<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q
(Mark One)

(X)      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2001

                                       OR

( )      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from _____ to _____.

                          Commission File Number 0-1349

                               Enesco Group, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Massachusetts                                    04-1864170
------------------------------------                ----------------------------
  (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                       Identification No.)

225 Windsor Drive, Itasca, Illinois                           60143
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)

                                  630-875-5300
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
      (Former name, address and fiscal year, if changed since last report)
--------------------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
      Yes [x]        No [ ]
                                                          June 30,
                                                    2001            2000
                                                    ----            ----
Shares Outstanding:

Common Stock with                                 13,727,741     13,577,032
 Associated Rights


<PAGE>   2

                          PART 1. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                               ENESCO GROUP, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                       JUNE 30, 2001 AND DECEMBER 31, 2000
                                   (UNAUDITED)
                                 (IN THOUSANDS)

                                           JUNE 30,           DECEMBER 31,
                                             2001                 2000
                                             ----                 ----
ASSETS

CURRENT ASSETS:

Cash and certificates of deposit           $  7,424             $  4,006

Accounts receivable, net                     61,544               72,923

Inventories                                  66,048               60,491

Prepaid expenses                              3,499                3,640

Current tax assets                           11,968               12,095
                                           --------             --------

    Total current assets                    150,483              153,155
                                           --------             --------

PROPERTY PLANT AND EQUIPMENT:

Property, plant and equipment, at cost       86,463               85,505

Less accumulated depreciation                58,804               56,256
                                           --------             --------

    Property, plant and equipment, net       27,659               29,249
                                           --------             --------

OTHER ASSETS:

Goodwill and other intangibles, net          34,421               35,564
Other                                         1,052                  947
Deferred income taxes                        12,175               12,564
                                           --------             --------

Total other assets                           47,648               49,075
                                           --------             --------

TOTAL ASSETS                               $225,790             $231,479
                                           ========             ========






The accompanying notes are an integral part of these condensed financial
statements.

                                        2
<PAGE>   3

                               ENESCO GROUP, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                       JUNE 30, 2001 AND DECEMBER 31, 2000
                                   (UNAUDITED)
                                 (IN THOUSANDS)

                                                  JUNE 30,          DECEMBER 31,
                                                    2001                2000
                                                    ----                ----
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Notes and loans payable                          $  31,061           $  14,000

Accounts payable                                    11,708              17,867

Federal, state and foreign income taxes             31,777              35,154

Accrued expenses
    Payroll and commissions                          2,331               3,698
    Royalties                                        5,527               7,747
    Postretirement benefits                          3,852               4,407
    Other                                           11,027              11,351
                                                 ---------           ---------

    Total current liabilities                       97,283              94,224
                                                 ---------           ---------

LONG-TERM LIABILITIES:

Postretirement benefits                              5,028               6,065
Deferred income taxes                                4,655               5,497
                                                 ---------           ---------

    Total long-term liabilities                      9,683              11,562
                                                 ---------           ---------

SHAREHOLDERS' EQUITY:

Common stock                                         3,154               3,154

Capital in excess of par value                      48,086              48,711

Retained earnings                                  331,480             337,615

Accumulated other comprehensive income              (5,801)             (4,388)
                                                 ---------           ---------
                                                   376,919             385,092
Less - shares held in treasury, at cost           (258,095)           (259,399)
                                                 ---------           ---------

    Total shareholders' equity                     118,824             125,693
                                                 ---------           ---------

TOTAL LIABILITIES AND EQUITY                     $ 225,790           $ 231,479
                                                 =========           =========



The accompanying notes are an integral part of these condensed financial
statements.


                                        3
<PAGE>   4

                               ENESCO GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    THREE MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




<TABLE>
<CAPTION>
                                                                 2001          2000
                                                                 ----          ----
<S>                                                            <C>           <C>
Net revenues                                                   $ 67,329      $ 73,296
Cost of sales                                                    35,158        43,059
                                                               --------      --------

Gross profit                                                     32,171        30,237
Selling, distribution, general and administrative expenses       34,048        34,358
                                                               --------      --------

Operating profit (loss)                                          (1,877)       (4,121)

Interest expense                                                   (669)         (738)
Interest income                                                      78           811
Amortization of goodwill                                           (487)         (534)
Other income (expense)                                              (94)          521
                                                               --------      --------

Income (loss) before income taxes                                (3,049)       (4,061)

Income tax expense (benefit)                                       (354)       (1,625)
                                                               --------      --------

Net income (loss)                                              $ (2,695)     $ (2,436)
                                                               ========      ========

Earnings (Loss) Per Common Share:
    Basic and diluted                                          $  (0.20)     $  (0.18)
                                                               ========      ========
</TABLE>





The accompanying notes are an integral part of these condensed financial
statements.


                                        4
<PAGE>   5

                               ENESCO GROUP, INC.
      CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                     SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





<TABLE>
<CAPTION>
                                                                  2001           2000
                                                                  ----           ----
<S>                                                            <C>            <C>
Net revenues                                                   $ 130,074      $ 146,756
Cost of sales                                                     69,386         82,489
                                                               ---------      ---------

Gross profit                                                      60,688         64,267
Selling, distribution, general and administrative expenses        68,099         67,000
                                                               ---------      ---------

Operating profit (loss)                                           (7,411)        (2,733)

Interest expense                                                  (1,241)        (1,395)
Interest income                                                      200            964
Amortization of goodwill                                            (976)        (1,069)
Other income (expense)                                               (74)           446
                                                               ---------      ---------

Income (loss) before income taxes                                 (9,502)        (3,787)

Income tax expense (benefit)                                      (3,367)        (1,515)
                                                               ---------      ---------

Net income (loss)                                                 (6,135)        (2,272)

Retained earnings, beginning of period                           337,615        326,305
Cash dividends, $.28 per share in 2000                                 -         (3,783)
                                                               ---------      ---------

Retained earnings, end of period                               $ 331,480      $ 320,250
                                                               =========      =========

Earnings (Loss) Per Common Share:
    Basic and diluted                                          $   (0.45)     $   (0.17)
                                                               =========      =========
</TABLE>




The accompanying notes are an integral part of these condensed financial
statements.


                                        5
<PAGE>   6

                               ENESCO GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                    2001          2000
                                                                    ----          ----
<S>                                                              <C>           <C>
OPERATING ACTIVITIES:

Net income (loss)                                                $ (6,135)     $ (2,272)
Adjustments to reconcile net income to net
    cash provided by operating activities                          (6,440)         (225)
                                                                 --------      --------

    Net cash provided (used) by operating activities              (12,575)       (2,497)
                                                                 --------      --------

INVESTING ACTIVITIES:

Purchase of property, plant & equipment                            (1,615)       (2,419)
Proceeds from sales of property, plant & equipment                      -            75
                                                                 --------      --------

    Net cash provided (used) by investing activities               (1,615)       (2,344)
                                                                 --------      --------

FINANCING ACTIVITIES:

Cash dividends                                                          -        (3,783)
Notes and loans payable                                            17,061          (251)
Common stock issuance                                                 679           737
                                                                 --------      --------

    Net cash provided (used) by financing activities               17,740        (3,297)
                                                                 --------      --------

Effect of exchange rate changes on cash and cash equivalents         (132)         (433)
                                                                 --------      --------

Increase (decrease) in cash and cash equivalents                    3,418        (8,571)

Cash and cash equivalents, beginning of year                        4,006        10,819
                                                                 --------      --------

Cash and cash equivalents, end of period                         $  7,424      $  2,248
                                                                 ========      ========
</TABLE>




The accompanying notes are an integral part of these condensed financial
statements.

                                        6
<PAGE>   7

                               ENESCO GROUP, INC.


              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


The consolidated condensed financial statements and related notes included in
this report have been prepared by Enesco, without audit, except for the December
31, 2000 condensed balance sheet, which was included in Enesco's Annual Report
on Form 10-K for the year ended December 31, 2000, filed under the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The information in this report
reflects all normal recurring adjustments and disclosures that are, in our
opinion, necessary to fairly present the results of operations and financial
condition for the interim periods. It is suggested that these condensed
financial statements be read in conjunction with the audited financial
statements and related notes included in Enesco's Annual Report on Form 10-K for
the year ended December 31, 2000.

1.   ACCOUNTING POLICIES:

Enesco's financial statements for the three and six months ended June 30, 2001
have been prepared in accordance with the accounting policies described in Note
1 to the December 31, 2000 consolidated financial statements included in our
2000 Annual Report on Form 10-K. We consider all highly liquid securities,
including certificates of deposit with maturities of three months or less, when
purchased, to be cash equivalents. Accounts receivable are stated net of
reserves for uncollectible accounts and returns and allowances of $8.0 million
at June 30, 2001 and $7.3 million at December 31, 2000.

Enesco recognizes revenue when title passes to its customers which generally
occurs when merchandise is turned over to the shipper. A provision for
anticipated merchandise returns and allowances is recorded based upon historical
experience. Amounts billed to customers for shipping and handling are included
in revenue. License and royalty fees received by Enesco are recognized as
revenue when earned.


                                        7
<PAGE>   8

Adoption of SAB 101 "Revenue Recognition" in the fourth quarter of 2000 and EITF
00-22 "Accounting for Points and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to be Delivered in
the Future" in the first quarter of 2001 did not affect Enesco's accounting and
reporting policies. In accordance with EITF 00-10 "Accounting for Shipping and
Handling Fees and Costs" (which was adopted in the fourth quarter 2000) Enesco
classifies shipping and handling costs billed to customers as revenue and the
related costs are classified as cost of sales. Revenues and cost of sales for
the second quarter and first half of 2000 were restated by $1.6 million and $3.1
million, respectively, to include shipping and handling costs billed to
customers. Adoption of SFAS 133 "Accounting for Derivative Instruments and
Hedging Activities" on January 1, 2001 did not have a material impact on the
results of operations or financial condition.

Enesco paid cash for interest and taxes as follows (in thousands):

                                                  Six Months Ended
                                                      June 30
                                                      -------

                                                 2001          2000
                                                 ----          ----

     Interest                                  $ 1,216       $ 1,498
     Income taxes                              $   432       $ 1,278


                                        8
<PAGE>   9

2.   COMPREHENSIVE INCOME:

Other comprehensive income consists only of cumulative foreign currency
translation adjustments. Comprehensive income (loss) for the three and six
months ended June 30, 2001 and 2000 was as follows (in thousands):

<TABLE>
<CAPTION>
                                                                Three Months Ended          Six Months Ended
                                                                      June 30                    June 30
                                                                      -------                    -------

                                                                 2001         2000         2001          2000
                                                                 ----         ----         ----          ----
<S>                                                            <C>          <C>          <C>           <C>
     Net income (loss)                                         $(2,695)     $(2,436)     $(6,135)      $(2,272)
     Other comprehensive income (loss):
        Cumulative translation adjustments (no tax effects)        433       (1,297)      (1,413)       (1,800)
                                                               --------------------      ---------------------
                                                               $(2,262)     $(3,733)     $(7,548)      $(4,072)
                                                               ====================      =====================
</TABLE>

3.   GEOGRAPHIC OPERATING SEGMENTS:

Enesco operates in one industry segment, predominately in two major geographic
areas (United States and International). The following tables summarizes
Enesco's operations by geographic area for the three and six months ended June
30, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                  Three Months Ended             Six Months Ended
                                       March 31                       June 30
                                       --------                       -------

                                  2001           2000           2001           2000
                                  ----           ----           ----           ----
<S>                            <C>            <C>            <C>            <C>
NET SALES:
United States                  $  49,091      $  53,845      $  95,297      $ 110,333
United States intercompany          (467)          (488)        (1,191)        (1,073)
International                     18,881         20,204         36,430         38,218
International intercompany          (176)          (265)          (462)          (722)
                               ------------------------      ------------------------
Total consolidated             $  67,329      $  73,296      $ 130,074      $ 146,756
                               ========================      ========================

OPERATING PROFIT (LOSS):
United States                  $  (3,103)     $  (5,166)     $  (9,006)     $  (4,888)
International                      1,226          1,045      $   1,595      $   2,155
                               ------------------------      ------------------------
Total consolidated             $  (1,877)     $  (4,121)     $  (7,411)     $  (2,733)
                               ========================      ========================
</TABLE>

Transfers between geographic areas are made at the market value of the
merchandise transferred. No single customer accounted for 5% or more of
consolidated net sales. Export sales to foreign unaffiliated customers represent
less than 10% of consolidated net sales.

There were no material changes in assets from the amount disclosed in Enesco's
December 31, 2000 Annual Report and the basis of geographic area measurement of
sales and operating profit did not change in 2001.


                                        9
<PAGE>   10

4.   INVENTORY CLASSES:

The major classes of inventories at June 30, 2001 and December 31, 2000 were as
follows (in thousands):

                                    June 30,       December 31,
                                      2001             2000
                                      ----             ----

Raw materials and supplies          $   686          $   574
Work in progress                         92               87
Finished goods in transit             8,040            9,483
Finished goods                       57,230           50,347
                                    ------------------------
                                    $66,048          $60,491
                                    ========================


5.   CORPORATE HEADQUARTERS CLOSING RESERVE:

Enesco's corporate headquarters closing reserve, established in 1997, provided
for severance and benefit payments due to terminated employees. During the first
six months of 2001, the Company made $900 thousand of payments, which were
charged against the corporate headquarters closing reserve. At June 30, 2001,
$2.5 million remained in the reserve, the majority of which is for future
severance payments.

6.   OTHER INCOME (EXPENSE):

Other income (expense) for the three and six months ended June 30, 2001 and 2000
consists of the following (in thousands):

                                       Three Months Ended     Six Months Ended
                                             June 30               June 30
                                             -------               -------

                                         2001       2000       2001       2000
                                         ----       ----       ----       ----

Foreign currency gain (loss)            $  16      $ (76)     $  15      $(133)
Gain (loss) on sale of fixed assets         -        (22)         1        (25)
Miscellaneous                            (110)       619        (90)       604
                                        ----------------      ----------------
                                        $ (94)     $ 521      $ (74)     $ 446
                                        ================      ================


                                       10
<PAGE>   11

7.   EARNINGS PER COMMON SHARE (BASIS OF CALCULATIONS):

Basic earnings per common share are based on the average number of common shares
outstanding during the period. Diluted earnings per common share assumes, in
addition to the above, a dilutive effect of common share equivalents during the
period. Common share equivalents represent dilutive stock options and warrants
calculated using the treasury stock method.

The number of shares used in the earnings per share calculations for the three
and six months ended June 30, 2001 and 2000 were as follows (in thousands):

                                        Three Months Ended     Six Months Ended
                                              June 30               June 30
                                              -------               -------

                                          2001       2000       2001       2000
                                          ----       ----       ----       ----
Basic
   Average common shares outstanding     13,701     13,559     13,671     13,533

Diluted
   Stock options/warrants                     -          -          -          -
                                         -----------------     -----------------

Average shares diluted                   13,701     13,559     13,671     13,533
                                         =================     =================


The average number of shares outstanding for 2001 and 2000 excluded the common
stock equivalents relating to options and warrants since the impact of the
reported net loss was antidilutive. Inclusion of the options and warrants would
have increased the average shares outstanding for 2001 by approximately 1%.
Also, the average shares outstanding for 2000 did not include common stock
equivalents relating to options since the exercise price of all options exceeded
the market price during the first half of 2000.

8.   DERIVATIVE FINANCIAL INSTRUMENTS:

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS No. 137 and SFAS No.
138. The Statement establishes accounting and reporting standards requiring that
derivative instruments be recorded in the balance sheet as either an asset or a
liability measured at its fair value. The Statement requires that changes in the
fair value of derivatives be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows derivative gains and losses to offset related results on the hedged item
in the income statement and requires that a company formally document, designate
and assess the effectiveness of transactions that receive hedge


                                       11
<PAGE>   12

accounting. The adoption of SFAS No. 133 on January 1, 2001 did not have a
material impact on the consolidated financial condition or results of operations
of Enesco.

Enesco operates globally with various manufacturing and distribution facilities
and product sourcing locations around the world. Enesco may reduce its exposure
to fluctuations in interest rates and foreign exchange rates by creating
offsetting positions through the use of derivative financial instruments. Enesco
currently does not use derivative financial instruments for trading or
speculative purposes. Enesco regularly monitors its foreign currency exposures
and ensures that the hedge contract amounts do not exceed the amounts of the
underlying exposures.

Enesco's current hedging activity is limited to foreign currency purchases and
intercompany foreign currency transactions. The purpose of Enesco's foreign
currency hedging activities is to protect Enesco from the risk that the eventual
settlement of foreign currency transactions will be adversely affected by
changes in exchange rates. Enesco hedges these exposures by entering into
various short-term foreign exchange forward contracts. Under SFAS No. 133, the
instruments are carried at fair value in the condensed consolidated balance
sheet as a component of other current assets or other current liabilities.
Changes in the fair value of foreign exchange forward contracts that meet the
applicable hedging criteria of SFAS No. 133 are recorded as a component of other
comprehensive income and reclassified into earnings in the same period during
which the hedged transaction affects earnings. Changes in the fair value of
foreign exchange forward contracts that do not meet the applicable hedging
criteria of SFAS No. 133 are recorded currently in income as cost of sales or
foreign exchange gain or loss, as applicable. Enesco's hedging activities did
not have a material impact on Enesco's results of operations or financial
condition during the six months ended June 30, 2001.

9.   DOMESTIC WORKFORCE REDUCTION:

On May 3, 2001 Enesco reduced its workforce in the United States by 120
positions, or approximately 14%. This workforce reduction affected union,
non-union, clerical and professional employees and will generate annual savings
of approximately $8 million. One-time severance costs approximating $500
thousand were recorded in the second quarter of 2001.

10.  NEW PRESIDENT AND CEO:

Daniel DalleMolle was elected as President and Chief Executive Officer (CEO) of
Enesco as of March 28, 2001. Mr. DalleMolle succeeded interim CEO Anne-Lee
Verville. The President and CEO position had been vacant since the resignation
of Jeffrey A. Hutsell on June 27, 2000. Mr. DalleMolle was also appointed to
Class II of the Board of Directors on March 28, 2001. His Board term will expire
on April 24, 2003.


                                       12
<PAGE>   13

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                               ENESCO GROUP, INC.
                    THREE AND SIX MONTHS ENDED JUNE 30, 2001


The information set forth below should be read in conjunction with the unaudited
consolidated condensed financial statements and notes thereto included in Part I
- Item 1 of the Quarterly Report and the Company's Annual Report on Form 10-K
for the year ended December 31, 2000 which contains the audited financial
statements and notes thereto for the years ended December 31, 2000, 1999, and
1998 and Management's Discussion and Analysis of Financial Condition and Results
of Operations for those respective periods.

RESULTS OF OPERATIONS

Second quarter 2001 revenues were down approximately $6 million, or 8%, from the
same period in 2000. Year to date sales for 2001 were down approximately $17
million, or 11%, from the year ago period. The majority of the revenue decline
continues to be focused in United States card, gift and collectible channels.

International sales for the second quarter of 2001 were down $1.2 million, or
6%, from the same period in 2000. Year to date international sales for 2001 were
down $1.5 million, or 4%, from the year ago period. International sales for 2001
were unfavorably impacted by the strength of the U.S. dollar versus local
currencies. If foreign currency denominated sales for 2001 were translated into
United States dollars at 2000 exchange rates, sales for the second quarter and
first half would have been higher by $1.1 million and $2.5 million,
respectively. In other words, year to date 2001 international sales in local
currencies were up compared to 2000.



                                       13
<PAGE>   14

Unfilled orders (backlog) at the beginning of the year were down approximately
$2 million, or 4%, compared to the year ago period. Net new orders for 2001,
when compared to prior year, were down 11% for the second quarter and down 20%
for the six-month period. Backlog at June 30, 2001 was down approximately $21
million, or 24%, from the same period last year. Orders received and accepted by
Enesco are subject to cancellation for credit considerations, product
availability and customer requests.

Enesco's Precious Moments lines represented approximately 42% of 2001 year to
date sales compared to 43% for 2000 and the Cherished Teddies lines represented
approximately 14% of 2001 year to date sales compared to 16% for 2000.

Gross margin for 2001 compared to 2000 increased $1.9 million, or 6%, for the
second quarter and decreased $3.6 million, or 6%, for the first half. The 2000
results for the second quarter and year to date periods included a $2.9 million
inventory write-down related to the termination of the Precious Moments
acquisition. Gross profit margin for 2001 expressed as a percentage of sales,
excluding the one-time $2.9 million charge in 2000, compares favorably with the
margins for 2000. The improved gross margin for the second quarter (48% vs. 45%)
and six-months (47% vs. 46%) reflects selected price increases as well as
changes in product mix.

Selling, distribution, general and administrative (SD&A) expenses decreased $310
thousand, or 1%, for the second quarter and increased $1.1 million, or 2%, for
the six-month period of 2001 versus 2000. Results for 2001 included one-time
charges totaling $2.8 million, comprised of $2.3 million ($500 thousand in the
second quarter and $1.8 million in the first quarter) for the U.S. sales force
reorganization and a $500 thousand (second quarter) severance provision for the
May 2001 domestic work force reduction. Likewise, second quarter 2000 results
included one-time charges of $2.2 million for the termination of the Precious
Moments acquisition and $2.8 million for executive severance offset by a gain of
$2.7 million on the termination of supplemental retirement plans. Exclusive of
one-time items, SD&A costs for 2001 were up $980 thousand, or 3%, for the second
quarter and up $589 thousand, or 1%, for the six months from the comparable 2000
periods. The increase from 2000 reflects $1.7 million of increased domestic bad
debt expense that exceeded cost reductions. SD&A costs, excluding one-time
items, were 49% of sales for the second quarter of 2001 and 50% for the first
six months of 2001, compared to 44% for both periods in 2000. Enesco expects to
report a reduction in recurring operating expenses for the balance of 2001.


                                       14
<PAGE>   15

The operating loss of $1.9 million for the second quarter of 2001 was $2.2
million better than the operating loss of $4.1 million for the year ago period.
For the first six months of 2001 the operating loss of $7.4 million was $4.7
million worse than the $2.7 million loss reported for 2000. These variances are
based on the operating items described in the preceding paragraphs.

In the second quarter, Enesco initiated several courses of action aimed at
improving operational performance and increasing shareholder value. The first
initiative, announced in May 2001, reduced the U.S. workforce by 14% and will
generate annual savings of approximately $8 million. One time costs associated
with the workforce reduction totaled $500 thousand. Secondly, Enesco negotiated
extended payment terms from certain vendors. Third, Enesco is in the process of
restructuring its Operations, Marketing and Sales departments to generate
efficiencies in the supply chain and product development cycle as well as
improved customer service. Lastly, operating costs are being more closely
scrutinized, unnecessary expenditures are being eliminated and all incremental
spending must be cost-justified prior to being incurred.

Interest expense for 2001 was lower for both the quarter and year to date
periods due to lower average borrowings and lower interest rates. Lower interest
income in 2001 is mainly due to a non-recurring $675 thousand second quarter
2000 amount related to an expired warranty term. Amortization of goodwill was
lower for both the quarter and year to date period due to completion of an
asset's amortization period at the end of 2000. Other expenses for 2001 are
higher due to the non-recurring $625 thousand gain on an expired warranty term
recorded in the second quarter of 2000.

The income tax benefit for 2001 was 11.6% of the pre-tax loss for the second
quarter and 35.4% of the pre-tax loss for the six-month period. The difference
from the 40% rate for the three and six months periods in 2000 reflects the
geographical mix of earnings and the impact of non-deductible goodwill
amortization. The actual effective income tax rates are dependent upon numerous
factors and actual results may vary.

INTERNATIONAL ECONOMIES AND CURRENCY:

The value of the U.S. dollar versus international currencies where Enesco
conducts business impacts operating results. Fluctuations in the value of the
U.S. dollar versus international currencies affect the U.S. dollar translation
value of international currency denominated balance


                                       15
<PAGE>   16

sheet items. The changes in the balance sheet dollar values due to international
currency translation fluctuations are recorded as a component of shareholders'
equity. In addition to the currency risks, Enesco's international operations,
including sources of imported products, are subject to risks of doing business
abroad, including reliance on third party overseas manufacturers, import or
export restrictions and changes in economic and political climates.

FINANCIAL CONDITION:

Enesco has historically satisfied its capital requirements with internally
generated funds and short-term loans. Working capital requirements fluctuate
during the year and are generally greatest during the third quarter and lowest
at the beginning of the first quarter.

The major sources of funds, in the first six months of 2001, from operating
activities were from depreciation, amortization, and lower accounts receivable
due to lower sales. Accounts receivable days sales outstanding also decreased
from 2000 due to more stringent domestic credit policies implemented in the
third quarter of 2000. Accounts payable and accrued expenses decreased from
year-end levels due to timing of payments and the impact of lower sales volumes.
The corporate headquarters closing reserve at June 30, 2001 totaled $2.5
million, a decrease of $900 thousand from year-end. Due to the duration and
timing of severance provisions and related benefits, the reserve will not be
fully utilized until the first quarter of 2004. The reserve is expected to be
utilized as follows: $1.1 million for the remainder of 2001, $800 thousand in
2002, $500 thousand in 2003 and $100 thousand in 2004.

Enesco has filed and continues to file tax returns with a number of taxing
authorities worldwide. While we believe such filings have been and are in
compliance with applicable laws, regulations and interpretations, positions
taken are subject to challenge by the taxing authorities often for an extended
number of years after the filing dates. Enesco has established accruals for tax
assessments. These accruals are included in current income taxes payable since
it is uncertain as to when assessments may be made and paid. Based upon Enesco's
current liquid asset position and credit facilities, Enesco believes it has
adequate resources to fund any such assessments. To the extent accruals differ
from actual assessments or when the open tax years are closed, the accruals will
be adjusted through the provision for income taxes. The majority of the open tax
years become closed at the end of December for the particular open year.


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The major use of cash in investing activities in the first six months of 2001
was for capital expenditures. Capital expenditures of approximately $5 million
are currently anticipated for 2001. Year to date capital expenditures for 2001
totaled $1.6 million.

The major source of cash in financing activities in the first six months of 2001
was the increase in short term debt. The principal sources of Enesco's liquidity
are its available cash balances, cash from operations and available financing
alternatives.

In August 2000, Enesco entered into a $50 million revolving credit facility with
Fleet National Bank to replace an existing credit facility. The Fleet credit
agreement contains financial and operating covenants including restrictions on
indebtedness and liens, selling property, repurchasing our stock and paying
dividends. In addition, Enesco is required to satisfy consolidated net worth,
fixed charge coverage ratio and leverage ratio tests at the end of each quarter.

In March 2001, Enesco agreed to modify its credit agreement with Fleet, which
included modification of the financial covenants. Enesco further agreed, in
April 2001, to modify the Fleet credit agreement to reduce the commitment to $25
million and to grant Fleet a security interest in inventory and accounts
receivable. Enesco further amended the credit agreement with Fleet National Bank
in June 2001 and August 2001. The amended agreement includes an assignment of a
$10 million interest to a participant bank, an increased revolving credit
commitment to $35 million, increased credit capacity to $50 million including a
letter of credit facility of $15 million, an extension of the facility
termination date and mortgages on two parcels of domestic real estate. These
modifications are not expected to have a material effect on Enesco's liquidity
or the ability of Enesco to meet working capital requirements. Enesco is in the
process of extending the existing facility or syndicating a new credit facility.
Management expects the new or extended credit facility to be in place in
September, 2001.

CURRENT AND PENDING ACCOUNTING STANDARDS:

EITF 00-14 "Accounting for Certain Sales Incentives" and EITF 00-25 "Vendor
Income Statement Characterization of Consideration from a Vendor to Retailer"
will become effective later this year. Enesco has determined that EITF 00-14
will not materially impact its results of operations and financial condition.
The impact of EITF 00-25, while not expected to have a material impact, is
currently under review.


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Adoption of SAB 101 "Revenue Recognition" in the fourth quarter of 2000 and EITF
00-22 "Accounting for Points and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to be Delivered in
the Future" in the first quarter of 2001 did not affect Enesco's accounting and
reporting policies. In accordance with EITF 00-10 "Accounting for Shipping and
Handling Fees and Costs" (which was adopted in the fourth quarter 2000) Enesco
classifies shipping and handling costs billed to customers as revenue and the
related costs are classified as cost of sales. Revenue and cost of sales for the
first quarter of 2000 were restated to include the shipping and handling costs
billed to customers. Adoption of SFAS 133 "Accounting for Derivative Instruments
and Hedging Activities" on January 1, 2001 did not have a material impact on the
results of operations or financial condition.

Financial Accounting Standards (FAS) No. 141 "Business Combinations" and FAS 142
"Goodwill and Intangible Assets" were finalized on June 30, 2001. FAS 141 is not
expected to have any impact on the historical financial statements of Enesco. We
are evaluating the impact FAS 142 will have on Enesco's results of operations
and financial position.

FORWARD LOOKING STATEMENTS:

This Form 10-Q including all information incorporated by reference into this
Form 10-Q, contains certain forward-looking statements within the meaning of the
Federal securities laws. These forward-looking statements may include the words
"believe," "expect," "plans" or similar words and are based in part on Enesco's
reasonable expectations and are subject to a number of factors and risks, many
of which are beyond Enesco's control. Enesco's future results may differ
materially from its current results and actual results could differ materially
from those projected in the forward-looking statements contained in, and
incorporated by reference into, this Form 10-Q as a result of certain factors
including, but not limited to, those set forth below. Readers should also
carefully review any risk factors described in other documents that we file from
time to time with the Securities and Exchange Commission:

     -    Our ability to manufacture, increase capacity, source and ship new and
          continuing product in a timely manner and consumers' acceptance of
          those products at prices that will be sufficient to profitably recover
          development, manufacturing, marketing, royalty and other costs of the
          products;


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     -    Economic conditions including retail sales, higher fuel prices,
          currency fluctuations and government regulation and other actions in
          the various markets in which we operate throughout the world;

     -    The inventory policies of retailers, together with the increased
          reliance by retailers on quick response inventory management
          techniques, which increase the risk of underproduction of popular
          items, overproduction of less popular items and failure to achieve
          tight and compressed shipping schedules;

     -    The impact of competition on revenues, margins and other aspects of
          Enesco's business, including the ability to secure, maintain and renew
          popular licenses and the ability to attract and retain talented
          employees in a competitive environment.

In light of these uncertainties and risks, there can be no assurance that the
forward-looking statements in this Form 10-Q will occur or continue in the
future. Except for required, periodic filings under the Securities Exchange Act
of 1934, Enesco undertakes no obligations to release publicly any revisions to
these forward looking statements that may reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.



ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this item either is set forth in Exhibit 13 to Enesco's
Annual Report on Form 10-K for the year ended December 31, 2000, as updated by
Note 8 to the Consolidated Condensed Financial Statements included in Item 1
herein, or is immaterial. To manage Enesco's foreign currency risk, as of June
30, 2001 Enesco had entered into forward exchange agreements with a notional
value of $3 million that will mature within 90 days. The fair value is not
significant.


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                        PART II.     OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K


     (a)  Exhibits

          10.1 Fifth Amendment to Amended and Restated Senior Revolving Credit
               Agreement
          10.2 Borrower Note-LaSalle Bank
          10.3 Back-up L/C and B/A Demand Note-Fleet National Bank
          10.4 Mortgage, Assignment of Leases and Rents, and Security
               Agreement-Fleet National Bank
          10.5 Sixth Amendment to Amended and Restated Senior Revolving Credit
               Agreement


     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed by Enesco during the quarter for
          which this report is filed.

All other items hereunder are omitted because either such item is inapplicable
or the response to it is negative.




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                                   Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                   ENESCO GROUP, INC.
                                   (Registrant)



Date:  August 13, 2001             /s/ Daniel DalleMolle
                                   -----------------------------------------
                                   Daniel DalleMolle
                                   President and Chief Executive Officer





Date:  August 13, 2001             /s/ Jeffrey W. Lemajeur
                                   -----------------------------------------
                                   Jeffrey W. Lemajeur
                                   Chief Financial Officer




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