<PAGE>
UNITED STATES
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 September 30, 1998
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: 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) 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
----- -----
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 2, 1998
- ----- -------------------------------
Common Stock, no par value 7,405,000
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A.C. MOORE ARTS & CRAFTS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet as of September 30, 1998
and December 31, 1997 3
Consolidated Statement of Income for the three
and nine month periods ended September 30, 1998 and 1997 4
Consolidated Statement of Cash Flows for the nine
month periods ended September 30, 1998 and 1997 5
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 11
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
</TABLE>
2
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A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
September December
30, 1998 31, 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,621 $15,835
Marketable securities 3,911 4,004
Inventories 54,840 37,022
Prepaid expenses and other current assets 1,261 1,034
------- -------
62,633 57,895
Property and equipment, net 10,740 7,655
Other assets 594 517
------- -------
$73,967 $66,067
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings under line of credit $ 2,750 --
Trade accounts payable 19,024 12,479
Accrued payroll and payroll taxes 1,214 2,353
Accrued expenses 1,369 2,089
------- -------
24,357 16,921
------- -------
Long-term liabilities:
Deferred taxes 854 830
Other long-term liabilities 1,520 1,230
------- -------
2,374 2,060
------- -------
26,731 18,981
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SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares
authorized, none issued
Common stock, no par value, 20,000,000 shares
authorized, 7,405,000 shares outstanding 42,943 42,829
Retained earnings 4,293 4,257
------- -------
47,236 47,086
------- -------
$73,967 $66,067
======= =======
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 41,783 $ 31,295 $ 116,693 $ 84,952
Cost of sales (including buying and
distribution costs) 26,499 19,770 73,878 53,731
----------- ----------- ----------- -----------
Gross margin 15,284 11,525 42,815 31,221
Selling, general and administrative expenses 15,016 10,779 41,463 29,333
Pre-opening expenses 662 397 1,647 1,106
----------- ----------- ----------- -----------
Income (loss) from operations (394) 349 (295) 782
Net interest (income) expense (55) 260 (355) 540
----------- ----------- ----------- -----------
Income (loss) before income taxes (339) 89 60 242
Income tax expense (benefit) (132) -- 24 7
----------- ----------- ----------- -----------
Net income (loss) $ (207) $ 89 $ 36 $ 235
=========== =========== =========== ===========
Basic net income (loss) per share $ (0.03) $ 0.02 $ 0.00 $ 0.05
=========== =========== =========== ===========
Weighted average shares outstanding 7,405,000 4,300,000 7,405,000 4,300,000
=========== =========== =========== ===========
Diluted net income (loss) per share $ (0.03) $ 0.02 $ 0.00 $ 0.05
=========== =========== =========== ===========
Weighted average shares outstanding
plus impact of stock options 7,405,000 4,326,000 7,553,000 4,326,000
=========== =========== =========== ===========
Pro forma income and per share data:
Income before income taxes, as reported $ 89 $ 242
Pro forma income tax provision 36 97
----------- -----------
Pro forma net income $ 53 $ 145
=========== ===========
Pro forma basic net income per share $ 0.01 $ 0.03
=========== ===========
Pro forma diluted net income per share $ 0.01 $ 0.03
=========== ===========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 36 $ 235
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 1,539 1,065
Compensation expense related to stock options 114 --
Changes in assets and liabilities:
Inventories (17,818) (9,934)
Prepaid expenses and other current assets (227) (636)
Accounts payable and accrued expenses 4,686 3,698
Other assets (77) (50)
Other long-term liabilities 314 188
-------- --------
Net cash (used in) operating activities (11,433) (5,434)
-------- --------
Cash flows (used in) investing activities: Capital expenditures (4,624) (2,871)
-------- --------
Cash flows from financing activities:
Proceeds from line of credit 2,750 7,331
Proceeds from redemption of marketable securities 4,004 --
Investment in marketable securities (3,911) --
Proceeds from shareholders' loans -- 3,705
Repayment of long-term debt -- (1,392)
Distributions to shareholders -- (6,771)
-------- --------
Net cash provided by financing activities 2,843 2,873
-------- --------
Net (decrease) in cash (13,214) (5,432)
Cash and cash equivalents at beginning of period 15,835 6,431
-------- --------
Cash and cash equivalents at end of period $ 2,621 $ 999
======== ========
</TABLE>
See accompanying notes to financial statements
5
<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. and its wholly owned subsidiaries (collectively
the "Company"). The Company is a chain of 36 retail superstores (34 of which
were open as of September 30, 1998) 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 1997. 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, 1998 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 Information
Prior to the Company's initial public offering completed on October 9, 1997 the
Company elected to be taxed under the S Corporation provisions of the Internal
Revenue Code. Under these provisions, the shareholders of the Company included
their pro rata share of the Company's income or loss in their individual federal
and state tax returns. A portion of the distributions to shareholders was
related to their individual income tax liabilities resulting from S Corporation
taxable earnings. The Company's earnings subsequent to conversion to C
Corporation status reflect all applicable income taxes.
For the three and nine month periods ended September 30, 1997, pro forma taxes
have been computed as if the Company was subject to all applicable federal and
state income taxes, assuming the tax rate that would have applied had the
Company been taxed as a C Corporation.
(4) Earnings Per Share
The weighted average shares outstanding plus impact of stock options for the
three month period ended September 30, 1998 excludes potentially dilutive shares
as the result would be antidilutive.
6
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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 "Cautionary Statement Relating to Forward Looking Statements" in the
Company's Annual Report on Form 10-K 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
year. 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 Company's net sales have grown significantly in both the three and
nine month periods ended September 30, 1998 as compared with the previous year,
principally as a result of the addition of new superstores. The Company's loss
from operations of $394,000 in the three months ended September 30, 1998
compares with a profit from operations of $349,000 in the comparable 1997 period
and the Company's loss from operations of $295,000 for the nine months ended
September 30, 1998 compares with a profit from operations of $782,000 in the
comparable 1997 period. The principal reasons for the declines are related to
(a) the reduction in gross margin rate, (b) the cost of opening new stores,
which costs are expensed as they are incurred, and (c) the impact of new stores.
While new stores in the past have produced operating profits in their first year
of operation they often generate losses during the first nine months of the
year. In 1998 the Company opened nine stores through September 30, 1998; in the
first nine months of 1997 the Company opened six stores.
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:
7
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 63.4% 63.2% 63.3% 63.3%
------------- ------------- ------------ ------------
Gross Margin 36.6% 36.8% 36.7% 36.7%
Selling, general and administrative expenses 35.9% 34.4% 35.5% 34.5%
Pre-opening expenses 1.6% 1.3% 1.4% 1.3%
------------- ------------- ------------ ------------
Income (loss) from operations (0.9%) 1.1% (0.2%) 0.9%
Net interest (income) expense (0.1%) 0.8% (0.3%) 0.6%
------------- ------------- ------------ ------------
Income (loss) before income taxes (0.8%) 0.3% 0.1 % 0.3%
Income tax expense (benefit) (0.3%) 0.0% 0.1 % 0.0%
------------- ------------- ------------ ------------
Net income (loss) (0.5%) 0.3% 0.0 % 0.3%
============= ============= ============ ============
Pro forma income tax provision 0.1% 0.1%
------------- ------------
Pro forma net income 0.2% 0.2%
============= ============
Number of stores open at end of period 34 23
</TABLE>
Three Months Ended September 30, 1998 Compared to Three Months Ended
September 30, 1997
Net Sales. Net sales increased $10.5 million, or 33.5%, to $41.8 million
in the three months ended September 30, 1998 from $31.3 million in the
comparable 1997 period. This increase resulted from (i) net sales of $6.4
million from nine new superstores open during the period, (ii) net sales of $3.5
million from superstores opened in 1997 not included in the comparable store
base, and (iii) a comparable store sales increase of $.6 million, or 2%. 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 $6.7 million,
or 34.0%, to $26.5 million in the three months ended September 30, 1998 from
$19.8 million in the three months ended September 30, 1997. The gross margin
increased $3.8 million, or 32.6%, to $15.3 million in the three months ended
September 30, 1998 from $11.5 million in the three months ended September 30,
1997. The gross margin decreased to 36.6% of net sales in the three months ended
September 30, 1998 from 36.8% in the three months ended September 30, 1997.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses include (a) direct store level expenses, including rent
and related operating costs, payroll, advertising, depreciation and other direct
costs, and (b) 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 $4.2 million, or 39.3%, in the
three months ended September 30, 1998 to $15.0 million from $10.8 million in the
three months ended September 30, 1997. Of the increase, $3.9 million was
attributable to the nine superstores open during 1998 which were not open during
1997 and the superstores opened in the first quarter of 1997 not in the
comparable store base. The remainder of the increase is attributable to the
increase in corporate costs, principally from the addition of corporate staff
8
<PAGE>
and infrastructure to support the growth of the Company. As a percentage of
sales, selling, general and administrative costs increased to 35.9% of net sales
in the three months ended September 30, 1998 from 34.4% of net sales in the
three months ended September 30, 1997. This increase is primarily 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 has adopted the Financial Accounting
Standards Board Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" and accordingly expenses store pre-opening expense as incurred.
Pre-opening expense for the four new superstores opened in the third quarter of
1998 and new superstores which are being prepared to open amounted to $662,000.
In the third quarter of 1997, the Company opened two superstores and had
pre-opening expense of $397,000.
Net Interest (Income) Expense. In the third quarter of 1998 the Company
had net interest income of $55,000 from the investment of cash received from the
sale of common shares in October 1997. In the third quarter of 1997, the Company
had net interest expense of $260,000 due to outstanding balances under its
long-term debt agreements.
Income Taxes. Prior to the Company's initial public offering on October
9, 1997 the Company elected to be taxed under the S Corporation provisions of
the Internal Revenue Service. Under these provisions, the shareholders of the
Company included their pro rata share of income or loss in their individual
returns. On October 9, 1997 the Company converted to C Corporation status and
the Company's earnings subsequent to that date reflect all applicable income
taxes.
Nine Months Ended September 30, 1998 Compared to Nine Months Ended
September 30, 1997
Net Sales. Net sales increased $31.7 million, or 37.4%, to $116.7
million in the nine months ended September 30, 1998 from $85.0 million in the
comparable 1997 period. This increase resulted from (i) net sales of $12.6
million from nine new superstores opened during the period (ii) net sales of
$15.5 million from superstores opened in 1997 not included in the comparable
store base, and (iii) a comparable store sales increase of $3.6 million, or 4%.
Gross Margin. Cost of sales increased $20.1 million, or 37.5%, to $73.9
million in the nine months ended September 30, 1998 from $53.7 million in the
nine months ended September 30, 1997. The gross margin increased $11.6 million,
or 37.1%, to $42.8 million in the nine months ended September 30, 1998 from
$31.2 million in the nine months ended September 30, 1997. The gross margin was
36.7% of net sales in the nine months ended September 30, 1998 and September 30,
1997.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $12.1 million, or 41.4%, in the nine months
ended September 30, 1998 to $41.5 million from $29.3 million in the nine months
ended September 30, 1997. Of the increase, $10.5 million was attributable to the
nine superstores open during 1998 which were not open during 1997 and the
superstores opened in the nine months of 1997 not in the comparable store base.
The remainder of the increase is attributable to the increase in corporate
costs, principally from the addition of corporate staff and infrastructure to
support the growth of the Company. As a percentage of sales, selling, general
and administrative costs increased to 35.5% of net sales in the nine months
ended September 30, 1998 from 34.5% of net sales in the nine months ended
September 30, 1997. This increase is primarily due to the new stores, which, on
average, have higher operating costs as a percent of sales than older stores.
9
<PAGE>
Pre-Opening Expense. Pre-opening expense for the nine new superstores
opened in the first nine months of 1998 and the superstores being prepared to
open amounted to $1.6 million. In the first nine months of 1997, the Company
opened six superstores which had pre-opening expense of $1.1 million.
Net Interest (Income) Expense. In the first nine months of 1998 the
Company had interest income of $355,000 from the investment of cash received
from the sale of common shares in October 1997. In the first half of 1997, the
Company had net interest expense of $540,000 due to outstanding balances under
its long-term debt agreements.
Liquidity 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 sale of common shares in
October 1997, 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.
In October 1997 the Company completed an initial public offering of
3,105,000 shares of its common stock, including shares issued upon exercise of
an underwriters' overallotment option in November 1997. Net proceeds to the
Company, after deducting underwriting commissions and discounts and expenses,
was $42.6 million. Approximately $28.0 million of the proceeds were used to
retire long-term debt, borrowings under the line of credit and the loans from
shareholders.
At September 30, 1998 and December 31, 1997 the Company's working
capital was $38.3 million and $41.0 million, respectively. Cash used in
operations was $11.4 million for the nine months ended September 30, 1998 as a
result of additions to inventory in the amount of $17.8 million for new stores
and for the buildup of imported product for the fall and Christmas selling
seasons. Part of the inventory increase was financed through increases in
accounts payable of $4.7 million.
Net cash used in investing activities during the nine months ended
September 30, 1998 and 1997 was $4.6 million and $2.9 million, respectively.
This use of cash was primarily the result of new store openings. In 1998, the
Company expects to spend approximately $6.5 million on capital expenditures,
which includes approximately $5.0 million for new store openings and the
remainder for distribution equipment in support of the warehouse expansion,
systems development and fixtures for existing stores. There are no other
material commitments for capital expenditures other than new store openings in
the next 12 months.
On March 11, 1998 the Company entered into a new four year financing
agreement with a bank which provides a $25 million revolving credit facility,
$15 million of which is available immediately with the remainder available in $5
million increments in 1999 and 2000, provided the Company is in compliance with
the agreement's covenants.
The Company believes the proceeds from the public offering, together
with cash generated from operations and available borrowings under the financing
agreement will be sufficient to finance its working capital and capital
expenditure requirements for at least the next 12 months.
10
<PAGE>
Year 2000
The Company's computer systems operate on a PC-based local area network
("LAN"). Each superstore has personal computers linked to the main office LAN by
modem. Management has evaluated the issues relating to the Year 2000 (Y2K) as it
may affect (a) the Company's operating and financial systems and (b) future
operating results and has determined that in most instances, the systems are
compliant with Year 2000 requirements. In those instances where the hardware or
software is not compliant, the Company has determined a course of action which
should be complete by the end of the second quarter of 1999. The Company has
determined the cost of addressing the Y2K issue is immaterial and the changes
required in the Company's systems to become Y2K compliant are of a magnitude
which is unlikely to impact future operating performance. The Company has
surveyed all of its significant vendors and has ascertained that in most cases
those vendors are already in compliance or have plans to be compliant by the
middle of 1999.
In evaluating the risks to the Company, the most serious risk would be
if a vendor does not become compliant with the Y2K requirements and, as a
result, is unable to ship needed inventory to the Company. Should this occur,
the Company does have the ability to resource product from another vendor.
The Company is in the early stages of developing contingency plans to
mitigate the potential disruptions that may result from the Y2K issue. These
plans may include identifying and securing alternate suppliers, stockpiling of
select products and other measures considered appropriate by management. The
Company expects to complete these plans by the middle of 1999. Once developed
and approved, contingency plans, and the related cost estimates if any, will be
continually refined as additional information becomes available.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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 .................................... 724,375
----------
Total Expenses.................... $3,984,625
==========
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 ($42,590,375
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 ............. 256,000
Working capital ................................... 10,407,473
Temporary investment in marketable securities ..... 3,928,000
-----------
Net Proceeds ................... $42,590,375
===========
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
12
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
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 March 11, 1998, 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.**
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter
ended March 31, 1998.
- -----------------
* 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.
*** Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997.
13
<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.
Date: November 9, 1998 By: /s/ Leslie H. Gordon
---------------------------
Senior Vice President and
Chief Financial Officer
(duly authorized officer
and principal financial
officer)
14
<PAGE>
EXHIBIT INDEX
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 March 11, 1998, 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.**
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
- -------------------
* 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.
*** Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,621
<SECURITIES> 3,911
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 54,840
<CURRENT-ASSETS> 62,633
<PP&E> 17,451
<DEPRECIATION> (6,711)
<TOTAL-ASSETS> 73,967
<CURRENT-LIABILITIES> 24,357
<BONDS> 0
0
0
<COMMON> 42,943
<OTHER-SE> 4,293
<TOTAL-LIABILITY-AND-EQUITY> 73,967
<SALES> 116,693
<TOTAL-REVENUES> 116,693
<CGS> 73,878
<TOTAL-COSTS> 43,110
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (355)
<INCOME-PRETAX> 60
<INCOME-TAX> 24
<INCOME-CONTINUING> 36
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</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> .05
<EPS-DILUTED> .05
</TABLE>
