Michaels Companies 10-Q 4 Dec 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Oct. 31, 2015	Nov. 25, 2015
Document and Entity Information
Entity Registrant Name	Michaels Companies, Inc.
Entity Central Index Key	1,593,936
Document Type	10-Q
Document Period End Date	Oct. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--01-30
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		208,962,744
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Oct. 31, 2015	Nov. 01, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Net sales	$ 1,168,423	$ 1,130,195	$ 3,230,293	$ 3,130,393
Cost of sales and occupancy expense	702,825	678,012	1,949,577	1,892,270
Gross profit	465,598	452,183	1,280,716	1,238,123
Selling, general, and administrative	308,704	307,537	879,974	865,408
Related party expenses				35,682
Store pre-opening costs	1,042	2,167	4,326	4,462
Operating income	155,852	142,479	396,416	332,571
Interest expense	33,840	41,457	105,967	159,183
Losses on early extinguishments of debt and refinancing costs			6,072	67,980
Other expense, net	112	797	171	587
Income before income taxes	121,900	100,225	284,206	104,821
Provision for income taxes	45,103	36,161	104,960	43,986
Net income	76,797	64,064	179,246	60,835
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	88	(2,520)	(2,819)	(1,843)
Comprehensive income	$ 76,885	$ 61,544	$ 176,427	$ 58,992
Earnings per share:
Basic (in dollars per share)	$ 0.37	$ 0.31	$ 0.86	$ 0.32
Diluted (in dollars per share)	$ 0.37	$ 0.31	$ 0.85	$ 0.32
Weighted-average shares outstanding:
Basic (in shares)	207,323	203,269	206,629	187,784
Diluted (in shares)	209,753	207,215	209,595	191,602

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015	Nov. 01, 2014
Current assets:
Cash and equivalents	$ 114,746	$ 378,295	$ 193,798
Merchandise inventories	1,277,053	958,171	1,115,813
Prepaid expenses and other	95,046	84,894	99,623
Deferred income taxes	38,474	38,345	37,019
Income tax receivables	19,566	2,418	41,574
Total current assets	1,544,885	1,462,123	1,487,827
Property and equipment, at cost	1,645,328	1,579,446	1,546,321
Less accumulated depreciation and amortization	(1,259,921)	(1,193,074)	(1,169,534)
Property and equipment, net	385,407	386,372	376,787
Goodwill	94,290	94,290	94,290
Debt issuance costs, net	31,711	40,613	45,725
Deferred income taxes	20,205	20,245	23,587
Other assets	6,641	1,638	1,648
Total assets	2,083,139	2,005,281	2,029,864
Current liabilities:
Accounts payable	557,170	447,165	504,176
Accrued liabilities and other	370,671	391,997	369,319
Current portion of long-term debt	24,900	24,900	204,900
Income taxes payable	6,285	25,570	634
Total current liabilities	959,026	889,632	1,079,029
Long-term debt	2,924,751	3,124,374	3,130,631
Deferred income taxes	17,222	9,580	1,193
Other liabilities	92,065	93,220	87,561
Total liabilities	$ 3,993,064	$ 4,116,806	$ 4,298,414
Commitments and contingencies
Stockholders' Deficit:
Common stock, $0.06775 par value, 350,000 shares authorized; 208,922 shares issued and outstanding at October 31, 2015; 205,803 shares issued and outstanding at January 31, 2015; and 204,242 shares issued and outstanding at November 1, 2014	$ 13,970	$ 13,799	$ 13,774
Additional paid-in capital	582,833	557,831	549,807
Accumulated deficit	(2,492,104)	(2,671,350)	(2,830,486)
Accumulated other comprehensive loss	(14,624)	(11,805)	(1,645)
Total stockholders' deficit	(1,909,925)	(2,111,525)	(2,268,550)
Total liabilities and stockholders' deficit	$ 2,083,139	$ 2,005,281	$ 2,029,864

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Oct. 31, 2015	Jan. 31, 2015	Nov. 01, 2014
CONSOLIDATED BALANCE SHEETS
Common Stock, par value (in dollars per share)	$ 0.06775	$ 0.06775	$ 0.06775
Common Stock, shares authorized	350,000	350,000	350,000
Common Stock, shares issued	208,922	205,803	204,242
Common Stock, shares outstanding	208,922	205,803	204,242

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Operating activities:
Net income	$ 179,246	$ 60,835
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	85,382	82,266
Share-based compensation	9,483	14,599
Debt issuance costs amortization	6,455	7,984
Accretion of long-term debt	(98)	(483)
Deferred income taxes	7,553	4,989
Losses on early extinguishments of debt and refinancing costs	6,072	67,980
Excess tax benefit from share-based compensation	(14,039)	(546)
Other		1,223
Changes in assets and liabilities:
Merchandise inventories	(318,365)	(217,049)
Prepaid expenses and other	(10,169)	(4,049)
Other assets	(43)	(1,728)
Accounts payable	122,709	137,922
Accrued interest	5,345	(30,964)
Accrued liabilities and other	(34,540)	(17,453)
Income taxes	(36,433)	(69,091)
Other long-term liabilities	(1,065)	67
Net cash provided by operating activities	7,493	36,502
Cash flows from investing activities:
Additions to property and equipment	(89,726)	(104,274)
Purchase of long-term investment	(5,000)
Net cash used in investing activities	(94,726)	(104,274)
Financing activities:
Payment of PIK notes	(184,467)	(443,542)
Borrowings on restated revolving credit facility	45,040	23,000
Payments on restated revolving credit facility	(45,040)	(23,000)
Borrowings on restated term loan credit facility		845,750
Payments on restated term loan credit facility	(18,675)	(14,425)
Payment of 2018 senior notes		(1,057,208)
Issuance of 2020 senior subordinated notes		255,000
Issuance of common stock		445,660
Payment of debt issuance costs		(11,078)
Payments of dividends	(492)	(530)
Change in cash overdraft	(1,713)	4,424
Proceeds from stock options exercised	35,420	7,628
Common stock repurchased	(20,428)	(9,519)
Excess tax benefits from share-based compensation	14,039	546
Net cash (used in) provided by financing activities	(176,316)	22,706
Net change in cash and equivalents	(263,549)	(45,066)
Cash and equivalents at beginning of period	378,295	238,864
Cash and equivalents at end of period	$ 114,746	$ 193,798

Basis of Presentation

Basis of Presentation	9 Months Ended
	Oct. 31, 2015
Basis of Presentation
Basis of Presentation	1. BASIS OF PRESENTATION 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. Our consolidated financial statements include the accounts of The Michaels Companies, Inc. and our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. 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 our annual report on Form 10-K for the fiscal year ended January 31, 2015 filed with the Securities and Exchange Commission (“SEC”) pursuant to section 13 or 15(d) under the Securities Exchange Act of 1934. 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 to fiscal year mean the year in which that fiscal year began. References to “fiscal 2015” relate to the 52 weeks ended January 30, 2016 and references to “fiscal 2014” relate to the 52 weeks ended January 31, 2015. In addition, all references to “the third quarter of fiscal 2015” relate to the 13 weeks ended October 31, 2015 and all references to “the third quarter of fiscal 2014” relate to the 13 weeks ended November 1, 2014. Finally, all references to “the nine months ended October 31, 2015” relate to the 39 weeks ended October 31, 2015 and all references to “the nine months ended November 1, 2014” relate to the 39 weeks ended November 1, 2014. Because of the seasonal nature of our business, the results of operations for the 13 and 39 weeks ended October 31, 2015 are not indicative of the results to be expected for the entire year. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Amortization of the costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15 “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements” , which clarifies that the guidance in ASU 2015-03 does not apply to line-of-credit arrangements. Given the absence of the authoritative guidance in ASU 2015-03, the SEC will not object to an entity deferring and presenting debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period and is to be applied retrospectively, with early application permitted. As of October 31, 2015 , the reduction to our long-term assets and debt would be approximately $27 million. We are currently evaluating the requirements of the standard to determine when we will adopt and implement its provisions. In April 2015, the FASB issued ASU 2015-05, “ Intangibles — Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement ” (“ASU 2015-05”). ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for a customer’s accounting for service contracts. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. We are currently evaluating the impact, if any, of the adoption of this new standard on our consolidated financial statements and related disclosures. In May 2014, the FASB issued 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. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year. ASU 2014-09 is therefore now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard is to be applied retrospectively, with early application permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are evaluating the new standard, but do not anticipate a material impact to the consolidated financial statements once implemented. In July 2015, the FASB issued ASU No. 2015-11, “ Inventory (Topic 330): Simplifying the Measurement of Inventory ” (“ASU 2015-11”). ASU 2015-11 provides guidance for the subsequent measurement of inventory and requires that inventory that is measured using average cost be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. When evidence exists that the net realizable value of inventory is lower than its cost, the difference will be recognized as a loss in earnings in the period in which it occurs. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied prospectively, with early application permitted. We do not believe the implementation of this standard will result in a material impact to the consolidated financial statements.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Oct. 31, 2015
Fair Value Measurements
Fair Value Measurements	2. FAIR VALUE MEASUREMENTS As defined in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“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”) and our 5.875% senior subordinated notes maturing in 2020 (“2020 Senior Subordinated Notes”) as of October 31, 2015. The fair values of our Restated Term Loan Credit Facility and our 2020 Senior Subordinated Notes were determined based on quoted market prices which are considered Level 2 inputs within the fair value hierarchy. Carrying Fair Value Value (in thousands) Restated term loan credit facility $ $ Senior subordinated notes

Debt

Debt	9 Months Ended
	Oct. 31, 2015
Debt
Debt	3. DEBT Long-term debt consists of the following (in thousands): October 31, January 31, November 1, Interest Rate 2015 2015 2014 Restated term loan credit facility Variable $ $ $ Senior subordinated notes % PIK notes 7.50 % / 8.25 % — Total debt Less current portion Long-term debt $ $ $ Cash paid for interest totaled $94.5 million and $182.9 million for the 39 weeks ended October 31, 2015 and November 1, 2014, respectively. 7.50%/8.25% PIK Toggle Notes On April 6, 2015, an irrevocable notice of redemption was delivered to the holders of the 7.50% / 8.25% PIK Toggle Notes due 2018 (“PIK Notes”). Pursuant to the notice, the remaining $180.9 million in principal of the PIK Notes was redeemed on May 6, 2015. During the nine months ended October 31, 2015, the Company recorded $6.1 million of debt extinguishment costs, which consists of a 2% redemption premium and $2.5 million of unamortized debt issuance costs. This final payment retired the PIK Notes and discharged the obligations under the indenture governing the PIK Notes. Restated Revolving Credit Facility As of October 31, 2015, the borrowing base of our senior secured asset-based revolving credit facility (“Restated Revolving Credit Facility”) was $650.0 million, of which Michaels Stores, Inc. (“MSI”) had $586.7 million of unused borrowing capacity. Outstanding standby letters of credit, which reduce our borrowing base, totaled $63.3 million as of October 31, 2015. There were no outstanding borrowings under the Restated Revolving Credit Facility as of October 31, 2015. Debt Issuance Costs Accumulated amortization of debt issuance costs was $59.7 million, $54.6 million, and $53.2 million as of October 31, 2015, January 31, 2015 and November 1, 2014, respectively.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	9 Months Ended
	Oct. 31, 2015
Other Comprehensive (Loss) Income
Accumulated Other Comprehensive Loss	4. ACCUMULATED OTHER COMPREHENSIVE LOSS The following table includes detail regarding changes in the composition of accumulated other comprehensive loss (in thousands): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Beginning of period $ $ $ $ Foreign currency translation adjustment and other End of period $ $ $ $

Income Taxes

Income Taxes	9 Months Ended
	Oct. 31, 2015
Income Taxes
Income Taxes	5. INCOME TAXES Income tax expense totaled $45.1 million in the third quarter of fiscal 2015 compared to $36.2 million in the third quarter of fiscal 2014. Income tax expense for the nine months ended October 31, 2015 was $105.0 million compared to $44.0 million in the same period in the prior year. The increase in income tax expense in both periods was due to higher pre-tax income as compared to the same periods in the prior year. The current year income tax expense was partially offset by our assertion to indefinitely reinvest fiscal 2015 earnings of our Canadian subsidiary into our operations outside the U.S. Accordingly, we have not provided for U.S. federal income taxes or foreign withholding taxes on fiscal 2015 earnings of our Canadian subsidiaries' undistributed earnings. However, if any portion were to be distributed, the related U.S. tax liability may be reduced by foreign income taxes paid on those earnings. We currently estimate our annualized effective tax rate for fiscal 2015 to be approximately 36.9% . Cash paid for income taxes totaled $119.7 million and $106.7 million for the 39 weeks ended October 31, 2015 and November 1, 2014, respectively.

Earnings per Share

Earnings per Share	9 Months Ended
	Oct. 31, 2015
Earnings Per Share
EARNINGS PER SHARE	6. 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 the potential dilutive impact from the exercise of stock options and restricted shares. Common equivalent shares are excluded from the computation if their effect is anti-dilutive. There were 0.9 million anti-dilutive shares during the third quarters of fiscal 2015 and fiscal 2014. There were 0.5 million and 3.4 million anti-dilutive shares during the nine months ended October 31, 2015 and November 1, 2014, respectively. The following table presents a reconciliation of the diluted weighted-average shares (in thousands, except per share data): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Numerator: Net income $ $ $ $ Income related to unvested restricted shares Income available to common stockholders $ $ $ $ Denominator: Basic weighted-average shares Effect of dilutive securities: Stock options Restricted shares Dilutive weighted-average shares Basic earnings per common share $ $ $ $ Diluted earnings per common share $ $ $ $

Segments and Geographic Informa

Segments and Geographic Information	9 Months Ended
	Oct. 31, 2015
Segments and Geographic Information
Segments and Geographic Information	7. SEGMENTS AND GEOGRAPHIC INFORMATION We consider our Michaels-U.S., Michaels-Canada and Aaron Brothers 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 our operating segments into one reporting segment. Our net sales by country are as follows (in thousands): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 United States $ $ $ $ Canada Total $ $ $ $ Our chief operating decision makers evaluate historical operating performance and forecast 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 EBITDA (excluding losses on early extinguishment of debt and refinancing costs) to net income is presented below (in thousands): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Net income $ $ $ $ Interest expense Losses on early extinguishment of debt and refinancing costs — — Provision for income taxes Depreciation and amortization Other EBITDA (excluding losses on early extinguishment of debt and refinancing costs) $ $ $ $

Contingencies

Contingencies	9 Months Ended
	Oct. 31, 2015
Contingencies
Contingencies	8. CONTINGENCIES Rea Claim On September 15, 2011, MSI 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 MSI in California. The lawsuit alleges that MSI improperly classified its store managers as exempt employees and as such failed to pay all wages, overtime, 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. MSI succes sfully removed the case to the United States District Court for the Central District of California and on May 8, 2014, the class was decertified. As a result of the decer tification, we have 38 individual claims pending as well as a separate representative action pending in the California Superior Court in and for the County of San Diego brought on behalf of store managers throughout the state. 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 . Fair Credit Reporting Claim On December 11, 2014, MSI was served with a lawsuit, Christina Graham v. Michaels Stores, Inc. , filed in the U.S. District Court for the District of New Jersey by a former associate. The lawsuit is a purported class action, bringing plaintiff’s individual claims, as well as claims on behalf of a putative class of applicants who applied for employment with Michaels through an online application, and on whom a background check for employment was procured. The lawsuit alleges that MSI violated the Fair Credit Reporting Act (“FCRA”) and the New Jersey Fair Credit Reporting Act by failing to provide the proper disclosure and obtain the proper authorization to conduct background checks. Since the initial filing, another named plaintiff joined the lawsuit, which was amended in February 2015, Christina Graham and Gary Anderson v. Michaels Stores, Inc. , with substantially similar allegations. The plaintiffs seek statutory and punitive damages as well as attorneys’ fees and costs. Following the filing of the Graham case in New Jersey, five additional purported class action lawsuits with six plaintiffs were filed, Michele Castro and Janice Bercut v. Michaels Stores, Inc. , in the U.S. District Court for the Northern District of Texas, Michelle Bercut v. Michaels Stores, Inc. in the Superior Court of California for Sonoma County, Raini Burnside v. Michaels Stores, Inc. , pending in the U.S. District Court for the Western District of Missouri, Sue Gettings v. Michaels Stores, Inc ., in the U.S. District Court for the Southern District of New York, and Barbara Horton v. Michaels Stores, Inc., in the U.S. District Court for the Central District of California. All of the plaintiffs alleged violations of the FCRA. In addition, the Castro, Horton and Janice Bercut lawsuits also alleged violations of California’s unfair competition law. The Burnside, Horton and Gettings lawsuits have been dismissed and an offer of judgment has been accepted in the Castro lawsuit and will be dismissed. The Graham, Janice Bercut and Michelle Bercut lawsuits were transferred for centralized pretrial proceedings to the District of New Jersey. The Company intends to defend the remaining lawsuits vigorously. We cannot reasonably estimate the potential loss, or range of loss, related to the lawsuits, if any. Data Security Incident Five putative class actions were filed against MSI relating to the January 2014 data breach. The plaintiffs generally alleged that 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. These four cases were filed in the United States District Court for the Northern District of Illinois, Eastern Division. On March 18, 2014, an additional putative class action was filed in the United States District Court for the Eastern District of New York, Mary Jane Whalen v. Michaels Stores, Inc. , 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 Illinois actions. On July 14, 2014, the Company’s motion to dismiss the consolidated complaint was granted. On December 2, 2014, Whalen filed a new lawsuit against MSI related to the data breach in the United States District Court for the Eastern District of New York, Mary Jane Whalen v. Michaels Stores, Inc. , seeking damages including declaratory relief, monetary damages, statutory damages, punitive damages, attorneys’ fees and costs, injunctive relief, pre and post judgment interest, and other relief as available. The Company filed a motion to dismiss and is awaiting a decision from the Court. The Company int ends to defend this lawsuit vigorously. We cannot reasonably estimate the potential loss, or range of loss, related to the lawsuits, if any. In connection with the breach, payment card companies and associations have sought to require us to reimburse them for unauthorized card charges and costs to replace cards and may also seek 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, various states’ attorneys general investigate d events related to the data breach, including how it occurred, its consequen ces and our responses. We fully cooperate d in these investigations and we do not expect any further action. We cannot reasonably estimate the potential loss or range of loss related to any reimbursement costs, fines or penalties that may be assessed. Such amounts incurred to date are immaterial to the consolidated financial statements. Consumer Product Safety Commission Claim On April 21, 2015, the United States Department of Justice, on behalf of the Consumer Product Safety Commission (the “CPSC”), filed a complaint against MSI and Michaels Stores Procurement Company, Inc. (“MSPC”) in the U.S. District Court for the Northern District of Texas. The complaint seeks civil penalties for an alleged failure to timely report a potential product safety hazard to the CPSC related to the breakage of certain glass vases. The complaint also alleges the report contained a material misrepresentation and seeks injunctive relief requiring MSI and MSPC to, among other things, establish internal recordkeeping and compliance monitoring systems. The Company filed a partial motion to dismiss on June 18, 2015 seeking dismissal of the CPSC’s claims for money damages, and is awaiting a decision from the Court. We believe we have meritorious defenses and intend to defend the lawsuit vigorously. We do not believe the resolution of the lawsuit will have a material effect on our consolidated financial statements. 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 consolidated financial statements. As of October 31, 2015, the aggregate estimated loss is approximately $15 million, which includes amounts recorded by the Company.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Oct. 31, 2015
Related Party Transactions
Related Party Transactions	9. RELATED PARTY TRANSACTIONS Affiliates of , or funds advised by , Bain Capital Partners, LLC (“Bain Capital”) and The Blackstone Group L.P. (“The Blackstone Group”, together with Bain Capital and their applicable affiliates, the “Sponsors”) own approximately 63% of our outstanding common stock as of October 31, 2015. Prior to our initial public offering (“IPO”) on July 2, 2014, the Sponsors and another common stockholder, Highfields Capital Management LP (“Highfields”), received annual management fees of $12.0 million and $ 1.0 million, respectively. In connection with the IPO, the management agreement was terminated and the Company paid the Sponsors and Highfields an aggregate $30. 2 million termination fee. We recognized management fees and reimbursement of out-of pocket expenses of $35.7 million during the nine months ended November 1, 2014. These expenses are included in related party expenses in the consolidated statements of comprehensive income. No related party expenses were incurred in fiscal 2015 or in the third quarter of fiscal 2014. 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 the third quarters of fiscal 2015 and fiscal 2014 were $2.3 million and $2.2 million, respectively. Payments made during the nine months ended October 31, 2015 and November 1, 2014 were $5.7 million and $5.8 million, respectively. These expenses are included in selling, general and administrative (“SG&A”) in the consolidated statements of comprehensive 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 each of the third quarters of fiscal 2015 and fiscal 2014 were $5.1 million and $4.2 million, respectively. Payments made during the nine months ended October 31, 2015 and November 1, 2014 were $18.0 million and $15.5 million, respectively. These expenses are recognized in cost of sales as the sales are incurred. The Blackstone Group owns an equity position in Brixmor Properties Group, a vendor we utilize to lease certain properties. Payments associated with this vendor during the third quarters of fiscal 2015 and fiscal 2014 were $0.5 million and $0.8 million, respectively. Payments made during the nine months ended October 31, 2015 and November 1, 2014 were $1.8 million and $2.5 million, respectively. These expenses are included in cost of sales and occupancy expense in the consolidated statements of comprehensive income. The Blackstone Group owns an equity position in Hilton Hotels, an external vendor we utilize for hospitality services. Payments associated with this vendor during the nine months ended October 31, 2015 were $0.4 million. Payments made during the third quarter of fiscal 2014 and the nine months ended November 1, 2014 totaled $1.4 million. These expenses are included in SG&A in the consolidated statements of comprehensive income. Five of our current directors, Joshua Bekenstein, Nadim El Gabbani, Lewis S. Klessel, Matthew S. Levin and Peter F. Wallace, 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 and The Blackstone Group. As of October 31, 2015, affiliates of The Blackstone Group held $47.3 million of our Restated Term Loan Credit Facility.

Condensed Consolidated Financia

Condensed Consolidated Financial Information	9 Months Ended
	Oct. 31, 2015
Condensed Consolidated Financial Information
Condensed Consolidated Financial Information	10. CONDENSED CONSOLIDATED FINANCIAL INFORMATION Our debt covenants restrict MSI, and certain subsidiaries of MSI, from various activities including the incurrence of additional debt, payment of dividends and the repurchase of MSI’s capital stock (subject to certain exceptions), among other things. The following condensed consolidated financial information represents the financial information of MSI and its wholly-owned subsidiaries subject to these restrictions. The information is presented in accordance with the requirements of Rule 12-04 under the SEC’s Regulation S-X. Michaels Stores, Inc. Condensed Consolidated Balance Sheets (in thousands) October 31, January 31, November 1, ASSETS 2015 2015 2014 Current assets: Cash and equivalents $ $ $ Merchandise inventories Prepaid expenses and other current assets Total current assets Property and equipment, net Goodwill Other assets Total assets $ $ $ LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ $ $ Accrued liabilities and other Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt Other liabilities Total stockholders’ deficit Total liabilities and stockholders’ deficit $ $ $ Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Net sales $ $ $ $ Cost of sales and occupancy expense Gross profit Selling, general and administrative Other operating expense Operating income Interest and other expense Income before income taxes Provision for income taxes Net income $ $ $ $ Other comprehensive income, net of tax: Foreign currency translation adjustment and other Comprehensive income $ $ $ $ Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 39 Weeks Ended October 31, November 1, 2015 2014 Cash flows from operating activities: Net cash provided by operating activities $ $ Cash flows from investing activities: Additions to property and equipment Purchase of long-term investment — Net cash used in investing activities Cash flows from financing activities: Net repayments of debt Net borrowings of debt Payment of dividend to Michaels Funding, Inc. Other financing activities Net cash used in financing activities Net change in cash and equivalents Cash and equivalents at beginning of period Cash and equivalents at end of period $ $

Basis of Presentation (Policies

Basis of Presentation (Policies)	9 Months Ended
	Oct. 31, 2015
Basis of Presentation
Recent Accounting Pronouncements	Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Amortization of the costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15 “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements” , which clarifies that the guidance in ASU 2015-03 does not apply to line-of-credit arrangements. Given the absence of the authoritative guidance in ASU 2015-03, the SEC will not object to an entity deferring and presenting debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period and is to be applied retrospectively, with early application permitted. As of October 31, 2015 , the reduction to our long-term assets and debt would be approximately $27 million. We are currently evaluating the requirements of the standard to determine when we will adopt and implement its provisions. In April 2015, the FASB issued ASU 2015-05, “ Intangibles — Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement ” (“ASU 2015-05”). ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for a customer’s accounting for service contracts. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. We are currently evaluating the impact, if any, of the adoption of this new standard on our consolidated financial statements and related disclosures. In May 2014, the FASB issued 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. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 by one year. ASU 2014-09 is therefore now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard is to be applied retrospectively, with early application permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. We are evaluating the new standard, but do not anticipate a material impact to the consolidated financial statements once implemented. In July 2015, the FASB issued ASU No. 2015-11, “ Inventory (Topic 330): Simplifying the Measurement of Inventory ” (“ASU 2015-11”). ASU 2015-11 provides guidance for the subsequent measurement of inventory and requires that inventory that is measured using average cost be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. When evidence exists that the net realizable value of inventory is lower than its cost, the difference will be recognized as a loss in earnings in the period in which it occurs. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and is to be applied prospectively, with early application permitted. We do not believe the implementation of this standard will result in a material impact to the consolidated financial statements.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Oct. 31, 2015
Fair Value Measurements
Schedule of carrying and fair values of debt	Carrying Fair Value Value (in thousands) Restated term loan credit facility $ $ Senior subordinated notes

Debt (Tables)

Debt (Tables)	9 Months Ended
	Oct. 31, 2015
Debt
Schedule of outstanding debt	Long-term debt consists of the following (in thousands): October 31, January 31, November 1, Interest Rate 2015 2015 2014 Restated term loan credit facility Variable $ $ $ Senior subordinated notes % PIK notes 7.50 % / 8.25 % — Total debt Less current portion Long-term debt $ $ $

Accumulated Other Comprehensi19

Accumulated Other Comprehensive Loss (Tables)	9 Months Ended
	Oct. 31, 2015
Other Comprehensive (Loss) Income
Schedule of accumulated other comprehensive loss	The following table includes detail regarding changes in the composition of accumulated other comprehensive loss (in thousands): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Beginning of period $ $ $ $ Foreign currency translation adjustment and other End of period $ $ $ $

Earnings per Share (Tables)

Earnings per Share (Tables)	9 Months Ended
	Oct. 31, 2015
Earnings Per Share
Schedule of calculation of basic and diluted earnings per share	The following table presents a reconciliation of the diluted weighted-average shares (in thousands, except per share data): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Numerator: Net income $ $ $ $ Income related to unvested restricted shares Income available to common stockholders $ $ $ $ Denominator: Basic weighted-average shares Effect of dilutive securities: Stock options Restricted shares Dilutive weighted-average shares Basic earnings per common share $ $ $ $ Diluted earnings per common share $ $ $ $

Segments and Geographic Infor21

Segments and Geographic Information (Tables)	9 Months Ended
	Oct. 31, 2015
Segments and Geographic Information
Schedule of sales and assets by country	Our net sales by country are as follows (in thousands): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 United States $ $ $ $ Canada Total $ $ $ $
Schedule of reconciliation of net income to EBITDA	A reconciliation of EBITDA (excluding losses on early extinguishment of debt and refinancing costs) to net income is presented below (in thousands): 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Net income $ $ $ $ Interest expense Losses on early extinguishment of debt and refinancing costs — — Provision for income taxes Depreciation and amortization Other EBITDA (excluding losses on early extinguishment of debt and refinancing costs) $ $ $ $

Condensed Consolidated Financ22

Condensed Consolidated Financial Information (Tables)	9 Months Ended
	Oct. 31, 2015
Condensed Consolidated Financial Information
Schedule of Condensed Consolidated Balance Sheets	Michaels Stores, Inc. Condensed Consolidated Balance Sheets (in thousands) October 31, January 31, November 1, ASSETS 2015 2015 2014 Current assets: Cash and equivalents $ $ $ Merchandise inventories Prepaid expenses and other current assets Total current assets Property and equipment, net Goodwill Other assets Total assets $ $ $ LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ $ $ Accrued liabilities and other Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt Other liabilities Total stockholders’ deficit Total liabilities and stockholders’ deficit $ $ $
Schedule of Condensed Consolidated Statements of Comprehensive Income	Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended 39 Weeks Ended October 31, November 1, October 31, November 1, 2015 2014 2015 2014 Net sales $ $ $ $ Cost of sales and occupancy expense Gross profit Selling, general and administrative Other operating expense Operating income Interest and other expense Income before income taxes Provision for income taxes Net income $ $ $ $ Other comprehensive income, net of tax: Foreign currency translation adjustment and other Comprehensive income $ $ $ $
Schedule of Condensed Consolidated Statements of Cash Flows	Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 39 Weeks Ended October 31, November 1, 2015 2014 Cash flows from operating activities: Net cash provided by operating activities $ $ Cash flows from investing activities: Additions to property and equipment Purchase of long-term investment — Net cash used in investing activities Cash flows from financing activities: Net repayments of debt Net borrowings of debt Payment of dividend to Michaels Funding, Inc. Other financing activities Net cash used in financing activities Net change in cash and equivalents Cash and equivalents at beginning of period Cash and equivalents at end of period $ $

Basis of Presentation (Details)

Basis of Presentation (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2015	Jan. 31, 2015	Nov. 01, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt issuance costs, net	$ 31,711	$ 40,613	$ 45,725
Long-term debt	$ 2,924,751	$ 3,124,374	$ 3,130,631
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Duration period of fiscal year	364 days
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Duration period of fiscal year	371 days
Pro Forma Adjustment | ASU 2015-03
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt issuance costs, net	$ 27,000
Long-term debt	$ 27,000

Fair Value Measurements (Debt)

Fair Value Measurements (Debt) (Details) $ in Thousands	Oct. 31, 2015USD ($)
5.875% Senior Subordinated Notes due 2020
Fair Value Measurements
Stated interest rate (as a percent)	5.875%
Carrying Value | Restated Term Loan Credit Facility
Fair Value Measurements
Long-term loans and notes	$ 2,435,587
Carrying Value | 5.875% Senior Subordinated Notes due 2020
Fair Value Measurements
Long-term loans and notes	514,064
Fair Value | Restated Term Loan Credit Facility
Fair Value Measurements
Long-term loans and notes	2,446,569
Fair Value | 5.875% Senior Subordinated Notes due 2020
Fair Value Measurements
Long-term loans and notes	$ 540,090

Debt (Condensed) (Details)

Debt (Condensed) (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	May. 06, 2015	Jan. 31, 2015
Debt
Total debt	$ 2,949,651	$ 3,335,531		$ 3,149,274
Less current portion	(24,900)	(204,900)		(24,900)
Long-term debt	2,924,751	3,130,631		3,124,374
Cash paid for interest	94,500	182,900
Loss on early extinguishments of debt	(6,072)	(67,980)
Unamortized debt issuance costs	59,700	53,200		54,600
Restated Term Loan Credit Facility
Debt
Total debt	2,435,587	2,459,831		2,453,770
5.875% Senior Subordinated Notes due 2020
Debt
Total debt	$ 514,064	514,850		514,654
Stated interest rate (as a percent)	5.875%
PIK Notes
Debt
Total debt		360,850		180,850
PIK interest rate one (as a percent)	7.50%
PIK interest rate two (as a percent)	8.25%
Debt redeemed			$ 180,900
Loss on early extinguishments of debt	$ 6,100
Redemption premiums included in loss on extinguishment of debt (as a percent)	2.00%
Unamortized debt issuance costs	$ 2,500
Michaels Stores
Debt
Less current portion	(24,900)	(24,900)		(24,900)
Long-term debt	2,924,751	$ 2,949,781		$ 2,943,524
Michaels Stores | Restated Revolving Credit Facility
Debt
Borrowing base amount	650,000
Unused borrowing capacity	586,700
Outstanding letters of credit	63,300
Outstanding borrowings	$ 0

Accumulated Other Comprehensi26

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Oct. 31, 2015	Nov. 01, 2014
Other Comprehensive (Loss) Income
Balance at the beginning of the period	$ (14,712)	$ 875	$ (11,805)	$ 198
Foreign currency translation adjustment and other	88	(2,520)	(2,819)	(1,843)
Balance at the end of the period	$ (14,624)	$ (1,645)	$ (14,624)	$ (1,645)

Income Taxes (Condensed) (Detai

Income Taxes (Condensed) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Oct. 31, 2015	Nov. 01, 2014
Income Taxes
Provision for income taxes	$ 45,103	$ 36,161	$ 104,960	$ 43,986
Effective tax rate (as a percent)			36.90%
Cash paid for income taxes			$ 119,700	$ 106,700

Earnings per share (Details)

Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Oct. 31, 2015	Nov. 01, 2014
Earnings Per Share
Anti-dilutive stock options shares excluded from the computation of earnings per share (in shares)	900		500	3,400
Net income	$ 76,797	$ 64,064	$ 179,246	$ 60,835
Income related to unvested restricted shares	237	293	661	249
Income available to common stockholders	$ 76,560	$ 63,771	$ 178,585	$ 60,586
Denominator:
Basic weighted average shares (in shares)	207,323	203,269	206,629	187,784
Effect of dilutive securities:
Employee stock options (in shares)	2,187	3,723	2,695	3,656
Restricted shares (in shares)	243	223	271	162
Dilutive weighted average shares (in shares)	209,753	207,215	209,595	191,602
Earnings per share:
Basic earnings per common share (in dollars per share)	$ 0.37	$ 0.31	$ 0.86	$ 0.32
Diluted earnings per common share (in dollars per share)	$ 0.37	$ 0.31	$ 0.85	$ 0.32

Segments and Geographic Infor29

Segments and Geographic Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015USD ($)	Nov. 01, 2014USD ($)	Oct. 31, 2015USD ($)item	Nov. 01, 2014USD ($)
Segments
Number of reportable segments | item			1
Net sales	$ 1,168,423	$ 1,130,195	$ 3,230,293	$ 3,130,393
United States
Segments
Net sales	1,064,855	1,018,679	2,944,119	2,829,021
Canada
Segments
Net sales	$ 103,568	$ 111,516	$ 286,174	$ 301,372

Segments and Geographic Infor30

Segments and Geographic Information (EBITDA) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Oct. 31, 2015	Nov. 01, 2014
Segments and Geographic Information
Net income	$ 76,797	$ 64,064	$ 179,246	$ 60,835
Interest expense	33,840	41,457	105,967	159,183
Losses on early extinguishment of debt and refinancing costs			6,072	67,980
Provision for income taxes	45,103	36,161	104,960	43,986
Depreciation and amortization	29,433	29,093	85,382	82,266
Other	(46)	(58)	(226)	(227)
EBITDA	$ 185,127	$ 170,717	$ 481,401	$ 414,023

Contingencies (Details)

Contingencies (Details) $ in Millions	May. 08, 2014item	Sep. 15, 2011item	Jan. 31, 2015item	Oct. 31, 2015USD ($)	Dec. 03, 2013item
Commitments and Contingencies
Aggregate estimate of possible loss | $				$ 15
Rea claims
Commitments and Contingencies
Number of plaintiffs	38	4
Number of certified members					200
Fair credit reporting claim
Commitments and Contingencies
Number of plaintiffs			6
Number of new claims filed			5
Data security incident
Commitments and Contingencies
Number of pending claims			5
Number of cases consolidated			4

Related Party Transactions (Det

Related Party Transactions (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2015USD ($)	Nov. 01, 2014USD ($)	Oct. 31, 2015USD ($)item	Nov. 01, 2014USD ($)	Jan. 31, 2015USD ($)
Related Party Transactions
Expenses recognized				$ 35,682
Long-term debt held	$ 2,949,651	$ 3,335,531	$ 2,949,651	3,335,531	$ 3,149,274
Restated Term Loan Credit Facility
Related Party Transactions
Long-term debt held	2,435,587	2,459,831	2,435,587	2,459,831	2,453,770
Sponsors and Highfields Capital Management LP
Related Party Transactions
Termination fee					30,200
Expenses recognized		0	$ 0	35,700
The Sponsors
Related Party Transactions
Percentage owned by related party			63.00%
Annual management fees					12,000
Bain Capital Partners, LLC
Related Party Transactions
Number of directors | item			5
The Blackstone Group | Restated Term Loan Credit Facility
Related Party Transactions
Long-term debt held	47,300		$ 47,300
The Blackstone Group | Store Inventory Count Services
Related Party Transactions
Expenses recognized	2,300	2,200	5,700	5,800
The Blackstone Group | Candy Type Items
Related Party Transactions
Expenses recognized	5,100	4,200	18,000	15,500
The Blackstone Group | Hospitality Services
Related Party Transactions
Payments for services		1,400	400	1,400
The Blackstone Group | Lease Services
Related Party Transactions
Expenses recognized	$ 500	$ 800	$ 1,800	$ 2,500
Highfields Capital Management LP
Related Party Transactions
Annual management fees					$ 1,000

Condensed Consolidated Financ33

Condensed Consolidated Financial Information (Balance Sheet) (Details) - USD ($) $ in Thousands	Oct. 31, 2015	Jan. 31, 2015	Nov. 01, 2014	Feb. 01, 2014
Current assets:
Cash and equivalents	$ 114,746	$ 378,295	$ 193,798	$ 238,864
Merchandise inventories	1,277,053	958,171	1,115,813
Prepaid expenses and other	95,046	84,894	99,623
Total current assets	1,544,885	1,462,123	1,487,827
Property and equipment, net	385,407	386,372	376,787
Goodwill	94,290	94,290	94,290
Other assets	6,641	1,638	1,648
Total assets	2,083,139	2,005,281	2,029,864
Current liabilities:
Accounts payable	557,170	447,165	504,176
Accrued liabilities and other	370,671	391,997	369,319
Current portion of long-term debt	24,900	24,900	204,900
Total current liabilities	959,026	889,632	1,079,029
Long-term debt	2,924,751	3,124,374	3,130,631
Other liabilities	92,065	93,220	87,561
Total stockholders' deficit	(1,909,925)	(2,111,525)	(2,268,550)
Total liabilities and stockholders' deficit	2,083,139	2,005,281	2,029,864
Michaels Stores
Current assets:
Cash and equivalents	110,007	373,559	189,029	$ 234,160
Merchandise inventories	1,277,053	958,171	1,115,813
Prepaid expenses and other	153,002	125,374	147,539
Total current assets	1,540,062	1,457,104	1,452,381
Property and equipment, net	385,407	386,372	376,787
Goodwill	94,290	94,290	94,290
Other assets	64,472	64,305	73,507
Total assets	2,084,231	2,002,071	1,996,965
Current liabilities:
Accounts payable	557,170	447,016	504,176
Accrued liabilities and other	369,183	388,785	359,116
Current portion of long-term debt	24,900	24,900	24,900
Other	44,525	59,885	524
Total current liabilities	995,778	920,586	888,716
Long-term debt	2,924,751	2,943,524	2,949,781
Other liabilities	109,400	102,913	89,273
Total stockholders' deficit	(1,945,698)	(1,964,952)	(1,930,805)
Total liabilities and stockholders' deficit	$ 2,084,231	$ 2,002,071	$ 1,996,965

Condensed Consolidated Financ34

Condensed Consolidated Financial Information (Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014	Oct. 31, 2015	Nov. 01, 2014
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	$ 1,168,423	$ 1,130,195	$ 3,230,293	$ 3,130,393
Cost of sales and occupancy expense	702,825	678,012	1,949,577	1,892,270
Gross profit	465,598	452,183	1,280,716	1,238,123
Selling, general and administrative expense	308,704	307,537	879,974	865,408
Operating income	155,852	142,479	396,416	332,571
Interest expense	33,840	41,457	105,967	159,183
Income before income taxes	121,900	100,225	284,206	104,821
Provision for income taxes	45,103	36,161	104,960	43,986
Net income	76,797	64,064	179,246	60,835
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	88	(2,520)	(2,819)	(1,843)
Comprehensive income	76,885	61,544	176,427	58,992
Michaels Stores
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	1,168,423	1,130,195	3,230,293	3,130,393
Cost of sales and occupancy expense	702,825	678,012	1,949,577	1,892,270
Gross profit	465,598	452,183	1,280,716	1,238,123
Selling, general and administrative expense	308,467	307,538	879,196	863,019
Other operating expense	1,042	2,167	4,326	40,144
Operating income	156,089	142,478	397,194	334,960
Interest expense	33,978	35,501	102,393	177,335
Income before income taxes	122,111	106,977	294,801	157,625
Provision for income taxes	45,181	38,682	108,886	63,136
Net income	76,930	68,295	185,915	94,489
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	88	(2,520)	(2,819)	(1,843)
Comprehensive income	$ 77,018	$ 65,775	$ 183,096	$ 92,646

Condensed Consolidated Financ35

Condensed Consolidated Financial Information (Cash Flow) (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2015	Nov. 01, 2014
Cash flows from operating activities:
Net cash provided by operating activities	$ 7,493	$ 36,502
Cash flows from investing activities:
Additions to property and equipment	(89,726)	(104,274)
Purchase of long-term investment	(5,000)
Net cash used in investing activities	(94,726)	(104,274)
Cash flows from financing activities:
Net cash (used in) provided by financing activities	(176,316)	22,706
Net change in cash and equivalents	(263,549)	(45,066)
Cash and equivalents at beginning of period	378,295	238,864
Cash and equivalents at end of period	114,746	193,798
Michaels Stores
Cash flows from operating activities:
Net cash provided by operating activities	11,550	101,936
Cash flows from investing activities:
Additions to property and equipment	(89,726)	(104,274)
Purchase of long-term investment	(5,000)
Net cash used in investing activities	(94,726)	(104,274)
Cash flows from financing activities:
Net repayments of debt	(63,715)	(1,094,633)
Net borrowings of debt	45,040	1,123,750
Payment of dividend to Michaels Funding, Inc.	(188,046)	(60,333)
Other financing activities	26,345	(11,577)
Net cash (used in) provided by financing activities	(180,376)	(42,793)
Net change in cash and equivalents	(263,552)	(45,131)
Cash and equivalents at beginning of period	373,559	234,160
Cash and equivalents at end of period	$ 110,007	$ 189,029