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) January 24, 2008
A.C. Moore Arts & Crafts, Inc.
(Exact name of registrant as specified in its charter)
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| Pennsylvania
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000-23157
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22-3527763 |
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| (State or other jurisdiction
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(Commission File Number)
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(IRS Employer Identification No.) |
| of incorporation) |
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| 130 A.C. Moore Drive, Berlin, NJ
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08009 |
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| (Address of principal executive offices)
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(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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
This Current Report on Form 8-K (the “Report”) of A.C. Moore Arts & Crafts, Inc. (the “Company”)
contains statements that are forward-looking within the meaning of applicable federal securities
laws and are based on 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 (“SEC”) filings.
Item 1.01 Entry into a Material Definitive Agreement.
On January 24, 2008, the Company entered into a promissory note and loan modification agreement
(the “loan modification”) with Wachovia Bank, National Association (the “Bank”), the lender on the
Company’s two mortgages relating to the Company’s corporate offices and distribution center and
$35.0 million line of credit, dated October 28, 2003, as amended (together, the “loan documents”).
Due to the Company’s continuing review of its inventory accounting methods as previously disclosed
in its Current Report on Form 8-K and press release dated October 24, 2007, the Company was unable
to file its Form 10-Q for the quarter ended September 30, 2007 (the “Form 10-Q”) by the due date of
November 9, 2007. In addition, as reported, the Company will be required to restate financial
statements for certain prior periods. The inventory accounting review and restatement process has
delayed the delivery to the Bank of the Company’s financial statements for the quarter ended
September 30, 2007. Pursuant to the loan modification, the Bank has agreed to waive non-compliance
with certain provisions of the loan documents as a result of the matters described above, including
without limitation, the Company’s failure to deliver the financial statements for the quarter ended
September 30, 2007. This waiver does not include potential defaults that may exist in the future
relating to the restatements; provided, however, that the Bank agreed to not recalculate interest
for any prior periods.
The loan modification also amended the loan documents to (i) increase the interest rate for the two
mortgages and borrowing under the line of credit from a LIBOR-based rate plus 65 basis points to a
LIBOR-based rate plus 90 basis points, and (ii) require the Company to maintain a deposit account
with the Bank with a minimum balance of $500,000. These two provisions terminate when the Company
files the Form 10-Q and the required restatements.
The two mortgages, which are secured by land, buildings and equipment, originally totaled an
aggregate of $30.0 million, $22.5 million payable over 15 years (“Mortgage No. 1”) and $7.5 million
(“Mortgage No. 2”) payable over seven years. As of December 31, 2007, $17.6 million was
outstanding on Mortgage No. 1 and $4.0 million was outstanding on Mortgage No. 2. As of the date
of this Report, the Company has no outstanding principal balance under the line of credit; however,
a $6.45 million letter of credit has been issued under the line. The letter of credit replaced a
workers compensation insurance cash escrow account that has been redeployed in other investments of
the Company.