Exhibit 99
Enesco Group, Inc. Reports Second Quarter 2004 Results
ITASCA, Ill.--(BUSINESS WIRE)--Aug. 4, 2004--Enesco Group, Inc.
(NYSE:ENC), a leader in the giftware, collectible and home decor
industries, today reported results for the second quarter ended June
30, 2004.
Second Quarter 2004 Summary
-- Revenue of $59.1 million was 3% lower than 2Q'03; gross profit
of $26.8 million, decreased by 3% from 2Q'03.
-- Second quarter results were impacted by issues relating to the
implementation of a new Enterprise Resource Planning (ERP)
system and a high concentration of orders late in the second
quarter.
-- Year-to-date, incoming orders have outpaced last year.
Financial Results
For the second quarter of 2004, Enesco reported total revenue of
$59.1 million, a decrease of 3% when compared to revenue of $60.9
million for the second quarter of 2003. While Enesco's underlying
business remained strong, revenue in the U.S. was impacted this
quarter by shipping problems related to the implementation of a new
ERP system, coupled with a higher than normal concentration of orders
late in the second quarter.
Gross profit of $26.8 million diminished by 3%, compared to $27.6
million the prior year. However, gross profit, as a percentage of
sales remained stable at 45.3%, as the Company continues to focus on
higher margin opportunities.
Operating expenses were $28.4 million, which was $4.8 million
higher than prior year. Expenses for the quarter included $2.2 million
for Bilston & Battersea, Walt Disney Art Classics and Gregg Gift, and
$.6 million related to foreign currency translation rate impacts. The
balance of the increase can be primarily attributed to strategic
investments in Enesco's brands and marketing promotions, such as the
PM Rocks! campaign, as well as the costs related to the inefficiencies
of the ERP system integration. An operating loss of $1.6 million for
the second quarter of 2004 compares to operating income of $4 million
for the same period in the prior year.
Enesco experienced a net loss of $1.2 million or $0.08 per diluted
share this quarter compared to net income of $2.2 million or $0.15 per
diluted share during the same period last year.
"We are disappointed with our performance this quarter and the
operational issues we have encountered," said Tom Bradley, CFO and
interim CEO of Enesco. "Our implementation team is focused on
resolving issues which will allow the system to accommodate our
business processes. We are encouraged by the strong demand that exists
for our products and would like to express our sincere appreciation
for our customers' patience and loyalty during this time."
A conference call will be broadcast live on Thursday, August 5,
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: 8647935. 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, Halcyon 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 STATEMENTS OF INCOME
(UNAUDITED)
Second Quarter and Six Months Ended June 30, 2004 and 2003
(In thousands, except per share amounts)
Second Quarter Six Months
--------------------------- -----------------------------
2004 2003 % Change 2004 2003 % Change
-------- -------- --------- --------- --------- ---------
Net revenues $59,113 $60,886 -3% $109,565 $107,023 2%
Cost of sales 32,342 33,277 62,138 60,904
-------- -------- --------- ---------
Gross profit 26,771 27,609 -3% 47,427 46,119 3%
Gross profit % 45.3% 45.3% 43.3% 43.1%
Selling,
distribution,
general and
administrative
expense 28,410 23,590 20% 56,288 46,611 21%
-------- -------- --------- ---------
Operating
profit
(loss) (1,639) 4,019 (8,861) (492)
Interest
expense (189) (495) (274) (544)
Interest
income 143 236 255 406
Other income
(expense),
net (285) (229) (600) (635)
-------- -------- --------- ---------
Income (loss)
before income
taxes (1,970) 3,531 (9,480) (1,265)
Income tax
expense
(benefit) (818) 1,357 (3,926) (648)
-------- -------- --------- ---------
Net income
(loss) $(1,152) $2,174 $(5,554) $(617)
======== ======== ========= =========
Earnings
(loss)
per share:
Net income
(loss):
Basic ($0.08) $0.15 ($0.39) ($0.04)
Diluted ($0.08) $0.15 ($0.39) ($0.04)
Average basic
shares
outstanding 14,238 14,026 14,204 13,972
Average diluted
shares
outstanding 14,965 14,420 14,926 14,293
ENESCO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
June 30, December 31,
2004 2003
------------ ------------
Current Assets:
Cash and equivalents $9,145 $10,645
Accounts receivable, net 69,407 65,190
Inventories 65,488 60,820
Other current assets 9,339 9,260
-------------------------
Total current assets 153,379 145,915
Property, plant and equipment, net 28,165 28,341
Other assets 34,387 28,212
-------------------------
Total assets $215,931 $202,468
=========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and loans payable $27,427 $2,858
Accounts payable 19,710 21,723
Federal, state and foreign income taxes 1,777 7,375
Total accrued expenses 14,748 19,609
-------------------------
Total current liabilities 63,662 51,565
Total long-term liabilities 9,691 3,551
Minority interest 100 114
Total shareholders' equity 142,478 147,238
-------------------------
Total liabilities and shareholders' equity $215,931 $202,468
=========================
CONTACT: Enesco Group, Inc.
Tom Bradley (Investors), 630-875-5990
jgadzins@enesco.com
or
Donna Shaults (Media), 630-875-5464
dshaults@enesco.com