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. 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 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
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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. Retirement 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, which report appears in this December 31, 2003 Annual Report
on Form 11-K of Enesco Group, Inc. Retirement Plan.
/s/ KPMG LLP
Chicago, Illinois
June 28, 2004
ENESCO GROUP, INC. RETIREMENT PLAN
Financial Statements and Supplemental Schedules
December 31, 2003 and 2002
(With Report of Independent Registered Public Accounting Firm)
ENESCO GROUP, INC. RETIREMENT PLAN
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
Enesco Group, Inc. Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of Enesco Group, Inc. Retirement Plan (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. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2003 and 2002
ENESCO GROUP, INC. RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
2003 2002
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Assets:
Investments $26,716,395 23,903,466
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Receivables:
Company contributions 16,920 771,463
Participant contributions 30,640 32,234
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Total receivables 47,560 803,697
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Net assets available for benefits $26,763,955 24,707,163
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See accompanying notes to financial statements
2
ENESCO GROUP, INC. RETIREMENT PLAN
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 $ 380,737
Net appreciation in fair value of investments 4,424,050
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Total investment income 4,804,787
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Contributions:
Participant 1,429,114
Company 690,928
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Total contributions 2,120,042
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Total additions 6,924,829
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Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 2,585,570
Administrative expenses 80,993
Transfers to other plan 2,201,474
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Total deductions 4,868,037
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Net increase in assets available for plan benefits 2,056,792
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Net assets available for plan benefits:
Beginning of year 24,707,163
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End of year $26,763,955
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See accompanying notes to financial statements.
3
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2003 and 2002
(1) DESCRIPTION OF THE 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.
As of January 1, 2003, the Plan was amended and restated so that the Plan
would become a 401(k) "Safe Harbor Plan" under IRS rules. The amendments
included changes in the amount of permitted employee contributions, the
matching contribution formula and vesting provisions. Also, the Plan no
longer offered the Money Purchase feature of the Plan as provided in
previous years, as a separate Money Purchase Plan was created. Plan
assets of $2,201,474 that related to the Money Purchase feature were
transferred out of the Plan on January 1, 2003 into the new Money
Purchase Plan created by the Company.
(a) ELIGIBILITY
All 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.
(b) PARTICIPANT CONTRIBUTIONS
Participants may elect to contribute a minimum of 1% up to a
maximum of 15% of pretax annual compensation, as defined in the
Plan, subject to certain limitations. Participants may also
contribute amounts representing distributions from other qualified
plans. 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.
(c) COMPANY CONTRIBUTIONS
The Company provides for matching contributions (Matching
Contributions), paid in shares of the Company's common stock, of
100% of a participant's contribution not to exceed 3% of
compensation for the plan year, plus 50% of contributions that
exceed 3% of compensation but do not exceed 5% of compensation. A
participant may change their investment allocation in the
Company's common stock to other funds not more than once per
fiscal quarter.
(d) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocations of Plan earnings/losses, net of any
investment and administrative expenses, and forfeitures.
Allocations are based on participant contributions, and 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 into
various investment options offered by the Plan, which, as of December 31, 2003,
consisted of a Company stock fund and ten mutual funds.
4
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2003 and 2002
(e) VESTING
Participants are vested immediately in their contributions and
Company matching contributions plus actual earnings thereon.
(f) FORFEITURES
Forfeitures are used first to reinstate certain participants'
forfeited accounts, as defined in the plan agreement, and then to
pay certain plan expenses. Any excess amounts are allocated to
eligible participants, as defined in the plan agreement.
(g) 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).
(h) BENEFIT PAYMENTS
Participants (or their beneficiaries, as applicable) may elect to
have the value of their vested account distributed in a lump-sum
payment to them upon permanent disability or death, upon reaching
normal retirement age (65), or upon termination of employment.
(i) PLAN TERMINATION
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.
(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 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.
5
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2003 and 2002
(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. The Company's
common stock is valued at its year-end 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.
(d) PAYMENT OF BENEFITS
Benefit payments are recorded when paid.
(e) ADMINISTRATIVE EXPENSES
Administrative expenses are generally paid by the Plan.
(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, 158,989 and
163,288 shares, respectively $ 4,238,652 3,060,010
Vanguard International Growth Fund, 129,709 and
126,814, respectively 2,092,212 1,542,064
Vanguard Prime Money Market Fund, 4,843,740 and
6,416,030 shares, respectively 4,843,740 6,416,030
Vanguard Total Bond Market Index Fund, 238,385 and
258,863 shares, respectively 2,457,754 2,687,000
Vanguard U.S. Growth Fund, 186,058 and
215,678 shares, respectively 2,820,644 2,601,079
Vanguard Wellington Fund, 142,225 and 151,643 shares,
respectively 4,097,497 3,724,359
Common stock:
Enesco Group, Inc. common stock, 334,630 and 291,275
shares, respectively 3,453,386 2,062,062
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.
6
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2003 and 2002
(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.
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ENESCO GROUP, INC. RETIREMENT PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
(b) IDENTITY OF ISSUE/ (e) CURRENT
(a) (c) DESCRIPTION OF INVESTMENT (d) COST VALUE
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Mutual funds:
* American Funds New Perspective ** $ 161,677
* Vanguard Extended Market Index Fund ** 4,238,652
* Vanguard International Growth Fund ** 2,092,212
* Vanguard Prime Money Market Fund ** 4,843,740
* Vanguard Total Bond Market Index Fund ** 2,457,754
* Vanguard U.S. Growth Fund ** 2,820,644
* Vanguard Wellington Fund ** 4,097,497
* Vanguard Total Stock Market Index Fund ** 1,144,609
* Vanguard Windsor II Fund ** 1,248,354
* Vanguard Morgan Growth Investment Fund ** 71,213
Common stock:
* Enesco Group, Inc. common stock ** 3,453,386
* Participant loans, 5% to 5.25% ** 86,657
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$26,716,395
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* Represents a party-in-interest.
**Cost omitted for participant-directed investments.
See accompanying report of independent registered public accounting firm.
8