Fourth Quarter 2002 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)--Feb. 20, 2003 Enesco E·nes·co , Georges 1881-1955. Romanian-born violinist and composer whose works include the opera Oedipus (1936) and three symphonies. Noun 1. 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 net income of $15.9 million for the fourth quarter of 2002, or $1.12 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 net income of $2.9 million, or $.21 per diluted share, for the fourth quarter of 2001. Impacting both the 2002 fourth quarter and the 2001 fourth quarter were adjustments to reduce accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. related to prior year income taxes. Excluding these items, net income for the fourth quarter of 2002 would have been $3.0 million, or $.21 per diluted share, compared to a net loss of $6.5 million, or ($.47) per diluted share, in the fourth quarter of 2001. Income before the cumulative effect of a change in accounting principle, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , for 2002 was $20.7 million, or $1.47 per diluted share, compared to $1.1 million, or $.08 per diluted share, for 2001. Net revenues for the quarter ended December December: see month. 31, 2002 were $63.4 million, compared to net revenues of $60.5 million for the same period a year ago, a 5 percent increase. Net revenues for 2002 were $253.8 million, compared to $267.1 million for 2001, a 5 percent decrease. "Fourth quarter 2002 revenue exceeded 2001, as expected, because of new product offerings and improved customer service," 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. . "Enesco's gross profit percentage increase and cost reductions allowed us to post significantly higher earnings for the quarter. We will continue to focus on these areas to positively impact our future results. I am also extremely pleased to report that we ended 2002 with $17 million of cash and no debt, which gives Enesco greater flexibility to pursue growth opportunities than in the past few years," concluded DalleMolle. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the fourth quarter of 2002 was $5.6 million compared to an $8.6 million 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. for the fourth quarter of 2001. Operating income for 2002 was $13.8 million compared to a $9.5 million operating loss for 2001. Operating results for 2001 were adversely impacted by an $8.7 million fourth quarter adjustment to write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. certain inventories that were discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: as part of the Company's product rationalization rationalization, in psychology: see defense mechanism. program. 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 Mary, the mother of Jesus Mary, in the Bible, mother of Jesus. Christian tradition reckons her the principal saint, naming her variously the Blessed Virgin Mary, Our Lady, and Mother of God (Gr., theotokos). Her name is the Hebrew Miriam. 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 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. lines throughout the world. Further information is available on the Company's web site at www.enesco.com. Except for the historical information contained herein, the matters in this release are 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 involve risks and uncertainties, and the actual results could differ materially from the Company's present expectations. A description of the risk factors that could cause such material differences is set forth in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001, filed under the Securities Exchange Act of 1934. The Company undertakes no obligation to update or publish in the future any forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information. Note: A conference call will be broadcast live on Friday, February 21, 2003, at 10 A.M. Central Standard Time (11 A.M. Eastern) at http://www.enesco.com and http://www.streetevents.com. An online replay will also be available approximately one hour after the call. Please refer to the end of this 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. The conference call replay will be available for one week following the call at 1-800-642-1687, conference i.d.: 7624106.
CONSOLIDATED STATEMENTS OF OPERATIONS
Fourth Quarter and Year Ended December 31, 2002 and 2001
(In thousands, except per share amounts)
Fourth Quarter Year
---------------------------- ----------------------------
2002 2001 % Change 2002 2001 % Change
--------- --------- -------- --------- --------- --------
Net
revenues(1) $63,379 $60,542 5% $ 253,788 $ 267,107 -5%
Cost of sales 35,587 37,341 -5% 146,696 152,145 -4%
Inventory
writedown(2) - 8,744 8,744
--------- --------- --------- ---------
Gross profit 27,792 14,457 92% 107,092 106,218 1%
Selling,
distribution,
general and
administrative
expense 22,220 22,541 -1% 93,322 113,816 -18%
Amortization
of goodwill(3) - 487 - 1,950
--------- --------- --------- ---------
Operating
profit (loss) 5,572 (8,571) 13,770 (9,548)
Interest
expense (242) (286) (747) (1,523)
Interest
income 72 128 286 371
Other income
(expense),
net (423) (617) (1,533) (1,342)
--------- --------- --------- ----------
Income (loss)
before income
taxes and
cumulative
effect of a
change in
accounting
principle 4,979 (9,346) 11,776 (12,042)
Income tax
benefit(4) (10,903) (12,222) (8,897) (13,153)
--------- --------- --------- ---------
Income (loss)
before
cumulative
effect of a
change in
accounting
principle 15,882 2,876 20,673 1,111
Cumulative
effect of a
change in
accounting
principle,
net of income
taxes(3) - - (29,031) -
--------- --------- --------- ---------
Net income
(loss) $15,882 $2,876 $ (8,358) $ 1,111
========= ========= ========= =========
Earnings (loss)
per share:
Income (loss)
before
cumulative
effect of
a change in
accounting
principle
Basic $1.14 $0.21 $1.49 $0.08
Diluted $1.12 $0.21 $1.47 $0.08
Basic and
diluted
cumulative
effect of
a change in
accounting
principle $0.00 $0.00 ($2.09) $0.00
Net income
(loss):
Basic $1.14 $0.21 ($0.60) $0.08
Diluted $1.12 $0.21 ($0.60) $0.08
Average basic
shares
outstanding 13,899 13,759 13,854 13,708
Average diluted
shares
outstanding 14,167 13,841 14,110 13,836
(1) Revenue amounts have been adjusted for all periods presented to
reflect co-op advertising as a reduction in revenue rather than as
a selling expense per EITF 00-25.
(2) Cost of sales for 2001 includes an $8.7 million fourth quarter
adjustment to writedown certain inventories that were discontinued
as part of the Company's product rationalization program.
(3) Amortization of goodwill ceased after 2001, per FAS 142. Goodwill
impairment is recorded as the cumulative effect of a change in
accounting principle in accordance with FAS 142.
(4) Provisions for income taxes includes a $12.9 million benefit for
the fourth quarter of 2002, and a $9.4 million benefit for the
fourth quarter of 2001, related primarily to prior year tax
accruals which were no longer required due to completed tax audits
and closed tax years for a number of taxing authorities worldwide.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
December 31
-------------------
2002 2001
Current Assets:
Cash and equivalents $ 17,418 $ 7,932
Accounts receivable, net 54,347 58,582
Inventories 48,334 56,437
Other current assets 10,077 15,674
-------------------
Total current assets 130,176 138,625
Property, plant and equipment, net 26,229 26,582
Other assets 23,380 54,344
-------------------
Total assets $ 179,785 $ 219,551
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and loans payable $ - $ 6,749
Accounts payable 18,395 28,345
Federal, state and foreign income taxes 15,416 28,713
Total accrued expenses 20,266 20,429
-------------------
Total current liabilities 54,077 84,236
Total long-term liabilities 3,795 8,938
Total shareholders' equity 121,913 126,377
-------------------
Total liabilities and
shareholders' equity $ 179,785 $ 219,551
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