<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from to .
------- -------
Commission File Number: 000-23157
---------
A.C. MOORE ARTS & CRAFTS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 22-3527763
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 University Court Blackwood, NJ 08012
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(609) 228-6700
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) 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 No X
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at November 12, 1997
- ----- --------------------------------
Common Stock, no par value 7,405,000
<PAGE>
A.C. MOORE ARTS & CRAFTS, INC. AND SUBSIDIARY
BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
December September September
31,1996 30,1997 30,1997
-------- --------- ---------
PRO FORMA
(UNAUDITED)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 6,431 $ 999 $14,709
Accounts receivable 162 212 212
Inventories 25,255 35,189 35,189
Prepaid expenses and other current assets 361 947 604
-------- ------- -------
32,209 37,347 50,714
Property and equipment, net 5,114 6,920 6,920
Other assets 476 526 526
-------- ------- -------
$ 37,799 $44,793 $58,160
======== ======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under line of credit $ -- $ 7,331 $ --
Current portion of long-term dept 1,857 1,857
Trade accounts payable 6,226 10,526 10,526
Accrued payroll 1,795 1,235 1,235
Accrued income, payroll and sales taxes 1,022 749 749
Accrued expenses 712 944 994
-------- ------- -------
11,612 22,642 13,504
-------- ------- -------
Long-term debt 6,653 5,260
Loans from shareholders-subordinated 11,095 14,800 --
Deferred tax liability -- -- 659
Other long term liabilities 947 1,135 1,135
-------- ------- -------
18,695 21,195 1,794
-------- ------- -------
30,307 43,837 15,298
-------- ------- -------
Shareholders' equity:
Preferred stock, no par value, 5,000,000
shares authorized, none issued
Common stock, no par value, 20,000,000 shares
authorized, 4,300,000 shares outstanding at
December 31, 1996 and September 30, 1997,
7,405,000 pro forma shares outstanding at
September 30, 1997 200 200 42,815
Retained earnings 7,292 756 47
-------- ------- -------
7,492 956 42,862
-------- ------- -------
$ 37,799 $44,793 $58,160
======== ======= =======
</TABLE>
See accompanying notes to financial statements
<PAGE>
A.C. MOORE ARTS & CRAFTS, INC.
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------- --------------------------
1996 1997 1996 1997
---------------------------- --------------------------
<S> <C> <C> <C> <C>
Net sales $ 25,687 $ 31,295 $ 70,666 $ 84,952
Cost of sales (including buying and
distribution costs) 16,416 19,770 45,154 53,731
------------------------------ -----------------------------
Gross Margin 9,271 11,525 25,512 31,221
Selling, general and administrative expenses 8,176 10,779 23,809 29,333
Pre-opening expenses -- 397 140 1,106
------------------------------ -----------------------------
Income from operations 1,095 349 1,563 782
Interest expense 170 260 431 540
------------------------------ -----------------------------
Income before income taxes 925 89 1,132 242
State income tax expense 14 -- 31 7
------------------------------ -----------------------------
Net Income $ 911 $ 89 $ 1,101 $ 235
============================== =============================
Pro forma and supplemental income date (Note 3):
Income before income taxes, as reported $ 925 $ 89 $ 1,132 $ 242
Pro forma income tax provision 364 36 447 97
------------------------------ -----------------------------
Pro forma net income $ 561 $ 53 $ 685 $ 145
============================== =============================
Pro forma net income per share $ 0.12 $ 0.01 $ 0.15 $ 0.03
============================== =============================
Pro forma weighted average shares
outstanding 4,623,249 4,623,249 4,623,249 4,623,249
Supplemental pro forma net income per $ 0.11 $ 0.03 $ 0.17 $ 0.08
share ============================== =============================
Supplemental pro forma weighted average
shares outstanding 5,978,322 6,435,378 5,978,322 6,435,378
</TABLE>
See accompanying notes to financial statements
<PAGE>
A.C. MOORE ARTS & CRAFTS, INC.
STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1996 1997
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,101 $ 235
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 832 1,065
Changes in assets and liabilities:
Accounts receivable 34 (51)
Inventories (3,241) (9,934)
Prepaid expenses and other current assets (95) (585)
Accounts payable and accrued expenses 847 3,698
Othor assets (21) (50)
Other long-term liabilities 78 188
------ ------
Net cash (used 1n) operating activities (465) (5,434)
------ ------
Cash flows (used in) investing activlties: Capital expenditures (1,041) (2,871)
------ ------
Cash flows from financing activities:
Proceeds from line of credit -- 7,331
Proceeds from shareholders' loans 3,500 3,705
Repayment of long-term debt (311) (1,392)
Distributions to shareholders (6,567) (6,771)
------ ------
Net cash provided by (used in) financing activities (3,378) 2,873
------ ------
Net (decrease) in cash (4,884) (5,432)
Cash and cash equivalents at beginning of year 5,875 6,431
------ ------
Cash and cash equivalents at end of year $ 991 $ 999
====== ======
</TABLE>
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The consolidated financial statements included herein include the accounts of
A.C. Moore Arts & Crafts, Inc. (the Company) and its wholly owned subsidiary.
The Company is a chain of 25 retail superstores (23 of which were open as of
September 30, 1997) selling arts and crafts merchandise. The stores are located
in the mid-Atlantic and Northeast regions.
These financial statements have been prepared by management without audit and
should be read in conjunction with the consolidated financial statements and
notes thereto for the year 1996. Due to the seasonality of the Company's
business, the results for the interim periods are not necessarily indicative of
the results for the year. The accompanying consolidated financial statements
reflect, in the opinion of management, all adjustments necessary for a fair
presentation of the interim financial statements. In the opinion of management,
all such adjustments are of a normal and recurring nature.
(2) Management Estimates
The preparation of these consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of expenses during
the reported period and related disclosures. Significant estimates made as of
and for the three and nine month periods ended September 30, 1996 and September
30, 1997 include provisions for shrinkage, capitalized buying, warehousing and
distribution costs related to inventory and markdowns of merchandise
inventories. Actual results could differ from those estimates.
(3) Pro Forma and Supplemental Information
Earnings Per Share
The computation of primary pro forma earnings per share is based on the weighted
average number of outstanding common shares during the period plus common stock
equivalents, if dilutive, consisting of certain shares subject to stock options.
Pursuant to the requirements of the Securities and Exchange Commission, common
and common equivalent shares issued by the Company during the twelve month
period immediately preceeding the filing of the initial public offering have
been included in the calculation of the shares used in computing net income per
share as if they were outstanding for all periods presented, using the treasury
stock method and the initial public offering price of $15.00 per share.
Additionally, the weighted average number of outstanding common shares includes
the effects of the incremental number of shares required to fund distributions
to shareholders in excess of earnings for the preceding 12 months (including the
estimated distribution of $50,000 to be paid from a portion of the net proceeds
of the sale of shares). Historical net income per share data has not been
presented since such amounts are not deemed to be meaningful due to the
significant change in the Company's capital structure which occurred in
connection with the initial public offering of the Company's common stock (the
Offering).
The supplemental pro forma net income per share is based on pro forma net income
per share, increased to give effect to the reduction in interest costs of
$105,000 and $319,000 for the three and nine months ended September 30, 1996,
respectively, and $156,000 and $354,000 for the three and nine months ended
September 30, 1997, respectively, (net of the applicable income taxes), which
would have resulted assuming the application of a portion of the net proceeds
from the Offering were used to repay certain indebtedness of the Company.
<PAGE>
Pro Forma Balance Sheet
The unaudited pro forma balance sheet reflects the sale of the shares of Common
Stock of the Company in the initial public offering at a price of $15.00 per
share, net of underwriting discounts and commissions and estimated offering
expenses and the application of the net proceeds therefrom. It also reflects a
distribution of earnings of $50,000 in connection with the Company's conversion
from S Corporation to C Corporation status and a charge associated with the
provision for deferred income taxes of $659,000 which the Company will recognize
upon its termination of S Corporation status assuming the termination occurred
at September 30, 1997.
Pro Forma Taxes
On October 9, 1997 the Company terminated its S Corporation status and converted
to C Corporation status. As an S Corporation, the net income of the Company for
federal and certain state income tax purposes was taxable directly to the
Company's shareholders. The Company's future earnings will be subject to
corporate taxes.
The pro forma information has been computed as if the Company was subject to
federal and all applicable state corporate income taxes for each of the periods
presented, assuming the tax rate that would have applied had the Company been
taxed as a C Corporation.
(4) Equity Offering
On October 1997 the Company completed an initial public offering of 2,700,000
shares of its common stock. Net proceeds to the Company, after deducting
underwriting discounts and commissions and expenses, were $37,015,000. The
proceeds were used to retire long-term debt, borrowings under a line of credit
and loans from shareholders totaling approximately $29,250,000. In November
1997, an additional 405,000 shares of common stock were sold pursuant to the
underwriters' over-allotment option, providing additional net proceeds to the
Company of approximately $5,600,000.
(5) Stock Inocntivc Plan
The Company's Employee, Director and Consultant Stock Option Plan (the "1997
Plan"), pursuant to which 1,000,000 shares of common stock may be granted, was
adopted by the Company's Board of Directors in July 1997 for the purpose of
securing for the Company and its shareholders the benefits arising from the
ownership of Company stock options by key employees and non-employee directors
who are expected to contribute to the Company's future growth and success. On
July 22, 1997, options to purchase 444,500 shares of common stock were granted
under the 1997 Plan at an exercise price per share of $9.00. On September 15,
1997, the Company amended the 1997 Plan to permit the exercise of options
granted under the 1997 Plan without regard to whether the Company has completed
an initial public offering. The Company's estimated fair value on the date the
Plan was amended (measurement date) was $10.20. The options granted to date
under the 1997 Plan vest one-third in 1998, one-third in 1999 and one-third in
2000. Accordingly, the Company will record aggregate compensation expense of
approximately $533,000 spread ratably over the three-year vesting period.
<PAGE>
ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis contains certain forward-looking
statements. These forward-looking statements do not constitute historical facts
and involve risks and uncertainties. Actual results could differ materially from
those referred to in the forward-looking statements due to a number of factors,
including, but not limited to, the following: ability to open and operate new
stores; weather and economic conditions; dependence on key personnel;
competition; ability to anticipate merchandise trends and consumer demands;
ability to maintain relationships with suppliers, successful implementation of
systems, and ability to meet future capital needs. For additional information
concerning factors that could cause actual results to differ materially from the
information contained herein, reference is made to the information under the
heading "Risk Factors" in the Company's Registration Statement on Form S-1
(Registration No. 333-32859) dated October 9, 1997 as filed with the Securities
and Exchange Commission.
Due to the importance of the fall selling season, the fourth quarter has
historically contributed, and the Company expects it will continue to
contribute, disproportionately to the Company's profitability for the entire
ycar. As a result, the Company's quarterly results of operations may fluctuate.
In addition, results of a period shorter than a full year may not be indicative
of results expected for the entire year.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected statement of
operations data expressed as a percentage of net sales and the number of stores
open at the end of each such period:
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
1996 1997 1996 1997
----------------------- -----------------------
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 63.9% 63.2% 63.9% 63.3%
----------------------- -----------------------
Gross Margin 36.1% 36.8% 36.1% 36.7%
Selling, General
and Administrative Expenses 31.8% 34.4% 33.7% 34.5%
Pre-Opening Expenses 0.0% 1.3% 0.2% 1.3%
----------------------- -----------------------
Income From Operations 4.3% 1.1% 2.2% 0.9%
Interest Expense 0.7% 0.8% 0.6% 0.6%
----------------------- -----------------------
Income Before Income Taxes 3.6% 0.3% 1.6% 0.3%
----------------------- -----------------------
State Income Tax Expense 0.1% 0.0% 0.0% 0.0%
----------------------- -----------------------
Net Income 3.5% 0.3% 1.6% 0.3%
======================= =======================
Number of Stores Open At
End of Period 17 23 17 23
</TABLE>
Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996
Net Sales. Net sales increased $5.6 million, or 21.8% to $31.3 million in the
three months ended September 30, l997 from $25.7 million in the comparable 1996
period. This increase resulted from net sales of $5.4 million from six new
superstores opened in 1997 which were not open in 1996 and a comparable store
sales increase of $200,000, or 0.9%. Stores are added to the comparable store
base at the beginning of the fourteenth full month of operation.
Gross Margin. Cost of sales includes the cost of merchandise, plus certain
distribution and purchasing costs. Cost of sales increased $3.4 million, or
20.4% to $19.8 million in the three months ended September 30, 1997 from $16.4
million in the three months ended September 30, 1996. The gross margin increased
$2.2 million, or 24.3% to $11.5 million in the three months ended September 30,
1997 from $9.3 million in the three months ended September 30, 1996. The gross
margin increased slightly to 36.8% of net sales in the quarter from 36.1% in the
comparable 1996 quarter.
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses include (i) all direct store level expenses, including
rent and related operating costs, payroll, advertising, depreciation and other
direct costs, and (ii) all corporate level costs not directly associated with or
allocable to cost of sales including executive salaries, accounting and finance,
corporate information systems, office facilities and other corporate expenses.
Selling, general and administrative expenses increased $2.6 million, or 31.8% to
$10.8 million for the three month period ended September 30, 1997 from $8.2
million for the three months ended September 30, 1996. Of the increase, $1.9
million was attributable to the six superstores open during the third quarter of
1997 which were not open in 1996. The remainder of the increase is attributable
to $300,000 in operating expenses in the comparable superstores and $400,000 in
corporate costs, principally from the addition of corporate staff and
infrastructure to support the expected growth of the Company. As a percentage of
sales, selling, general and administrative expenses increased to 34.4% in the
three month period ending September 30, 1997 from 31.8% in the three month
period ended September 30, 1996 due to the new stores, which, on average, have
higher operating costs as a percent of sales than older stores.
Pre-Opening Expense. The Company expenses store pre-opening expense in the
quarter that a superstore is opened. Pre-opening expense for the two new
superstores opened in the third quarter of 1997 amounted to $397,000. The
Company did not open any superstores in the third quarter of 1996.
Interest Expense. Interest expense, net was approximately $260,000 for the three
months ended September 30, 1997, an increase of $90,000 from the comparable
period in 1996. This increase was due to greater borrowings in the third quarter
of 1997 to fund operations and the addition of the six superstores.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
Net Sales. Net sales increased $14.3 million, or 20.2% to $85.0 million in the
nine months ended September 30, 1997 from $70.7 million in the comparable 1996
period. This increase resulted from (i) net sales of $10.4 million from six new
superstores opened in 1997 which were not open in 1996, (ii) $400,000 from the
superstore opened in 1996 not included in the comparable store base, and (iii)
a comparable store sales increase of $3.5 million, or 5.1%.
Gross Margin. Cost of sales increased $8.5 million, or 19.0%, to $53.7 million
in the nine months ended September 30, 1997 from $45.2 million in the nine
months ended September 30, 1996. The gross margin increased $5.7 million, or
22.4% to $31.2 million in the nine months ended September 30, 1997 from $25.5
million in the nine months ended September 30, 1996. The gross margin increased
slightly to 36.7% of net sales in the nine months from 36.1% in the comparable
1996 period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $5.5 million or 23.2% to $29.3 million for the
nine month period ended September 30, 1997 from $23.8 million for the three
months ended September 30, 1996. Of the increase, $3.9 million was attributable
to the six superstores open during the third quarter of 1997 which were not open
in 1996 and the one superstore opened in the first half of 1996 not included in
the comparable store base. The remainder of the increase is from $600,000 in
operating expenses in the comparable superstores and $1.0 million in corporate
costs, principally from the addition of corporate staff and infrastructure
to support the expected growth of the Company. As a percentage of sales,
selling, general and administative expenses increased to 34.5% in the nine month
period ending September 30, 1997 from 33.7% in the nine month period ended
September 30, 1996 due to the new stores, which, on average, have higher
operating costs as a percent of sales than older stores.
Pre-Opening Expense. Pre-opening expense for the six new superstores opened in
1997 amounted to $1.1 million. In 1996 the Company opened one superstore which
had pre-opening expense of $140,000.
Interest Expense. Interest expense, net was approximately $540,000 for the nine
months ended September 30, 1997, an increase of $109,000 from the comparable
period in 1996. This increase was due to greater borrowings in the nine months
of 1997 to fund operations and the addition of the six superstores.
LIQUIDY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support its
inventory requirements and capital expenditures, pre-opening expenses and
beginning inventory for new superstores. Prior to the public offering, the
Company had financed its operations and new store openings primarily with cash
from operations, borrowing under bank financing agreements and subordinated
loans from its shareholders.
<PAGE>
At September 30, 1996 and September 30,1997, the Company's working capital was
$16.7 million and $14.7 million, respectively. Cash used in operations was
$500,000 for the nine months ended September 30, 1996 as a result of seasonal
additions to inventory in the amount of $3.2 million offset by an increase in
trade payables of $1.4 million and a $500,000 reduction in accrued liabilities,
principally for the payment of accrued bonuses. For the nine months ended
September 30, 1997, approximately $5.4 million of cash was used in operations.
This was principally the result of a $9.9 million increase in inventory to
support the six new stores already opened in 1997 and the two stores to open in
the fourth quarter and the normal seasonal inventory buildup, offset by an
increase of $3.7 million in trade accounts payable.
Net cash used in investing activities during the first nine months of 1996 and
1997 was approximately $1.0 million and $2.9 million, respectively. This use of
cash was primarily the result of new store openings, the addition of a new
warehouse management system and other management information systems upgrades,
and, in 1996, relocating the distribution center to a new larger facility.
Net cash of $3.4 million was used in financing activities during the first nine
months of 1996, During the first nine months of 1997, cash of $2.9 million was
generated by financing activities, The Company distributed $6.6 million and $6.8
million to shareholders in the nine months ended September 30, 1996 and 1997,
respectively. The shareholders loaned $3.5 million and $3.7 million to the
Company for working capital in the first nine months of 1996 and 1997,
respectively. The Company borrowed $7.3 million under the Bank line of credit
during the first nine months of 1997 and the outstanding balances under the Loan
Agreement were $9.0 million and $14.4 million at September 30, 1996 and
September 30, 1997, respectively. In October 1997 the Company completed an
initial public offering of 2,700,000 shares of its common stock. Net proceeds to
the Company, after deducting underwriting commissions and discounts and
expenses, were $37.0 million. The proceeds were used to retire long-term debt,
borrowings under the line of credit and the loans from shareholders totaling
approximately $29.3 million. In November 1997 an additional 405,000 shares of
common stock were sold pursuant to an underwriters' over allotment option,
providing additional net proceeds to the Company of approximately $5.6 million.
Subsequent to the completion of the offering, the Company continued to have
available $24.2 million in Bank financing arrangements of which $17.2 million
was currently available and the remaining $7.0 million will be available on
March 31, 1998, subject to the achievement of certain performance measurements.
<PAGE>
Part II Other Information
Item 2. Changes in Securities and Use of Proceeds
(d) The Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission (Commission file number 333-32859) for the
sale of Common Stock in the Company's initial public offering (the "Offering").
The Company registered 3,105,000 shares of Common Stock, including 405,000
shares of Common Stock for sale upon exercise of an option granted to the
underwriters to cover over-allotments. The effective date of the Registration
Statement was October 8, 1997. The Offering commenced on October 9, 1997 and was
terminated after the sale of all securities registered. The managing
underwriters for the Offering were BT Alex. Brown Incorporated and Janney
Montgomery Scott Inc. The aggregate price to the public of the 3,105,000 shares
of Common Stock registered was $46,575,000. The Company completed the Offering,
selling all 3,105,000 shares of Common Stock registered for the aggregate
offering price of $46,575,000.
The Company incurred the following expenses in connection with the
issuance and distribution of its Common Stock in the Offering:
Underwriting Discounts and Commissions . . . . . . $3,260,250
Expenses paid to or for Underwriters . . . . . . --
Other Expenses* . . . . . . . . . . . . . . . . . 700,000
----------
Total Expenses . . . . . . . . . $3,960,250
----------------
*Reasonable estimate
All payments of expenses were direct or indirect payments to persons
other than directors or officers of the Company or their associates, persons
owning ten percent or more of any class of equity securities of the Company, or
affiliates of the Company.
The Company used the net proceeds of the Offering ($42,614,750 after
deducting total expenses set forth above) for the following purposes:
Repayment of outstanding bank indebtedness . . . . $13,198,902
Repayment of subordinated shareholder loans . . . 14,800,000
Payment of S Corporation Distribution* . . . . . . 50,000
Working capital . . . . . . . . . . . . . . . . . 1,676,098
Temporary investment in Evergreen Institutional
Fund . . . . . . . . . . . . . . . . . . . . . 12,889,750
-----------
Total . . . . . . . . . . . . . . . $42,614,750
--------------
*Reasonable estimate
<PAGE>
The payments with respect to the subordinated shareholder loans and the
S Corporation Distribution were made to William Kaplan, a shareholder owning
more than 10% of the Common Stock of the Company and a director of the Company,
and John E. Parker, a director and President and Chief Executive Officer of the
Company and a shareholder owning more than 10% of the Common Stock of the
Company. All other payments were direct or indirect payments to persons other
than directors or officers of the Company or their associates, persons owning
ten percent or more of any class of equity securities of the Company, or
affiliates of the Company.
Item 6. Exhibits and Reports on 8-K:
a. Exhibits:
3.1 Articles of Incorporation*
3.2 By-laws*
10.1 1997 Employee, Director and Consultant Stock Option Plan**
10.2 Form of Stock Option Award Agreement**
10.3 Loan Agreement, dated January 23, 1997, between the Company
and KeyBank National Association*
10.4 Correspondence reflecting option granted to Richard Lesser*
10.5 Tax Indemnification Agreement, dated July 22, 1997, among the
Company, John E. Parker and William Kaplan*
10.6 Lease, dated August 14, 1995, between Freeport 130 LLC and
A.C. Moore, Inc.**
11.1 Statements regarding computation of per share earnings
27.1 Financial Data Schedule
b. There were no reports on Form 8-K filed during the quarter ended
September 30, 1997.
- --------------
* Incorporated by reference to the Company's Registration Statement on Form S-1
filed August 5, 1997, Registration Number 333-32859.
** Incorporated by reference to Amendment No. 1 to the Company's Registration
Statement on Form S-1 filed September 16, 1997, Registration Number 333-32859.
<PAGE>
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.
A.C. MOORE ARTS & CRAFTS, INC.
/s/ Leslie H. Gordon
------------------------------------------
Senior Vice President, Treasurer and
Chief Financial Officer
Date: November 14, 1997
<PAGE>
Exhibit 11.1
A.C. MOORE ARTS & CRAFTS, INC.
Pro Forma Net Income Per Share
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------------- ----------------------------
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pro forma net income $ 561,000 $ 53,000 $ 685,000 $ 145,000
========== ========== ========== ==========
Weighted average shares
outstanding 4,300,000 4,300,000 4,300,000 4,300,000
Stock options 222,262 222,262 222,262 222,262
Equivalent shares necessary
to fund distributions to
shareholders in excess of
earnings 100,987 100,987 100,987 100,987
---------- ---------- ---------- ----------
4,623,249 4,623,249 4,623,249 4,623,249
========== ========== ========== ==========
Pro forma net income per
share $0.12 $0.01 $0.15 $0.03
========== ========== ========== ==========
</TABLE>
<PAGE>
A.C. MOORE ARTS & CRAFTS, INC.
Supplemental Pro Forma Net Income Per Share
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------- -------------------------------
1996 1997 1996 1997
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Pro forma net income $ 561,000 $ 53,000 $ 685,000 $ 145,000
Reversal of interest expense, net of
tax, on assumed payment of debt as of
beginning of period 105,126 156,155 319,306 354,155
---------- ---------- ---------- ----------
Supplemental pro forma net income $ 666,126 $ 209,155 $1,004,306 $ 499,155
========== ========== ========== ==========
Weighted average share outstanding 4,300,000 4,300,000 4,300,000 4,300,000
Stock options 222,262 222,262 222,262 222,262
Equivalent shares necessary to fund
distributions to shareholders
in excess of earnings 100,987 100,987 100,987 100,987
Equivalent shares necessary to fund
payment of debt 1,355,073 1,812,129 1,355,073 1,812,129
---------- ---------- ---------- ----------
5,978,322 6,435,378 5,978,322 6,435,378
========== ========== ========== ==========
Supplemental pro forma net
income per share $ 0.11 $ 0.03 $ 0.17 $ 0.08
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 999
<SECURITIES> 0
<RECEIVABLES> 212
<ALLOWANCES> 0
<INVENTORY> 35,189
<CURRENT-ASSETS> 37,347
<PP&E> 11,697
<DEPRECIATION> (4,777)
<TOTAL-ASSETS> 44,793
<CURRENT-LIABILITIES> 22,642
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 756
<TOTAL-LIABILITY-AND-EQUITY> 44,793
<SALES> 84,952
<TOTAL-REVENUES> 84,952
<CGS> 53,731
<TOTAL-COSTS> 30,439
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 540
<INCOME-PRETAX> 242
<INCOME-TAX> 7
<INCOME-CONTINUING> 235
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
