company is filing this Current Report on Form 8-K
solely in order to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 (the
"Act"). Readers are cautioned that each of the expectations and
estimates stated above constitute an expectation or estimate that
would be a "forward-looking statement" within the meaning of the
Act. However, to the extent that any such information (singularly
or in combination) or that
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any conclusion or expectation drawn from such information would
be a "forward-looking statement", readers are cautioned that
forward-looking statements involve inherent risks and
uncertainties and that a number of important factors could cause
actual results to differ materially from the goals, strategies,
prospects, sales, plans, objectives, expectations, estimates,
beliefs, views and intentions expressed in such forward-looking
statements. Such factors are discussed below.
Readers are cautioned that dealer orders, Company revenue,
actual growth, SG&A and earnings per share are dependent on
numerous factors, including the amount, quality and market
acceptance of new product introductions, the timing and extent of
promotional and marketing efforts undertaken by the Company, and
retailer and consumer demand. Furthermore, dealer order patterns
have historically varied in number, mix and timing, and there can
be no assurance that the order trend experience year-to-date will
continue.
Other factors (including: consumer acceptance of new
products; product development efforts; identification and
retention of sculpting and other artisan talent; completion of
third party product manufacturing; dealer reorders and order
cancellations; control of operating expenses; corporate cash flow
application; identification, completion and results of
acquisitions and other corporate development efforts;
identification and implementation of strategic business
initiatives; grants of stock options or other equity equivalents;
actual or deemed exercises of stock options; and industry,
general economic, regulatory, transportation and international
trade and monetary conditions) can significantly impact the
Company's sales, earnings, earnings per share, and capital
expenditures. Actual results may vary materially from
forward-looking statements and the assumptions on which they are
based. The Company cautions that the foregoing list of factors is
not exclusive and that other risks and uncertainties may cause
actual results to differ materially from those in forward-looking
statements. The Company undertakes no obligation to update or
publish in the future any forward-looking statements.
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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.
Date: October 22, 1998
DEPARTMENT 56, INC.
/s/ Mark R. Kennedy
--------------------------
Mark R. Kennedy
Senior Vice President and
Chief Financial Officer
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