8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) October 20, 2006

A.C. Moore Arts & Crafts, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction
of incorporation)
000-23157
(Commission File Number)

22-3527763
(IRS Employer Identification No.)

130 A.C. Moore Drive, Berlin, NJ
(Address of principal executive offices)
08009
(Zip Code)

Registrant’s telephone number, including area code (856) 768-4930

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On October 20, 2006, A.C. Moore Arts & Crafts, Inc. issued a press release. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release dated October 20, 2006.

SIGNATURE

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 hereunto duly authorized.

	A.C. MOORE ARTS & CRAFTS, INC.
Date: October 20, 2006	By:	/s/ Amy Rhoades
		Name:	Amy Rhoades
		Title:	Vice President and General Counsel

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated October 20, 2006.

EX-99.1

For:	From:
A.C. Moore Arts & Crafts, Inc.	Gregory FCA Communications, Inc.
For More Information Contact: Marc Katz, Chief Financial Officer (856) 768-4957	For More Information Contact: Joe Crivelli (610) 642-8253

A.C. Moore Reports Third Quarter Results

• Total Sales of $128.9 million, a 12% Increase

• Comparable Store Sales Increase of 2%

Berlin, New Jersey, October 20, 2006 – A.C. Moore Arts & Crafts, Inc. (Nasdaq: ACMR) today announced results for the third quarter ended September 30, 2006.

Sales for the third quarter of 2006 grew to $128.9 million, an increase of 12% over sales of $115.1 million during the third quarter of 2005. Same store sales increased by 2% versus 2005. Net loss in the third quarter was $2.6 million, or $0.13 per share, compared with a net loss of $1.9 million, or $0.10 per share, in the third quarter of 2005. Third quarter 2006 results include costs of $888,000 related to the changes in management. These costs include severance costs relating to departing executives and other employees, as well as recruiting costs. The impact of these costs was $0.03 per share. The third quarter results also include $643,000 in expense for stock-based compensation, or $0.02 per share. The Company started expensing stock-based compensation in January 2006.

Sales for the nine months ended September 30, 2006 were $391.7 million, an increase of 11% over sales of $351.5 million in the same period in 2005. Same store sales increased by 1% for the nine month period. The net loss for the nine months ended September 30, 2006 was $4.2 million, or $0.21 per share, versus a net loss of $0.7 million, or $0.04 per share, in the same period in 2005. Results for the nine months ended September 30, 2006 include costs of $2.9 million related to the changes in management and $2.2 million for stock-based compensation expense, or $0.09 per share and $0.07 per share, respectively.

Rick A. Lepley, Chief Executive Officer, stated, “We are happy about growing sales 12% during the quarter and the 2% same store sales increase we achieved. Each month during the third quarter showed progressive improvement in operating margins. We are continuing to work on reducing expenses and improving merchandising margins in an effort to move the Company back to an acceptable level of profitability as quickly as possible.”

The Company will host a conference call today, Friday, October 20, 2006 at 11:00 a.m., Eastern Time, to discuss third quarter 2006 results. To participate in the conference call, please call 973-935-2987, and provide the operator with PIN # 7871038. If you are unable to access the live call, please dial 973-341-3080 and enter PIN # 7871038 to access the taped digital replay. The replay will be available at approximately 1:00 p.m. on October 20, 2006 and will remain available until November 3, 2006 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 approximately two hours after the conference call ends and will remain available on the company’s website until October 20, 2007.

About A.C. Moore:

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 119 stores in 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 costs associated with a change in management, 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, difficulties in implementing measures to reduce costs and expenses and improve margins, supply constraints or difficulties, the effectiveness of advertising strategies, the impact of the threat of terrorist attacks and war, 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)

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2006			2005			2006			2005
Net sales	$	128,936		$	115,094		$	391,667		$	351,462
Cost of sales		75,955			68,402			232,739			210,953
Gross Margin		52,981			46,692			158,928			140,509
Selling, general and administrative expenses		55,356			48,426			160,387			139,036
Costs related to change in management		888			—			2,915			—
Store pre-opening expenses		930			1,194			2,225			2,300
Income (loss) from operations		(4,193	)		(2,928	)		(6,599	)		(827	)
Net interest expense (income)		216			202			342			324
Income (loss) before income taxes		(4,409	)		(3,130	)		(6,941	)		(1,151	)
Provisions for income taxes		(1,764	)		(1,230	)		(2,776	)		(453	)
Net income (loss)	$	(2,646	)	$	(1,900	)	$	(4,165	)	$	(698	)
Basic net income (loss) per share	$	(0.13	)	$	(0.10	)	$	(0.21	)	$	(0.04	)
Diluted net income (loss) per share	$	(0.13	)	$	(0.10	)	$	(0.21	)	$	(0.04	)
Weighted average shares outstanding		19,916,159			19,807,508			19,873,304			19,740,392
Weighted average shares outstanding plus impact of stock options		19,916,159			19,807,508			19,873,304			19,740,392

A.C. MOORE ARTS & CRAFTS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

(unaudited)

	September30,
		2006		2005
ASSETS
Current assets:
Cash and cash equivalents	$	22,224	$	15,701
Marketable securities		—		12,554
Inventories		173,754		166,997
Prepaid expenses and other current assets		10,369		11,935
		206,347		207,187
Non-current assets:
Property and equipment, net		93,759		87,089
Other assets		1,471		1,432
	$	301,577	$	295,708
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	2,571	$	2,571
Trade accounts payable		37,973		45,225
Other current liabilities		15,912		10,374
		56,456		58,170
Non-current liabilities:
Long-term debt		22,286		24,857
Deferred tax liability		7,460		7,841
Accrued lease liability		17,025		16,939
		46,771		49,637
		103,227		107,807
Shareholders’ Equity		198,350		187,901
	$	301,577	$	295,708