SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12
A.C. MOORE ARTS & CRAFTS, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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|X| No fee required.
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(4) Date Filed:
A.C. MOORE ARTS & CRAFTS, INC.
500 University Court
Blackwood, NJ 08012
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held June 18, 2004
To the Shareholders of A.C. Moore Arts & Crafts, Inc.:
The 2004 Annual Meeting of Shareholders (the "Meeting") of A.C. Moore
Arts & Crafts, Inc. (the "Company" or "A.C. Moore") will be held on Friday, June
18, 2004 at 10:00 a.m., prevailing time, at the Company's headquarters, located
at 500 University Court, Blackwood, New Jersey, 08012 for the purpose of
considering and acting upon the following:
1. To elect two Class B directors to hold office for a term of three
years and until each of their respective successors is duly elected and
qualified, as described in the accompanying proxy statement;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31,
2004; and
3. To transact such other business as may properly come before the
Meeting.
Only shareholders of record at the close of business on April 20, 2004,
are entitled to notice of, and to vote at, the Meeting or any adjournment or
postponement thereof.
If the Meeting is adjourned for one or more periods aggregating at least
15 days because of the absence of a quorum, those shareholders entitled to vote
who attend the reconvened Meeting, if less than a quorum as determined under
applicable law, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in this Notice of Meeting.
If you are a registered shareholder (that is, if your stock is registered
in your name), you may vote by telephone or electronically through the Internet,
by following the instructions included with your proxy card. The deadline for
voting by telephone or electronically through the Internet is 11:59 p.m.,
Eastern Standard Time, on June 17, 2004. If you vote by telephone or
electronically through the Internet, you do not need to return your proxy card.
If your shares are held in "street name," (that is, if your stock is registered
in the name of your broker or bank) please check your proxy card or contact your
broker or nominee to determine whether you will be able to vote by telephone or
electronically through the Internet.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO VOTE YOUR SHARES
PROMPTLY TO ENSURE THEY ARE REPRESENTED AT THE MEETING. YOU MAY SUBMIT YOUR
PROXY VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH THE INTERNET AS DESCRIBED IN
THE FOLLOWING MATERIALS OR BY COMPLETING AND SIGNING THE ENCLOSED PROXY CARD AND
RETURNING IT IN THE SELF-ADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Janet Parker
Secretary
Blackwood, New Jersey
April 23, 2004
A.C. MOORE ARTS & CRAFTS, INC.
500 University Court
Blackwood, NJ 08012
(856) 228-6700
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
-----------------------------
The Board of Directors of A.C. Moore Arts & Crafts, Inc. (the "Company"
or "A.C. Moore") is soliciting proxies for use at the 2004 Annual Meeting of
Shareholders (the "Meeting") and any adjournments or postponements thereof. This
proxy statement and accompanying proxy card are first being mailed or given to
shareholders on or about April 23, 2004.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
When is the Meeting and where will it be held?
The meeting will be held on Friday, June 18, 2004 at 10:00 a.m.,
prevailing time, at the Company's new headquarters, located at 500 University
Court, Blackwood, New Jersey, 08012.
What is the purpose of the Meeting?
At the Meeting, shareholders will consider and act upon the matters
outlined in the Notice of Annual Meeting of Shareholders, including:
o the election of two Class B directors;
o ratification of the appointment of the Company's independent
auditors; and
o such other business as may properly come before the Meeting.
Who is entitled to vote at the Meeting?
The Board has set April 20, 2004 as the record date for the Meeting
(the "Record Date"). If you were a shareholder of record, as shown on the stock
transfer books of the Company, at the close of business on the Record Date, you
are entitled to notice of and to vote at the Meeting or any adjournment or
postponement thereof. Each share of Common Stock is entitled to one vote on each
matter which may be brought before the meeting.
On the Record Date, there were 19,413,076 shares of common stock, no
par value per share (the "Common Stock") issued and outstanding and, therefore,
eligible to vote at the meeting.
How many shares must be present to hold the Meeting?
The holders of a majority of the outstanding shares of Common Stock as
of the Record Date must be present, in person or represented by proxy, at the
Meeting in order to hold the Meeting and conduct business. This is called a
quorum. If you submit a properly executed proxy card, vote by telephone or
electronically through the Internet, then your shares will be counted as part of
the quorum. All shares of the Company's Common Stock present in person or
represented by proxy (including broker non-votes) and entitled to vote at the
Meeting, no matter how they are voted or whether they abstain from voting, will
be counted in determining the presence of a quorum.
If the Meeting is adjourned because of the absence of a quorum, those
shareholders entitled to vote who attend the adjourned meeting, although
constituting less than a quorum as provided herein, shall nevertheless
constitute a quorum for the purpose of electing directors. If the Meeting is
adjourned for one or more periods aggregating at least 15 days because of the
absence of a quorum, those shareholders entitled to vote who attend the
reconvened Meeting, if less than a quorum as determined under applicable law,
shall nevertheless constitute a quorum for the purpose of acting upon any matter
set forth in the Notice of Annual Meeting.
What vote is required for the election of directors or for a proposal to be
approved?
The election of directors will be determined by a plurality vote and
the two nominees receiving the most "for" votes will be elected. Approval of any
other proposal will require the affirmative vote of a majority of the votes cast
on the proposal.
How do I vote my shares?
If you are a registered shareholder (that is, if your stock is
registered in your name) you may vote or provide voting instructions by
telephone or electronically through the Internet, by following the instructions
included with your proxy card. The deadline for registered shareholders to vote
telephonically or electronically through the Internet is 11:59 p.m., Eastern
Standard Time, on June 17, 2004.
The Company encourages you to take advantage of these ways to vote your
shares for matters to be covered at the Meeting. Set forth below is a summary of
the three voting methods which registered shareholders may utilize to submit
their votes.
Vote by Telephone - 1-866-626-4508. Use any touch-tone telephone to
vote your proxy 24 hours a day, 7 days a week. Have your proxy card in hand when
you call. You will be prompted to enter your Control Number(s) which are located
on your proxy Card and then follow the directions given.
Vote Electronically through the Internet - http://www.votestock.com.
Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have your
proxy card in hand when you access the web site. You will be prompted to enter
your Control Number(s) which are located on your proxy card to create and submit
an electronic ballot.
Vote by Mail. Mark, sign and date your proxy card and return such card
in the postage-paid envelope we have provided you.
If you vote by telephone or electronically through the Internet, you do
not need to return your proxy card. Please note that although there is no charge
to you for voting by telephone or electronically through the Internet, there may
be costs associated with electronic access such as usage charges for Internet
service providers and telephone companies. The Company does not cover these
costs; they are solely your responsibility. The telephone and Internet voting
procedures being made available to you are valid forms of granting proxies under
Pennsylvania Business Corporation Law.
If your shares are held in "street name," (that is, if your stock is
registered in the name of your broker or bank) please check your proxy card or
contact your broker or nominee to determine whether you will be able to vote by
telephone or electronically.
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If my shares are held by my broker or other nominee, how do I vote my shares?
If your shares are held in a stock brokerage account or by another
nominee, such as a bank or trust, then the broker or other nominee is considered
to be the shareholder of record with respect to those shares. However, you still
are considered to be the beneficial owner of those shares, with your shares
being held in "street name." Street name holders generally cannot vote their
shares directly and must instead instruct the broker, bank, trust or other
nominee how to vote their shares. Your broker or other nominee could vote your
shares without your instructions on the proposal for election of directors, but
are not required to do so. To be sure your shares are voted, you should instruct
your broker or other nominee to vote your shares.
What if I do not specify how I want my shares voted?
If you submit a signed proxy card or submit your proxy by telephone or
electronically through the Internet but do not indicate how you want your shares
voted, the persons named in the enclosed proxy will vote your shares of Common
Stock:
o "for" the election of each of the persons identified below in
"Proposal 1: Election of Directors" as nominees for election as
directors;
o "for" ratification of the appointment of PricewaterhouseCoopers
LLP ("PricewaterhouseCoopers") as the independent auditors of the
Company for the year ending December 31, 2004; and
o with respect to any other matter that properly comes before the
Meeting, the proxy holders will vote the proxies in their
discretion in accordance with their best judgment and in the
manner they believe to be in the best interest of A.C. Moore.
If I abstain from voting or withhold authority to vote for any proposal, will
my shares be counted in the vote?
Under the Pennsylvania Business Corporation Law, an abstention,
withholding of authority to vote or broker non-vote will have no effect on the
vote and will not be counted in determining whether either proposal has received
the required shareholder vote.
Can I change my vote after submitting my proxy?
Yes. You can change your vote at any time before your proxy is voted at
the Meeting. If you are a shareholder of record, you may revoke your proxy by:
o submitting a later-dated proxy by telephone, Internet or mail.
o attending the Meeting and voting in person. Your attendance alone
will not revoke your proxy. You must also vote in person at the
Meeting.
If you hold your shares in street name, you must contact your broker or
other nominee regarding how to revoke your proxy and change your vote.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, it means that you hold shares
that are registered in more than one account. To ensure that all of your shares
are voted, you will need to sign and return each proxy card you receive.
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Who pays for the cost of the solicitation of proxies?
The Company will bear the cost of this solicitation. In addition to
solicitation by mail, officers, directors or employees of the Company may also
solicit proxies in person or by telephone, facsimile, telegraph or teletype,
without additional compensation. Upon request, the Company will pay the
reasonable expenses incurred by record holders of the Company's Common Stock who
are brokers, dealers, banks or voting trustees, or their nominees, for mailing
proxy material and annual shareholder reports to the beneficial owners of the
shares they hold of record.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board of
Directors shall consist of not fewer than one nor more than 15 directors, with
the exact number to be fixed by the Board of Directors. The Board of Directors
has fixed the number of directors at seven. Pursuant to the Articles of
Incorporation of the Company, the directors are divided into three classes,
which are required to be as nearly equal in number as possible. One class of
directors is to be elected annually for a term of three years. The Board of
Directors is currently comprised of two classes of two directors each, and one
class of three directors.
At the Meeting shareholders will elect two Class B directors to serve
for a term of three years and until each of their respective successors is
elected and qualified. Unless directed otherwise, the persons named in the
enclosed proxy intend to vote such proxy "for" the election of the listed
nominees or, in the event of inability of a nominee to serve for any reason, for
the election of such other person as the Board of Directors may designate to
fill the vacancy. The Board of Directors has no reason to believe that any
nominee will not be a candidate or will be unable to serve.
The Board of Directors has nominated Richard J. Bauer and Richard J.
Drake to serve as the Class B directors. Mr. Bauer and Mr. Drake currently serve
as directors. The nominees have consented to being named in the Proxy Statement
and to serve if elected. The following table sets forth information, as of the
Record Date, concerning A.C. Moore's directors and nominees for election to the
Board of Directors:
Director Term
Name Age Position Since (1) Expires
---- --- -------- --------- -------
William Kaplan .................. 76 Chairman of the Board 1984 2006
John E. (Jack) Parker ........... 62 Chief Executive Officer and Director 1984 2006
Richard J. Bauer (2)............. 78 Director 1990 2004
Richard J. Drake (2)............. 70 Director 1984 2004
Lawrence H. Fine ................ 50 President, Chief Operating Officer and Director 2002 2005
Richard Lesser .................. 69 Director 1993 2005
Eli J. Segal..................... 61 Lead Director 2002 2005
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(1) Includes service as a director of A.C. Moore Incorporated, the Company's
wholly-owned operating subsidiary.
(2) Nominee for Director.
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The following information about A.C. Moore's directors and nominees for
director is based, in part, upon information supplied by such persons. Unless
otherwise indicated, each individual has had the same principal occupation for
more than five years.
Mr. Kaplan, the Company's co-founder, has been the Chairman of the
Company's Board of Directors since inception. Mr. Kaplan also serves as the
Chairman of the Board of Directors and an executive officer of L'egent
International, Ltd. an importer and distributor of women's handbags and leather
accessories, which he co-founded in 1992.
Mr. Parker, the Company's co-founder, has been Chief Executive Officer
and a director of the Company since inception and was the Company's President
from inception until June 2001. From 1959 to 1984, Mr. Parker worked for the
F.W. Woolworth Company, a general merchandise retailer ("Woolworth"), in various
management positions, most recently as President and Chief Executive Officer of
the United States General Merchandise Group where he was responsible for more
than 1,000 stores, including the entire domestic chain of Woolworth retail
stores. Mr. Parker is the husband of Patricia A. Parker, the Company's Executive
Vice President, Merchandising, and the father of Janet Parker, the Company's
Executive Vice President, Merchandising and Marketing.
Mr. Bauer has been a director of the Company since September 1990. Mr.
Bauer is Chairman of the Board and Chief Executive Officer of Eastern Alloys,
Inc. an independent zinc alloyer, which he founded in 1965. Mr. Bauer is the
co-founder and current Chairman of the Board of Service Aluminum Corporation, an
aluminum trading company.
Mr. Drake has been a director of the Company since its founding. He is
Chairman of Drake, Sommers, Loeb, Tarshis, Catania & Liberth P.L.L.C., a
professional limited liability company which renders legal services.
Mr. Fine has been a director of the Company since August 2002. Mr. Fine
has served as the Company's President since June 2001 and the Company's Chief
Operating Officer since February 2003. Previously Mr. Fine was Executive Vice
President - General Merchandise Manager for arts and crafts retailer Michaels
Stores, Inc., a position he held since November 1996. From 1995 until joining
Michaels in November 1996, he was Senior Vice President of Merchandising for
Party City Corp, a specialty retailer of party merchandise. Prior to joining
Party City, Mr. Fine held a variety of merchandising positions with the Jamesway
Corporation, a retail mass-merchandiser, for nearly 16 years.
Mr. Lesser has been a director of the Company since March 1993. He is
currently a Senior Corporate Adviser to and a Director of The TJX Companies,
Inc., a New York Stock Exchange traded retail company, and served as The TJX
Companies, Inc.'s Executive Vice President from 1991 until December 6, 2001 and
Chief Operating Officer from 1994 to 1999. Mr. Lesser also served as the
Chairman of The Marmaxx Group, a division of TJX Companies that operates TJ Maxx
and Marshalls, from February 2001 to December 2001 and was President of The
Marmaxx Group from 1995 through 2001. Mr. Lesser held various other executive
and merchandising positions with TJX from 1981 to 1993. Mr. Lesser is also a
director of Reebok International, a New York Stock Exchange traded shoe and
apparel manufacturer and Dollar Tree Stores, Inc., a Nasdaq traded retail
company.
Mr. Segal has been a director of the Company since August 2002 and was
appointed the Lead Director of the Company's Board of Directors in February
2004. Mr. Segal has served as the Chairman of the Board of SchoolSports, Inc., a
magazine and internet content provider, since 2000. From September 2003 through
February 2004, Mr. Segal was the Chairman of the Wes Clark for President
Campaign. From 1997 to 2000, Mr. Segal served as the President and Chief
Executive Officer of the Welfare to Work Partnership, a nonpartisan business
organization. From 1993 to 1996, Mr. Segal served as an Assistant to the
President of the United States and as Chief Executive Officer of The Corporation
For National Service, the federal government office overseeing AmeriCorps. Mr.
Segal is a director of Hasbro, Inc., a New York Stock Exchange traded
manufacturer of toys and games and Citizens Financial Group.
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Independence
The Board of Directors has determined that the following directors,
constituting a majority of the members of the Board, are independent as defined
in the applicable listing standards of the Nasdaq Stock Market: William Kaplan,
Richard J. Bauer, Richard J. Drake, Richard Lesser and Eli J. Segal.
Communication with the Board
Shareholders may communicate with the Board of Directors, including the
non-management directors, by sending a letter to an individual director or to
the Company's Board of Directors, c/o Leslie H. Gordon, A.C. Moore Arts &
Crafts, Inc., 500 University Court, Blackwood, NJ 08012. All shareholder
communications received by Mr. Gordon will be delivered to the Company's Lead
Director or to the director to which such correspondence is addressed.
Meetings of the Board of Directors and Committees
The Board of Directors of A.C. Moore held five meetings during 2003.
The Audit Committee held seven meetings, the Compensation Committee held two
meetings and the Nominating Committee held one meeting during 2003. During
fiscal 2003, all directors, other than Eli Segal, attended 75% or more of the
meetings of the Board and committees of which they were members. Mr. Segal
attended 71% of such meetings.
Attendance at Annual Meeting of Shareholders
The Board of Directors has an informal policy that all of the directors
should attend the annual meeting of shareholders, absent exceptional cause. All
directors attended the 2003 annual meeting of shareholders.
Committees of the Board
The Board of Directors has three standing committees.
o Compensation Committee. The Compensation Committee reviews and
makes recommendations to the Board of Directors regarding the
salaries, bonuses, and other forms of compensation for executive
officers of A.C. Moore and administers various compensation and
benefit plans. The current members of the Compensation Committee
are Messrs. Bauer, Lesser (Chairman) and Segal. The Board of
Directors has determined that each member of the Compensation
Committee is independent as defined in the applicable listing
standards of the Nasdaq Stock Market. The report of the
Compensation Committee begins on page 11 of this Proxy Statement.
o Audit Committee. The Audit Committee is directly responsible for
the appointment, compensation, retention and oversight of the work
of the Company's independent auditors; reviews the independence of
the Company's independent auditors; discusses with management and
the Company's outside auditors the quality and adequacy of the
Company's internal financial controls; discusses the Company's
annual audited financial statements and quarterly financial
statements with management and the Company's independent auditor;
and establishes procedures for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters. The
Audit Committee also pre-approves the professional services
provided by the Company's independent auditors. The
responsibilities of the Audit Committee are further described in
the Audit Committee Charter adopted by the Audit Committee and the
Board of Directors, a copy of which is attached as Appendix A to
this Proxy Statement. The current members of the Audit Committee
are Messrs. Bauer (Chairman), Lesser and Segal. Mr. Drake served
as a member of the Audit Committee during fiscal 2003 and resigned
from his position as a member of the Audit Committee in February
2004. The Board of Directors has determined that each member of
the Audit Committee is independent as defined in applicable
listing standards of the Nasdaq Stock Market and SEC regulations.
The report of the Audit Committee is set forth on page 9 of this
Proxy Statement.
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The Board of Directors of the Company has determined that no
member of the Audit Committee is an audit committee financial
expert as that term is defined by the SEC. The Board of Directors
has determined that each Audit Committee member has sufficient
knowledge in financial and accounting matters to serve effectively
on the Audit Committee. In addition, the Audit Committee has the
ability on its own to retain independent accountants or other
advisers whenever it deems appropriate. At this time, the Board of
Directors does not believe that it is necessary to actively search
for an outside person to serve on the Board of Directors who would
qualify as an audit committee financial expert. The Board of
Directors periodically will review and monitor the need for an
audit committee financial expert.
o Nominating Committee. The Nominating Committee makes
recommendations to the Board of Directors regarding the size of
the Board of Directors; identifies individuals qualified to become
members of the Board of Directors consistent with the criteria
approved by the Nominating Committee; considers nominees made by
shareholders in accordance with the Company's bylaws; recommends
to the Board of Directors, the director nominees for each annual
meeting of shareholders; assists the Board of Directors in the
event of a vacancy by identifying individuals to fill such vacancy
and annually recommends, to the Board of Directors, director
nominees for each board committee. The current members of the
Nominating Committee are Messrs. Bauer, Lesser (Chairman) and
Segal. Mr. Segal was appointed to the Nominating Committee in
February 2004. The Board of Directors has determined that each
member of the Nominating Committee is independent as defined in
the applicable listing standards of the Nasdaq Stock Market. The
Nominating Committee recommended the nomination of the directors
listed on page 4, who stand for election at the 2004 annual
meeting of shareholders. The Nominating Committee is governed by a
written charter approved by the Board of Directors, a copy of
which can be found on the Company's website, www.acmoore.com,
under the "Investor Relations" section in "Corporate Governance."
Director Nomination Process
Director Qualifications. Nominees for director will be selected on the
basis of outstanding achievement in their careers; broad experience; education;
independence under applicable Nasdaq and SEC rules; financial expertise;
integrity; financial integrity; ability to make independent, analytical
inquiries; understanding of the business environment; and willingness to devote
adequate time to Board of Directors and committee duties. Nominees should also
have experience in the retail industry and knowledge about the issues affecting
the retail industry. Finally, the proposed nominee should be free of conflicts
of interest that could prevent such nominee from acting in the best interest of
shareholders. Additional special criteria apply to directors being considered to
serve on a particular committee of the Board of Directors. For example, members
of the Audit Committee must meet additional standards of independence and have
the ability to read and understand the Company's financial statements.
7
Director Nominee Selection Process. In the case of an incumbent
director whose term of office expires, the Nominating Committee reviews such
director's service to the Company during the past term, including, but not
limited to, the number of board and committee meetings attended, as applicable,
quality of participation and whether the candidate continues to meet the general
qualifications for a director outlined above, including the director's
independence, as well as any special qualifications required for membership on
any committees on which such director serves.
In the case of a new director candidate, the selection process for
director candidates includes the following steps:
o identification of director candidates by the Nominating Committee
based upon suggestions from current directors and executives and
recommendations received from shareholders;
o possible engagement of a director search firm;
o interviews of candidates by the Nominating Committee;
o reports to the Board of Directors by the Nominating Committee on
the selection process;
o recommendations by the Nominating Committee; and
o formal nominations by the Board of Directors for inclusion in the
slate of directors at the annual meeting.
The Nominating Committee will consider properly submitted shareholder
recommendations for director candidates. Director candidates recommended by
shareholders are given the same consideration as candidates suggested by
directors and executive officers. Under the Company's bylaws, a shareholder who
desires to nominate directors for election at the Company's shareholders meeting
must comply with the procedures summarized below under "- Shareholder
Nominations".
Shareholder Nominations. According to the Company's bylaws, nominations
by shareholders for directors to be elected at a meeting of shareholders which
have not previously been approved by the Board of Directors must be submitted to
the Secretary of the Corporation in writing, either by personal delivery,
nationally-recognized express mail or United States mail, postage prepaid, not
later than (i) the latest date upon which shareholder proposals must be
submitted to the Company for inclusion in the Company's proxy statement relating
to such meeting pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended, or other applicable rules or regulations under the federal
securities laws or, if no such rules apply, at least 90 days prior to the date
one year from the date of the immediately preceding annual meeting of
shareholders, and (ii) with respect to an election to be held at a special
meeting of shareholders, the close of business on the tenth day following the
date on which notice of such meeting is first given to shareholders. Each
nomination is required to set forth:
o the name and address of the shareholder making the nomination and
the person or persons nominated;
o a representation that the shareholder is a holder of record of
capital stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to vote for
the person or persons nominated;
8
o a description of all arrangements and understandings between the
shareholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination
was made by the shareholder;
o such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC had the
nominee been nominated by the Board of Directors; and
o the consent of each nominee to serve as a director of the Company
if so elected. All nominations which are late will be rejected by
the Company.
Audit Committee Report
On February 19, 2004, the Audit Committee met with management to review
and discuss the audited financial statements. Management represented to the
Audit Committee that the Company's financial statements were prepared in
accordance with generally accepted accounting principles. The Audit Committee
also conducted discussions with its independent auditors,
PricewaterhouseCoopers, regarding the matters required by the Statement on
Auditing Standards No. 61. As required by Independence Standards Board Standard
No. 1, "Independence Discussion with Audit Committees," the Audit Committee has
discussed with and received the required written disclosures and confirming
letter from PricewaterhouseCoopers regarding its independence and has discussed
with PricewaterhouseCoopers its independence. Based upon the review and
discussions referred to above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003.
This Audit Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the SEC that
incorporates by reference all or any portion of this Proxy Statement, except to
the extent that the Company specifically requests that the Report be
specifically incorporated by reference.
THE AUDIT COMMITTEE
Richard J. Bauer (Chairman)
Richard Lesser
Eli J. Segal
Director Compensation
Directors' Fees. Except for Mr. Kaplan, who received annual directors'
compensation of $150,000 for his services as Chairman of the Board in 2003,
directors who are not officers, employees or consultants of the Company receive
a directors' fee of $15,000 annually plus $1,000 for each Board of Directors
meeting they attend, $1,000 for a Committee Chair, and $500 for each committee
meeting they attend. In 2004, Mr. Kaplan will receive $100,000 for his services
as Chairman of the Board and Mr. Segal will receive $50,000 for his services as
Lead Director.
Stock Options. Messrs. Bauer, Drake, Lesser and Segal, each a
non-employee director of the Company, were each granted an option to acquire
20,000 shares of Common Stock in 2003 under the Company's 2002 Stock Option
Plan.
9
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the Record Date, certain
information with respect to the beneficial ownership of the Common Stock (i) by
each person who is known by A.C. Moore to be the beneficial owner of more than
5% of the Common Stock, (ii) by each director and nominee for director of A.C.
Moore, (iii) by each executive officer of A.C. Moore named in the Summary
Compensation Table and (iv) by all directors and executive officers of A.C.
Moore as a group. Except as otherwise indicated, to the knowledge of the
Company, the beneficial owners of the Common Stock listed below have sole
investment and voting power with respect to such shares.
Shares Beneficially Owned (1)
-----------------------------
Name of Beneficial Owner Number Percent
------------------------ ------ -------
William Kaplan (2)....................... 2,500,162 (3) 12.9%
Jack Parker (2).......................... 2,761,700 (4) 14.2
Patricia A. Parker ...................... 38,333 (5) *
Lawrence H. Fine......................... 83,495 (6) *
Leslie H. Gordon......................... 97,667 (7) *
Jack Robinson............................ 75,950 (8) *
Richard J. Bauer......................... 57,000 (9) *
Richard J. Drake......................... 86,000 (10) *
Richard Lesser........................... 64,000 (11) *
Eli J. Segal............................. 6,667 (12) *
T. Rowe Price Associates, Inc............ 1,777,600 (13) 9.2
Wellington Management, LLP............... 2,708,580 (14) 14.0
The 2004 William Kaplan GRAT............. 2,000,000 (15) 10.3
All executive officers and
directors as a group (12 persons)...... 5,863,786 (16) 29.4
----------------------------
* Denotes less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and includes voting or investment power with respect to the Common
Stock. Shares of Common Stock issuable upon the exercise of securities
currently exercisable or exercisable within 60 days of the Record Date
are deemed outstanding for computing the share ownership and percentage
ownership of the person holding such securities, but are not deemed
outstanding for computing the percentage of any other person.
(2) The address of each of Messrs. Kaplan and Parker is 500 University Court,
Blackwood, New Jersey 08012.
(3) Includes: (i) 2,000,000 shares held of record by The 2004 William Kaplan
GRAT. Mr. Kaplan is the Investment Trustee of The 2004 William Kaplan
GRAT. Accordingly, Mr. Kaplan has the sole power to vote and dispose of
the shares owned of record by The 2004 William Kaplan GRAT.
(4) Does not include 38,333 shares subject to presently exercisable options
owned by Patricia A. Parker, Mr. Parker's spouse, as to which Mr. Parker
disclaims beneficial ownership.
(5) Ms. Parker's total includes 38,333 shares subject to presently
exercisable options. Does not include 2,761,700 shares owned of record by
Jack Parker, Ms. Parker's spouse, as to which Ms. Parker disclaims
beneficial ownership.
(6) Includes: (i) 58,333 shares subject to presently exercisable options and
(ii) 1,162 shares of Common Stock allocated to Mr. Fine's account under
A.C. Moore's 401(k) Plan. This information related to the 401(k) Plan is
based on a plan statement dated as of December 31, 2003.
(7) Includes 62,667 shares subject to presently exercisable options.
10
(8) Includes: (i) 74,167 shares subject to presently exercisable options and
(ii) 783 shares of Common Stock allocated to Mr. Robinson's account under
A.C. Moore's 401(k) Plan. This information related to the 401(k) Plan is
based on a plan statement dated as of December 31, 2003.
(9) Includes 54,000 shares subject to presently exercisable options. Does not
include 9,800 shares owned of record by Mr. Bauer's spouse, as to which
Mr. Bauer disclaims beneficial ownership.
(10) Includes 82,000 shares subject to presently exercisable options.
(11) Represents 64,000 shares subject to presently exercisable options.
(12) Includes 6,667 shares subject to presently exercisable options.
(13) Information with respect to T. Rowe Price Associates, Inc. is derived
from T. Rowe Price Associates, Inc. Schedule 13G relating to A.C. Moore
filed with the SEC. The address of T. Rowe Price Associates, Inc. is 100
E. Pratt Street, Baltimore, Maryland 21202.
(14) Information with respect to Wellington Management Company, LLP (WMC) is
derived from WMC's schedule 13G relating to A.C. Moore filed with the
SEC. The address of WMC is 75 State Street, Boston, Massachusetts 02109.
(15) The address of The 2004 William Kaplan GRAT is c/o Robert J. Laughlin,
V.P., J.P. Morgan Trust Company of Delaware, 500 Stanton Christiana Road,
Newark, DE 19713. William Kaplan is the Investment Trustee of The 2004
William Kaplan GRAT. Accordingly, Mr. Kaplan has the sole power to vote
and dispose of the shares owned of record by The 2004 William Kaplan
GRAT.
(16) Includes 524,334 shares subject to presently exercisable options.
Executive Compensation
Compensation Committee Report
The Compensation Committee of A.C. Moore's Board of Directors reviews
comparative executive compensation in order to make compensation recommendations
to the Board regarding the Company's chief executive officer and other executive
officers and oversees all compensation programs involving the issuance of equity
securities of A.C. Moore. The Compensation Committee's executive compensation
policies are designed to provide competitive levels of compensation, integrate
pay with A.C. Moore's annual and long-term performance goals, reward
above-average corporate performance, recognize individual initiative and
achievements, and assist A.C. Moore in attracting and retaining qualified
executives.
A.C. Moore's executive officer compensation program is comprised of
base salary, annual cash incentive compensation, and long-term incentive
compensation in the form of stock options, and various benefits available to all
full time employees of A.C. Moore, including participation in group medical and
life insurance plans and a 401(k) Plan. The Company seeks to be competitive with
compensation programs offered by companies of a similar size within the retail
industry.
Base Salary and Incentive Compensation. Prior to the beginning of each
fiscal year, financial and other goals are established for the Company and
reviewed with the Board. Each executive officer is responsible for accomplishing
the goals pertaining to his or her area of responsibility. Base salaries are
based on the results of individual performance, as well as other considerations
such as the executive officer's level of responsibility, years of service with
A.C. Moore, professional background and surveys of compensation levels of
comparable retail companies. Incentive compensation is based upon the
achievement of Company profit objectives. All executive officers, except Jack
Parker who has excluded himself from the Company's incentive compensation
program, are eligible to participate in the Company's incentive compensation
program. No executive officer of the Company received bonus compensation during
2003 because the Company did not meet the pre-approved financial objectives.
11
Stock Options. A.C. Moore uses its 2002 Stock Option Plan and its 1997
Employee, Director and Consultant Stock Option Plan (the "Option Plans") as
long-term incentive plans for executive officers and key employees. The
objectives of the Option Plans with respect to executive officers are to align
the long-term interests of executive officers and shareholders by creating a
direct link between executive compensation and shareholder return and to enable
executives to develop and maintain a significant long-term equity interest in
A.C. Moore. The Option Plans authorize the Compensation Committee to award stock
options to officers and key employees. Stock options granted to executive
officers are based upon the level and degree of responsibility of the positions
they hold. In general under the Option Plans, options are granted with an
exercise price equal to the fair market value of the Common Stock on the date of
grant and are exercisable according to a vesting schedule determined by the
Compensation Committee at the time of grant. In 2003, 2002 and 2001, the Board
of Directors granted options to purchase an aggregate of 322,375 shares, 312,300
shares and 306,600 shares, respectively of Common Stock under the Option Plans.
Information concerning the option grants to certain executive officers is set
forth in the Summary Compensation Table.
Policy with Respect to Section 162(m) of the Internal Revenue Code.
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder (collectively, "Section 162(m)"), denies a
deduction to any publicly held corporation, such as A.C. Moore, for certain
compensation exceeding $1,000,000 paid during a calendar year to the chief
executive officer and the four other highest paid executive officers, excluding,
among other things, certain performance-based compensation. Where appropriate,
the Compensation Committee has taken action to reduce the impact of this
provision. For example, the Compensation Committee intends that the Option Plans
qualify for the performance-based exclusion. The Compensation Committee
continually evaluates to what extent Section 162(m) will apply to its other
compensation programs.
Discussion of 2003 Compensation for the Chief Executive Officer. In
considering the compensation for Mr. Parker, the Chief Executive Officer, the
Compensation Committee reviewed his existing compensation arrangements and
compensation levels of comparable retail companies. The Compensation Committee
accordingly made the determination that the annual compensation for the Chief
Executive Officer be established at $450,000 for 2003. In 2002 and 2001, the
compensation committee had established Mr. Parker's compensation at $450,000 and
$350,000, respectively. Mr. Parker, as a major shareholder of A.C. Moore,
elected not to participate in either the incentive compensation program or the
Option Plans. Mr. Parker also elected to reduce his compensation to $380,000 for
2003 and 2002 and $300,000 for 2001.
As part of his overall compensation package, Mr. Parker was also
provided various life insurance policies.
THE COMPENSATION COMMITTEE
Richard Lesser (Chairman)
Richard J. Bauer
Eli J. Segal
Summary Compensation Table
The following table sets forth the compensation earned during each of
the last three years by the Company's Chief Executive Officer and four other
most highly compensated executive officers of the Company (collectively, the
"Named Executive Officers") whose aggregate salaries and bonuses exceeded
$100,000 for services rendered in all capacities to the Company during 2003:
12
Long Term
Compensation
Annual Compensation ------------
----------------------------------- Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
--------------------------- ---- ------ ----- ------- ------------
Jack Parker.................... 2003 $ 380,000 -- -- $ 46,141(1)
Chief Executive Officer 2002 380,000 -- -- 48,721
2001 300,000 -- -- 47,703
Lawrence H. Fine............... 2003 $ 350,000 $ -- 100,000 $ 1,500(4)
President 2002 338,462 64,700 100,000 1,500
2001 175,000 100,000(2) 100,000(3) 1,500
Leslie H. Gordon............... 2003 $ 244,625 $ -- 20,000 $ 1,500(4)
Executive Vice President and 2002 237,500 57,250 20,000 1,500
Chief Financial Officer 2001 225,000 47,500 18,000(3) 1,500
Patricia A. Parker............. 2003 $ 215,000 $ -- 10,000 $ 1,500(4)
Executive Vice President, 2002 215,000 32,350 10,000 16,661
Merchandising 2001 215,000 30,000 -- 19,310
Jack Robinson.................. 2003 $ 220,000 -- 7,500 $ 1,500(4)
Executive Vice President,
Store Operations
----------------------------
(1) Includes (i) $44,641 of life insurance premiums paid by the Company in
2003 and (ii) $1,500 annual contribution by the Company pursuant to the
Company's 401(k) Plan.
(2) Includes a $50,000 employment signing bonus.
(3) Adjusted to reflect the two-for-one stock split distributed on July 31,
2002.
(4) Represents annual contribution by the Company pursuant to the Company's
401(k) Plan.
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning stock
options granted during fiscal 2003 to the Named Executive Officers. The exercise
price per share of each option was equal to the fair market value of the Common
Stock at the grant date as determined by the Board of Directors.
Individual Grants
-----------------------------------------
Percent of Potential Realizable Value
Total at Assumed Annual Rates of
Number of Options Exercise Stock Price Appreciation for
Securities Granted to or Base Option Term(1)
Underlying Employees in Price Expiration ----------------------------
Name Options Granted Fiscal Year ($/Share) Date 5% 10%
---- --------------- ------------ --------- ---------- ----------- ------------
Jack Parker.................... -- -- -- -- -- --
Lawrence H. Fine............... 100,000 31.0 $26.67 8/29/2013 $ 1,677,000 $4,251,000
Leslie H. Gordon............... 20,000 6.2 26.67 8/29/2013 335,400 850,200
Patricia A. Parker............. 10,000 3.1 26.67 8/29/2013 167,700 425,100
Jack Robinson.................. 7,500 2.3 26.67 8/29/2013 125,775 318,825
---------------------------
(1) This column shows the hypothetical gain or option spreads of the options
granted based on assumed annual compound stock appreciation rates of 5%
and 10% over the full term of the options. The 5% and 10% assumed rates
of appreciation are mandated by the rules of the SEC and do not represent
the Company's estimate or projection of future Common Stock prices. The
gains shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise of
the option or the sale of the underlying shares, or reflect
non-transferability, vesting or termination provisions. The actual gains,
if any, on the exercise of stock options will depend on the future
performance of the Common Stock.
13
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning the
number and value of unexercised options to purchase Common Stock held at the end
of fiscal 2003 by the Named Executive Officers.
Number of Securities Value of Unexercised In-
Underlying Unexercised The Money Options at
Options at Fiscal Year-End Fiscal Year End (1)
Shares --------------------------- --------------------------
Acquired on
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------------- ----------- ------------- ----------- -------------
Jack Parker................ -- -- -- -- -- --
Lawrence H. Fine........... 41,666 $ 622,764 (2) 58,333 200,001 $ 350,250 $ 470,343
Leslie H. Gordon........... 85,000 1,344,686 (3) 92,667 39,333 1,308,560 67,640
Patricia A. Parker......... -- -- 38,333 16,667 558,000 1,000
Jack Robinson.............. -- -- 74,167 15,833 1,057,358 37,217
----------------------------
(1) Based upon the latest reported sale price on the Nasdaq National Market on
December 31, 2003 ($19.26 per share) less the option exercise price.
(2) Of the 41,666 shares acquired on exercise, Mr. Fine retained ownership of
20,000 shares with a value realized of $228,300.
(3) Of the 85,000 shares acquired on exercise, Mr. Gordon retained ownership of
10,000 shares with a value realized of $190,000.
Employment Agreements
On June 11, 2001, the Company entered into an employment agreement with
the Company's President, Lawrence H. Fine. The term of Mr. Fine's employment
agreement is three years, unless earlier terminated by the Company or Mr. Fine.
Mr. Fine's employment agreement entitles him to receive an annual base salary of
$325,000 for his first year of employment, $350,000 for his second year of
employment and $375,000 for his third year of employment. Irrespective of Mr.
Fine's employment agreement, the Company and Mr. Fine agreed to maintain Mr.
Fine's salary at $350,000 during his third year of employment. Mr. Fine's
employment agreement also provides for the payment of a minimum guaranteed
annual bonus in the amount of $50,000. As the Company did not meet its 2003
financial objectives, Mr. Fine elected not to receive his annual bonus for that
year. Mr. Fine's employment agreement provides for severance payments to be paid
to Mr. Fine if his employment is terminated by the Company without cause or in
the event of a change in control transaction.
In accordance with the terms of his employment agreement, Mr. Fine was
granted options to acquire 100,000 shares of Common Stock under the Option Plans
upon the commencement of his employment and options for an additional 100,000
shares on August 22, 2002. Mr. Fine's employment agreement further provides that
in the third year of his employment, and in each subsequent year, Mr. Fine will
be a participant in the Company's Option Plans, and that further stock options
grants will be in accordance with the provisions of the Company's Option Plans.
Mr. Fine's employment agreement also prohibits him from divulging
confidential information regarding the Company or the Company's business to any
other party. In addition, Mr. Fine's employment agreement prohibits him, during
the term of his employment with the Company and for a period of two years
following termination of his employment, from engaging in a business that
competes with the Company and from soliciting as executives or managers any
individuals who were the Company's executives or managers at the time of his
employment.
14
Severance Arrangement
The Company has agreed to pay Leslie H. Gordon a sum equal to one year
of his then current salary if his employment is terminated by the Company
without cause.
Certain Relationships and Related Transactions
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consisted of Messrs. Bauer and Lesser in
2003. No person who served as a member of the Compensation Committee during 2003
was a current or former officer or employee of the Company or engaged in certain
transactions with the Company required to be disclosed by regulations of the
SEC. Additionally, there were no compensation committee "interlocks" during
2003, which generally means that no executive officer of the Company served as a
director or member of the compensation committee of another entity, one of whose
executive officers served as a director or member of the Compensation Committee
of the Company.
Other Related Transactions
Richard J. Drake, a director of the Company, is a member of a law firm
which the Company has retained during 2003 and which the Company intends to
retain during 2004.
In 2003, the Company reimbursed L'egent International, Ltd. and related
companies ("L'egent") $352,295 for merchandise sold in the Company's stores.
William Kaplan, a director of the Company, is Chairman of the Board of Directors
and an executive officer and principal shareholder of L'egent.
15
STOCK PERFORMANCE GRAPH
The following graph compares the yearly changes in the total return on
the Company's Common Stock against two other measures of performance. The
comparison is on a cumulative basis for the Company's last five fiscal years.
The two other performance measures are the Nasdaq Stock Market Index and the
Nasdaq Retail Trade Index. In each case, we assumed an initial investment of
$100 on December 31, 1998. Dates on the following chart represent the last
trading day of the indicated calendar year. We paid no dividends during such
five-year period.
[OBJECT OMITTED]
December 31,
-----------------------------------------------------------------
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
A.C. Moore 100 95 134 480 414 627
Nasdaq Stock Market Index 100 185 112 89 61 92
The NASDAQ Retail Trade Index 100 88 54 74 63 88
16
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Executive officers, directors and
greater than ten percent shareholders are required by regulation of the SEC to
furnish the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during 2003, all Section 16(a) filing requirements
applicable to the Company's executive officers, directors and greater than
ten-percent beneficial owners were complied with during 2003, except that the
following reports were not timely filed: Jack Robinson filed a Form 3 which was
not timely by approximately twenty days and Richard Lesser, Jack Robinson,
Lawrence Fine, Janet Parker, Leslie Gordon, Eli Segal, Richard Drake, Richard
Bauer and Patricia Parker, each filed a Form 4 related to a grant of options
which was not timely by three days.
SHAREHOLDER PROPOSALS
Under the Company's bylaws, shareholder proposals with respect to the
2005 annual meeting of shareholders, including nominations for directors, which
have not been previously approved by the Board of Directors must be submitted to
the Secretary of the Company not later than December 27, 2004. Any such
proposals must be in writing and sent either by personal delivery,
nationally-recognized express mail or United States mail, postage prepaid to
A.C. Moore Arts & Crafts, Inc., 500 University Court, Blackwood, NJ 08012,
attention: Secretary of the Company. Each nomination or proposal must include
the information required by the bylaws. All late or nonconforming nominations or
proposals will be rejected.
Shareholder proposals for the 2005 annual meeting of shareholders must
be submitted to A.C. Moore by December 27, 2004 to receive consideration for
inclusion in A.C. Moore's proxy statement relating to the 2005 annual meeting of
shareholders. Any such proposal must also comply with the proxy rules under the
Securities Exchange Act of 1934, including Rule 14a-8.
In addition, shareholders are notified that the deadline for providing
the Company timely notice of any shareholder proposal to be submitted outside of
the Rule 14a-8 process for consideration at the Company's 2005 annual meeting of
shareholders is December 27, 2004. As to all such matters which the Company does
not have notice on or prior to December 27, 2004, discretionary authority shall
be granted to the persons designated in the Company's proxy statement related to
the 2005 annual meeting of shareholders to vote on such proposal.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors has appointed
PricewaterhouseCoopers, independent auditors, to serve as A.C. Moore's
independent auditors for the year ending December 31, 2004. Shareholders will be
asked to ratify this appointment. Although action by the shareholders on this
matter is not required, the Audit Committee believes it is appropriate to seek
shareholder ratification of the appointment of independent auditors to provide a
forum for shareholders to express their views with regard to the Audit
Committee's appointment. If the shareholders do not ratify the appointment of
PricewaterhouseCoopers, the selection of independent auditors may be
reconsidered by the Audit Committee. A representative of PricewaterhouseCoopers
is expected to be present at the Meeting and to be available to respond to
appropriate questions. The representative will have the opportunity to make a
statement if he or she so desires.
17
Principal Accountant Fees and Services
Aggregate fees for professional services rendered for us by
PricewaterhouseCoopers as of or for the years ended December 31, 2003 and 2002
were:
Services Rendered (1) 2003 2002
------------------------------------------------------------------------
Audit Fees.............................. $ 213,500 $ 156,500
Audit Related fees...................... 33,000 65,000
Tax Fees................................ 20,491 55,285
All Other Fees.......................... -- --
Total................................... $ 266,991 $ 276,785
----------------------------
(1) The aggregate fees included in Audit fees are fees billed for the fiscal
years for the audit of the registrant's annual financial statements and
reviews of financial statements and statutory and regulatory filings or
engagements. The aggregate fees included in each of the other categories
are fees billed in the fiscal years.
Audit fees for the years ended December 31, 2003 and 2002,
respectively, were for professional services rendered for the audits of the
consolidated financial statements of the Company, quarterly reviews, issuance of
consents, and assistance with review of documents filed with the SEC.
Audit related fees for the year ended December 31, 2003 and 2002 were
for internal control procedures and consultations concerning financial
accounting and reporting standards.
Tax fees for the year ended December 31, 2003 and 2002 were for
services relating to tax advice and tax planning other than those directly
related to the audit of the income tax accrual.
The Audit Committee has considered and determined that the services
provided by PricewaterhouseCoopers are compatible with PricewaterhouseCoopers
maintaining its independence.
The Audit Committee has adopted a policy that requires advance approval
of all audit, audit-related, tax services and other services performed by the
independent auditor. The policy provides for pre-approval by the Audit Committee
of specifically defined audit and non-audit services. Unless the specific
service has been previously pre-approved with respect to that year, the Audit
Committee must approve the permitted service before the independent auditor is
engaged to perform it. The Audit Committee pre-approved all of the audit and
non-audit services provided to the Company by PricewaterhouseCoopers in fiscal
year 2003.
The Board of Directors recommends that you vote "FOR" approval of Proposal 2.
OTHER MATTERS
A.C. Moore is not presently aware of any matters (other than procedural
matters) which will be brought before the Meeting which are not reflected in the
attached Notice of the Meeting. The enclosed proxy confers discretionary
authority to vote with respect to any and all of the following matters that may
come before the Meeting: (i) matters which the Company did not receive notice by
December 17, 2003 were to be presented at the Meeting; (ii) approval of the
minutes of a prior meeting of shareholders, if such approval does not amount to
ratification of the action taken at the meeting; (iii) the election of any
person to any office for which a bona fide nominee named in this Proxy Statement
is unable to serve or for good cause will not serve; (iv) any proposal omitted
from this Proxy Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9
under the Securities Exchange Act of 1934; and (v) matters incident to the
conduct of the Meeting. In connection with such matters, the persons named in
the enclosed proxy will vote in accordance with their best judgment.
18
HOUSEHOLDING
In order to reduce printing costs and postage fees, the Company has
adopted the process called "householding" for mailing its annual report and
proxy statement to "street name holders," which refers to shareholders whose
shares are held in a stock brokerage account or by a bank or other nominee. This
means that street name holders who share the same last name and address will
receive only one copy of the Company's annual report and proxy statement, unless
the Company receives contrary instructions from a street name holder at that
address. The Company will continue to mail a proxy card to each shareholder of
record.
If you prefer to receive multiple copies of the Company's proxy
statement and annual report at the same address, you may obtain additional
copies by writing to A.C. Moore Arts & Crafts, Inc. ATTN.: Leslie H. Gordon,
Executive Vice President and Chief Financial Officer, 500 University Court,
Blackwood, NJ 08012 or by calling (856) 228-6700, ext. 109. Eligible
shareholders of record receiving multiple copies of the annual report and proxy
statement can request householding by contacting the Company in the same manner.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
This Proxy Statement is accompanied by A.C. Moore's 2003 Annual Report
to Shareholders which includes a copy of the Annual Report on Form 10-K for the
year ended December 31, 2003 as filed with the SEC.
By Order of the Board of Directors
Janet Parker
Secretary
Blackwood, New Jersey
April 23, 2004
19
APPENDIX A
A.C. MOORE ARTS & CRAFTS, INC.
AUDIT COMMITTEE CHARTER
Purpose
There shall be a committee of the board of directors (the "Board") to
be known as the audit committee. The audit committee's purpose is to:
(A) oversee the accounting and financial reporting processes of the
Company and the audits of the financial statements of the Company; and
(B) prepare an audit committee report as required by the SEC's rules to
be included in the Company's annual proxy statements, or, if the Company does
not file a proxy statement, in the Company's annual report filed on Form 10-K
with the SEC.
Composition
The audit committee shall have at least three (3) members, each of whom
must meet the following conditions:
(i) be independent as defined under Rule 4200(a)(15) of The Nasdaq
Stock Market (except as set forth in Rule 4350 (d)(2)(B));
(ii) meet the criteria for independence set forth in Rule
10A-3(b)(1) under the Securities Exchange Act of 1934 (subject
to the exemptions provided in Rule 10A-3(c));
(iii) not have participated in the preparation of the financial
statements of the Company or any current subsidiary of the
Company at any time during the past three years; and
(iv) be able to read and understand fundamental financial
statements, including a Company's balance sheet, income
statement, and cash flow statement.
Additionally, the Company must certify that it has, and will
continue to have, at least one member of the audit committee who has
past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
The Board shall elect or appoint a chairperson of the audit committee.
Alternatively, the audit committee members shall elect a chairperson by vote of
a majority of the full committee. The chairperson will have authority to act on
behalf of the audit committee between meetings.
Specific Responsibilities and Authority
The specific responsibilities and authority of the audit committee
shall be as follows:
A-1
(A) be directly responsible for the appointment, compensation,
retention and oversight of the work of any registered public accounting firm
engaged (including resolution of disagreements between management and the
auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services for the
Company, and each such registered public accounting firm must report directly to
the audit committee.
(B) establish procedures for (i) the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and (ii) the confidential, anonymous submissions
by Company employees of concerns regarding questionable accounting or auditing
matters;
(C) have the authority to engage independent counsel and other
advisers, as it determines necessary to carry out its duties;
(D) receive appropriate funding from the Company, as determined by the
audit committee in its capacity as a committee of the Board, for payment of: (i)
compensation to any registered public accounting firm engaged for the purpose of
preparing or issuing an audit report or performing other audit, review or attest
services for the Company; (ii) compensation to any advisers employed by the
audit committee; and (iii) ordinary administrative expenses of the audit
committee that are necessary or appropriate in carrying out its duties;
(E) ensure its receipt from the outside auditors of a formal written
statement delineating all relationships between the auditor and the Company,
consistent with Independence Standards Board Standard 1, and actively engaging
in a dialogue with the auditor with respect to any disclosed relationships or
services that may impact the objectivity and independence of the auditor and for
taking, or recommending that the full Board take, appropriate action to oversee
the independence of the outside auditor;
(F) at least annually, obtain and review a report by the independent
auditor describing: the firm's internal quality-control procedures; any material
issues raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps taken to deal
with any such issues;
(G) discuss the Company's annual audited financial statements and
quarterly financial statements with management and the independent auditor,
including the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations;"
(H) discuss with management and the outside auditors the quality and
adequacy of the Company's internal financial controls;
(I) report regularly to the Board;
(J) make an annual performance evaluation of the audit committee;
(K) review and reassess the adequacy of the audit committee's charter
annually; and
(L) make such other recommendations to the Board on such matters,
within the scope of its function, as may come to its attention and which in its
discretion warrant consideration by the Board.
A-2
General Comments
While the fundamental responsibility for the Company's financial
statements and disclosures rests with management and the independent auditor,
the audit committee will review
(A) major issues regarding accounting principles and financial
statement presentations, including any significant changes in
the Company's selection or application of accounting
principles, and major issues as to the adequacy of the
Company's internal controls and any special audit steps
adopted in light of material control deficiencies;
(B) analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and
judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative generally accepted accounting principle ("GAAP")
methods on the financial statements; and
(C) the effect of regulatory and accounting initiatives, as well
as off-balance sheet structures, on the financial statements
of the Company.
Meetings
The audit committee shall meet at least four times per year on a
quarterly basis, or more frequently as circumstances require. One or more
meetings may be conducted in whole or in part by telephone conference call or
similar means if it is impracticable to obtain the personal presence of each
audit committee member. The Company shall make available to the audit committee,
at its meetings and otherwise, such individuals and entities as may be
designated from time to time by the audit committee, such as members of
management including (but not limited to) the internal audit and accounting
staff, the independent auditors, inside and outside counsel, and other
individuals or entities (whether or not employed by the Company and including
any corporate governance employees and individuals or entities performing
internal audit services as independent contractors).
Any member of the Audit Committee may call a meeting of the Committee
upon due notice to each other member. Any action of the Audit Committee shall be
taken by the affirmative vote of a majority of the members. Any action of the
Audit Committee may be taken without a meeting, if all members of the Audit
Committee consent thereto in writing.
Delegation
Any duties and responsibilities of the audit committee, including, but
not limited to, the authority to pre-approve all audit and permitted non-audit
services, may be delegated to one or more members of the audit committee or a
subcommittee of the audit committee.
Limitations
The audit committee is responsible for the duties and responsibilities
set forth in this charter, but its role is oversight and therefore it is not
responsible for either the preparation of the Company's financial statements or
the auditing of the Company's financial statements. The members of the audit
committee are not employees of the Company and need not be accountants or
auditors by profession or experts in accounting or auditing. Management has the
responsibility for preparing the financial statements and implementing internal
controls and the independent auditors have the responsibility for auditing the
financial statements and monitoring the effectiveness of the internal controls,
subject, in each case, to the oversight of the audit committee described in this
charter. The review of the financial statements by the audit committee is not of
the same character or quality as the audit performed by the independent
auditors. The oversight exercised by the audit committee is not a guarantee that
the financial statements will be free from mistake or fraud. In carrying out its
responsibilities, the audit committee believes its policies and procedures
should remain flexible in order to best react to a changing environment.
A-3
APPENDIX B
Form of Proxy
A.C. MOORE ARTS & CRAFTS, INC.
BLACKWOOD, NEW JERSEY
PROXY FOR 2004 ANNUAL MEETING OF SHAREHOLDERS, JUNE 18, 2004
Solicited On Behalf of the Board of Directors
The undersigned hereby constitutes and appoints Jack Parker and William
Kaplan, and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, for and in the name, place and stead of the undersigned,
to appear at the annual meeting of shareholders of A.C. Moore Arts & Crafts,
Inc. to be held on the 18th day of June, 2004 and at any postponement or
adjournment thereof, and to vote all of the shares of A.C. Moore Arts & Crafts,
Inc. which the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present. The undersigned
hereby directs that this proxy be voted as marked.
This Proxy will, when properly executed, be voted as directed. If no
directions to the contrary are indicated in the boxes provided, the persons
named herein intend to vote FOR each proposal listed on this proxy card.
A majority of said attorneys and proxies present and acting at the
meeting in person or by their substitutes (or if only one is present and acting,
then that one) may exercise all the powers conferred hereby. Discretionary
authority is conferred hereby as to certain matters as may properly come before
the meeting.
(Continued and to be marked, signed and dated on the reverse side)
(1) The election of Richard J. Bauer and Richard J. Drake as Class B directors of the Company to hold office for a
term of three years and until each of their respective successors is duly elected and qualified.
FOR all nominees WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority to vote
listed above (except to vote for the for any individual nominee, write that nominee's
as marked to the nominees listed name in the space provided below.)
contrary at right.) above.
[ ] [ ] ---------------------------------------------------
(2) Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors for the year
ending December 31, 2004.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(3) To transact such other business as may properly come before the meeting or any postponement or adjournment
thereof.
Receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 23,
2004 and the Company's 2003 Annual Report to
Shareholders is hereby acknowledged.
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Signature
---------------------------------------
Signature
Dated: _________________________________
Please sign exactly as your name or names appear
hereon, including any official position or
representative capacity.
Please mark, date and sign this proxy and return it promptly in the enclosed postage paid envelope.
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YOUR VOTE IS IMPORTANT
VOTE TODAY IN ONE OF THREE WAYS:
1. VOTE BY TELEPHONE: After you call the phone number below, you will be asked to enter the control number at the
bottom of the page. You will need to respond to only a few simple prompts. Your vote will be confirmed and cast as
directed.
Call toll-free in the U.S. or Canada at
1-866-626-4508 on a touch-tone telephone
OR
2. VOTE BY INTERNET:
Log-on to www.votestock.com
Enter your control number printed below
Vote your proxy by checking the appropriate boxes
Click on "Accept Vote"
OR
3. VOTE BY MAIL: If you do not wish to vote by telephone or over the Internet, please complete, sign, date and return
the above proxy card in the pre-paid envelope provided.
YOUR CONTROL NUMBER IS:
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| You may vote by telephone or Internet 24 hours a day, 7 days a week. |
| Telephone and Internet voting is available through 11:59 p.m., |
| Eastern Standard Time, on June 17, 2004. |
| Your telephone or Internet vote authorizes the named proxies to vote in the same manner |
| as if you marked, signed and returned your proxy card. |
| |
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