Michaels Companies 10-Q 1 Dec 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Oct. 28, 2017	Nov. 24, 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	Oct. 28, 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		181,248,635
Document Fiscal Year Focus	2,017
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. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net sales	$ 1,240,196	$ 1,227,206	$ 3,471,352	$ 3,446,438
Cost of sales and occupancy expense	756,088	760,598	2,117,100	2,124,383
Gross profit	484,108	466,608	1,354,252	1,322,055
Selling, general, and administrative	329,298	318,580	970,561	939,093
Store pre-opening costs	952	1,704	2,592	4,238
Operating income	153,858	146,324	381,099	378,724
Interest expense	32,818	31,538	94,305	95,711
Losses on early extinguishments of debt and refinancing costs		6,887		7,292
Other (income) expense, net	(360)	259	950	188
Income before income taxes	121,400	107,640	285,844	275,533
Income taxes	41,640	31,181	98,314	92,692
Net income	79,760	76,459	187,530	182,841
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	(4,418)	(3,650)	4,254	5,800
Comprehensive income	$ 75,342	$ 72,809	$ 191,784	$ 188,641
Earnings per common share:
Basic (in dollars per share)	$ 0.44	$ 0.37	$ 1.01	$ 0.88
Diluted (in dollars per share)	$ 0.44	$ 0.37	$ 1	$ 0.88
Weighted-average common shares outstanding:
Basic (in shares)	180,710	203,864	185,521	205,580
Diluted (in shares)	181,987	205,313	186,775	207,293

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
Current Assets:
Cash and equivalents	$ 176,771	$ 298,813	$ 149,970
Merchandise inventories	1,404,206	1,127,777	1,394,092
Prepaid expenses and other	95,993	87,175	93,691
Accounts receivable, net	30,936	23,215	36,927
Income taxes receivable	5,792	5,825	26,757
Total current assets	1,713,698	1,542,805	1,701,437
Property and equipment, at cost	1,545,004	1,488,136	1,759,229
Less accumulated depreciation and amortization	(1,143,112)	(1,074,972)	(1,347,027)
Property and equipment, net	401,892	413,164	412,202
Goodwill	119,074	119,074	119,074
Other intangible assets, net	22,253	23,702	24,457
Deferred income taxes	36,946	36,834	30,293
Other assets	12,233	12,061	12,016
Total assets	2,306,096	2,147,640	2,299,479
Current Liabilities:
Accounts payable	674,222	517,268	714,198
Accrued liabilities and other	400,138	397,497	386,280
Current portion of long-term debt	140,125	31,125	24,900
Income taxes payable	16,673	78,334
Total current liabilities	1,231,158	1,024,224	1,125,378
Long-term debt	2,707,120	2,723,187	2,734,758
Other liabilities	100,656	98,655	98,866
Total liabilities	4,038,934	3,846,066	3,959,002
Commitments and contingencies
Stockholders’ Deficit:
Common stock, $0.06775 par value, 350,000 shares authorized; 181,263 shares issued and outstanding at October 28, 2017; 193,311 shares issued and outstanding at January 28, 2017; and 204,584 shares issued and outstanding at October 29, 2016	12,159	12,948	13,703
Additional paid-in capital	7,722	233,129	468,627
Accumulated deficit	(1,742,749)	(1,930,279)	(2,125,597)
Accumulated other comprehensive loss	(9,970)	(14,224)	(16,256)
Total stockholders' deficit	(1,732,838)	(1,698,426)	(1,659,523)
Total liabilities and stockholders' deficit	$ 2,306,096	$ 2,147,640	$ 2,299,479

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 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	181,263	193,311	204,584
Common Stock, shares outstanding	181,263	193,311	204,584

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016
Cash flows from operating activities:
Net income	$ 187,530	$ 182,841
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	86,232	86,679
Share-based compensation	18,232	11,884
Debt issuance costs amortization	3,823	5,308
Accretion of long-term debt, net	(379)	(217)
Deferred income taxes	529	10,106
Losses on early extinguishments of debt and refinancing costs		7,292
Losses on disposition of property and equipment		56
Excess tax benefits from share-based compensation		(7,485)
Changes in assets and liabilities, excluding acquired net assets:
Merchandise inventories	(275,086)	(306,925)
Prepaid expenses and other	(8,818)	(7,554)
Accounts receivable	(7,721)	(4,764)
Other assets	(1,010)	(353)
Accounts payable	150,947	233,266
Accrued interest	(314)	6,716
Accrued liabilities and other	12,685	(18,613)
Income taxes	(61,628)	(63,001)
Other liabilities	1,405	1,280
Net cash provided by operating activities	106,427	136,516
Cash flows from investing activities:
Additions to property and equipment	(72,640)	(82,163)
Acquisition of Lamrite West, net of cash acquired		(151,100)
Purchases of long-term investment		(1,325)
Net cash used in investing activities	(72,640)	(234,588)
Cash flows from financing activities:
Common stock repurchased	(253,595)	(160,287)
Payments on term loan credit facility	(18,675)	(12,450)
Borrowings on asset-based revolving credit facility	357,200	42,000
Payments on asset-based revolving credit facility	(248,200)	(42,000)
Payment of debt issuance costs		(11,542)
Payments of dividends	(408)	(415)
Proceeds from stock options exercised	7,849	15,860
Excess tax benefits from share-based compensation		7,485
Net cash used in financing activities	(155,829)	(161,349)
Net change in cash and equivalents	(122,042)	(259,421)
Cash and equivalents at beginning of period	298,813	409,391
Cash and equivalents at end of period	176,771	149,970
Supplemental Cash Flow Information:
Cash paid for interest	91,794	83,958
Cash paid for taxes	$ 159,013	$ 144,483

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Oct. 28, 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 ending February 3, 2018 and references to “fiscal 2016” relate to the 52 weeks ended January 28, 2017. In addition, all references to “the third quarter of fiscal 2017” relate to the 13 weeks ended October 28, 2017 and all references to “the third quarter of fiscal 2016” relate to the 13 weeks ended October 29, 2016. Finally, all references to “the nine months ended October 28, 2017” relate to the 39 weeks ended October 28, 2017 and all references to “the nine months ended October 29, 2016” relate to the 39 weeks ended October 29, 2016. Because of the seasonal nature of our business, the results of operations for the 13 and 39 weeks ended October 28, 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 June 2017, the Board of Directors authorized a new share repurchase program for the Company to purchase $500.0 million of the Company’s common stock on the open market. The share repurchase program does not have an expiration date, and the timing and number of repurchase transactions under the program will depend on market conditions, corporate considerations, debt agreements and regulatory requirements. Shares repurchased under the program are held as treasury shares until retired. During the nine months ended October 28, 2017, we repurchased 12.7 million shares under our share repurchase programs for an aggregate amount of $249.5 million, including $99.4 million repurchased under our previous authorization. As of October 28, 2017, we had $350.0 million of availability remaining under our current program. Accounting Pronouncements Recently Adopted In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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 $0.1 million of excess tax benefits related to share-based compensation in income tax expense for the third quarter of fiscal 2017 and $1.1 million for the nine months ended October 28, 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 May 2017, the FASB issued ASU 2017-09, “ Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”) . ASU 2017-09 provides clarity on when a change to the terms or conditions of a share-based payment award would require an entity to apply modification accounting. ASU 2017-09 is effective on a prospective basis for reporting periods beginning after December 15, 2017, with early adoption permitted. We do not anticipate a material impact to the consolidated financial statements once implemented. 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 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 and related disclosures. We believe the most significant impact relates to our accounting for real estate leases, which will be recorded as right-of-use assets and lease 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 each of these standards is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We plan to adopt the standard using the 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 an agent and customer incentive arrangements. We do not anticipate that the adoption of ASU 2014-09 will result in a material adjustment on the date of implementation.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Oct. 28, 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. October 28, January 28, October 29, 2017 2017 2016 (in thousands) Term loan credit facility $ 2,250,412 $ 2,266,304 $ 2,286,723 Senior subordinated notes 520,838 526,575 526,575

DEBT

DEBT	9 Months Ended
	Oct. 28, 2017
DEBT
DEBT	3. DEBT Long-term debt consists of the following (in thousands): October 28, January 28, October 29, Interest Rate 2017 2017 2016 Term loan credit facility Variable $ 2,244,800 $ 2,263,475 $ 2,269,700 Asset-based revolving credit facility Variable 109,000 — — Senior subordinated notes % 510,000 510,000 510,000 Total debt 2,863,800 2,773,475 2,779,700 Less unamortized discount/premium and debt costs (16,555) (19,163) (20,042) Total debt, net 2,847,245 2,754,312 2,759,658 Less current portion (140,125) (31,125) (24,900) Long-term debt $ 2,707,120 $ 2,723,187 $ 2,734,758 Revolving Credit Facility As of October 28, 2017 and October 29, 2016, the borrowing base under our senior secured asset-based revolving credit facility was $850.0 million, of which Michaels Stores, Inc. (“MSI”) had unused borrowing capacity of $675.7 million and $792.7 million, respectively. As of October 28, 2017 and October 29, 2016, outstanding standby letters of credit, which reduce our borrowing base, totaled $65.3 million and $57.3 million, respectively.

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE LOSS	9 Months Ended
	Oct. 28, 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 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 Beginning of period $ (5,552) $ (12,606) $ (14,224) $ (22,056) Foreign currency translation adjustment and other (4,418) (3,650) 4,254 5,800 End of period $ (9,970) $ (16,256) $ (9,970) $ (16,256)

INCOME TAXES

INCOME TAXES	9 Months Ended
	Oct. 28, 2017
INCOME TAXES
INCOME TAXES	5. INCOME TAXES The effective tax rate was 34.3% for the third quarter of fiscal 2017 compared to 29.0% for the third quarter of fiscal 2016 and 34.4% for the nine months ended October 28, 2017 compared to 33.6% for the same period in the prior year. The effective tax rate for both periods of fiscal 2017 was higher than the same periods in the prior year due to certain federal tax credits recognized in the prior year and an increase in state taxes, partially offset by benefits realized associated with our direct sourcing initiatives that began in the second half of fiscal 2016.

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Oct. 28, 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 stock options and restricted stock units. Common equivalent shares are excluded from the computation if their effect is anti-dilutive. There were 5.8 million and 2.7 million anti-dilutive shares during the third quarters of fiscal 2017 and fiscal 2016, respectively. There were 6.0 million and 2.0 million anti-dilutive shares during the nine months ended October 28, 2017 and October 29, 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 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 Basic earnings per common share: Net income $ 79,760 $ 76,459 $ 187,530 $ 182,841 Less income related to unvested restricted shares (297) (462) (789) (1,180) Income available to common shareholders - Basic $ 79,463 $ 75,997 $ 186,741 $ 181,661 Weighted-average common shares outstanding - Basic 180,710 203,864 185,521 205,580 Basic earnings per common share $ $ $ $ Diluted earnings per common share: Net income $ 79,760 $ 76,459 $ 187,530 $ 182,841 Less income related to unvested restricted shares (295) (459) (784) (1,171) Income available to common shareholders - Diluted $ 79,465 $ 76,000 $ 186,746 $ 181,670 Weighted-average common shares outstanding - Basic 180,710 203,864 185,521 205,580 Effect of dilutive stock options and restricted stock units 1,277 1,449 1,254 1,713 Weighted-average common shares outstanding - Diluted 181,987 205,313 186,775 207,293 Diluted earnings per common share $ $ $ $

SEGMENTS AND GEOGRAPHIC INFORMA

SEGMENTS AND GEOGRAPHIC INFORMATION	9 Months Ended
	Oct. 28, 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 chief operating decision makers evaluate historical operating performance and forecast future periods’ operating performance based on operating income. Our net sales by country are as follows (in thousands): 13 Weeks Ended 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 United States $ 1,117,626 $ 1,118,273 $ 3,152,048 $ 3,152,477 Canada 122,570 108,933 319,304 293,961 Total $ 1,240,196 $ 1,227,206 $ 3,471,352 $ 3,446,438

CONTINGENCIES

CONTINGENCIES	9 Months Ended
	Oct. 28, 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 February 18, 2018. 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. We do not believe the resolution of the lawsuits will have a material effect on our consolidated financial statements. Data Security Incident Five putative class actions were filed against MSI relating to the January 2014 data breach. The plaintiffs generally 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 were 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 were 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 and Whalen did not appeal further, thereby concluding the matter. 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 October 28, 2017, the aggregate estimated loss was approximately $10 million, which includes amounts recorded by the Company.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Oct. 28, 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 40% of our outstanding common stock as of October 28, 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 third quarters of fiscal 2017 and fiscal 2016 were $2.3 million and $2.1 million, respectively. Payments made during the nine months ended October 28, 2017 and October 29, 2016 were $6.0 million and $5.9 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 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 third quarters of fiscal 2017 and fiscal 2016 were $1.9 million and $1.4 million, respectively. Payments made during the nine months ended October 28, 2017 and October 29, 2016 were $5.1 million and $3.5 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 third quarters of fiscal 2017 and fiscal 2016 were $0.3 million and $0.2 million, respectively. Payments made during the nine months ended October 28, 2017 and October 29, 2016 were $0.7 million. These expenses are recognized in cost of sales and occupancy expense in the consolidated statements of comprehensive income as the sales are incurred. Two of our current directors, Joshua Bekenstein 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 28, 2017, affiliates of The Blackstone Group held $71.7 million of our Amended Term Loan Credit Facility.

CONDENSED CONSOLIDATED FINANCIA

CONDENSED CONSOLIDATED FINANCIAL INFORMATION	9 Months Ended
	Oct. 28, 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) October 28, January 28, October 29, ASSETS 2017 2017 2016 Current assets: Cash and equivalents $ 176,007 $ 294,054 $ 145,217 Merchandise inventories 1,404,206 1,127,777 1,394,092 Prepaid expenses and other current assets 131,695 116,072 147,796 Total current assets 1,711,908 1,537,903 1,687,105 Property and equipment, net 401,892 413,164 412,202 Goodwill 119,074 119,074 119,074 Other assets 72,036 73,201 68,401 Total assets $ 2,304,910 $ 2,143,342 $ 2,286,782 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 674,222 $ 517,268 $ 714,198 Accrued liabilities and other 399,363 395,745 385,102 Current portion of long-term debt 140,125 31,125 24,900 Other current liabilities 60,884 123,258 36,263 Total current liabilities 1,274,594 1,067,396 1,160,463 Long-term debt 2,707,120 2,723,187 2,734,758 Other liabilities 108,112 103,972 103,615 Total stockholders’ deficit (1,784,916) (1,751,213) (1,712,054) Total liabilities and stockholders’ deficit $ 2,304,910 $ 2,143,342 $ 2,286,782 Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 Net sales $ 1,240,196 $ 1,227,206 $ 3,471,352 $ 3,446,438 Cost of sales and occupancy expense 756,088 760,598 2,117,100 2,124,383 Gross profit 484,108 466,608 1,354,252 1,322,055 Selling, general and administrative 328,855 318,438 969,793 937,849 Store pre-opening costs 952 1,704 2,592 4,238 Operating income 154,301 146,466 381,867 379,968 Interest and other expense 32,460 38,689 95,261 103,207 Income before income taxes 121,841 107,777 286,606 276,761 Income taxes 41,806 31,232 98,601 93,149 Net income $ 80,035 $ 76,545 $ 188,005 $ 183,612 Other comprehensive income, net of tax: Foreign currency translation adjustment and other (4,418) (3,650) 4,254 5,800 Comprehensive income $ 75,617 $ 72,895 $ 192,259 $ 189,412 Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 39 Weeks Ended October 28, October 29, 2017 2016 Cash flows from operating activities: Net cash provided by operating activities $ 109,782 $ 148,191 Cash flows from investing activities: Additions to property and equipment (72,640) (82,163) Acquisition of Lamrite West, net of cash acquired — (151,100) Purchase of long-term investment — (1,325) Net cash used in investing activities (72,640) (234,588) Cash flows from financing activities: Net repayments of debt (266,875) (54,450) Net borrowings of debt 357,200 42,000 Payment of dividend to Michaels Funding, Inc. (245,514) (156,529) Other financing activities — (4,057) Net cash used in financing activities (155,189) (173,036) Net change in cash and equivalents (118,047) (259,433) Cash and equivalents at beginning of period 294,054 404,650 Cash and equivalents at end of period $ 176,007 $ 145,217

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Oct. 28, 2017
FAIR VALUE MEASUREMENTS
Schedule of carrying and fair values of debt	October 28, January 28, October 29, 2017 2017 2016 (in thousands) Term loan credit facility $ 2,250,412 $ 2,266,304 $ 2,286,723 Senior subordinated notes 520,838 526,575 526,575

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Oct. 28, 2017
DEBT
Schedule of outstanding debt	Long-term debt consists of the following (in thousands): October 28, January 28, October 29, Interest Rate 2017 2017 2016 Term loan credit facility Variable $ 2,244,800 $ 2,263,475 $ 2,269,700 Asset-based revolving credit facility Variable 109,000 — — Senior subordinated notes % 510,000 510,000 510,000 Total debt 2,863,800 2,773,475 2,779,700 Less unamortized discount/premium and debt costs (16,555) (19,163) (20,042) Total debt, net 2,847,245 2,754,312 2,759,658 Less current portion (140,125) (31,125) (24,900) Long-term debt $ 2,707,120 $ 2,723,187 $ 2,734,758

ACCUMULATED OTHER COMPREHENSI18

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)	9 Months Ended
	Oct. 28, 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 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 Beginning of period $ (5,552) $ (12,606) $ (14,224) $ (22,056) Foreign currency translation adjustment and other (4,418) (3,650) 4,254 5,800 End of period $ (9,970) $ (16,256) $ (9,970) $ (16,256)

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Oct. 28, 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 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 Basic earnings per common share: Net income $ 79,760 $ 76,459 $ 187,530 $ 182,841 Less income related to unvested restricted shares (297) (462) (789) (1,180) Income available to common shareholders - Basic $ 79,463 $ 75,997 $ 186,741 $ 181,661 Weighted-average common shares outstanding - Basic 180,710 203,864 185,521 205,580 Basic earnings per common share $ $ $ $ Diluted earnings per common share: Net income $ 79,760 $ 76,459 $ 187,530 $ 182,841 Less income related to unvested restricted shares (295) (459) (784) (1,171) Income available to common shareholders - Diluted $ 79,465 $ 76,000 $ 186,746 $ 181,670 Weighted-average common shares outstanding - Basic 180,710 203,864 185,521 205,580 Effect of dilutive stock options and restricted stock units 1,277 1,449 1,254 1,713 Weighted-average common shares outstanding - Diluted 181,987 205,313 186,775 207,293 Diluted earnings per common share $ $ $ $

SEGMENTS AND GEOGRAPHIC INFOR20

SEGMENTS AND GEOGRAPHIC INFORMATION (Tables)	9 Months Ended
	Oct. 28, 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 39 Weeks Ended October 28, October 29, October 28, October 29, 2017 2016 2017 2016 United States $ 1,117,626 $ 1,118,273 $ 3,152,048 $ 3,152,477 Canada 122,570 108,933 319,304 293,961 Total $ 1,240,196 $ 1,227,206 $ 3,471,352 $ 3,446,438

CONDENSED CONSOLIDATED FINANC21

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Tables)	9 Months Ended
	Oct. 28, 2017
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Schedule of Condensed Consolidated Balance Sheets	Michaels Stores, Inc. Condensed Consolidated Balance Sheets (in thousands) October 28, January 28, October 29, ASSETS 2017 2017 2016 Current assets: Cash and equivalents $ 176,007 $ 294,054 $ 145,217 Merchandise inventories 1,404,206 1,127,777 1,394,092 Prepaid expenses and other current assets 131,695 116,072 147,796 Total current assets 1,711,908 1,537,903 1,687,105 Property and equipment, net 401,892 413,164 412,202 Goodwill 119,074 119,074 119,074 Other assets 72,036 73,201 68,401 Total assets $ 2,304,910 $ 2,143,342 $ 2,286,782 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 674,222 $ 517,268 $ 714,198 Accrued liabilities and other 399,363 395,745 385,102 Current portion of long-term debt 140,125 31,125 24,900 Other current liabilities 60,884 123,258 36,263 Total current liabilities 1,274,594 1,067,396 1,160,463 Long-term debt 2,707,120 2,723,187 2,734,758 Other liabilities 108,112 103,972 103,615 Total stockholders’ deficit (1,784,916) (1,751,213) (1,712,054) Total liabilities and stockholders’ deficit $ 2,304,910 $ 2,143,342 $ 2,286,782
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 28, October 29, October 28, October 29, 2017 2016 2017 2016 Net sales $ 1,240,196 $ 1,227,206 $ 3,471,352 $ 3,446,438 Cost of sales and occupancy expense 756,088 760,598 2,117,100 2,124,383 Gross profit 484,108 466,608 1,354,252 1,322,055 Selling, general and administrative 328,855 318,438 969,793 937,849 Store pre-opening costs 952 1,704 2,592 4,238 Operating income 154,301 146,466 381,867 379,968 Interest and other expense 32,460 38,689 95,261 103,207 Income before income taxes 121,841 107,777 286,606 276,761 Income taxes 41,806 31,232 98,601 93,149 Net income $ 80,035 $ 76,545 $ 188,005 $ 183,612 Other comprehensive income, net of tax: Foreign currency translation adjustment and other (4,418) (3,650) 4,254 5,800 Comprehensive income $ 75,617 $ 72,895 $ 192,259 $ 189,412
Schedule of Condensed Consolidated Statements of Cash Flows	Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 39 Weeks Ended October 28, October 29, 2017 2016 Cash flows from operating activities: Net cash provided by operating activities $ 109,782 $ 148,191 Cash flows from investing activities: Additions to property and equipment (72,640) (82,163) Acquisition of Lamrite West, net of cash acquired — (151,100) Purchase of long-term investment — (1,325) Net cash used in investing activities (72,640) (234,588) Cash flows from financing activities: Net repayments of debt (266,875) (54,450) Net borrowings of debt 357,200 42,000 Payment of dividend to Michaels Funding, Inc. (245,514) (156,529) Other financing activities — (4,057) Net cash used in financing activities (155,189) (173,036) Net change in cash and equivalents (118,047) (259,433) Cash and equivalents at beginning of period 294,054 404,650 Cash and equivalents at end of period $ 176,007 $ 145,217

BASIS OF PRESENTATION, Fiscal Y

BASIS OF PRESENTATION, Fiscal Year (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016	Feb. 03, 2018	Jan. 28, 2017
Fiscal year
Duration period of fiscal year	91 days	91 days	273 days	273 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

BASIS OF PRESENTATION, Stock Re

BASIS OF PRESENTATION, Stock Repurchase (Details) - USD ($) shares in Millions, $ in Millions	9 Months Ended
	Oct. 28, 2017	Jun. 30, 2017
Share Repurchase Program
Number of shares repurchased	12.7
Value of shares repurchased	$ 249.5
Share Repurchase Program June 2017
Share Repurchase Program
Common stock share repurchase authorized amount		$ 500
Remaining amount under share repurchase program	350
Share Repurchase Program Previous Authorization
Share Repurchase Program
Value of shares repurchased	$ 99.4

BASIS OF PRESENTATION, Acct Pro

BASIS OF PRESENTATION, Acct Pronouncements (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Oct. 28, 2017	Oct. 28, 2017
ASU 2016-09
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Excess tax benefits related to share-based compensation	$ 0.1	$ 1.1

FAIR VALUE MEASUREMENTS, Debt (

FAIR VALUE MEASUREMENTS, Debt (Details) - USD ($) $ in Thousands	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
Senior subordinated notes
Fair Value Measurements
Interest rate (as a percent)	5.875%	5.875%	5.875%
Level 2 | Term loan credit facility
Fair Value Measurements
Long-term loans and notes	$ 2,250,412	$ 2,266,304	$ 2,286,723
Level 2 | Senior subordinated notes
Fair Value Measurements
Long-term loans and notes	$ 520,838	$ 526,575	$ 526,575

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016
Debt
Total debt	$ 2,863,800	$ 2,773,475	$ 2,779,700
Less unamortized discount/premium and debt costs	(16,555)	(19,163)	(20,042)
Total debt, net	2,847,245	2,754,312	2,759,658
Less current portion	(140,125)	(31,125)	(24,900)
Long-term debt	2,707,120	2,723,187	2,734,758
Term loan credit facility
Debt
Total debt	2,244,800	$ 2,263,475	$ 2,269,700
Asset-based revolving credit facility
Debt
Total debt	$ 109,000
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) - Michaels Stores - Asset-based revolving credit facility - USD ($) $ in Millions	Oct. 28, 2017	Oct. 29, 2016
Asset-based Revolving Credit Facility
Maximum borrowing capacity	$ 850	$ 850
Unused borrowing capacity	675.7	792.7
Outstanding letters of credit	$ 65.3	$ 57.3

ACCUMULATED OTHER COMPREHENSI28

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Accumulated Other Comprehensive Loss
Balance			$ (1,698,426)
Balance	$ (1,732,838)	$ (1,659,523)	(1,732,838)	$ (1,659,523)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Loss
Balance	(5,552)	(12,606)	(14,224)	(22,056)
Balance	(9,970)	(16,256)	(9,970)	(16,256)
Foreign Currency Translation Adjustment & Other
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss	$ (4,418)	$ (3,650)	$ 4,254	$ 5,800

INCOME TAXES, Condensed (Detail

INCOME TAXES, Condensed (Details)	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
INCOME TAXES
Effective tax rate (as a percent)	34.30%	29.00%	34.40%	33.60%

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Earnings per share
Anti-dilutive stock options shares excluded from the computation of earnings per share (in shares)	5,800	2,700	6,000	2,000
Basic earnings per common share:
Net income	$ 79,760	$ 76,459	$ 187,530	$ 182,841
Income available to common shareholders - Basic	$ 79,463	$ 75,997	$ 186,741	$ 181,661
Weighted-average common shares outstanding - Basic (in shares)	180,710	203,864	185,521	205,580
Basic earnings per common share (in dollars per share)	$ 0.44	$ 0.37	$ 1.01	$ 0.88
Diluted earnings per common share:
Net income	$ 79,760	$ 76,459	$ 187,530	$ 182,841
Income available to common shareholders - Diluted	$ 79,465	$ 76,000	$ 186,746	$ 181,670
Weighted-average common shares outstanding - Basic (in shares)	180,710	203,864	185,521	205,580
Effect of dilutive stock options and restricted stock units (in shares)	1,277	1,449	1,254	1,713
Weighted-average common shares outstanding - Diluted (in shares)	181,987	205,313	186,775	207,293
Diluted earnings per common share (in dollars per share)	$ 0.44	$ 0.37	$ 1	$ 0.88
Restricted shares
Basic earnings per common share:
Less income related to unvested restricted shares	$ (297)	$ (462)	$ (789)	$ (1,180)
Diluted earnings per common share:
Less income related to unvested restricted shares	$ (295)	$ (459)	$ (784)	$ (1,171)

SEGMENTS AND GEOGRAPHIC INFOR31

SEGMENTS AND GEOGRAPHIC INFORMATION (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 28, 2017USD ($)	Oct. 29, 2016USD ($)	Oct. 28, 2017USD ($)item	Oct. 29, 2016USD ($)
Segments
Number of reportable segments | item			1
Net Sales	$ 1,240,196	$ 1,227,206	$ 3,471,352	$ 3,446,438
United States
Segments
Net Sales	1,117,626	1,118,273	3,152,048	3,152,477
Canada
Segments
Net Sales	$ 122,570	$ 108,933	$ 319,304	$ 293,961

CONTINGENCIES (Details)

CONTINGENCIES (Details) $ in Millions	Jan. 24, 2017	Mar. 18, 2014item	Sep. 15, 2011item	Sep. 30, 2014item	Oct. 28, 2017USD ($)item	Oct. 28, 2017USD ($)item	Mar. 14, 2014item	Dec. 03, 2013item
Commitments and Contingencies
Aggregate estimate of possible loss | $					$ 10	$ 10
Fair credit reporting claim
Commitments and Contingencies
Number of plaintiffs					6
Number of claims filed					5
Period dismissal order was stayed	30 days
Number of amendments filed						0
Number of cases dismissed						2
Number of consolidated cases filed					3	3
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		9 Months Ended
	Oct. 28, 2017USD ($)item	Oct. 29, 2016USD ($)	Oct. 28, 2017USD ($)item	Oct. 29, 2016USD ($)	Jan. 28, 2017USD ($)
Related Party Transactions
Long-term debt	$ 2,847,245	$ 2,759,658	$ 2,847,245	$ 2,759,658	$ 2,754,312
The Sponsors
Related Party Transactions
Percentage owned by related party			40.00%
The Blackstone Group | Term loan credit facility
Related Party Transactions
Long-term debt	71,700		$ 71,700
The Blackstone Group | Store Inventory Count Services | Selling, General and Administrative Expenses
Related Party Transactions
Expenses recognized	2,300	2,100	6,000	5,900
The Blackstone Group | Lease Services | Cost of Sales and Occupancy Expense
Related Party Transactions
Expenses recognized	1,900	1,400	5,100	3,500
The Blackstone Group | Transportation services | Cost of Sales and Occupancy Expense
Related Party Transactions
Expenses recognized	$ 300	$ 200	$ 700	$ 700
Bain Capital or The Blackstone Group
Related Party Transactions
Number of directors | item	2		2

CONDENSED CONSOLIDATED FINANC34

CONDENSED CONSOLIDATED FINANCIAL INFORMATION, Balance Sheet (Details) - USD ($) $ in Thousands	Oct. 28, 2017	Jan. 28, 2017	Oct. 29, 2016	Jan. 30, 2016
Current Assets:
Cash and equivalents	$ 176,771	$ 298,813	$ 149,970	$ 409,391
Merchandise inventories	1,404,206	1,127,777	1,394,092
Prepaid expenses and other current assets	95,993	87,175	93,691
Total current assets	1,713,698	1,542,805	1,701,437
Property and equipment, net	401,892	413,164	412,202
Goodwill	119,074	119,074	119,074
Other assets	12,233	12,061	12,016
Total assets	2,306,096	2,147,640	2,299,479
Current Liabilities:
Accounts payable	674,222	517,268	714,198
Accrued liabilities and other	400,138	397,497	386,280
Current portion of long-term debt	140,125	31,125	24,900
Total current liabilities	1,231,158	1,024,224	1,125,378
Long-term debt	2,707,120	2,723,187	2,734,758
Other liabilities	100,656	98,655	98,866
Total stockholders' deficit	(1,732,838)	(1,698,426)	(1,659,523)
Total liabilities and stockholders' deficit	2,306,096	2,147,640	2,299,479
Michaels Stores
Current Assets:
Cash and equivalents	176,007	294,054	145,217	$ 404,650
Merchandise inventories	1,404,206	1,127,777	1,394,092
Prepaid expenses and other current assets	131,695	116,072	147,796
Total current assets	1,711,908	1,537,903	1,687,105
Property and equipment, net	401,892	413,164	412,202
Goodwill	119,074	119,074	119,074
Other assets	72,036	73,201	68,401
Total assets	2,304,910	2,143,342	2,286,782
Current Liabilities:
Accounts payable	674,222	517,268	714,198
Accrued liabilities and other	399,363	395,745	385,102
Current portion of long-term debt	140,125	31,125	24,900
Other current liabilities	60,884	123,258	36,263
Total current liabilities	1,274,594	1,067,396	1,160,463
Long-term debt	2,707,120	2,723,187	2,734,758
Other liabilities	108,112	103,972	103,615
Total stockholders' deficit	(1,784,916)	(1,751,213)	(1,712,054)
Total liabilities and stockholders' deficit	$ 2,304,910	$ 2,143,342	$ 2,286,782

CONDENSED CONSOLIDATED FINANC35

CONDENSED CONSOLIDATED FINANCIAL INFORMATION, Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016	Oct. 28, 2017	Oct. 29, 2016
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	$ 1,240,196	$ 1,227,206	$ 3,471,352	$ 3,446,438
Cost of sales and occupancy expense	756,088	760,598	2,117,100	2,124,383
Gross profit	484,108	466,608	1,354,252	1,322,055
Selling, general, and administrative	329,298	318,580	970,561	939,093
Store pre-opening costs	952	1,704	2,592	4,238
Operating income	153,858	146,324	381,099	378,724
Income before income taxes	121,400	107,640	285,844	275,533
Income taxes	41,640	31,181	98,314	92,692
Net income	79,760	76,459	187,530	182,841
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	(4,418)	(3,650)	4,254	5,800
Comprehensive income	75,342	72,809	191,784	188,641
Michaels Stores
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	1,240,196	1,227,206	3,471,352	3,446,438
Cost of sales and occupancy expense	756,088	760,598	2,117,100	2,124,383
Gross profit	484,108	466,608	1,354,252	1,322,055
Selling, general, and administrative	328,855	318,438	969,793	937,849
Store pre-opening costs	952	1,704	2,592	4,238
Operating income	154,301	146,466	381,867	379,968
Interest and other expense	32,460	38,689	95,261	103,207
Income before income taxes	121,841	107,777	286,606	276,761
Income taxes	41,806	31,232	98,601	93,149
Net income	80,035	76,545	188,005	183,612
Other comprehensive income, net of tax:
Foreign currency translation adjustment and other	(4,418)	(3,650)	4,254	5,800
Comprehensive income	$ 75,617	$ 72,895	$ 192,259	$ 189,412

CONDENSED CONSOLIDATED FINANC36

CONDENSED CONSOLIDATED FINANCIAL INFORMATION, Cash Flow (Details) - USD ($) $ in Thousands	9 Months Ended
	Oct. 28, 2017	Oct. 29, 2016
Cash flows from operating activities:
Net cash provided by operating activities	$ 106,427	$ 136,516
Cash flows from investing activities:
Additions to property and equipment	(72,640)	(82,163)
Acquisition of Lamrite West, net of cash acquired		(151,100)
Purchases of long-term investment		(1,325)
Net cash used in investing activities	(72,640)	(234,588)
Cash flows from financing activities:
Net cash used in financing activities	(155,829)	(161,349)
Net change in cash and equivalents	(122,042)	(259,421)
Cash and equivalents at beginning of period	298,813	409,391
Cash and equivalents at end of period	176,771	149,970
Michaels Stores
Cash flows from operating activities:
Net cash provided by operating activities	109,782	148,191
Cash flows from investing activities:
Additions to property and equipment	(72,640)	(82,163)
Acquisition of Lamrite West, net of cash acquired		(151,100)
Purchases of long-term investment		(1,325)
Net cash used in investing activities	(72,640)	(234,588)
Cash flows from financing activities:
Net repayments of debt	(266,875)	(54,450)
Net borrowings of debt	357,200	42,000
Payment of dividend to Michaels Funding, Inc.	(245,514)	(156,529)
Other financing activities		(4,057)
Net cash used in financing activities	(155,189)	(173,036)
Net change in cash and equivalents	(118,047)	(259,433)
Cash and equivalents at beginning of period	294,054	404,650
Cash and equivalents at end of period	$ 176,007	$ 145,217