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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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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 financial statements are furnished for the Plan:
(1) Consent of Independent Public Accountants.
(2) Independent Auditors' Report.
(3) 2001 Report of Arthur Andersen LLP.
(4) Statement of Net Assets Available for Benefits, as of December 31, 2002
and December 31, 2001.
(5) Statement of Changes in Net Assets Available for Benefits, for the year
ended December 31, 2002.
(6) Notes to Financial Statements and Supplemental Schedule.
(7) Exhibit 99.1 -- CEO Certification pursuant to Section 906 of the
Sarbanes Oxley Act.
(8) Exhibit 99.2 -- CFO Certification pursuant to Section 906 of the
Sarbanes Oxley Act.
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: July 15, 2003 By: /s/ M. Frances Durden
-----------------------------------------
M. Frances Durden, Member
Administrative Committee of
Enesco Group, Inc. Retirement Plan
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to incorporation by reference in the registration statement (No.
33-11415) on Form S-8 of Enesco Group, Inc. of our report dated June 13, 2003,
relating to the statement of net assets available for benefits of Enesco Group,
Inc. Retirement Plan as of December 31, 2001 and the related statement of
changes in net assets available for benefits for the year then ended, which
report appears in this December 31, 2002 Annual Report on Form 11-K of Enesco
Group, Inc. Retirement Plan.
/s/ KPMG LLP
June 13, 2003
ENESCO GROUP, INC. RETIREMENT PLAN
Financial Statements and Supplemental Schedules
December 31, 2002 and 2001
(With Independent Auditors' Report Thereon)
ENESCO GROUP, INC. RETIREMENT PLAN
December 31, 2002 and 2001
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 5
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2002 and
2001 7
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 2002 8
Notes to Financial Statements 9
SUPPLEMENTAL SCHEDULE:
Schedule H, Line 4i -- Schedule of Assets (Held at End of Year) -- December 31, 2002 14
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator of the
Enesco Group, Inc. Retirement Plan:
We have audited the accompanying statement of net assets available for benefits
of Enesco Group, Inc. Retirement Plan (the Plan) as of December 31, 2002, and
the related statement of changes in net assets available for benefits for the
year then ended. 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 audit. The accompanying 2001 statement of net
assets available for benefits of the Plan was audited by other auditors who have
ceased operations. Those auditors expressed an unqualified opinion on that
financial statement in their report dated May 31, 2002.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides 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, 2002, and the changes in net assets available for benefits for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
Our audit was 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 13, 2003
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Enesco Group, Inc. Retirement Plan
We have audited the accompanying statements of net assets available for benefits
of ENESCO GROUP, INC. RETIREMENT PLAN as of December 31, 2001 and 2000, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2001. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the 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, 2001 and 2000, and the changes in net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
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, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Chicago, Illinois
May 31, 2002
______________________________________________________________________________
| |
| This report is a copy of a report previously issued by Arthur Anderson LLP. |
| Arthur Andersen LLP has not reissued the report. |
|______________________________________________________________________________|
ENESCO GROUP, INC. RETIREMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
------------------- -------------------
Assets:
Investments $ 23,903,466 26,827,208
------------------- -------------------
Receivables:
Company contributions 771,463 990,188
Participant contributions 32,234 1,033
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Total receivables 803,697 991,221
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Net assets available for benefits $ 24,707,163 27,818,429
=================== ===================
See accompanying notes to financial statements.
ENESCO GROUP, INC. RETIREMENT PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2002
Additions:
Additions to net assets attributed to:
Investment income (loss):
Interest and dividends $ 473,439
Net depreciation in fair value of investments (3,232,589)
-----------------
Total net investment loss (2,759,150)
-----------------
Contributions:
Participant 1,018,835
Company 1,208,347
-----------------
Total contributions 2,227,182
-----------------
Other additions 9,629
-----------------
Total additions (522,339)
-----------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 2,449,972
Administrative expenses 138,955
-----------------
Total deductions 2,588,927
-----------------
Net decrease (3,111,266)
Net assets available for benefits:
Beginning of year 27,818,429
-----------------
End of year $ 24,707,163
=================
See accompanying notes to financial statements.
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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.
(A) ELIGIBILITY
The Plan allows all eligible employees who are employed on a
full-time basis to become a participant in the Plan on the first
entry date coinciding with or next following their hire date. All
eligible employees not employed on a full-time basis shall become
a participant in the Plan as of the first entry date next
following the date on which the eligible employee completes the
eligibility service requirement of 1,000 hours worked in a
12-month period.
(B) 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.
(C) COMPANY CONTRIBUTIONS
The Company provides for matching contributions (Matching
Contributions) of 50% of a participant's contribution. The Company
also provides for supplemental matching contributions
(Supplemental Matching Contributions), whereby the Company will
contribute (in Company stock) an amount equal to one-sixth of the
Company's Matching Contributions, as defined in the Plan agreement
(subject to a maximum of $800) for each eligible participant on
the last day of each Plan year. In 2002 the Company was committed
to contribute in Company stock $138,172 related to Company
Supplemental Matching Contributions. Company Matching and
Supplemental Matching Contributions are invested exclusively in
the Company stock fund. The Company, at its discretion, may also
provide for profit sharing contributions (Profit Sharing
Contributions) based on a target percentage of eligible
compensation established by the Company that would be allocable to
all eligible participants, as defined in the Plan agreement. There
were no Profit Sharing Contributions to the Plan during 2002. In
addition, participants in the Plan who are still employed by the
Company on the last day on the Plan year, are eligible to receive
a contribution in an amount equal to 3% of their eligible
compensation (Money Purchase Contributions). All Company
contributions are subject to certain limitations.
(D) INVESTMENT OPTIONS
Participants direct the investment of their account balance
(except Company Matching and Supplemental Matching Contributions
-- see note 4) into various investment options offered by the
Plan, which currently consist of a Company stock fund and nine
mutual funds.
(Continued)
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(E) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocations of (a) the Company's contributions,
(b) Plan earnings/losses, net of any investment and administrative
expenses (c) and forfeitures (see below). 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.
(F) VESTING
Participants are vested immediately in their contributions plus
actual earnings thereon. Participants become immediately vested
upon permanent disability, death, or upon retirement at age 65 or
after. Vesting in the Company's total contributions is based on
the following schedule:
<Table>
<Caption>
PERCENT
COMPLETED YEARS OF SERVICE VESTED
-------------------------------- ---------------
Less than 1 year of service 0%
At least 1, but less than 2 10
At least 2, but less than 3 20
At least 3, but less than 4 40
At least 4, but less than 5 70
5 or more 100
</Table>
(G) FORFEITURES
Forfeitures from the Company's Money Purchase Contributions are
used to reduce the Company's Money Purchase Contributions in the
subsequent year. Forfeitures in the amount of $113,076 were used
to reduce Company Money Purchase Contributions in 2002.
Forfeitures from the Company's Profit Sharing Contributions,
Company Matching and Supplemental Matching Contributions 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.
(H) PARTICIPANT LOANS
Participants may borrow from their accounts a minimum of $500 up
to a maximum of $50,000 or 50% of their vested account balance
(excluding Company Profit Sharing Contributions and Money Purchase
Contributions), 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,
plus 1%. 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).
(I) BENEFIT PAYMENTS
Participants (or their beneficiaries, as applicable) may elect to
have the value of their vested account distributed to them upon
permanent disability or death, upon reaching normal retirement age
(65), or
(Continued)
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
upon termination of employment. A participant may elect to
receive either a lump-sum amount equal to the value of the
participant's vested interest in their account, or monthly,
quarterly or annual installments for a specified number of years
not to exceed the participant's life expectancy and that of their
beneficiary. Participants may elect to receive any holdings in
Company stock in cash or stock.
(J) TERMINATION OF THE PLAN
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. If the Plan is terminated, Plan participants will be fully
vested in their Company contribution account balances.
(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.
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 paid by the Plan.
(Continued)
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(3) INVESTMENTS
The following presents investments that represent 5% or more of the
Plan's net assets as of December 31, 2002 and 2001:
2002 2001
------------------- -------------------
Mutual funds:
Vanguard Extended Market Index Fund, 163,288 and
172,708 shares, respectively $ 3,060,010 3,987,826
Vanguard International Growth Fund, 126,814 and
125,020, respectively 1,542,064 1,876,555
Vanguard Prime Money Market Fund, 6,416,030 and
6,469,606 shares, respectively 6,416,030 6,469,606
Vanguard Total Bond Market Index Fund, 258,863 and
221,400 shares, respectively 2,687,000 2,244,999
Vanguard U.S. Growth Fund, 215,678 and
224,419 shares, respectively 2,601,079 4,230,292
Vanguard Wellington Fund, 151,643 and 163,893 shares,
respectively 3,724,359 4,467,715
Common stock:
Enesco Group, Inc. common stock, 291,275 and 258,507
shares, respectively 2,062,062 1,628,595
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $3,232,589 as follows:
Mutual funds $ (3,437,672)
Common stock 205,083
-------------------
Net depreciation in fair
value of investments $ (3,232,589)
===================
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.
(Continued)
ENESCO GROUP, INC. RETIREMENT PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(4) NONPARTICIPANT-DIRECTED INVESTMENT
The Company's Matching and Supplemental Matching Contributions are
invested directly into the Company's common stock. Participants may also
direct their own contributions into the Company's common stock.
Information about the net assets as of December 31, 2002 and 2001, and
the significant components of the changes in the net assets for the year
ended December 31, 2002, of the Company's common stock, which includes
both participant-directed and nonparticipant-directed amounts are as
follows:
2002 2001
------------------- -------------------
Net assets:
Enesco Group, Inc. common stock $ 2,062,062 1,628,595
Company Supplemental Matching Contributions receivable 138,172 136,634
------------------- -------------------
$ 2,200,234 1,765,229
=================== ===================
Changes in net assets for the year ended
December 31, 2002:
Additions:
Contributions $ 623,172
Net appreciation in fair value of
investment 205,083
Deductions:
Benefits paid to participants (272,093)
Net interfund transfer (121,157)
-------------------
$ 435,005
===================
(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.
ENESCO GROUP, INC. RETIREMENT PLAN
Schedule H, Line 4i -- Schedule of Assets (Held at End of Year)
December 31, 2002
(B) IDENTITY OF ISSUE/ (E) CURRENT
(A) (C) DESCRIPTION OF INVESTMENT (D) COST VALUE
- -------------- --------------------------------------------------------------- ------------------- -------------------
Mutual funds:
* American Funds New Perspective ** $ 74,034
* Vanguard Extended Market Index Fund ** 3,060,010
* Vanguard International Growth Fund ** 1,542,064
* Vanguard Prime Money Market Fund ** 6,416,030
* Vanguard Total Bond Market Index Fund ** 2,687,000
* Vanguard U.S. Growth Fund ** 2,601,079
* Vanguard Wellington Fund ** 3,724,359
* Vanguard Total Stock Market Index Fund ** 848,134
* Vanguard Windsor II Fund ** 843,814
Common stock:
* Enesco Group, Inc. common stock 2,582,978 2,062,062
* Participant loans, 5.75% to 9.50% ** 44,880
-------------------
$ 23,903,466
===================
* Represents a party-in-interest.
**Cost omitted for participant-directed investments.
See accompanying independent auditors' report.