Michaels Companies 10-Q29 Aug 142014 Q2 Quarterly reportFinancial data

Company Profile

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
Document and Entity Information	Aug. 02, 2014	Aug. 15, 2014
Document and Entity Information	'	'
Entity Registrant Name	'Michaels Companies, Inc.	'
Entity Central Index Key	'0001593936	'
Document Type	'10-Q	'
Document Period End Date	2-Aug-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--01-31	'
Entity Current Reporting Status	'Yes	'
Entity Filer Category	'Non-accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	203,952,228
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q2	'

CONSOLIDATED_STATEMENTS_OF_COM

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $)	3 Months Ended		6 Months Ended
In Millions, except Per Share data, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME	'	'	'	'
Net sales	$948	$904	$2,000	$1,897
Cost of sales and occupancy expense	591	567	1,214	1,151
Gross profit	357	337	786	746
Selling, general, and administrative	270	254	552	526
Share-based compensation	2	8	6	11
Related party expenses	32	3	35	7
Store pre-opening costs	1	1	2	3
Operating income	52	71	191	199
Interest expense	61	46	118	93
Losses on early extinguishment of debt and refinancing costs	68	'	68	7
Other expense, net	'	1	'	1
(Loss) income before income taxes	-77	24	5	98
Provision for income taxes	-29	7	8	35
Net (loss) income	-48	17	-3	63
Other comprehensive (loss) income, net of tax:	'	'	'	'
Foreign currency translation adjustment and other	2	-1	1	-2
Comprehensive (loss) income	($46)	$16	($2)	$61
(Loss) earnings per share:	'	'	'	'
Basic (in dollars per share)	($0.26)	$0.09	($0.02)	$0.36
Diluted (in dollars per share)	($0.26)	$0.09	($0.02)	$0.35
Basic (in shares)	185	175	180	175
Diluted (in shares)	185	179	180	179

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
In Millions, unless otherwise specified	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
Current assets:	'	'	'
Cash and equivalents	$90	$239	$56
Merchandise inventories	937	901	909
Prepaid expenses and other	101	95	96
Deferred income taxes	37	39	38
Income tax receivables	75	2	36
Total current assets	1,240	1,276	1,135
Property and equipment, at cost	1,531	1,600	1,542
Less accumulated depreciation and amortization	-1,165	-1,242	-1,195
Property and equipment, net	366	358	347
Goodwill	94	94	94
Debt issuance costs, net	48	52	56
Deferred income taxes	24	28	29
Other assets	1	3	2
Total assets	1,773	1,811	1,663
Current liabilities:	'	'	'
Accounts payable	318	368	289
Accrued liabilities and other	336	411	341
Share-based compensation liability	'	'	19
Current portion of long-term debt	48	16	238
Deferred income taxes	'	1	4
Income taxes payable	1	30	'
Total current liabilities	703	826	891
Long-term debt	3,317	3,678	3,682
Deferred income taxes	1	2	2
Share-based compensation liability	'	'	26
Other liabilities	86	87	81
Total liabilities	4,107	4,593	4,682
Commitments and contingencies	'	'	'
Stockholders' deficit:	'	'	'
Common stock, $0.06775 par value, 350 million shares authorized; 204 million shares issued and outstanding at August 2, 2014, 175 million shares issued and outstanding at February 1, 2014, and 175 million shares issued and outstanding at August 3, 2013	14	12	12
Additional paid-in capital	545	94	34
Accumulated deficit	-2,894	-2,888	-3,069
Accumulated other comprehensive income	1	'	4
Total stockholders' deficit	-2,334	-2,782	-3,019
Total liabilities and stockholders' deficit	$1,773	$1,811	$1,663

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
CONSOLIDATED BALANCE SHEETS	'	'	'
Common stock, par value (in dollars per share)	$0.07	$0.07	$0.07
Common stock, shares authorized	350,000,000	350,000,000	350,000,000
Common stock, shares issued	204,000,000	175,000,000	175,000,000
Common stock, shares outstanding	204,000,000	175,000,000	175,000,000

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013
Cash flows from operating activities:	'	'
Net (loss) income	($3)	$63
Adjustments to reconcile net (loss) income to net cash used in operating activities:	'	'
Depreciation and amortization	53	50
Share-based compensation	10	13
Debt issuance costs amortization	6	4
Accretion of long-term debt	'	-1
Losses on early extinguishment of debt and refinancing costs	68	7
Changes in operating assets and liabilities:	'	'
Merchandise inventories	-37	-47
Prepaid expenses and other	-5	-9
Deferred income taxes	5	'
Other assets	-2	1
Accounts payable	-38	43
Accrued interest	-46	-1
Accrued liabilities and other	-31	-75
Income taxes	-103	-71
Other long-term liabilities	-1	-3
Net cash used in operating activities	-124	-26
Cash flows used in investing activities:	'	'
Additions to property and equipment	-65	-50
Cash flows used in financing activities:	'	'
Issuance of senior subordinated notes due 2020	255	'
Payments of subordinated discount notes due 2016	'	-142
Payment of senior notes due 2018	-1,000	'
Redemption premium on senior notes due 2018	-57	'
Payment of PIK notes due 2018	-439	'
Redemption premium on PIK notes due 2018	-4	'
Issuance of PIK notes due 2018	'	800
Issuance of common stock	446	'
Borrowings on senior secured term loan facility	846	'
Payments on senior secured term loan facility	-8	-4
Borrowings on asset-based revolving credit facility	23	375
Payments on asset-based revolving credit facility	'	-154
Payment of debt issuance costs	-11	-16
Payment of dividends	-1	-767
Change in cash overdraft	-8	-14
Other financing activities	-2	-2
Net cash provided by financing activities	40	76
Net change in cash and equivalents	-149	'
Cash and equivalents at beginning of period	239	56
Cash and equivalents at end of period	90	56
Supplemental cash flow information:	'	'
Cash paid for interest	158	89
Cash paid for income taxes	$106	$109

BASIS_OF_PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
BASIS OF PRESENTATION	Aug. 02, 2014
BASIS OF PRESENTATION	'
BASIS OF PRESENTATION	'
	1. BASIS OF PRESENTATION

	The consolidated financial statements include the accounts of The Michaels Companies, Inc. and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. All expressions of the “Company”, “us,” “we,” “our,” and all similar expressions are references to The Michaels Companies, Inc. and our consolidated, wholly-owned subsidiaries, unless otherwise expressly stated or the context otherwise requires. Disclosures for Michaels Stores, Inc. (“MSI”) have been included to meet the disclosure requirements of Rule 12-04 of Regulation S-X as further discussed in Note 10.

	In July 2013, the Company’s corporate structure was reorganized into a holding company structure. The Michaels Companies, Inc. (“Parent”), Michaels FinCo Holdings, LLC (“FinCo Holdings”), Michaels FinCo, Inc. (“FinCo Inc.”) and Michaels Funding, Inc. (“Holdings”) and Michaels Stores MergerCo, Inc. (“MergerCo”) were formed in connection with the Reorganization and MergerCo was merged with and into MSI, with MSI being the surviving corporation.

	The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements and accompanying footnotes included in our prospectus filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 27, 2014 (“Prospectus”). In the opinion of management, all adjustments (consisting of normal recurring accruals and other items) considered necessary for a fair presentation have been included.

	We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. All references herein to “fiscal 2014” relate to the 52 weeks ending January 31, 2015 and all references to “fiscal 2013” relate to the 52 weeks ended February 1, 2014. In addition, all references herein to “the second quarter of fiscal 2014” relate to the 13 weeks ended August 2, 2014, and all references to “the second quarter of fiscal 2013” relate to the 13 weeks ended August 3, 2013. Finally, all references to “the six months ended August 2, 2014” relate to the 26 weeks ended August 2, 2014, and the “the six months ended August 3, 2013” relate to the 26 weeks ended August 3, 2013. Because of the seasonal nature of our business, the results of operations for the 13 and 26 weeks ended August 2, 2014 are not indicative of the results to be expected for the entire year.

	Stock Split

	On June 6, 2014, our Board of Directors approved a common stock split in the ratio of 1.476 to 1.00. All share and related option information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the increased number of shares resulting from this action.

	Initial Public Offering

	On July 2, 2014, the Company completed an initial public offering (“IPO”) in which we issued and sold 27.8 million shares of common stock at a public offering price of $17.00 per share. After deducting for underwriting fees, the net proceeds of $446 million were used to redeem $439 million of our then outstanding 7.50%/8.25% PIK Toggle Notes which were due in 2018 (‘‘PIK Notes’’) and to pay other expenses of the offering.

	Preferred Shares

	During the second quarter of fiscal 2014, the Board of Directors authorized 50 million shares of preferred stock. No preferred shares have been issued as of August 2, 2014.

	Recent Accounting Pronouncements

	In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. We are evaluating the new standard, but do not anticipate a material impact to the financial statements once implemented.

LOSS_EARNINGS_PER_SHARE

(LOSS) EARNINGS PER SHARE	6 Months Ended
	Aug. 02, 2014
(LOSS) EARNINGS PER SHARE	'
(LOSS) EARNINGS PER SHARE	'
	2. (LOSS) EARNINGS PER SHARE

	Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income available to common stockholders by the weighted average shares outstanding plus dilutive potential shares from the exercise of stock options and restricted shares. Common equivalent shares are excluded from the computation if their effect is anti-dilutive. In periods when we recognize a net loss, we exclude the impact of outstanding stock options and restricted shares from the diluted loss per share calculation as their inclusion would have an anti-dilutive effect.

	The following table presents a reconciliation of the diluted weighted average shares (in millions):

		13 Weeks Ended		26 Weeks Ended
		August 2,	August 3,	August 2,	August 3,
		2014	2013	2014	2013
	Basic weighted average shares	185	175	180	175
	Employee stock options	—	4	—	4
	Dilutive weighted average shares	185	179	180	179

	The calculation of diluted weighted average shares excludes the impact of 4 million anti-dilutive stock options for each of the second quarter of fiscal 2014 and the six months ended August 2, 2014.

DEBT

DEBT	6 Months Ended
	Aug. 02, 2014
DEBT	'
DEBT	'
	3. DEBT

	We were in compliance with the terms and conditions of all debt agreements for all periods presented. Our outstanding debt is detailed in the table below (in millions):

			The Michaels Companies, Inc.									Michaels Stores, Inc.
		Interest	August 2,			February 1,			August 3,			August 2,			February 1,			August 3,
		Rate	2014			2014			2013			2014			2014			2013

	Senior secured term loan	Variable	$	2,466		$	1,628		$	1,636		$	2,466		$	1,628		$	1,636
	Senior notes	7.75%	—			1,006			1,007			—			1,006			1,007
	Senior subordinated notes	5.88%	515			260			—			515			260			—
	Senior subordinated notes	11.38%	—			—			255			—			—			255
	Asset-based revolving credit facility	Variable	23			—			222			23			—			222
	PIK notes	7.50% / 8.25%	361			800			800			—			—			—

	Total debt		3,365			3,694			3,920			3,004			2,894			3,120

	Less current portion		(48		)	(16		)	(238		)	(48		)	(16		)	(238		)

	Long-term debt		$	3,317		$	3,678		$	3,682		$	2,956		$	2,878		$	2,882

	Senior Notes, Additional Term Loan and Senior Subordinated Notes

	On June 16, 2014, MSI issued an additional $250 million of our 5.875% Senior Subordinated Notes maturing in 2020 (“2020 Senior Subordinated Notes”) at 102% of face value. On July 2, 2014, MSI also issued an additional $850 million of debt under our existing term loan facility at 99.5% of face value and maturing in 2020 (“Additional Term Loan”). The net proceeds from these borrowings were used to fully redeem the outstanding 2018 Senior Notes (“Senior Notes”) and to pay the applicable make-whole premium and accrued interest on the Senior Notes. In accordance with ASC 470, Debt (“ASC 470”), the Company capitalized $19 million of costs related to the issuance of the 2020 Senior Subordinated Notes and the Additional Term Loan. In accordance with ASC 470, we recorded a loss on the early extinguishment of debt of $56 million related to the redemption of the Senior Notes. The $56 million loss consisted of $51 million of redemption premiums and $10 million to write off related debt issuance costs. This loss was partially offset by a $5 million write off of unamortized net premiums.

	PIK Toggle Notes

	On July 2, 2014, the Company completed an IPO and received net proceeds totaling $446 million. The proceeds were used to redeem $439 million of our then outstanding PIK Notes and to pay other expenses of the offering. In accordance with ASC 470, we recorded a loss on the early extinguishment of debt of $12 million related to the redemption of the PIK Notes. The $12 million loss consisted of a $4 million redemption premium and an $8 million write off of related debt issuance costs.

	Restated Revolving Credit Facility

	As of August 2, 2014, the borrowing base of our restated senior secured asset-based revolving credit facility (“Restated Revolving Credit Facility”) totaled $650 million, of which we had $23 million of outstanding borrowings, $63 million of outstanding letters of credit and $564 million of unused borrowing capacity.

	Debt Issuance Costs

	Accumulated amortization of debt issuance costs was $51 million, $56 million, and $55 million as of August 2, 2014, February 1, 2014, and August 3, 2013, respectively.

ACCUMULATED_OTHER_COMPREHENSIV

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	6 Months Ended
	Aug. 02, 2014
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	'
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	'
	4. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

	The following table includes detail regarding changes in the composition of accumulated other comprehensive income (loss) (in millions):

		13 Weeks Ended						26 Weeks Ended
		August 2,			August 3,			August 2,		August 3,
		2014			2013			2014		2013
	Beginning of period	$	(1	)	$	5		$	—	$	6
	Foreign currency translation adjustment and other	2			(1		)	1		(2		)
	End of period	$	1		$	4		$	1	$	4

FAIR_VALUE_MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Aug. 02, 2014
FAIR VALUE MEASUREMENTS	'
FAIR VALUE MEASUREMENTS	'
	5. FAIR VALUE MEASUREMENTS

	As defined in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level valuation hierarchy for fair value measurements. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect less transparent active market data, as well as internal assumptions. These two types of inputs create the following fair value hierarchy:

	Level 1 — Quoted prices for identical instruments in active markets;
	Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable; and
	Level 3 — Instruments with significant unobservable inputs.

	The table below provides the carrying and fair values of our senior secured term loan facility (“Restated Term Loan Credit Facility”), our 2020 Senior Subordinated Notes and our PIK Notes. The fair value of our Restated Term Loan Credit Facility was determined based on quoted market prices of similar instruments which are considered Level 2 inputs within the fair value hierarchy. The fair values of our notes were determined based on recent trades which are considered Level 1 inputs within the fair value hierarchy.

		August 2, 2014
		Carrying		Fair
		Value		Value
		(In millions)
	Senior secured term loan	$	2,466	$	2,461
	Senior subordinated notes	515		509
	PIK notes	361		361

INCOME_TAXES

INCOME TAXES	6 Months Ended
INCOME TAXES	Aug. 02, 2014
INCOME TAXES	'
INCOME TAXES	'
	6. INCOME TAXES

	The effective tax rate was 37.7% and 29.2% for the second quarters of fiscal 2014 and fiscal 2013, respectively. The increase in the effective tax rate in the second quarter of fiscal 2014 was due primarily to state tax credits recognized in the prior year as a result of a change in state tax laws and non-deductible charges related to the IPO completed in July 2014.

	Tax expense for the first six months of fiscal 2014 and fiscal 2013 was $8 million and $35 million, respectively. The tax expense for the first six months of fiscal 2014 is lower than the prior year primarily due to lower pretax income as a result of the IPO and the debt restructuring completed in the second quarter of fiscal 2014. We currently estimate our annualized effective tax rate for fiscal 2014 to be approximately 38%.

CONTINGENCIES

CONTINGENCIES	6 Months Ended
CONTINGENCIES	Aug. 02, 2014
CONTINGENCIES	'
CONTINGENCIES	'
	7. CONTINGENCIES

	Rea Claim

	On September 15, 2011, the Company was served with a lawsuit filed in the California Superior Court in and for the County of Orange (“Superior Court”) by four former store managers as a class action proceeding on behalf of themselves and certain former and current store managers employed by Michaels in California. The lawsuit alleges that the Company stores improperly classified its store managers as exempt employees and as such failed to pay all wages, overtime and waiting time penalties and failed to provide accurate wage statements. The lawsuit also alleges that the foregoing conduct was in breach of various laws, including California’s unfair competition law. On December 3, 2013, the Superior Court entered an Order certifying a class of approximately 200 members. The Company successfully removed the case to the United States District Court for the Central District of California and on May 8, 2014, the class was de-certified. We believe we have meritorious defenses and intend to defend the lawsuits vigorously. We do not believe the resolution of the lawsuits will have a material effect on our consolidated financial statements.

	Data Security Incident

	Five putative class actions were filed against MSI relating to the January 2014 data breach. The plaintiffs generally allege MSI failed to secure and safeguard customers’ private information including credit and debit card information, and as such, breached an implied contract, and violated the Illinois Consumer Fraud Act (and other states’ similar laws) and are seeking damages including declaratory relief, actual damages, punitive damages, statutory damages, attorneys’ fees, litigation costs, remedial action, pre and post judgment interest and other relief as available. The cases are as follows: Christina Moyer v. Michaels Stores, Inc., was filed on January 27, 2014; Michael and Jessica Gouwens v. Michaels Stores, Inc., was filed on January 29, 2014; Nancy Maize and Jessica Gordon v. Michaels Stores, Inc., was filed on February 21, 2014; and Daniel Ripes v. Michaels Stores, Inc., was filed on March 14, 2014. All four of these cases were filed in the United States District Court-Northern District of Illinois, Eastern Division. A case, Mary Jane Whalen v. Michaels Stores, Inc., was filed in the United States District Court for the Eastern District of New York on March 18, 2014, but was voluntarily dismissed by the plaintiff on April 11, 2014, without prejudice to her right to re-file a complaint. On April 16, 2014, an order was entered consolidating the current actions. On July 14, 2014, the Company’s motion to dismiss the consolidated complaint was granted.

	In addition, payment card companies and associations may require us to reimburse them for unauthorized card charges and costs to replace cards and may also impose fines or penalties in connection with the data breach, and enforcement authorities may also impose fines or other remedies against us. We have also incurred other costs associated with the data breach, including legal fees, investigative fees, costs of communications with customers and credit monitoring services provided to our customers. In addition, state and federal agencies, including states’ attorneys general and the Federal Trade Commission may investigate events related to the data breach, including how it occurred, its consequences and our responses. Although we intend to cooperate in these investigations, we may be subject to fines or other obligations, which may have an adverse effect on how we operate our business and our results of operations. We cannot reasonably estimate the potential loss or range of loss related to any fines or penalties that may be assessed, if any.

	California Zip Code Claims

	On August 15, 2008, Linda Carson, a consumer, filed a purported class action proceeding against MSI in the Superior Court of California, County of San Diego (“San Diego Superior Court”), on behalf of herself and all similarly-situated California consumers. The Carson lawsuit alleges that MSI unlawfully requested and recorded personally identifiable information (i.e., her zip code) as part of a credit card transaction. The plaintiff seeks statutory penalties, costs, interest, and attorneys’ fees. On February 10, 2011, the California Supreme Court ruled, in a similar matter, Williams-Sonoma v. Pineda, that zip codes are personally identifiable information and, therefore, the Song-Beverly Credit Card Act of 1971, as amended (“Song Act”), prohibits businesses from requesting or requiring zip codes in connection with a credit card transaction.

	Subsequent to the California Supreme Court decision, three additional purported class action lawsuits seeking similar relief have been filed against MSI: Carolyn Austin v. Michaels Stores, Inc. and Tiffany Heon v. Michaels Stores, Inc., both in the San Diego Superior Court and Sandra A. Rubinstein v. Michaels Stores, Inc. in the Superior Court of California, County of Los Angeles, Central Division. An order coordinating the cases has been entered and plaintiffs filed a Consolidated Complaint on April 24, 2012. The parties settled the lawsuit for an amount that will not have a material effect on our consolidated financial statements. On August 6, 2014, the Court granted final approval of the settlement.

	General

	In addition to the litigation discussed above, we are now, and may be in the future, involved in various other lawsuits, claims and proceedings incident to the ordinary course of business. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources.

	For some of the matters disclosed above, as well as other matters previously disclosed in the Company’s filings with the SEC, the Company is able to estimate a range of losses in excess of the amounts recorded, if any, in the accompanying financial statements. The aggregate estimated loss is approximately $9 million, which includes amounts recorded by the Company.

SEGMENTS_AND_GEOGRAPHIC_INFORM

SEGMENTS AND GEOGRAPHIC INFORMATION	6 Months Ended
	Aug. 02, 2014
SEGMENTS AND GEOGRAPHIC INFORMATION	'
SEGMENTS AND GEOGRAPHIC INFORMATION	'
	8. SEGMENTS AND GEOGRAPHIC INFORMATION

	We consider our Michaels - U.S., Michaels — Canada, and Aaron Brothers stores to be our operating segments for purposes of determining reportable segments based on the criteria of ASC 280, Segment Reporting (“ASC 280”). We determined that each of our operating segments have similar economic characteristics and meet the aggregation criteria set forth in ASC 280. Therefore, we combine those operating segments into one reporting segment.

	Our net sales by country are as follows (in millions):

		13 Weeks Ended					26 Weeks Ended
		August 2,			August 3,		August 2,			August 3,
		2014			2013		2014			2013

	United States	$	858		$	819	$	1,810		$	1,717
	Canada	90			85		190			180
	Net sales	$	948		$	904	$	2,000		$	1,897

	Our chief operating decision makers evaluate historical operating performance and forecasted future periods’ operating performance based on operating income and earnings before interest, income taxes, depreciation, amortization and losses on early extinguishment of debt and refinancing costs (“EBITDA (excluding losses on early extinguishment of debt and refinancing costs)”). We believe these metrics more closely reflect the operating effectiveness of factors over which management has control. A reconciliation of net (loss) income to EBITDA (excluding losses on early extinguishment of debt and refinancing costs) is presented below (in millions).

		13 Weeks Ended					26 Weeks Ended
		August 2,			August 3,		August 2,			August 3,
		2014			2013		2014			2013
	Net (loss) income	$	(48	)	$	17	$	(3	)	$	63
	Interest expense	61			46		118			93
	Provision for income taxes	(29		)	7		8			35
	Losses on early extinguishments of debt and refinancing costs	68			—		68			7
	Depreciation and amortization	26			25		53			50
	EBITDA (excluding losses on early extinguishments of debt and refinancing costs)	$	78		$	95	$	244		$	248

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
RELATED PARTY TRANSACTIONS	Aug. 02, 2014
RELATED PARTY TRANSACTIONS	'
RELATED PARTY TRANSACTIONS	'
	9. RELATED PARTY TRANSACTIONS

	Bain Capital Partners, LLC (“Bain Capital”) and The Blackstone Group L.P. (“The Blackstone Group”, together with Bain Capital, the “Sponsors”) owned approximately 80% of our outstanding common stock as of August 2, 2014. Prior to our IPO on July 2, 2014, the Sponsors and another common stockholder, Highfields Capital Management LP (“Highfields”), received annual management fees of $12 million and $1 million, respectively. In connection with the offering, the management agreement was terminated and the Company paid the Sponsors and Highfields an aggregate $30 million termination fee. We recognized $32 million and $3 million of expenses related to management fees during the second quarters of fiscal 2014 and fiscal 2013, respectively. During the six months ended August 2, 2014 and August 3, 2013, we recognized management fees totaling $35 million and $7 million, respectively. These expenses are included in related party expenses in the consolidated statements of comprehensive (loss) income.

	Bain Capital owns a majority equity position in LogicSource, an external vendor we utilize for print procurement services. Payments associated with this vendor during each of the second quarters of fiscal 2014 and fiscal 2013 totaled $1 million. Payments made during the six months ended August 2, 2014 and August 3, 2013 totaled $2 million. These expenses are included in selling, general and administrative in the consolidated statements of comprehensive (loss) income.

	The Blackstone Group owns a majority equity position in Brixmor Properties Group, a vendor we utilize to lease certain properties. Payments associated with this vendor during each of the second quarters of fiscal 2014 and fiscal 2013 totaled $1 million. Payments made during the six months ended August 2, 2014 and August 3, 2013 each totaled $2 million. These expenses are included in cost of sales and occupancy expense in the consolidated statements of comprehensive (loss) income.

	The Blackstone Group owns a majority equity position in RGIS, an external vendor we utilize to count our store inventory. Payments associated with this vendor during each of the second quarters of fiscal 2014 and fiscal 2013 totaled $2 million. Payments made during the six months ended August 2, 2014 and August 3, 2013 totaled $4 million and $3 million, respectively. These expenses are included in selling, general and administrative in the consolidated statements of comprehensive (loss) income.

	The Blackstone Group owns a majority equity position in Vistar, an external vendor we utilize for all of the candy-type items in our stores. Payments associated with this vendor during the second quarters of fiscal 2014 and fiscal 2013 totaled $4 million and $6 million, respectively. Payments made during the six months ended August 2, 2014 and August 3, 2013 totaled $11 million and $12 million, respectively. These expenses are recognized in cost of sales as merchandise is sold.

	Our current directors (other than Jill A. Greenthal, John J. Mahoney, James A. Quella, and Carl S. Rubin) are affiliates of Bain Capital or The Blackstone Group. As such, some or all of such directors may have an indirect material interest in payments with respect to debt securities of the Company that have been purchased by affiliates of Bain Capital or The Blackstone Group. As of August 2, 2014, affiliates of The Blackstone Group held approximately $71 million of our Restated Term Loan Credit Facility.

CONDENSED_CONSOLIDATED_FINANCI

CONDENSED CONSOLIDATED FINANCIAL INFORMATION	6 Months Ended
CONDENSED CONSOLIDATED FINANCIAL INFORMATION	Aug. 02, 2014
CONDENSED CONSOLIDATED FINANCIAL INFORMATION	'
CONDENSED CONSOLIDATED FINANCIAL INFORMATION	'
	10. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

	All obligations of MSI under the 2020 Senior Subordinated Notes, Restated Term Loan Credit Facility and Restated Revolving Credit Facility are guaranteed by each of MSI’s subsidiaries other than Aaron Brothers Card Services, LLC, Artistree of Canada, ULC, Michaels Stores of Puerto Rico, LLC and certain foreign and domestic subsidiary holding companies. In addition, all obligations of MSI under the Restated Term Loan Credit Facility and Restated Revolving Credit Facility are guaranteed by Holdings. As of August 2, 2014, the financial statements of Aaron Brothers Card Services, LLC, Artistree of Canada, ULC, Michaels Stores of Puerto Rico, LLC and certain foreign and domestic subsidiary holding companies were immaterial. Each subsidiary guarantor is 100% owned, directly or indirectly, by the Company and all guarantees are joint and several and full and unconditional.

	The following condensed consolidated financial information represents the financial information of MSI and its wholly-owned subsidiaries. The information is presented in accordance with the requirements of Rule 12-04 under the SEC’s Regulation S - X. In addition, disclosure requirements of Rule 12-04 of Regulation S-X regarding material contingencies and long-term obligations are included in Note 3. Debt, Note 6. Income taxes, and Note 7. Contingencies.

	Michaels Stores, Inc.
	Condensed Consolidated Balance Sheets

			August 2,			February 1,			August 3,
			2014			2014			2013
			(In millions)
	ASSETS
	Current assets:
	Cash and equivalents		$	85		$	234		$	51
	Merchandise inventories		937			901			909
	Prepaid expenses and other		100			97			96
	Deferred income taxes		37			39			38
	Income tax receivables		48			2			36
	Total current assets		1,207			1,273			1,130
	Property and equipment, net		366			358			347
	Goodwill		94			94			94
	Debt issuance costs, net		42			37			40
	Deferred income taxes		23			28			29
	Long-term receivable from Parent		7			8			3
	Other assets		2			3			2
	Total assets		$	1,741		$	1,801		$	1,645

	LIABILITIES AND STOCKHOLDERS’ DEFICIT
	Current liabilities:
	Accounts payable		$	318		$	368		$	289
	Accrued liabilities and other		331			377			335
	Share-based compensation liability		—			—			19
	Current portion of long-term debt		48			16			238
	Dividend payable to Holdings		—			30			—
	Deferred income taxes		—			1			4
	Income taxes payable		1			42			—
	Total current liabilities		698			834			885
	Long-term debt		2,956			2,878			2,882
	Share-based compensation liability		—			—			26
	Other liabilities		88			90			83
	Total stockholders’ deficit		(2,001		)	(2,001		)	(2,231		)
	Total liabilities and stockholders’ deficit		$	1,741		$	1,801		$	1,645

	Michaels Stores, Inc.
	Condensed Consolidated Statements of Comprehensive (Loss) Income

			13 Weeks Ended						26 Weeks Ended
			August 2,			August 3,			August 2,			August 3,
			2014			2013			2014			2013
			(In millions)

	Net sales		$	948		$	904		$	2,000		$	1,897
	Cost of sales and occupancy expense		591			567			1,214			1,151
	Gross profit		357			337			786			746

	Selling, general, and administrative		269			254			551			526
	Share-based compensation		2			8			6			11
	Related party expenses		32			3			35			7
	Store pre-opening costs		1			1			2			3
	Operating income		53			71			192			199
	Interest expense		45			45			86			92
	Losses on early extinguishment of debt and refinancing costs		56			—			56			7
Other expense, net		—			1			—			1
(Loss) income before income taxes		(48		)	25			50			99
Provision for income taxes		(18		)	8			24			36
Net (loss) income		(30		)	17			26			63

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment and other		2			(1		)	1			(2		)
Comprehensive (loss) income		$	(28	)	$	16		$	27		$	61

Michaels Stores, Inc.
Condensed Consolidated Statement of Cash Flows

		26 Weeks Ended
		August 2,			August 3,
		2014			2013
		(In millions)
Cash flows used in operating activities:
Net cash used in operating activities		$	(58	)	$	(14	)

Cash flows used in investing activities:
Cash paid for property and equipment		(65		)	(50		)

Cash flows from financing activities:
Net repayments of long-term debt		(1,066		)	(146		)
Net borrowings on asset-based revolving credit facility		1,113			221
Other financing activities		(73		)	(16		)
Net cash (used in) provided by financing activities		(26		)	59

Change in cash and equivalents		(149		)	(5		)
Beginning cash and equivalents		234			56
Ending cash and equivalents		$	85		$	51

BASIS_OF_PRESENTATION_Policies

BASIS OF PRESENTATION (Policies)	6 Months Ended
BASIS OF PRESENTATION (Policies)	Aug. 02, 2014
BASIS OF PRESENTATION	'
Stock Split	'
	Stock Split

	On June 6, 2014, our Board of Directors approved a common stock split in the ratio of 1.476 to 1.00. All share and related option information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the increased number of shares resulting from this action.
Initial Public Offering	'
	Initial Public Offering

	On July 2, 2014, the Company completed an initial public offering (“IPO”) in which we issued and sold 27.8 million shares of common stock at a public offering price of $17.00 per share. After deducting for underwriting fees, the net proceeds of $446 million were used to redeem $439 million of our then outstanding 7.50%/8.25% PIK Toggle Notes which were due in 2018 (‘‘PIK Notes’’) and to pay other expenses of the offering.
Preferred Shares	'
	Preferred Shares

	During the second quarter of fiscal 2014, the Board of Directors authorized 50 million shares of preferred stock. No preferred shares have been issued as of August 2, 2014.
Recent Accounting Pronouncements	'
	Recent Accounting Pronouncements

	In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied retrospectively, with early application not permitted. We are evaluating the new standard, but do not anticipate a material impact to the financial statements once implemented.

LOSS_EARNINGS_PER_SHARE_Tables

(LOSS) EARNINGS PER SHARE (Tables)	6 Months Ended
(LOSS) EARNINGS PER SHARE (Tables)	Aug. 02, 2014
(LOSS) EARNINGS PER SHARE	'
Schedule of reconciliation of the diluted weighted average shares	'
	The following table presents a reconciliation of the diluted weighted average shares (in millions):

		13 Weeks Ended		26 Weeks Ended
		August 2,	August 3,	August 2,	August 3,
		2014	2013	2014	2013
	Basic weighted average shares	185	175	180	175
	Employee stock options	—	4	—	4
	Dilutive weighted average shares	185	179	180	179

DEBT_Tables

DEBT (Tables)	6 Months Ended
	Aug. 02, 2014
DEBT	'
Schedule of outstanding debt	'
	Our outstanding debt is detailed in the table below (in millions):

			The Michaels Companies, Inc.									Michaels Stores, Inc.
		Interest	August 2,			February 1,			August 3,			August 2,			February 1,			August 3,
		Rate	2014			2014			2013			2014			2014			2013

	Senior secured term loan	Variable	$	2,466		$	1,628		$	1,636		$	2,466		$	1,628		$	1,636
	Senior notes	7.75%	—			1,006			1,007			—			1,006			1,007
	Senior subordinated notes	5.88%	515			260			—			515			260			—
	Senior subordinated notes	11.38%	—			—			255			—			—			255
	Asset-based revolving credit facility	Variable	23			—			222			23			—			222
	PIK notes	7.50% / 8.25%	361			800			800			—			—			—

	Total debt		3,365			3,694			3,920			3,004			2,894			3,120

	Less current portion		(48		)	(16		)	(238		)	(48		)	(16		)	(238		)

	Long-term debt		$	3,317		$	3,678		$	3,682		$	2,956		$	2,878		$	2,882

ACCUMULATED_OTHER_COMPREHENSIV1

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	6 Months Ended
	Aug. 02, 2014
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	'
Schedule of accumulated other comprehensive income (loss)	'
	The following table includes detail regarding changes in the composition of accumulated other comprehensive income (loss) (in millions):

		13 Weeks Ended						26 Weeks Ended
		August 2,			August 3,			August 2,		August 3,
		2014			2013			2014		2013
	Beginning of period	$	(1	)	$	5		$	—	$	6
	Foreign currency translation adjustment and other	2			(1		)	1		(2		)
	End of period	$	1		$	4		$	1	$	4

FAIR_VALUE_MEASUREMENTS_Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Aug. 02, 2014
FAIR VALUE MEASUREMENTS	'
Schedule of carrying and fair values of loan and notes	'


		August 2, 2014
		Carrying		Fair
		Value		Value
		(In millions)
	Senior secured term loan	$	2,466	$	2,461
	Senior subordinated notes	515		509
	PIK notes	361		361

SEGMENTS_AND_GEOGRAPHIC_INFORM1

SEGMENTS AND GEOGRAPHIC INFORMATION (Tables)	6 Months Ended
	Aug. 02, 2014
SEGMENTS AND GEOGRAPHIC INFORMATION	'
Schedule of net sales by country	'
	Our net sales by country are as follows (in millions):

		13 Weeks Ended					26 Weeks Ended
		August 2,			August 3,		August 2,			August 3,
		2014			2013		2014			2013

	United States	$	858		$	819	$	1,810		$	1,717
	Canada	90			85		190			180
	Net sales	$	948		$	904	$	2,000		$	1,897
Schedule of reconciliation of EBITDA (excluding refinancing costs and losses on early extinguishment of debt)	'
	A reconciliation of net (loss) income to EBITDA (excluding losses on early extinguishment of debt and refinancing costs) is presented below (in millions).

		13 Weeks Ended					26 Weeks Ended
		August 2,			August 3,		August 2,			August 3,
		2014			2013		2014			2013
	Net (loss) income	$	(48	)	$	17	$	(3	)	$	63
	Interest expense	61			46		118			93
	Provision for income taxes	(29		)	7		8			35
	Losses on early extinguishments of debt and refinancing costs	68			—		68			7
	Depreciation and amortization	26			25		53			50
	EBITDA (excluding losses on early extinguishments of debt and refinancing costs)	$	78		$	95	$	244		$	248

CONDENSED_CONSOLIDATED_FINANCI1

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Tables)	6 Months Ended
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Tables)	Aug. 02, 2014
CONDENSED CONSOLIDATED FINANCIAL INFORMATION	'
Schedule of Supplemental Condensed Consolidated Balance Sheets	'

	Condensed Consolidated Balance Sheets

		August 2,			February 1,			August 3,
		2014			2014			2013
		(In millions)
	ASSETS
	Current assets:
	Cash and equivalents	$	85		$	234		$	51
	Merchandise inventories	937			901			909
	Prepaid expenses and other	100			97			96
	Deferred income taxes	37			39			38
	Income tax receivables	48			2			36
	Total current assets	1,207			1,273			1,130
	Property and equipment, net	366			358			347
	Goodwill	94			94			94
	Debt issuance costs, net	42			37			40
	Deferred income taxes	23			28			29
	Long-term receivable from Parent	7			8			3
	Other assets	2			3			2
	Total assets	$	1,741		$	1,801		$	1,645

	LIABILITIES AND STOCKHOLDERS’ DEFICIT
	Current liabilities:
	Accounts payable	$	318		$	368		$	289
	Accrued liabilities and other	331			377			335
	Share-based compensation liability	—			—			19
	Current portion of long-term debt	48			16			238
	Dividend payable to Holdings	—			30			—
	Deferred income taxes	—			1			4
	Income taxes payable	1			42			—
	Total current liabilities	698			834			885
	Long-term debt	2,956			2,878			2,882
	Share-based compensation liability	—			—			26
	Other liabilities	88			90			83
	Total stockholders’ deficit	(2,001		)	(2,001		)	(2,231		)
	Total liabilities and stockholders’ deficit	$	1,741		$	1,801		$	1,645
Schedule of Supplemental Condensed Consolidated Statements of Comprehensive (Loss) Income	'

	Condensed Consolidated Statements of Comprehensive (Loss) Income

		13 Weeks Ended						26 Weeks Ended
		August 2,			August 3,			August 2,			August 3,
		2014			2013			2014			2013
		(In millions)

	Net sales	$	948		$	904		$	2,000		$	1,897
	Cost of sales and occupancy expense	591			567			1,214			1,151
	Gross profit	357			337			786			746

	Selling, general, and administrative	269			254			551			526
	Share-based compensation	2			8			6			11
	Related party expenses	32			3			35			7
	Store pre-opening costs	1			1			2			3
	Operating income	53			71			192			199
	Interest expense	45			45			86			92
	Losses on early extinguishment of debt and refinancing costs	56			—			56			7
	Other expense, net	—			1			—			1
	(Loss) income before income taxes	(48		)	25			50			99
	Provision for income taxes	(18		)	8			24			36
	Net (loss) income	(30		)	17			26			63

	Other comprehensive (loss) income, net of tax:
	Foreign currency translation adjustment and other	2			(1		)	1			(2		)
	Comprehensive (loss) income	$	(28	)	$	16		$	27		$	61
Schedule of Supplemental Condensed Consolidated Statements of Cash Flows	'

	Condensed Consolidated Statement of Cash Flows

		26 Weeks Ended
		August 2,			August 3,
		2014			2013
		(In millions)
	Cash flows used in operating activities:
	Net cash used in operating activities	$	(58	)	$	(14	)

	Cash flows used in investing activities:
	Cash paid for property and equipment	(65		)	(50		)

	Cash flows from financing activities:
	Net repayments of long-term debt	(1,066		)	(146		)
	Net borrowings on asset-based revolving credit facility	1,113			221
	Other financing activities	(73		)	(16		)
	Net cash (used in) provided by financing activities	(26		)	59

	Change in cash and equivalents	(149		)	(5		)
	Beginning cash and equivalents	234			56
	Ending cash and equivalents	$	85		$	51

BASIS_OF_PRESENTATION_Details

BASIS OF PRESENTATION (Details) (USD $)	0 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
In Millions, except Per Share data, unless otherwise specified	Jul. 02, 2014	Jun. 06, 2014	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013	Jan. 31, 2015	Feb. 01, 2014
	Jul. 02, 2014	Jun. 06, 2014	item	item	item	item	item	item
Fiscal year	'	'	'	'	'	'	'	'
Number of weeks in a fiscal year	'	'	13	13	26	26	52	52
Stock split ratio	'	1.476	'	'	'	'	'	'
Shares sold in initial public offering	27.8	'	'	'	'	'	'	'
Public offering price (in dollars per share)	$17	'	'	'	'	'	'	'
Net proceeds from initial public offering	$446	'	'	'	'	'	'	'
Preferred stock, shares authorized	'	'	50	'	50	'	'	'
Preferred stock, shares issued	'	'	0	'	0	'	'	'
PIK Notes	'	'	'	'	'	'	'	'
Fiscal year	'	'	'	'	'	'	'	'
Net proceeds used to redeem outstanding notes	$439	'	'	'	439	'	'	'
PIK interest rate one (as a percent)	'	'	'	'	7.50%	'	'	'
PIK interest rate two (as a percent)	'	'	'	'	8.25%	'	'	'

LOSS_EARNINGS_PER_SHARE_Detail

(LOSS) EARNINGS PER SHARE (Details)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Reconciliation of the diluted weighted average shares	'	'	'	'
Basic weighted average shares (in shares)	185	175	180	175
Employee stock options (in shares)	'	4	'	4
Diluted weighted average shares (in shares)	185	179	180	179
Anti-dilutive stock options shares excluded from the computation of earnings per share (in shares)	4	'	4	'

DEBT_Details

DEBT (Details) (USD $)

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

Jun. 16, 2014

Feb. 01, 2014

Aug. 02, 2014

Jun. 16, 2014

Feb. 01, 2014

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Feb. 01, 2014

Aug. 03, 2013

Aug. 02, 2014

In Millions, unless otherwise specified

Michaels Stores, Inc.

Senior secured term loan

Senior notes

5.875% senior subordinated notes

11.375% senior subordinated notes

Asset-based revolving credit facility

PIK Notes

Michaels Stores, Inc.

Minimum

Maximum

Debt

Total debt

$3,365

$3,694

$3,920

$3,004

$2,894

$3,120

$2,466

$1,628

$1,636

$2,466

$1,628

$1,636

$1,006

$1,007

$1,006

$1,007

$515

$260

$515

$260

$255

$23

$222

$23

$222

$361

$800

Less current portion

-48

-16

-238

-48

-16

-238

Long-term debt

$3,317

$3,678

$3,682

$2,956

$2,878

$2,882

Interest rate (as a percent)

7.75%

5.88%

11.38%

7.50%

8.25%

DEBT_Details_2

DEBT (Details 2) (USD $)

0 Months Ended

3 Months Ended

6 Months Ended

0 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

0 Months Ended

In Millions, unless otherwise specified

Jul. 02, 2014

Aug. 02, 2014

Aug. 03, 2013

Jul. 02, 2014

Aug. 02, 2014

Aug. 03, 2013

Jul. 02, 2014

Aug. 02, 2014

Jun. 16, 2014

Aug. 02, 2014

Jun. 16, 2014

Jul. 02, 2014

Jun. 16, 2014

Aug. 02, 2014

PIK Notes

MSI

2020 Senior Subordinated Notes and Additional Term Loan

5.875% senior subordinated notes

Additional Term Loan

Senior notes

MSI

Debt

Principal amount of notes issued

$250

Interest rate (as a percent)

5.88%

7.75%

Issue price as a percentage of face value

102.00%

99.50%

Maximum borrowing capacity

850

Debt issuance cost capitalized

Loss on early extinguishment of debt

-68

-7

-12

-56

-7

-56

Redemption premiums included in loss on extinguishment of debt

Unamortized debt issuance costs written-off related to loss on early extinguishment of debt

Write off of unamortized net premiums

Net proceeds from initial public offering

446

Net proceeds used to redeem outstanding notes

$439

DEBT_Details_3

DEBT (Details 3) (Restated Revolving Credit Facility, USD $)	Aug. 02, 2014
In Millions, unless otherwise specified	Aug. 02, 2014
Restated Revolving Credit Facility	'
Asset-based Revolving Credit Facility	'
Borrowing base amount	$650
Outstanding borrowings	23
Outstanding letters of credit	63
Unused borrowing capacity	$564

DEBT_Details_4

DEBT (Details 4) (USD $)	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
In Millions, unless otherwise specified	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
DEBT	'	'	'
Accumulated amortization of debt issuance costs	$51	$56	$55

ACCUMULATED_OTHER_COMPREHENSIV2

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Other comprehensive (loss) income	'	'	'	'
Balance at the beginning of the period	($1)	$5	'	$6
Foreign currency translation adjustment and other	2	-1	1	-2
Balance at the end of the period	$1	$4	$1	$4

FAIR_VALUE_MEASUREMENTS_Detail

FAIR VALUE MEASUREMENTS (Details) (USD $)	Aug. 02, 2014
In Millions, unless otherwise specified	Aug. 02, 2014
Carrying Value \| Senior secured term loan	'
Fair Value Measurements	'
Long-term loans and notes	$2,466
Carrying Value \| 2020 Senior Subordinated Notes	'
Fair Value Measurements	'
Long-term loans and notes	515
Carrying Value \| PIK Notes	'
Fair Value Measurements	'
Long-term loans and notes	361
Fair Value \| Senior secured term loan	'
Fair Value Measurements	'
Long-term loans and notes	2,461
Fair Value \| 2020 Senior Subordinated Notes	'
Fair Value Measurements	'
Long-term loans and notes	509
Fair Value \| PIK Notes	'
Fair Value Measurements	'
Long-term loans and notes	$361

INCOME_TAXES_Details

INCOME TAXES (Details) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Effective tax rate from continuing operations	'	'	'	'
Effective tax rate (as a percent)	37.70%	29.20%	'	'
Tax expense	($29)	$7	$8	$35
Annualized Estimate	'	'	'	'
Effective tax rate from continuing operations	'	'	'	'
Effective tax rate (as a percent)	'	'	38.00%	'

CONTINGENCIES_Details

CONTINGENCIES (Details) (USD $)	Aug. 02, 2014	Sep. 15, 2011	Dec. 03, 2013	Mar. 18, 2014	Feb. 10, 2011
In Millions, unless otherwise specified		Employee claims	Employee claims	Consumer Class Action Claims	Consumer Class Action Claims
		Rea claim	Rea claim	Data security incident	California zip code claims
		item	item	MSI	item
				item
CONTINGENCIES	'	'	'	'	'
Aggregate estimate of possible loss	$9	'	'	'	'
Commitments and Contingencies	'	'	'	'	'
Number of plaintiffs	'	4	'	'	'
Number of certified members	'	'	200	'	'
Number of class actions filed	'	'	'	5	3

SEGMENTS_AND_GEOGRAPHIC_INFORM2

SEGMENTS AND GEOGRAPHIC INFORMATION (Details) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
	Aug. 02, 2014	Aug. 03, 2013	item	Aug. 03, 2013
SEGMENTS AND GEOGRAPHIC INFORMATION	'	'	'	'
Number of reportable segments	'	'	1	'
Net sales by country	'	'	'	'
Net sales	$948	$904	$2,000	$1,897
United States	'	'	'	'
Net sales by country	'	'	'	'
Net sales	858	819	1,810	1,717
Canada	'	'	'	'
Net sales by country	'	'	'	'
Net sales	$90	$85	$190	$180

SEGMENTS_AND_GEOGRAPHIC_INFORM3

SEGMENTS AND GEOGRAPHIC INFORMATION (Details 2) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
SEGMENTS AND GEOGRAPHIC INFORMATION	'	'	'	'
Net (loss) income	($48)	$17	($3)	$63
Interest expense	61	46	118	93
Provision for income taxes	-29	7	8	35
Losses on early extinguishment of debt and refinancing costs	68	'	68	7
Depreciation and amortization	26	25	53	50
EBITDA (excluding losses on early extinguishments of debt and refinancing costs)	$78	$95	$244	$248

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details) (USD $)

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

0 Months Ended

6 Months Ended

0 Months Ended

In Millions, unless otherwise specified

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Feb. 01, 2014

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Aug. 02, 2014

Aug. 03, 2013

Jul. 02, 2014

Aug. 02, 2014

Jul. 02, 2014

Bain Capital Partners, LLC

The Blackstone Group

The Sponsors

Highfields Capital Management LP

The Sponsors and Highfields

Print procurement services received from an external vendor

Restated Term Loan Credit Facility

Store inventory counting services received from an external vendor

Candy-type items in stores received from an external vendor

Lease services of certain properties from a vendor

Related Party Transactions

Percentage owned by related party

80.00%

Annual management fees

$12

Expenses recognized

Agreement termination fee

Long-term debt held

$3,365

$3,920

$3,365

$3,920

$3,694

$71

CONDENSED_CONSOLIDATED_FINANCI2

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Details) (USD $)	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013	Feb. 02, 2013
In Millions, unless otherwise specified	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013	Feb. 02, 2013
Current assets:	'	'	'	'
Cash and equivalents	$90	$239	$56	$56
Merchandise inventories	937	901	909	'
Prepaid expenses and other	101	95	96	'
Deferred income taxes	37	39	38	'
Income tax receivables	75	2	36	'
Total current assets	1,240	1,276	1,135	'
Property and equipment, net	366	358	347	'
Goodwill	94	94	94	'
Debt issuance costs, Net	48	52	56	'
Deferred income taxes	24	28	29	'
Total assets	1,773	1,811	1,663	'
Current liabilities:	'	'	'	'
Accounts payable	318	368	289	'
Accrued liabilities and other	336	411	341	'
Share-based compensation liability	'	'	19	'
Current portion of long-term debt	48	16	238	'
Deferred income taxes	'	1	4	'
Income taxes payable	1	30	'	'
Total current liabilities	703	826	891	'
Long-term debt	3,317	3,678	3,682	'
Share-based compensation liability	'	'	26	'
Total stockholders' deficit	-2,334	-2,782	-3,019	'
Total liabilities and stockholders' deficit	1,773	1,811	1,663	'
MSI	'	'	'	'
Current assets:	'	'	'	'
Cash and equivalents	85	234	51	56
Merchandise inventories	937	901	909	'
Prepaid expenses and other	100	97	96	'
Deferred income taxes	37	39	38	'
Income tax receivables	48	2	36	'
Total current assets	1,207	1,273	1,130	'
Property and equipment, net	366	358	347	'
Goodwill	94	94	94	'
Debt issuance costs, Net	42	37	40	'
Deferred income taxes	23	28	29	'
Long-term receivable from Parent	7	8	3	'
Other assets	2	3	2	'
Total assets	1,741	1,801	1,645	'
Current liabilities:	'	'	'	'
Accounts payable	318	368	289	'
Accrued liabilities and other	331	377	335	'
Share-based compensation liability	'	'	19	'
Current portion of long-term debt	48	16	238	'
Dividend payable to Holdings	'	30	'	'
Deferred income taxes	'	1	4	'
Income taxes payable	1	42	'	'
Total current liabilities	698	834	885	'
Long-term debt	2,956	2,878	2,882	'
Share-based compensation liability	'	'	26	'
Other liabilities	88	90	83	'
Total stockholders' deficit	-2,001	-2,001	-2,231	'
Total liabilities and stockholders' deficit	$1,741	$1,801	$1,645	'
Guarantor Subsidiaries	'	'	'	'
Supplemental Condensed Consolidated Balance Sheets	'	'	'	'
Percentage of equity ownership owned	100.00%	'	'	'

CONDENSED_CONSOLIDATED_FINANCI3

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Details 2) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Condensed Consolidated Statement of Comprehensive (Loss) Income	'	'	'	'
Net sales	$948	$904	$2,000	$1,897
Cost of sales and occupancy expense	591	567	1,214	1,151
Gross profit	357	337	786	746
Selling, general and administrative	270	254	552	526
Share-based compensation	2	8	6	11
Related party expenses	32	3	35	7
Store pre-opening costs	1	1	2	3
Operating income	52	71	191	199
Interest expense	61	46	118	93
Losses on early extinguishment of debt and refinancing costs	68	'	68	7
Other expense, net	'	1	'	1
(Loss) income before income taxes	-77	24	5	98
Provision for income taxes	-29	7	8	35
Net (loss) income	-48	17	-3	63
Other comprehensive (loss) income , net of tax:	'	'	'	'
Foreign currency translation adjustment and other	2	-1	1	-2
Comprehensive (loss) income	-46	16	-2	61
MSI	'	'	'	'
Condensed Consolidated Statement of Comprehensive (Loss) Income	'	'	'	'
Net sales	948	904	2,000	1,897
Cost of sales and occupancy expense	591	567	1,214	1,151
Gross profit	357	337	786	746
Selling, general and administrative	269	254	551	526
Share-based compensation	2	8	6	11
Related party expenses	32	3	35	7
Store pre-opening costs	1	1	2	3
Operating income	53	71	192	199
Interest expense	45	45	86	92
Losses on early extinguishment of debt and refinancing costs	56	'	56	7
Other expense, net	'	1	'	1
(Loss) income before income taxes	-48	25	50	99
Provision for income taxes	-18	8	24	36
Net (loss) income	-30	17	26	63
Other comprehensive (loss) income , net of tax:	'	'	'	'
Foreign currency translation adjustment and other	2	-1	1	-2
Comprehensive (loss) income	($28)	$16	$27	$61

CONDENSED_CONSOLIDATED_FINANCI4

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Details 3) (USD $)	6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013
Cash flows used in operating activities:	'	'
Net cash used in operating activities	($124)	($26)
Cash flows used in investing activities:	'	'
Cash paid for property and equipment	-65	-50
Cash flows from financing activities:	'	'
Net cash provided by financing activities	40	76
Net change in cash and equivalents	-149	'
Cash and equivalents at beginning of period	239	56
Cash and equivalents at end of period	90	56
MSI	'	'
Cash flows used in operating activities:	'	'
Net cash used in operating activities	-58	-14
Cash flows used in investing activities:	'	'
Cash paid for property and equipment	-65	-50
Cash flows from financing activities:	'	'
Net repayments of long-term debt	-1,066	-146
Net borrowings on asset-based revolving credit facility	1,113	221
Other financing activities	-73	-16
Net cash provided by financing activities	-26	59
Net change in cash and equivalents	-149	-5
Cash and equivalents at beginning of period	234	56
Cash and equivalents at end of period	$85	$51