Exhibit 99
Enesco Group, Inc. Reports First Quarter 2004 Results;
Revenue Gross Margin Improvements Continue;
Board of Directors Begins Search for Permanent CEO
ITASCA, Ill.--(BUSINESS WIRE)--May 6, 2004--Enesco Group, Inc. (NYSE:ENC),
a leader in the giftware, collectible and home decor industry, today reported
results for the first quarter ended March 31, 2004.
First Quarter 2004 Summary
-- Revenue of $50.5 million, 9% higher than 1Q '03
-- Gross profit of $20.7 million, an increase of 12% from 1Q '03
-- Operating profit and net income were impacted by investments in the
Company's strategic marketing initiatives and ERP implementation.
Financial Results
For the first quarter of 2004, Enesco reported total revenue of $50.5
million, an increase of 9% when compared to revenue of $46.1 million for the
first quarter of 2003. This increase was attributed to $4.7 million of combined
revenues from the Bilston & Battersea acquisition, the Walt Disney Art Classics
alliance and the Gregg Gift acquisition. Also contributing to the increase was a
$2.7 million impact of favorable foreign currency translation rates. Revenue in
the core business stabilized relative to first quarter 2003 performance, but was
impacted by the challenges of transitioning to a new ERP (Enterprise Resource
Planning) system.
Gross profit of $20.7 million was 12% higher than the first quarter of
2003. This increase was driven by higher product margins and fewer closeout
sales for the quarter. Gross profit was also positively impacted by the Bilston
& Battersea and Gregg Gift acquisitions, and the Walt Disney Art Classics
alliance, as well as favorable foreign currency translation rates.
Operating expenses were $27.9 million, including $1.6 million for Bilston &
Battersea, Walt Disney Art Classics and Gregg Gift expenses, and $1.1 million
related to foreign currency translation rate impacts. While the first quarter
operating costs are traditionally higher due to normal seasonality of the
business, the increase is also attributed to strategic investments in Enesco's
brands and marketing promotions, and the implementation of an ERP business
system. An operating loss of $7.2 million for the first quarter of 2004 compares
to a loss of $4.5 million from the same period in the prior year.
Enesco experienced a net loss of $4.4 million or $0.31 per diluted share
compared to a net loss of $2.8 million or $0.20 per diluted share during the
same period last year.
"We are encouraged by the continued revenue growth and the success of our
acquired companies during this quarter, and are particularly pleased that our
U.S.-based trade shows were very successful," said Tom Bradley, CFO and interim
CEO of Enesco. "We continue to focus on driving channel business, product
development, international expansion, strategic alliances and accretive
acquisitions. During the quarter, we made several key investments to support our
long-term strategy while continuing to rationalize products. We look forward to
reaping the benefits from these key investments and decisions going forward."
Board Begins Search
Enesco's Board of Directors has engaged the services of Korn Ferry
International to conduct a search for a permanent CEO. Tom Bradley, Enesco's
CFO, will continue to act as interim CEO. "The Board believes that it is in the
best interest of shareholders to consider all available candidates both internal
and external," explained Anne-Lee Verville, Chairman of the Board.
A conference call will be broadcast live on Friday, May 7, 2004, at 10:00
a.m. Central Time (11:00 a.m. Eastern) at http://www.enesco.com and
http://www.streetevents.com. An online replay also will be available
approximately one hour after the call.
To listen to the Webcast, your computer must have RealPlayer installed. If
you do not have RealPlayer, go to http://www.streetevents.com prior to the call,
to download RealPlayer for free.
For a phone replay, call 800-642-1687. Passcode: 6777988. The replay will
be available for one week following the conference call.
About Enesco Group, Inc.
Enesco Group, Inc. is a world leader in the gift, collectible and home
decor industries. Serving more than 40,000 customers globally, Enesco
distributes products to a wide variety of specialty card and gift retailers,
home decor boutique as well as mass-market chains and direct mail retailers.
Internationally, Enesco serves markets operating in Europe, Australia, Mexico,
Asia and the Pacific Rim. With subsidiaries located in Europe and Canada, and a
business unit in Hong Kong, Enesco's international distribution network is a
leader in the industry. The Company's product lines include some of the world's
most recognizable brands, including Precious Moments, Walt Disney Classics
Collection, Nickelodeon, Heartwood Creek, Halycon Days, Lilliput Lane, and
Border Fine Arts, among others. Further information is available on the
Company's web site at www.enesco.com.
This press release contains various forward-looking statements that are
based on management's current assumptions and beliefs and upon information
currently available to management. The Company has tried to identify such
forward-looking statements by use of such words as "expects," "intends,"
"anticipates," "could," "estimates," "plans," and "believes," and similar
expressions, but these words are not the exclusive means of identifying such
statements. Such statements are subject to various risks, uncertainties and
other factors which could cause actual results to vary materially from those
anticipated, estimated, expected or projected. Important factors that may cause
actual future events or results to differ materially and adversely from those
described in the forward-looking statements include, but are not limited: the
Company's success in developing new products and consumer reaction to the
Company's new products; the Company's ability to secure, maintain and renew
popular licenses, particularly our licenses for Precious Moments, Cherished
Teddies, Heartwood Creek and Disney; the Company's ability to grow revenues in
mass and niche market channels; the Company's ability to identify and close on
strategic acquisitions; changes in general economic conditions, as well as
specific market conditions; fluctuations in demand for our products;
manufacturing lead times; the timing of orders and shipments and our ability to
predict customer demands; inventory levels and purchase commitments exceeding
requirements based upon incorrect forecasts; collection of accounts receivable;
changes in the regulations and procedures affecting the importation of goods
into the United States; changes in foreign exchange rates; price and product
competition in the giftware industry; variations in sales channels, product
costs or mix of products sold; and, possible future terrorist attacks,
epidemics, or acts of war.
In addition, the Company operates in a continually changing business
environment and does not intend to update or revise the forward-looking
statements contained herein, which speak only as of the date hereof. Additional
information regarding forward-looking statement risk factors is contained in the
Company's reports and filings with the Securities and Exchange Commission. In
light of these risks and uncertainties, the forward-looking statements contained
herein may not occur and actual results could differ materially from those set
forth herein. Accordingly, you should not rely on these forward-looking
statements as a prediction of actual future results.
ENESCO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
March 31, December 31,
2004 2003
------------ ------------
Current Assets:
Cash and equivalents $10,571 $10,645
Accounts receivable, net 61,541 65,190
Inventories 60,124 60,820
Other current assets 8,725 9,260
-------------------------
Total current assets 140,961 145,915
Property, plant and equipment, net 28,031 28,341
Other assets 34,680 28,212
-------------------------
Total assets $203,672 $202,468
=========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and loans payable $15,679 $2,858
Accounts payable 16,652 21,723
Federal, state and foreign income taxes 3,581 7,375
Total accrued expenses 13,737 19,609
-------------------------
Total current liabilities 49,649 51,565
Total long-term liabilities 10,019 3,551
Minority interest 111 114
Total shareholders' equity 143,893 147,238
-------------------------
Total liabilities and shareholders' equity $203,672 $202,468
=========================
ENESCO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
First Quarter Ended March 31, 2004 and 2003
(In thousands, except per share amounts)
2004 2003 % Change
-------- -------- ---------
Net revenues $50,452 $46,137 9%
Cost of sales 29,796 27,627 8%
-------- --------
Gross profit 20,656 18,510 12%
Gross Profit % 40.9% 40.1%
Selling, distribution, general and
administrative expense 27,878 23,021 21%
-------- --------
Operating loss (7,222) (4,511) 60%
Interest expense (85) (49)
Interest income 112 170
Other income (expense), net (315) (406)
-------- --------
Loss before income taxes (7,510) (4,796) 57%
Income tax benefit (3,108) (2,005)
-------- --------
Net loss $(4,402) $(2,791) 58%
======== ========
Loss per share basic and diluted:
Net loss ($0.31) ($0.20)
Average basic and diluted shares
outstanding 14,178 13,931
CONTACT: Enesco Group, Inc.
Investor contact:
Tom Bradley, 630-875-5990
jgadzins@enesco.com
Media contact:
Donna Shaults, 630-875-5464
dshaults@enesco.com