UNITED STATES
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, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 001-09267
A. ENESCO GROUP, INC. RETIREMENT PLAN
(Full title of the plan)
B. Enesco Group, Inc., 225 Windsor Drive, Itasca, IL 60143
(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)
REQUIRED INFORMATION
The financial statements furnished for the Plan are listed in the table
of contents.
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 30, 2005 By: /s/ Paula E. Manley
----------------------------------
Paula E. Manley
Chief Financial Officer
ENESCO GROUP, INC. RETIREMENT PLAN
TABLE OF CONTENTS
PAGE
Report of Independent Registered Public Accounting Firm 1
Financial Statements (prepared in accordance with the financial reporting requirements of ERISA)
Statements of Net Assets Available for Benefits as of December 31, 2004 and 2003 2
Statement of Changes in Net Assets Available for Benefits for the
Year ended December 31, 2004 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES
1 Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2004 8
2 Schedule H, Line 4j - Schedule of Reportable Transactions - December 31, 2004 9
EXHIBITS
Consent of Independent Registered Public Accounting Firm
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, 2004 and
2003, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2004. 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, 2004 and 2003, and the changes in net assets available for benefits
for the year ended December 31, 2004, 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 schedules of assets
(held at end of year) and reportable transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements, but are 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. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have 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/ KPMG LLP
Chicago, Illinois
June 15, 2005
ENESCO GROUP, INC. RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
2004 2003
------------ -----------
Assets:
Investments $ 27,209,048 26,716,395
------------ -----------
Receivables:
Company contributions 18,970 16,920
Participant contributions 35,119 30,640
------------ -----------
Total receivables 54,089 47,560
------------ -----------
Net assets available for benefits $ 27,263,137 26,763,955
============ ===========
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, 2004
Additions:
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 575,341
Net appreciation in fair value of investments 1,129,731
-----------
Total investment income 1,705,072
-----------
Contributions:
Participant 1,578,966
Company 767,846
-----------
Total contributions 2,346,812
-----------
Total additions 4,051,884
-----------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 3,506,610
Administrative expenses 46,092
-----------
Total deductions 3,552,702
-----------
Net increase in assets available for benefits 499,182
Net assets available for benefits:
Beginning of year 26,763,955
-----------
End of year $27,263,137
===========
See accompanying notes to financial statements.
3
(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
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 who have attained age 50 before
the end of the Plan year may make additional elective
deferrals (catch-up contributions).
(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 contributions 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, 2004, consisted of a Company stock
fund and ten mutual funds.
4
(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.
(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.
5
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
sponsor. Investment advice expenses are split between
forfeitures and the Plan sponsor.
(3) INVESTMENTS
The following presents investments that represent 5% or more of the
Plan's net assets as of December 31, 2004 and 2003:
2004 2003
----------- ---------
Mutual funds:
Vanguard Extended Market Index Fund, 144,894 and
158,989 shares, respectively $ 4,543,907 4,238,652
Vanguard International Growth Fund, 122,599 and
129,709, respectively 2,312,221 2,092,212
Vanguard Prime Money Market Fund, 4,469,947 and
4,843,740 shares, respectively 4,469,947 4,843,740
Vanguard Total Bond Market Index Fund, 216,396 and
238,385 shares, respectively 2,222,396 2,457,754
* Vanguard U.S. Growth Fund, 0 and
186,058 shares, respectively -- 2,820,644
Vanguard Wellington Fund, 145,490 and 142,225 shares,
respectively 4,392,362 4,097,497
Vanguard Windsor II Fund, 68,715 and 47,125
shares, respectively 2,111,637 1,248,354
* Vanguard Morgan Growth Investment Fund, 155,541
and 4,789 shares, respectively 2,538,435 71,213
Common stock:
** Enesco Group, Inc. common stock, 741,866 and 334,630
shares, respectively 2,811,675 3,453,386
* On March 31, 2004, funds deposited in the Vanguard US Growth Fund were
liquidated and transferred to the Vanguard Morgan Growth Investment
Fund.
** Nonparticipant-directed
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
(4) NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed
investments is as follows:
DECEMBER 31,
-------------------------------
2004 2003
----------- ----------
Net assets:
Enesco Group, Inc. common stock $ 2,811,675 3,453,386
----------- ----------
$ 2,811,675 3,453,386
=========== ==========
YEAR ENDED
DECEMBER 31,
2004
------------
Changes in net assets:
Contributions $ 844,196
Net depreciation in fair value of
investments (730,141)
Company contribution receivable (2,006)
Benefits paid to participants (325,398)
Transfers to participant-directed
investments (428,362)
----------
$ (641,711)
==========
(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 common stock 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 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
SUPPLEMENTAL SCHEDULE 1
ENESCO GROUP, INC. RETIREMENT PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
(b) IDENTITY OF ISSUE/ (e) CURRENT
(a) (c) DESCRIPTION OF INVESTMENT (d) COST VALUE
- ----- ---------------------------------------------------- -------- ------------
Mutual funds:
American Funds New Perspective ** $ 298,793
* Vanguard Extended Market Index Fund ** 4,543,907
* Vanguard International Growth Fund ** 2,312,221
* Vanguard Prime Money Market Fund ** 4,469,947
* Vanguard Total Bond Market Index Fund ** 2,222,396
* Vanguard Target Retirement 2005 ** 597
* Vanguard Target Retirement 2015 ** 28,892
* Vanguard Target Retirement 2025 ** 25,191
* Vanguard Target Retirement 2035 ** 59,992
* Vanguard Target Retirement 2045 ** 3,348
* Vanguard Wellington Fund ** 4,392,362
* Vanguard Total Stock Market Index Fund ** 1,256,814
* Vanguard Windsor II Fund ** 2,111,637
* Vanguard Morgan Growth Investment Fund ** 2,538,435
Common stock:
* Enesco Group, Inc. common stock (741,866 shares) 3,058,502 2,811,675
* Participant loans, 5% to 7% ** 132,841
------------
$ 27,209,048
============
* Represents a party-in-interest.
** Cost omitted for participant-directed investments.
See accompanying report of independent registered public accounting firm.
8
SUPPLEMENTAL SCHEDULE 2
ENESCO GROUP, INC. RETIREMENT PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
December 31, 2004
(a) (b) (c) (d) (g) (h) (i)
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN OR
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSETS PRICE PRICE ASSET DATE (LOSS)
- -------------------------- ------------------------------- --------- ------- ------- ----------- ------------
The Vanguard Group Enesco Group, Inc. common stock $ 877,847 -- -- 877,847 --
The Vanguard Group Enesco Group, Inc. common stock -- 789,417 728,746 789,417 60,671
See accompanying report of independent registered public accounting firm.
9