SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 0-1349
A. ENESCO GROUP, INC. RETIREMENT PLAN
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(Full title of the plan)
B. Enesco Group, Inc., 225 Windsor Drive, Itasca, IL 60143
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(Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office)
REQUIRED INFORMATION
The following financial statements are furnished for the Plan and are
filed herewith in paper format under Rule 101(b) (3) of Regulation S-T:
(1) Consent of Independent Auditors.
(2) Independent Auditors' Report.
(3) Audited Statement of Net Assets Available for Benefits, with Fund
Information, as of December 31, 2001 and December 31, 2000.
(4) Audited Statement of Changes in Net Assets Available for Benefits, with
Fund Information, for the fiscal years ended December 31, 2001 and
December 31, 2000.
(5) Notes to Plan Financial Statements and Supplemental Schedules.
(6) Exhibit 99.1 -- Audit by Arthur Andersen LLP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATE: June 7, 2002 By: /s/ M. Frances Durden
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M. Frances Durden, Member
Administrative Committee of
Enesco Group, Inc. Retirement Plan
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report, dated May 31, 2002, included in the Enesco Group, Inc.
Retirement Plan Annual Report on Form 11-K as of and for the year ended December
31, 2001, to the Company's previously filed Registration Statement Number
33-11415 on Form S-8.
/s/ Arthur Andersen LLP
Chicago, Illinois
May 31, 2002
ENESCO GROUP, INC. RETIREMENT PLAN
Financial Statements and Schedule
As of December 31, 2001 and 2000
Together With Auditors' Report
Employer Identification Number 04-1864170
Plan Number 007
ENESCO GROUP, INC. RETIREMENT PLAN
DECEMBER 31, 2001 AND 2000
(EMPLOYER IDENTIFICATION NUMBER 04-1864170, PLAN NUMBER 007)
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000 Exhibit I
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2001 Exhibit II
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
SCHEDULE:
Schedule H, Line 4i--Schedule of Assets (Held at End of
Year)--December 31, 2001 Schedule
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Enesco Group, Inc. Retirement Plan
We have audited the accompanying statements of net assets available for benefits
of ENESCO GROUP, INC. RETIREMENT PLAN as of December 31, 2001 and 2000, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2001. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Chicago, Illinois
May 31, 2002
EXHIBIT I
ENESCO GROUP, INC. RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
(EMPLOYER IDENTIFICATION NUMBER 04-1864170, PLAN NUMBER 007)
2001 2000
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ASSETS:
Investments (Note 3) $26,827,208 $31,548,289
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Receivables-
Company contributions 990,188 811,794
Participant contributions 1,033 -
----------- -----------
Total receivables 991,221 811,794
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NET ASSETS AVAILABLE FOR BENEFITS $27,818,429 $32,360,083
=========== ===========
The accompanying notes to financial statements and schedule
are an integral part of these statements.
EXHIBIT II
ENESCO GROUP, INC. RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
(EMPLOYER IDENTIFICATION NUMBER 04-1864170, PLAN NUMBER 007)
ADDITIONS:
Additions to net assets attributed to-
Investment income (loss)-
Interest and dividends $ 1,011,374
Net depreciation in fair value of investments (3,124,831)
------------
Total net investment loss (2,113,457)
------------
Contributions-
Company 1,473,488
Participant 1,215,796
------------
Total contributions 2,689,284
------------
Total additions 575,827
------------
DEDUCTIONS:
Deductions from net assets attributed to-
Benefits paid to participants (5,055,267)
Administrative expenses (62,214)
------------
Total deductions (5,117,481)
------------
NET DECREASE (4,541,654)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 32,360,083
------------
End of year $27,818,429
===========
The accompanying notes to financial statements and schedule
are an integral part of this statement.
ENESCO GROUP, INC. RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 2001 AND 2000
1. DESCRIPTION OF PLAN
The Enesco Group, Inc. Retirement Plan (the "Plan") is a defined
contribution plan established by Enesco Group, Inc. (the "Company") to
provide eligible employees with a program to save for retirement. It is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"), as amended. The following description of the Plan
provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
ELIGIBILITY
The Plan was amended effective January 1, 2001, to allow all eligible
employees who are employed on a full-time basis to become a participant in
the Plan on the first entry date (i.e., first day of the following month)
coinciding with or next following their hire date. All eligible employees
not employed on a full-time basis shall become a participant in the Plan
as of the first entry date next following the date on which the eligible
employee completes the eligibility service requirement of a 1,000 hours
worked in a 12-month period.
PARTICIPANT CONTRIBUTIONS
Participants may elect to contribute a minimum of 1% up to a maximum of 6%
of pretax annual compensation, as defined in the Plan, subject to certain
limitations. Participants may also contribute amounts representing
distributions from other qualified plans.
COMPANY CONTRIBUTIONS
The Company provides for a matching contribution ("Matching
Contributions") of 50% of a participant's contribution. The Company also
provides for supplemental matching contributions ("Supplemental Matching
Contributions"), whereby the Company will contribute (in Company stock) an
amount equal to one-sixth of the Company's Matching Contributions, as
defined in the Plan agreement (subject to a maximum of $800) for each
eligible participant on the last day of each Plan year. In 2001, the
Company contributed in Company stock $136,634 related to the Company
Supplemental Matching Contribution. Company Matching and Supplemental
Matching Contributions are invested exclusively in the Company Stock Fund.
The Company, at its discretion, may also provide for profit sharing
contributions ("Profit Sharing Contributions") based on a target
percentage of eligible compensation established by the Company that would
be allocable to all eligible participants, as defined in the Plan
agreement. There were no Profit Sharing Contributions to the Plan during
2001. In addition, participants in the Plan, who are still employed by the
Company on the last day on the Plan year, are eligible to receive a
contribution in an amount equal to 3% of their eligible compensation
("Money Purchase Contributions"). All Company contributions are subject to
certain limitations.
-2-
INVESTMENT OPTIONS
Participants direct the investment of their account balance (except
Company Matching and Supplemental Matching Contributions- see Note 4) into
various investment options offered by the Plan, which currently consist of
a Company stock fund and nine mutual funds.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contributions, (b) Plan
earnings/losses, net of any investment and administrative expenses (c) and
forfeitures (see below). Allocations are based on participant
contributions, account balances or compensation, as defined. The benefit
to which a participant is entitled is the benefit that can be provided
from the participant's vested account.
VESTING
Participants are vested immediately in their contributions plus actual
earnings thereon. Participants become immediately vested upon permanent
disability, death or upon retirement at age 65 of after. Vesting in the
Company's total contributions is based on the following schedule:
COMPLETED YEARS PERCENT
OF SERVICE VESTED
---------- --------
Less than 1 year of service 0%
At least 1, but less than 2 10
At least 2, but less than 3 20
At least 3, but less than 4 40
At least 4, but less than 5 70
5 or more 100
========
FORFEITURES
Forfeitures from the Company's Money Purchase Contributions are used to
reduce the Company's Money Purchase Contributions in the subsequent year.
There were no forfeitures used to reduce Company Money Purchase
Contributions in 2001. Forfeitures from the Company's Profit Sharing
Contributions, Company Matching and Supplemental Matching Contributions
are used first to reinstate certain participants' forfeited accounts, as
defined in the Plan agreement, then applied to pay certain Plan expenses.
Any excess amounts are allocated to eligible participants, as defined in
the Plan agreement.
PARTICIPANT LOANS
Participants may borrow from their accounts a minimum of $500 up to a
maximum of $50,000 or 50% of their vested account balance (excluding
Company Profit Sharing Contributions and Money Purchase Contributions),
whichever is less, less the participant's highest outstanding loan
balance, if any. Loans are secured by the balance in the participant's
account and bear interest at the prime interest rate as listed in The Wall
Street Journal on the first business day of the calendar quarter in which
the loan is issued, plus 1%. Principal and interest installment payments
are made through payroll deductions and are payable within 5 years (except
for loans used to acquire a principal residence which are payable within
20 years).
-3-
BENEFIT PAYMENTS
Participants (or their beneficiaries, as applicable) may elect to have the
value of their vested account distributed to them upon permanent
disability or death, upon reaching normal retirement age (65), or upon
termination of employment. A participant may elect to receive either a
lump-sum amount equal to the value of the participant's vested interest in
their account, or monthly, quarterly, or annual installments for a
specified number of years not to exceed the participant's life expectancy
and that of their beneficiary. Participants may elect to receive any
holdings in Company stock in cash or stock.
TERMINATION OF THE PLAN
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue contributions and terminate the Plan
at any time, subject to the provisions of ERISA. If the Plan is
terminated, Plan participants will be fully vested in their Company
contribution account balances.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities, and changes therein and disclosure of contingent assets
and liabilities. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Shares of mutual funds
are valued at quoted market prices, which represent the net asset value of
shares held by the Plan at year-end. The Company stock fund is valued at
its year-end unit closing price. Participant loans are valued at cost,
which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded as earned. Dividend income is recorded on the
ex dividend date. Capital gain distributions are included in dividend
income.
PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
ADMINISTRATIVE EXPENSES
Administrative expenses are paid by the Plan.
-4-
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's
net assets as of December 31, 2001 and 2000:
2001 2000
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Mutual funds-
Vanguard Extended Market Index Fund, 172,708 and 179,422
shares, respectively $3,987,826 $4,776,216
Vanguard International Growth Fund, 125,020 and 132,893
shares, respectively 1,876,555 2,507,685
Vanguard Prime Money Market Fund, 6,469,606 and 6,923,821
shares, respectively 6,469,606 6,923,821
Vanguard Total Bond Market Index Fund, 221,400 and 199,742
shares, respectively 2,244,999 1,989,427
Vanguard U.S. Growth Fund, 224,419 and 251,720 shares,
respectively 4,230,292 6,960,070
Vanguard Wellington Fund, 163,893 and 199,651 shares,
respectively 4,467,715 5,632,160
Common stock-
Enesco Group Inc. Common Stock, 258,507 shares 1,628,595 N/A
=========== ==========
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $3,124,831 as follows:
Mutual funds $(3,503,417)
Common stock 378,586
-----------
Net depreciation in fair value
of investments $(3,124,831)
===========
The Plan provides for investments in common stock and mutual funds that,
in general, are exposed to various risks such as interest rate, credit and
overall market volatility risks. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the
statements of net assets available for benefits.
4. NONPARTICIPANT-DIRECTED INVESTMENT
The Company's Matching and Supplemental Matching Contributions are
invested directly into the Company Stock Fund. Participants may also
direct their own contributions into the Company Stock Fund. Information
about the net assets as of December 31, 2001 and 2000, and the significant
components of the changes in the net assets for the year ended December
31, 2001, of the Company Stock Fund, which includes both
participant-directed and nonparticipant-directed amounts are as follows:
-5-
2001 2000
---------- --------
Net assets-
Enesco Group, Inc. common stock $1,628,595 $867,836
Company Supplemental Matching
Contributions receivable 136,634 108,160
---------- --------
$1,765,229 $975,996
========== ========
Changes in net assets-
Additions-
Contributions $ 657,160
Net appreciation in fair value of
investment 378,586
Deductions-
Benefits paid to participants (158,988)
Net interfund transfer (87,525)
----------
$ 789,233
==========
5. RELATED-PARTY TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of
Vanguard Fiduciary Trust Company ("VFTC"). VFTC acts as trustee for the
Plan. The Plan also invests in Company stocks and allows loans to
participants. These transactions qualify as party-in-interest
transactions, which are exempt from the prohibited transaction rules.
6. TAX STATUS OF THE PLAN
The Plan received a favorable determination letter from the Internal
Revenue Service (the "IRS") dated February 19, 1998. However, the Plan was
restated effective January 1, 1999 and was subsequently amended. The Plan
has requested but has not received a new determination from the IRS
stating that the Plan is designed in accordance with the applicable
requirements of the Internal Revenue Code (the "IRC"). However, the plan
administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC.
Therefore, the plan administrator believes that the Plan was qualified and
the related trust was tax-exempt as of the financial statement dates.
SCHEDULE
ENESCO GROUP, INC. RETIREMENT PLAN
SCHEDULE H, LINE 4I--SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2001
(EMPLOYER IDENTIFICATION NUMBER 04-1864170, PLAN NUMBER 007)
(b) IDENTITY OF ISSUE/ (e) CURRENT
(a) (c) DESCRIPTION OF INVESTMENT (d) COST VALUE
----- --------------------------------------------------------- ---------- ---------------
MUTUAL FUNDS:
* American Funds New Perspective ** $ 46,456
* Vanguard Extended Market Index Fund ** 3,987,826
* Vanguard International Growth Fund ** 1,876,555
* Vanguard Prime Money Market Fund ** 6,469,606
* Vanguard Total Bond Market Index Fund ** 2,244,999
* Vanguard U.S. Growth Fund ** 4,230,292
* Vanguard Wellington Fund ** 4,467,715
* Vanguard Total Stock Market Index Fund ** 1,053,887
* Vanguard Windsor II Fund ** 790,027
COMMON STOCK:
* Enesco Group, Inc. common stock $2,397,757 1,628,595
* PARTICIPANT LOANS, 7.0% to 9.5% ** 31,250
========== -----------
$26,827,208
===========
*Represents a party-in-interest.
**Cost omitted for participant-directed investments.
The accompanying notes to financial statements and schedule
are an integral part of this schedule.