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, 2003
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. PROFIT SHARING PLAN FOR UNION EMPLOYEES
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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 information is furnished for the Plan:
(1) Consent of Independent Registered Public Accounting Firm.
(2) Report of Independent Registered Public Accounting Firm.
(3) Statements of Net Assets Available for Benefits, as of December 31,
2003 and December 31, 2002.
(4) Statement of Changes in Net Assets Available for Benefits, for the
year ended December 31, 2003.
(5) Notes to Financial Statements and Supplemental Schedule.
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 28, 2004 By: /s/ Josette Goldberg
--------------------------------
Josette Goldberg, Chair
Administrative Committee of
Enesco Group, Inc. Retirement Plan
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the registration statement (No.
33-11415) on Form S-8 of Enesco Group, Inc. of our report dated June 18, 2004,
relating to the statements of net assets available for benefits of Enesco Group,
Inc. Profit Sharing Plan for Union Employees as of December 31, 2003 and 2002,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2003, which report appears in this December 31, 2003
Annual Report on Form 11-K of Enesco Group, Inc. Profit Sharing Plan for Union
Employees.
/s/ KPMG LLP
Chicago, Illinois
June 28, 2004
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002
(With Report of Independent Registered Public Accounting Firm Thereon)
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Financial Statements and Supplemental Schedule
December 31, 2003 and 2002
TABLE OF CONTENTS
PAGE
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2003 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
- - December 31, 2003 8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Plan Administrator of the
Enesco Group, Inc. Profit Sharing Plan for Union Employees:
We have audited the accompanying statements of net assets available for benefits
of Enesco Group, Inc. Profit Sharing Plan for Union Employees (the Plan) as of
December 31, 2003 and 2002, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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, 2003 and 2002, and the changes in net assets available for benefits
for the year ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.
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, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KPMG LLP
Chicago, Illinois
June 18, 2004
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
2003 2002
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Assets:
Investments $3,396,577 2,905,840
Company contribution receivable 4,878 283,835
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Net assets available for benefits $3,401,455 3,189,675
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See accompanying notes to financial statements
2
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
Additions:
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 54,618
Net appreciation in fair value of investments 220,355
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Total investment income 274,973
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Contributions:
Participant 114,740
Company 57,371
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Total contributions 172,111
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Total additions 447,084
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Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 217,030
Administrative expenses 18,274
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Total deductions 235,304
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Net increase in assets available for plan benefits 211,780
Net assets available for plan benefits:
Beginning of year 3,189,675
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End of year $3,401,455
==========
See accompanying notes to financial statements
3
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Notes to Financial Statements
December 31, 2003 and 2002
(1) DESCRIPTION OF THE PLAN
(a) GENERAL
The Enesco Group, Inc. Profit Sharing Plan for Union Employees
(the Plan) is a defined contribution plan, which commenced on
January 1, 1988. The Plan provides retirement, disability, or
death benefits to eligible union employees of Enesco Group, Inc.
(the Company) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
As of January 1, 2003, the Plan was amended and restated so that
in addition to being a profit sharing plan, a 401(k) component was
added providing for both employee and Company matching
contributions. A separate Money Purchase Plan was also created
effective January 1, 2003.
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.
(b) ELIGIBILITY
All union employees of the Company are eligible to become
participants in the Plan on applicable entry dates, which are
defined by the Plan as the first day of each calendar month.
Participants continue to be eligible until a break in service is
experienced, which occurs when a participant fails to perform
services for the Company for a period of at least 12 consecutive
months.
(c) 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, or elective deferrals of all or part of any cash bonuses
received in each Plan year. Participants that are age 50 or older
at any time during a calendar year may make additional elective
deferrals (catch-up contributions) in excess of previously defined
elective deferrals up to $2,000 in 2003. This limit will increase
by $1,000 each year through 2006, at which time the limit will be
$5,000. After December 31, 2006, increases will be adjusted for
inflation, rising in $500 increments.
(d) PROFIT SHARING CONTRIBUTIONS
The Company may elect to make a profit-sharing contribution to the
Plan each year. To be eligible for this contribution, a
participant must perform at least 1,000 hours of service during a
Plan year and be employed on the last day of the Plan year. Each
eligible participant will receive a pro-rata allocation based on
the participant's compensation in relation to total compensation
of all eligible participants. There were no profit-sharing
contributions to the Plan in 2003 or 2002.
(e) MATCHING CONTRIBUTIONS
The Plan provides for matching contributions, paid in shares of
the Company's common stock, of 50% of a participant's elective
deferrals for a Plan year up to 6% of a participant's
compensation. A participant is eligible for such contribution if
the participant is eligible to participate in the Plan for at
least one day of the Plan year and makes elective deferrals.
4 (Continued)
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Notes to Financial Statements
December 31, 2003 and 2002
(f) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and allocations of Plan earnings or losses, net of
any investment and administrative expenses, and forfeitures.
Allocations are based on 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.
Participants direct the investment of their individual account
balance, including elective deferrals, profit-sharing
contributions, rollover contributions, and matching contributions
into various investment options offered by the Plan, which, as of
December 31, 2003, consisted of ten mutual funds and the Company
stock fund.
(g) VESTING
Participants are vested immediately in all elective deferrals,
catch-up contributions, and rollover contributions. Participants
become immediately vested upon permanent disability, death, or
reaching the normal retirement age as defined in the Plan. Vesting
in matching contributions and profit-sharing contributions is
based on the following schedule:
PERCENT
COMPLETED YEARS OF SERVICE VESTED
-------------------------- -------
Less than 1 year of service 0%
At least 1, but less than 2 20
At least 2, but less than 3 40
At least 3, but less than 4 60
At least 4, but less than 5 80
5 or more 100
(h) FORFEITURES
The nonvested portion of terminated participants' accounts may be
used to first offset plan administrative costs and then to reduce
matching and profit sharing contributions. As of the Plan year
ended December 31, 2003, there were no unused forfeitures.
(i) BENEFIT PAYMENTS
Participants (or their beneficiaries, as applicable) may elect to
have the value of their vested account distributed to them in a
lump-sum payment upon permanent disability or death, upon reaching
normal retirement age 65, incurring a qualified financial
hardship, or upon termination of employment.
5 (Continued)
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Notes to Financial Statements
December 31, 2003 and 2002
(j) PARTICIPANT LOANS
Participants may borrow from their accounts a minimum of $1,000 up
to a maximum of $50,000 or 50% of their vested account balance,
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. 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).
(k) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
In the event of plan termination, participants will become 100%
vested in their accounts.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the
accrual method of accounting.
(b) USE OF ESTIMATES
The preparation of the 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, liabilities, and changes therein,
and disclosure of contingent assets and liabilities. Actual
results could differ from these estimates.
(c) 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.
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.
(d) PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
(e) ADMINISTRATIVE EXPENSES
Administrative expenses are generally paid by the Plan.
6 (Continued)
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Notes to Financial Statements
December 31, 2003 and 2002
(3) INVESTMENTS
The following presents investments that represent 5% or more of the
Plan's net assets as of December 31, 2003 and 2002:
2003 2002
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Mutual funds:
Vanguard Extended Market Index Fund, 8,650 and
9,754 shares, respectively $ 230,601 182,783
Vanguard Prime Money Market Fund, 1,744,656 and
1,840,725 shares, respectively 1,744,656 1,840,725
Vanguard Total Bond Market Index Fund, 25,298 and
24,345 shares, respectively 260,818 252,705
Vanguard U.S. Growth Fund, 10,950 and
12,042 shares, respectively * 145,227
Vanguard Wellington Fund, 16,560 and 16,873 shares,
respectively 477,087 414,410
* Asset did not exceed 5% of the Plan's assets at December 31, 2003.
The Plan provides for investments in 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) 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 common stock and allows loans to
participants. These transactions qualify as party-in-interest
transactions, which are exempt from the prohibited transaction rules.
(5) TAX STATUS OF THE PLAN
The Plan has received a favorable determination letter dated September 6,
2002 from the Internal Revenue Service indicating that it is qualified
under Section 401(a) of the Internal Revenue Code (Code) and therefore
the related trust is exempt from tax under Section 501(a) of the Code.
The plan sponsor and plan administrator are not aware of any course of
action or series of events that have occurred that would adversely affect
the qualified status of the Plan.
7
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
(b) IDENTITY OF ISSUE / (e) CURRENT
(c) DESCRIPTION OF INVESTMENT (d) COST VALUE
-------------------------------------------------------------- ------------- --------------
Mutual funds:
* Vanguard Extended Market Index Fund $ ** 230,601
* Vanguard International Growth Fund ** 51,819
* Vanguard Prime Money Market Fund ** 1,744,656
* Vanguard Total Bond Market Index Fund ** 260,818
* Vanguard U.S. Growth Fund ** 166,000
* Vanguard Wellington Fund ** 477,087
* Vanguard Total Stock Market Index Fund ** 12,646
* Vanguard Windsor II Fund ** 25,751
American Funds New Perspective Fund ** 7,759
Common stock:
* Enesco Group, Inc. common stock ** 62,699
* Participant loans, 5% to 5.25% ** 356,741
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$ -- 3,396,577
=========== =========
* Represents a party-in-interest.
** Cost omitted for participant-directed investments
See accompanying report of independent registered public accounting firm.
8