<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

                  (Mark One)

           [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2002
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from ______ to ______

                        Commission file number 000-23157

                         A.C. MOORE ARTS & CRAFTS, INC.
             (Exact name of registrant as specified in its charter)

                  Pennsylvania                               23-3527763
        (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                   Identification No.)

         500 University Court, Blackwood, NJ                     08012
       (Address of principal executive offices)                (Zip code)

       Registrant's telephone number, including area code: (856) 228-6700

        Securities registered pursuant to section 12(b) of the Act: None

           Securities registered pursuant to section 12(g) of the Act:
                           Common Stock, no par value
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

Yes    X          No          .
    -------          ---------

As of June 28, 2002, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $298,000,000 based on the
closing price of the registrant's common stock on such date, $23.68, as reported
on the Nasdaq Stock Market. (1)

The number of shares of Common Stock outstanding as of March 20, 2003 was
18,845,879.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement for the 2003 Annual Meeting of
Shareholders are incorporated into Part III of this Form 10-K.

--------------------------
         (1) The aggregate dollar amount of the voting stock set forth equals
the number of shares of Common Stock outstanding, reduced by the number of
shares of Common Stock held by executive officers, and directors and
shareholders owning in excess of 10% of the registrant's Common Stock. The
information provided shall in no way be construed as an admission that any
person whose holdings are excluded from this figure is an affiliate of the
registrant or that any person whose holdings are included in this figure is not
an affiliate of the registrant and any such admission is hereby disclaimed. The
information provided herein is included solely for record keeping purposes of
the Securities and Exchange Commission.

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                                     PART I

ITEM 1. BUSINESS.

Our Company

         We are a rapidly growing specialty retailer offering a vast selection
of arts, crafts, and floral merchandise to a broad demographic of consumers. Our
target customers are primarily women between the ages of 25 and 55 who are
looking for ideas to decorate their homes, create handmade items, or otherwise
engage in arts and crafts activities. We have grown from 17 stores in January
1997 to 71 stores in December 2002. In 2002, for stores open for the full
calendar year, our average sales per square foot were $272, which we believe to
be the highest in our industry, and our average sales per store were
approximately $6.1 million.

         Our stores are located in the eastern United States from New England to
the Carolinas. For the foreseeable future we intend to locate our new stores
within 800 miles of our suburban Philadelphia distribution center, an area
encompassing approximately 50% of the United States population. We believe we
can support at least 140 stores in this geographic area from our new
distribution center to be opened in 2004.

         Our assortment of merchandise consists of approximately 60,000 stock
keeping units, or SKUs, with more than 45,000 SKUs offered at each store at any
one time. We believe we offer a superior shopping experience that is
differentiated by our broad merchandise assortment, high in-stock positions,
exciting stores, attentive and knowledgeable sales associates and competitive
prices.

         We have a highly experienced management team which is comprised of
executives who have each participated in the expansion of several large
retailers. Collectively, our top management team consisting of our Chief
Executive Officer, President, and Chief Operating Officer, Chief Financial
Officer, two Executive Vice Presidents of Merchandising, and our Executive Vice
President of Store Operations have more than 174 years experience in retailing.

         We became a holding company in July 1997 by incorporating in
Pennsylvania and exchanging 4,300,000 shares of our common stock for all the
capital stock of our operating subsidiary which was organized in Delaware in
1984.

Our Market

         The Hobby Industry Association (HIA) announced that its Consumer Usage
& Purchase Study revealed that industry sales for 2002 were approximately $29
billion, a 13% increase from $25.7 billion in 2001. The market is comprised
primarily of arts and crafts products, silk and dried flowers and picture
frames. Our market is highly fragmented and is served by multi-store arts and
crafts retailers, mass merchandisers, small, local specialty retailers, mail
order vendors, hardware stores and a variety of other retailers.

         The size and growth of our market is sustained by the popularity of
arts and crafts. According to a 2001 HIA report, 54% of United States households
participated in crafts and craft-related hobbies during 2000. Further, a June
2001 Harris Poll reports that the popularity of crafts is similar to the
popularity of watching sports, listening to music, playing golf, boating,
hunting, and other similar leisure activities. The current popularity of crafts
is reflected in the national media. For example, crafts are prominently featured
on Martha Stewart Living(R) and in related publications.




                                        1
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Our Merchandise

         Our merchandising strategy is to offer the broadest and deepest
assortment of arts, crafts and floral merchandise and to provide our customers
with all of the components necessary for their crafting projects on a regular
basis. Below is a representative list of our merchandise:

         o     Art Supplies, Scrapbooking and Frames: paints, brushes, canvas,
               drawing tools, rubber stamps and stationery, scrapbooking
               supplies, stencils and frames.

         o     Traditional Crafts: stitchery, yarn for knitting and rug hooking,
               cake and candy making supplies, glass crafts, decoupage, wood
               crafts, kids crafts, felt, glitter, dollmaking, dollhouses and
               furniture, and instructional books.

         o     Floral and Accessories: silk and dried flowers, accessories like
               vases and other products to assist in the arrangement of flowers,
               pre-made and custom made floral arrangements, ribbon and lace,
               wedding related items, potpourri, candles, candle making supplies
               and wicker baskets.

         o     Fashion Crafts: t-shirts and sweatshirts, decorative items like
               patches and rhinestones and jewelry making supplies like beads.

         o     Seasonal Items: craft making materials, decorations and floral
               products for all major holidays and seasons, including Christmas,
               Fall/Halloween, Spring/Easter, Valentine's Day and St. Patrick's
               Day.

Business and Operating Strategy

         We believe that our customers expect exceptional service and a broad
assortment of in-stock merchandise at competitive prices in an exciting and
easy-to-shop store. Our goal is to consistently deliver an overall value
proposition that exceeds our customers' expectations and offers them a superior
shopping experience. In order to achieve this goal we pursue the following five
primary business and operating strategies:

         We strive to offer the broadest and deepest assortment of arts, crafts
and floral merchandise.

         We believe that key elements in a customer's decision where to shop are
variety and selection of merchandise. We believe our stores offer the broadest
and deepest selection of arts, crafts and floral merchandise in our industry.
Each of our stores stocks 60,000 SKUs across five major merchandise categories
during the course of a year, with more than 45,000 SKUs offered at each store at
any one time. Our buyers actively seek new merchandising opportunities by
monitoring industry trends, working with domestic and international vendors,
attending trade shows and craft fairs and regularly interacting with our
customers. We believe that our ability to provide new merchandise to our
customers on a continuous basis differentiates us from our competitors.

         We strive to maintain a superior in-stock merchandise position.

         Craft projects usually require multiple components. Providing all of
the components for a particular craft project in a single store on a regular
basis is critical to meeting the demands of our customers. Therefore, we
designed our merchandise distribution systems to ensure rapid replenishment of
inventory and the highest levels of in-stock positions in our stores. Our
distribution center will deliver merchandise to each of our stores three to five
times per week during our peak selling season, and two to three times per week
throughout the balance of the year. In our peak selling season, our store
managers can replenish 65% of their shelf merchandise assortment within two to
three days.






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         We strive to operate exciting, easy-to-shop stores.

         We provide our customers with project ideas by displaying samples of
completed craft projects throughout our stores. We believe that these displays
generate excitement and foster impulse buying and return visits to our stores.
We regularly provide video and live in-store crafting demonstrations. We offer
frequent in-store classes for children and adults in most of our stores on a
wide variety of craft skills. Our stores are designed to be uncluttered, well
organized, and well lit. Wide aisles and easy to read signage help our customers
locate merchandise and make our stores easy-to-shop.

         To ensure prompt and personalized service, we staff our stores with a
high ratio of store personnel to customers, typically including a store manager,
three associate managers, nine department managers and a full staff of full-time
and part-time team members. Store personnel, many of whom are crafters
themselves, assist customers with merchandise selection and project ideas.

         We strive to attract and retain experienced and entrepreneurial store
management.

         To provide optimal customer service, we strive to foster merchandising
creativity and an entrepreneurial culture throughout all levels of our
organization. Store managers are empowered and encouraged to identify
merchandising opportunities and to tailor displays to local preferences for
craft projects. While receiving direction and support from corporate level
management, this autonomy allows store managers to use individual creativity to
cater to the needs and demands of customers. If proven successful, merchandising
ideas generated by a store manager can be implemented quickly throughout our
chain. We believe this helps us to increase sales and profitability. Store
managers and associate managers earn incentive bonuses based on annual increases
in the profitability of their stores. We believe our focus on empowering and
rewarding our employees, all of whom are "team members," helps in recruiting,
hiring and retaining talented personnel. Our turnover rate for store managers
averaged 8% per year from 1998 through 2002.

         We strive to provide superior price/value for our customers.

         We believe that our customers consider the relationship between the
quality and price of our merchandise to be important factors in their buying
decisions. Therefore, we strive to be the price/value leader in all of our
merchandise categories. Our purchasing professionals and store managers actively
monitor competitors' prices to ensure we maintain low prices while preserving
merchandise quality and value. Our policy to beat any competitor's advertised
price by 10% is clearly displayed in our stores. In addition, on a weekly basis,
we advertise select items at 20% to 50% off their everyday low prices. We
believe that our price/value strategy exceeds our customers' expectations and
enhances customer loyalty.

Growth Strategy

         The market in which we operate is large and fragmented. We believe that
this presents an opportunity to continue to grow our business for the
foreseeable future. Our objective is to improve our market share in existing
geographic markets and to expand into new geographic markets while enhancing our
profitability through greater leverage of our corporate infrastructure. To
support our growth, we expect to expand our facilities, upgrade our management
information systems and hire additional corporate personnel. We believe by
increasing our store base we can obtain economies of scale in advertising,
distribution, purchasing and management costs and, as a result, improve our
operating margins.







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         Opening New Stores:

         During the next two years we intend to increase our store base of 71
locations at December 31, 2002 by approximately 20% per year. Our current
strategy is to open new stores within an 800 mile radius of our existing
corporate headquarters and distribution center located in suburban Philadelphia.
This geographic area contains approximately 50% of the United States population.
Ultimately, we believe that we can at least double the number of our existing
stores within this geographic area without significantly diluting the sales in
our existing stores. In the future, we may open stores in other regions.

         Our site selection strategy is overseen by a Vice President of Real
Estate who is responsible for identifying favorable store locations in both
existing and new geographic markets. Our site selection criteria include an
assessment of population and demographic characteristics of the market area,
customer traffic, performance of other retailers within the area, co-tenants at
the proposed site, projected profitability and cash return on investment.

         We have developed a standardized procedure for opening new stores. Our
new store opening team develops the floor plan and inventory layout based on our
store prototype and hires and trains team members in connection with the opening
of each new store. For each new store we plan to open in the next two years, we
expect to spend approximately $1.3 million, which includes $365,000 for fixtures
and equipment, $195,000 in pre-opening costs, and $700,000 for in-store
inventory, net of accounts payable.

         Increasing Sales in Existing Stores:

         In 2002, for stores open at least one full calendar year, our average
sales per square foot were $272, which we believe to be the highest in our
industry, and our average sales per store were approximately $6.1 million. Our
comparable store sales growth was 5% in 2002, 8% in 2001, 3% in 2000, 6% in 1999
and 3% in 1998. Stores are added to the comparable store base at the beginning
of their fourteenth full month of operation. Our primary method of increasing
sales in our existing stores is to successfully execute our business and
operating strategies, including:

         o     providing the broadest and deepest merchandise assortment,

         o     maintaining a superior in-stock position,

         o     operating exciting and easy-to-shop stores,

         o     providing new merchandise and crafting ideas to our customers,

         o     hiring and retaining entrepreneurial and knowledgeable store
               managers and sales teams, and

         o     providing superior price/value for our customers.








                                        4
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Merchandising

         Our merchandising strategy is to offer the broadest and deepest
assortment of arts, crafts and floral merchandise and to provide our customers
with all of the components necessary for their crafting projects on a regular
basis. We believe our merchandise appeals to a wide range of recreational and
professional crafters of all ages and economic backgrounds. However, our primary
customers are women ages 25 to 55. We maintain a fresh and exciting shopping
environment by frequently introducing new merchandise into our stores and by
regularly updating our displays of completed craft projects. Our buyers actively
seek new merchandising opportunities by monitoring industry trends, working with
domestic and international vendors, and regularly attending trade shows and
craft fairs.

         The following table describes net sales for each of our merchandise
categories as a percentage of our total net sales for the years ended December
31, 2000 through 2002:

                                                         Year Ended December 31,
                                                         -----------------------
                                                          2002     2001    2000
                                                         ------   ------  ------
              Art supplies, scrapbooking and frames...    35.0%    32.0%   31.0%
              Traditional crafts......................    29.0     30.0    30.0
              Floral and accessories..................    24.0     25.0    26.0
              Fashion crafts..........................     7.0      8.0     8.0
              Seasonal items..........................     5.0      5.0     5.0
                                                         ------   ------  ------
              Total...................................   100.0%   100.0%  100.0%


         Our corporate office develops a planogram for each of our basic and
seasonal merchandise categories which is implemented at the store level. A
planogram is a diagram that shows how and where each specific retail product
should be placed on shelves or displays. The planograms are developed by a team
consisting of our buyers and members of our planogram department, with input
from key vendors. The planograms are developed using information about the
products, such as size, shape, colors, or theme, sales volume and inventory
levels. By analyzing past and current sales patterns, we can then adjust our
planograms to present merchandise in a manner that helps maximize sales.

         Our point of sale, or POS, system allows us to make better
merchandising decisions by identifying sales volume and seasonality patterns of
particular items of merchandise. With this information we can make better
decisions regarding when to stock, reorder, mark-down and discontinue
merchandise.

         Our purchasing staff and store managers actively monitor competitors'
prices to ensure we maintain low prices while preserving merchandise quality and
value. Our policy of beating any competitor's advertised price by 10% is clearly
displayed in our stores. On a weekly basis, we advertise select items at 20% to
50% off their everyday low prices. We also accept competitors' coupons. We
believe that our strategy of price/value leadership enhances customer loyalty
and provides superior value.

         Our stores regularly feature seasonal merchandise that complements our
core merchandising strategy. Seasonal merchandise is offered for all major
holidays and seasons, including Christmas, Fall/Halloween, Spring/Easter,
Valentine's Day and St. Patrick's Day. By far the greatest portion of our
seasonal merchandise is sold during the Christmas season. This includes
merchandise in our seasonal department as well as seasonal products sold in
other merchandise categories. Our Christmas holiday merchandise is given floor
and shelf space in our stores beginning in late summer. The Christmas holiday
season is longer for our stores than for many traditional retailers because of
the project-oriented nature of Christmas crafts and gift-making ideas. We
believe that our holiday merchandise assortment differs from some of our
competitors because a substantial amount of our seasonal merchandise is used to
create holiday crafts and gifts rather than consisting of traditional Christmas
trees and decorations.








                                        5
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Stores

         Our stores are typically 20,000 to 25,000 square feet. Most of our
stores are located in strip centers that are easily accessible from main traffic
arteries and have convenient parking. Our store size varies based on market
demographics and real estate availability. Most of our store leases have an
average initial term of ten years, with two five year renewal options, and
provide for predetermined escalations in future minimum annual rent or
additional rent contingent upon store sales levels. Our stores are generally
open from 9:30 a.m. to 9:00 p.m., Monday through Saturday, and from 10:00 a.m.
to 6:00 p.m. on Sunday.

         Store layout and operations

         Our stores provide a "one-stop-shopping" destination for arts, crafts
and floral merchandise in an exciting and spacious shopping environment. We
design our stores to be attractive and easy-to-shop with a layout intended to
lead customers through the entire store in order to expose them to all of our
merchandise categories. Wide aisles and easy to read signage help our customers
locate merchandise. We use end-of-aisle displays to feature best-selling items
and promotional merchandise. Generally, the center of the store contains the
floral area, which includes a ribbon center and counter for free floral
arrangement services. Our stores also contain a customer service area and eight
to 11 registers for quick checkout. Our prototype store is apportioned
approximately 80% to selling space with the remainder devoted to delivery,
storage, classroom and office areas.

         We emphasize the display of completed craft projects in each department
to provide customers with crafting ideas. Because many customers browse for new
craft ideas, we believe eye-catching displays of completed craft projects are
effective at motivating impulse purchases. Our knowledgeable store team members,
many of whom are crafters themselves, are available to explain the displays in
detail to customers and to offer assistance on related craft projects.

         We offer frequent in-store classes for children and adults in most of
our stores in a dedicated classroom. Classes are taught by team members and
outside professionals. Typical classes provide instruction on oil painting, cake
decorating, advanced stamping, or scrapbooking.

         Store management and training

         Each store is managed by a store manager who is typically assisted by
three associate store managers and nine department managers, and a full staff of
full-time and part-time team members. Our store managers and associate store
managers are responsible primarily for customer service, training, hiring store
level team members, and inventory management. The department managers are
responsible for merchandise ordering, inventory management and customer service.
We develop new store managers by promoting from within our organization. We
selectively hire experienced store managers from other retailers who start at
our stores as associate store managers.

         A key part of our strategy and management style is to foster an
entrepreneurial culture and merchandising creativity throughout all levels of
our organization which we believe helps to promote customer loyalty. Store
managers are empowered and encouraged to identify merchandising opportunities
and to tailor displays to local preferences for craft projects. While receiving
direction and support from corporate level management, this autonomy allows
store managers to use their own creativity to cater to the needs and demands of
their customers. If proven successful, merchandising ideas generated by a store
manager can be implemented throughout our chain. We believe this helps to
increase sales and profitability. Our store managers and associate store
managers earn incentive bonuses based upon annual increases in the profitability
of their stores. We believe our focus on empowering and rewarding our team
members helps in recruiting, hiring and retaining talented personnel.








                                        6
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         Our training program for store managers and associate store managers
includes several annual company-sponsored conferences to refine and develop
their skills in merchandising, merchandise trends, store operations, financial
controls, human resources and general management. Training sessions are also
held for floral designers and classroom coordinators at various times during the
year. Many of our team members are crafters themselves and we provide them with
the industry's most extensive product training to create a sales staff with a
strong focus on customer service and a willingness to assist customers in
assembling and coordinating their craft projects.

Purchasing

         Our purchasing programs are designed to support our business strategy
of providing customers with the broadest and deepest assortment of high quality
arts, crafts and floral merchandise at value prices while maintaining high
in-stock positions. Our buying staff of 20 professionals oversees all of our
purchasing. Buyers and store management regularly attend trade shows and craft
fairs to monitor industry trends and to obtain new craft ideas.

         In-store department managers are responsible for daily reordering of
merchandise for their departments. In 2002, approximately 99% of our merchandise
orders were placed through our EDI system. Approximately 60% of our orders were
shipped directly from vendors to our stores; the remaining 40%, approximately
one-third of which are floral and seasonal items, were shipped from our
distribution center. Merchandise assortments at our stores can be enhanced by
products ordered by store managers to meet the unique needs of their customers.
All purchases are monitored through centralized system controls.

         In 2002, we purchased our inventory from more than 500 vendors
worldwide. One of the key criteria for the selection of vendors is their
responsiveness to our delivery requirements and timing needs. In 2002:

         o     the largest 25 domestic vendors accounted for approximately 45%
               of our purchases,

         o     the largest vendor, SBAR'S, Inc., a specialty distributor of arts
               and crafts merchandise, primarily to independent arts and crafts
               retailers, accounted for approximately 19% of our purchases, and

         o     approximately 12% of our merchandise, primarily floral and
               seasonal items, was directly imported from foreign manufacturers
               or their agents, almost exclusively from the People's Republic of
               China.

All of our overseas purchases are denominated in United States dollars.

Distribution

         Our distribution strategy is focused on supporting our stores and
maintaining high in-stock positions in all of our merchandise categories. Our
stores receive merchandise deliveries three to five times per week from our
distribution center during our peak selling season, and two to three times per
week throughout the balance of the year, depending on store size.

         We lease 561,000 square feet of distribution and warehouse facilities,
consisting of our 253,000 square foot distribution center and adjoining 10,000
square foot office complex in suburban Philadelphia and our two nearby satellite
warehouses which total an additional 308,000 square feet. Our distribution
center is leased for a term which expires in March 2005, subject to our option
to renew the term for an additional six years. Our satellite warehouses are
leased for a term which expires in March 2004.

         Our distribution center and warehouse operations are supported by our
real-time warehouse management system which uses hand-held computers and radio
frequency communication technology to track merchandise. Our warehouse
management system enables us to update our inventory records instantly to
reflect all of the merchandise receiving and shipping activities that occur at
our distribution center throughout the day. We believe our warehouse management
system helps to make our distribution center and warehouse operations efficient
and is instrumental in helping us meet our commitment to provide superior
inventory replenishment to each of our stores.







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         We lease a fleet of tractors and trailers to deliver merchandise to 38
of our 71 stores directly from our distribution center. Additionally, we have
contracted with a dedicated third party carrier to deliver merchandise to the 33
stores where an overnight stay is required because of travel time. In 2002,
approximately 40% of our merchandise was delivered from our distribution center
to our stores.

         We are currently negotiating to build a new distribution center and
office complex which we plan to open in 2004. We anticipate that this new
facility, which will be located near our existing distribution center, will be
700,000 square feet for distribution plus 60,000 square feet of office space.
The total cost of the land and building for this facility is estimated to be in
the range of $40.0 million. We expect to finance two-thirds of this project
through long-term debt. We believe that our new facility, when completed, will
enable us to effectively service all of our existing and a total of
approximately 140 store locations within an 800-mile radius of the new
distribution center.

Marketing

         Our marketing and advertising is designed to attract our target
customers consisting primarily of women between the ages of 25 and 55. A study
published in Craftrends in November 2001, surveyed 1,000 craft customers across
the country. Of the 1,000 participants, 66% were between the ages of 26 and 54,
89% were female and 46% had an income greater than $60,000. We believe that our
target customer is consistent with this demographic profile.

         We advertise 51 weeks per year, typically in midweek editions of local
and/or regional newspapers. In 2002 we ran 17 multi-page newspaper inserts in
local and regional newspapers. In addition, prior to store openings, we use
radio advertisements to develop customer awareness and we place special
pre-opening advertisements, normal advertising copy and/or grand opening inserts
in newspapers. We create all of our advertising in-house. Our net advertising
expense was 2.0% of net sales in 2002.

         We believe that teachers, who often purchase arts and crafts
merchandise for in-school projects, are an important customer segment. To
generate goodwill, we offer teachers who join our "Teachers Program" a 10%
discount on all regularly and sale priced merchandise. We have issued over
525,000 discount cards to teachers in this program. Similarly, our "Crafty Kids
Birthday Club," with over 300,000 members, is intended to develop future
crafters as customers. Members of this club receive a $5.00 gift certificate
each year for their birthday.








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<PAGE>

         Our updated website, www.acmoore.com, is designed to drive additional
store traffic and serve as another marketing channel to build brand name
awareness. Our website features weekly advertisements, a store locator and an
in-store class schedule, as well as suggested craft projects for children and
adults with accompanying instructions and shopping lists for merchandise to be
purchased at our stores. The craft projects on our website change both
seasonally and according to new trends. The most recent enhancement to our
website is the addition of on-line video segments that allow customers to learn
the latest crafting tips, techniques and project ideas. We do not sell our
merchandise on our website, although gift cards may be purchased online.

Management Information Systems

         We believe that we have implemented leading information technology
systems which support merchandising, store ordering, warehouse inventory
management, finance and administration. Our management information systems are
secure, redundant and scalable. We expect to continue to enhance the performance
of our systems through software and hardware upgrades and other improvements,
such as the systems integration of our stores and distribution center to improve
our inventory processing capabilities.

         In August 2000, we completed the installation of our POS system in
every store. This system, which includes merchandise universal product code or
bar code scanning at the registers along with the expansion of our radio
frequency re-order system, allows our stores to reduce or re-deploy employee
team members that had previously been used to price mark each SKU. With the POS
data capturing capabilities, faster and more detailed sales and margin
information is available. We have improved our merchandising efforts by polling
the POS system on a regular basis to evaluate sale and pricing trends for each
SKU. In addition, we are able to generate data to assess the performance of our
advertising and promotional programs. This system also improves the speed of the
check-out process, reduces pricing errors and provides greater control over
register operations.

         Our real-time management information and control system has been
designed to support our key business objective of maintaining a high in-stock
position. Utilizing a radio frequency based hand-held computer, our department
managers electronically record and then transmit their orders to the corporate
office. These orders are then automatically sent to the appropriate vendor. This
internally developed system is based upon electronic data interchange, or EDI,
and connects with most of our vendors as well as with our distribution center.
Those vendors that lack EDI capability are given an option to use a web-based
solution that links with our systems.

Competition

         The market in which we compete is highly fragmented, containing
multi-store arts and crafts retailers, mass merchandisers, small local specialty
retailers, mail order vendors, hardware stores and a variety of other retailers.
We believe we are one of only seven retailers in the United States dedicated to
serving the arts and crafts market that have annual sales in excess of $100
million. We compete with many retailers and classify our principal competition
within the following three categories:

         o     Multi-store specialty chains. This category includes several
               multi-store specialty chains operating more than 35 stores and
               comprises: Michaels Stores, Inc., a chain which operates
               approximately 760 Michaels Stores throughout the United States;
               Jo-Ann Stores, Inc. which operates approximately 850 Jo-Ann
               Stores and approximately 70 Jo-Ann etc. stores nationwide; Hobby
               Lobby Stores, Inc. a chain which operates approximately 290
               stores primarily in the Midwestern United States; Garden Ridge,
               Inc., which operates approximately 40 stores primarily in the
               southeast and midwest United States; and Rag Shops, Inc. which
               operates approximately 70 stores located primarily in New Jersey
               and Florida.





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<PAGE>

         o     Mass merchandisers. This category includes Wal-Mart Stores, Inc.,
               and other mass merchandisers. These retailers typically dedicate
               only a relatively small portion of their selling space to a
               limited assortment of arts and crafts supplies and floral
               merchandise.

         o     Small, local specialty retailers. This category includes
               thousands of local "Mom & Pop" arts and crafts retailers.
               Typically, these are single store operations managed by the
               owner. The stores generally offer a limited selection and have
               limited resources for advertising, purchasing and distribution.
               Many of these stores have established a loyal customer base
               within a given community and compete on customer service.

         We believe that the principal competitive factors of our business are
pricing, breadth of merchandise selection, in-stock position and customer
service. We believe that we are well positioned to compete on each of these
factors.

Team Members

         As of December 31, 2002, we had 1,987 full-time and 2,645 part-time
team members, 4,319 of whom worked at our stores, 151 at the distribution center
and 162 at the corporate offices. None of our team members are covered by a
collective bargaining agreement, and we believe our relationship with our team
members to be good.

Trademarks

         We use the "A.C. Moore" name as a tradename and as a service mark in
connection with the sale of our merchandise. Our "A.C. Moore" logo has been
registered with the United States Patent and Trademark Office as a service mark.

Website and Availability of Information

         Our internet address is www.acmoore.com. We make available free of
charge on or through www.acmoore.com our annual report on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act, as soon as reasonably practicable after we electronically file such
material with, or furnish it to, the SEC.

         In addition, we will provide, at no cost, paper or electronic copies of
our reports and other filings made with the SEC. Requests should be directed to:

                          Leslie H. Gordon
                          A.C. Moore Art & Crafts, Inc.
                          500 University Court
                          Blackwood, NJ   08012

         The information on the website listed above, is not and should not be
considered part of this annual report on Form 10-K and is not incorporated by
reference in this document. This website is only intended to be an inactive
textual reference.







                                       10
<PAGE>

Cautionary Statement Relating to Forward Looking Statements

         Certain oral statements made by our management from time to time and
certain statements contained herein or in other periodic reports filed by us
with the Securities and Exchange Commission or incorporated by reference herein
or therein are "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), with respect to our results
of operations and our business. All such statements, other than statements of
historical facts, including those regarding market trends, our financial
position and results of operations, business strategy, projected costs, and
plans and objectives of management for future operations, are forward-looking
statements. In general, such statements are identified by the use of
forward-looking words or phrases including, but not limited to, "intended,"
"will," "should," "may," "believes," "expects," "expected," "anticipates," and
"anticipated" or the negative thereof or variations thereon or similar
terminology. These forward-looking statements are based on our current
expectations. Although we believe that the expectations reflected in such
forward looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct. These forward-looking statements
represent our current judgment. We disclaim any intent or obligation to update
our forward-looking statements. Because forward-looking statements involve risks
and uncertainties, our actual results could differ materially. Important factors
that could cause actual results to differ materially from our expectations
("Cautionary Statements") include those that are discussed below. All subsequent
written and oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by the Cautionary
Statements.

An increase in our sales, profitability and cash flow will depend on our ability
to increase the number of stores we operate and increase the productivity and
profitability of our existing stores.

         The key components of our growth strategy are to increase the number of
stores we operate and increase the productivity and profitability of our
existing stores. If we are unable to implement this strategy, our ability to
increase our sales, profitability and cash flow could be significantly impaired.
To the extent we are unable to open new stores as planned, our sales growth
would come only from increases in comparable store sales. Growth in
profitability in that case would depend significantly on our ability to increase
margins or reduce our costs as a percentage of sales. There are many factors,
some of which are beyond our control, which could impact our ability to
implement our strategy for opening new stores. These factors include:

         o     our ability to identify suitable markets in which to expand,

         o     the availability of suitable sites for additional stores,

         o     the ability to negotiate acceptable lease terms for sites we
               identify,

         o     the availability of acceptable financing to support our growth,
               and

         o     our ability to hire, train and retain a sufficient number of
               qualified managers and other store personnel.








                                       11
<PAGE>

Our success will depend on how well we manage our growth.

         Even if we are able to implement, to a significant degree, our key
growth strategies of expanding our store base and increasing the productivity
and profitability of our existing stores, we may experience problems relating to
our growth, which may prevent any significant increase in profitability or
negatively impact our cash flow. For example:

         o     The costs of opening and operating new stores may offset the
               increased sales generated by the additional stores;

         o     The opening of additional stores in an existing market could
               reduce net sales from existing stores in that market;

         o     The opening of stores in new geographic markets may present
               competitive and merchandising challenges that are different
               than those we face in our existing geographic markets;

         o     The closure or relocation of under-performing stores may
               result in us retaining liability for expensive leases;

         o     Our growth may outpace our ability to expand, upgrade and improve
               our administrative, operational and management systems, controls
               and resources;

         o     We may be unable to hire and train sufficient qualified managers
               and other store personnel;

         o     Our suppliers may be unable to meet our increased demand for
               merchandise as a result of the additional stores and increased
               productivity of our existing stores; and

        o      We may be unable to expand our existing distribution
               capabilities, or employ third-party distribution services on a
               cost effective basis, to provide sufficient merchandise for
               sale by our new stores.

A weak fourth quarter would have a material adverse effect on our operating
results for the year.

         Our business is affected by the seasonality pattern common to most
retailers. Due to the importance of our peak selling season, which includes
Fall/Halloween, Thanksgiving and Christmas, the fourth quarter has historically
contributed, and is expected to continue to contribute, virtually all of our net
income for the entire year. In anticipation of increased sales activity during
the fourth quarter, we increase our short-term borrowings and incur significant
additional expense both prior to and during the fourth quarter. These expenses
may include acquisition of additional inventory, advertising, in-store
promotions, seasonal staffing needs and other similar items. As a result, any
factors negatively affecting us during the fourth quarter of any year, including
adverse weather and unfavorable economic conditions, would have a material
adverse effect on our results of operations for the entire year.

Our quarterly results fluctuate due to a variety of factors and are not a
meaningful indicator of future performance.

         Our quarterly results have fluctuated in the past and may fluctuate
significantly in the future depending upon a variety of factors, including,
among other things:

         o     the mix of merchandise sold,

         o     the timing and level of markdowns,






                                       12
<PAGE>

         o     promotional events,

         o     adverse weather conditions;

         o     store openings and closings,

         o     remodels or relocations of our stores,

         o     length and timing of the holiday seasons,

         o     competitive factors, and

         o     general economic and political conditions.

We believe that period-to-period comparisons of past operating results cannot be
relied upon as indicators of future performance. If our operating results in any
future period fall below the expectations of securities analysts and investors,
the market price of our securities would likely decline.

Our success depends on key personnel whom we may not be able to retain or hire.

         We are currently dependent upon the continued services, ability and
experience of our senior management team, particularly John E. ("Jack") Parker,
our Chief Executive Officer and Lawrence H. Fine, our President and Chief
Operating Officer. The loss of the services of Mr. Parker or Mr. Fine or other
members of senior management could have a material adverse effect on us. We do
not maintain any key man life insurance on any members of our senior management
team. Our success in the future will also be dependent upon our ability to
attract and retain other qualified personnel, including store managers.

We face an extremely competitive retail business market.

         The arts and crafts retailing business is highly competitive. We
currently compete against a diverse group of retailers, including multi-store
arts and crafts retailers, mass merchandisers, small local specialty retailers,
mail order vendors, hardware stores and a variety of other retailers. Almost all
of our stores face aggressive competition in their market area from one or more
of our major competitors. In addition, alternative methods of selling crafts,
such as over the Internet or direct marketing, could result in additional future
competitors and increased price competition because our customers could more
readily comparison shop. Some of our competitors, particularly the mass
merchandisers and national arts and crafts chains, have substantially greater
financial resources and operate more stores than we do. We also compete with
these and other retailers for customers, suitable retail locations, suppliers
and qualified employees and management personnel. Moreover, increased
competition may result in potential or actual litigation between us and our
competitors relating to such activities as competitive sales and hiring
practices, exclusive relationships with key suppliers and manufacturers and
other matters. As a result, increased competition may adversely affect our
future financial performance, and we cannot assure you that we will be able to
compete effectively in the future.











                                       13
<PAGE>

We may not be able to successfully anticipate changes in merchandise trends and
consumer demands and our failure to do so may lead to loss of sales and the
closing of under-performing stores.

         Our success depends, in large part, on our ability to anticipate and
respond in a timely manner to changing merchandise trends and consumer demands.
Accordingly, any delay or failure by us in identifying and correctly responding
to changing merchandise trends and consumer demand could adversely affect
consumer acceptance of the merchandise in our stores. In addition, we make
decisions regarding merchandise well in advance of each of the seasons in which
such merchandise will be sold. Significant deviations from projected demand for
merchandise would have a material adverse effect on our results of operations
and financial condition, either from lost sales due to insufficient inventory or
lower margins due to the need to mark down excess inventory.

         A material decline in sales and other adverse conditions resulting from
our failure to accurately anticipate changes in merchandise trends and consumer
demands may require us to close under-performing stores. Closing stores would
subject us to additional costs including, but not limited to, taking reserves on
impaired assets, loss of customer goodwill and costs associated with outstanding
lease obligations.

Because of our small store base adverse events could have a greater impact on us
than if we had a larger store base.

         As of December 31, 2002, we operated a chain of 71 stores. The results
achieved to date by our relatively small store base may not be indicative of the
results of the larger number of stores which we intend to operate in existing
and new geographic markets. Because our current and planned stores are located
in the eastern United States, the effect on us of adverse events in this region
(such as weather or unfavorable regional economic conditions) may be greater
than if our stores were more geographically dispersed. Because overhead costs
are spread over a smaller store base, increases in our general and
administrative expenses could affect our profitability more negatively than if
we had a larger store base. Due to our relatively small store base, one or more
unsuccessful new stores, or a decline in sales at an existing store, will have a
more significant effect on our results of operations than would be the case if
we had a larger store base.

A disruption in the operations of our distribution center could have a material
adverse effect on our financial condition and results of operations.

         Our distribution center in suburban Philadelphia handles much of the
distribution for our stores. Our distribution center, and thus our distribution
operations, are vulnerable to damage or interruption from fire, flood, power
loss, break-ins and similar events. We have no formal disaster recovery plan.
The occurrence of unanticipated problems at our distribution center, all of
which may not be covered by insurance, could cause interruptions or delays in
our business which would have a material adverse effect on our financial
condition and results of operations.

We depend on a number of key vendors to supply our merchandise, and the loss of
any one of our key vendors may result in a loss of sales and significantly harm
our operating results.

         Our performance depends on our ability to purchase our merchandise in
sufficient quantities at competitive prices. Although we have many sources of

                                       14
<PAGE>
merchandise, SBAR'S, our largest supplier of merchandise, accounted for
approximately 19% of the aggregate dollar volume of our purchases in 2002. We
depend on SBAR'S to provide us with low-cost merchandise that would be less
efficient for us to obtain directly from other vendors or manufacturers. Our
future success is dependent upon our ability to maintain a good relationship
with SBAR'S and our other principal suppliers. We do not have any long-term
purchase agreements or other contractual assurances of continued supply, pricing
or access to new products, and any vendor or distributor could discontinue
selling to us at any time. We may not be able to acquire desired merchandise in
sufficient quantities or on terms acceptable to us in the future, or be able to
develop relationships with new vendors to replace discontinued vendors. Our
inability to acquire suitable merchandise in the future or the loss of one or
more key vendors and our failure to replace any one or more of them may have a
material adverse effect on our business, results of operation and financial
condition. Our smaller vendors generally have limited resources, production
capacities and operating histories, and some of our vendors have limited the
distribution of their merchandise in the past. These vendors may be susceptible
to cash flow problems, downturns in economic conditions, production
difficulties, quality control issues and difficulty delivering agreed-upon
quantities on schedule. We also cannot assure you that we would be able, if
necessary, to return product to these vendors and obtain refunds of our purchase
price or obtain reimbursement or indemnification from any of our vendors if
their products prove defective.

We face risks associated with sourcing and obtaining merchandise from foreign
sources.

         We have in recent years placed increased emphasis on obtaining floral
and seasonal items from overseas vendors, with approximately 12% of all of our
merchandise being purchased from overseas vendors in 2002. In addition, many of
our domestic suppliers purchase a portion of their merchandise from foreign
sources. Our future success will depend in large measure upon our ability to
maintain our existing foreign supplier relationships and to develop new ones.
While we rely on our long-term relationships with our foreign vendors, we have
no long-term contracts with them. In addition, virtually all of the merchandise
which we purchase from foreign sources is manufactured in the People's Republic
of China. Since adoption of an "open-door policy" in 1978, the Chinese
government has been pursuing economic reform policies, including the
encouragement of foreign trade and investment and greater economic
decentralization. We cannot assure you, however, that China will continue to
pursue these policies. Many of our imported products are subject to duties,
tariffs and quotas that may limit the quantity of some types of goods which we
may import into the United States. Our dependence on foreign imports also makes
us vulnerable to risks associated with products manufactured abroad, including,
among other things:

         o     changes in import duties, tariffs and quotas,

         o     loss of "most favored nation" trading status by the United
               States in relation to a particular foreign country, including
               the People's Republic of China,

         o     work stoppages,

         o     delays in shipments,

         o     freight cost increases,

         o     economic uncertainties, including inflation,

         o     foreign government political unrest, and

         o     trade restrictions, including the United States retaliating
               against protectionist foreign trade practices.








                                       15
<PAGE>

In addition, the recent outbreak of Severe Acute Respiratory Syndrome in China
may disrupt the manufacturing of goods and/or our ability to purchase goods from
suppliers in China. If any of these or other factors were to render the conduct
of business in particular countries undesirable or impractical, our financial
condition and results of operations could be materially and adversely affected
because we would have difficulty sourcing the merchandise we need to remain
competitive. An interruption or delay in supply from our foreign sources, or the
imposition of additional duties, taxes or other charges on these imports could
have a material adverse effect on our business, financial condition and results
of operations unless and until alternative supply arrangements are secured.
Products from alternative sources may be of lesser quality and/or more expensive
than those we currently purchase, resulting in a loss of sales to us.

Transition to a new distribution center may cause disruption in our operations.

         We are currently negotiating the construction of a new 700,000 square
foot distribution center in suburban Philadelphia which we plan to open in 2004
to replace our current distribution center and to support our growing store
base. If the systems and controls we set-up for the new facility do not work as
planned, or if the new facility is not ready at the time we anticipate, our
ability to supply our stores could be impaired which could have a material
adverse effect on our sales and financial performance.

We face risks relating to inventory.

         We depend upon our in-store department managers to reorder the majority
of our merchandise. The failure of these department managers to accurately
respond to inventory requirements could adversely affect consumer acceptance of
the merchandise in our stores and negatively impact sales which could have a
material adverse effect on our results of operations and financial condition. If
we misjudge the market, we may significantly overstock unpopular products and be
forced to take significant inventory markdowns, which would have a negative
impact on our operating results and cash flow. Conversely, shortages of key
items could have a material adverse impact on our operating results. In
addition, we conduct a physical inventory in our stores once a year, and
quarterly results are based on an estimated gross margin and accrual for
estimated inventory shrinkage.

Our management information systems may prove inadequate.

         We depend on our management information systems for many aspects of our
business. Some of our key software has been developed by our own programmers and
this software may not be easily integrated with other software and systems. Our
business will be materially and adversely affected if our management information
systems are disrupted or if we are unable to improve, upgrade, integrate or
expand upon our systems, particularly in light of our intention to significantly
increase the number of stores that we operate and our planned move to a new
distribution center.

Our two largest shareholders will continue to have substantial influence over
matters requiring a shareholder vote.

         Our two largest shareholders own approximately 32% of our outstanding
common stock. These shareholders, therefore, have the ability to exert
significant influence over our board of directors and the outcome of shareholder
votes.






                                       16
<PAGE>

An increase in the cost of fuel oil and oil-related products could impact our
earnings and margins.

         Prices for oil have fluctuated dramatically in the past and have risen
in recent months as a result of disruptions in oil producing countries. These
fluctuations impact our distribution costs and the distribution costs of our
vendors. If the price of fuel oil continues to increase, our distribution costs
will increase, which could impact our earnings. In addition, many of the
products we sell, such as paints, are oil-based. If the price of oil continues
to increase, the price of the oil-based products we purchase and sell may
increase, which could impact our margins.

Terrorist attacks and threats or actual war may impact all aspects of our
operations, revenues, costs and stock price in unpredictable ways.

         Recent terrorist attacks in the United States, as well as future events
occurring in response or in connection to them, including, without limitation,
future terrorist attacks against United States targets, rumors or threats of
war, actual conflicts involving the United States or its allies or military or
trade disruptions impacting our domestic or foreign suppliers of merchandise,
may impact our operations, including, among other things, causing delays or
losses in the delivery of merchandise to us and decreased sales of the products
we carry. More generally, any of these events could cause consumer confidence
and spending to decrease or result in increased volatility in the United States
and worldwide financial markets and economy. They also could result in a
deepening of any economic recession in the United States or abroad. These events
could also temporarily increase demand for our products as consumers respond by
traveling less and engaging in home-based leisure activities which could
contribute to a temporary increase in our sales which may not be sustainable.
Any of these occurrences could have a significant impact on our operating
results, revenues and costs and may result in the volatility of the market price
for our common stock and on the future price of our common stock.

EXECUTIVE OFFICERS OF THE REGISTRANT

         Our executive officers are as follows:
<TABLE>
<CAPTION>
                 Name                     Age                   Position
--------------------------------------    ---    ------------------------------------------------------
<S>                                       <C>    <C>
John E. (Jack) Parker.................    61     Chief Executive Officer and Director
Lawrence H. Fine......................    49     President, Chief Operating Officer and Director
Patricia A. Parker....................    60     Executive Vice President, Merchandising
Leslie H. Gordon......................    59     Executive Vice President and Chief Financial Officer
Janet Parker..........................    40     Executive Vice President, Merchandising and Marketing
Jack Robinson.........................    51     Executive Vice President, Store Operations
</TABLE>

         Mr. Parker, our co-founder, has been Chief Executive Officer and a
director since our inception and was our President from inception until June
2001. From 1959 to 1984, Mr. Parker worked for the F.W. Woolworth Company 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 and the father of
Janet Parker.

         Mr. Fine has served as our President since June 2001 and our Chief
Operating Officer since February 2003. Mr. Fine was elected as a director in
August 2002. Previously Mr. Fine was Executive Vice President - General
Merchandise Manager for arts and crafts retailer Michaels Stores, Inc., a
position he held since December 1996. From 1995 until joining Michaels in
December 1996, he was Senior Vice President of Merchandising for Party City
Corp. Prior to joining Party City, Mr. Fine held a variety of merchandising
positions with the Jamesway Corporation for nearly 16 years.






                                       17
<PAGE>

         Ms. Patricia Parker has served as our Executive Vice President,
Merchandising since September 1990. From 1985 to 1990, she served as our Vice
President. Ms. Parker is responsible for purchasing all of our floral and
seasonal merchandise and our import purchasing program. Ms. Parker served as a
director of the Company until August 2002. Ms. Parker is the wife of Jack Parker
and the mother of Janet Parker.

         Mr. Gordon has served as our Executive Vice President and Chief
Financial Officer since February 1999. From March 1996 to January 1999, Mr.
Gordon served as our Senior Vice President, Treasurer and Chief Financial
Officer. From 1992 to 1995, Mr. Gordon was Senior Vice President, Finance of
C & J Clark America, Inc., a shoe manufacturer, wholesaler and retailer. From
1986 to 1992, Mr. Gordon served as Senior Vice President, Finance, of SILO,
Inc., an electronics retailer.

         Ms. Janet Parker has served as our Executive Vice President,
Merchandising and Marketing since February 2003. From 1994 to January 2003 Ms.
Parker served as Senior Vice President, Merchandising. From 1990 to 1994, Ms.
Parker served as our Vice President of Administration and from 1985 to 1990, she
served as our Accounting Manager. Ms. Parker is the daughter of Jack and
Patricia A. Parker.

         Mr. Robinson has been Executive Vice President, Store Operations since
February 2003. From 1997 to 2003 Mr. Robinson served as our Senior Vice
President Store Operations and prior to that, as Vice President, Store
Operations from 1993 to 1997. From 1990 to 1993, Mr. Robinson was a store
manager for the Company. Prior to 1990, Mr. Robinson held various management
positions with the F.W. Woolworth Company.

ITEM 2.  PROPERTIES.

         As of December 31, 2002, we operated 71 stores in twelve states, all of
which are leased and located within a 700 mile radius of our suburban
Philadelphia distribution center. The number of our stores located in each state
and the city in which each store is located is shown in the following table:


















                                       18
<PAGE>
<TABLE>
<CAPTION>
Connecticut (4)           New Hampshire (1)           North Carolina (7)        Rhode Island (1)
---------------           -----------------           ------------------        ----------------
<S>                       <C>                         <C>                       <C>
 Manchester                Nashua                      Cary                      Warwick
 New London                                            Concord
 Orange                   New Jersey (11)              Fayetteville
 Plainville               ---------------              Hickory
                           Brick Town                  Raleigh                  South Carolina (2)
                           Clifton                     Wilmington               ------------------
                           Deptford                    Winston-Salem             Greenville
                           East Brunswick                                        N. Charleston
                           English Creek
Delaware (2)               Hamilton
------------               Linden
 Dover                     Moorestown
 Wilmington                Parsippany                 Pennsylvania (14)         Tennessee (1)
                           Shrewsbury                 -----------------         -------------
                           Watchung                    Allentown                 Knoxville
                                                       Altoona
Maine (1)                                              Bensalem
---------                                              Broomall
 Portland                                              Exton
                                                       Hanover
                                                       Harrisburg
                                                       Lancaster
Maryland (5)              New York (10)                Langhorne                Virginia (2)
------------              ------------                 Montgomeryville          ------------
 Frederick                 Binghamton                  Muncy                     Fairfax
 Glen Burnie               Ithaca                      Philadelphia              Falls Church
 Hagerstown                Latham                      Reading
 Rockville                 Middletown                  Scranton
 White Marsh               Nanuet
                           Poughkeepsie                                         West Virginia (2)
                           Saratoga Springs                                     -----------------
                           Syracuse                                              Clarksburg
Massachusetts (8)          Utica                                                 Huntington
-----------------          Yorktown Heights
 Bellingham
 Brockton
 Danvers
 Framingham
 Holyoke
 Hyannis
 North Dartmouth
 Woburn
</TABLE>

         Most store leases have an average initial term of ten years, with three
five-year renewal options, and provide for predetermined escalations in future
minimum annual rent or additional rent contingent upon store sales levels. The
pro rata portion of scheduled rent escalations has been included in other
long-term liabilities in our balance sheet.

         We select store sites on the basis of various factors, including
physical location, demographics, anchor and other tenants, location within the
center, parking and available lease terms. We look for co-tenants that generate
a high rate of shopping traffic, such as specialty value-oriented women's
retailers, leading chain supermarkets, discount chains, home improvement
centers, book stores and domestics stores. We believe our stores are attractive
to developers because they attract high rates of customer traffic and generate
above average net sales per square foot.

         We lease 561,000 square feet of distribution and warehouse facilities,
consisting of our 253,000 square foot distribution center and adjoining 10,000
square foot office complex in suburban Philadelphia and our two nearby satellite
warehouses which total an additional 308,000 square feet. Our distribution
center is leased for a term which expires in March 2005, subject to our option
to renew the term for an additional six years. Our satellite warehouses are
leased for a term which expires in March 2004.







                                       19
<PAGE>

         We are currently negotiating to build a new distribution center and
office complex, which we plan to open in 2004. We anticipate that this new
facility, which will be located near our existing distribution center, will be
700,000 square feet for distribution plus 60,000 square feet of office space.
The total cost of the land and building for this facility is estimated to be in
the range of $40.0 million. We expect to finance two-thirds of this project
through long term debt. We believe that our new facility, when completed, will
enable us to effectively service all of our existing and planned store locations
within an 800 mile radius of the new distribution center.

ITEM 3.  LEGAL PROCEEDINGS.

         From time to time, we are involved in litigation arising in the
ordinary course of our business. None of the pending litigation, in the opinion
of management, is likely to have a materially adverse effect on our results of
operations or financial condition. We maintain general liability insurance in
amounts deemed adequate by management.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

          No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 2002, through the solicitation of proxies or otherwise.
























                                       20
<PAGE>



                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Our common stock is quoted on the Nasdaq National Market and trades
under the symbol "ACMR." The following table sets forth the high and low sales
prices per share of our common stock as reported on the Nasdaq National Market
for the periods indicated. All prices have been adjusted for the 2 for 1 stock
split paid July 31, 2002.

                                                         High         Low
                                                        ------       ------
             Year Ended December 31, 2002
First Quarter........................................   $19.36       $13.12
Second Quarter.......................................    24.30        18.03
Third Quarter........................................    23.96        14.81
Fourth Quarter.......................................    22.28        12.71

             Year Ended December 31, 2001
First Quarter........................................    $4.72        $3.97
Second Quarter.......................................     7.70         4.32
Third Quarter........................................     9.53         5.83
Fourth Quarter.......................................    17.00         7.58

         The number of record holders of our common stock as of March 20, 2003
was approximately 108.

         Since becoming a public company we have never declared or paid any cash
dividends on our common stock. We currently intend to retain our future
earnings, if any, to finance the expansion of our business and do not expect to
pay any cash dividends in the foreseeable future.

         See Part III, Item 12 for a description of our equity compensation
plans.














                                       21
<PAGE>



ITEM 6. SELECTED FINANCIAL DATA.

         The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes included elsewhere herein. The statement of income data for the years
ended December 31, 2002, 2001 and 2000 and the balance sheet data at December
31, 2002 and 2001 are derived from our audited consolidated financial statements
appearing elsewhere herein. The statement of income data for the years ended
December 31, 1999 and 1998 and the balance sheet data at December 31, 2000, 1999
and 1998 are derived from our audited consolidated financial statements not
included herein.
<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                             -----------------------------------------------------
                                                               2002         2001       2000      1999       1998
                                                             --------     --------   --------  --------   --------
                                                              (In thousands, except per share and operating data)
        <S>                                                  <C>          <C>        <C>       <C>        <C>
         Statement of Income Data:
           Net sales.......................................  $393,392     $332,413   $262,057  $222,998   $187,005
           Gross margin....................................   148,791      124,098     96,207    79,920     68,278
           Selling, general and administrative expenses       123,117      105,447     83,516    70,336     60,214
           Store pre-opening expenses......................     2,340        2,518      1,928       609      2,234
           Income from operations..........................    23,334       16,133     10,763     8,975      5,830
           Net income......................................    14,457        9,507      6,557     5,664      3,935
           Net income per share, diluted (1)...............  $   0.77     $   0.61   $   0.44  $   0.38   $   0.26

         Weighted average shares outstanding, diluted(1) ..    18,828       15,505     14,888    14,810     15,034
         Balance Sheet Data (as of):
           Working capital.................................  $123,811     $ 56,422   $ 47,168  $ 46,625   $ 42,721
           Total assets....................................   196,658      123,811    107,392    90,617     82,357
           Total debt .....................................     1,846        3,174      1,201     1,568      1,918
           Shareholders' equity............................   144,031       73,727     63,681    56,972     51,171

         Other Data:
           Cash flows from operating activities............     8,171        6,768      6,709     9,808     (4,445)
           Number of stores open at end of period..........        71           61         50        40         37
           Net sales per total square foot (2).............  $    272     $    273   $    271  $    271   $    302
           Average net sales per store (000's) (2).........  $  6,064     $  6,070   $  5,919  $  5,915   $  6,329
           Comparable store sales increase (3).............        5%           8%         3%        6%         3%
</TABLE>
---------------
(1) All share and per share data has been adjusted to reflect the 2 for 1 stock
    split paid July 31, 2002.
(2) Includes only stores open during the entire period.
(3) Stores are added to the comparable store base at the beginning of their
    fourteenth full month of operation.














                                       22
<PAGE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

Overview

         We are a rapidly growing specialty retailer offering a vast selection
of arts, crafts and floral merchandise to a broad demographic of consumers. Our
target customers are primarily women between the ages of 25 and 55 who are
looking for ideas to decorate their homes, create handmade items, or otherwise
engage in arts and crafts activities. We have grown from 17 stores in January
1997 to 71 stores in December 2002. Our stores are located in the eastern United
States from New England to the Carolinas.

         We established our first store in Moorestown, New Jersey in 1984 and
grew to five stores by the end of 1993. We added a total of 12 additional stores
in 1994 and 1995. In 1995, we began implementing an aggressive expansion plan
and built our infrastructure to position us for that growth. By the end of 1996,
we had recruited experienced senior retail executives in the areas of
operations, merchandising and finance, and made key additions and changes in
other areas such as buying, information systems, human resources and real
estate. From 1997 through 2002 we continued to strengthen and expand our
management team including the addition of Lawrence H. Fine as our President in
June 2001. We also continued to develop our operating systems, the most
important of which was our POS system implemented in August 2000.

         In 1996, we leased a new 131,000 square foot distribution center and
office complex in suburban Philadelphia, which was expanded to 263,000 square
feet in 1998. We also developed an automated ordering system using EDI to link
us electronically with most of our vendors and developed a real estate program
to accommodate our expansion plan. In 1997, we received financing for our growth
through an initial public offering of our common stock with net proceeds, after
the payment of outstanding debt, of approximately $16 million. In 1997 and 1998,
we continued implementing our expansion strategy by opening a total of 20 new
stores.

         In 1998 we did not meet our profit objectives. As a result, in 1999, we
made a decision to concentrate on improving the profitability of our existing
store base and to open only three stores. We revamped our store opening
procedures, prepared our systems for further expansion, and strengthened our
merchandising with improved communication between our store management and our
buyers.

         With the changes we made in 1999, we re-established our expansion plan
and opened ten new stores in 2000, 11 new stores in 2001 and 12 new stores in
2002. In 2002 we closed two stores; one was destroyed by fire and the other was
in an area which had negative demographic changes and the lease had expired.
During the next two years, we intend to increase our store base by approximately
20% per year, all within 800 miles of our suburban Philadelphia distribution
center, an area encompassing approximately 50% of the United States population.
We believe we can operate at least 140 stores in this area without significantly
diluting sales in our existing stores. To accommodate this growth, we are in the
process of negotiating the construction of a new distribution center to replace
our existing facility. The new distribution center will be 700,000 square feet
plus 60,000 square feet of office space and will be located near our existing
facility.









                                       23
<PAGE>

Results of Operations

         The following table sets forth, for the periods indicated, selected
statement of operations data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                     ---------------------------------
                                                                      2002         2001          2000
                                                                     ------       ------        ------
         <S>                                                         <C>          <C>           <C>
         Net sales.............................................      100.0%       100.0%        100.0%
         Cost of sales.........................................       62.2         62.7          63.3
                                                                     ------       ------        ------
         Gross margin..........................................       37.8         37.3          36.7
         Selling, general and administrative expenses..........       31.3         31.7          31.9
         Store pre-opening expenses............................        0.6          0.7           0.7
                                                                     ------       ------        ------
         Income from operations................................        5.9          4.9           4.1
         Interest expense (income), net........................       (0.2)         0.2           0.1
                                                                     ------       ------        ------
         Income before income taxes............................        6.1          4.7           4.0
         Provision for income taxes............................        2.4          1.8           1.5
                                                                     ------       ------        ------
         Net income............................................        3.7%         2.9%          2.5%
                                                                     ======       ======        ======
</TABLE>
2002 Compared to 2001

         Net Sales. Net sales increased $61.0 million, or 18.3%, to $393.4
million in 2002 from $332.4 million in 2001. This increase resulted from (i) net
sales of $29.2 million from twelve new stores opened in 2002, (ii) net sales of
$15.9 million from stores opened in 2001 which were not included in the 2001
comparable store base, and (iii) a comparable store sales increase of $15.9
million, or 5%. Stores are added to the comparable store base at the beginning
of the fourteenth full month of operation.

         Gross Margin. Gross margin is net sales minus the cost of merchandise
including certain distribution and purchasing costs. The gross margin increased
to 37.8% of net sales in 2002 from 37.3% in 2001. The increase is due to changes
in our product mix, cost reductions obtained from our vendors and from
leveraging our buying and distribution expense over a larger store base.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses include (i) direct store level expenses, including rent
and related operating costs, payroll, advertising, depreciation and other direct
costs, and (ii) corporate level costs not directly associated with or allocable
to cost of sales including executive salaries, accounting and finance, corporate
information systems, office facilities and other expenses. Selling, general and
administrative expenses increased $17.7 million, or 16.8%, in 2002 to $123.1
million from $105.4 million in 2001. Of the $17.7 million increase, $15.7
million was attributable to the stores opened in 2002 which were not open during
2001 and the stores opened in 2001 which were not included in the 2001
comparable store base. The remaining increase of $2.0 million is attributable to
the increase in corporate costs to support our growth. As a percentage of net
sales, selling, general and administrative costs decreased to 31.3% of net sales
in 2002 from 31.7% of net sales in 2001. This decrease is primarily due to
leveraging store and central costs over a greater sales base.

         Store Pre-Opening Expenses. We expense store pre-opening costs as they
are incurred. Pre-opening expenses for the 12 new stores opened in 2002,
amounted to $2.3 million. In 2001, we opened eleven new stores and relocated two
stores and incurred pre-opening expenses of $2.5 million.







                                       24
<PAGE>

         Interest Expense. Interest was $277,000 for 2002, a decrease of
$504,000 from 2001. The decrease is due to the reduction in short term
borrowings as a result of cash received from the sale of shares in March 2002.

         Interest Income. Interest income was $750,000 in 2002, an increase of
$644,000 from 2001. The increase was due to income from cash investments made
with the proceeds of our 2002 sale of shares.

         Income Taxes. Our effective income tax rate was 39.3% for 2002 and
38.5% for 2001. The increase in our effective rate is principally due to
increases in our state taxes.

2001 Compared to 2000

         Net Sales. Net sales increased $70.4 million, or 26.8%, to $332.4
million in 2001 from $262.1 million in 2000. This increase resulted from (i) net
sales of $28.9 million from eleven new stores opened in 2001, (ii) net sales of
$19.9 million from stores opened in 2000 which were not included in the 2000
comparable store base, and (iii) a comparable store sales increase of $21.6
million, or 8%.

         Gross Margin. The gross margin increased to 37.3% of net sales in 2001
from 36.7% in 2000. The increase is due to changes in our product mix, cost
reductions obtained from our vendors and from leveraging our buying and
distribution expense over a larger store base, offset somewhat by higher freight
costs.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $21.9 million, or 26.3%, in 2001 to $105.4
million from $83.5 million in 2000. Of the $21.9 million increase, $15.8 million
was attributable to the stores opened in 2001 which were not open during 2000
and the stores opened in 2000 which were not included in the 2000 comparable
store base. Of the remainder, $3.9 million is due to increases in the comparable
stores and $2.2 million is attributable to the increase in corporate costs to
support our growth. As a percentage of net sales, selling, general and
administrative costs decreased to 31.7% of net sales in 2001 from 31.9% of net
sales in 2000. This decrease is primarily due to leveraging store and central
costs over a greater sales base.

         Store Pre-Opening Expenses. We expense store pre-opening costs as they
are incurred. Pre-opening expenses for the 11 new stores opened in 2001, and two
stores which were relocated during the year amounted to $2.5 million. In 2000,
we opened ten new stores and incurred pre-opening expenses of $1.9 million.

         Interest Expense. Interest expense was $781,000 for 2001, an increase
of $436,000 from 2000. The increase is due to the use of short term borrowings
to fund the new stores added in 2000 and 2001.

         Interest Income. Interest income was $106,000 in 2001, a decrease of
$52,000 from 2000. The decrease was due to a lower balance of cash investments
as the proceeds of our 1997 initial public offering of common stock were used to
fund our growth.

         Income Taxes. Our effective income tax rate was 38.5% for 2001 and
38.0% for 2000.








                                       25
<PAGE>

Quarterly Results and Seasonality

         The following table sets forth our unaudited quarterly operating
results for our eight most recent quarterly periods and the number of stores
open at the end of each period (dollars in thousands, except share and store
data).
<TABLE>
<CAPTION>
                                                          2002                                  2001
                                          -----------------------------------  ------------------------------------
                                           First    Second   Third    Fourth     First    Second    Third   Fourth
                                          Quarter  Quarter  Quarter   Quarter   Quarter  Quarter  Quarter   Quarter
                                          -------  -------  -------  --------  --------  -------  -------  --------
<S>                                       <C>      <C>      <C>      <C>       <C>       <C>      <C>      <C>
Net sales............................     $85,853  $82,866  $89,726  $134,947   $66,423  $67,131  $76,220  $122,639
Cost of sales .......................      54,162   52,170   56,423    81,846    41,978   42,264   47,951    76,122
                                          -------  -------  -------  --------  --------  -------  -------  --------
  Gross margin.......................      31,691   30,696   33,303    53,101    24,445   24,867   28,269    46,517
  Selling, general and administrative      29,585   29,514   31,180    32,838    23,438   24,718   26,936    30,355
  Pre-opening expense................         654      384      850       452     1,075      374      625       444
                                          -------  -------  -------  --------  --------  -------  -------  --------
Income (loss) from operations........       1,452      798    1,273    19,811       (68)    (225)     708    15,718
  Interest expense (income), net.....          11     (187)    (150)     (147)       32      149      297       197
                                          -------  -------  -------  --------  --------  -------  -------  --------
Income (loss) before income taxes....       1,441      985    1,423    19,958      (100)    (374)     411    15,521
Income tax expense (benefit).........         565      401      566     7,818       (38)    (141)     156     5,974
                                          -------  -------  -------  --------  --------  -------  -------  --------
Net income (loss)....................         876      584      857    12,140       (62)    (233)     255     9,547
                                          =======  =======  =======  ========  ========  =======  =======  ========
Net income (loss)  per share, diluted     $  0.05  $  0.03  $  0.04  $   0.62  $  (0.00) $ (0.02) $  0.02  $    .60
Diluted average shares outstanding...      16,936   19,780   19,807    19,710    14,846   14,858   15,576    15,914

Number of stores open at end of period         63       65       70        71        53       55       58        61
Comparable store sales increase......         14%      10%       4%       (2%)       4%       4%       7%       15%
</TABLE>

         Due to the importance of our peak selling season, which includes
Fall/Halloween, Thanksgiving and Christmas, the fourth quarter has historically
contributed, and is expected to continue to contribute, virtually all of our
profitability for the entire year. As a result, any factors negatively affecting
us during the fourth quarter of any year, including adverse weather and
unfavorable economic conditions, would have a material adverse effect on our
results of operations for the entire year.

         Our quarterly results of operations also may fluctuate based upon such
factors as the length of holiday seasons, the date on which holidays fall, the
number and timing of new store openings, the amount of store pre-opening
expenses, the amount of net sales contributed by new and existing stores, the
mix of products sold, the amount of sales returns, the timing and level of
markdowns and other competitive factors.

         Our success depends, in large part, on our ability to anticipate and
respond in a timely manner to changing merchandise trends and consumer demands.
Accordingly, any delay or failure by us in identifying and correctly responding
to changing merchandise trends and consumer demand could adversely affect
consumer acceptance of the merchandise in our stores. In addition, we make
decisions regarding merchandise well in advance of each of the seasons in which
such merchandise will be sold. Significant deviations from projected demand for
merchandise would have a material adverse effect on our results of operations
and financial condition, either from lost sales due to insufficient inventory or
lower margins due to the need to mark down excess inventory.

Liquidity and Capital Resources

         Our cash is used primarily for working capital to support our inventory
requirements and fixtures and equipment, pre-opening expenses and beginning
inventory for new stores. In recent years, we have financed our operations and
new store openings primarily with cash from operations, the net proceeds we
received from our initial public offering in 1997 and with borrowings under bank
financing agreements.






                                       26
<PAGE>

         In March 2002 we completed a secondary offering in which we sold
3,500,000 new post-split shares, with net cash proceeds of $52,125,000.

         At December 31, 2002 and 2001, our working capital was $123.8 million
and $56.4 million, respectively. During 2002, 2001 and 2000, cash of $8.2
million, $6.7 million and $6.8 million was generated by operations,
respectively. In these three periods, $16.8 million, $12.9 million and $13.5
million of cash, respectively, was used to increase inventory levels to support
both new and existing stores. In these periods, part of the inventory increase
was financed through increases in accounts payable of $2.6 million, $1.3 million
and $8.1 million, respectively.

         Net cash used in investing activities during 2002, 2001 and 2000 was
$9.7 million, $8.7 million and $10.6 million, respectively. This use of cash was
for capital expenditures. In 2002 and 2001, capital expenditures related
principally to new store openings. In 2000, capital expenditures related
principally to new store openings and the implementation of the POS system. In
2003, we expect to spend approximately $44.0 million on capital expenditures,
which includes approximately $34.0 million for land, building, equipment and
systems for our new distribution center, $5.0 million for new store openings,
and the remainder for remodeling existing stores, upgrading systems in existing
stores, warehouse equipment and corporate systems development. The total cost of
the new distribution center is estimated to be in the range of $40.0 million. We
expect to finance two-thirds of this project through long-term debt.

         In the year ended December 31, 2002, net cash provided by financing
activities was principally the $ 52.1 million proceeds from our sale of shares
in March 2002.

         In the year ended December 31, 2001, net cash provided by financing
activities was $2.4 million, principally as a result of $2.8 million of proceeds
received from equipment financing.

        On July 11, 2002 we signed a new $25.0 million one year line of credit
agreement with First Union National Bank. With the successful completion of the
sale of shares in March 2002, we no longer required the existing $50.0 million
revolving credit agreement which contained several restrictive covenants and was
more expensive to maintain. Borrowing under this new line will bear interest at
LIBOR plus 125 basis points. We believe the cash generated from operations
during the year, funds received through the financing of the new distribution
center and available borrowings under the new financing agreement will be
sufficient to finance our working capital and capital expenditures requirements
for at least the next 12 months.

         We lease our retail stores, distribution center, satellite warehouse
facilities, and corporate headquarters under noncancelable operating leases. At
December 31, 2002 our total obligations under these operating leases were $166.7
million. In addition, we had capital lease obligations of $1.8 million at
December 31, 2002. The following table reflects as of December 31, 2002 the
payments due for the periods indicated under our capital and operating leases.
<TABLE>
<CAPTION>
                                                       Payments Due By Period ($000)
     Contractual      ------------------------------------------------------------------------------------------------
     Obligations             Total         Less than 1 Year       1-3 Years          4-5 Years         After 5 Years
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S>                   <C>                <C>                 <C>                <C>                 <C>
Capital Lease
   Obligations....      $    1,846           $  1,342           $     504                 --                  --
Operating
   Leases.........        $166,687            $22,155             $58,429            $33,837             $52,266
</TABLE>















                                       27
<PAGE>

General

        On June 25, 2002, our Board of Directors approved a two-for-one stock
split to shareholders of record as of the close of business on July 15, 2002.
The shares were distributed on July 31, 2002.

Critical Accounting Policies

        Our accounting policies are more fully described in Note 1 of the Notes
to Consolidated Financial Statements included herein. As disclosed in Note 1 of
the Notes to Consolidated Financial Statements, the preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions about future events that affect the
amounts reported in the Consolidated Financial Statements and accompanying
notes. Since future events and their effects cannot be determined with absolute
certainty, actual results may differ from those estimates. Management makes
adjustments to its assumptions and judgments when facts and circumstances
dictate. The amounts currently estimated by us are subject to change if
different assumptions as to the outcome of future events were made. We evaluate
our estimates and judgments on an ongoing basis and predicate those estimates
and judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances. Management believes the
following critical accounting policies, among others, encompass the more
significant judgments and estimates used in preparation of the Consolidated
Financial Statements.

Revenue Recognition

Revenue is recognized at point of retail sale.

Merchandise Inventories

         We value our inventories at stores at the lower of cost or market as
determined using the retail inventory method. Because we do not have perpetual
inventory records for inventory in our stores, we perform complete physical
inventories in each of our stores at the end of each year. The actual physical
count of merchandise is made principally by third party inventory counting
service firms.

         Inventory valuation methods also require certain management estimates
and judgments. These include estimates of net realizable value on product
designated for clearance or on slow moving merchandise. The accuracy of our
estimates can be affected by many factors, some of which are outside of our
control, including changes in economic conditions and consumer buying trends.
Historically, we have not experienced significant differences in our estimates
of recovery compared with actual results. We believe our process results in
reasonable estimates of our retail inventory on hand at year-end.

Advertising Costs

         The costs incurred for advertising are expensed the first time the
advertising takes place, and are offset by re-imbursements received under
cooperative advertising programs with certain vendors. Co-op advertising funds
are only recognized when we have performed our contractual obligation under a
co-op advertising agreement.









                                       28
<PAGE>

Impairment of Long-Lived Assets

         We periodically review long-lived assets for impairment by comparing
the carrying value of assets with their estimated future undiscounted cash
flows. To the extent these future estimates change, the conclusion regarding
impairment may differ from our current estimates, and the loss, if any, would be
recognized at that time. The impairment loss is calculated as the difference
between assets carrying values and the present value of estimated net cash flows
or comparable market values, giving consideration to recent operating
performance and pricing trends.

Income Taxes

         We do business in various jurisdictions that impose income taxes.
Management determines the aggregate amount of income tax expense to accrue and
the amount currently payable based upon the tax statutes of each jurisdiction.
This process involves adjusting income determined using generally accepted
accounting principles for items that are treated differently by the applicable
taxing authorities. Deferred tax liabilities are reflected on our balance sheet
for temporary differences that will reverse in subsequent years. If different
judgments had been made, our tax expense, assets and liabilities could have been
different.

Other Estimates

         Management uses estimates in the determination of the required accruals
for general liability, workers' compensation, and health insurance. These
estimates are based upon examination of historical trends, industry claims
experience and, in certain cases, calculations performed by third-party experts.
Projected claims information may change in the future and may require management
to revise these accruals.

         We are periodically involved in various legal actions arising in the
normal course of business. Management is required to assess the probability of
any adverse judgments as well as the potential range of any losses. Management
determines the required accruals after a careful review of the facts of each
legal action. Our accruals may change in the future due to new developments in
these matters.

Inflation/Deflation

         Management does not believe that inflation or deflation has had a
material effect on our financial condition or results of operations during the
past three years.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards, or SFAS, No. 143, "Accounting for
Asset Retirement Obligations" requires the recognition of a liability for the
estimated cost of disposal as part of the initial cost of a long-lived asset. We
must adopt SFAS 143 in 2003. We believe that adopting this pronouncement will
not have a material impact on our consolidated results of operations, financial
position or cash flows.

In May 2002, the Financial Accounting Standards Board, or FASB issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections as of April 2002". SFAS 145 among
other things, rescinds various pronouncements regarding early extinguishment of
debt. It allows extraordinary accounting treatment for early extinguishment of
debt only when the provisions of Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions", are met. SFAS 145 provisions regarding early
extinguishment of debt are generally effective for fiscal years beginning after
May 15, 2002. We adopted this statement effective January 1, 2003. The adoption
of SFAS 145 did not have a material impact on our financial position, results of
operations or cash flows.








                                       29
<PAGE>

In June 2002, the FASB, issued SFAS, No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and supercedes
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Under EITF 94-3, a liability for an exit cost
was recognized at the date of commitment to an exit or disposal plan. This
Statement also establishes that fair value is the objective for initial
measurement of the liability. We must adopt SFAS 146 for all exit or disposal
activities that are initiated after December 31, 2002. We do not believe that
adopting this pronouncement will have a material impact on our consolidated
results of operations, financial position or cash flows.

In November 2002, the EITF reached consensus on Issue 02-16, "Accounting by a
Customer (including a Reseller) for Cash Consideration Received from a Vendor."
EITF Issue 02-16 addresses the accounting for cash consideration received by a
customer from a vendor (e.g., slotting fees, cooperative advertising payments,
buydowns) and rebates or refunds from a vendor that is payable only if the
customer completes a specified cumulative level of purchases or remains a
customer for a specified time period. EITF Issue 02-16 is effective for
agreements modified or entered into after January 1, 2003. We are currently
evaluating the impact of EITF Issue 02-16, and have not determined whether or
not the adoption of the provisions of EITF Issue 02-16 will have a material
impact on our consolidated operating results or financial position.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure an amendment of FASB Statement No.
123", SFAS 148 amends SFAS 123 to provide alternative methods of transition for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation. It also amends the disclosure provisions
of SFAS 123 to require prominent disclosure about the effects on reported net
income of an entity's accounting policy decisions with respect to stock-based
employee compensation. It also amends APB Opinion No. 28, "Interim Financial
Reporting", to require disclosure about those effects in interim financial
information. We have adopted the disclosure requirements of SFAS 148 in this
Form 10-K for the fiscal year ended December 31, 2002.

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". FIN 45 elaborates on the disclosures to
be made by a guarantor about its obligations under certain guarantees that it
has issued. It also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The disclosure requirements of FIN 45 are
effective for financial statements for periods ending after December 15, 2002.
The initial recognition and initial measurement provisions of FIN 45 are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. We have determined that no additional disclosures are
required for this Form 10-K issued for the year ended December 31, 2002, and the
adoption of the initial recognition and measurement provisions of FIN 45 is not
expected to have a material impact on our financial position, results of
operations, or cash flows.






                                       30
<PAGE>

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities". FIN 46 clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The disclosure requirements of FIN 46 are effective
for financial statements issued after January 31, 2003. The initial recognition
provisions of FIN 46 are applicable immediately to new variable interests in
variable interest entities created after January 31, 2003. For a variable
interest in a variable interest entity created before February 1, 2003, the
initial recognition provisions of FIN 46 are to be implemented no later than the
beginning of the first interim or annual reporting period beginning after June
15, 2003. We have determined that we do not have any variable interests in any
variable interest entities. Therefore, no disclosure is required for this Form
10-K issued for the fiscal year ended December 31, 2002 and the adoption of the
initial recognition provisions of FIN 46 is not expected to have a material
impact on our financial position, results of operations, or cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

         Not applicable.






























                                       31
<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                                      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                            A.C. MOORE ARTS & CRAFTS, INC.

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
Report of Independent Accountants.........................................................................       33

Consolidated Balance Sheets at December 31, 2002 and 2001.................................................       34

Consolidated Statements of Income for each of the three years
         in the period ended December 31, 2002............................................................       35

Consolidated Statements of Changes in Shareholders' Equity for each of the
         three years in the period ended December 31, 2002................................................       36

Consolidated Statements of Cash Flows for each of the three
         years in the period ended December 31, 2002......................................................       37

Notes to Consolidated Financial Statements................................................................       38
</TABLE>


















                                                         32
<PAGE>



                        Report of Independent Accountants


To the Board of Directors and Shareholders of
A.C. Moore Arts & Crafts, Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of A.C.
Moore Arts & Crafts, Inc. and its subsidiaries at December 31, 2002 and 2001,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
February 19, 2003















                                       33
<PAGE>




                           A.C. MOORE ARTS & CRAFTS, INC.
                             CONSOLIDATED BALANCE SHEETS

                               (dollars in thousands)
<TABLE>
<CAPTION>
                                                                   December 31,
                                                               --------------------
                                                                 2002        2001
                                                               --------    --------
<S>                                                            <C>         <C>
ASSETS
Current assets:
   Cash and cash equivalents.............................      $ 61,584    $ 10,818
   Accounts receivable...................................         1,858         703
   Inventories...........................................       102,497      85,674
   Prepaid expenses and other current assets.............           871         823
                                                               --------    --------
                                                                166,810      98,018

Property and equipment, net..............................        27,997      24,969
Other assets.............................................         1,851         824
                                                               --------    --------
                                                               $196,658    $123,811
                                                               ========    ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of equipment leases...................      $  1,342    $  1,329
   Trade accounts payable................................        24,253      23,322
   Accrued payroll and payroll taxes.....................         5,737       5,098
   Accrued expenses......................................         8,326       7,247
   Income taxes payable..................................         3,341       4,600
                                                               --------    --------
                                                                 42,999      41,596
                                                               --------    --------
Long-term liabilities:
   Capitalized equipment leases, less current portion....           504       1,845
   Deferred tax liability................................         5,150       3,427
   Other long-term liabilities...........................         3,974       3,216
                                                               --------    --------
                                                                  9,628       8,488
                                                               --------    --------
                                                                 52,627      50,084
                                                               --------    --------
Commitments and contingencies

Shareholders' equity:
   Preferred stock, no par value, 10,000,000 shares authorized,
     none issued.........................................            --          --

   Common stock, no par value, 40,000,000 shares authorized,
     18,806,047 shares at December 31, 2002 and 14,932,012
     shares at December 31, 2001.........................        99,654      43,807

   Retained earnings.....................................        44,377      29,920
                                                               --------    --------
                                                                144,031      73,727
                                                               --------    --------
                                                               $196,658    $123,811
                                                               ========    ========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.




                                       34
<PAGE>



                               A.C. MOORE ARTS & CRAFTS, INC.
                             CONSOLIDATED STATEMENTS OF INCOME

                        (dollars in thousands except per share data)
<TABLE>
<CAPTION>
                                                                December 31,
                                                    2002            2001          2000
                                                 -----------    -----------    -----------
<S>                                              <C>            <C>            <C>
Net sales..................................      $   393,392    $   332,413    $   262,057
Cost of sales (including buying and
   distribution costs).....................          244,601        208,315        165,850
                                                 -----------    -----------    -----------
Gross margin...............................          148,791        124,098         96,207
Selling, general and administrative
  expenses.................................          123,117        105,447         83,516
Store pre-opening expenses.................            2,340          2,518          1,928
                                                 -----------    -----------    -----------
Income from operations.....................           23,334         16,133         10,763
   Interest expense........................              277            781            345
   Interest income.........................             (750)          (106)          (158)
                                                 -----------    -----------    -----------
Income before income taxes.................           23,807         15,458         10,576
  Provision for income taxes ..............            9,350          5,951          4,019
                                                 -----------    -----------    -----------
Net income.................................      $    14,457    $     9,507    $     6,557
                                                 ===========    ===========    ===========

Basic net income per share.................      $      0.81    $      0.64    $      0.44
                                                 ===========    ===========    ===========

Weighted average shares outstanding........       17,861,897     14,874,398     14,811,794

Diluted net income per share...............      $      0.77    $      0.61    $      0.44
                                                 ===========    ===========    ===========

Weighted average shares outstanding
   plus impact of stock options............       18,828,130     15,505,290     14,888,226
</TABLE>




              The accompanying notes are an integral part of these
                       consolidated financial statements.

















                                       35
<PAGE>

<TABLE>
<CAPTION>
                                        A.C. MOORE ARTS & CRAFTS, INC.
                           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                                       (in thousands except share data)

                                                                            Common       Retained
                                                              Shares         Stock       Earnings      Total
                                                            ----------      -------       -------    --------
<S>                                                         <C>             <C>           <C>        <C>
Balance, December 31, 1999...........................       14,810,000      $43,116       $13,856    $ 56,972
Net income...........................................               --           --         6,557       6,557
Compensation expense related to stock options........               --          102            --         102
Exercise of stock options............................           20,666           50            --          50
                                                            ----------      -------       -------    --------
Balance, December 31, 2000...........................       14,830,666       43,268        20,413      63,681
Net income...........................................               --           --         9,507       9,507
Exercise of stock options ...........................          101,346          439            --         439
Tax benefit from exercise of stock options...........               --          100            --         100
                                                            ----------      -------       -------    --------
Balance, December 31, 2001...........................       14,932,012       43,807        29,920      73,727
Net income...........................................               --           --        14,457      14,457
Proceeds from the sale of common stock...............        3,500,000       52,125                    52,125
Exercise of stock options ...........................          374,035        1,481            --       1,481
Compensation expense related to stock options........                           300                       300
Tax benefit from exercise of stock options...........                         1,941            --       1,941
                                                            ----------      -------       -------    --------
Balance, December 31, 2002 ..........................       18,806,047      $99,654       $44,377    $144,031
                                                            ==========      =======       =======    ========
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.









                                       36
<PAGE>



                         A.C. MOORE ARTS & CRAFTS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                           ------------------------------
                                                             2002       2001       2000
                                                           --------   --------   --------
<S>                                                        <C>        <C>        <C>
Cash flows from operating activities:
Net income ..........................................      $ 14,457   $  9,507   $  6,557
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Depreciation and amortization.....................         6,203      5,220      3,829
   Compensation expense related to stock options.....           300         --        102
   Provision for deferred income taxes...............         1,723      1,107        600
   Changes in assets and liabilities:
     Accounts receivable.............................          (703)       127       (339)
     Inventories.....................................       (16,823)   (12,888)   (13,459)
     Prepaid expenses and other current assets.......           (48)       399       (319)
     Accounts payable, accrued payroll and payroll
       taxes and accrued expenses....................         2,649      1,334      8,085
     Income taxes payable............................           682      1,342      1,226
     Other long-term liabilities.....................           758        617        522
     Other assets....................................        (1,027)         3        (95)
                                                           --------   --------   --------

Net cash provided by operating activities............         8,171      6,768      6,709
                                                           --------   --------   --------

Cash flows from investing activities:
   Capital expenditures..............................        (9,683)    (8,672)   (10,635)
Cash flows from financing activities:
   Proceeds from sale of shares, net.................        52,125         --         --
   Proceeds from exercise of stock options...........         1,481        439         50
   Proceeds from line of credit......................         2,000     20,250      9,750
   Repayment of line of credit......................         (2,000)   (20,250)    (9,750)
   Proceeds from equipment financing.................            --      2,791
   Repayment of equipment financing..................        (1,328)      (818)      (367)
                                                           --------   --------   --------
Net cash provided by (used in) financing activities..        52,278      2,412       (317)
                                                           --------   --------   --------
Net increase (decrease) in cash and cash equivalents.        50,766        508     (4,243)
Cash and cash equivalents at beginning of year.......        10,818     10,310     14,553
                                                           --------   --------   --------
Cash and cash equivalents at end of year.............      $ 61,584   $ 10,818   $ 10,310
                                                           ========   ========   ========

Supplemental cash flow information:..................
Cash paid during the year for:
   Interest .........................................      $    316 $      756   $    339
                                                           ========   ========   ========
   Income taxes .....................................      $  6,945 $   3,399    $  2,249
                                                           ========   ========   ========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.








                                       37
<PAGE>



                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Summary of Significant Accounting Policies

Organization and basis of presentation. A.C. Moore Arts & Crafts, Inc. became a
holding company in July 1997 by incorporating in Pennsylvania and exchanging its
common stock for all of the capital stock of A.C. Moore Inc. held by its
shareholders. The consolidated financial statements include the accounts of A.C.
Moore Arts & Crafts, Inc. and its wholly owned subsidiaries (collectively the
"Company"). All intercompany accounts and transactions have been eliminated. As
of December 31, 2002, the Company operated a 71-store chain of retail arts and
crafts stores in the eastern region of the United States.

Cash and cash equivalents. Cash and cash equivalents are stated at cost, which
approximates market value. Cash equivalents include only securities having an
original maturity of three months or less.

Concentration of credit risk. Financial instruments, which potentially subject
the Company to concentrations of credit risk, are cash and cash equivalents. The
Company limits its credit risk by placing its investments in highly rated,
highly liquid funds.

Inventories. Inventories, which consist of general consumer merchandise held for
sale, are stated at the lower of cost or market. The cost of store inventories
is determined by the retail inventory method. Warehouse inventories are
determined on a first-in, first-out basis. The Company includes as inventoriable
costs certain indirect costs, principally purchasing, warehousing and
distribution.

Property and equipment. Property and equipment are stated at cost. Depreciation
is provided on a straight-line basis over the estimated useful lives of the
assets. Furniture, fixtures and equipment are depreciated over periods of five
to ten years and leasehold improvements are depreciated over the shorter of
their estimated useful lives or the term of the related lease. Maintenance and
repairs are charged to operations as incurred and major improvements are
capitalized. Amortization of assets recorded under capital leases is included in
depreciation expense.

The Company periodically reviews long-lived assets for impairment by comparing
the carrying value of assets with their estimated future undiscounted cash
flows. If it is determined that an impairment loss has occurred, the loss would
be recognized during that period. The impairment loss is calculated as the
difference between the carrying values of the asset and the present value of
estimated net cash flows or comparable market values, giving consideration to
recent operating performance and pricing trends. The Company had no impairment
losses related to long-lived assets during 2002, 2001 or 2000.

Other Assets. In 2002 the Company paid $982,000 for the rights to obtain a lease
at a favorable rate for a new store to open in the near future. This amount is
included in other assets on the balance sheet and will be amortized over a
ten-year period commencing with the opening of the store.

Revenue recognition. Revenue is recognized at point of retail sale.

Store pre-opening expenses. Direct incremental costs incurred to prepare a store
for opening are charged to expense as incurred.

Advertising costs. The costs incurred for advertising are expensed the first
time the advertising takes place and are offset by reimbursements received under
cooperative advertising programs with certain vendors. Co-op advertising funds
are only recognized when we have performed our contractual obligations under a
co-op advertising agreement. Net advertising expense during 2002, 2001 and 2000
was $7,864,000, $8,173,000, and $6,518,000, respectively.







                                       38
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair value of financial investments. The carrying amounts of cash, cash
equivalents and marketable securities, accounts receivable, other current
assets, accounts payable, accrued expenses and other liabilities approximate
fair value because of the short maturity of these instruments. The carrying
amount of capital lease obligations approximate fair value, as the interest
rates on the obligations approximate rates currently available to the Company
for obligations with similar terms and remaining maturities.

Use of estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the amount
of revenues and expenses during the reporting period. Differences from those
estimates, if any, are recorded in the period they become known.

Stock option plan. The Company accounts for its employee stock options using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25). Compensation cost for stock
options is measured as the excess of the quoted market price of the Company's
stock at the date of grant over the amount an employee must pay to acquire the
stock.

Had compensation cost for the Company's stock-based compensation plan been
determined based on the fair value at the grant date for awards under those
plans, consistent with the requirements of SFAS No. 123, "Accounting for
Stock-Based Compensation," net income and earnings per share would have been
reduced to the following pro-forma amounts:
<TABLE>
<CAPTION>
                                                                      2002          2001         2000
                                                                   -----------   ----------   ----------
    <S>                              <C>                           <C>           <C>          <C>
    Net income ..................... -- As reported                $14,457,000   $9,507,000   $6,557,000
                                     -- Compensation cost, net         725,000      478,000      523,000
                                     -- Pro forma                   13,732,000    9,029,000    6,034,000


    Basic earnings per share........ -- As reported                $       .81   $      .64   $      .44
                                     -- Pro forma                          .77          .60          .40

    Diluted earnings per share...... -- As reported                $       .77   $      .61   $      .44
                                     -- Pro forma                          .73          .58          .40
</TABLE>
The pro forma results may not be representative of the effects on reported
operations for future years. The fair value of the options was calculated using
a Black-Scholes options pricing model with the following weighted-average
assumptions: risk-free interest rate of 4.1% for 2002, 5.1% for 2001, 6.3% for
2000 and; no dividend yield; and a weighted average expected life of the options
of seven years. In accordance with the provisions of SFAS No. 123 the expected
stock price volatility was 45.2% for 2002, 48.4% for 2001, and 46.6% for 2000.

Income Taxes. The Company uses the asset and liability method of accounting for
income taxes. The Company does business in various jurisdictions that impose
income taxes. Management determines the aggregate amount of income tax expense
to accrue and the amount currently payable based upon the tax statutes of each
jurisdiction. This process includes adjusting income determined using generally
accepted accounting principles for items that are treated differently by the
applicable taxing authorities. Deferred tax liabilities are reflected on the
Company's balance sheet for temporary differences that will reverse in
subsequent years. If different judgments had been made, the Company's tax
expense and liabilities could have been different.







                                       39
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Recent Accounting Pronouncements. Statement of Financial Accounting Standards,
or SFAS, No. 143, Accounting for Asset Retirement Obligations requires the
recognition of a liability for the estimated cost of disposal as part of the
initial cost of a long-lived asset. The Company must adopt SFAS No. 143 in 2003.
The Company believes that adopting this pronouncement will not have a material
impact on its consolidated results of operations, financial position or cash
flows.

In May 2002, the Financial Accounting Standards Board, or FASB issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections as of April 2002". SFAS 145 among
other things, rescinds various pronouncements regarding early extinguishment of
debt. It allows extraordinary accounting treatment for early extinguishment of
debt only when the provisions of Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions", are met. SFAS 145 provisions regarding early
extinguishment of debt are generally effective for fiscal years beginning after
May 15, 2002. The Company adopted this statement effective January 1, 2003. The
adoption of SFAS 145 did not have a material impact on the Company's financial
position, results of operations or cash flows.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and supercedes
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Under EITF 94-3, a liability for an exit cost
was recognized at the date of commitment to an exit or disposal plan. This
Statement also establishes that fair value is the objective for initial
measurement of the liability. The Company must adopt SFAS 146 for all exit or
disposal activities that are initiated after December 31, 2002. The Company does
not believe that adopting this pronouncement will have a material impact on its
consolidated results of operations, financial position or cash flows.

In November 2002, the EITF reached consensus on Issue 02-16, "Accounting by a
Customer (including a Reseller) for Cash Consideration Received from a Vendor."
EITF Issue 02-16 addresses the accounting for cash consideration received by a
customer from a vendor (e.g., slotting fees, cooperative advertising payments,
buydowns) and rebates or refunds from a vendor that is payable only if the
customer completes a specified cumulative level of purchases or remains a
customer for a specified time period. EITF Issue 02-16 is effective for
agreements modified or entered into after January 1, 2003. We are currently
evaluating the impact of EITF Issue 02-16, and have not determined whether or
not the adoption of the provisions of EITF Issue 02-16 will have a material
impact on our consolidated operating results or financial position.












                                       40
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure an amendment of FASB Statement No.
123". SFAS 148 amends SFAS 123 to provide alternative methods of transition for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation. It also amends the disclosure provisions
of SFAS 123 to require prominent disclosure about the effects on reported net
income of an entity's accounting policy decisions with respect to stock-based
employee compensation. It also amends APB Opinion No. 28, "Interim Financial
Reporting", to require disclosure about those effects in interim financial
information. The Company has adopted the disclosure requirements of SFAS 148 in
this Form 10-K for the fiscal year ended December 31, 2002.

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". FIN 45 elaborates on the disclosures to
be made by a guarantor about its obligations under certain guarantees that it
has issued. It also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The disclosure requirements of FIN 45 are
effective for financial statements for periods ending after December 15, 2002.
The initial recognition and initial measurement provisions of FIN 45 are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The Company has determined that no additional disclosures are
required for this Form 10-K issued for the year ended December 31, 2002, and the
adoption of the initial recognition and measurement provisions of FIN 45 is not
expected to have a material impact on the Company's financial position, results
of operations, or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities". FIN 46 clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The disclosure requirements of FIN 46 are effective
for financial statements issued after January 31, 2003. The initial recognition
provisions of FIN 46 are applicable immediately to new variable interests in
variable interest entities created after January 31, 2003. For a variable
interest in a variable interest entity created before February 1, 2003, the
initial recognition provisions of FIN 46 are to be implemented no later than the
beginning of the first interim or annual reporting period beginning after June
15, 2003. The Company has determined that it does not have any variable
interests in any variable interest entities. Therefore, no disclosure is
required for this Form 10-K issued for the fiscal year ended December 31, 2002
and the adoption of the initial recognition provisions of FIN 46 is not expected
to have a material impact on the Company's financial position, results of
operations, or cash flows.

2.       Earnings Per Share

The following is a reconciliation of the denominators of the basic and diluted
earnings per share computations:

                                                      Year Ended December 31,
                                                  -----------------------------
                                                   2002      2001         2000
                                                  ------     ------      ------
                                                         (in thousands)
         Basic................................    17,862     14,874      14,812
         Effect of dilutive options...........       966        631          76
                                                  ------     ------      ------
         Diluted..............................    18,828     15,505      14,888
                                                  ======     ======      ======

         Options whose exercise price is in excess of the average market price,
309,850 shares, have not been considered as dilutive options.









                                       41
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.       Property and Equipment

Property and equipment consists of:

                                                               December 31,
                                                         -----------------------
                                                           2002           2001
                                                         --------       --------
                                                              (in thousands)
Furniture, fixtures and equipment....................    $ 45,622       $ 37,066
Leasehold improvements...............................         492            548
Equipment for future stores..........................         287            542
Capital leases.......................................       4,715          4,715
                                                         --------       --------
                                                           51,116         42,871
Less:  Accumulated depreciation and amortization.....      23,119         17,902
                                                         --------       --------
                                                         $ 27,997       $ 24,969
                                                         ========       ========

         As a result of a fire in one of our stores in November 2002, $452,000
in property and equipment, net of depreciation, was transferred to our insurance
receivable account.

4.       Financing Agreement

On July 11, 2002 the Company entered into a new $25 million one year revolving
credit agreement with Union National Bank (the "Credit Facility"). The credit
agreement contains certain financial covenants including those related to
tangible net worth and funded debt. The Company was in compliance with this
agreement at December 31, 2002. Borrowings under the credit agreement will bear
interest rates at LIBOR plus 125 basis points.

There were no amounts outstanding at December 31, 2002 under this revolving line
of credit nor were there amounts outstanding at December 31, 2001 under the
previous revolving line of credit.

5.       Income Taxes

The Company utilizes the asset and liability method of accounting for income
taxes. Under this method, deferred tax liabilities and assets are recognized for
the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. As of December 31,
2002 and 2001, the deferred tax liability $5,150,000 and $3,427,000 respectively
is comprised principally of temporary differences related to depreciation.















                                       42
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A reconciliation of income tax expense at the federal income tax rate to the
income tax provision is as follows:
<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                                      ----------------------------------
                                                                       2002          2001          2000
                                                                      ------        ------        ------
                                                                                  (in thousands)
         <S>                                                          <C>           <C>           <C>
         United States federal taxes at statutory rate........        $8,332        $5,410        $3,701
         State and local taxes, net...........................         1,002           514           206
         Non-deductible stock option expense..................           105            --            31
         Other................................................           (89)           27            81
                                                                      ------        ------        ------
         Income tax provision.................................        $9,350        $5,951        $4,019
                                                                      ======        ======        ======
</TABLE>

The income tax provision consists of the following:
<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                      ----------------------------------
                                                                       2002          2001          2000
                                                                      ------        ------        ------
         <S>                                                          <C>           <C>           <C>
         Current tax expense:
           Federal..............................................      $6,245        $4,253        $3,254
           State................................................       1,382           591           165
                                                                      ------        ------        ------
             Total current.....................................        7,627         4,844         3,419
                                                                      ------        ------        ------
         Deferred tax expense:
           Federal..............................................       1,564           909           448
           State..................................................       159           198           152
                                                                      ------        ------        ------
             Total deferred....................................        1,723         1,107           600
                                                                      ------        ------        ------
             Total income tax provision........................       $9,350        $5,951        $4,019
                                                                      ======        ======        ======
</TABLE>

6.       Shareholders' Equity

The Company has authorized 10,000,000 shares of undesignated preferred stock.
The Company may issue preferred stock in one or more series by vote of its Board
of Directors having the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption, redemption prices and liquidation
preferences approved by the Board of Directors.

On June 25, 2002 our Board of Directors approved a two-for-one common stock
split to shareholders of record as of the close of business on July 15, 2002.
The shares were distributed on July 31, 2002. All references to the number of
shares of Common Stock (except for shares authorized), per share prices, and
earning per share amounts in the consolidated financial statements and related
notes thereto have been adjusted to reflect the stock split on a retroactive
basis, unless otherwise expressly stated.

At December 31, 2002, under the Company's Employee, Director and Consultant
Stock Option Plan (the "1997 Plan"), the Company may grant up to 2,000,000
shares of common stock. Stock options expire ten years from the date of grant
and vest ratably over a three year period. Shares available for future grants
amounted to 42,528 at December 31, 2002 and 125,280 at December 31, 2001.

In March 2002, our Board of Directors adopted our 2002 Stock Option Plan (the
"2002 Plan"). This Plan was approved by majority shareholder vote at our Annual
Meeting of Shareholders on May 16, 2002. Under the 2002 Plan, the Company, may
grant up to 1,500,000 shares of common stock. Stock options expire ten years
from the date of grant and vest ratably over a three year period. Shares
available for future grants amounted to 1,292,150 at December 31, 2002.














                                       43
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For 2002, 2001 and 2000, the Company's stock option activity is summarized
below:
<TABLE>
<CAPTION>
                                                    2002                     2001                    2000
                                            ----------------------   ----------------------  -----------------------
                                                          Weighted                 Weighted                 Weighted
                                                           Average                  Average                  Average
                                                          Exercise                 Exercise                 Exercise
                                             Options        Price     Options        Price    Options        Price
                                            ---------       ------   ---------     --------  ---------      --------
<S>                                         <C>             <C>      <C>           <C>       <C>            <C>
Outstanding at beginning of year......      1,752,708       $ 5.02   1,582,566       $3.61   1,330,600       $ 4.66
Granted...............................        312,300        19.13     306,600        7.58     368,400         3.94
Forfeited.............................         21,698         6.27      35,112        4.49      95,768         5.44
Exercised.............................        245,035         4.82     101,346        4.33      20,666         2.39
                                            ---------       ------   ---------     -------   ---------       ------
Outstanding at end of year............      1,798,275       $ 7.48   1,752,708       $5.02   1,582,566       $ 3.61
                                            =========       ======   =========       =====   =========       ======
Exercisable at end of year............      1,188,980       $ 4.68   1,124,894       $4.74     810,536       $ 5.09
                                            =========       ======   =========       =====   =========       ======
</TABLE>

         Also in 2002, options were exercised for 129,000 shares at an exercise
price of $2.33 by a Board Member. These shares had been granted in 1995 in
recognition of financial consulting services.

The following table summarizes information about stock options outstanding at
December 31, 2002.
<TABLE>
<CAPTION>
                                     Stock Options Outstanding                    Stock Options Exercisable
                        -----------------------------------------------------  --------------------------------
                                        Weighted Average        Weighted
  Range of Exercise                     Remaining Life       Average Exercise                  Weighted Average
       Prices               Shares         (Years)               Price           Shares         Exercise Price
  -----------------      ---------      ----------------     ----------------  ---------       ----------------
  <S>                    <C>            <C>                  <C>               <C>             <C>
      2.88-3.94            549,959           7.0                $  3.45          450,635          $  3.35
      4.50-5.45            586,600           5.2                   4.66          519,930             4.56
      7.10-8.32            339,866           7.2                   8.04          214,416             7.87
     10.00-14.03            12,000           8.8                  13.36            3,999            13.36
     19.11-21.64           309,850           9.5                  19.13               --               --
                         ---------           ---                -------        ---------          -------
                         1,798,275           6.9                $  7.48        1,188,980          $  4.68
                         =========           ===                =======        =========          =======
</TABLE>
Effective September 15, 1997, options to purchase 444,500 shares of common stock
were granted under the 1997 Plan at an exercise price per share of $9.00 with an
exercise term of ten years. The estimated fair value of the shares on the
measurement date was $10.20. The related compensation expense was amortized
ratably over the three year vesting period. At December 31, 2000, all such
compensation had been recognized.

7.       Retirement Plan

In January 1999 the Company established a 401(k) savings plan (the "401(k)
Plan") for eligible team members. Participation in the 401(k) Plan is voluntary
and available to any team member who is 21 years of age and has completed a
three month eligibility period. Participants may elect to contribute up to 20%
of their compensation. In accordance with the provisions of the 401(k) Plan, the
Company makes a matching contribution to the account of each participant in an
amount equal to 25% of the first 6% of eligible compensation contributed by each
participant with a maximum match of $1,500. The Company's matching contribution
expense for 2002 was $277,000, for 2001 was $206,000, and for 2000 was $170,000.







                                       44
<PAGE>


                         A.C. MOORE ARTS & CRAFTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.       Commitments and Contingencies

Commitments

The Company leases its retail stores, administrative offices and warehouse
facilities under noncancelable operating leases. The lease for the
administrative offices and distribution center has an initial lease term of six
years with a six-year renewal option. Most store leases have an average initial
term of ten years, with three five year renewal options, and provide for
predetermined escalations in future minimum annual rent or additional rent
contingent upon store sales levels. The pro rata portion of scheduled rent
escalations has been included in other long-term liabilities in the accompanying
balance sheet. For the years 2002 and 2001 the amounts of accrued rent expense
recognized over the amounts paid were $758,000 and $617,000, respectively, and
has been included in other long-term liabilities in the accompanying
consolidated balance sheet.

Rent expense under operating leases consists of:
<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                        --------------------------------------
                                                         2002            2001           2000
                                                        -------         -------        -------
                                                                     (in thousands)
        <S>                                             <C>             <C>            <C>
        Minimum rentals .............................   $20,450         $16,124        $12,883
        Contingent payments .........................       148             150            118
                                                        -------         -------        -------
                                                        $20,598         $16,274        $13,001
                                                        =======         =======        =======
</TABLE>

In 2002, the Company entered into 7 leases for stores to open in 2003.

Future minimum lease payments (including those for unopened stores) as of
December 31, 2002 for non-cancelable operating leases with terms in excess of
one year are as follows (in thousands):
<TABLE>
           <S>                                                                           <C>
           2002.............................................................             $ 22,155
           2003.............................................................               20,305
           2004.............................................................               19,183
           2005.............................................................               18,942
           2006.............................................................               18,024
           Thereafter.......................................................               68,078
                                                                                         --------
           Total minimum future rentals.....................................             $166,687
                                                                                         ========
</TABLE>

Contingencies

The Company is not a party to any material legal proceedings other than routine
litigation incidental to its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect
the financial position, operating results or cash flows of the Company.













                                       45
<PAGE>



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

         We had no changes in or disagreements with accountants on accounting
and financial disclosure of the type referred to in Item 304 of Regulation S-K.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         Incorporated by reference from our Proxy Statement relating to our 2003
Annual Meeting of Shareholders to be filed in accordance with General
Instruction G(3) to Form 10-K, except information concerning certain executive
officers of the Company which is set forth in Part I of this Annual Report on
Form 10-K and which is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

         Incorporated by reference from our Proxy Statement relating to our 2003
Annual Meeting of Shareholders to be filed in accordance with General
Instruction G(3) to Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

         Incorporated by reference from our Proxy Statement relating to our 2003
Annual Meeting of Shareholders to be filed in accordance with General
Instruction G(3) to Form 10-K.

Equity Compensation Plan Information

The following table details information regarding the company's existing equity
compensation plans as of December 31, 2002:
<TABLE>
<CAPTION>
                                                                                           (c)
                                                (a)                                 Number of securities
                                              Number of                             remaining available
                                          securities to be            (b)           for future issuance
                                            issued upon         Weighted-average        under equity
                                            exercise of        exercise price of     compensation plans
                                            outstanding            outstanding     (excluding securities
                                         options, warrants      options, warrants   reflected in column
              Plan Category                  and rights             and rights            (a))
-------------------------------------    -----------------     ------------------  --------------------
<S>                                      <C>                   <C>                 <C>
Equity compensation plans
approved by security holders (1).....        1,798,275               $7.48              1,334,678

Equity compensation plans not
approved by security holders.........            -                     -                   -

Total................................        1,798,275               $7.48              1,334,678
</TABLE>
-------------
(1) These plans are the Company's 1997 Employee, Director and Consultant Stock
Option Plan and the Company's 2002 Stock Option Plan.







                                       46
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Incorporated by reference from our Proxy Statement relating to our 2003
Annual Meeting of Shareholders to be filed in accordance with General
Instruction G(3) to Form 10-K.

ITEM 14.  CONTROLS AND PROCEDURES

         (a) Evaluation of disclosure controls and procedures. Based on their
evaluation of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days of the
filing date of this Annual Report on Form 10-K, the Company's principal
executive officer and principal financial officer have concluded that the
Company's disclosure controls and procedures are effective to timely alert
management to material information relating to the Company during the period
when its periodic reports are being prepared.

         (b) Changes in internal controls. There were no significant changes in
the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of the principal executive
officer's and principal financial officer's evaluation referred to above,
including any corrective actions with regard to significant deficiencies and
material weaknesses.



















                                       47
<PAGE>



                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

             (a)  The following documents are filed as part of this
                  Annual Report on Form 10-K:

                  (1) Financial Statements:

                  Report of Independent Accountants

                  Consolidated Balance Sheets at December 31, 2002 and
                           2001

                  Consolidated Statements of Income for each of the
                           three years in the period ended December 31,
                           2002

                  Consolidated Statements of Changes in Shareholders'
                           Equity for each of the three years in the
                           period ended December 31, 2002

                  Consolidated Statements of Cash Flows for each of the
                           three years in the period ended December 31,
                           2002

                  Notes to Consolidated Financial Statements

                  (2) Financial Statement Schedules:

                  No financial statement schedules are required to be filed as
                  part of this report.

                  (3) Exhibits:

                           The exhibits filed as part of this report are listed
                  under exhibits at subsection (c) of this Item 14.

             (b)  Current Reports on Form 8-K:

                         A report on Form 8-K was filed on behalf of the
                  Registrant on November 7, 2002 concerning the 10b5-1 Plans
                  of Messrs. Gordon, Bauer, Drake and Rambo.













                                       48
<PAGE>




             (c)  Exhibits:

     Exhibit Number        Description
     --------------        ------------

      *3.1                 Articles of Incorporation

      *3.2                 Bylaws

    *+10.1                 1997 Employee, Director and Consultant Stock Option
                           Plan

   **+10.2                 2002 Stock Option Plan

    *+10.3                 Form of Stock Option Award Agreement

     *10.4                 Tax Indemnification Agreement, dated July 22, 1997,
                           among the Company, John E. Parker and William Kaplan

     *10.5                 Lease, dated August 14, 1995, between Freeport 130
                           LLC and A.C. Moore, Inc.

   ***10.6                 Second Amendment to Lease, dated as of March 25,
                           1998, between Freeport IBO LLC and A.C. Moore, Inc.

 ****+10.7                 Employment Agreement, dated June 4, 2001, between Rex
                           A. Rambo and A.C. Moore, Inc.

 ****+10.8                 Employment Agreement, dated June 11, 2001, between
                           Lawrence H. Fine and A.C. Moore, Inc.

  ****10.9                 Credit Agreement, dated as of August 3, 2001, among
                           A.C. Moore Incorporated, The Lenders Party Thereto,
                           and KeyBank National Association, As Administrative
                           Agent and Lead Manager.

  ****10.10                Security Agreement, dated as of August 3, 2001, among
                           A.C. Moore Incorporated, A.C. Moore Arts & Crafts,
                           Inc., Moorestown Finance, Inc., Blackwood Assets,
                           Inc., each of A.C. Moore Incorporated's subsidiaries,
                           and KeyBank National Association.

  ****10.11                Guarantee Agreement, dated as of August 3, 2001,
                           among A.C. Moore Arts & Crafts, Inc., A.C. Moore
                           Incorporated, Moorestown Finance, Inc., Blackwood.
                           Assets, Inc., each of the subsidiaries of A.C. Moore
                           Incorporated listed in Schedule 1 to the Guarantee
                           Agreement, and KeyBank National Association.

   ***21.1                 Subsidiaries of the Company

      23.1                 Consent of PricewaterhouseCoopers LLP







                                       49
<PAGE>

      99.1                 Certification of the Company's Chief Executive
                           Officer pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002.

     99.2                  Certification of the Company's Chief Financial
                           Officer pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002.
-------------------
+                 Management contract or compensatory plan or arrangement.
*                 Incorporated by reference to the Company's Registration
                     Statement on Form S-1 (#333-32859)
**                Incorporated by reference to the Company's definitive proxy
                     statement filed on April 22, 2002.
***               Incorporated by reference to the Company's Form 10-K for the
                     year ended December 31, 1998.
****              Incorporated by reference to the Company's Form 10-Q for the
                     quarter ended June 30, 2001.






















                                       50
<PAGE>



                                   SIGNATURES

              Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                            A.C. MOORE ARTS & CRAFTS, INC.

Date: March 24, 2003                              By:      /s/ John E. Parker
                                                     ---------------------------
                                                         John E. Parker,
                                                         Chief Executive Officer


              Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
                 SIGNATURE                                   CAPACITY                            DATE
   --------------------------------------  -------------------------------------     --------------------------------
   <S>                                     <C>                                       <C>
    /s/ John E. Parker                     Chief Executive Officer and Director             March 24, 2003
   --------------------------------------  (Principal Executive Officer)
   John E. Parker


    /s/ Leslie H. Gordon                   Executive Vice President and Chief Financial     March 24, 2003
   --------------------------------------  Officer (Principal Financial and Accounting
   Leslie H. Gordon                        Officer)


    /s/ William Kaplan                     Chairman of the Board                            March 24, 2003
   --------------------------------------
   William Kaplan


    /s/ Lawrence H. Fine                   Director                                         March 24, 2003
   --------------------------------------
   Lawrence H. Fine


    /s/ Richard Lesser                     Director                                         March 24, 2003
   --------------------------------------
   Richard Lesser


    /s/ Richard J. Bauer                   Director                                         March 24, 2003
   --------------------------------------
   Richard J. Bauer


    /s/ Richard J. Drake                   Director                                         March 24, 2003
   --------------------------------------
   Richard J. Drake


    /s/ Eli J. Segal                       Director                                         March 24, 2003
   --------------------------------------
   Eli J. Segal
</TABLE>






                                       51
<PAGE>



                                  CERTIFICATION

         I, John E. Parker, Chief Executive Officer of A.C. Moore Arts & Crafts,
Inc., certify that:

         1. I have reviewed this annual report on Form 10-K of A.C. Moore Arts &
Crafts, Inc.

         2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            (a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

            (b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

            (c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

         5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

            (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

         6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:    March 24, 2003             /s/ John E. Parker
       ----------------          -----------------------------------------------
                                 John E. Parker
                                 Executive Officer (Principal Executive Officer)









<PAGE>




                                  CERTIFICATION

         I, Leslie H. Gordon, Chief Financial Officer of A.C. Moore Arts &
Crafts, Inc., certify that:

         1. I have reviewed this annual report on Form 10-K of A.C. Moore Arts &
Crafts, Inc.

         2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            (a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

            (b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

            (c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

         5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

            (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

         6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 24, 2003          /s/ Leslie H. Gordon
      -----------------    -----------------------------------------------------
                           Leslie H. Gordon
                           Executive Vice President and Chief Financial Officer
                           (Principal Financial Officer)














<PAGE>
                                  EXHIBIT INDEX


  Exhibit No.              Description
  -----------              -----------

       *3.1                Articles of Incorporation

       *3.2                Bylaws

     *+10.1                1997 Employee, Director and Consultant Stock Option
                           Plan

    **+10.2                2002 Stock Option Plan

     *+10.3                Form of Stock Option Award Agreement

      *10.4                Tax Indemnification Agreement, dated July 22, 1997,
                           among the Company, John E. Parker and William Kaplan

      *10.5                Lease, dated August 14, 1995, between Freeport 130
                           LLC and A.C. Moore, Inc.

    ***10.6                Second Amendment to Lease, dated as of March 25,
                           1998, between Freeport IBO LLC and A.C. Moore, Inc.

  ****+10.7                Employment Agreement, dated June 4, 2001, between Rex
                           A. Rambo and A.C. Moore, Inc.

  ****+10.8                Employment Agreement, dated June 11, 2001, between
                           Lawrence H. Fine and A.C. Moore, Inc.

   ****10.9                Credit Agreement, dated as of August 3, 2001, among
                           A.C. Moore Incorporated, The Lenders Party Thereto,
                           and KeyBank National Association, As Administrative
                           Agent and Lead Manager.

   ****10.10               Security Agreement, dated as of August 3, 2001, among
                           A.C. Moore Incorporated, A.C. Moore Arts & Crafts,
                           Inc., Moorestown Finance, Inc., Blackwood Assets,
                           Inc., each of A.C. Moore Incorporated's subsidiaries,
                           and KeyBank National Association.

   ****10.11               Guarantee Agreement, dated as of August 3, 2001,
                           among A.C. Moore Arts & Crafts, Inc., A.C. Moore
                           Incorporated, Moorestown Finance, Inc., Blackwood.
                           Assets, Inc., each of the subsidiaries of A.C. Moore
                           Incorporated listed in Schedule 1 to the Guarantee
                           Agreement, and KeyBank National Association.

    ***21.1                Subsidiaries of the Company

       23.1                Consent of PricewaterhouseCoopers LLP






<PAGE>

       99.1                Certification of the Company's Chief Executive
                           Officer pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002.

       99.2                Certification of the Company's Chief Financial
                           Officer pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002.
-------------------
+                 Management contract or compensatory plan or arrangement.
*                 Incorporated by reference to the Company's Registration
                    Statement on Form S-1 (#333-32859).
**                Incorporated by reference to the Company's definitive proxy
                    statement filed on April 22, 2002.
***               Incorporated by reference to the Company's Form 10-K for the
                    year ended December 31, 1998.
****              Incorporated by reference to the Company's Form 10-Q for the
                    quarter ended June 30, 2001.