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. PROFIT SHARING PLAN FOR UNION EMPLOYEES
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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 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. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
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 9
2 Schedule H, Line 4j - Schedule of Reportable Transactions - December 31, 2004 10
EXHIBITS
Consent of Independent Registered Public Accounting Firm
</Table>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Plan Administrator of the
Enesco Group, Inc. Profit Sharing Plan for Union Employees:
We have audited the accompanying statements of net assets available for benefits
of Enesco Group, Inc. Profit Sharing Plan for Union Employees (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. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Statements of Net Assets Available for Benefits
December 31, 2004 and 2003
2004 2003
---------- ----------
Assets:
Investments $3,622,010 3,396,577
Receivables:
Company contributions 2,928 1,626
Participant contributions 5,855 3,252
---------- ----------
Total receivables 8,783 4,878
---------- ----------
Net assets available for benefits $3,630,793 3,401,455
========== ==========
See accompanying notes to financial statements
2
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
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 $ 83,664
Net appreciation in fair value of investments 74,596
----------
Total investment income 158,260
----------
Contributions:
Participant 118,408
Company 59,205
----------
Total contributions 177,613
----------
Total additions 335,873
----------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 91,887
Administrative expenses 14,648
----------
Total deductions 106,535
----------
Net increase in assets available for plan benefits 229,338
Net assets available for plan benefits:
Beginning of year 3,401,455
----------
End of year $3,630,793
==========
See accompanying notes to financial statements
3
(1) DESCRIPTION OF THE PLAN
(a) GENERAL
The Enesco Group, Inc. Profit Sharing Plan for Union Employees (the
Plan) is a defined contribution plan, which commenced on January 1,
1988. The Plan provides retirement, disability, or death benefits to
eligible union employees of Enesco Group, Inc. (the Company) and is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA), as amended.
As of January 1, 2003, the Plan was amended and restated so that in
addition to being a profit sharing plan, a 401(k) component became
available for both employee and Company matching contributions.
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.
(b) ELIGIBILITY
All union 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. Participants continue to be
eligible until a break in service is experienced, which occurs when a
participant fails to perform services for the Company for a period of
at least 12 consecutive months.
(c) 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, or elective
deferrals of all or part of any cash bonuses received in each plan
year. Participants who have attained age 50 before the end of the Plan
year may make additional elective deferrals (catch-up contributions).
(d) PROFIT SHARING CONTRIBUTIONS
The Company may elect to make a profit-sharing contribution to the
Plan each year. To be eligible for this contribution, a participant
must perform at least 1,000 hours of service during a plan year and be
employed on the last day of the plan year. Each eligible participant
will receive a pro-rata allocation based on the participant's
compensation in relation to total compensation of all eligible
participants. There were no profit-sharing contributions to the Plan
in 2004 or 2003.
(e) MATCHING CONTRIBUTIONS
The Plan provides for matching contributions, paid in shares of the
Company's stock, of 50% of a participant's elective deferrals for a
plan year up to 6% of a participant's compensation. A participant is
eligible for such contribution if the participant is eligible to
participate in the Plan for at least one day of the plan year and
makes elective deferrals.
4
(f) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and allocations of plan earnings or losses, net of any
investment and administrative expenses, and forfeitures. Allocations
are based on 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, including elective deferrals, profit-sharing contributions,
rollover contributions, and matching contributions into various
investment options offered by the Plan, which, as of December 31,
2004, consisted of nine mutual funds and the Company stock fund.
(g) VESTING
Participants are vested immediately in all elective deferrals,
catch-up contributions, and rollover contributions. Participants
become immediately vested upon permanent disability, death, or
reaching the normal retirement age as defined in the Plan. Vesting in
matching contributions and profit-sharing contributions is based on
the following schedule:
PERCENT
Completed years of service VESTED
---------------------------------------- ------------
Less than 1 year of service 0%
At least 1, but less than 2 20
At least 2, but less than 3 40
At least 3, but less than 4 60
At least 4, but less than 5 80
5 or more 100
(h) FORFEITURES
The nonvested portion of terminated participants' accounts may be used
to first offset plan administrative costs and then to reduce matching
and profit sharing contributions. As of the plan year ended December
31, 2004, there were no unused forfeitures.
(i) BENEFIT PAYMENTS
Participants (or their beneficiaries, as applicable) may elect to have
the value of their vested account distributed to them in a lump-sum
payment upon permanent disability or death, upon reaching normal
retirement age 65, incurring a qualified financial hardship, or upon
termination of employment.
5
(j) 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).
(k) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of plan termination, participants will become 100% vested in their
accounts.
(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 the 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, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from
these 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.
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.
6
(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, 7,369 and
8,650 shares, respectively $ 231,119 230,601
Vanguard Prime Money Market Fund, 1,856,084 and
1,744,656 shares, respectively 1,856,084 1,744,656
Vanguard Total Bond Market Index Fund, 20,785 and
25,298 shares, respectively 213,469 260,818
Vanguard Wellington Fund, 16,996 and 16,560 shares,
respectively 513,110 477,087
Loan Fund 345,982 356,742
On March 31, 2004, funds deposited in the Vanguard US Growth Fund were
liquidated and transfered to the Vanguard Morgan Growth Investment Fund.
The Plan provides for investments in 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.
(4) NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to nonparticpant-directed investments is as
follows:
DECEMBER 31,
----------------------
2004 2003
-------- --------
Net assets:
Enesco Group, Inc. common stock $161,861 62,699
-------- --------
$161,861 62,699
======== ========
7
YEAR ENDED
DECEMBER 31,
2004
--------
Changes in net assets:
Contributions $ 65,602
Net depreciation in fair value of
investments (10,670)
Company contribution receivable (1,378)
Benefits paid to participants (8,184)
Transfers from participant-directed
investments 53,792
--------
$ 99,162
========
(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
No determination letter has been obtained by the Plan. However, the Plan
administrator and the Plan's general counsel believe that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. The Plan is using a Prototype
document from Vanguard Fiduciary Trust Company that has received a
favorable determination letter dated August 22, 2001, by the Internal
Revenue Service. Therefore, no provision for income taxes has been included
in the Plan's financial statements.
8
SUPPLEMENTAL SCHEDULE 1
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
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:
* Vanguard Extended Market Index Fund $ ** 231,119
* Vanguard International Growth Fund ** 49,766
* Vanguard Prime Money Market Fund ** 1,856,084
* Vanguard Total Bond Market Index Fund ** 213,469
* Vanguard Target Retirement 2015 ** 465
* Vanguard Target Retirement 2025 ** 12,788
* Vanguard Morgan Growth Investment Fund ** 172,057
* Vanguard Wellington Fund ** 513,110
* Vanguard Total Stock Market Index Fund ** 22,349
* Vanguard Windsor II Fund ** 32,953
American Funds New Perspective Fund ** 10,007
Common stock:
* Enesco Group, Inc. common stock (42,707 shares) 155,596 161,861
* Participant loans, 5% to 5.75% ** 345,982
------------------- -------------------
$ 155,596 3,622,010
=================== ===================
* Represents a party-in-interest.
** Cost omitted for participant-directed investments.
See accompanying report of independent registered public accounting firm.
9
SUPPLEMENTAL SCHEDULE 2
ENESCO GROUP, INC. PROFIT SHARING PLAN
FOR UNION EMPLOYEES
Schedule H, Line 4j - Schedule of Reportable Transactions
December 31, 2004
(a) (b) (c) (d) (g) (h) (i)
CURRENT VALUE
OF ASSET ON
IDENTIFY OF PURCHASE SELLING COST OF TRANSACTION NET GAIN OR
PARTY INVOLVED DESCRIPTION OF ASSETS PRICE PRICE ASSET DATE (LOSS)
- ------------------ ----------------------------------- ----------- ------ ------- -------------- -----------
The Vanguard Group Enesco Group, Inc. common stock $209,556 -- -- 209,556 --
The Vanguard Group Enesco Group, Inc. common stock -- 99,724 102,267 99,724 (2,543)
See accompanying report of independent registered public accounting firm.
10