<PAGE> 1
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, 2000
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
---------------------------------------------
(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,
2000 1999
---- ----
Shares Outstanding:
Common Stock with 13,531,755 15,445,011
Associated Rights
Total number of pages
contained herein
---
Index to Exhibits is
on page
---
The accompanying notes are an integral part of these condensed
financial statements.
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(Unaudited)
(In Thousands)
March 31, December 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and certificates of deposit $ 5,384 $ 10,819
Accounts receivable, net 72,300 81,553
Inventories 62,318 62,317
Prepaid expenses 3,437 3,763
Taxes on income 9,894 12,680
-------- --------
Total current assets 153,333 171,132
-------- --------
Property, Plant and Equipment, at cost: 82,887 82,244
Less accumulated depreciation 52,484 51,251
-------- --------
Property, plant and equipment, net 30,403 30,993
-------- --------
Other Assets:
Goodwill and other intangibles, net 37,778 38,410
Other 25,461 25,438
Deferred income taxes 11,151 11,394
-------- --------
Total other assets 74,390 75,242
-------- --------
Total Assets $258,126 $277,367
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
<PAGE> 3
<TABLE>
<CAPTION>
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(Unaudited)
(In Thousands)
March 31, December 31,
2000 1999
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and loans payable $ 27,285 $ 28,178
Accounts payable 17,871 21,296
Taxes on income 40,602 43,196
Accrued expenses
Payroll and commissions 2,721 5,337
Royalties 5,662 6,565
Postretirement benefits 3,381 4,740
Other 16,418 19,386
--------- ---------
Total current liabilities 113,940 128,698
--------- ---------
Long-Term Liabilities:
Postretirement benefits 28,035 28,273
Deferred income taxes 5,331 5,964
--------- ---------
Total long-term liabilities 33,366 34,237
--------- ---------
Shareholders' Equity:
Common stock 3,154 3,154
Capital in excess of par value 48,631 48,754
Retained earnings 322,687 326,305
Accumulated other comprehensive income (3,346) (2,843)
--------- ---------
371,126 375,370
Less - shares held in treasury, at cost (260,306) (260,938)
--------- ---------
Total shareholder's equity 110,820 114,432
--------- ---------
Total Liabilities and Equity $ 258,126 $ 277,367
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE> 4
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
(In thousands, except per share amounts)
2000 1999
---- ----
Net sales $ 71,884 $ 93,925
Cost of sales 37,854 47,793
--------- ---------
Gross profit 34,030 46,132
Selling, distribution, general and
administrative expenses 32,642 38,570
--------- ---------
Operating profit 1,388 7,562
Interest expense (657) (413)
Other income (expense), net (457) 81
--------- ---------
Income before income taxes 274 7,230
Income taxes 110 2,892
--------- ---------
Net income 164 4,338
Retained earnings, beginning of period 326,305 315,335
Cash dividends, $.28 per share in 2000 and 1999 (3,782) (4,441)
--------- ---------
Retained earnings, end of period $ 322,687 $ 315,232
--------- ---------
Earnings Per Common Share:
Basic $ 0.01 $ 0.28
--------- ---------
Diluted $ 0.01 $ 0.28
--------- ---------
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE> 5
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
(In thousands)
2000 1999
---- ----
Operating Activities:
Net income $ 164 $ 4,338
Adjustments to reconcile net income to net
cash provided by operating activities (176) 12,727
-------- --------
Net cash provided (used) by operating activities (12) 17,065
-------- --------
Investing Activities:
Purchase of property, plant & equipment (1,200) (919)
Proceeds from sales of property, plant & equipment 74 2,012
-------- --------
Net cash provided (used) by investing activities (1,126) 1,093
-------- --------
Financing Activities:
Cash dividends (3,782) (4,441)
Exchanges and purchases of common stock -- (7,547)
Notes and loans payable (893) 187
Other common stock issuance 509 188
-------- --------
Net cash used by financing activities (4,166) (11,613)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents (131) (216)
-------- --------
Increase (decrease) in cash and cash equivalents (5,435) 6,329
Cash and cash equivalents, beginning of year 10,819 17,905
-------- --------
Cash and cash equivalents, end of quarter $ 5,384 $ 24,234
-------- --------
<PAGE> 6
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, 1999 condensed balance sheet, which was derived from the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, 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. Certain reclassifications
have been made in 1999 financial statements to conform to the 2000 presentation.
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, 1999.
1. ACCOUNTING POLICIES:
The Company's financial statements for the three months ended March 31,
2000 have been prepared in accordance with the accounting policies described in
Note 1 to the December 31, 1999 consolidated financial statements included in
the Company's 1999 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 are
stated net of reserves for uncollectible accounts, returns and allowances of
$9.7 million at March 31, 2000 and $10.4 million at December 31, 1999.
<PAGE> 7
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. License and royalty fees received by the Company are
recognized as revenue.
The Company paid cash for interest and taxes as follows (in thousands):
Three Months Ended
March 31
--------
2000 1999
---- ----
Interest $570 $363
Income taxes $588 $574
2. COMPREHENSIVE INCOME:
The other comprehensive income consists only of cumulative translation
adjustments. Comprehensive income (loss) for the three months ended March 31,
2000 and 1999 was as follows (in thousands):
Three Months Ended
March 31
--------
2000 1999
---- ----
Net income $ 164 $ 4,338
Other comprehensive income:
Cumulative translation adjustments (no tax effects) (503) (854)
------- -------
Comprehensive income $ (339) $ 3,484
======= =======
<PAGE> 8
3. GEOGRAPHIC OPERATING SEGMENTS:
The Company operates in one industry segment, predominately in two
major geographic areas (United States and International). The following tables
summarize the Company's operations by geographic area for the three months ended
March 31, 2000 and 1999 (in thousands):
Three Months Ended
March 31
--------
2000 1999
---- ----
Net Sales:
United States $ 55,051 $ 75,047
United States intercompany (585) (849)
International 17,875 20,649
International intercompany (457) (922)
-------- --------
Total consolidated $ 71,884 $ 93,925
======== ========
Operating Profit:
United States $ 278 $ 6,237
International 1,110 1,325
-------- --------
Total consolidated $ 1,388 $ 7,562
======== ========
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, 1999 Annual Report and the basis of geographic area
measurement of sales and operating profit did not change in 2000.
<PAGE> 9
4. INVENTORY CLASSES:
The major classes of inventories at March 31, 2000 and December 31,
1999 were as follows (in thousands):
March 31, December 31,
2000 1999
---- ----
Raw materials and supplies $ 722 $ 736
Work in progress 128 94
Finished goods in transit 11,255 13,221
Finished goods 50,213 48,266
------- -------
$62,318 $62,317
======= =======
5. OTHER INCOME (EXPENSE), NET:
Other income (expense), net for the three months ended March 31, 2000
and 1999 consists of the following (in thousands):
Three Months Ended
March 31
--------
2000 1999
Interest income $ 152 $ 147
Amortization of other assets (535) (515)
Other, net (74) 449
----- -----
$(457) $ 81
===== =====
<PAGE> 10
6. EARNINGS PER COMMON SHARE (BASIS OF CALCULATIONS):
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.
The number of shares used in the earnings per share calculations for
the three months ended March 31, 2000 and 1999 were as follows (in thousands):
Three Months Ended
March 31
--------
2000 1999
---- ----
Basic
Average common shares outstanding 13,506 15,750
Diluted
Stock options -- --
------ ------
Average shares diluted 13,506 15,750
====== ======
The lower average number of shares outstanding for 2000
primarily resulted from the repurchase of shares as part of the Company's 1999
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.
<PAGE> 11
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.
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
inter-company 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,
2000, 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,
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, 2000, net deferred amounts on outstanding agreements
were not material. The outstanding agreement amounts (notional value) at March
31, 2000, are $5.8 million.
<PAGE> 12
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, 2001 will have a
material impact on the consolidated financial condition or results of operations
of the Company.
8. SUBSEQUENT EVENT:
On April 19, 2000 the Company entered into an agreement to purchase certain
assets of Precious Moments, Inc. and the Precious Moments Company for $125
million in cash plus other considerations, ranging up to 40 percent of the cash
purchase price, to be paid over three years based on certain conditions. The
transaction is expected to close no later than June 30, 2000.
The purchase will be financed by the issuance of debt. To comply with bank
covenants, the Company expects to discontinue both its current dividend to
shareholders and its stock repurchase plan.
The full year 1999 on-going revenues for the businesses to be acquired were
approximately $36.2 million with $17.5 million of this amount being royalty
payments Enesco made to Precious Moments, Inc. Thus, non-Enesco revenues to be
acquired were $18.7 million in 1999; $9.7 million from the PMC vinyl gift and
dolls and $9 million from third party licensing income.
The 1999 on-going operating profits of the businesses to be acquired were
approximately $24 million with earnings before interest, taxes, depreciation and
amortization (EBITDA) of approximately $25.7 million.
<PAGE> 13
The anticipated net assets to be acquired are approximately $30 million,
most of which are intangible assets. The actual numbers will vary depending on
the closing date balance sheet. The goodwill associated with the purchase will
be amortized over 20 years.
The majority of the potential purchase price, subject to certain
conditions, and the transaction fees are expected to be paid in 2000 with
subsequent year's payments totaling less than $10 million subject to certain
conditions.
Assuming all purchase conditions are met and projecting the closing balance
sheet, the first year acquisition amount including transaction fees and other in
kind considerations would be in the $174 million range.
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ENESCO GROUP, INC.
THREE MONTHS ENDED MARCH 31, 2000
The information set forth below should be read in conjunction with the
unaudited consolidated condensed 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, 1999 which contains the audited
financial statements and notes thereto for the years ended December 31, 1999,
1998, and 1997 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, 1999, 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 OPERATION:
First quarter 2000 sales decreased 23% compared to the same period in
1999. The majority of the decline continued to be focused in the United States
card, gift, and collectible channels due to starting the year with unfilled
orders down approximately $9 million compared to the same period last year and
to continued first quarter 2000 lower new order intake of 24% compared to 1999.
Net international sales decreased 12% and represented 24% of this
year's first quarter sales compared to 21% in 1999. Net local currency
international sales were translated into United States dollars at lower exchange
rates in 2000 versus 1999. If the net year-to-date 2000 local currency sales
were translated into United States dollars at the 1999 exchange rates, sales
would have been approximately $300 thousand higher in 2000. The Precious Moments
line represented approximately 43% of first quarter 2000 sales, compared to 38%
in 1999 and the Cherished Teddies line represented approximately 16% of 2000
sales, compared to 26% in 1999.
<PAGE> 15
Total Company unfilled orders as of March 31, 2000, including $4.7
million of letters of intent, were down approximately $22 million or 19%
compared to the same period last year. Net orders entered are orders received
and approved by the Company, subject to cancellation for various reasons,
including credit considerations, inventory shortages and customer requests.
The first quarter of 2000 marks the Company's first period operating
under its new seasonal shipping schedule. As a way to reduce working capital -
while improving customer service and deliveries - the Company in the United
States now introduces new products according to occasion and ships the
merchandise to retail outlets according to a predetermined shipping schedule.
Under this new structure, product will be purchased later and shipped closer to
the time it will sell through at retail, allowing Enesco to reduce its inventory
and extended credit terms offered on the sale of seasonal merchandise. The
change won't have a material affect on annual operating results. However in
2000, it will shift a sizable amount of revenues and operating profit previously
recorded in the second quarter to the third quarter. For example, if the new
schedule had been in affect in 1999, it would have shifted approximately $20
million of second-quarter revenues into the third quarter. The seasonal pattern
of quarterly operating profit will follow the sales pattern and will be affected
by the impact of fixed costs on the quarterly sales changes.
The amount of sales expected to be shifted to the third quarter this
year, that historically would have been shipped in the second quarter, is
expected at this time to be substantially less than $20 million due primarily to
the phase in of the new program in 2000 to accommodate customers during this
first year.
The gross margin for the first quarter decreased compared to 1999
following the sales decrease. The Company's gross profit margin expressed as a
percentage of sales was 47% in 2000 compared to 49% in 1999. The decrease was
due to lower margins in the United States due to product and sales channel mix,
as all products and channels do not have the same gross margin.
Selling, distribution, general and administrative expenses, which are
largely fixed, decreased 15% in the first quarter of 2000 versus 1999 and
represented 45% of net sales in 2000 and 41% in 1999. The 2000 expenses were a
higher percentage of sales principally due to the impact of lower sales on fixed
costs. The 2000 reductions in expenses were from lower variable expenses of
approximately 10% of sales and reductions in fixed costs.
<PAGE> 16
Due to the above factors first quarter 2000 operating profit decreased
to $1.4 million compared to $7.6 million last year with the majority of the
decrease in the United States.
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 the risks of doing business abroad,
including reliance on third party overseas manufacturers, 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.
NET INTEREST EXPENSE increased in the first quarter this year due to
the higher borrowings, principally from starting the year with higher borrowings
versus 1999.
OTHER EXPENSE, net was higher than 1999, since 1999 benefited from a
net gain on the sales of assets of approximately $350 thousand.
THE PROVISION FOR INCOME TAXES was 40% in the first quarter of 2000 and
1999. 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.
<PAGE> 17
The major sources of funds in the first quarter of 2000 from operating
activities were from net income, depreciation, amortization, and lower accounts
receivable, due to lower sales. Accounts receivable days sales outstanding
increased compared to 1999 due to slower payments in the United States. Current
tax assets and current taxes payable decreased primarily due to the disposal of
inventory previously written down. Accounts payable and accrued expenses
decreased from year-end levels due to timing of payments and the impact of lower
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 or when the open tax years are closed, the accruals will be adjusted
through the provision for income taxes. The majority of the open tax years
become closed at the end of December for the particular open year.
The major use of cash in investing activities in the first quarter of
2000 was for capital expenditures. Capital expenditure commitments for $6
million are forecasted for 2000. The 1999 proceeds from the sales of property,
plant and equipment primarily represented the sale of the Company's former
Westfield, MA corporate headquarters.
The Company has established a grantor trust to provide assets for
various non-qualified supplemental retirement plans. Approximately $18.7 million
of assets for these plans are on the Company's balance sheet as long-term other
assets. The Company has decided to offer the participants of these plans a lump
sum pay out in the month of May 2000, calculated by actuaries. If all of the
participants were to accept the lump sum pay out, the Company would realize a
gain on the termination of the various plans of approximately $2.5 million. Most
of the participants are expected to accept the pay out. In addition the Company
will be able to take a current tax deduction for the lump sum payments, which
would correspondingly reduce deferred tax assets.
<PAGE> 18
The major uses of cash in financing activities in the first quarter of
2000 were for dividends to shareholders. The principal sources of the Company's
liquidity are its available cash balances, cash from operations and available
financing alternatives.
As reported more fully in Note 8 (Subsequent Event) to these financial
statements, the Company entered into an agreement to purchase certain assets of
Precious Moments, Inc. and the Precious Moments Company. To complete this
transaction the Company will have to arrange total company financing in the
amount of $200 million to have adequate funds for the acquisition and for
anticipated future requirements for working capital and capital expenses. Due to
anticipated financing covenants it is expected that the Company's current
dividend to shareholders and stock repurchasing program will be discontinued.
<PAGE> 19
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, 1999 as
updated by Note 7 to the Consolidated Condensed Financial Statements included in
Item 1 herein, or is immaterial.
<PAGE> 20
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 27, 2000.
(c) The first matter voted upon at the meeting was the election of
Directors. The members of Class II were standing for election to a
three-year term expiring at the Annual Meeting in 2003. Upon motion
duly made and seconded, it was voted to elect Eugene Freedman, Allan G.
Keirstead and Donna Brooks Lucas as Class II Directors for a three-year
term expiring at the Annual Meeting in 2003 and until their successors
are elected and qualified. The votes for each of the candidates were
reported as follows:
Eugene Freedman For: 10,125,774
Withheld: 1,128,179
Allan G. Keirstead For: 10,117,018
Withheld: 1,136,935
Donna B. Lucas For: 10,065,036
Withheld: 1,188,917
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 2000. Upon motion duly made and seconded,
it was voted that the appointment by the Board of Directors at its
March 1, 2000 meeting of Arthur Andersen LLP, independent certified
public accountants, as independent accountants for the Company for its
fiscal year ending December 31, 2000 be ratified and approved. The
votes for the independent accountants were reported as follows:
Arthur Andersen LLP For: 11,180,299
Against: 53,390
Abstain: 20,264
<PAGE> 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule for the Three Months
Ended March 31, 2000
(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.
<PAGE> 22
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 12, 2000 /s/ Jeffrey A. Hutsell
-----------------------------------------
Jeffrey A. Hutsell
President and Chief Executive Officer
Date: May 12, 2000 /s/ Allan G. Keirstead
-----------------------------------------
Allan G. Keirstead
Chief Administrative and Financial
Officer
<PAGE> 23
EXHIBIT INDEX
Reg. S-K
Item 601 Exhibit 10-Q Page No.
- --------- ------- -------------
27 Financial Data Schedule for the ----
Three Months Ended March 31, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,384
<SECURITIES> 0
<RECEIVABLES> 82,030
<ALLOWANCES> 9,730
<INVENTORY> 62,318
<CURRENT-ASSETS> 153,333
<PP&E> 82,887
<DEPRECIATION> 52,484
<TOTAL-ASSETS> 258,126
<CURRENT-LIABILITIES> 113,940
<BONDS> 0
0
0
<COMMON> 3,154
<OTHER-SE> 107,666
<TOTAL-LIABILITY-AND-EQUITY> 258,126
<SALES> 71,884
<TOTAL-REVENUES> 71,884
<CGS> 37,854
<TOTAL-COSTS> 37,854
<OTHER-EXPENSES> 33,328
<LOSS-PROVISION> (686)
<INTEREST-EXPENSE> 657
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</TABLE>
