Michaels Companies 10-Q 6 Jun 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 29, 2017	May 25, 2017
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	Apr. 29, 2017
Amendment Flag	false
Current Fiscal Year End Date	--02-03
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		188,851,842
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net sales	$ 1,158,563	$ 1,158,880
Cost of sales and occupancy expense	690,929	694,129
Gross profit	467,634	464,751
Selling, general, and administrative	327,396	317,800
Store pre-opening costs	978	1,626
Operating income	139,260	145,325
Interest expense	30,437	32,219
Other (income) expense, net	(44)	446
Income before income taxes	108,867	112,660
Income taxes	36,659	41,895
Net income	72,208	70,765
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	(5,272)	14,209
Comprehensive income	$ 66,936	$ 84,974
Earnings per common share:
Basic (in dollars per share)	$ 0.38	$ 0.34
Diluted (in dollars per share)	$ 0.38	$ 0.34
Weighted-average common shares outstanding:
Basic (in shares)	188,968	206,994
Diluted (in shares)	190,399	208,973

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 29, 2017	Jan. 28, 2017	Apr. 30, 2016
Current Assets:
Cash and equivalents	$ 197,863	$ 298,813	$ 171,870
Merchandise inventories	1,102,346	1,127,777	1,057,642
Prepaid expenses and other	84,865	87,175	84,706
Accounts receivable, net	26,381	23,215	24,890
Income taxes receivable	3,394	5,825	7,150
Total current assets	1,414,849	1,542,805	1,346,258
Property and equipment, at cost	1,497,816	1,488,136	1,712,074
Less accumulated depreciation and amortization	(1,094,767)	(1,074,972)	(1,309,312)
Property and equipment, net	403,049	413,164	402,762
Goodwill	119,074	119,074	119,074
Other intangible assets, net	23,219	23,702	24,251
Deferred income taxes	37,376	36,834	44,390
Other assets	12,214	12,061	9,958
Total assets	2,009,781	2,147,640	1,946,693
Current Liabilities:
Accounts payable	430,261	517,268	373,492
Accrued liabilities and other	348,807	397,497	359,815
Current portion of long-term debt	24,900	31,125	24,900
Income taxes payable	108,345	78,334	36,402
Total current liabilities	912,313	1,024,224	794,609
Long-term debt	2,717,831	2,723,187	2,740,064
Other liabilities	101,562	98,655	95,378
Total liabilities	3,731,706	3,846,066	3,630,051
Commitments and contingencies
Stockholders’ Deficit:
Common stock, $0.06775 par value, 350,000 shares authorized; 188,849 shares issued and outstanding at April 29, 2017; 193,311 shares issued and outstanding at January 28, 2017; and 207,725 shares issued and outstanding at April 30, 2016	12,656	12,948	13,898
Additional paid-in capital	142,986	233,129	549,124
Treasury stock			(860)
Accumulated deficit	(1,858,071)	(1,930,279)	(2,237,673)
Accumulated other comprehensive loss	(19,496)	(14,224)	(7,847)
Total stockholders' deficit	(1,721,925)	(1,698,426)	(1,683,358)
Total liabilities and stockholders' deficit	$ 2,009,781	$ 2,147,640	$ 1,946,693

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Apr. 29, 2017	Jan. 28, 2017	Apr. 30, 2016
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	188,849	193,311	207,725
Common Stock, shares outstanding	188,849	193,311	207,725

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Cash flows from operating activities:
Net income	$ 72,208	$ 70,765
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	28,551	29,470
Share-based compensation	4,942	3,129
Debt issuance costs amortization	1,274	1,974
Accretion of long-term debt, net	(126)	(62)
Deferred income taxes	259	(3,991)
(Gains) losses on disposition of property and equipment	(17)	32
Excess tax benefits from share-based compensation		(4,599)
Changes in assets and liabilities, excluding acquired net assets:
Merchandise inventories	25,516	28,982
Prepaid expenses and other	2,311	1,467
Accounts receivable	(3,166)	6,888
Other assets	(433)	(320)
Accounts payable	(91,767)	(108,337)
Accrued interest	(4,983)	6,675
Accrued liabilities and other	(46,266)	(43,905)
Income taxes	32,442	(9,558)
Other liabilities	2,200	(2,473)
Net cash provided by (used in) operating activities	22,945	(23,863)
Cash flows from investing activities:
Additions to property and equipment	(15,690)	(14,664)
Acquisition of Lamrite West, net of cash acquired		(144,600)
Net cash used in investing activities	(15,690)	(159,264)
Cash flows from financing activities:
Common stock repurchased	(100,167)	(60,978)
Payments on term loan credit facility	(12,450)	(6,225)
Borrowings on asset-based revolving credit facility	12,000
Payments on asset-based revolving credit facility	(12,000)
Payments of dividends	(317)	(317)
Proceeds from stock options exercised	4,729	8,664
Excess tax benefits from share-based compensation		4,599
Other financing activities		(137)
Net cash used in financing activities	(108,205)	(54,394)
Net change in cash and equivalents	(100,950)	(237,521)
Cash and equivalents at beginning of period	298,813	409,391
Cash and equivalents at end of period	197,863	171,870
Supplemental Cash Flow Information:
Cash paid for interest	34,560	23,638
Cash paid for taxes	$ 4,245	$ 53,997

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Apr. 29, 2017
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 28, 2017 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 2017” relate to the 53 weeks ended February 3, 2018 and references to “fiscal 2016” relate to the 52 weeks ended January 28, 2017. In addition, all references to “the first quarter of fiscal 2017” relate to the 13 weeks ended April 29, 2017 and all references to “the first quarter of fiscal 2016” relate to the 13 weeks ended April 30, 2016. Because of the seasonal nature of our business, the results of operations for the 13 weeks ended April 29, 2017 are not indicative of the results to be expected for the entire year. Certain prior year amounts have been reclassified in the accompanying consolidated financial statements to conform to our fiscal 2017 presentation. Share Repurchase Program In fiscal 2016, the Board of Directors authorized the Company to purchase $500.0 million of the Company’s common stock on the open market. Shares repurchased under the program are held as treasury shares until retired. During the first quarter of fiscal 2017 and 2016, we repurchased 4.8 million and 2.3 million shares for an aggregate amount of $99.3 million and $59.3 million, respectively. As of April 29, 2017, we have utilized all availability under our share repurchase program. Accounting Pronouncements Recently Adopted In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. We adopted the new guidance on a prospective basis in the first quarter of fiscal 2017. As a result of the adoption, we recognized $0.9 million of excess tax benefits related to share-based compensation in income tax expense for the first quarter of fiscal 2017. Excess tax benefits were historically recorded in additional paid-in capital. In addition, cash flows related to excess tax benefits are now classified as an operating activity. Cash flows were historically classified as a financing activity. We have elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized each period. None of the other provisions in this amended guidance had a material impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under ASU 2017-04, goodwill impairment is to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value with the loss recognized not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The standard is to be applied on a prospective basis. We do not anticipate a material impact to the consolidated financial statements once implemented. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory” (“ASU 2016-16”). ASU 2016-16 requires entities to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within that reporting period, with early adoption permitted. We are currently evaluating the new standard but do not anticipate a material impact to the consolidated financial statements once implemented. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 clarifies how companies should present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within that reporting period, with early adoption permitted. We have evaluated the new standard and it will not have a material impact to the consolidated financial statements once implemented. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. We are currently evaluating the impact that ASU 2016-02 will have on the consolidated financial statements. We believe the most significant impact relates to our accounting for real estate leases, which will be recorded as assets and liabilities on our balance sheet upon adoption. 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 March 2016, the FASB issued ASU No. 2016-08 , “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ” which provides further guidance on identifying performance obligations and improves the operability and understandability of the licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. The guidance under these standards is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and are to be applied using a retrospective or modified retrospective approach. While we continue to assess all potential impacts of the guidance, our focus has been on vendor arrangements in which we act as either a principal or agent and customer incentive arrangements. Based on our preliminary assessment, we do not anticipate that the adoption of ASU 2014-09 will have a material impact on our consolidated financial statements once implemented.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
	Apr. 29, 2017
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. Impairment losses related to store-level property and equipment are calculated using significant unobservable inputs including the present value of future cash flows expected to be generated using a risk-adjusted weighted-average cost of capital and comparable store sales growth assumptions, and therefore are classified as a Level 3 measurement in the fair value hierarchy. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates their estimated fair values due to the short maturities of these instruments. The table below provides the fair values of our senior secured term loan facility (“Amended Term Loan Credit Facility”) and our 5.875% senior subordinated notes maturing in 2020 (“2020 Senior Subordinated Notes ). The fair values of our Amended 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. April 29, January 28, April 30, (in thousands) Term loan credit facility $ 2,245,397 $ 2,266,304 $ 2,280,483 Senior subordinated notes 522,750 526,575 534,225

DEBT

DEBT	3 Months Ended
	Apr. 29, 2017
DEBT
DEBT	3. DEBT Long-term debt consists of the following (in thousands): April 29, January 28, April 30, Interest Rate 2017 2017 2016 Term loan credit facility Variable $ 2,251,025 $ 2,263,475 $ 2,275,925 Senior subordinated notes % 510,000 510,000 510,000 Total debt 2,761,025 2,773,475 2,785,925 Less unamortized discount/premium and debt costs (18,294) (19,163) (20,961) Total debt, net 2,742,731 2,754,312 2,764,964 Less current portion (24,900) (31,125) (24,900) Long-term debt $ 2,717,831 $ 2,723,187 $ 2,740,064 Revolving Credit Facility As of April 29, 2017 and April 30, 2016, the borrowing base under our senior secured asset-based revolving credit facility was $786.9 million and $650.0 million, respectively, of which Michaels Stores, Inc. (“MSI”) had unused borrowing capacity of $727.6 million and $585.5 million, respectively. As of April 29, 2017 and April 30, 2016, outstanding standby letters of credit, which reduce our borrowing base, totaled $59.3 million and $64.5 million, respectively. There were no outstanding borrowings under our senior secured asset-based revolving credit facility as of April 29, 2017 and April 30, 2016. Debt Issuance Costs Accumulated amortization of debt issuance costs was $64.9 million, $63.7 million and $63.0 million as of April 29, 2017, January 28, 2017 and April 30, 2016, respectively.

ACCUMULATED OCI (LOSS)

ACCUMULATED OCI (LOSS)	3 Months Ended
	Apr. 29, 2017
ACCUMULATED OCI (LOSS)
ACCUMULATED OCI (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 April 29, April 30, 2017 2016 Beginning of period $ (14,224) $ (22,056) Foreign currency translation adjustment and other (5,272) 14,209 End of period $ (19,496) $ (7,847)

INCOME TAXES

INCOME TAXES	3 Months Ended
	Apr. 29, 2017
INCOME TAXES
INCOME TAXES	5. INCOME TAXES The effective tax rate was 33.7% for the first quarter of fiscal 2017 and 37.2% for the first quarter of fiscal 2016. The effective tax rate for the first quarter of fiscal 2017 is lower than the same period in the prior year due to benefits realized associated with our direct sourcing initiatives implemented in the second half of fiscal 2016 and the recognition of $0.9 million of excess tax benefits associated with the adoption of the new share-based compensation accounting standard.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Apr. 29, 2017
EARNINGS PER SHARE
EARNINGS PER SHARE	6. EARNINGS PER SHARE The Company’s unvested restricted stock awards contain non-forfeitable rights to dividends and meet the criteria of a participating security as defined by ASC 260, “ Earnings Per Share ”. In applying the two-class method, net income is allocated to both common and participating securities based on their respective weighted-average shares outstanding for the period. Basic earnings per share is computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average common shares outstanding plus the potential dilutive impact from the exercise of stock options and restricted stock units. Common equivalent shares are excluded from the computation if their effect is anti-dilutive. There were 4.9 million and 1.9 million anti-dilutive shares during the first quarters of fiscal 2017 and fiscal 2016, respectively. The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share data): 13 Weeks Ended April 29, April 30, 2017 2016 Basic earnings per common share: Net income $ 72,208 $ 70,765 Less income related to unvested restricted shares (337) (476) Income available to common shareholders - Basic $ 71,871 $ 70,289 Weighted-average common shares outstanding - Basic 188,968 206,994 Basic earnings per common share $ $ Diluted earnings per common share: Net income $ 72,208 $ 70,765 Less income related to unvested restricted shares (334) (471) Income available to common shareholders - Diluted $ 71,874 $ 70,294 Weighted-average common shares outstanding - Basic 188,968 206,994 Effect of dilutive stock options and restricted stock units 1,431 1,979 Weighted-average common shares outstanding - Diluted 190,399 208,973 Diluted earnings per common share $ $

SEGMENTS AND GEOGRAPHIC INFORMA

SEGMENTS AND GEOGRAPHIC INFORMATION	3 Months Ended
	Apr. 29, 2017
SEGMENTS AND GEOGRAPHIC INFORMATION
SEGMENTS AND GEOGRAPHIC INFORMATION	7. SEGMENTS AND GEOGRAPHIC INFORMATION We consider Michaels-U.S., Michaels-Canada, Aaron Brothers, Pat Catan’s and Darice 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 Michaels-U.S., Michaels-Canada, Aaron Brothers and Pat Catan’s have similar economic characteristics and meet the aggregation criteria set forth in ASC 280. Therefore, we combine these operating segments into one reporting segment. Darice does not meet the materiality criteria in ASC 280 and, therefore, is not disclosed as a reportable segment. Our net sales by country are as follows (in thousands): 13 Weeks Ended April 29, April 30, 2017 2016 United States $ 1,056,643 $ 1,063,837 Canada 101,920 95,043 Total $ 1,158,563 $ 1,158,880 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 and amortization (“EBITDA”). We believe these metrics more closely reflect the operating effectiveness of factors over which management has control. A reconciliation of EBITDA to net income is presented below (in thousands): 13 Weeks Ended April 29, April 30, 2017 2016 Net income $ 72,208 $ 70,765 Interest expense 30,437 32,219 Income taxes 36,659 41,895 Depreciation and amortization 28,551 29,470 Interest income (144) (280) EBITDA $ 167,711 $ 174,069

CONTINGENCIES

CONTINGENCIES	3 Months Ended
	Apr. 29, 2017
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 alleged that MSI 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 alleged 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 successfully removed the case to the U.S. District Court for the Central District of California and on May 8, 2014, the class was decertified. Three of the four named plaintiffs’ claims were resolved in September 2014 and the remaining one is set for trial on September 12, 2017. The individual claims of 26 former class members remain pending in the Central District of California. In addition, a separate representative action brought on behalf of store managers throughout the state is pending in the California Superior Court, County of San Diego. 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 employee. 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. , 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, as well as the claims by Michele Castro, have been dismissed. The Graham, Janice Bercut and Michelle Bercut lawsuits were transferred for centralized pretrial proceedings to the District of New Jersey. On January 24, 2017, the Company’s motion to dismiss for lack of standing was granted, and the court declined to rule on the merits of plaintiffs’ claims. The dismissal order was stayed for 30 days to allow the plaintiffs to amend their complaints. Because there were no amendments filed, two of the three centralized cases were dismissed and subsequently appealed to the U.S. Court of Appeals for the Third Circuit, and the remaining case ( Michelle Bercut ) was remanded to California Superior Court. 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). The plaintiffs 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 U.S. District Court for the Northern District of Illinois, Eastern Division. On March 18, 2014, an additional putative class action was filed in the U.S. 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 U.S. 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 which was granted on December 28, 2015, and judgment was entered in favor of the Company on January 8, 2016. Plaintiff appealed the judgment to the U.S. Court of Appeals for the Second Circuit and on May 2, 2017, the Second Circuit affirmed the dismissal. The Company intends to defend any further appeals of this case vigorously. We cannot reasonably estimate the potential loss, or range of loss, related to the lawsuit, if any. Consumer Product Safety Commission Claim On April 21, 2015, the U.S. 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. On April 4, 2017, the CPSC filed an amended complaint eliminating their misrepresentation claim. 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 lawsuits involving the Company, we are able to estimate a range of losses in excess of the amounts recorded, if any, in the accompanying consolidated financial statements. As of April 29, 2017, the aggregate estimated loss was approximately $11 million, which includes amounts recorded by the Company.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Apr. 29, 2017
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”) owned approximately 39% of our outstanding common stock as of April 29, 2017. The Blackstone Group owns a majority equity position in RGIS, a vendor we utilize to count our store inventory. Payments associated with this vendor during the first quarters of fiscal 2017 and fiscal 2016 were $2.0 million. These expenses are included in selling, general and administrative (“SG&A”) in the consolidated statements of comprehensive income. The Blackstone Group owns an equity position in Vistar, a vendor we utilize for all of the candy-type items in our stores. Payments associated with this vendor during the first quarters of fiscal 2017 and fiscal 2016 were $6.6 million and $6.3 million, respectively. These expenses are recognized in cost of sales and occupancy expense in the consolidated statements of comprehensive income as the sales are incurred. The Blackstone Group owns a majority equity position in Excel Trust, Inc., Blackstone Real Estate DDR Retail Holdings III, LLC and Blackstone Real Estate RC Retail Holdings, LLC, vendors we utilize to lease certain properties. Payments associated with these vendors during the first quarters of fiscal 2017 and fiscal 2016 were $1.7 million and $0.8 million, respectively. These expenses are included in cost of sales and occupancy expense in the consolidated statements of comprehensive income. Certain affiliates of The Blackstone Group have significant influence over US Xpress Enterprises, Inc., a vendor we utilize for transportation services. Payments associated with this vendor during the first quarters of fiscal 2017 and fiscal 2016 were $0.2 million and $0.3 million, respectively. These expenses are recognized in cost of sales and occupancy expense in the consolidated statements of comprehensive income as the sales are incurred. Four of our current directors, Joshua Bekenstein, Nadim El Gabbani, Lewis S. Klessel 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 April 29, 2017, affiliates of The Blackstone Group held $51.9 million of our Amended Term Loan Credit Facility.

CONDENSED CONSOLIDATED FINANCIA

CONDENSED CONSOLIDATED FINANCIAL INFORMATION	3 Months Ended
	Apr. 29, 2017
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) April 29, January 28, April 30, ASSETS 2017 2017 2016 Current assets: Cash and equivalents $ 197,100 $ 294,054 $ 167,126 Merchandise inventories 1,102,346 1,127,777 1,057,642 Prepaid expenses and other current assets 114,536 116,072 116,641 Total current assets 1,413,982 1,537,903 1,341,409 Property and equipment, net 403,049 413,164 402,762 Goodwill 119,074 119,074 119,074 Other assets 73,414 73,201 77,292 Total assets $ 2,009,519 $ 2,143,342 $ 1,940,537 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 430,261 $ 517,268 $ 373,492 Accrued liabilities and other 347,987 395,745 358,193 Current portion of long-term debt 24,900 31,125 24,900 Other current liabilities 153,243 123,258 81,956 Total current liabilities 956,391 1,067,396 838,541 Long-term debt 2,717,831 2,723,187 2,740,064 Other liabilities 109,975 103,972 93,198 Total stockholders’ deficit (1,774,678) (1,751,213) (1,731,266) Total liabilities and stockholders’ deficit $ 2,009,519 $ 2,143,342 $ 1,940,537 Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended April 29, April 30, 2017 2016 Net sales $ 1,158,563 $ 1,158,880 Cost of sales and occupancy expense 690,929 694,129 Gross profit 467,634 464,751 Selling, general and administrative 327,465 317,265 Other operating expense 978 1,626 Operating income 139,191 145,860 Interest and other expense 30,396 32,670 Income before income taxes 108,795 113,190 Income taxes 36,634 42,092 Net income $ 72,161 $ 71,098 Other comprehensive income, net of tax: Foreign currency translation adjustment and other (5,272) 14,209 Comprehensive income $ 66,889 $ 85,307 Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 13 Weeks Ended April 29, April 30, 2017 2016 Cash flows from operating activities: Net cash provided by (used in) operating activities $ 26,543 $ (17,149) Cash flows from investing activities: Additions to property and equipment (15,690) (14,664) Acquisition of Lamrite West, net of cash acquired — (144,600) Net cash used in investing activities (15,690) (159,264) Cash flows from financing activities: Net repayments of debt (24,450) (6,225) Net borrowings of debt 12,000 — Payment of dividend to Michaels Funding, Inc. (95,357) (59,348) Other financing activities — 4,462 Net cash used in financing activities (107,807) (61,111) Net change in cash and equivalents (96,954) (237,524) Cash and equivalents at beginning of period 294,054 404,650 Cash and equivalents at end of period $ 197,100 $ 167,126

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Apr. 29, 2017
FAIR VALUE MEASUREMENTS
Schedule of carrying and fair values of debt	April 29, January 28, April 30, (in thousands) Term loan credit facility $ 2,245,397 $ 2,266,304 $ 2,280,483 Senior subordinated notes 522,750 526,575 534,225

DEBT (Tables)

DEBT (Tables)	3 Months Ended
	Apr. 29, 2017
DEBT
Schedule of outstanding debt	Long-term debt consists of the following (in thousands): April 29, January 28, April 30, Interest Rate 2017 2017 2016 Term loan credit facility Variable $ 2,251,025 $ 2,263,475 $ 2,275,925 Senior subordinated notes % 510,000 510,000 510,000 Total debt 2,761,025 2,773,475 2,785,925 Less unamortized discount/premium and debt costs (18,294) (19,163) (20,961) Total debt, net 2,742,731 2,754,312 2,764,964 Less current portion (24,900) (31,125) (24,900) Long-term debt $ 2,717,831 $ 2,723,187 $ 2,740,064

ACCUMULATED OCI (LOSS) (Tables)

ACCUMULATED OCI (LOSS) (Tables)	3 Months Ended
	Apr. 29, 2017
ACCUMULATED OCI (LOSS)
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 April 29, April 30, 2017 2016 Beginning of period $ (14,224) $ (22,056) Foreign currency translation adjustment and other (5,272) 14,209 End of period $ (19,496) $ (7,847)

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Apr. 29, 2017
EARNINGS PER SHARE
Schedule of calculation of basic and diluted earnings per share	The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share data): 13 Weeks Ended April 29, April 30, 2017 2016 Basic earnings per common share: Net income $ 72,208 $ 70,765 Less income related to unvested restricted shares (337) (476) Income available to common shareholders - Basic $ 71,871 $ 70,289 Weighted-average common shares outstanding - Basic 188,968 206,994 Basic earnings per common share $ $ Diluted earnings per common share: Net income $ 72,208 $ 70,765 Less income related to unvested restricted shares (334) (471) Income available to common shareholders - Diluted $ 71,874 $ 70,294 Weighted-average common shares outstanding - Basic 188,968 206,994 Effect of dilutive stock options and restricted stock units 1,431 1,979 Weighted-average common shares outstanding - Diluted 190,399 208,973 Diluted earnings per common share $ $

SEGMENTS AND GEOGRAPHIC INFOR20

SEGMENTS AND GEOGRAPHIC INFORMATION (Tables)	3 Months Ended
	Apr. 29, 2017
SEGMENTS AND GEOGRAPHIC INFORMATION
Schedule of sales and assets by country	Our net sales by country are as follows (in thousands): 13 Weeks Ended April 29, April 30, 2017 2016 United States $ 1,056,643 $ 1,063,837 Canada 101,920 95,043 Total $ 1,158,563 $ 1,158,880
Schedule of reconciliation of net income to EBITDA	A reconciliation of EBITDA to net income is presented below (in thousands): 13 Weeks Ended April 29, April 30, 2017 2016 Net income $ 72,208 $ 70,765 Interest expense 30,437 32,219 Income taxes 36,659 41,895 Depreciation and amortization 28,551 29,470 Interest income (144) (280) EBITDA $ 167,711 $ 174,069

CONDENSED CONSOLIDATED FINANC21

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Tables)	3 Months Ended
	Apr. 29, 2017
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Schedule of Condensed Consolidated Balance Sheets	Michaels Stores, Inc. Condensed Consolidated Balance Sheets (in thousands) April 29, January 28, April 30, ASSETS 2017 2017 2016 Current assets: Cash and equivalents $ 197,100 $ 294,054 $ 167,126 Merchandise inventories 1,102,346 1,127,777 1,057,642 Prepaid expenses and other current assets 114,536 116,072 116,641 Total current assets 1,413,982 1,537,903 1,341,409 Property and equipment, net 403,049 413,164 402,762 Goodwill 119,074 119,074 119,074 Other assets 73,414 73,201 77,292 Total assets $ 2,009,519 $ 2,143,342 $ 1,940,537 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 430,261 $ 517,268 $ 373,492 Accrued liabilities and other 347,987 395,745 358,193 Current portion of long-term debt 24,900 31,125 24,900 Other current liabilities 153,243 123,258 81,956 Total current liabilities 956,391 1,067,396 838,541 Long-term debt 2,717,831 2,723,187 2,740,064 Other liabilities 109,975 103,972 93,198 Total stockholders’ deficit (1,774,678) (1,751,213) (1,731,266) Total liabilities and stockholders’ deficit $ 2,009,519 $ 2,143,342 $ 1,940,537
Schedule of Condensed Consolidated Statements of Comprehensive Income	Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended April 29, April 30, 2017 2016 Net sales $ 1,158,563 $ 1,158,880 Cost of sales and occupancy expense 690,929 694,129 Gross profit 467,634 464,751 Selling, general and administrative 327,465 317,265 Other operating expense 978 1,626 Operating income 139,191 145,860 Interest and other expense 30,396 32,670 Income before income taxes 108,795 113,190 Income taxes 36,634 42,092 Net income $ 72,161 $ 71,098 Other comprehensive income, net of tax: Foreign currency translation adjustment and other (5,272) 14,209 Comprehensive income $ 66,889 $ 85,307
Schedule of Condensed Consolidated Statements of Cash Flows	Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 13 Weeks Ended April 29, April 30, 2017 2016 Cash flows from operating activities: Net cash provided by (used in) operating activities $ 26,543 $ (17,149) Cash flows from investing activities: Additions to property and equipment (15,690) (14,664) Acquisition of Lamrite West, net of cash acquired — (144,600) Net cash used in investing activities (15,690) (159,264) Cash flows from financing activities: Net repayments of debt (24,450) (6,225) Net borrowings of debt 12,000 — Payment of dividend to Michaels Funding, Inc. (95,357) (59,348) Other financing activities — 4,462 Net cash used in financing activities (107,807) (61,111) Net change in cash and equivalents (96,954) (237,524) Cash and equivalents at beginning of period 294,054 404,650 Cash and equivalents at end of period $ 197,100 $ 167,126

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Fiscal Year (Details)	3 Months Ended		12 Months Ended
	Apr. 29, 2017	Apr. 30, 2016	Feb. 03, 2018	Jan. 28, 2017
Fiscal year
Duration period of fiscal year	91 days	91 days	371 days	364 days
Minimum
Fiscal year
Duration period of fiscal year	364 days
Maximum
Fiscal year
Duration period of fiscal year	371 days

SUMMARY OF SIGNIFICANT ACCOUN23

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Preferred Shares and Other (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016	Jan. 28, 2017
Share Repurchase Program
Common stock share repurchase authorized amount			$ 500
Number of shares repurchased	4.8	2.3
Value of shares repurchased	$ 99.3	$ 59.3

SUMMARY OF SIGNIFICANT ACCOUN24

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Acct Pronouncements (Details) $ in Millions	3 Months Ended
	Apr. 29, 2017USD ($)
ASU 2016-09
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Excess tax benefits related to share-based compensation	$ 0.9

FAIR VALUE MEASUREMENTS, Debt (

FAIR VALUE MEASUREMENTS, Debt (Details) - Level 2 - USD ($) $ in Thousands	Apr. 29, 2017	Jan. 28, 2017	Apr. 30, 2016
Term loan credit facility
Fair Value Measurements
Long-term loans and notes	$ 2,245,397	$ 2,266,304	$ 2,280,483
Senior subordinated notes
Fair Value Measurements
Long-term loans and notes	$ 522,750	$ 526,575	$ 534,225

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	Apr. 29, 2017	Jan. 28, 2017	Apr. 30, 2016
Debt
Total debt	$ 2,761,025	$ 2,773,475	$ 2,785,925
Less unamortized discount/premium and debt costs	(18,294)	(19,163)	(20,961)
Total debt, net	2,742,731	2,754,312	2,764,964
Less current portion	(24,900)	(31,125)	(24,900)
Long-term debt	2,717,831	2,723,187	2,740,064
Term loan credit facility
Debt
Total debt	$ 2,251,025	$ 2,263,475	$ 2,275,925
Senior subordinated notes
Debt
Stated interest rate (as a percent)	5.875%	5.875%	5.875%
Total debt	$ 510,000	$ 510,000	$ 510,000

DEBT, Revolving (Details)

DEBT, Revolving (Details) - USD ($) $ in Millions	Apr. 29, 2017	Jan. 28, 2017	Apr. 30, 2016
Asset-based Revolving Credit Facility
Accumulated amortization of debt issuance costs	$ 64.9	$ 63.7	$ 63
Michaels Stores | Asset-based revolving credit facility
Asset-based Revolving Credit Facility
Current availability	786.9		650
Unused borrowing capacity	727.6		585.5
Outstanding letters of credit	59.3		64.5
Outstanding borrowings	$ 0		$ 0

ACCUMULATED OCI (LOSS) (Details

ACCUMULATED OCI (LOSS) (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Accumulated Other Comprehensive Loss
Balance	$ (1,698,426)
Balance	(1,721,925)	$ (1,683,358)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Loss
Balance	(14,224)	(22,056)
Balance	(19,496)	(7,847)
Foreign Currency Translation Adjustment & Other
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss	$ (5,272)	$ 14,209

INCOME TAXES, Condensed (Detail

INCOME TAXES, Condensed (Details)	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
INCOME TAXES
Effective tax rate (as a percent)	33.70%	37.20%

INCOME TAXES, ASU 2016-09 (Deta

INCOME TAXES, ASU 2016-09 (Details) $ in Millions	3 Months Ended
	Apr. 29, 2017USD ($)
ASU 2016-09
New accounting standard
Excess tax benefits related to share-based compensation	$ 0.9

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Earnings per share
Anti-dilutive stock options shares excluded from the computation of earnings per share (in shares)	4,900	1,900
Basic earnings per common share:
Net income	$ 72,208	$ 70,765
Income available to common shareholders - Basic	$ 71,871	$ 70,289
Weighted-average common shares outstanding - Basic (in shares)	188,968	206,994
Basic earnings per common share (in dollars per share)	$ 0.38	$ 0.34
Diluted earnings per common share:
Net income	$ 72,208	$ 70,765
Income available to common shareholders - Diluted	$ 71,874	$ 70,294
Weighted-average common shares outstanding - Basic (in shares)	188,968	206,994
Effect of dilutive stock options and restricted stock units (in shares)	1,431	1,979
Weighted-average common shares outstanding - Diluted (in shares)	190,399	208,973
Diluted earnings per common share (in dollars per share)	$ 0.38	$ 0.34
Restricted shares
Basic earnings per common share:
Less income related to unvested restricted shares	$ (337)	$ (476)
Diluted earnings per common share:
Less income related to unvested restricted shares	$ (334)	$ (471)

SEGMENTS AND GEOGRAPHIC INFOR32

SEGMENTS AND GEOGRAPHIC INFORMATION (Details) $ in Thousands	3 Months Ended
	Apr. 29, 2017USD ($)item	Apr. 30, 2016USD ($)
Segments
Number of reportable segments | item	1
Net Sales	$ 1,158,563	$ 1,158,880
United States
Segments
Net Sales	1,056,643	1,063,837
Canada
Segments
Net Sales	$ 101,920	$ 95,043

SEGMENTS AND GEOGRAPHIC INFOR33

SEGMENTS AND GEOGRAPHIC INFORMATION, EBITDA (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
SEGMENTS AND GEOGRAPHIC INFORMATION
Net income	$ 72,208	$ 70,765
Interest expense	30,437	32,219
Income taxes	36,659	41,895
Depreciation and amortization	28,551	29,470
Interest income	(144)	(280)
EBITDA	$ 167,711	$ 174,069

CONTINGENCIES (Details)

CONTINGENCIES (Details) $ in Millions	Jan. 24, 2017	Mar. 18, 2014item	Sep. 15, 2011item	Sep. 30, 2014item	Apr. 29, 2017USD ($)item	Apr. 29, 2017USD ($)item	Mar. 14, 2014item	Dec. 03, 2013item
Commitments and Contingencies
Aggregate estimate of possible loss | $					$ 11	$ 11
Fair credit reporting claim
Commitments and Contingencies
Number of plaintiffs					3	6
Number of claims filed						5
Period dismissal order was stayed	30 days
Number of amendments filed					0
Number of cases dismissed					2
Data security incident
Commitments and Contingencies
Number of new claims filed		5
Number of consolidated cases filed							4
Employee claims | Rea claims
Commitments and Contingencies
Number of plaintiffs			4
Number of claims settled				3
Number of pending claims					1	1
Consumer Class Action Claims | Rea claims
Commitments and Contingencies
Number of certified members								200
Number of pending claims					26	26

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details) $ in Thousands	3 Months Ended
	Apr. 29, 2017USD ($)item	Apr. 30, 2016USD ($)	Jan. 28, 2017USD ($)
Related Party Transactions
Long-term debt	$ 2,742,731	$ 2,764,964	$ 2,754,312
The Sponsors
Related Party Transactions
Percentage owned by related party	39.00%
The Blackstone Group | Term loan credit facility
Related Party Transactions
Long-term debt	$ 51,900
The Blackstone Group | Store Inventory Count Services | Selling, General and Administrative Expenses
Related Party Transactions
Expenses recognized	2,000	2,000
The Blackstone Group | Candy Type Items | Cost of Sales and Occupancy Expense
Related Party Transactions
Expenses recognized	6,600	6,300
The Blackstone Group | Lease Services | Cost of Sales and Occupancy Expense
Related Party Transactions
Expenses recognized	1,700	800
The Blackstone Group | Transportation services | Cost of Sales and Occupancy Expense
Related Party Transactions
Expenses recognized	$ 200	$ 300
Bain Capital or The Blackstone Group
Related Party Transactions
Number of directors | item	4

CONDENSED CONSOLIDATED FINANC36

CONDENSED CONSOLIDATED FINANCIAL INFORMATION, Balance Sheet (Details) - USD ($) $ in Thousands	Apr. 29, 2017	Jan. 28, 2017	Apr. 30, 2016	Jan. 30, 2016
Current Assets:
Cash and equivalents	$ 197,863	$ 298,813	$ 171,870	$ 409,391
Merchandise inventories	1,102,346	1,127,777	1,057,642
Prepaid expenses and other current assets	84,865	87,175	84,706
Total current assets	1,414,849	1,542,805	1,346,258
Property and equipment, net	403,049	413,164	402,762
Goodwill	119,074	119,074	119,074
Other assets	12,214	12,061	9,958
Total assets	2,009,781	2,147,640	1,946,693
Current Liabilities:
Accounts payable	430,261	517,268	373,492
Accrued liabilities and other	348,807	397,497	359,815
Current portion of long-term debt	24,900	31,125	24,900
Total current liabilities	912,313	1,024,224	794,609
Long-term debt	2,717,831	2,723,187	2,740,064
Other liabilities	101,562	98,655	95,378
Total stockholders' deficit	(1,721,925)	(1,698,426)	(1,683,358)
Total liabilities and stockholders' deficit	2,009,781	2,147,640	1,946,693
Michaels Stores
Current Assets:
Cash and equivalents	197,100	294,054	167,126	$ 404,650
Merchandise inventories	1,102,346	1,127,777	1,057,642
Prepaid expenses and other current assets	114,536	116,072	116,641
Total current assets	1,413,982	1,537,903	1,341,409
Property and equipment, net	403,049	413,164	402,762
Goodwill	119,074	119,074	119,074
Other assets	73,414	73,201	77,292
Total assets	2,009,519	2,143,342	1,940,537
Current Liabilities:
Accounts payable	430,261	517,268	373,492
Accrued liabilities and other	347,987	395,745	358,193
Current portion of long-term debt	24,900	31,125	24,900
Other current liabilities	153,243	123,258	81,956
Total current liabilities	956,391	1,067,396	838,541
Long-term debt	2,717,831	2,723,187	2,740,064
Other liabilities	109,975	103,972	93,198
Total stockholders' deficit	(1,774,678)	(1,751,213)	(1,731,266)
Total liabilities and stockholders' deficit	$ 2,009,519	$ 2,143,342	$ 1,940,537

CONDENSED CONSOLIDATED FINANC37

CONDENSED CONSOLIDATED FINANCIAL INFORMATION, Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	$ 1,158,563	$ 1,158,880
Cost of sales and occupancy expense	690,929	694,129
Gross profit	467,634	464,751
Selling, general, and administrative	327,396	317,800
Operating income	139,260	145,325
Income before income taxes	108,867	112,660
Income taxes	36,659	41,895
Net income	72,208	70,765
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	(5,272)	14,209
Comprehensive income	66,936	84,974
Michaels Stores
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	1,158,563	1,158,880
Cost of sales and occupancy expense	690,929	694,129
Gross profit	467,634	464,751
Selling, general, and administrative	327,465	317,265
Other operating expense	978	1,626
Operating income	139,191	145,860
Interest and other expense	30,396	32,670
Income before income taxes	108,795	113,190
Income taxes	36,634	42,092
Net income	72,161	71,098
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	(5,272)	14,209
Comprehensive income	$ 66,889	$ 85,307

CONDENSED CONSOLIDATED FINANC38

CONDENSED CONSOLIDATED FINANCIAL INFORMATION, Cash Flow (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 29, 2017	Apr. 30, 2016
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$ 22,945	$ (23,863)
Cash flows from investing activities:
Additions to property and equipment	(15,690)	(14,664)
Acquisition of Lamrite West, net of cash acquired		(144,600)
Net cash used in investing activities	(15,690)	(159,264)
Cash flows from financing activities:
Other financing activities		(137)
Net cash used in financing activities	(108,205)	(54,394)
Net change in cash and equivalents	(100,950)	(237,521)
Cash and equivalents at beginning of period	298,813	409,391
Cash and equivalents at end of period	197,863	171,870
Michaels Stores
Cash flows from operating activities:
Net cash provided by (used in) operating activities	26,543	(17,149)
Cash flows from investing activities:
Additions to property and equipment	(15,690)	(14,664)
Acquisition of Lamrite West, net of cash acquired		(144,600)
Net cash used in investing activities	(15,690)	(159,264)
Cash flows from financing activities:
Net repayments of debt	(24,450)	(6,225)
Net borrowings of debt	12,000
Payment of dividend to Michaels Funding, Inc.	(95,357)	(59,348)
Other financing activities		4,462
Net cash used in financing activities	(107,807)	(61,111)
Net change in cash and equivalents	(96,954)	(237,524)
Cash and equivalents at beginning of period	294,054	404,650
Cash and equivalents at end of period	$ 197,100	$ 167,126