First Quarter 2003 Financial Results Reported by Enesco Group, Inc.Business Editors ITASCA I·tas·ca A lake of northwest Minnesota. It was identified in 1832 as the source of the Mississippi River. , Ill.--(BUSINESS WIRE)--April 22, 2003 Acquisition of Bilston & Battersea Enamels, plc Finalized See finalization. Enesco Group, Inc. (NYSE NYSE See: New York Stock Exchange :ENC ENC Encoded (File Name Extension) ENC Enclosure ENC Mime-Encoded (virus scanners) ENC Eastern North Carolina ENC Eisenhower National Clearinghouse for Mathematics and Science Education ) today reported revenues of $46.1 million for the quarter ended March 31, 2003, compared with revenues of $54.9 million for the same period a year ago. The 16 percent decline in revenue was caused by contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction of the card, gift and collectible collectible An asset of limited supply that is sought for a variety of reasons including, it is hoped, an increase in value. Stamps, antiques, coins, and works of art are among the many things usually classified as collectibles. distribution channel in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . As previously reported, the Company had a lower order backlog in this channel entering into the first quarter of 2003. In addition, first quarter 2003 revenues were impacted adversely by the sluggish global economy and continued rationalization rationalization, in psychology: see defense mechanism. of products and customers. "Our first quarter earnings performance is in line with prior year trends that result from the seasonality of our business," said Dan DalleMolle, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Enesco. "We continue to make progress to become the supplier of choice in the retail specialty channel A specialty channel (or speciality channel) is a television channel which consists of programming focused on a single type or targeted at a specific demographic. . For 2003, we will focus on growing our mass and niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. business and pursuing strategic acquisitions, which will strengthen all channels. We expect these initiatives will achieve significant results by the end of the year." The loss before the cumulative effect of a change in accounting principle for the quarter was $2.8 million, or $.20 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a loss before the cumulative effect of a change in accounting principle of $1.4 million, or $.10 per diluted share, in the first quarter of 2002. The first quarter operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $4.5 million compared to a $2.2 million operating loss for the first quarter one year ago. "Product line rationalization generated $1.4 million of costs in the first quarter of 2003. This inventory adjustment was related to a write-down of slow moving products introduced in 2001. Also, the 13 percent reduction in operating costs operating costs npl → gastos mpl operacionales mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. some of this year's operating loss despite the decline in revenue. Our lower cost structure positions us for healthy cash generation and future earnings growth," concluded DalleMolle. The Company also reported that the acquisition of Bilston & Battersea Enamels, plc has been finalized. Enesco paid approximately $4 million in cash to acquire the company that generated revenue of $10 million in 2002. Bilston & Battersea Enamels manufactures and distributes giftware, home accessories and related products, including the high quality, hand-decorated enamels sold under the Halcyon hal·cy·on n. 1. A kingfisher, especially one of the genus Halcyon. 2. A fabled bird, identified with the kingfisher, that was supposed to have had the power to calm the wind and the waves while it nested on the sea Days Enamels and Halycon Days Bonbonnieres brands. About Enesco Group, Inc. A global leader in the gift, collectibles and home decor industries for 45 years, Enesco Group, Inc. offers such popular product lines as Cherished Teddies, Mary Engelbreit, Lilliput Lane, Border Fine Arts and NICI NICI Nijmegen Institute for Cognition and Information NICI Negative Ion Chemical Ionization NICI National Information and Communications Infrastructure NICI National Interagency Civil-Military Institute NICI National Interagency Counterdrug Institute , among others. The Company's award winning Precious Moments figurine collection is one of the top collectible lines throughout the world. Further information is available on the Company's web site at www.enesco.com. This press release contains various forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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, 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 accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying ; changes in the regulations and procedures effecting 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 This article is a list of major epidemics. Worldwide Pandemics
The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. . In addition, the Company operates in a continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. 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 here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . 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. A conference call will be broadcast live on Wednesday, April 23, 2003, 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. Please see end of the release for more details. 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, where you can download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. RealPlayer for free. For a phone replay, call 800/642-1687. Passcode: 9595785. The replay will be available for one week following the call.
ENESCO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
First Quarter Ended March 31, 2003 and 2002
(In thousands, except per share amounts)
2003 2002 % Change
-------- --------- ---------
Net revenues $46,137 $54,877 -16%
Cost of sales 27,627 30,708 -10%
-------- ---------
Gross profit 18,510 24,169 -23%
Selling, distribution, general and
administrative expense 23,021 26,378 -13%
-------- ---------
Operating loss (4,511) (2,209)
Interest expense (49) (123)
Interest income 170 98
Other income (expense), net (406) (311)
-------- ---------
Loss before income taxes and cumulative
effect of a change in accounting (4,796) (2,545)
Income tax benefit (2,005) (1,138)
-------- ---------
Loss before cumulative effect of a
change in accounting principle (2,791) (1,407)
Cumulative effect of a change in
accounting principle, net of
income taxes (1) - (29,031)
-------- ---------
Net loss $(2,791) $(30,438)
======== =========
Loss per share - basic and diluted
Loss before cumulative effect of a
change in accounting principle ($0.20) ($0.10)
Cumulative effect of a change in
accounting
principle, net of income taxes $0.00 ($2.10)
Net loss ($0.20) ($2.20)
Average basic and diluted shares
outstanding 13,931 13,790
(1) Amortization of goodwill ceased after 2001, per FAS 142. Goodwill
impairment was recorded as the cumulative effect of a change in
accounting principle on January 1, 2002 in accordance with FAS
142.
ENESCO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS Unaudited
March 31, December 31,
2003 2002
------------ ------------
Current Assets:
Cash and equivalents $ 11,517 $ 17,418
Accounts receivable, net 48,916 54,347
Inventories 43,920 48,334
Other current assets 8,774 10,077
------------ ------------
Total current assets 113,127 130,176
Property, plant and equipment, net 26,178 26,229
Other assets 23,388 23,380
------------ ------------
Total assets $ 162,693 $ 179,785
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and loans payable $ - $ -
Accounts payable 12,997 18,395
Federal, state and foreign income taxes 13,171 15,416
Total accrued expenses 13,388 20,266
------------ ------------
Total current liabilities 39,556 54,077
Total long-term liabilities 3,336 3,795
Total shareholders' equity 119,801 121,913
------------ ------------
Total liabilities and shareholders' equity $ 162,693 $ 179,785
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