Enesco (NYSE:ENC)
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Enesco Group, Inc. (NYSE:ENC), a leader in the giftware,
and home and garden decor industries, today announced the divestiture
of its Dartington Crystal operation from Enesco Limited, Enesco's
subsidiary in the United Kingdom. The Company sold the business and
assets of Dartington in a management buyout transaction, effective
April 28, 2006. Following a review of its product strategy in the
fourth quarter of 2005, Enesco determined that glassware was not a
strategic fit for the Company and began to actively market the sale of
the Dartington operation.
The assets sold include the inventory, machinery and equipment,
leasehold properties and intellectual property rights of the
Dartington business. The employees, including their accumulated rights
and benefits, have transferred with the business to the new owners.
The receivables and payables of the business have been retained, and
respectively will be collected and settled by Enesco Limited. The
owned factory in Torrington, England also has been retained and is
being leased to the purchaser. The total consideration for the sale is
dependent upon the yet to be finalized value of inventory at the date
of closing, but is estimated to be approximately $2.4 million, of
which $0.5 million was received in cash at closing and the balance of
which is due in installments between May and December 2006. Title to
the inventory is being retained by Enesco Limited to the extent of the
remaining deferred consideration.
Enesco Limited acquired Dartington Crystal, a designer and
manufacturer of uncut crystal products, in 2004 for approximately $7
million in cash. Total goodwill recorded on this acquisition was $1.2
million. In the fourth quarter of 2005, Enesco performed its first
annual impairment analysis on the Dartington goodwill, and concluded
that impairment existed at December 31, 2005. A complete write-off of
the Dartington goodwill balance as of November 30, 2005 of $1.1
million was recorded in the fourth quarter. The loss on sale,
including professional costs, is $2.4 million pre-tax.
In 2005, Dartington had a $2.5 million operating loss, including
the $1.1 million write-off, and is expected to have a $0.5 million
loss in the first quarter of 2006.
"As part of our Operating Improvement Plan, we evaluated the
performance and profitability of our European operations, and found
that Dartington was not a strategic fit with our product mix and core
channels of distribution," said Cynthia Passmore, President and CEO of
Enesco. "While the sale will negatively impact our financials in the
second quarter of this year, we believe it will positively impact our
financials longer term."
About Enesco Group, Inc.
Enesco Group, Inc. is a world leader in the giftware, and home and
garden decor industries. Serving more than 44,000 customers worldwide,
Enesco distributes products to a wide variety of specialty card and
gift retailers, home decor boutiques, as well as mass-market chains
and direct mail retailers. Internationally, Enesco serves markets
operating in the United Kingdom, Canada, Europe, Mexico, Australia and
Asia. 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. Enesco's product lines include some of the
world's most recognizable brands, including Border Fine Arts, Bratz,
Circle of Love, Foundations, Halcyon Days, Jim Shore Designs, Lilliput
Lane, Pooh & Friends, Walt Disney Classics Collection, and Walt Disney
Company, among others. Further information is available on Enesco's
web site at www.enesco.com.
This press release contains forward-looking statements, which
reflect management's current assumptions and beliefs and are based on
information currently available to management. Enesco 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 to: Enesco's success in implementing its comprehensive
plan for operating improvement and achieving its goals for cost
savings and market share increases; Enesco's success in developing new
products and consumer reaction to Enesco's new products; Enesco's
ability to secure, maintain and renew popular licenses, particularly
our Cherished Teddies, Disney and Jim Shore Designs licenses; Enesco's
ability to grow revenues in mass and niche market channels; Enesco's
ability to comply with covenants contained in its credit facility;
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 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, Enesco 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 Enesco'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.