Exhibit 99.1
A.C. MOORE [GRAPHIC OMITTED] General Office o Distribution Center
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130 A.C. Moore Drive o Berlin, NJ 08009
PHONE: (856) 768-4930 o FAX: (856) 753-4723
FOR: FROM:
A.C. Moore Arts & Crafts, Inc. Gregory FCA Communications, Inc.
Leslie Gordon For More Information Contact:
Chief Financial Officer Joe Crivelli
(856) 768-4930 (610) 642-8253
FOR IMMEDIATE RELEASE
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A.C. MOORE REPORTS FULL YEAR EARNINGS OF $0.84 PER SHARE
ADJUSTED FOR LEASE ACCOUNTING
BERLIN, NEW JERSEY, MARCH 9, 2005 - A.C. Moore Arts & Crafts, Inc. (Nasdaq:
ACMR) announced today that sales for the fourth quarter ended December 31, 2004
were $177.3 million, an increase of 18.4% over sales of $149.7 million for the
fourth quarter ended December 31, 2003. Same store sales increased 5.6% versus
the previous year. Net income for the fourth quarter ended December 31, 2004 was
$14.4 million or $0.72 per fully-diluted share compared to a net income of $14.4
million or $0.72 per fully-diluted share for the comparable prior period which
has been restated to correct the Company's lease accounting. Net income in the
fourth quarter of 2004 was reduced by $0.05 per share due to the accounting
change for cooperative advertising that we have described in previous
announcements.
Sales for the year ended December 31, 2004 were a record $497.6 million, an
increase of 14.7% over sales of $433.9 million during the year ended December
31, 2003. Same store sales grew by 4% for the year. Net income for the year 2004
was $16.8 million or $0.84 per fully-diluted share, 3% lower than net income of
$17.0 million or $0.86 per fully-diluted share in 2003. The 2003 amounts have
been restated to correct the Company's lease accounting. Net income in 2004 was
reduced by $3.4 million, $0.17 per share, due to the accounting change for
cooperative advertising.
LEASE ACCOUNTING AND IMPACT OF ACCOUNTING CHANGE ON 2004
As announced in a press release on February 22, 2005, the Company reviewed its
lease accounting practices as a result of perspectives expressed in a letter
from the Securities and Exchange Commission dated February 7, 2005 and
determined that its method of accounting for leasehold improvements funded by
landlord incentives or allowances and its method of accounting for rent holidays
were not correct. The Company has now corrected its method of accounting for
construction allowances and its method of accounting for leases as they relate
to the period from date of possession to store opening. The results above and
the attached financial statements for both 2003 and 2004 reflect these
adjustments. The accounting correction had no effect on cash or net cash flows.
The correction resulted in a decrease in selling, general and administrative
expense of $62,000 for each of the first three quarters of 2004. Offsetting this
decrease were increases in pre-opening expense of $23,000, $127,000 and $259,000
in the first, second and third quarters, respectively. The restatement increased
net income by $24,000 in the first quarter and decreased net income by $40,000
in the second quarter, with no impact on earnings per share. The third quarter
net income decreased by $121,000, a decrease of $0.01 per share. The impact of
the correction in the fourth quarter was to decrease net income by $0.01 per
share compared with the Company's previous forecast.
Jack Parker, Chief Executive Officer, said, "In 2004 we opened 15 stores,
executed our merchandising plans to achieve a 4% comparable store increase, and
generated net income of $0.84 per share. Excluding the cost of the accounting
change for cooperative advertising, our net income would have increased by 19%
over 2003. We also moved into a new distribution center that provides us with
greater automation and a new warehouse management system, both of which are
designed to support the future growth of the Company and significantly improve
the productivity of our distribution process. All of these were accomplished
despite the roof collapse in our previous distribution center that could have
destroyed our business for a considerable period of time if not for the energy
of our entire organization. I am grateful for what they did. Now we are in a
great position to concentrate on growing our business for the future."
Based on current market conditions and expectations, A.C. Moore is presently
planning the following for 2005:
o 15 new store openings and relocation of one existing store. In the
first quarter, we relocated one existing store and we expect to open
two new stores in the second quarter. The remainder of the new stores
will open in the second half of the year.
o Comparable store sales growth in the range of 3% to 5%. In the first
quarter, weather conditions have not been favorable and, as a result,
we expect comp store sales to be slightly below 2004 levels.
o Year over year total sales growth in the range of 17% to 19%.
o Earnings per fully-diluted share are expected to be within the range of
$1.06 to $1.09 for the year. This would represent an increase in net
income of 27% to 32% over 2004. These projections include the impact of
our change in accounting for cooperative advertising. We estimate that
the change in the timing of income recognition for cooperative
advertising will reduce 2005 EPS by approximately $0.07 per share. In
2004 the impact was $0.17 per share. The projected earnings do not
include the potential effect of accounting for stock based
compensation, the impact of which is presently being reviewed.
A. C. Moore will host a conference call today, Wednesday, March 9, 2005 at 5
p.m. EST to discuss the results.
To participate, please call 719-955-1568 and give the operator pin number
8727416. If you are unable to access the live call, please dial 719-457-0820 and
enter pin number 8727416 to access the taped digital replay. The replay will be
available at approximately 7:00 p.m. on March 9th and will remain available
until Tuesday, March 15th at 11:59 p.m. A simultaneous webcast of the conference
call may be accessed at http://www.acmoore.com. Go to "Investor Relations" and
click on "Corporate Profile." To listen to the live call, please go to the web
site at least fifteen minutes early to register, download and install any
necessary audio software. An archive of the conference call will be available
approximately two hours after the conference call ends and will remain available
on the company's website until March 9, 2006.
The company plans to release its first quarter 2005 sales results on Thursday,
April 7, 2005. The company also plans to release its first quarter 2005 earnings
on Wednesday, April 20, 2005, and will host a conference call at 5:00 PM EDT on
that date to discuss the results.
A. C. Moore operates arts and crafts stores that offer a vast assortment of
traditional and contemporary arts and crafts merchandise for a wide range of
customers. The Company operates 96 stores on the eastern United States. For more
information about the Company, visit our website at www.acmoore.com.
# # #
This press release contains statements that are forward-looking within the
meaning of applicable federal securities laws and are based on A.C. Moore's
current expectations and assumptions as of this date. The Company undertakes no
obligation to update or revise any forward-looking statement whether the result
of new developments or otherwise. These statements are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those anticipated. Factors that could cause actual results to differ from
those anticipated include, but are not limited to, the impact of the adoption of
EITF Issue 02-16, the impact of the adoption of FAS 123R, customer demand and
trends in the arts and crafts industry, related inventory risks due to shifts in
customer demand, the effect of economic conditions, the impact of adverse
weather conditions, the impact of competitors' locations or pricing, the
availability of acceptable real estate locations for new stores, difficulties
with respect to new system technologies, supply constraints or difficulties, the
effectiveness of advertising strategies, the impact of the threat of terrorist
attacks and war, the uncertainty of the final resolution of the insurance claim
relating to the roof collapse, and other risks detailed in the Company's
Securities and Exchange Commission filings.
A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands, except per share data)
(unaudited)
Three months ended Year ended
December 31, December 31,
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2004 2003 2004 2003
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restated (a) restated (a)
Net sales $ 177,250 $ 149,690 $ 497,626 $ 433,928
Cost of sales 104,471 92,737 299,872 272,034
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Gross Margin 72,779 56,953 197,754 161,894
Selling, general and administrative expenses 47,686 32,788 166,485 131,890
Pre-opening expenses 1,579 900 4,036 2,842
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Income from operations 23,514 23,265 27,233 27,162
Net interest (income) 66 (85) (163) (404)
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Income before income taxes 23,448 23,350 27,396 27,566
Income tax expense 9,028 8,921 10,548 10,532
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Net income $ 14,420 $ 14,429 $ 16,848 $ 17,034
=============== ================ =============== ================
Basic net income per share $ 0.74 $ 0.75 $ 0.86 $ 0.89
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Diluted net income per share $ 0.72 $ 0.72 $ 0.84 $ 0.86
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Weighted average shares outstanding 19,604,070 19,340,167 19,481,623 19,112,816
=============== ================ =============== ================
Weighted average shares outstanding
plus impact of stock options 20,167,269 20,011,209 20,011,503 19,729,418
=============== ================ =============== ================
(a) The impact of the Company's correction of lease accounting from previously
reported amounts is as follows:
Decrease in selling, general and administrative expense $ 55 $ 218
Increase in pre-opening expense 296 666
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Reduction in income before taxes 241 448
Reduction in income tax expense 92 171
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Reduction in net income $ 149 $ 277
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Reduction in diluted EPS $ (0.01) $ (0.02)
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A.C. MOORE ARTS & CRAFTS, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
December 31,
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2004 2003
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restated (a)
ASSETS
Current assets:
Cash and cash equivalents $ 48,428 $ 43,700
Marketable securities 17,558 -
Inventories 142,832 121,493
Prepaid expenses and other current assets 10,328 2,962
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219,146 168,155
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Non-current assets:
Marketable securities - 14,132
Property and equipment, net 83,219 51,075
Other assets 1,747 1,801
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$ 304,112 $ 235,163
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,571 $ 504
Accounts payable to trade and others 50,256 33,558
Other current liabilities 15,905 21,342
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68,732 55,404
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Non-current liabilities:
Long-term debt 26,786 -
Deferred taxes 8,584 3,977
Accrued rent liability 13,795 10,523
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49,165 14,500
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117,897 69,904
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Shareholders' equity 186,215 165,259
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$ 304,112 $ 235,163
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(a) The impact of the Company's correction of lease accounting from previously
reported amounts is as follows:
Increase in property and equipment, net $ 3,369
Decrease in deferred taxes $ 973
Increase in accrued rent liability $ 5,794
Decrease in shareholders' equity $ 1,452