UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 000-23157
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
A. C. MOORE ARTS & CRAFTS, INC. 401(K) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
A. C. MOORE ARTS & CRAFTS, INC.
130 A. C. MOORE DRIVE
BERLIN, NJ 08009
A. C. MOORE ARTS & CRAFTS, INC. 401(K) PLAN
In 1999, A. C. Moore Arts & Crafts, Inc. (the "Employer" or the "Company")
established the A. C. Moore Arts & Crafts, Inc. 401(k) Plan (the "Plan"). The
name of the issuer of the securities held pursuant to the Plan and the address
of its principal executive office is A. C. Moore Arts & Craft, Inc., 130 A. C.
Moore Drive, Berlin, NJ 08009.
Contributions Under the Plan. Employees may elect to contribute up to 100
percent of their annual compensation, subject to IRS limitations. The Company
made a matching contribution of 25 percent of the first 6 percent of the
employee compensation contributed as an elective deferral subject to a maximum
of $1,500 for 2005.
Administration of the Plan. An officer of the Company at its principal executive
office administers the Plan. Certain administrative functions may be delegated
to employees of the Company. Officers and employees do not receive compensation
from the Plan.
Custodian of Investments. The assets of the Plan are held in trust and managed
by the Plan's trustee Frontier Trust Company. BISYS Plan Services provides
record keeping services for the Plan's trustee.
Reports to Participating Employees: Each participant in the Plan receives
quarterly statements of their accounts each plan year.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
administrator has duly caused this annual report to be signed on behalf of the
Plan by the undersigned hereunto duly authorized.
A. C. MOORE ARTS & CRAFTS, INC. 401(K) PLAN
Date: June 22, 2006 By: /s/ LORI LUCENTE-MCKEAGE
Lori Lucente-McKeage
Administrator
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) and related Prospectus pertaining to A. C. Moore Arts & Crafts, Inc. 401(k)
Plan of our report dated May 25, 2006, with respect to the financial statements
and supplementary schedules of the A. C. Moore Arts & Crafts, Inc. 401(k) Plan
included in this Annual Report (Form 11-K) for the year ended December 31, 2005.
/s/ STOCKTON BATES, LLP
Stockton Bates, LLP
Philadelphia, Pennsylvania
June 22, 2006
CERTIFICATION
The undersigned hereby certifies, for the purposes of Section 1350 of
Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, in her capacity as an administrator of
the A. C. Moore Arts & Crafts, Inc. 401(k) Plan (the "Plan"), that, to her
knowledge, the Annual Report for the Plan on Form 11-K for the period ended
December 31, 2005, fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that the information contained
in such report fairly presents, in all material respects the net assets
available for benefits and changes in net assets available for benefits of the
Plan. This written statement is being furnished to the Securities and Exchange
Commission as an exhibit to such form 11-K. A signed original of this statement
has been provided to the Plan and will be retained by the Plan and furnished to
the Securities and Exchange Commission or its staff upon request.
Date: June 22, 2006 By: /s/ Lori Lucente-McKeage
Lori Lucente-McKeage
VP and Treasurer
A.C. MOORE
ARTS & CRAFTS, INC.
401(k) PLAN
Financial Statements
December 31, 2005
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
DECEMBER 31, 2005
CONTENTS
PAGE
----
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statement of Net Assets Available for Benefits
as of December 31, 2005 and 2004 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2005 3
Notes to Financial Statements 4 - 7
SUPPLEMENTARY INFORMATION:
Schedule of Assets Held for Investment Purposes
as of December 31, 2005 8
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
BERLIN, NEW JERSEY
We have audited the accompanying statements of net assets available for
benefits of the A.C. Moore Arts & Crafts, Inc. 401(k) Plan (the "Plan") as of
December 31, 2005 and 2004, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2005. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the A.C. Moore
Arts & Crafts, Inc. 401(k) Plan as of December 31, 2005 and 2004, and the
changes in net assets available for benefits for the year ended December 31,
2005, in conformity with accounting principles generally accepted in the
United States of America.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of assets held for
investment purposes at end of year included on page 8 is presented for the
purpose of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental
information is the responsibility of the Plan's management. The supplemental
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
CERTIFIED PUBLIC ACCOUNTANTS
PHILADELPHIA, PENNSYLVANIA
MAY 25, 2006
PAGE 2
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31: 2005 2004
----------------- -----------------
ASSETS:
Cash $ 728 $ 8,704
----------------- -----------------
Investments, at fair value:
Corporate stocks - common 2,434,905 4,952,922
Common/collective trusts 1,433,588 1,223,807
Registered investment companies 7,944,100 5,932,478
Participant loans 594,566 467,726
----------------- -----------------
TOTAL INVESTMENTS 12,407,159 12,576,933
Receivables:
Employer contributions 5,433 10,044
Participants' contributions 36,152 67,080
----------------- -----------------
41,585 77,124
----------------- -----------------
TOTAL ASSETS 12,449,472 12,662,761
LIABILITIES - -
----------------- -----------------
NET ASSETS AVAILABLE FOR BENEFITS $ 12,449,472 $ 12,662,761
================= =================
See Accompanying Notes
PAGE 3
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2005:
ADDITIONS:
Additions to net assets attributed to:
Investment income:
Net decrease in fair value of investments (See Note 4) $(2,025,419)
Interest and dividends 182,087
----------------
(1,843,332)
Contributions:
Employer 338,496
Participants 2,161,193
----------------
2,499,689
----------------
TOTAL ADDITIONS 656,357
DEDUCTIONS:
Deductions from net assets attributed to:
Benefits paid to participants 869,646
----------------
TOTAL DEDUCTIONS 869,646
----------------
NET DECREASE (213,289)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 12,662,761
----------------
End of year $ 12,449,472
================
See Accompanying Notes
PAGE 4
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
1. DESCRIPTION OF PLAN:
The following description of the A.C. Moore Arts &
Crafts, Inc. 401(k) Plan provides only general information. Participants
should refer to the Plan agreement for a more complete description of
the Plan's provisions.
The A.C. Moore Arts & Crafts, Inc. 401(k) Plan (the
Plan) was established in 1999 by A.C. Moore Arts & Crafts, Inc. (the
Company) to provide for retirement income and financial protection in
the event of death or retirement of covered employees and to provide for
the financial protection and compensation of employees in the event of
permanent disability. The Plan is subject to the Employee Retirement
Income Security Act of 1974 (ERISA). All administrative expenses are
paid directly by the Company.
All employees of the employer and participating
affiliates who are at least 21 years of age and have completed 1/4 year
of service are eligible to participate in this Plan, except non-resident
aliens, and employees who are members of a union who bargained
separately for retirement benefits during negotiations. Employees will
become participants in the Plan on the entry date coincident with or
next following the date they meet the participation requirements. The
entry dates for the Plan are the first day of each month.
Participants may elect to contribute up to 100 percent
of their annual compensation, subject to IRS limitations. The Company
made a matching contribution of 25 percent of the first 6 percent of the
employee compensation contributed as an elective deferral subject to a
maximum of $1,500 for 2005.
Each participant's account is credited with the
participant's and employer's contribution and related plan earnings,
transfer contributions and rollovers. Allocations are based on
participant earnings or account balances. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
The Company generally remits employee deferral and
Company matching contributions to the plan on a weekly basis.
BISYS Plan Services provides record keeping services for
the Plan's Trustee, Frontier Trust Company, FSB. The employees' and
employer's contributions were deposited in a fund held by the Trustee
during the year.
Participants may direct the investment of their account
balances among alternative investment funds provided under the Plan.
Participants are immediately vested in their voluntary
contributions and any transfers or rollovers plus actual earnings
thereon. Vesting in the remainder of their accounts is based on years of
continuous service. A participant is 100 percent vested after 3 years of
credited service.
On termination of service, the normal form of payment to
a participant is a lump sum. An optional form of payment is installments
payable in cash or in kind, or part cash and part in kind over a period
not to exceed the participant's expected lifetime, or the joint future
lifetime of the participant and spouse.
Plan assets allocated to the accounts of persons who
have terminated with the Company but have not withdrawn from the Plan
approximate $1,600,000 at December 31, 2005.
PAGE 5
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING:
The accompanying financial statements have been prepared
on the accrual basis of accounting.
VALUATION OF INVESTMENTS:
The Plan's investments are stated at fair value and
consist of shares in mutual funds and common stock of A.C. Moore Arts &
Crafts, Inc. (plan sponsor). The investments are held and managed by
Frontier Trust Company, FSB. Security transactions in these funds and
common stock are recorded on a trade date basis. The value of the mutual
funds fluctuates to reflect the fair market values of the securities
held in these funds.
USE OF ESTIMATES:
Management uses estimates and assumptions in preparing
financial statements. Those estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities and the reported revenues and expenses. Actual
results could differ from those estimates.
FORFEITURES:
Employer contributions for the years ended December 31,
2005 and 2004 were reduced by $6,696 and $14,044, respectively, from
forfeited non-vested accounts. At December 31, 2005 forfeited non-vested
accounts totaled $16,179.
LOANS:
Loans are available to all participants in the Plan on a
uniform and nondiscriminatory basis. Loans must bear a reasonable rate
of interest and be adequately secured. A participant may borrow any
amount up to 50% of their vested account balance, subject to a maximum
of $50,000 minus their highest outstanding loan amount during the prior
twelve months. Repayment of a loan must be made at least quarterly, on
an after-tax basis, in level payments of principal and interest, and
repaid within five years, except for the purchase of a primary
residence.
3. TAX STATUS:
The Internal Revenue Service has determined and informed
the Company by a letter dated June 14, 2005, that the Plan and related
trust are designed in accordance with applicable sections of the
Internal Revenue Code.
PAGE 6
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
4. INVESTMENTS:
Investments that represents 5% or more of fair value of
the Plan's net assets are as follows:
December 31: 2005 2004
------------ ------------
A.C. Moore Arts & Crafts, Inc. $2,434,905 $4,952,922
ML Retirement Preservation Trust 1,433,588 1,223,807
ML Bond Fund Intermediate Term Class A 929,290
Massachusetts Investors Growth Stock Fund 1,119,930
ML Basic Value Fund Class A 1,141,638 1,068,010
Black Rock Aurora Portfolio A 1,525,224
DWS Core Fixed Income Fund Class A 1,160,872
Growth Fund of America 1,572,279
Munder Small Cap Value Fund 1,915,731
ML S&P 500 Index Fund Class I 626,570
During 2005, the Plan's investments (including gains and
losses on investments bought and sold, as well as held during the year)
decreased in value by $2,025,419 as follows:
Common stock ($2,459,522)
Registered investment companies (mutual funds) 434,103
----------------
($2,025,419)
=================
5. RISKS AND UNCERTAINTIES:
The Plan provides for investment options in any
combination of stocks and mutual funds. Investment securities are
exposed to various risks, such as interest rate, market and credit. Due
to the level of risk associated with certain investment securities and
the level of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in risks in
the near term would materially affect participant's account balances and
the amounts reported in the statement of net assets available for
benefits and the statement of changes in net assets available for
benefits.
6. PLAN TERMINATION:
Although it has not expressed any intent to do so, the
Company has the right under the Plan to terminate the Plan subject to
the provisions of ERISA. In the event the Plan is terminated,
participants will become 100 percent vested in their accounts.
PAGE 7
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
A reconciliation of net assets available for benefits as
reported on the financial statements to that reported on the Form 5500
follows:
December 31: 2005 2004
---------------- ----------------
Net assets available for benefits
per the financial statements $12,449,472 $12,662,761
Receivable employer contributions (5,433) (10,044)
Receivable participants' contributions (36,152) (67,080)
----------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS,
PER FORM 5500 $12,407,887 $12,585,637
================ =============
A reconciliation of net decrease in net assets available
for benefits as reported on the financial statements to that reported on
Form 5500 follows:
Year Ended December 31, 2005:
Net decrease in net assets available for
benefits per the financial statements ($213,289)
Difference in employer contributions 4,611
Difference in participants' contributions 30,928
----------------
NET DECREASE IN NET ASSETS
AVAILABLE FOR BENEFITS,
PER FORM 5500 ($177,750)
=================
The above differences are attributable to the financial
statements being reported on the accrual basis of accounting, while
certain items on Form 5500 are being reported on the cash basis, namely
contributions. In addition, unrealized appreciation (depreciation) and
dividend income are combined for Form 5500 reporting purposes.
8. COMMITMENTS AND CONTINGENCIES
The Plan is currently undergoing an audit examination by
the Internal Revenue Service. The Plan Administrators do not expect the results
of the examination will have a material effect on the financial statements of
the Plan.
SUPPLEMENTARY INFORMATION
PAGE 8
A.C. MOORE ARTS & CRAFTS, INC.
401(k) PLAN
PLAN 001 EI# 22-3527763
ATTACHMENT TO FORM 5500, SCHEDULE H, PART IV, (i)
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 31, 2005:
(a) (b) (e)
PAR VALUE/ MARKET
IDENTITY OF ISSUE UNITS VALUE
----------- ----------
(C) DESCRIPTION OF INVESTMENT
COMMON STOCK:
* A.C. Moore Arts & Crafts, Inc. 167,347.5 $ 2,434,905
------------
2,434,905
------------
COMMON/COLLECTIVE TRUSTS:
ML Retirement Preservation Trust 1,433,587.8 1,433,588
REGISTERED INVESTMENT COMPANIES:
ALLIANZ Innovation Fund Class A 7,054.4 274,910
DWS Core Fixed Income Fund Class A 107,887.7 1,160,872
Eaton Vance Utilities Fund Class A 24,842.3 285,190
Evergreen Health Care Fund Class A 19,460.2 374,805
Growth Fund of America 51,550.2 1,572,279
ML Basic Value Fund Class A 36,922.3 1,141,638
ML S&P 500 Index Fund Class I 40,979.0 626,570
Munder Small Cap Value Fund 70,070.7 1,915,731
The Oakmark Equity and Income Fund 5,009.4 124,785
Thornburg International Value Class A 19,919.6 467,317
Stock Pending Settlement Fund N/A 3
------------
7,944,100
------------
PARTICIPANT LOANS (225 LOANS AT INTEREST RANGING FROM 4.0% TO 10.5%,
MATURING THROUGH 2010):
Loan Fund N/A 594,566
------------
TOTAL $ 12,407,159
============
* Represents a party-in-interest to the Plan.