A.C. Moore Reports Fourth Quarter and 2007 Financial Results

A.C. Moore Arts & Crafts, Inc. (Nasdaq:ACMR) (the "Company” or "A.C. Moore”) today announced results for the fourth quarter and year ended December 31, 2007. Results for 2006 set forth below are on a restated basis. Net income in the fourth quarter was $4.7 million, or $0.23 per share, compared with net income of $4.9 million, or $0.24 per share, in the fourth quarter of 2006. Fourth quarter 2007 results include costs of $0.02 per share related to the inventory restatement, costs of $0.02 per share related to the closing of two store locations and $0.01 per share related to interest accrued on a tax settlement. Fourth quarter 2006 results included costs of $0.04 per share related to a store closure and lease termination and $0.01 per share related to management change costs. The net income for the year ended December 31, 2007 was $3.8 million, or $0.19 per share, versus a net loss of $0.4 million, or $0.02 per share, in the same period in 2006. Results for the year ended December 31, 2007 include the costs mentioned in the fourth quarter as well as $0.03 per share related to a one-time legal settlement and $0.01 per share for management change costs. Results for 2006 included expenses of $0.10 per share for management change costs and $0.04 per share related to a store closure and lease termination. Rick A. Lepley, Chief Executive Officer, stated, "We are relieved to have identified the inventory valuation error and culminate six months of hard work with the filing of our third quarter 2007 Form 10-Q and our restated financials next week.” Mr. Lepley continued, "We are also pleased to have maintained a respectable cash position throughout the year. While we have posted increases in gross margin rate and EPS, we must continue to focus on execution at the corporate and store level to improve profitability. This is especially important in light of the macroeconomic headwinds we may be facing in this second year of our three year turnaround plan.” The Company will host a conference call beginning at 8:00 a.m., Eastern Time, on Monday, March 24, 2008 to discuss fourth quarter and fiscal 2007 results. To participate in the conference call, please call 800-559-6679 and provide the operator with passcode #39971119. If you are unable to access the live call, please dial 800-642-1687 and enter pin #39971119 to access the taped digital replay. The replay will be available at approximately 10:00 a.m. ET on March 24, 2008 and will remain available until April 7, 2008 at 11:59 p.m. A simultaneous webcast of the conference call may be accessed at www.acmoore.com. Go to "Investor Relations” and click on "Corporate Profile.” To listen to the live call via webcast, please go to the Company’s website at least 15 minutes early to register, download and install any necessary audio software. An archive of the conference call will be available on the Company’s website approximately two hours after the conference call ends. About A.C. Moore: A.C. Moore provides a vast assortment of traditional and contemporary arts and crafts merchandise for a wide range of customers. The Company serves customers through its 136 stores located in the Eastern United States from Maine to Florida and nationally via its ecommerce site, www.acmoore.com. For more information about A.C. Moore, 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 as 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 Company’s ability to implement its business and operating initiatives to improve profitability, customer demand and trends in the arts and crafts industry, inventory risks, the effect of economic conditions and gasoline prices, the impact of unfavorable 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, difficulties in implementing measures to reduce costs and expenses and improve margins, supply constraints or difficulties, the effectiveness of and changes to advertising strategies, difficulties in determining the outcome and impact of litigation, the impact of the threat of terrorist attacks and war, the Company’s ability to maintain an effective system of internal control over financial reporting, the results of the Company’s review of its inventory accounting practices, the Company’s ability to regain compliance with Nasdaq listing standards, the Company’s ability to meet its expected filing date for the Form 10-Q for the third quarter of 2007 and any prior financial statements requiring restatement and other risks detailed in the Company’s Securities and Exchange Commission filings. [Tables to Follow]           A.C. MOORE ARTS & CRAFTS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (dollars in thousands, except per share data)         Three months ended Twelve months ended December 31, December 31, 2007 2006 2007 2006   (as restated)   (as restated)   Net sales $ 177,266 $ 197,837 $ 559,693 $ 589,506 Cost of sales   108,604   127,915     330,962     362,678   Gross Margin 68,662 69,922 228,731 226,828 Selling, general and administrative expenses 60,133 58,913 220,218 219,298 Costs related to change in management - 458 435 3,376 Store pre-opening expenses   1,155   1,016     2,608     3,241   Income (Loss) from operations 7,374 9,535 5,470 913 Net interest expense (income)   323   (18 )   (206 )   323   Income before income taxes 7,051 9,553 5,676 590 Provisions (Benefit) for income taxes   2,400   4,626     1,893     996   Net income (loss) $ 4,651 $ 4,927   $ 3,783   $ (406 )   Basic net income (loss) per share $ 0.23 $ 0.25   $ 0.19   $ (0.02 )   Diluted net income (loss) per share $ 0.23 $ 0.24   $ 0.19   $ (0.02 )   Weighted average shares outstanding   20,298,601   20,086,330     20,245,964     19,929,185     Weighted average shares outstanding plus impact of stock options   20,345,510   20,191,580     20,349,023     19,929,185   A.C. MOORE ARTS & CRAFTS, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands)       December 31, 2007 2006   (as restated)   ASSETS   Current assets: Cash and cash equivalents $ 65,195 $ 76,120 Inventories 128,391 122,450 Prepaid expenses and other current assets   26,884   19,017 220,470 217,587 Property and equipment, net 99,328 95,268 Other assets   2,092   1,409 $ 321,890 $ 314,264 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 2,571 $ 2,571 Trade accounts payable 48,780 48,703 Other current liabilities   24,082   23,107   75,433   74,381 Non-current liabilities: Long-term debt 19,071 21,643 Deferred tax and other liabilities 8,719 6,605 Accrued lease liability   19,067   19,430   46,857   47,678   122,290   122,059   Shareholders' Equity   199,600   192,205 $ 321,890 $ 314,264