Michaels Companies 10-Q4 Sep 192020 Q2 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Aug. 03, 2019	Aug. 28, 2019
Document and Entity Information
Entity Registrant Name	MICHAELS COMPANIES, INC.
Entity Central Index Key	0001593936
Document Type	10-Q
Document Period End Date	Aug. 3, 2019
Document Quarterly Report	true
Entity File Number	001-36501
Entity Tax Identification Number	37-1737959
Entity Address, Address Line One	8000 Bent Branch Drive
Entity Address, City or Town	Irving
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75063
Entity Incorporation, State or Country Code	DE
City Area Code	972
Local Phone Number	409-1300
Trading Symbol	MIK
Amendment Flag	false
Current Fiscal Year End Date	--02-01
Document Fiscal Year Focus	2019
Title of 12(b) Security	Common Stock
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Document Transition Report	false
Entity Filer Category	Large Accelerated Filer
Document Fiscal Period Focus	Q2
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		155,274,639

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net sales	$ 1,033,689	$ 1,053,267	$ 2,127,408	$ 2,208,778
Cost of sales and occupancy expense	666,703	679,938	1,342,783	1,378,887
Gross profit	366,986	373,329	784,625	829,891
Selling, general and administrative	290,074	300,981	610,670	629,598
Restructure charges	3,869	(3,220)	6,956	44,278
Store pre-opening costs	1,743	1,295	2,969	2,799
Operating income	71,300	74,273	164,030	153,216
Interest expense	40,134	37,101	77,493	71,695
Losses on early extinguishments of debt and refinancing costs	1,155	1,835	1,155	1,835
Other (income) expense, net	(252)	(832)	2,853	(2,525)
Income before income taxes	30,263	36,169	82,529	82,211
Income taxes	5,716	8,681	20,291	27,838
Net income	24,547	27,488	62,238	54,373
Other comprehensive income, net of tax:
Foreign currency and interest rate swaps	(4,762)	807	(9,588)	(6,246)
Comprehensive income	$ 19,785	$ 28,295	$ 52,650	$ 48,127
Earnings per common share:
Basic (in dollars per share)	$ 0.16	$ 0.15	$ 0.39	$ 0.30
Diluted (in dollars per share)	$ 0.16	$ 0.15	$ 0.39	$ 0.30
Weighted-average common shares outstanding:
Basic (in shares)	157,272	177,348	157,511	179,436
Diluted (in shares)	157,273	178,215	157,535	180,426

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Aug. 03, 2019	Feb. 02, 2019	Aug. 04, 2018
Current Assets:
Cash and equivalents	$ 130,981	$ 245,887	$ 123,191
Merchandise inventories	1,256,465	1,108,715	1,280,095
Prepaid expenses and other	69,672	98,659	98,742
Accounts receivable, net	18,234	57,328	31,095
Income taxes receivable	5,707	4,935	16,523
Total current assets	1,481,059	1,515,524	1,549,646
Property and equipment, at cost	1,703,912	1,656,098	1,613,115
Less accumulated depreciation and amortization	(1,266,421)	(1,217,021)	(1,167,985)
Property and equipment, net	437,491	439,077	445,130
Operating lease assets	1,611,029
Goodwill	112,069	112,069	119,074
Other intangible assets, net	14,082	17,238	20,983
Deferred income taxes	28,142	25,005	31,532
Other assets	23,277	19,423	26,180
Total assets	3,707,149	2,128,336	2,192,545
Current Liabilities:
Accounts payable	533,473	485,004	555,270
Accrued liabilities and other	321,847	378,742	351,987
Current portion of operating lease liabilities	298,993
Current portion of long-term debt	24,900	24,900	140,261
Income taxes payable	11,974	43,907	427
Total current liabilities	1,191,187	932,553	1,047,945
Long-term debt	2,655,391	2,681,000	2,695,087
Long-term operating lease liabilities	1,377,039
Other liabilities	71,102	140,978	148,893
Total liabilities	5,294,719	3,754,531	3,891,925
Commitments and contingencies
Stockholders' Deficit:
Common stock, $0.06775 par value, 350,000 shares authorized; 155,199 shares issued and outstanding at August 3, 2019; 157,774 shares issued and outstanding at February 2, 2019; and 171,375 shares issued and outstanding at August 4, 2018	10,419	10,594	11,504
Additional paid-in-capital		5,954
Accumulated deficit	(1,573,843)	(1,628,185)	(1,700,978)
Accumulated other comprehensive loss	(24,146)	(14,558)	(9,906)
Total stockholders' deficit	(1,587,570)	(1,626,195)	(1,699,380)
Total liabilities and stockholders' deficit	$ 3,707,149	$ 2,128,336	$ 2,192,545

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Aug. 03, 2019	Feb. 02, 2019	Aug. 04, 2018
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	155,199	157,774	171,375
Common Stock, shares outstanding	155,199	157,774	171,375

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018
Cash flows from operating activities:
Net income	$ 62,238	$ 54,373
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of operating lease assets	162,861
Depreciation and amortization	62,730	59,054
Share-based compensation	12,006	12,334
Debt issuance costs amortization	2,539	2,522
Loss on write-off of investment	5,036
Accretion of long-term debt, net	(262)	(256)
Restructure charges	6,956	44,278
Deferred income taxes	39	770
Losses on early extinguishments of debt and refinancing costs	1,155	1,835
Changes in assets and liabilities:
Merchandise inventories	(148,311)	(177,586)
Prepaid expenses and other	(10,782)	2,217
Accounts receivable	37,674	(6,366)
Other assets	(9,391)	(1,165)
Operating lease liabilities	(140,287)
Accounts payable	44,537	54,823
Accrued interest	(1,045)	553
Accrued liabilities and other	(54,843)	(49,838)
Income taxes	(34,327)	(87,341)
Other liabilities	(631)	3,231
Net cash used in operating activities	(2,108)	(86,562)
Cash flows used in investing activities:
Additions to property and equipment	(57,533)	(69,908)
Cash flows from financing activities:
Common stock repurchased	(27,325)	(252,508)
Payments on term loan credit facility	(12,450)	(11,790)
Payment of 2020 senior subordinated notes	(510,000)
Issuance of 2027 senior notes	500,000
Borrowings on asset-based revolving credit facility		133,600
Payments on asset-based revolving credit facility		(15,600)
Payment of debt refinancing costs	(6,032)	(1,069)
Payment of dividends		(317)
Proceeds from stock options exercised	542	1,449
Net cash used in financing activities	(55,265)	(146,235)
Net change in cash and equivalents	(114,906)	(302,705)
Cash and equivalents at beginning of period	245,887	425,896
Cash and equivalents at end of period	130,981	123,191
Supplemental Cash Flow Information:
Cash paid for interest	76,991	69,101
Cash paid for taxes	$ 54,676	$ 114,950

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at Feb. 03, 2018	$ 12,206	$ 21,740	$ (1,539,781)	$ (3,660)	$ (1,509,495)
Balance (in shares) at Feb. 03, 2018	181,919
Net income			54,373		54,373
Foreign currency and interest rate swaps				(6,246)	(6,246)
Share-based compensation		13,047			13,047
Exercise of stock options and other awards	$ 34	1,415			1,449
Exercise of stock options and other awards (in shares)	500
Repurchase of stock and retirements	$ (736)	(36,202)	(215,570)		(252,508)
Repurchase of stock and retirements (in shares)	(11,044)
Balance at Aug. 04, 2018	$ 11,504		(1,700,978)	(9,906)	$ (1,699,380)
Balance (in shares) at Aug. 04, 2018	171,375				171,375
Balance at May. 05, 2018	$ 12,225	27,463	(1,512,896)	(10,713)	$ (1,483,921)
Balance (in shares) at May. 05, 2018	182,055
Net income			27,488		27,488
Foreign currency and interest rate swaps				807	807
Share-based compensation		5,726			5,726
Exercise of stock options and other awards	$ 9	900			909
Exercise of stock options and other awards (in shares)	126
Repurchase of stock and retirements	$ (730)	(34,089)	(215,570)		(250,389)
Repurchase of stock and retirements (in shares)	(10,806)
Balance at Aug. 04, 2018	$ 11,504		(1,700,978)	(9,906)	$ (1,699,380)
Balance (in shares) at Aug. 04, 2018	171,375				171,375
Balance at Feb. 02, 2019	$ 10,594	5,954	(1,628,185)	(14,558)	$ (1,626,195)
Balance (in shares) at Feb. 02, 2019	157,774				157,774
Net income			62,238		$ 62,238
Foreign currency and interest rate swaps				(9,588)	(9,588)
Share-based compensation		12,758			12,758
Exercise of stock options and other awards	$ 40	502			542
Exercise of stock options and other awards (in shares)	594
Repurchase of stock and retirements	$ (215)	(19,214)	(7,896)		(27,325)
Repurchase of stock and retirements (in shares)	(3,240)
Issuance of restricted stock awards (in shares)	71
Balance at Aug. 03, 2019	$ 10,419		(1,573,843)	(24,146)	$ (1,587,570)
Balance (in shares) at Aug. 03, 2019	155,199				155,199
Balance at May. 04, 2019	$ 10,620	11,900	(1,590,494)	(19,384)	$ (1,587,358)
Balance (in shares) at May. 04, 2019	158,126
Net income			24,547		24,547
Foreign currency and interest rate swaps				(4,762)	(4,762)
Share-based compensation		5,154			5,154
Exercise of stock options and other awards	$ 2				2
Exercise of stock options and other awards (in shares)	39
Repurchase of stock and retirements	$ (203)	$ (17,054)	(7,896)		(25,153)
Repurchase of stock and retirements (in shares)	(3,011)
Issuance of restricted stock awards (in shares)	45
Balance at Aug. 03, 2019	$ 10,419		$ (1,573,843)	$ (24,146)	$ (1,587,570)
Balance (in shares) at Aug. 03, 2019	155,199				155,199

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
BASIS OF PRESENTATION	Aug. 03, 2019
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 February 2, 2019 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-week 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 2019” relate to the 52 weeks ending February 1, 2020 and references to “fiscal 2018” relate to the 52 weeks ended February 2, 2019. In addition, all references to “the second quarter of fiscal 2019” relate to the 13 weeks ended August 3, 2019 and all references to “the second quarter of fiscal 2018” relate to the 13 weeks ended August 4, 2018. Finally, all references to “the six months ended August 3, 2019” relate to the 26 weeks ended August 3, 2019 and all references to “the six months ended August 4, 2018” relate to the 26 weeks ended August 4, 2018. Because of the seasonal nature of our business, the results of operations for the 13 and 26 weeks ended August 3, 2019 are not indicative of the results to be expected for the entire year. Restructure Charges In March 2018, we closed substantially all of our Aaron Brothers stores and in January 2019, we closed all 36 of our Pat Catan’s stores. In the first six months of fiscal 2019, we recorded a restructure charge related to Pat Catan’s totaling $7.0 million, primarily related to employee-related expenses and the impairment of an indefinite-lived intangible asset. In the first six months of fiscal 2018, we recorded a restructure charge related to Aaron Brothers totaling $44.3 million, primarily related to the transfer of the rights to sell inventory and other assets to a third party to facilitate the store closures and assist with the disposition of our remaining lease obligations and employee-related expenses. In the first six months of fiscal 2018, Pat Catan's and Aaron Brothers had net sales totaling approximately $48.7 million and $12.9 million, respectively. Excluding the restructure charges, Aaron Brothers and Pat Catan’s did not have a material impact on the Company’s operating income in the periods presented. Share Repurchase Program In September 2018, the Board of Directors authorized a new share repurchase program for the Company to purchase $500 million of the Company’s common stock on the open market or through accelerated share repurchase transactions. 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 six months ended August 3, 2019, we repurchased 3.0 million shares for an aggregate amount of $25.1 million. As of August 3, 2019, we had $373.4 million of availability remaining under our current share repurchase program. Accounting Pronouncement Recently Adopted In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" Leases (Topic 842): Targeted Improvements

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
FAIR VALUE MEASUREMENTS	Aug. 03, 2019
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	2. FAIR VALUE MEASUREMENTS As defined in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements ● 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 operating lease assets and 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 and Restated Term Loan Credit Facility”), our 8% senior notes maturing in 2027 (“2027 Senior Notes”), our 5.875% senior subordinated notes maturing in 2020 (“2020 Senior Subordinated Notes’’) and our interest rate swaps. August 3, February 2, August 4, 2019 2019 2018 (in thousands) Assets Interest rate swaps $ — $ — $ 2,342 Liabilities Term loan credit facility $ 2,125,045 $ 2,177,098 $ 2,217,784 Senior notes 481,525 — — Senior subordinated notes — 511,913 513,825 Short-term portion of interest rate swaps 9,679 2,557 3,233 Long-term portion of interest rate swaps 8,902 3,809 — The fair values of our Amended and Restated Term Loan Credit Facility, our 2027 Senior Notes and our 2020 Senior Subordinated Notes were determined based on quoted market prices which are considered Level 1 inputs within the fair value hierarchy. The fair value of our interest rate swaps was calculated using significant observable inputs including the present value of estimated future cash flows using the applicable interest rate curves and, therefore, were classified as Level 2 inputs within the fair value hierarchy. The short-term and long-term interest rate swap liabilities are recorded in accrued liabilities and other liabilities, respectively, in our consolidated balance sheets. The interest rate swap asset in fiscal 2018 is recorded in other assets in our consolidated balance sheets.

REVENUE RECOGNITION

REVENUE RECOGNITION	6 Months Ended
REVENUE RECOGNITION	Aug. 03, 2019
REVENUE RECOGNITION
REVENUE RECOGNITION	3. REVENUE RECOGNITION Our revenue is primarily associated with sales of merchandise to customers within our stores, customers utilizing our e-commerce platforms and through our Darice wholesale business (“Darice”). Revenue from sales of our merchandise is recognized when the customer takes possession of the merchandise. Payment for our retail sales is typically due at the time of the sale. Right of Return A sales return reserve is established using historical customer return behavior and reduces both revenue and cost of goods sold. The Company presents the gross sales return reserve in other current liabilities and the estimated value of the merchandise expected to be returned in prepaid expenses and other in the consolidated balance sheets. Customer Receivables As of August 3, 2019, February 2, 2019 and August 4, 2018, receivables from customers, which consist primarily of trade receivables related to Darice, were approximately $15.4 million, $32.1 million and $23.9 million, respectively, and are included in accounts receivable, net in the consolidated balance sheets. Gift Cards The gift card liability is included in accrued liabilities and other in the consolidated balance sheets. The following table includes activity related to gift cards (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Balance at beginning of period $ 55,708 $ 51,513 $ 61,071 $ 56,729 Issuance of gift cards 13,140 13,734 24,465 25,278 Revenue recognized (1) (13,668) (13,685) (29,415) (29,601) Gift card breakage 584 (1,049) (357) (1,893) Balance at end of period $ 55,764 $ 50,513 $ 55,764 $ 50,513 (1) Revenue recognized from the beginning liability during the second quarters of fiscal 2019 and fiscal 2018 totaled $7.5 million and $7.6 million, respectively. Revenue recognized from the beginning liability during the first six months of fiscal 2019 and fiscal 2018 totaled $15.8 million and $16.0 million, respectively.

LEASES

LEASES	6 Months Ended
LEASES	Aug. 03, 2019
LEASES
LEASES	4. LEASES We lease our retail store locations, distribution centers, office facilities and certain equipment under non-cancelable operating leases. Substantially all store leases have initial lease terms of approximately 10 years, the majority of which provide for one or more five-year renewal options. The exercise of lease renewal options is at the Company’s sole discretion. We include the lease renewal option periods in the calculation of our operating lease assets and liabilities when it is reasonably certain that we will renew the lease. Our operating lease assets represent our right to use an underlying asset for the lease term and our operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, operating lease assets exclude lease incentives received. As most of our leases do not contain an implicit rate of return, we use our estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. For operating leases that commenced prior to the adoption date of the new lease accounting standard, we used the incremental borrowing rate as of the adoption date. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. Our short-term non-real estate leases, which have a non-cancelable lease term of less than one year, are not included in the operating lease assets or liabilities. Short-term lease expense is recognized on a straight-line basis over the lease term. The components of lease costs are as follows (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 3, 2019 2019 Operating lease cost (1) $ 104,600 $ 210,065 Variable lease cost (2) 36,077 72,517 Total lease cost $ 140,677 $ 282,582 (1) Includes an immaterial amount related to short-term non-real estate leases. (2) Includes taxes, insurance and common areas maintenance costs for our leased facilities which are paid based on actual cost incurred by the lessor. Also includes contingent rent which is immaterial in the periods presented. Additional information related to our operating leases is as follows (in thousands, except weighted-average data): 26 Weeks Ended August 3, 2019 Operating cash outflows included in the measurement of lease liabilities $ 214,439 Operating lease assets obtained in exchange for new operating lease liabilities $ 133,137 Weighted-average remaining lease term 6.2 years Weighted-average discount rate 5.6% Maturities of our lease liabilities are as follows as of August 3, 2019 (in thousands): Fiscal Year 2019 $ 179,032 2020 406,190 2021 353,635 2022 292,097 2023 229,286 Thereafter 545,236 Total lease payments $ 2,005,476 Less: Interest (329,444) Present value of lease liabilities $ 1,676,032 Lease payments exclude $78.2 million related to 26 leases that have been signed as of August 3, 2019 but have not yet commenced.

DEBT

DEBT	6 Months Ended
DEBT	Aug. 03, 2019
DEBT
DEBT	5. DEBT Long-term debt consists of the following (in thousands): August 3, February 2, August 4, Interest Rate 2019 2019 2018 Term loan credit facility Variable $ 2,195,000 $ 2,207,450 $ 2,220,560 Asset-based revolving credit facility Variable — — 118,000 Senior notes 8.00 % 500,000 — — Senior subordinated notes 5.875 % — 510,000 510,000 Total debt 2,695,000 2,717,450 2,848,560 Less unamortized discount/premium and debt costs (14,709) (11,550) (13,212) Total debt, net 2,680,291 2,705,900 2,835,348 Less current portion (24,900) (24,900) (140,261) Long-term debt $ 2,655,391 $ 2,681,000 $ 2,695,087 Revolving Credit Facility As of August 3, 2019 and August 4, 2018, the borrowing base under our senior secured asset-based revolving credit facility (“Amended Revolving Credit Facility”) was $789.3 million and $850.0 million, respectively, of which Michaels Stores, Inc. (“MSI”) had unused borrowing capacity of $686.1 million and $644.8 million, respectively. As of August 3, 2019 and August 4, 2018, outstanding standby letters of credit, which reduce our borrowing base, totaled $103.2 million and $87.2 million, respectively. On August 30, 2019, the Amended Revolving Credit Facility was amended to extend the maturity to August 2024. There were no other significant changes to the terms under the Amended Revolving Credit Facility. 8% Senior Notes due 2027 On July 8, 2019, MSI issued $500 million in principal amount of 2027 Senior Notes. The 2027 Senior Notes were issued pursuant to an indenture among MSI, certain subsidiaries of MSI, as guarantors, and U.S. Bank National Association, as trustee (the “2027 Senior Notes Indenture”). The 2027 Senior Notes mature on July 15, 2027 and bear interest at a rate of 8% per year, with interest payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2020. The net proceeds from the offering and sale of the 2027 Senior Notes, together with cash on hand, were used to redeem MSI’s outstanding 2020 Senior Subordinated Notes. The 2027 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of MSI’s subsidiaries that guarantee indebtedness under the Amended Revolving Credit Facility and the Amended and Restated Term Loan Credit Facility (collectively defined as the “Senior Secured Credit Facilities”). The 2027 Senior Notes are general, unsecured obligations of MSI, and the guarantees of the 2027 Senior Notes are general, unsecured obligations of the guarantors. They (i) rank equally in right of payment with all of MSI’s and the guarantors’ existing and future senior debt, including the Senior Secured Credit Facilities, (ii) are effectively subordinated to any of MSI’s and the guarantors’ existing and future secured debt to the extent of the value of the assets securing such debt, including the Senior Secured Credit Facilities, (iii) are structurally subordinated to all of the liabilities of MSI’s subsidiaries that are not guaranteeing the 2027 Senior Notes, and (iv) are senior in right of payment with all of MSI’s and the guarantors’ existing and future subordinated debt. At any time prior to July 15, 2022, MSI may redeem (a) up to 40% of the aggregate principal amount of the 2027 Senior Notes with the gross proceeds from one or more Equity Offerings, as defined in the 2027 Senior Notes Indenture, at a redemption price of 108% of the principal amount plus accrued and unpaid interest thereon to, but excluding, the redemption date and/or (b) all or part of the 2027 Senior Notes at 100% of the principal amount plus any accrued and unpaid interest thereon to, but excluding, the redemption date plus a make-whole premium. Thereafter, MSI may redeem all or part of the 2027 Senior Notes at the redemption prices set forth below (expressed as percentages of the principal amount of the 2027 Senior Notes to be redeemed) plus any accrued and unpaid interest thereon to, but excluding, the applicable date of redemption, if redeemed during the twelve month period beginning on July 15 of each of the years indicated below: Year Percentage 2022 104 % 2023 102 % 2024 and thereafter 100 % Upon a change in control, MSI is required to offer to purchase the 2027 Senior Notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest thereon to, but excluding, the date of purchase. Subject to certain exceptions and qualifications, the 2027 Senior Notes Indenture contains covenants that, among other things, limit MSI’s ability and the ability of its restricted subsidiaries, including the guarantors, to: ● incur additional indebtedness or issue certain disqualified stock or preferred stock; ● create liens; ● pay dividends on MSI’s capital stock or make distributions or redeem or repurchase MSI’s capital stock; ● prepay subordinated debt or make certain investments, loans, advances, and acquisitions; ● transfer or sell assets; ● engage in consolidations, amalgamations or mergers, or sell, transfer or otherwise dispose of all or substantially all of their assets; and ● enter into certain transactions with affiliates. The 2027 Senior Notes Indenture also provides for customary events of default which, if any of them occurs, would require or permit the principal of and accrued interest on the 2027 Senior Notes to become or to be declared due and payable. As of August 3, 2019, MSI was in compliance with all covenants. As of August 3, 2019, net debt issuance costs totaled $6.1 million and are being amortized over the life of the 2027 Senior Notes. As a result of the redemption of our 2020 Senior Subordinated Notes on July 29, 2019, MSI recorded a loss on the early extinguishment of debt of $1.2 million during the second quarter of fiscal 2019. Interest Rate Swaps In April 2018, we executed two interest rate swaps with an aggregate notional value of $1 billion associated with our outstanding Amended and Restated Term Loan Credit Facility. The interest rate swaps have a maturity date of April 30, 2021 and were executed for risk management and are not held for trading purposes. The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in the one-month LIBOR. The swaps replaced the one-month LIBOR with a fixed interest rate of 2.7765% and payments are settled monthly. The swaps qualify as cash flow hedges and changes in the fair values are recorded in accumulated other comprehensive income in the consolidated balance sheet. The changes in fair value are reclassified from accumulated other comprehensive income to interest expense in the same period that the hedged items affect earnings. Amounts reclassified from accumulated other comprehensive income to interest expense during the second quarters of fiscal 2019 and fiscal 2018 were $0.9 million and $2.0 million, respectively. Amounts reclassified from accumulated other comprehensive income to interest expense during the six months ended August 3, 2019 and August 4, 2018 were $1.6 million and $2.1 million, respectively.

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE LOSS	6 Months Ended
ACCUMULATED OTHER COMPREHENSIVE LOSS	Aug. 03, 2019
ACCUMULATED OTHER COMPREHENSIVE LOSS.
ACCUMULATED OTHER COMPREHENSIVE LOSS	6. ACCUMULATED OTHER COMPREHENSIVE LOSS The following table includes detail regarding changes in the composition of accumulated other comprehensive loss (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Beginning of period $ (19,384) $ (10,713) $ (14,558) $ (3,660) Foreign currency translation 2,259 (1,440) (549) (5,587) Interest rate swaps (7,021) 2,247 (9,039) (659) End of period $ (24,146) $ (9,906) $ (24,146) $ (9,906)

INCOME TAXES

INCOME TAXES	6 Months Ended
INCOME TAXES	Aug. 03, 2019
INCOME TAXES
INCOME TAXES	7. INCOME TAXES The effective tax rate was 24.6% for the six months ended August 3, 2019 compared to 33.9% for the same period in the prior year. The effective tax rate in fiscal 2019 was lower than the same period in the prior year due primarily to an $8.1 million charge recognized in fiscal 2018 related to repatriation taxes for accumulated earnings of our foreign subsidiaries associated with the enactment of the Tax Cuts and Jobs Act of 2017 and a tax benefit associated with a state income tax settlement in fiscal 2019. The decrease in the effective tax rate was partially offset by the vesting of restricted shares and the expiration of certain vested stock options.

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
EARNINGS PER SHARE	Aug. 03, 2019
EARNINGS PER SHARE
EARNINGS PER SHARE	8. 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 The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share data): 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Basic earnings per common share: Net income $ 24,547 $ 27,488 $ 62,238 $ 54,373 Less income related to unvested restricted shares (29) (56) (68) (123) Income available to common shareholders - Basic $ 24,518 $ 27,432 $ 62,170 $ 54,250 Weighted-average common shares outstanding - Basic 157,272 177,348 157,511 179,436 Basic earnings per common share $ 0.16 $ 0.15 $ 0.39 $ 0.30 Diluted earnings per common share: Net income $ 24,547 $ 27,488 $ 62,238 $ 54,373 Less income related to unvested restricted shares (29) (56) (68) (122) Income available to common shareholders - Diluted $ 24,518 $ 27,432 $ 62,170 $ 54,251 Weighted-average common shares outstanding - Basic 157,272 177,348 157,511 179,436 Effect of dilutive stock options and restricted stock units 1 867 24 990 Weighted-average common shares outstanding - Diluted 157,273 178,215 157,535 180,426 Diluted earnings per common share $ 0.16 $ 0.15 $ 0.39 $ 0.30

SEGMENTS AND GEOGRAPHIC INFORMA

SEGMENTS AND GEOGRAPHIC INFORMATION	6 Months Ended
SEGMENTS AND GEOGRAPHIC INFORMATION	Aug. 03, 2019
SEGMENTS AND GEOGRAPHIC INFORMATION
SEGMENTS AND GEOGRAPHIC INFORMATION	9. SEGMENTS AND GEOGRAPHIC INFORMATION We consider Michaels-U.S., Michaels-Canada, 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 Our net sales by country are as follows (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 United States (1) $ 939,036 $ 956,608 $ 1,933,136 $ 2,004,609 Canada 94,653 96,659 194,272 204,169 Total $ 1,033,689 $ 1,053,267 $ 2,127,408 $ 2,208,778 (1) In the first quarter of fiscal 2018 we closed substantially all of our Aaron Brothers stores and in the fourth quarter of fiscal 2018 we closed all of our Pat Catan’s stores. In the second quarter of fiscal 2018, Pat Catan’s sales totaled approximately $22.9 million . For the six months ended August 4, 2018, Pat Catan’s and Aaron Brothers sales totaled approximately $48.7 million and $12.9 million, respectively.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
RELATED PARTY TRANSACTIONS	Aug. 03, 2019
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	10. RELATED PARTY TRANSACTIONS Affiliates of, or funds advised by, Bain Capital Private Equity, L.P. (“Bain Capital”) and The Blackstone Group L.P. (“The Blackstone Group”, together with Bain Capital and their applicable affiliates, the “Sponsors”) owned approximately 47% of our outstanding common stock as of August 3, 2019. The Blackstone Group owns a majority equity position in RGIS, a vendor we utilized until February 2018 to count our store inventory. There were no payments associated with this vendor during the second quarter of fiscal 2018. Payments associated with this vendor during the six months ended August 4, 2018 were $0.7 million. 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 ShopCore Properties, LP, Blackstone Real Estate DDR Retail Holdings III, LLC and Blackstone Real Estate RC Retail Holdings, LLC and has significant influence over Edens Limited Partnership, vendors we utilize to lease certain properties. Payments associated with these vendors during the second quarters of fiscal 2019 and fiscal 2018 were $1.5 million and $2.1 million, respectively. Payments made during the six months ended August 3, 2019 and August 4, 2018 were $3.8 million and $4.9 million, respectively. These expenses are included in cost of sales and occupancy expense in the consolidated statements of comprehensive income. The Blackstone Group owns a majority equity position in JDA Software Group, Inc., a vendor we utilize for transportation and supply chain software. Payments associated with this vendor during the second quarters of fiscal 2019 and fiscal 2018 were $0.8 million and $0.6 million, respectively. Payments made during the six months ended August 3, 2019 and August 4, 2018 were $1.5 million and $1.9 million, respectively. These expenses are included in SG&A in the consolidated statements of comprehensive income. One of our current directors, Peter F. Wallace, is an affiliate of The Blackstone Group. As such, he may have an indirect material interest in payments with respect to debt securities of the Company that have been purchased by affiliates of The Blackstone Group. As of August 3, 2019, affiliates of The Blackstone Group held $67.9 million of our Amended and Restated Term Loan Credit Facility.

CONDENSED CONSOLIDATED FINANCIA

CONDENSED CONSOLIDATED FINANCIAL INFORMATION	6 Months Ended
CONDENSED CONSOLIDATED FINANCIAL INFORMATION	Aug. 03, 2019
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONDENSED CONSOLIDATED FINANCIAL INFORMATION	11. 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) August 3, February 2, August 4, ASSETS 2019 2019 2018 Current assets: Cash and equivalents $ 130,194 $ 245,108 $ 122,419 Merchandise inventories 1,256,465 1,108,715 1,280,095 Prepaid expenses and other current assets 93,549 160,767 135,480 Total current assets 1,480,208 1,514,590 1,537,994 Property and equipment, net 437,491 439,077 445,130 Operating lease assets 1,611,029 — — Goodwill 112,069 112,069 119,074 Other assets 65,509 61,667 79,093 Total assets $ 3,706,306 $ 2,127,403 $ 2,181,291 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 533,473 $ 485,004 $ 555,270 Accrued liabilities and other 321,473 378,313 351,584 Current portion of operating lease liabilities 298,993 — — Current portion of long-term debt 24,900 24,900 140,261 Other current liabilities 11,974 43,907 35,020 Total current liabilities 1,190,813 932,124 1,082,135 Long-term debt 2,655,391 2,681,000 2,695,087 Long-term operating lease liabilities 1,377,039 — — Other liabilities 127,800 199,705 162,693 Total stockholders’ deficit (1,644,737) (1,685,426) (1,758,624) Total liabilities and stockholders’ deficit $ 3,706,306 $ 2,127,403 $ 2,181,291 Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Net sales $ 1,033,689 $ 1,053,267 $ 2,127,408 $ 2,208,778 Cost of sales and occupancy expense 666,703 679,938 1,342,783 1,378,887 Gross profit 366,986 373,329 784,625 829,891 Selling, general and administrative 289,827 300,734 610,214 629,126 Restructure charges 3,869 (3,220) 6,956 44,278 Store pre-opening costs 1,743 1,295 2,969 2,799 Operating income 71,547 74,520 164,486 153,688 Interest and other expense, net 39,886 36,272 80,355 69,176 Losses on early extinguishment of debt and refinancing costs 1,155 1,835 1,155 1,835 Income before income taxes 30,506 36,413 82,976 82,677 Income taxes 5,774 8,740 20,398 27,951 Net income $ 24,732 $ 27,673 $ 62,578 $ 54,726 Other comprehensive income, net of tax: Foreign currency and interest rate swaps (4,762) 807 (9,588) (6,246) Comprehensive income $ 19,970 $ 28,480 $ 52,990 $ 48,480 Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 26 Weeks Ended August 3, August 4, 2019 2018 Cash flows from operating activities: Net cash used in operating activities $ (3,839) $ (87,943) Cash flows used in investing activities: Additions to property and equipment (57,533) (69,908) Cash flows from financing activities: Net repayments of debt (522,450) (27,390) Net borrowings of debt 500,000 133,600 Payment of debt refinancing costs (6,032) (1,069) Payment of dividend to Michaels Funding, Inc. (25,060) (250,000) Net cash used in financing activities (53,542) (144,859) Net change in cash and equivalents (114,914) (302,710) Cash and equivalents at beginning of period 245,108 425,129 Cash and equivalents at end of period $ 130,194 $ 122,419

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	6 Months Ended
BASIS OF PRESENTATION (Policies)	Aug. 03, 2019
BASIS OF PRESENTATION
Restructure Charges	Restructure Charges In March 2018, we closed substantially all of our Aaron Brothers stores and in January 2019, we closed all 36 of our Pat Catan’s stores. In the first six months of fiscal 2019, we recorded a restructure charge related to Pat Catan’s totaling $7.0 million, primarily related to employee-related expenses and the impairment of an indefinite-lived intangible asset. In the first six months of fiscal 2018, we recorded a restructure charge related to Aaron Brothers totaling $44.3 million, primarily related to the transfer of the rights to sell inventory and other assets to a third party to facilitate the store closures and assist with the disposition of our remaining lease obligations and employee-related expenses. In the first six months of fiscal 2018, Pat Catan's and Aaron Brothers had net sales totaling approximately $48.7 million and $12.9 million, respectively. Excluding the restructure charges, Aaron Brothers and Pat Catan’s did not have a material impact on the Company’s operating income in the periods presented.
Share Repurchase Program	Share Repurchase Program In September 2018, the Board of Directors authorized a new share repurchase program for the Company to purchase $500 million of the Company’s common stock on the open market or through accelerated share repurchase transactions. 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 six months ended August 3, 2019, we repurchased 3.0 million shares for an aggregate amount of $25.1 million. As of August 3, 2019, we had $373.4 million of availability remaining under our current share repurchase program.
Accounting Pronouncements Recently Adopted	Accounting Pronouncement Recently Adopted In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" Leases (Topic 842): Targeted Improvements

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
FAIR VALUE MEASUREMENTS (Tables)	Aug. 03, 2019
FAIR VALUE MEASUREMENTS
Schedule of fair values of debt and interest rate swaps	The table below provides the fair values of our senior secured term loan facility (“Amended and Restated Term Loan Credit Facility”), our 8% senior notes maturing in 2027 (“2027 Senior Notes”), our 5.875% senior subordinated notes maturing in 2020 (“2020 Senior Subordinated Notes’’) and our interest rate swaps. August 3, February 2, August 4, 2019 2019 2018 (in thousands) Assets Interest rate swaps $ — $ — $ 2,342 Liabilities Term loan credit facility $ 2,125,045 $ 2,177,098 $ 2,217,784 Senior notes 481,525 — — Senior subordinated notes — 511,913 513,825 Short-term portion of interest rate swaps 9,679 2,557 3,233 Long-term portion of interest rate swaps 8,902 3,809 —

REVENUE RECOGNITION (Tables)

REVENUE RECOGNITION (Tables)	6 Months Ended
REVENUE RECOGNITION (Tables)	Aug. 03, 2019
REVENUE RECOGNITION
Schedule of gift card liability	The gift card liability is included in accrued liabilities and other in the consolidated balance sheets. The following table includes activity related to gift cards (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Balance at beginning of period $ 55,708 $ 51,513 $ 61,071 $ 56,729 Issuance of gift cards 13,140 13,734 24,465 25,278 Revenue recognized (1) (13,668) (13,685) (29,415) (29,601) Gift card breakage 584 (1,049) (357) (1,893) Balance at end of period $ 55,764 $ 50,513 $ 55,764 $ 50,513 (1) Revenue recognized from the beginning liability during the second quarters of fiscal 2019 and fiscal 2018 totaled $7.5 million and $7.6 million, respectively. Revenue recognized from the beginning liability during the first six months of fiscal 2019 and fiscal 2018 totaled $15.8 million and $16.0 million, respectively.

LEASES (Tables)

LEASES (Tables)	6 Months Ended
LEASES (Tables)	Aug. 03, 2019
LEASES
Components of Lease Costs	The components of lease costs are as follows (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 3, 2019 2019 Operating lease cost (1) $ 104,600 $ 210,065 Variable lease cost (2) 36,077 72,517 Total lease cost $ 140,677 $ 282,582 (1) Includes an immaterial amount related to short-term non-real estate leases. (2) Includes taxes, insurance and common areas maintenance costs for our leased facilities which are paid based on actual cost incurred by the lessor. Also includes contingent rent which is immaterial in the periods presented.
Operating leases, supplemental cash flow information	Additional information related to our operating leases is as follows (in thousands, except weighted-average data): 26 Weeks Ended August 3, 2019 Operating cash outflows included in the measurement of lease liabilities $ 214,439 Operating lease assets obtained in exchange for new operating lease liabilities $ 133,137 Weighted-average remaining lease term 6.2 years Weighted-average discount rate 5.6%
Maturities of lease liabilities	Maturities of our lease liabilities are as follows as of August 3, 2019 (in thousands): Fiscal Year 2019 $ 179,032 2020 406,190 2021 353,635 2022 292,097 2023 229,286 Thereafter 545,236 Total lease payments $ 2,005,476 Less: Interest (329,444) Present value of lease liabilities $ 1,676,032

DEBT (Tables)

DEBT (Tables)	6 Months Ended
DEBT (Tables)	Aug. 03, 2019
DEBT
Schedule of outstanding debt	Long-term debt consists of the following (in thousands): August 3, February 2, August 4, Interest Rate 2019 2019 2018 Term loan credit facility Variable $ 2,195,000 $ 2,207,450 $ 2,220,560 Asset-based revolving credit facility Variable — — 118,000 Senior notes 8.00 % 500,000 — — Senior subordinated notes 5.875 % — 510,000 510,000 Total debt 2,695,000 2,717,450 2,848,560 Less unamortized discount/premium and debt costs (14,709) (11,550) (13,212) Total debt, net 2,680,291 2,705,900 2,835,348 Less current portion (24,900) (24,900) (140,261) Long-term debt $ 2,655,391 $ 2,681,000 $ 2,695,087
Schedule of redemption prices	Year Percentage 2022 104 % 2023 102 % 2024 and thereafter 100 %

ACCUMULATED OTHER COMPREHENSI_2

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)	6 Months Ended
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)	Aug. 03, 2019
ACCUMULATED OTHER COMPREHENSIVE 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 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Beginning of period $ (19,384) $ (10,713) $ (14,558) $ (3,660) Foreign currency translation 2,259 (1,440) (549) (5,587) Interest rate swaps (7,021) 2,247 (9,039) (659) End of period $ (24,146) $ (9,906) $ (24,146) $ (9,906)

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	6 Months Ended
EARNINGS PER SHARE (Tables)	Aug. 03, 2019
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 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Basic earnings per common share: Net income $ 24,547 $ 27,488 $ 62,238 $ 54,373 Less income related to unvested restricted shares (29) (56) (68) (123) Income available to common shareholders - Basic $ 24,518 $ 27,432 $ 62,170 $ 54,250 Weighted-average common shares outstanding - Basic 157,272 177,348 157,511 179,436 Basic earnings per common share $ 0.16 $ 0.15 $ 0.39 $ 0.30 Diluted earnings per common share: Net income $ 24,547 $ 27,488 $ 62,238 $ 54,373 Less income related to unvested restricted shares (29) (56) (68) (122) Income available to common shareholders - Diluted $ 24,518 $ 27,432 $ 62,170 $ 54,251 Weighted-average common shares outstanding - Basic 157,272 177,348 157,511 179,436 Effect of dilutive stock options and restricted stock units 1 867 24 990 Weighted-average common shares outstanding - Diluted 157,273 178,215 157,535 180,426 Diluted earnings per common share $ 0.16 $ 0.15 $ 0.39 $ 0.30

SEGMENTS AND GEOGRAPHIC INFOR_2

SEGMENTS AND GEOGRAPHIC INFORMATION (Tables)	6 Months Ended
SEGMENTS AND GEOGRAPHIC INFORMATION (Tables)	Aug. 03, 2019
SEGMENTS AND GEOGRAPHIC INFORMATION
Schedule of net sales by country	Our net sales by country are as follows (in thousands): 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 United States (1) $ 939,036 $ 956,608 $ 1,933,136 $ 2,004,609 Canada 94,653 96,659 194,272 204,169 Total $ 1,033,689 $ 1,053,267 $ 2,127,408 $ 2,208,778 (1) In the first quarter of fiscal 2018 we closed substantially all of our Aaron Brothers stores and in the fourth quarter of fiscal 2018 we closed all of our Pat Catan’s stores. In the second quarter of fiscal 2018, Pat Catan’s sales totaled approximately $22.9 million . For the six months ended August 4, 2018, Pat Catan’s and Aaron Brothers sales totaled approximately $48.7 million and $12.9 million, respectively.

CONDENSED CONSOLIDATED FINANC_2

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Tables)	6 Months Ended
CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Tables)	Aug. 03, 2019
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Schedule of Condensed Consolidated Balance Sheets	Michaels Stores, Inc. Condensed Consolidated Balance Sheets (in thousands) August 3, February 2, August 4, ASSETS 2019 2019 2018 Current assets: Cash and equivalents $ 130,194 $ 245,108 $ 122,419 Merchandise inventories 1,256,465 1,108,715 1,280,095 Prepaid expenses and other current assets 93,549 160,767 135,480 Total current assets 1,480,208 1,514,590 1,537,994 Property and equipment, net 437,491 439,077 445,130 Operating lease assets 1,611,029 — — Goodwill 112,069 112,069 119,074 Other assets 65,509 61,667 79,093 Total assets $ 3,706,306 $ 2,127,403 $ 2,181,291 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 533,473 $ 485,004 $ 555,270 Accrued liabilities and other 321,473 378,313 351,584 Current portion of operating lease liabilities 298,993 — — Current portion of long-term debt 24,900 24,900 140,261 Other current liabilities 11,974 43,907 35,020 Total current liabilities 1,190,813 932,124 1,082,135 Long-term debt 2,655,391 2,681,000 2,695,087 Long-term operating lease liabilities 1,377,039 — — Other liabilities 127,800 199,705 162,693 Total stockholders’ deficit (1,644,737) (1,685,426) (1,758,624) Total liabilities and stockholders’ deficit $ 3,706,306 $ 2,127,403 $ 2,181,291
Schedule of Condensed Consolidated Statements of Comprehensive Income	Michaels Stores, Inc. Condensed Consolidated Statements of Comprehensive Income (in thousands) 13 Weeks Ended 26 Weeks Ended August 3, August 4, August 3, August 4, 2019 2018 2019 2018 Net sales $ 1,033,689 $ 1,053,267 $ 2,127,408 $ 2,208,778 Cost of sales and occupancy expense 666,703 679,938 1,342,783 1,378,887 Gross profit 366,986 373,329 784,625 829,891 Selling, general and administrative 289,827 300,734 610,214 629,126 Restructure charges 3,869 (3,220) 6,956 44,278 Store pre-opening costs 1,743 1,295 2,969 2,799 Operating income 71,547 74,520 164,486 153,688 Interest and other expense, net 39,886 36,272 80,355 69,176 Losses on early extinguishment of debt and refinancing costs 1,155 1,835 1,155 1,835 Income before income taxes 30,506 36,413 82,976 82,677 Income taxes 5,774 8,740 20,398 27,951 Net income $ 24,732 $ 27,673 $ 62,578 $ 54,726 Other comprehensive income, net of tax: Foreign currency and interest rate swaps (4,762) 807 (9,588) (6,246) Comprehensive income $ 19,970 $ 28,480 $ 52,990 $ 48,480
Schedule of Condensed Consolidated Statements of Cash Flows	Michaels Stores, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) 26 Weeks Ended August 3, August 4, 2019 2018 Cash flows from operating activities: Net cash used in operating activities $ (3,839) $ (87,943) Cash flows used in investing activities: Additions to property and equipment (57,533) (69,908) Cash flows from financing activities: Net repayments of debt (522,450) (27,390) Net borrowings of debt 500,000 133,600 Payment of debt refinancing costs (6,032) (1,069) Payment of dividend to Michaels Funding, Inc. (25,060) (250,000) Net cash used in financing activities (53,542) (144,859) Net change in cash and equivalents (114,914) (302,710) Cash and equivalents at beginning of period 245,108 425,129 Cash and equivalents at end of period $ 130,194 $ 122,419

BASIS OF PRESENTATION, Fiscal Y

BASIS OF PRESENTATION, Fiscal Year (Narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
BASIS OF PRESENTATION, Fiscal Year (Narrative) (Details)	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018	Feb. 01, 2020	Feb. 02, 2019
Fiscal year
Duration period of fiscal year	91 days	91 days	182 days	182 days	364 days	364 days
Minimum [Member]
Fiscal year
Duration period of fiscal year			364 days
Maximum [Member]
Fiscal year
Duration period of fiscal year			371 days

BASIS OF PRESENTATION, Restruct

BASIS OF PRESENTATION, Restructure Charges (Narrative) (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2019store	Aug. 03, 2019USD ($)	Aug. 04, 2018USD ($)	Aug. 03, 2019USD ($)	Aug. 04, 2018USD ($)
Disposal group information
Restructure charges		$ 3,869	$ (3,220)	$ 6,956	$ 44,278
Revenues		$ 1,033,689	1,053,267	2,127,408	2,208,778
Not Discontinued Operations [Member]
Disposal group information
Number of stores closed \| store	36
Not Discontinued Operations [Member] \| Aaron Brothers [Member]
Disposal group information
Restructure charges					44,300
Revenues					12,900
Not Discontinued Operations [Member] \| Pat Catan's [Member]
Disposal group information
Restructure charges				$ 7,000
Revenues			$ 22,900		$ 48,700

BASIS OF PRESENTATION, Share Re

BASIS OF PRESENTATION, Share Repurchase Program (Narrative) (Details) - USD ($) shares in Millions, $ in Millions	6 Months Ended
	Aug. 03, 2019	Sep. 30, 2018
Share Repurchase Program
Value of shares repurchased	$ 25.1
Number of shares repurchased	3
Share Repurchase Program September 2018 [Member]
Share Repurchase Program
Common stock share repurchase authorized amount		$ 500
Remaining amount under share repurchase program	$ 373.4

BASIS OF PRESENTATION, Accounti

BASIS OF PRESENTATION, Accounting Pronouncements (Narrative) (Details) - USD ($) $ in Thousands	Feb. 03, 2019	Aug. 03, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating lease assets		$ 1,611,029
Operating lease liabilities		$ 1,676,032
ASU 2016-02 [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating lease assets	$ 1,700,000
Operating lease liabilities	$ 1,700,000
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
New Accounting Pronouncement or Change in Accounting Principle, Prior Period Not Restated [true false]	true
Operating leases, practical expedients package	true

FAIR VALUE MEASUREMENTS (Narrat

FAIR VALUE MEASUREMENTS (Narrative) (Details)	6 Months Ended
FAIR VALUE MEASUREMENTS (Narrative) (Details)	Aug. 03, 2019	Jul. 08, 2019	Feb. 02, 2019	Aug. 04, 2018
8.00% Senior Notes [Member]
Stated interest rate (as a percent)	8.00%	8.00%
Debt instrument, maturity date description	maturing in 2027
5.875% Senior Subordinated Notes [Member]
Stated interest rate (as a percent)	5.875%		5.875%	5.875%
Debt instrument, maturity date description	maturing in 2020

FAIR VALUE MEASUREMENTS (Schedu

FAIR VALUE MEASUREMENTS (Schedule of Fair Values of Debt and Interest Rate Swaps) (Details) - USD ($) $ in Thousands	Aug. 03, 2019	Feb. 02, 2019	Aug. 04, 2018
Interest Rate Swaps [Member]
Assets, Fair Value
Interest rate swaps			$ 2,342
Liabilities, Fair Value
Short-term portion of interest rate swaps	$ 9,679	$ 2,557	3,233
Long-term portion of interest rate swaps	8,902	3,809
8.00% Senior Notes [Member]
Liabilities, Fair Value
Senior notes	481,525
5.875% Senior Subordinated Notes [Member]
Liabilities, Fair Value
Senior subordinated notes		511,913	513,825
Term Loan Credit Facility [Member]
Liabilities, Fair Value
Term loan credit facility	$ 2,125,045	$ 2,177,098	$ 2,217,784

REVENUE RECOGNITION, Customer R

REVENUE RECOGNITION, Customer Receivables (Narrative) (Details) - USD ($) $ in Thousands	Aug. 03, 2019	Feb. 02, 2019	Aug. 04, 2018
Customer Receivables
Accounts receivable, net	$ 18,234	$ 57,328	$ 31,095
Darice [Member]
Customer Receivables
Accounts receivable, net	$ 15,400	$ 32,100	$ 23,900

REVENUE RECOGNITION, (Schedule

REVENUE RECOGNITION, (Schedule of Gift Card Liability) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
REVENUE RECOGNITION
Balance at beginning of period	$ 55,708	$ 51,513	$ 61,071	$ 56,729
Issuance of gift cards	13,140	13,734	24,465	25,278
Revenue recognized	(13,668)	(13,685)	(29,415)	(29,601)
Gift card breakage	584	(1,049)	(357)	(1,893)
Balance at end of period	55,764	50,513	55,764	50,513
Revenue recognized from the beginning liability	$ 7,500	$ 7,600	$ 15,800	$ 16,000

LEASES (Narrative) (Details)

LEASES (Narrative) (Details) $ in Millions	6 Months Ended
LEASES (Narrative) (Details) $ in Millions	Aug. 03, 2019USD ($)lease
LEASES
Operating leases, initial terms	10 years
Operating leases, renewal term	5 years
Operating leases, option to extend	true
Operating lease, lease not yet commenced, description	Lease payments exclude $78.2 million related to 26 leases that have been signed as of August 3, 2019 but have not yet commenced
Operating lease contracts signed, but not commenced \| $	$ 78.2
Number of operating lease contracts signed, but not commenced \| lease	26

LEASES (Components of Lease Cos

LEASES (Components of Lease Costs) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Aug. 03, 2019	Aug. 03, 2019
LEASES
Operating lease cost	$ 104,600	$ 210,065
Variable lease cost	36,077	72,517
Total lease cost	$ 140,677	$ 282,582

LEASES (Operating leases, suppl

LEASES (Operating leases, supplemental cash flow information) (Details) $ in Thousands	6 Months Ended
	Aug. 03, 2019USD ($)
LEASES
Operating cash outflows included in the measurement of lease liabilities	$ 214,439
Operating lease assets obtained in exchange for new operating lease liabilities	$ 133,137
Weighted-average remaining lease term	6 years 2 months 12 days
Weighted-average discount rate	5.60%

LEASES (Maturities of lease lia

LEASES (Maturities of lease liabilities) (Details) $ in Thousands	Aug. 03, 2019USD ($)
Operating Lease Liabilities, Payments Due
2019	$ 179,032
2020	406,190
2021	353,635
2022	292,097
2023	229,286
Thereafter	545,236
Total lease payments	2,005,476
Less: Interest	(329,444)
Present value of lease liabilities	$ 1,676,032

DEBT (Schedule of outstanding d

DEBT (Schedule of outstanding debt) (Details) - USD ($) $ in Thousands	Aug. 03, 2019	Jul. 08, 2019	Feb. 02, 2019	Aug. 04, 2018
Debt
Total debt	$ 2,695,000		$ 2,717,450	$ 2,848,560
Less unamortized discount/premium and debt costs	(14,709)		(11,550)	(13,212)
Total debt, net	2,680,291		2,705,900	2,835,348
Less current portion	(24,900)		(24,900)	(140,261)
Long-term debt	$ 2,655,391		$ 2,681,000	$ 2,695,087
8.00% Senior Notes [Member]
Debt
Stated interest rate (as a percent)	8.00%	8.00%
Total debt	$ 500,000
5.875% Senior Subordinated Notes [Member]
Debt
Stated interest rate (as a percent)	5.875%		5.875%	5.875%
Total debt			$ 510,000	$ 510,000
Term Loan Credit Facility [Member]
Debt
Total debt	$ 2,195,000		$ 2,207,450	2,220,560
Asset-Based Revolving Credit Facility [Member]
Debt
Total debt				$ 118,000

DEBT, Revolving Credit Facility

DEBT, Revolving Credit Facility (Narrative) (Details) - Asset-Based Revolving Credit Facility [Member] - USD ($) $ in Millions	Aug. 30, 2019	Aug. 03, 2019	Aug. 04, 2018
Subsequent Event [Member]
Asset-based Revolving Credit Facility
Debt instrument, maturity date description	maturity to August 2024
Michaels Stores [Member]
Asset-based Revolving Credit Facility
Maximum borrowing capacity		$ 789.3	$ 850
Unused borrowing capacity		686.1	644.8
Outstanding letters of credit		$ 103.2	$ 87.2

DEBT, 8.00% Senior Notes Due 20

DEBT, 8.00% Senior Notes Due 2027 (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018	Jul. 08, 2019
Debt Instrument [Line Items]
Losses on early extinguishments of debt and refinancing costs	$ 1,155	$ 1,835	$ 1,155	$ 1,835
8.00% Senior Notes [Member]
Debt Instrument [Line Items]
Principal amount of notes issued					$ 500,000
Debt instrument, maturity date description			maturing in 2027
Interest rate (as a percent)	8.00%		8.00%		8.00%
Redemption price, as percentage of principal amount plus any accrued and unpaid interest			100.00%
Debt issuance costs	$ 6,100		$ 6,100
Losses on early extinguishments of debt and refinancing costs	$ 1,200
8.00% Senior Notes [Member] \| 2022 [Member]
Debt Instrument [Line Items]
Redemption price, as percentage of principal amount plus any accrued and unpaid interest			104.00%
8.00% Senior Notes [Member] \| 2023 [Member]
Debt Instrument [Line Items]
Redemption price, as percentage of principal amount plus any accrued and unpaid interest			102.00%
8.00% Senior Notes [Member] \| 2024 and thereafter [Member]
Debt Instrument [Line Items]
Redemption price, as percentage of principal amount plus any accrued and unpaid interest			100.00%
8.00% Senior Notes [Member] \| Redeem up to 40% [Member]
Debt Instrument [Line Items]
Percentage of redemption of aggregate principal amount			40.00%
8.00% Senior Notes [Member] \| Redeem all or Part [Member]
Debt Instrument [Line Items]
Redemption price, as percentage of principal amount plus any accrued and unpaid interest			108.00%
8.00% Senior Notes [Member] \| Upon Change of Control [Member]
Debt Instrument [Line Items]
Redemption price, as percentage of principal amount plus any accrued and unpaid interest			101.00%

DEBT, Interest Rate Swaps (Narr

DEBT, Interest Rate Swaps (Narrative) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019USD ($)	Aug. 04, 2018USD ($)	Aug. 03, 2019USD ($)	Aug. 04, 2018USD ($)	Apr. 30, 2018USD ($)derivative
Debt
Interest expense	$ 40,134	$ 37,101	$ 77,493	$ 71,695
Term Loan Credit Facility [Member] \| Michaels Stores [Member]
Debt
Interest rate (as a percent)					2.7765%
Term Loan Credit Facility [Member] \| Michaels Stores [Member] \| Accumulated Gain (Loss), Cash Flow Hedge [Member] \| Reclassification out of Accumulated Other Comprehensive Income [Member]
Debt
Interest expense	$ 900	$ 2,000	$ 1,600	$ 2,100
Term Loan Credit Facility [Member] \| Interest Rate Swaps [Member] \| Michaels Stores [Member]
Debt
Number of interest rate swaps \| derivative					2
Notional value					$ 1,000,000

ACCUMULATED OTHER COMPREHENSI_3

ACCUMULATED OTHER COMPREHENSIVE LOSS (Schedule of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
Accumulated Other Comprehensive Loss
Balance	$ (1,587,358)	$ (1,483,921)	$ (1,626,195)	$ (1,509,495)
Balance	(1,587,570)	(1,699,380)	(1,587,570)	(1,699,380)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Loss
Balance	(19,384)	(10,713)	(14,558)	(3,660)
Foreign currency translation adjustment	2,259	(1,440)	(549)	(5,587)
Interest rate swaps	(7,021)	2,247	(9,039)	(659)
Balance	$ (24,146)	$ (9,906)	$ (24,146)	$ (9,906)

INCOME TAXES (Narrative) (Detai

INCOME TAXES (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended		12 Months Ended
INCOME TAXES (Narrative) (Details) - USD ($) $ in Millions	Aug. 03, 2019	Aug. 04, 2018	Feb. 02, 2019
INCOME TAXES
Effective tax rate (as a percent)	24.60%	33.90%
Expense (benefit) for repatriation of earnings of foreign subsidiaries			$ 8.1

EARNINGS PER SHARE (Narrative)

EARNINGS PER SHARE (Narrative) (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
EARNINGS PER SHARE
Anti-dilutive stock options shares excluded from the computation of earnings per share (in shares)	11.3	7.3	11.6	7

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
Basic earnings per common share:
Net income	$ 24,547	$ 27,488	$ 62,238	$ 54,373
Income available to common shareholders - Basic	$ 24,518	$ 27,432	$ 62,170	$ 54,250
Weighted-average common shares outstanding - Basic (in shares)	157,272	177,348	157,511	179,436
Basic earnings per common share (in dollars per share)	$ 0.16	$ 0.15	$ 0.39	$ 0.30
Diluted earnings per common share:
Net income	$ 24,547	$ 27,488	$ 62,238	$ 54,373
Income available to common shareholders - Diluted	$ 24,518	$ 27,432	$ 62,170	$ 54,251
Weighted-average common shares outstanding - Basic (in shares)	157,272	177,348	157,511	179,436
Effect of dilutive stock options and restricted stock units (in shares)	1	867	24	990
Weighted-average common shares outstanding - Diluted (in shares)	157,273	178,215	157,535	180,426
Diluted earnings per common share (in dollars per share)	$ 0.16	$ 0.15	$ 0.39	$ 0.30
Restricted Shares [Member]
Basic earnings per common share:
Less income related to unvested restricted shares	$ (29)	$ (56)	$ (68)	$ (123)
Diluted earnings per common share:
Less income related to unvested restricted shares	$ (29)	$ (56)	$ (68)	$ (122)

SEGMENTS AND GEOGRAPHIC INFOR_3

SEGMENTS AND GEOGRAPHIC INFORMATION (Narrative) (Details)	6 Months Ended
SEGMENTS AND GEOGRAPHIC INFORMATION (Narrative) (Details)	Aug. 03, 2019segment
SEGMENTS AND GEOGRAPHIC INFORMATION
Number of reportable segments	1

SEGMENTS AND GEOGRAPHIC INFOR_4

SEGMENTS AND GEOGRAPHIC INFORMATION, Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
Segments
Net sales	$ 1,033,689	$ 1,053,267	$ 2,127,408	$ 2,208,778
United States [Member]
Segments
Net sales	939,036	956,608	1,933,136	2,004,609
Canada [Member]
Segments
Net sales	$ 94,653	96,659	$ 194,272	204,169
Aaron Brothers [Member] \| Not Discontinued Operations [Member]
Segments
Net sales				12,900
Pat Catan's [Member] \| Not Discontinued Operations [Member]
Segments
Net sales		$ 22,900		$ 48,700

RELATED PARTY TRANSACTIONS (Nar

RELATED PARTY TRANSACTIONS (Narrative) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019USD ($)item	Aug. 04, 2018USD ($)	Aug. 03, 2019USD ($)item	Aug. 04, 2018USD ($)	Feb. 02, 2019USD ($)
Related Party Transactions
Long-term debt	$ 2,680,291	$ 2,835,348	$ 2,680,291	$ 2,835,348	$ 2,705,900
The Blackstone Group [Member]
Related Party Transactions
Number of directors \| item	1		1
Selling, General and Administrative Expenses [Member] \| The Blackstone Group [Member] \| Store Inventory Count Services (Member)
Related Party Transactions
Expenses recognized		0		700
Selling, General and Administrative Expenses [Member] \| The Blackstone Group [Member] \| Transportation and Supply Chain Software (Member)
Related Party Transactions
Expenses recognized	$ 800	600	$ 1,500	1,900
Cost of Sales and Occupancy Expense [Member] \| The Blackstone Group [Member] \| Lease Services (Member)
Related Party Transactions
Expenses recognized	$ 1,500	$ 2,100	$ 3,800	$ 4,900
The Sponsors [Member]
Related Party Transactions
Percentage of equity ownership owned	47.00%		47.00%
Term Loan Credit Facility [Member] \| The Blackstone Group [Member]
Related Party Transactions
Long-term debt	$ 67,900		$ 67,900

CONDENSED CONSOLIDATED FINANC_3

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Balance Sheet) (Details) - USD ($) $ in Thousands	Aug. 03, 2019	May 04, 2019	Feb. 02, 2019	Aug. 04, 2018	May 05, 2018	Feb. 03, 2018
Current assets:
Cash and equivalents	$ 130,981		$ 245,887	$ 123,191
Merchandise inventories	1,256,465		1,108,715	1,280,095
Prepaid expenses and other current assets	69,672		98,659	98,742
Total current assets	1,481,059		1,515,524	1,549,646
Property and equipment, net	437,491		439,077	445,130
Operating lease assets	1,611,029
Goodwill	112,069		112,069	119,074
Other assets	23,277		19,423	26,180
Total assets	3,707,149		2,128,336	2,192,545
Current liabilities:
Accounts payable	533,473		485,004	555,270
Accrued liabilities and other	321,847		378,742	351,987
Current portion of operating lease liabilities	298,993
Current portion of long-term debt	24,900		24,900	140,261
Total current liabilities	1,191,187		932,553	1,047,945
Long-term debt	2,655,391		2,681,000	2,695,087
Long-term operating lease liabilities	1,377,039
Other liabilities	71,102		140,978	148,893
Total stockholders' deficit	(1,587,570)	$ (1,587,358)	(1,626,195)	(1,699,380)	$ (1,483,921)	$ (1,509,495)
Total liabilities and stockholders' deficit	3,707,149		2,128,336	2,192,545
Michaels Stores [Member]
Current assets:
Cash and equivalents	130,194		245,108	122,419
Merchandise inventories	1,256,465		1,108,715	1,280,095
Prepaid expenses and other current assets	93,549		160,767	135,480
Total current assets	1,480,208		1,514,590	1,537,994
Property and equipment, net	437,491		439,077	445,130
Operating lease assets	1,611,029
Goodwill	112,069		112,069	119,074
Other assets	65,509		61,667	79,093
Total assets	3,706,306		2,127,403	2,181,291
Current liabilities:
Accounts payable	533,473		485,004	555,270
Accrued liabilities and other	321,473		378,313	351,584
Current portion of operating lease liabilities	298,993
Current portion of long-term debt	24,900		24,900	140,261
Other current liabilities	11,974		43,907	35,020
Total current liabilities	1,190,813		932,124	1,082,135
Long-term debt	2,655,391		2,681,000	2,695,087
Long-term operating lease liabilities	1,377,039
Other liabilities	127,800		199,705	162,693
Total stockholders' deficit	(1,644,737)		(1,685,426)	(1,758,624)
Total liabilities and stockholders' deficit	$ 3,706,306		$ 2,127,403	$ 2,181,291

CONDENSED CONSOLIDATED FINANC_4

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Statements of Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018	Aug. 03, 2019	Aug. 04, 2018
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	$ 1,033,689	$ 1,053,267	$ 2,127,408	$ 2,208,778
Cost of sales and occupancy expense	666,703	679,938	1,342,783	1,378,887
Gross profit	366,986	373,329	784,625	829,891
Selling, general and administrative	290,074	300,981	610,670	629,598
Restructure charges	3,869	(3,220)	6,956	44,278
Store pre-opening costs	1,743	1,295	2,969	2,799
Operating income	71,300	74,273	164,030	153,216
Losses on early extinguishments of debt and refinancing costs	1,155	1,835	1,155	1,835
Income before income taxes	30,263	36,169	82,529	82,211
Income taxes	5,716	8,681	20,291	27,838
Net income	24,547	27,488	62,238	54,373
Other comprehensive income, net of tax:
Foreign currency and interest rate swaps	(4,762)	807	(9,588)	(6,246)
Comprehensive income	19,785	28,295	52,650	48,127
Michaels Stores [Member]
Supplemental Condensed Consolidating Statement of Comprehensive Income
Net sales	1,033,689	1,053,267	2,127,408	2,208,778
Cost of sales and occupancy expense	666,703	679,938	1,342,783	1,378,887
Gross profit	366,986	373,329	784,625	829,891
Selling, general and administrative	289,827	300,734	610,214	629,126
Restructure charges	3,869	(3,220)	6,956	44,278
Store pre-opening costs	1,743	1,295	2,969	2,799
Operating income	71,547	74,520	164,486	153,688
Interest and other expense, net	39,886	36,272	80,355	69,176
Losses on early extinguishments of debt and refinancing costs	1,155	1,835	1,155	1,835
Income before income taxes	30,506	36,413	82,976	82,677
Income taxes	5,774	8,740	20,398	27,951
Net income	24,732	27,673	62,578	54,726
Other comprehensive income, net of tax:
Foreign currency and interest rate swaps	(4,762)	807	(9,588)	(6,246)
Comprehensive income	$ 19,970	$ 28,480	$ 52,990	$ 48,480

CONDENSED CONSOLIDATED FINANC_5

CONDENSED CONSOLIDATED FINANCIAL INFORMATION (Statements of Cash Flows) (Details) - USD ($) $ in Thousands	6 Months Ended
	Aug. 03, 2019	Aug. 04, 2018
Cash flows from operating activities:
Net cash provided by operating activities	$ (2,108)	$ (86,562)
Cash flows used in investing activities:
Additions to property and equipment	(57,533)	(69,908)
Cash flows from financing activities:
Payment of debt refinancing costs	(6,032)	(1,069)
Net cash used in financing activities	(55,265)	(146,235)
Net change in cash and equivalents	(114,906)	(302,705)
Cash and equivalents at beginning of period	245,887	425,896
Cash and equivalents at end of period	130,981	123,191
Michaels Stores [Member]
Cash flows from operating activities:
Net cash provided by operating activities	(3,839)	(87,943)
Cash flows used in investing activities:
Additions to property and equipment	(57,533)	(69,908)
Cash flows from financing activities:
Net repayments of debt	(522,450)	(27,390)
Net borrowings of debt	500,000	133,600
Payment of debt refinancing costs	(6,032)	(1,069)
Payment of dividend to Michaels Funding, Inc.	(25,060)	(250,000)
Net cash used in financing activities	(53,542)	(144,859)
Net change in cash and equivalents	(114,914)	(302,710)
Cash and equivalents at beginning of period	245,108	425,129
Cash and equivalents at end of period	$ 130,194	$ 122,419