SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____ .
Commission File Number 0-1349
Enesco Group, Inc.
- -----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Windsor Drive, Itasca, Illinois 60143
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
630-875-5300
------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
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(Former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
March 31,
1999 1998
---- ----
Shares Outstanding:
Common Stock with 15,445,011 16,343,251
Associated Rights
Total number of pages
contained herein __
Index to Exhibits is
on page __
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
(In Thousands)
March 31, December 31,
1999 1998
--------- ------------
ASSETS
CURRENT ASSETS:
Cash and certificates of deposit $24,234 $17,905
Accounts receivable, net 90,433 86,171
Inventories 70,287 81,740
Prepaid expenses 5,931 4,672
Current tax assets 14,954 15,199
----------- ------------
Total current assets 205,839 205,687
----------- ------------
PROPERTY, PLANT & EQUIPMENT, at cost 78,889 84,988
Less accumulated depreciation 47,655 51,375
------------- -------------
31,234 33,613
------------- -------------
OTHER ASSETS:
Goodwill and other intangibles, net 40,158 40,816
Other 27,317 27,287
Deferred tax assets 12,549 12,546
------------- -------------
80,024 80,649
------------- -------------
$317,097 $319,949
============= =============
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited)
(In Thousands)
March 31, December 31,
1999 1998
--------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable $7,882 $7,900
Accounts payable 28,572 25,373
Federal, state and foreign taxes on income 58,932 56,614
Accrued expenses--
Payroll and commissions 7,287 5,385
Royalties 7,215 6,826
Post-retirement benefits 5,332 5,280
Other 21,078 23,453
----------- ----------
Total current liabilities 136,298 130,831
----------- ----------
LONG-TERM LIABILITIES:
Post-retirement benefits 31,523 31,494
Deferred tax liabilities 7,011 7,043
----------- ----------
Total long-term liabilities 38,534 38,537
----------- ----------
SHAREHOLDERS' EQUITY:
Common stock 3,154 3,154
Capital in excess of par value 48,567 48,506
Retained earnings 315,232 315,335
Accumulated other comprehensive income (3,112) (2,258)
----------- ----------
363,841 364,737
Less - shares held in treasury, at cost (221,576) (214,156)
----------- ----------
Total shareholders' equity 142,265 150,581
----------- ----------
$317,097 $319,949
=========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited)
(In thousands, except per share amounts)
1999 1998
Net Sales $93,925 $108,220
Cost of Sales 47,793 57,452
--------- ---------
Gross Profit 46,132 50,768
Selling, Distribution, General and
Administrative Expenses 38,570 43,317
--------- ---------
Operating Profit 7,562 7,451
Interest expense (413) (756)
Other income (expense), net 81 (544)
--------- ---------
Income Before Income Taxes 7,230 6,151
Income taxes 2,892 2,645
--------- ---------
Net Income 4,338 3,506
Retained Earnings, beginning of period 315,335 355,806
Cash dividends, $.28 per share in 1999 and 1998 (4,441) (4,588)
--------- ---------
Retained Earnings, end of period $315,232 $354,724
========= =========
Earnings Per Common Share:
Basic $0.28 $0.21
========= =========
Diluted $0.28 $0.21
========= =========
The accompanying notes are an integral part of these condensed financial
statements.
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $4,338 $3,506
Adjustments to reconcile net income to net
cash provided by operating activities 12,759 (13,338)
-------- --------
Net cash provided (used) by operating activities 17,097 (9,832)
-------- --------
INVESTING ACTIVITIES:
Purchase of property, plant & equipment (919) (622)
Proceeds from sales of property, plant & equipment 2,012 41
Deferred tax liabilities (32) (11)
-------- --------
Net cash provided (used) by investing activities 1,061 (592)
-------- --------
FINANCING ACTIVITIES:
Cash dividends (4,441) (4,588)
Exchanges and purchases of common stock (7,547) (23,616)
Notes and loans payable 187 25,668
Exercise of stock options - 33
Other common stock issuance 188 360
-------- --------
Net cash used by financing activities (11,613) (2,143)
-------- --------
Effect of exchange rate changes on cash and cash equivalents (216) (83)
-------- --------
Increase (decrease) in cash and cash equivalents 6,329 (12,650)
Cash and cash equivalents, beginning of year 17,905 35,722
-------- --------
Cash and cash equivalents, end of quarter $24,234 $23,072
======== ========
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
ENESCO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements and related notes
included herein have been prepared by the Company, without audit except for
the December 31, 1998 condensed balance sheet, which was derived from the
Company's Annual Report on Form 10-K for the year ended December 31, 1998,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The information
furnished reflects all normal recurring adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods. The March 31, 1998 consolidated statement of cash flows
has been restated to reflect deferred taxes as separate classifications. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and related notes to consolidated
financial statements included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
1. ACCOUNTING POLICIES:
The Company's financial statements for the three months ended March
31, 1999 have been prepared in accordance with the accounting policies
described in Note 1 to the December 31, 1998 consolidated financial
statements included in the Company's 1998 Annual Report on Form 10-K. The
Company considers all highly liquid securities, including certificates of
deposit with maturities of three months or less, when purchased, to be cash
equivalents. Accounts receivable were net of reserves for uncollectible
accounts, returns and allowances of $10,963,000 at March 31, 1999 and
$9,300,000 at December 31, 1998.
The Company recognizes revenue as merchandise is turned over to the
shipper and a provision for anticipated merchandise returns and allowances
is recorded based upon historical experience. Amounts billed to customers
for shipping and handling orders and collector club subscriptions are
netted against the associated costs.
The Company paid cash for interest and taxes as follows (in
thousands):
Three Months Ended
March 31
------------------
1999 1998
---- ----
Interest $ 363 $ 583
Income taxes $ 574 $11,077
2. COMPREHENSIVE INCOME:
The other comprehensive income consists only of cumulative
translation adjustments. Comprehensive income (loss) for the three months
ended March 31, 1999 and 1998 was as follows (in thousands):
Three Months Ended
March 31
------------------
1999 1998
---- ----
NET INCOME $ 4,338 $ 3,506
------- -------
OTHER COMPREHENSIVE INCOME:
Cumulative translation adjustments (854) 102
(no tax effects) ------- -------
TOTAL OTHER COMPREHENSIVE INCOME (854) 102
------- -------
COMPREHENSIVE INCOME $ 3,484 $ 3,608
======= =======
3. GEOGRAPHIC OPERATING SEGMENTS:
The Company operates in one industry segment, predominately in two
major geographic areas (United States and Europe).
The following tables summarize the Company's operations by
geographic area for the three months ended March 31, 1999 and 1998 (in
thousands):
Geographic Areas
1999 1998
---- ----
Net sales
United States $ 75,047 $ 89,665
United States inter-company (849) (1,612)
International 20,649 21,669
International inter-company (922) (1,502)
--------- ---------
Total consolidated $ 93,925 $108,220
========= =========
Operating profit
United States $ 6,237 $ 6,642
International 1,325 809
--------- ---------
Total consolidated $ 7,562 $ 7,451
========= =========
Transfers between geographic areas are made at the market value of
the merchandise transferred. No single customer accounted for 10% or more
of consolidated net sales. Export sales to foreign unaffiliated customers
represent less than 10% of consolidated net sales.
There were no material changes in assets from the amount disclosed
in the Company's December 31, 1998 Annual Report and the basis of
geographic area measurement of sales and operating profit did not change in
the first quarter.
4. INVENTORY CLASSES:
The major classes of inventories at March and December 3l were as
follows (in thousands):
March 31, December 31,
1999 1998
---- ----
Raw materials and supplies $ 1,378 $ 1,185
Work in process 409 396
Finished goods in transit 11,922 12,202
Finished goods 56,578 67,957
-------- --------
$ 70,287 $ 81,740
======== ========
5. OTHER INCOME (EXPENSE), NET:
Other income (expense), net for the three months ended March 31,
1999 and 1998 consists of the following (in thousands):
1999 1998
---- ----
Interest income $ 147 $ 343
Amortization of other assets ( 515) ( 873)
Other, net 449 ( 14)
------ ------
$ 81 ($ 544)
====== ======
6. EARNINGS PER COMMON SHARE (BASIS OF CALCULATION):
Basic earnings per common share are based on the average number of
common shares outstanding during the period covered. Diluted earnings per
common share assumes, in addition to the above, a dilutive effect of common
share equivalents during the period. Common share equivalents represent
dilutive stock options using the treasury stock method.
For the first quarter basic computations, the average numbers of
outstanding shares utilized were 15,750,000 shares for 1999 and 16,595,000
shares for 1998. For the first quarter diluted computations, the average
numbers of shares utilized were 15,750,000 and 16,605,000 shares for 1999
and 1998, respectively, including common share equivalents of 10,000 in
1998. The lower average number of shares for the first quarter of 1999
primarily resulted from the repurchase of shares as part of the Company's
repurchase program.
7. FINANCIAL INSTRUMENTS:
The Company operates globally with various manufacturing and
distribution facilities and product sourcing locations around the world.
The Company may reduce its exposure to fluctuations in foreign interest
rates and exchange rates by creating offsetting positions through the use
of derivative financial instruments. The Company currently does not use
derivative financial instruments for trading or speculative purposes.
The notional amount of forward exchange contracts and options is
the amount of foreign currency bought or sold at maturity. The notional
amount of interest rate swaps is the underlying principal amount used in
determining the interest payments exchanged over the life of the swap. The
notional amounts are not a direct measure of the Company's exposure through
its use of derivatives.
The Company periodically uses interest rate swaps to hedge
portions of interest payable on debt. In addition, the Company may
periodically employ interest rate caps to reduce exposure, if any, to
increases in variable interest rates. In October 1996, the Company entered
into a three-year interest rate swap with a notional amount of $50 million
to effectively convert variable interest on debt to a fixed rate of 6.12%.
The Company may periodically hedge foreign currency royalties, net
investments in foreign subsidiaries, firm purchase commitments, contractual
foreign currency cash flows or obligations, including third-party and
intercompany foreign currency transactions. The Company regularly monitors
its foreign currency exposures and ensures that hedge contract amounts do
not exceed the amounts of the underlying exposures.
The Company enters into various short-term foreign exchange
agreements during the year. The purpose of the Company's foreign currency
hedging activities is to protect the Company from risk that the eventual
settlement of foreign currency transactions will be adversely affected by
changes in exchange rates. The Company's various subsidiaries import
products in foreign currencies and from time to time will enter into
agreements or build foreign currency deposits as a partial hedge against
currency fluctuations on inventory purchases. Gains and losses on these
agreements are deferred and recorded as a component of cost of sales when
the related inventory is sold. At March 31, 1999, deferred amounts were not
material. The Company makes short-term foreign currency intercompany loans
to various international subsidiaries and utilizes agreements to fully
hedge these transactions against currency fluctuations. The cost of these
agreements is included in the interest charged to the subsidiaries and
expensed monthly as the interest is accrued. The intercompany interest
eliminates upon consolidation and any gains and losses on the agreements
are recorded as a component of other income. The Company receives
dividends, technical service fees, royalties and other payments from its
subsidiaries and licensees. From time to time, the Company will enter into
foreign currency forward agreements as a partial hedge against currency
fluctuations on these current receivables. Gains and losses are recognized
or the credit or debit offsets the foreign currency payables. As of March
31, 1999, net deferred amounts on outstanding agreements were not material.
The outstanding agreement amounts (notional value) at March 31, 1999, are
$8.7 million U.S. dollars.
In June 1998, the FASB issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that a company must
formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. Management does not believe that SFAS No.
133, when adopted by the Company on January 1, 2000, will have a material
impact on the consolidated financial condition or results of operations of
the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ENESCO GROUP, INC.
THREE MONTHS ENDED MARCH 31, 1999
The information set forth below should be read in conjunction with
the unaudited condensed consolidated financial statements and notes thereto
included in Part I - Item 1 of the Quarterly Report and the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 which
contains the audited financial statements and notes thereto for the years
ended December 31, 1998, 1997 and 1996 and Management's Discussion and
Analysis of Financial Condition and Results of Operations for those
respective periods.
Forward-looking statements, in this Quarterly Report on Form 10-Q
as well as in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Readers are cautioned
that all forward-looking statements pertaining to the Company involve risks
and uncertainties, including, without limitation, risks detailed from time
to time in the Company's periodic reports and other information filed with
the Securities and Exchange Commission.
RESULTS OF OPERATIONS:
Net sales decreased 13% in the first quarter of 1999, due primarily
to lower unit volume in the United States. International sales decreased 2%
and represented 21% of total 1999 first quarter sales compared to 19% in
1998. The Precious Moments line represented 38% of the 1999 first quarter
sales compared to 39% in 1998 and the Cherished Teddies line represented
26% of 1999 first quarter sales compared to 21% in 1998.
The United States sales decrease reflected lower retailer ordering,
due in part to high retail inventory levels combined with the Company's
initiatives of tighter credit controls and fewer stock keeping units. In
the United States, the Company is continuing the process of analyzing the
total economic return for all of its product lines, with the objective to
improve the supply chain economics from factory to customer and to phase
out those product lines that do not have adequate returns. As these lines
are phased out, the absence of sales from these lines will reduce sales
volumes. This process will be expanded to the international locations
during 1999. Partly reflecting the reduction of product offerings and
improved deliveries, total unfilled orders as of the end of the first
quarter 1999 were down approximately $14 million or 11% compared to 1998.
New net orders received during the first quarter of 1999 were down slightly
compared to the first quarter 1998. Based on the lower amount of unfilled
orders as of March 31, 1999 compared to 1998, net sales for the second
quarter of 1999 will be down compared to the second quarter of 1998. To
improve customer communications, relationships and service in the United
States, the Company is in the process of combining, by July 1, 1999, its
two independent sales representative divisions into a single independent
sales force representing all the Company's United States product lines.
Gross profit decreased in 1999 following the sales decrease, but
gross profit as a percentage of net sales improved to 49% in 1999 compared
to 47% in 1998, due primarily to improved product sales mix reflecting the
Company's efforts to eliminate low margin products and to manage and lower
inventory levels.
Selling, distribution, general and administrative expenses
decreased 11% in the first quarter of 1999 versus 1998 and represented 41%
of first quarter 1999 sales, compared to 40% in 1998. The reduction in
expenses were from lower variable expenses due to the lower sales volume
and reductions from cost controls and work force reductions initiated in
1998.
Due to the factors described above, operating profit increased in
1999, and represented 8% of sales compared to 7% in 1998.
INTERNATIONAL ECONOMIES AND CURRENCY:
The value of the U.S. dollar versus international currencies where
the Company conducts business impacts the results of these businesses. In
addition to the currency risks, the Company's international operations,
including sources of imported products, are subject to other risks of doing
business abroad, including import or export restrictions and changes in
economic and political climates.
The fluctuations in net sales and operating profit margins from
quarter to quarter are partially due to the seasonal characteristics of the
Company's business.
INTEREST EXPENSE, net of investment income, decreased in the first
quarter of 1999 compared with 1998, from lower borrowing levels due to
lower levels of inventories this year compared to 1998.
OTHER INCOME, net in 1999 benefited from a net gain on the sales of
assets of approximately $350 thousand and a reduction of goodwill
amortization of $358 thousand resulting from the lower amount of goodwill
to be amortized after the 1998 $46 million write-off.
THE PROVISION FOR INCOME TAXES of 40% in the first quarter of 1999
was lower than the 43% provision in 1998, due primarily to the impact of
lower goodwill amortization in 1999 which does not receive a tax benefit
and the Company's expectation of 1999 income mix between the United States
and international locations. The actual effective tax rates are dependent
upon numerous factors and actual results may vary.
FINANCIAL CONDITION
The Company has historically satisfied its capital requirements
with internally generated funds and short-term loans. Working capital
requirements fluctuate during the year and are generally greatest during
the third quarter and lowest at the beginning of the first quarter.
The major sources of funds in the first quarter of 1999 from
operating activities were from net income, depreciation, amortization and
lower levels of inventory. Accounts receivable increased 5% from year-end
1998 and decreased 7% from the first quarter of 1998. The decrease from
March 1998 reflects lower sales, but the higher amount of days sales
outstanding is primarily due to the timing of sales during the first
quarter this year compared to 1998. Current taxes, accounts payable and
accrued expenses increased from year-end levels due to timing of payments
and seasonal sales volumes.
The Company has filed and continues to file tax returns with a
number of taxing authorities worldwide. While the Company believes such
filings have been and are in compliance with applicable laws, regulations
and interpretations, positions taken are subject to challenge by the taxing
authorities often for an extended number of years after the filing dates.
The Company has established accruals for tax assessments. These accruals
are included in current income taxes payable since it is uncertain as to
when assessments may be made and paid. Based upon the Company's current
liquid asset position and credit facilities, the Company believes it has
adequate resources to fund any such assessments. To the extent accruals
differ from actual assessments, the accruals will be adjusted through the
provision for income taxes.
The major use of cash in investing activities in the first quarter
of 1999 was for capital expenditures. Proceeds from the sales of property,
plant and equipment primarily represents the sale of the Company's former
Westfield, MA Corporate Headquarters. Capital expenditure commitments for
$6 million are forecasted for 1999. The level of changes of marketable
securities from period to period principally represents investment
alternatives versus certificates of deposit, time deposits, and
intercompany loans.
The major uses of cash in financing activities in the first quarter
of 1999 were for dividends to shareholders and purchases of common stock.
During the first three months this year, the Company repurchased 417
thousand shares for $7.5 million. The Company has an authorized program to
purchase shares of stock for the Company treasury from time to time in the
open market or in private transactions, depending on market and business
conditions, and may utilize funds for this purpose in the future. As of
March 31, 1999, approximately 2 million shares remained available for
purchase under the program. The Company's earnings, cash flow, and
available debt capacity have made and make stock repurchases, in the
Company's view, one of its best investment alternatives. The aggregate
exercise price of the total number of stock options outstanding was $99.9
million at March 31, 1999, and the Company could receive some or all of
these funds in the future if the options are exercised.
The principal sources of the Company's liquidity are its available
cash balances, cash from operations and available financing alternatives.
The Company is not aware of any trends, events, demands, commitments or
uncertainties which reasonably can be expected to have a material effect on
the liquidity of the Company and its ability to meet anticipated
requirements for working capital, dividends, capital expenditures and the
stock repurchase program.
Year 2000 Compliance Program
A Company-wide program has been initiated by management to update
all necessary information technology and non-technology systems to achieve
Year 2000 compliance. This effort has been in progress since early 1997.
The program includes impact assessment, correction, testing and
implementation stages. There is continual review and monitoring of progress
and achievement against plan.
In 1998 the Company engaged independent consulting resources to
audit and evaluate its approach and plans to achieve Year 2000 compliance.
This audit was completed at a cost of approximately $300,000. The results
were used to confirm and enhance, where necessary, the Year 2000 program
plans.
Impact assessment is complete, although there is ongoing effort to
confirm and monitor the Year 2000 programs of critical suppliers, customers
and third parties on whom the Company relies. Based on the results of the
impact assessment, if the Company's suppliers, customers and third parties
do not address the Year 2000 issues in a timely manner, there could be a
material financial risk to the Company.
The Company's product vendors and customer bases are fragmented
and generally are not dependent on computer control or systematization of
their business operations. Management, therefore, believes that the
greatest risks presented by potential Year 2000 failures of third parties
are those which would affect the general economy or certain industries,
such as may occur if there were insufficient electric power or other
utilities needed for the Company's operations or manufacture of its
products or insufficient reliable means of transporting the Company's
products. While such failures could affect important operations of the
Company, either directly or indirectly, in a significant manner, the
Company cannot at present estimate either the likelihood or the potential
cost of such failures.
Regarding internal issues, the Company has made substantial
progress to remedy all Year 2000 concerns identified. This is being
accomplished through internal correction or the normal replacement of
existing systems, computer software and hardware. All correction and
replacement work, including testing and implementation, is expected to be
completed by mid-year 1999.
The capital and operating cost of addressing the Year 2000 issues
are anticipated to be approximately $1,000,000 (excluding internal labor
costs) and are included in the planned capital and operating investment
budgets. The cost breakdown is estimated at approximately 80% capital and
20% expense. Most Year 2000 project work is being accomplished through the
use of internal resources. While this effort is substantial, it has often
been combined with other planned systems improvements, replacements and
maintenance projects. Thus, the Year 2000 work is not adversely affecting
planned improvements in the Company's systems, computer applications and
hardware environment.
The need for contingency plans will be addressed as part of the
Company's Year 2000 program. While the Company currently anticipates that
its own systems and those of critical business partners will be Year 2000
compliant, contingency plans, as appropriate, are now being developed.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item either is set forth in Exhibit 13
to the Company's Annual Report on Form 10-K for the year ended December 31,
1998 as updated by Note 7 to the Consolidated Condensed Financial
Statements included in Item 1 herein, or is immaterial.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on April 22, 1999.
(c) The first matter voted upon at the meeting was the election of
Directors. The members of Class I were standing for election to
a three-year term expiring at the Annual Meeting in 2002. Upon
motion duly made and seconded, it was voted to elect Judith R.
Haberkorn, Homer G. Perkins and H. L. Tower as Class I
Directors for a three-year term expiring at the Annual Meeting
in 2002 and until their successors are elected and qualified.
The votes for each of the candidates were reported as follows:
Judith R. Haberkorn For: 11,812,222
Withheld: 1,740,695
Homer G. Perkins For: 11,777,432
Withheld: 1,775,485
H. L. Tower For: 11,788,446
Withheld: 1,764,471
The second matter voted upon at the meeting was the approval
and ratification of the Board's appointment of Arthur Andersen LLP
as independent accountants for 1999. Upon motion duly made and
seconded, it was voted that the appointment by the Board of
Directors at its March 3, 1999 meeting of Arthur Andersen LLP,
independent certified public accountants, as independent
accountants for the Company for its fiscal year ending December
31, 1999 be ratified and approved. The votes for the independent
accountants were reported as follows:
Arthur Andersen LLP For: 13,483,052
Against: 30,133
Abstain: 39,732
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule for the Three Months
Ended March 31, 1999
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
Quarter for which this report is filed.
All other items hereunder are omitted because either such item is
inapplicable or the response to it is negative.
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 thereunto duly authorized.
ENESCO GROUP, INC.
(Registrant)
Date: May 13, 1999 /s/ Jeffrey A. Hutsell
-----------------------------------------
Jeffrey A. Hutsell
President and Chief Executive Officer
Date: May 13, 1999 /s/ Allan G. Keirstead
-----------------------------------------
Allan G. Keirstead
Chief Administrative and Financial Officer
EXHIBIT INDEX
Reg. S-K
Item 601 Exhibit 10-Q Page No.
- --------- ------- -------------
27 Financial Data Schedule for the
Three Months Ended March 31, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 24,234
<SECURITIES> 0
<RECEIVABLES> 101,396
<ALLOWANCES> 10,963
<INVENTORY> 70,287
<CURRENT-ASSETS> 205,839
<PP&E> 78,889
<DEPRECIATION> 47,655
<TOTAL-ASSETS> 317,097
<CURRENT-LIABILITIES> 136,298
<BONDS> 0
0
0
<COMMON> 3,154
<OTHER-SE> 139,111
<TOTAL-LIABILITY-AND-EQUITY> 317,097
<SALES> 93,925
<TOTAL-REVENUES> 93,925
<CGS> 47,793
<TOTAL-COSTS> 47,793
<OTHER-EXPENSES> 36,907
<LOSS-PROVISION> 1,663
<INTEREST-EXPENSE> 413
<INCOME-PRETAX> 7,230
<INCOME-TAX> 2,892
<INCOME-CONTINUING> 4,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,338
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
<FN>
Note: AS PER FASB STATEMENT NO. 128, EARNINGS PER SHARE, "PRIMARY"
IS NOW "BASIC".
</FN>
</TABLE>
