A.C. Moore Reports Full Year Earnings of $0.84 Per Share Adjusted
for Lease Accounting
BERLIN, N.J., March 9 /PRNewswire-FirstCall/ -- 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: -- 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. -- 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. -- Year over year total sales growth in the range of 17% to 19%. -- 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
http://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,
2004 2003 2004 2003
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
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
Income from operations 23,514 23,265 27,233 27,162
Net interest (income) 66 (85) (163) (404)
Income before
income taxes 23,448 23,350 27,396 27,566
Income tax expense 9,028 8,921 10,548 10,532
Net income $14,420 $14,429 $16,848 $17,034 Basic net income
per share $0.74 $0.75 $0.86 $0.89 Diluted net income
per share $0.72 $0.72 $0.84 $0.86 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
Reduction in
income before taxes 241 448
Reduction in
income tax expense 92 171
Reduction in net income $149 $277 Reduction in
diluted EPS $(0.01) $(0.02)
A.C. MOORE ARTS & CRAFTS, INC. CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited) December 31,
2004 2003
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
219,146 168,155
Non-current assets:
Marketable securities - 14,132
Property and equipment, net 83,219 51,075
Other assets 1,747 1,801
$304,112 $235,163 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
68,732 55,404
Non-current liabilities:
Long-term debt 26,786 -
Deferred taxes 8,584 3,977
Accrued rent liability 13,795 10,523
49,165 14,500
117,897 69,904 Shareholders' equity 186,215 165,259
$304,112 $235,163 (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
DATASOURCE: A.C. Moore Arts & Crafts, Inc.
CONTACT: Leslie Gordon, Chief Financial Officer of A.C. Moore Arts & Crafts, +1-856-768-4930 or Joe Crivelli of Gregory FCA Communications, +1-610-642-8253, for A.C. Moore Arts & Crafts Web site: http://www.acmoore.com/
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