Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Feb. 02, 2013 | Mar. 11, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'MICHAELS STORES INC | ' |
Entity Central Index Key | '0000740670 | ' |
Document Type | '10-K/A | ' |
Document Period End Date | 2-Feb-13 | ' |
Amendment Flag | 'true | ' |
Amendment Description | 'Michaels Stores Inc. (?Company?) is filing this Amendment No. 1 (this ?Form 10-K/A?) to its Annual Report on Form 10-K for the fiscal year ended February 2, 2013, filed with the Securities and Exchange Commission (?SEC?) on March 15, 2013 (the ?Form 10-K?), for the purpose of correcting historical share-based compensation expense caused by the Company?s immediate repurchase of shares following the exercise of stock options under its equity incentive plans. Since the participants held such shares for less than six months following exercise (?immature shares?), liability accounting applies to the plan. The Company has determined its previously issued audited consolidated financial statements for the fiscal years ended February 2, 2013 and January 28, 2012, contained an error with respect to ASC 718, Compensation ? Stock Compensation. Specifically, former participants in the Company?s Equity Incentive Plan and its successor Plan (The Michaels Companies, Inc. (?Parent?) Equity Incentive Plan, together the ?Plan?) exercised stock options upon their termination from the Company, and the Company repurchased the immature shares. The Company consistently repurchased shares in this manner and therefore, under accounting rules, established a pattern of repurchasing immature shares during the third quarter of 2011. The Company determined all stock options should have been treated as liability awards in accordance with the rules of ASC 718-10-25-9. Under liability accounting, the Company re-measures the fair value of stock compensation each period and recognizes changes in fair value as awards vest and until the award is settled. The Company originally recognized expense ratably over the vesting period based on the grant date fair value of the option in accordance with the fixed method of accounting. The Company determined the accounting error was material to fiscal 2011 and fiscal 2012 financial statements and those financial statements required restatement. The non-cash impact to share-based compensation expense was $18 million ($11, net of taxes) and $32 million ($20, net of taxes) for the fiscal years ended February 2, 2013 and January 28, 2012, respectively. As part of the restatement, the Company also recorded other adjustments related to merchandise inventories and closed store reserve which were previously determined to be immaterial to the respective periods. In total, the adjustments resulted in a decline of net income by $14 million for fiscal year ended February 2, 2013, and $19 million for fiscal year ended January 28, 2012. | ' |
Current Fiscal Year End Date | '--02-02 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'Yes | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Public Float | $0 | ' |
Entity Common Stock, Shares Outstanding | ' | 118,460,909 |
Document Fiscal Year Focus | '2012 | ' |
Document Fiscal Period Focus | 'FY | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Feb. 02, 2013 | Jan. 28, 2012 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and equivalents | $56 | $371 |
Merchandise inventories | 862 | 845 |
Prepaid expenses and other | 86 | 80 |
Deferred income taxes | 37 | 42 |
Income tax receivable | 3 | 1 |
Total current assets | 1,044 | 1,339 |
Property and equipment, at cost | 1,502 | 1,391 |
Less accumulated depreciation and amortization | -1,164 | -1,079 |
Property and equipment, net | 338 | 312 |
Goodwill | 94 | 95 |
Debt issuance costs, net of accumulated amortization of $54 at February 2, 2013 and $74 at January 28, 2012 | 46 | 59 |
Deferred income taxes | 30 | 29 |
Other assets | 3 | 4 |
Total non-current assets | 173 | 187 |
Total assets | 1,555 | 1,838 |
Current liabilities: | ' | ' |
Accounts payable | 263 | 301 |
Accrued liabilities and other | 367 | 389 |
Share-based compensation liability | 35 | 25 |
Current portion of long-term debt | 150 | 127 |
Deferred income taxes | 4 | 1 |
Income taxes payable | 37 | 18 |
Total current liabilities | 856 | 861 |
Long-term debt | 2,891 | 3,363 |
Deferred income taxes | 2 | 11 |
Share-based compensation liability | 27 | 19 |
Other long-term liabilities | 83 | 85 |
Total long-term liabilities | 3,003 | 3,478 |
Total liabilities | 3,859 | 4,339 |
Commitments and contingencies | ' | ' |
Stockholders' deficit: | ' | ' |
Common Stock, $0.10 par value, 220,000,000 shares authorized; 118,414,727 shares issued and outstanding at February 2, 2013; 118,265,885 shares issued and outstanding at January 28, 2012 | 12 | 12 |
Additional paid-in capital | 37 | 40 |
Accumulated deficit | -2,359 | -2,559 |
Accumulated other comprehensive income | 6 | 6 |
Total stockholders' deficit | -2,304 | -2,501 |
Total liabilities and stockholders' deficit | $1,555 | $1,838 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Feb. 02, 2013 | Jan. 28, 2012 |
In Millions, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Debt issuance costs, accumulated amortization (in dollars) | $54 | $74 |
Common Stock, par value (in dollars per share) | $0.10 | $0.10 |
Common Stock, shares authorized | 220,000,000 | 220,000,000 |
Common Stock, shares issued | 118,414,727 | 118,265,885 |
Common Stock, shares outstanding | 118,414,727 | 118,265,885 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | $1,524 | $1,014 | $892 | $978 | $1,404 | $996 | $857 | $953 | $4,408 | $4,210 | $4,031 |
Cost of sales and occupancy expense | 907 | 613 | 556 | 567 | 843 | 600 | 529 | 560 | 2,643 | 2,532 | 2,467 |
Gross profit | 617 | 401 | 336 | 411 | 561 | 396 | 328 | 393 | 1,765 | 1,678 | 1,564 |
Selling, general, and administrative expense | 345 | 276 | 252 | 259 | 322 | 277 | 239 | 252 | 1,132 | 1,090 | 1,051 |
Share-based compensation | 6 | 2 | 3 | 4 | 15 | 14 | 2 | 2 | 15 | 33 | 8 |
Impairment of intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | 8 | ' | ' |
Related party expenses | ' | ' | ' | ' | ' | ' | ' | ' | 13 | 13 | 14 |
Store pre-opening costs | ' | ' | ' | ' | ' | ' | ' | ' | 5 | 4 | 3 |
Operating income | 255 | 117 | 76 | 144 | 221 | 100 | 82 | 135 | 592 | 538 | 488 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 245 | 254 | 276 |
Refinancing costs and losses on early extinguishments of debt | 30 | 3 | ' | ' | 2 | 1 | 4 | 11 | 33 | 18 | 53 |
Other (income) and expense, net | ' | ' | ' | ' | ' | ' | ' | ' | -1 | 9 | 10 |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 315 | 257 | 149 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 115 | 100 | 46 |
Net income | 105 | 35 | 9 | 51 | 88 | 22 | 10 | 37 | 200 | 157 | 103 |
Other comprehensive (loss) income, net of tax: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1 | 1 |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | $200 | $156 | $104 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Operating activities: | ' | ' | ' |
Net income | $200 | $157 | $103 |
Adjustments: | ' | ' | ' |
Depreciation and amortization | 97 | 101 | 103 |
Share-based compensation | 21 | 41 | 8 |
Debt issuance costs amortization | 14 | 17 | 20 |
Accretion of long-term debt | ' | 35 | 50 |
Change in fair value of contingent consideration | ' | -4 | ' |
Change in fair value of interest rate cap | ' | 5 | 12 |
Refinancing costs and losses on early extinguishments of debt | 33 | 18 | 53 |
Impairment of intangible assets | 8 | ' | ' |
Changes in assets and liabilities: | ' | ' | ' |
Merchandise inventories | -21 | -19 | 47 |
Prepaid expenses and other | -7 | -7 | -1 |
Deferred income taxes | -2 | 21 | -28 |
Accounts payable | -35 | 38 | 36 |
Accrued interest | -10 | ' | -4 |
Accrued liabilities and other | -16 | 0 | 31 |
Income taxes | 18 | 0 | 16 |
Other long-term liabilities | -1 | 10 | -8 |
Net cash provided by operating activities | 299 | 409 | 438 |
Investing activities: | ' | ' | ' |
Business acquisition | ' | ' | -2 |
Additions to property and equipment | -124 | -109 | -81 |
Net cash used in investing activities | -124 | -109 | -83 |
Financing activities: | ' | ' | ' |
Borrowings on Restated Term Loan Credit Facility | 1,640 | ' | ' |
Repayments on senior secured term loan facility | -1,996 | -50 | -228 |
Borrowings on asset-based revolving credit facility | 322 | 145 | 48 |
Payments on asset-based revolving credit facility | -321 | -145 | -48 |
Issuance of senior notes due 2018 | 213 | ' | 794 |
Repayments on senior notes due 2014 | ' | ' | -791 |
Repurchase of subordinated discount notes due 2016 | -315 | -170 | ' |
Repurchase of senior subordinated notes due 2016 | ' | -7 | ' |
Payment of debt issuance costs | -13 | -7 | -34 |
Payment of refinancing costs | -12 | ' | ' |
Payment of capital leases | -3 | ' | ' |
Change in cash overdraft | -5 | -14 | 6 |
Net cash used in financing activities | -490 | -248 | -253 |
Net (decrease) increase in cash and equivalents | -315 | 52 | 102 |
Cash and equivalents at beginning of period | 371 | 319 | 217 |
Cash and equivalents at end of period | 56 | 371 | 319 |
Supplemental Cash Flow Information: | ' | ' | ' |
Cash paid for interest | 239 | 201 | 208 |
Cash paid for income taxes | 108 | 86 | 64 |
Non-cash investing activity: | ' | ' | ' |
Contingent consideration liability | ' | ' | $4 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
In Millions, except Share data, unless otherwise specified | |||||
Balance at Jan. 30, 2010 | ($2,766) | $12 | $35 | ($2,819) | $6 |
Balance (in shares) at Jan. 30, 2010 | ' | 118,387,229 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' |
Net income | 103 | ' | ' | 103 | ' |
Foreign currency translation and other | 1 | ' | ' | ' | 1 |
Exercise of stock options (in shares) | ' | 37,848 | ' | ' | ' |
Share-based compensation | 8 | ' | 8 | ' | ' |
Repurchase of stock (in shares) | ' | -7,569 | ' | ' | ' |
Issuance of stock (in shares) | ' | 2,342 | ' | ' | ' |
Repurchase of stock | 0 | ' | ' | ' | ' |
Balance at Jan. 29, 2011 | -2,654 | 12 | 43 | -2,716 | 7 |
Balance (in shares) at Jan. 29, 2011 | 118,419,850 | 118,419,850 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' |
Net income | 157 | ' | ' | 157 | ' |
Foreign currency translation and other | -1 | ' | ' | ' | -1 |
Reclass to share-based compensation liability | -4 | ' | -4 | ' | ' |
Reclass to share-based compensation liability (in shares) | ' | 0 | ' | ' | ' |
Exercise of stock options (in shares) | ' | 137,080 | ' | ' | ' |
Share-based compensation | 1 | ' | 1 | ' | ' |
Repurchase of stock (in shares) | ' | -426,027 | ' | ' | ' |
Issuance of stock (in shares) | ' | 134,982 | ' | ' | ' |
Balance at Jan. 28, 2012 | -2,501 | 12 | 40 | -2,559 | 6 |
Balance (in shares) at Jan. 28, 2012 | 118,265,885 | 118,265,885 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' |
Net income | 200 | ' | ' | 200 | ' |
Reclass to share-based compensation liability | -3 | ' | -3 | ' | ' |
Reclass to share-based compensation liability (in shares) | ' | 0 | ' | ' | ' |
Exercise of stock options (in shares) | ' | 430,475 | ' | ' | ' |
Repurchase of stock (in shares) | ' | -416,615 | ' | ' | ' |
Issuance of stock (in shares) | ' | 134,982 | ' | ' | ' |
Balance at Feb. 02, 2013 | ($2,304) | $12 | $37 | ($2,359) | $6 |
Balance (in shares) at Feb. 02, 2013 | 118,414,727 | 118,414,727 | ' | ' | ' |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||
Feb. 02, 2013 | |||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Note 1. Summary of Significant Accounting Policies | |||||||||||
Description of Business | |||||||||||
Michaels Stores, Inc. owns and operates a chain of specialty retail stores in 49 states and Canada featuring arts, crafts, framing, floral, home décor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator. Our wholly-owned subsidiary, Aaron Brothers, Inc., operates a chain of framing and art supply stores located in nine states. All expressions of the “Company”, “us”, “we”, “our”, and all similar expressions are references to Michaels Stores, Inc. and our consolidated, wholly-owned subsidiaries, unless otherwise expressly stated or the context otherwise requires. | |||||||||||
Fiscal Year | |||||||||||
We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. References to fiscal year mean the year in which that fiscal year began. Fiscal 2012 ended on February 2, 2013, fiscal 2011 ended on January 28, 2012, and fiscal 2010 ended on January 29, 2011. Fiscal 2012 contained 53 weeks, while fiscal 2011 and fiscal 2010 each contained 52 weeks. | |||||||||||
Consolidation | |||||||||||
Our Consolidated Financial Statements include the accounts of Michaels Stores, Inc. and all wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. | |||||||||||
Estimates | |||||||||||
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. | |||||||||||
Foreign Currency Translation | |||||||||||
The functional currency of our Canadian operations is the Canadian dollar. Translation adjustments result from translating our Canadian subsidiary’s financial statements into U.S. dollars. Balance sheet accounts are translated at exchange rates in effect at the balance sheet date. Income statement accounts are translated at average exchange rates during the year. Translation adjustments are recorded as a component of Accumulated other comprehensive income in our Consolidated Statements of Stockholders’ Deficit. Transaction gains and losses are recorded as a part of Other (income) and expense, net in our Consolidated Statements of Comprehensive Income. The cumulative translation adjustment in fiscal 2012 was $7 million, net of deferred taxes of $1 million, while in fiscal 2011, the cumulative translation adjustment was $6 million, net of deferred taxes of $5 million. In fiscal 2012, fiscal 2011, and fiscal 2010, we recorded transaction gains of $1 million, transaction losses of $4 million and transaction gains of $2 million, respectively, related to foreign currency exchange rates. | |||||||||||
Cash and Equivalents | |||||||||||
Cash and equivalents are comprised of cash, money market mutual funds, and short-term interest bearing securities with original maturities of three months or less and $22 million of credit card clearing accounts as of February 2, 2013 and January 28, 2012. Cash equivalents are carried at cost, which approximates fair value. We record interest income earned from our cash and equivalents as a component of other (income) and expense, net, in our financial statements. In fiscal 2012, fiscal 2011 and fiscal 2010, we had a nominal amount of interest income. | |||||||||||
Merchandise Inventories | |||||||||||
Merchandise inventories are valued at the lower of cost or market, with cost determined using a weighted average method. Cost is calculated based upon the purchase price of an item at the time it is received by us, and also includes the cost of warehousing, handling, purchasing, and importing, as well as inbound and outbound transportation, partially offset by vendor allowances. This net inventory cost is recognized through Cost of sales when the inventory is sold. It is impractical for us to assign specific allocated overhead costs and vendor allowances to individual units of inventory. As such, to match net inventory costs against the related revenues, we estimate the net inventory costs to be deferred and recognized each period as the inventory is sold. | |||||||||||
Vendor allowances, which primarily represent volume rebates and cooperative advertising funds, are recorded as a reduction to the cost of the merchandise inventories and a subsequent reduction in Cost of sales when the inventory is sold. We generally earn vendor allowances as a percentage of certain merchandise purchases with no minimum purchase requirements. Typically, our vendor allowance programs extend for a period of 12 months. We recognized vendor allowances of $110 million, or 2.5% of Net sales, in fiscal 2012, $115 million, or 2.7% of Net sales, in fiscal 2011, and $112 million, or 2.8% of Net sales, in fiscal 2010. During the three fiscal years ended February 2, 2013, the number of vendors from which vendor allowances were received ranged from approximately 650 to 670. | |||||||||||
We utilize perpetual inventory records to value inventory in our stores. Physical inventory counts are performed in a significant number of stores during each fiscal quarter by a third party inventory counting service, with substantially all stores open longer than one year subject to at least one count each fiscal year. We adjust our perpetual records based on the results of the physical counts. We maintain a provision for estimated shrinkage based on the actual historical results of our physical inventories. We compare our estimates to the actual results of the physical inventory counts as they are taken and adjust the shrink estimates accordingly. We also evaluate our merchandise to ensure that the expected net realizable value of the merchandise held at the end of a fiscal period exceeds cost. In the event that the expected net realizable value is less than cost, we reduce the value of that inventory accordingly. | |||||||||||
We routinely identify merchandise that requires some price reduction to accelerate sales of the product. The need for this reduction is generally attributable to clearance of seasonal merchandise or product that is being displaced from its assigned location in the store to make room for new merchandise. Additional SKUs that are candidates for repricing are identified using our perpetual inventory data. In each case, the appropriate repricing is determined at our corporate office. Price changes are transmitted electronically to the store and instructions are provided to our stores regarding product placement, signage, and display to ensure the product is effectively cleared. | |||||||||||
Property and Equipment | |||||||||||
Property and equipment is recorded at cost. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. Amortization of property under capital leases is on a straight-line basis over the lease term and is included in depreciation expense. We expense repairs and maintenance costs as incurred. We capitalize and depreciate significant renewals or betterments that substantially extend the life of the asset. Useful lives are generally estimated as follows (in years): | |||||||||||
Buildings | 30 | ||||||||||
Leasehold improvements | 10 | * | |||||||||
Fixtures and equipment | 8 | ||||||||||
Computer equipment | 5 | ||||||||||
* We amortize leasehold improvements over the lesser of 10 years or the remaining lease term of the underlying facility. | |||||||||||
Capitalized Software Costs | |||||||||||
We capitalize certain costs related to the acquisition and development of internal use software that is expected to benefit future periods. These costs are being amortized on a straight-line basis over the estimated useful life, which is generally five years. As of February 2, 2013 and January 28, 2012, we had unamortized capitalized software costs of $86 million and $74 million, respectively. These amounts are included in Property and equipment, net on the Consolidated Balance Sheets. Amortization of capitalized software costs totaled approximately $36 million, $30 million, and $14 million in fiscal 2012, fiscal 2011 and fiscal 2010, respectively. | |||||||||||
Goodwill | |||||||||||
Under the provisions of Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other, we review goodwill for impairment each year in the fourth quarter, or more frequently if required. In conducting our impairment review, we elect to first perform a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) the fair values of our reporting units are less than its carrying value. Factors used in our qualitative assessment include, but are not limited to, macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, company and reporting unit specific events, and the margin between the fair value and carrying value of each reporting unit in recent valuations. | |||||||||||
If, after assessing the totality of events or circumstances such as those described above, we determine that it is more likely than not that the fair value of our reporting unit is greater than its carrying amount, no further action is required. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we will compare each reporting unit’s carrying value to its estimated fair value, determined through estimated discounted future cash flows and market-based methodologies. If the carrying value exceeds the estimated fair value, we determine the fair value of all assets and liabilities of the reporting unit, including the implied fair value of goodwill. If the carrying value of goodwill exceeds the implied fair value, we recognize an impairment charge equal to the difference. There are assumptions and estimates underlying the determination of fair value and any resulting impairment loss. Significant changes in these assumptions, or another estimate using different, but still reasonable, assumptions could produce different results. During fiscal 2012, we recognized an impairment charge of $1 million for our online scrapbooking business (“ScrapHD”) goodwill. See Note 9 to our Consolidated Financial Statement for further information. During fiscal 2011 and fiscal 2010, there was no impairment charge taken on our goodwill. | |||||||||||
Impairment of Long-Lived Assets | |||||||||||
We evaluate long-lived assets, other than goodwill and assets with indefinite lives, for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Our evaluation compares the carrying value of the assets with their estimated future undiscounted cash flows. If it is determined that an impairment loss has occurred, the loss would be recognized during that period based on the estimated fair value of the assets. Our impairment analysis contains management assumptions about key variables including sales, growth rate, gross margin, payroll and other controllable expenses. If actual results differ from these estimates, we may be exposed to additional impairment losses that may be material. | |||||||||||
Reserve for Closed Facilities | |||||||||||
We maintain a reserve for future rental obligations, carrying costs, and other closing costs related to closed facilities, primarily closed and relocated stores. In accordance with ASC 420, Exit or Disposal Cost Obligations, we recognize exit costs for any store closures at the time the store is closed. Such costs are recorded within the Cost of sales and occupancy expense line item on our Consolidated Statements of Comprehensive Income. | |||||||||||
The cost of closing a store or facility is recorded at the estimated fair value of expected cash flows which we calculate as the lesser of the present value of future rental obligations remaining under the lease (less estimated sublease rental income) or the lease termination fee. The determination of the reserves is dependent on our ability to make reasonable estimates of costs to be incurred post-closure and of rental income to be received from subleases. In planning our store closures, we generally try to time our exits as close to the lease termination date as possible to minimize any remaining lease obligation. | |||||||||||
The following is a detail of account activity related to closed facilities: | |||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
(In millions) | |||||||||||
Balance at beginning of fiscal year | $ | 9 | $ | 5 | $ | 7 | |||||
Additions charged to costs and expenses | 5 | 7 | — | ||||||||
Payment of rental obligations and other | (6 | ) | (3 | ) | (2 | ) | |||||
Balance at end of fiscal year | $ | 8 | $ | 9 | $ | 5 | |||||
Insurance Liabilities | |||||||||||
We have insurance coverage for losses in excess of self-insurance limits for medical liability, general liability and workers’ compensation claims. Health care reserves are based on actual claims experience and an estimate of claims incurred but not reported. Reserves for general liability and workers’ compensation are determined through the use of actuarial studies. Due to the significant judgments and estimates utilized for determining these reserves, they are subject to a high degree of variability. In the event our insurance carriers are unable to pay claims submitted to them, we would record a liability for such estimated payments we expect to incur. | |||||||||||
Revenue Recognition | |||||||||||
Revenue from sales of our merchandise is recognized when the customer takes possession of the merchandise. Revenue is presented net of point-of-sale coupons, discounts, and sales taxes collected. Sales related to custom framing are recognized when the order is picked up by the customer. We deferred 10 days of custom framing revenue at the end of fiscal 2012 and 13 days of custom framing revenue at the end of fiscal 2011 and fiscal 2010. Our deferral is an estimate based on the number of days for manufacturing, in-store assembly, and customer pick-up. As of February 2, 2013 and January 28, 2012, our deferred framing revenue was approximately $8 million and $10 million, respectively. | |||||||||||
We allow for merchandise to be returned under most circumstances and provide a reserve for estimated returns. We use historical customer return behavior to estimate our reserve requirements. As of February 2, 2013 and January 28, 2012, our sales returns reserve was approximately $3 million. | |||||||||||
We record a gift card liability on the date we issue the gift card to the customer. We record revenue and reduce the gift card liability as the customer redeems the gift card. The deferred revenue associated with outstanding gift cards increased $3 million from $30 million at January 28, 2012, to $33 million at February 2, 2013. We escheat the value of unredeemed gift cards where required by law. Any remaining liabilities not subject to escheatment are evaluated to determine whether the likelihood of the gift card being redeemed is remote (gift card breakage). We recognize gift card breakage as revenue, by applying our estimate of the rate of gift card breakage over the period of estimated performance. Our estimates of the gift card breakage rate are applied to the estimated amount of gift cards that are expected to go unused, that are not subject to escheatment, and are based on customers’ historical redemption rates and patterns, which may not be indicative of future redemption rates and patterns. We recognized revenue of approximately $3 million in fiscal 2012, $1 million in fiscal 2011, and $3 million in fiscal 2010, related to such gift card balances. | |||||||||||
Costs of Sales and Occupancy Expenses | |||||||||||
Included in our Costs of sales are the following: | |||||||||||
· purchase price of merchandise, net of vendor allowances and rebates. | |||||||||||
· inbound freight, inspection costs, duties and import agent commissions. | |||||||||||
· warehousing, handling, and transportation costs (including internal transfer costs such as distribution center-to-store freight costs) and purchasing and receiving costs. | |||||||||||
· share-based compensation costs for those employees involved in preparing inventory for sale. | |||||||||||
Costs of sales are included in merchandise inventories and expensed as the merchandise is sold. | |||||||||||
Included in our occupancy expenses are the following costs which are recognized as period costs as described below: | |||||||||||
· store expenses such as rent, insurance, taxes, common area maintenance, utilities, repairs and maintenance. | |||||||||||
· amortization of store buildings and leasehold improvements. | |||||||||||
· store closure costs. | |||||||||||
· store remodel costs. | |||||||||||
We record rent expense ratably over the term of the lease beginning with the date we take possession of or control the physical access to the premises. We record leasehold improvement reimbursements as a liability and ratably adjust the liability as a reduction to rent expense over the lease term beginning with the date we take possession of or control the physical access to the premises. At times, we receive landlord reimbursements for leasehold improvements made during the lease term, which we record as a liability and ratably adjust as a reduction to rent expense over the remaining lease term. | |||||||||||
Selling, General, and Administrative Costs | |||||||||||
Included in our selling, general, and administrative costs are store personnel costs (including share-based compensation), store operating expenses, advertising expenses, store depreciation expense, and corporate overhead costs. | |||||||||||
Advertising costs are expensed in the period in which the advertising first occurs. Our cooperative advertising allowances are accounted for as a reduction in the purchase price of merchandise since an obligation to advertise specific product does not exist in our cooperative advertising arrangements. | |||||||||||
Advertising expenses were $179 million, $183 million, and $172 million for fiscal 2012, 2011, and 2010, respectively. | |||||||||||
Store Pre-Opening Costs | |||||||||||
We expense all start-up activity costs as incurred. Rent expense incurred prior to the store opening is recorded in Cost of sales and occupancy expense on our Consolidated Statements of Comprehensive Income. | |||||||||||
Income Taxes | |||||||||||
We record income tax expense using the liability method for taxes and are subject to income tax in many jurisdictions, including the U.S., various states and localities, and Canada. A current tax liability or asset is recognized for the estimated taxes payable or refundable on the tax returns for the current year and a deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized. In evaluating our ability to realize our deferred tax asset, we considered the following sources of future taxable income: | |||||||||||
· future reversals of existing taxable temporary differences. | |||||||||||
· future taxable income, exclusive of reversing temporary differences and carryforwards. | |||||||||||
· taxable income in prior carryback years. | |||||||||||
· tax-planning strategies. | |||||||||||
Our evaluation regarding whether a valuation allowance is required or should be adjusted also considers, among other things, the nature, frequency, and severity of recent losses, forecasts of future profitability and the duration of statutory carryforward periods. Our forecasts of future profitability represents our best estimate of these future events. After conducting this assessment, the valuation allowance recorded against our deferred tax assets was $10 million and $14 million as of February 2, 2013 and January 28, 2012, respectively. If actual results differ from estimated results or if we adjust these assumptions in the future, we may need to adjust our deferred tax assets or liabilities, which could impact our effective tax rate. | |||||||||||
The amount of income taxes we pay is subject to ongoing audits in the taxing jurisdictions in which we operate. During these audits, the taxing authorities may challenge items on our tax returns. Because the tax matters challenged by tax authorities are typically complex, the ultimate outcome of these challenges is uncertain. We recognize tax benefits for uncertain positions only to the extent that we believe it is more likely than not that the tax position will be sustained. Our future results may include favorable or unfavorable adjustments to our unrecognized tax benefits due to closure of income tax audits, new regulatory or judicial pronouncements, or other relevant events. As a result, our effective tax rate may fluctuate significantly on a quarterly and annual basis. | |||||||||||
Share-Based Compensation | |||||||||||
ASC 718, Stock Compensation, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements. We determined that our employee stock options should be recorded under the liability accounting guidance of ASC 718, as of the third quarter of 2011. As such, we recognized share-based compensation based on the fair value of our option awards. Expense for unvested options is recognized ratably over the requisite service period. We estimate the fair value of stock option awards using a Black-Scholes option value model. | |||||||||||
We report excess tax benefits as a cash inflow in the financing section of our Statement of Cash Flows and would record a tax deficiency, if any, as a cash outflow from operating activities. For fiscal 2012, fiscal 2011, and fiscal 2010, we did not have any tax benefits or tax deficiencies associated with share-based awards. | |||||||||||
Recent Accounting Pronouncements | |||||||||||
In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs,” an amendment to ASC topic 820, “Fair Value Measurements.” ASU 2011-04 conforms certain sections of ASC 820 to International Financial Reporting Standards in order to provide a single converged guidance on the measurement of fair value. The ASU also requires new quantitative and qualitative disclosures about the sensitivity of recurring Level 3 measurement disclosures, as well as transfers between Level 1 and Level 2 of the fair value hierarchy. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. We adopted all requirements of ASU 2011-04 on January 29, 2012, with no material impact on our consolidated financial statements. | |||||||||||
In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income,” an amendment to ASC topic 220, “Comprehensive Income.” ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. In December 2011, the FASB issued ASU No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” which deferred the provisions in ASU 2011-05 requiring reclassification adjustments out of other comprehensive income to be presented on the face of the financial statements. The other portions of ASU 2011-05 remain unchanged. These standards, which must be applied retroactively, are effective for interim and annual periods beginning after December 15, 2011, with earlier adoption permitted. We adopted all requirements of these standards on January 29, 2012, the beginning of our 2012 fiscal year. | |||||||||||
Restatement_Sharebased_Compens
Restatement - Share-based Compensation | 12 Months Ended | |||||||||||||
Feb. 02, 2013 | ||||||||||||||
Restatement - Share-based Compensation | ' | |||||||||||||
Restatement - Share-based Compensation | ' | |||||||||||||
Note 2. Restatement — Share-based Compensation | ||||||||||||||
The Company has determined its previously issued audited consolidated financial statements for the fiscal years ended February 2, 2013 and January 28, 2012, contained an error with respect to ASC 718, Compensation — Stock Compensation. Specifically, participants exercised stock options upon their termination from the Company, and the Company immediately re- purchased the immature shares (shares held less than six months following exercise). The Company repurchased shares in this manner and therefore, under accounting rules, established a pattern of repurchasing immature shares during the third quarter of 2011. The Company determined that, as a result, all stock options should have been treated as liability awards in accordance with the rules of ASC 718-10-25-9 at such time. Under liability accounting, the Company re-measures the fair value of stock compensation each period and recognizes changes in fair value as awards vest and until the award is settled. The Company originally recognized expense ratably over the vesting period based on the grant date fair value of the option. The Company determined the accounting error was material to fiscal 2011 and fiscal 2012 financial statements and those financial statements required restatement. The impact to share-based compensation expense was $18 million ($11 million, net of tax) and $32 million ($20 million, net of tax) for the fiscal years ended February 2, 2013 and January 28, 2012, respectively. As part of the restatement, the Company also recorded other adjustments related to merchandise inventories and closed store reserve which were previously determined to be immaterial to the respective periods. In total, the adjustments resulted in a decline of net income by $14 million for fiscal year ended February 2, 2013, and $19 million for fiscal year ended January 28, 2012. As a result of this restatement, the following footnotes have been restated: | ||||||||||||||
· Note 6 — Income Taxes | ||||||||||||||
· Note 7 — Share-based Compensation Restated | ||||||||||||||
· Note 13 — Segments and Geographic Information | ||||||||||||||
· Note 15 — Condensed Consolidating Financial Information | ||||||||||||||
The following tables illustrate the corrections as associated with certain line items in the financial statements (amounts in millions): | ||||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Fiscal 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 2,632 | $ | 6 | $ | 5 | $ | 2,643 | ||||||
Gross Profit | 1,776 | (6 | ) | (5 | ) | 1,765 | ||||||||
Selling, general and administrative expense | 1,135 | (3 | ) | — | 1,132 | |||||||||
Share-based compensation | — | 15 | — | 15 | ||||||||||
Operating income | 615 | (18 | ) | (5 | ) | 592 | ||||||||
Income before income taxes | 338 | (18 | ) | (5 | ) | 315 | ||||||||
Provision for income taxes | 124 | (7 | ) | (2 | ) | 115 | ||||||||
Net income | 214 | (11 | ) | (3 | ) | 200 | ||||||||
Comprehensive income | 214 | (11 | ) | (3 | ) | 200 | ||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Fiscal 2011 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 2,526 | $ | 7 | $ | (1 | ) | $ | 2,532 | |||||
Gross Profit | 1,684 | (7 | ) | 1 | 1,678 | |||||||||
Selling, general and administrative expense | 1,098 | (8 | ) | — | 1,090 | |||||||||
Share-based compensation | — | 33 | — | 33 | ||||||||||
Operating income | 569 | (32 | ) | 1 | 538 | |||||||||
Income before income taxes | 288 | (32 | ) | 1 | 257 | |||||||||
Provision for income taxes | 112 | (12 | ) | — | 100 | |||||||||
Net income | 176 | (20 | ) | 1 | 157 | |||||||||
Comprehensive income | 175 | (20 | ) | 1 | 156 | |||||||||
Consolidated Balance Sheet | ||||||||||||||
As of February 2, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 865 | $ | 1 | $ | (4 | ) | $ | 862 | |||||
Total current assets | 1,047 | 1 | (4 | ) | 1,044 | |||||||||
Deferred income taxes | 13 | 17 | — | 30 | ||||||||||
Total non-current assets | 156 | 17 | — | 173 | ||||||||||
Share-based compensation liability | — | 35 | — | 35 | ||||||||||
Income taxes payable | 40 | (1 | ) | (2 | ) | 37 | ||||||||
Total current liabilities | 824 | 34 | (2 | ) | 856 | |||||||||
Share-based compensation liability | — | 27 | — | 27 | ||||||||||
Total long-term liabilities | 2,976 | 27 | — | 3,003 | ||||||||||
Additional paid-in capital | 49 | (12 | ) | — | 37 | |||||||||
Accumulated deficit | (2,326 | ) | (31 | ) | (2 | ) | (2,359 | ) | ||||||
Total stockholders’ deficit | (2,259 | ) | (43 | ) | (2 | ) | (2,304 | ) | ||||||
Consolidated Balance Sheet | ||||||||||||||
As of January 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 840 | $ | 4 | $ | 1 | $ | 845 | ||||||
Total current assets | 1,334 | 4 | 1 | 1,339 | ||||||||||
Deferred income taxes | 18 | 11 | — | 29 | ||||||||||
Total non-current assets | 176 | 11 | — | 187 | ||||||||||
Share-based compensation liability | — | 25 | — | 25 | ||||||||||
Income taxes payable | 19 | (1 | ) | — | 18 | |||||||||
Total current liabilities | 837 | 24 | — | 861 | ||||||||||
Share-based compensation liability | — | 19 | — | 19 | ||||||||||
Total long-term liabilities | 3,459 | 19 | — | 3,478 | ||||||||||
Additional paid-in capital | 48 | (8 | ) | — | 40 | |||||||||
Accumulated deficit | (2,540 | ) | (20 | ) | 1 | (2,559 | ) | |||||||
Total stockholders’ deficit | (2,474 | ) | (28 | ) | 1 | (2,501 | ) | |||||||
Cash Flow Data | ||||||||||||||
Fiscal 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 214 | (11 | ) | (3 | ) | $ | 200 | ||||||
Share-based compensation | 5 | 16 | — | 21 | ||||||||||
Merchandise inventories | (25 | ) | 5 | (1 | ) | (21 | ) | |||||||
Deferred income taxes | 2 | (4 | ) | — | (2 | ) | ||||||||
Accrued liabilities and other | (12 | ) | (4 | ) | — | (16 | ) | |||||||
Income taxes | 19 | (1 | ) | — | 18 | |||||||||
Net cash provided by operating activities | 302 | 1 | (4 | ) | 299 | |||||||||
Net cash used in financing activities | (493 | ) | 3 | — | (490 | ) | ||||||||
Cash Flow Data | ||||||||||||||
Fiscal 2011 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 176 | (20 | ) | 1 | $ | 157 | |||||||
Share-based compensation | 9 | 32 | — | 41 | ||||||||||
Merchandise inventories | (14 | ) | (4 | ) | (1 | ) | (19 | ) | ||||||
Deferred income taxes | 32 | (11 | ) | — | 21 | |||||||||
Net cash provided by operating activities | 413 | (4 | ) | — | 409 | |||||||||
Net cash used in financing activities | (252 | ) | 4 | — | (248 | ) | ||||||||
Detail_of_Certain_Balance_Shee
Detail of Certain Balance Sheet Accounts | 12 Months Ended | |||||||
Feb. 02, 2013 | ||||||||
Detail of Certain Balance Sheet Accounts | ' | |||||||
Detail of Certain Balance Sheet Accounts | ' | |||||||
Note 3. Detail of Certain Balance Sheet Accounts | ||||||||
February 2, | January 28, | |||||||
2013 | 2012 | |||||||
(In millions) | ||||||||
Property and equipment: | ||||||||
Land and buildings | $ | 2 | $ | 2 | ||||
Fixtures and equipment | 863 | 820 | ||||||
Capitalized software | 264 | 228 | ||||||
Leasehold improvements | 373 | 341 | ||||||
$ | 1,502 | $ | 1,391 | |||||
Accrued liabilities and other: | ||||||||
Salaries, bonuses, and other payroll-related costs | $ | 94 | $ | 110 | ||||
Insurance liabilities | 71 | 67 | ||||||
Accrued interest | 33 | 43 | ||||||
Taxes, other than income and payroll | 51 | 64 | ||||||
Gift certificate and gift card liability | 33 | 30 | ||||||
Other | 85 | 75 | ||||||
$ | 367 | $ | 389 |
Debt
Debt | 12 Months Ended | |||||||||||||||||||
Feb. 02, 2013 | ||||||||||||||||||||
Debt | ' | |||||||||||||||||||
Debt | ' | |||||||||||||||||||
Note 4. Debt | ||||||||||||||||||||
Our debt consisted of the following for fiscal 2012 and fiscal 2011: | ||||||||||||||||||||
Interest Rate | Fiscal 2012 | Fiscal 2011 | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Senior secured term loan | Variable | $ | 1,640 | $ | 1,996 | |||||||||||||||
Senior notes | 7.75% | 1,007 | 795 | |||||||||||||||||
Senior subordinated notes | 11.38% | 393 | 393 | |||||||||||||||||
Subordinated discount notes | 13.00% | — | 306 | |||||||||||||||||
Asset-based revolving | ||||||||||||||||||||
credit facility | Variable | 1 | — | |||||||||||||||||
Total debt | 3,041 | 3,490 | ||||||||||||||||||
Less current portion | 150 | 127 | ||||||||||||||||||
Long-term debt | $ | 2,891 | $ | 3,363 | ||||||||||||||||
We capitalized $100 million of costs, net of write-offs, related to our issuance of various debt instruments. We amortize these deferred financing costs using the straight-line method, which produces results materially consistent with the effective interest method, over the lives of the respective debt agreements (which range from five to ten years) and record the amortization to interest expense. Our expected amortization expense pertaining to the deferred financing costs for each of the next five fiscal years and thereafter is as follows: | ||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||
Amortization expense | $ | 9 | $ | 9 | $ | 9 | $ | 9 | $ | 7 | $ | 3 | ||||||||
The aggregate amounts of scheduled maturities of our debt for the next five years and thereafter are as follows: | ||||||||||||||||||||
Fiscal Year | Amount | |||||||||||||||||||
(In millions) | ||||||||||||||||||||
2013 | 150 | |||||||||||||||||||
2014 | 16 | |||||||||||||||||||
2015 | 17 | |||||||||||||||||||
2016 | 272 | |||||||||||||||||||
2017 | 16 | |||||||||||||||||||
Thereafter | 2,562 | |||||||||||||||||||
Total debt payments | 3,033 | |||||||||||||||||||
Plus unrealized premium amortization | 12 | |||||||||||||||||||
Less unrealized discount accretion | (4 | ) | ||||||||||||||||||
Total debt balance as of February 2, 2013 | $ | 3,041 | ||||||||||||||||||
As of February 2, 2013 and January 28, 2012, the weighted average interest rate of the Current portion of our long-term debt was 10.69% and 13.00%, respectively. | ||||||||||||||||||||
Restated Term Loan Credit Facility | ||||||||||||||||||||
On October 31, 2006, we executed a $2.4 billion senior secured term loan facility (the “Senior Secured Term Loan Facility”) with Deutsche Bank Securities Inc., and other lenders. The full amount was borrowed on October 31, 2006, with the balance payable on October 31, 2013. On November 5, 2009, and December 15, 2011, we amended the Senior Secured Term Loan Facility to extend $1.0 billion and $619 million, respectively, of existing term loans (the “B-2 Term Loans” and “B-3 Term Loans”, respectively) to July 31, 2016, with the remaining $501 million of existing term loans (the “B-1 Term Loans”) keeping the original maturity date of October 31, 2013. | ||||||||||||||||||||
During fiscal 2012, we prepaid the remaining $501 million of our B-1 Term Loans. In accordance with ASC 470, Debt, we recorded a loss on early extinguishment of debt of approximately $2 million to write off debt issuance costs associated with the prepayment of B-1 Term Loans. | ||||||||||||||||||||
On January 28, 2013, we entered into an amended and restated credit agreement (the “Amended Credit Agreement”) to amend various terms of our Senior Secured Term Loan Facility, as amended. The Amended Credit Agreement, together with related security, guarantee and other agreements, is referred to as the “Restated Term Loan Credit Facility.” | ||||||||||||||||||||
The Restated Term Loan Credit Facility provides for senior secured financing of $1,640 million. The Company has the right under the Restated Term Loan Credit Facility to request additional term loans in an aggregate amount of up to (a) $500 million and (b) at the Company’s option, an amount of term loans so long as the Company’s Consolidated Secured Debt Ratio (as defined in the Amended Credit Agreement) is no more than 3.25 to 1.00 on a pro forma basis as of the last day of the most recently-ended four fiscal quarter-period for which internal financial statements are available. The lenders under the Restated Term Loan Credit Facility will not be under any obligation to provide any such additional term loans, and the incurrence of any additional term loans is subject to customary conditions precedent. | ||||||||||||||||||||
Borrowings under the Restated Term Loan Credit Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Deutsche Bank, (2) the federal funds effective rate plus 1/2 of 1% and (3) LIBOR, subject to certain adjustments, plus 1%, or (b) LIBOR, subject to certain adjustments, in each case plus an applicable margin. The applicable margin is 1.75% with respect to base rate borrowings and 2.75% with respect to LIBOR borrowings. In addition, the applicable margin is subject to a 0.25% decrease based on the Company’s Consolidated Secured Debt Ratio. | ||||||||||||||||||||
The Restated Term Loan Credit Facility requires the Company to prepay outstanding term loans with (x) 100% of the net proceeds of any debt issued by the Company or its subsidiaries (with exceptions for certain debt permitted to be incurred under the Restated Term Loan Credit Facility) and (y) 50% (which percentage will be reduced to 25% if the Company’s Consolidated Total Leverage Ratio (as defined in the Amended Credit Agreement) is less than 6.00:1.00 and will be reduced to 0% if the Company’s Consolidated Total Leverage Ratio is less than 5.00:1.00) of the Company’s annual Excess Cash Flow (as defined in the Amended Credit Agreement). | ||||||||||||||||||||
The Company must offer to prepay outstanding term loans at 100% of the principal amount to be prepaid, plus accrued and unpaid interest, with the proceeds of certain asset sales or casualty events under certain circumstances. | ||||||||||||||||||||
The Company may voluntarily prepay outstanding loans under the Restated Term Loan Credit Facility at any time without premium or penalty other than in the case of a Repricing Transaction (as defined in the Amended Credit Agreement) occurring prior to the first anniversary of the closing date, in which case a 1% prepayment fee would apply, and customary “breakage” costs with respect to LIBOR loans. | ||||||||||||||||||||
The Company is required to make scheduled quarterly payments, each equal to 0.25% of the original principal amount of the term loans, subject to adjustments relating to the incurrence of additional term loans under the Restated Term Loan Credit Facility, for the first six years and three quarters, with the balance paid on January 28, 2020 (the “Maturity Date”); provided, however, that the Maturity Date of the term loans will automatically become July 28, 2018, if as of July 28, 2018, (i) the Consolidated Secured Debt Ratio is greater than 3.25:1.00 and (ii) the then aggregate outstanding principal amount of the Company’s 2018 Senior Notes (and certain refinancings thereof requiring principal payments prior to April 28, 2020) exceeds $250 million. | ||||||||||||||||||||
The Restated Term Loan Credit Facility modified certain covenant baskets. In addition, the Restated Term Loan Credit Facility contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default (including change of control and cross-default to material indebtedness). As of February 2, 2013, we were in compliance with all covenants. | ||||||||||||||||||||
In accordance with ASC 470, we recorded $12 million of refinancing costs related to the Restated Term Loan Credit Facility. We also recorded a loss on early extinguishment of debt of approximately $6 million to write off debt issuance costs associated with the Senior Secured Term Loan Facility, with the remaining $9 million of unamortized debt issuance costs being amortized over the revised life of the Restated Term Loan Credit Facility through July 28, 2018. In addition, we capitalized $5 million in debt issuance costs associated with the execution of the Restated Term Loan Credit Facility that is being amortized as interest expense over the life of the Restated Term Loan Credit Facility. | ||||||||||||||||||||
73/4% Senior Notes due 2018 | ||||||||||||||||||||
On October 21, 2010, we issued $800 million aggregate principal amount of 73/4% Senior Notes that mature on November 1, 2018 (the “2018 Senior Notes”) at a discounted price of 99.262% of face value, resulting in an effective interest rate of 77/8%. Interest is payable semi-annually in arrears on each May 1 and November 1, commencing on May 1, 2011. The 2018 Senior Notes are guaranteed, jointly and severally, fully and unconditionally, on an unsecured senior basis, by each of our subsidiaries that guarantee indebtedness under our Restated Revolving Credit Facility and Restated Term Loan Facility (the “Senior Secured Credit Facilities”). | ||||||||||||||||||||
On September 27, 2012, we issued an additional $200 million aggregate principal amount (the “Additional Senior Notes” and, together with the 2018 Senior Notes, the “Senior Notes”) of our 2018 Senior Notes under the Indenture, dated as of October 21, 2010 (the “Indenture”), by and among the Company, the guarantors party thereto (“Guarantors”) and Law Debenture Trust Company of New York, as trustee (“Trustee”), as amended on the date of such issuance by a supplemental indenture, dated as of September 27, 2012, by and among the Company, the Guarantors and the Trustee. The Additional Senior Notes were issued at a premium of 106.25% of face value, resulting in an effective interest rate of 6½%. The Additional Senior Notes form a single class with the 2018 Senior Notes previously issued under the Indenture and have terms that are identical to the previously issued 2018 Senior Notes, except that interest on the Additional Senior Notes accrues from and including May 1, 2012, and the Additional Senior Notes are subject to the Registration Rights Agreement described below. | ||||||||||||||||||||
On September 27, 2012, we entered into a registration rights agreement with the initial purchasers of the Additional Senior Notes with respect to the Additional Senior Notes (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, we were required to file, and did initially file on November 16, 2012, an exchange offer registration statement, as amended (the “Exchange Offer Registration Statement”), enabling holders to exchange the Additional Senior Notes for registered notes with terms identical in all material respects to the terms of the Additional Senior Notes, except the registered notes would be freely tradable. We also agreed to use our reasonable best efforts to have the Exchange Offer Registration Statement declared effective by the Securities and Exchange Commission (the “SEC”) no later than 360 days after the date of the issuance of the Additional Senior Notes. On December 5, 2012, the Exchange Offer Registration Statement was declared effective by the SEC. We completed the exchange offer on January 18, 2013. | ||||||||||||||||||||
The Senior Notes and the guarantees thereof are our and the guarantors’ unsecured senior obligations and (i) rank senior in right of payment to all of our and the guarantors’ existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes (including the Senior Subordinated Notes and the Subordinated Discount Notes, as defined and described below); (ii) rank equally in right of payment to all of our and the guarantors’ existing and future debt and other obligations that are not, by their terms, expressly subordinated in right of payment to the Senior Notes; (iii) are effectively subordinated in right of payment to all of our and the guarantors’ existing and future secured debt (including obligations under the Senior Secured Credit Facilities), to the extent of the value of the assets securing such debt; and (iv) are structurally subordinated to all obligations of our subsidiaries that are not guarantors of the Senior Notes. | ||||||||||||||||||||
At any time prior to November 1, 2014, we may redeem all or a part of the Senior Notes at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed plus the Applicable Premium (as defined in the indenture governing the Senior Notes (the “Senior Indenture”)) and accrued and unpaid interest and Additional Interest (as defined in the 2018 Senior Indenture), if any, to the date of redemption, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date. On and after November 1, 2014, the Company may redeem the Senior Notes, in whole or in part, upon notice, at the redemption prices (expressed as percentages of principal amount of the Senior Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon and Additional Interest, if any, to the applicable date of redemption if redeemed during the twelve-month period beginning on November 1 of each of the years indicated below: | ||||||||||||||||||||
Year | Percentage | |||||||||||||||||||
2014 | 103.875 | % | ||||||||||||||||||
2015 | 101.938 | % | ||||||||||||||||||
2016 and thereafter | 100 | % | ||||||||||||||||||
In addition, until November 1, 2013, we may, at our option, on one or more occasions redeem up to 35% of the aggregate principal amount of the Senior Notes (including the aggregate principal amount of the Senior Notes issued after the issue date) at a redemption price equal to 107.750% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon and Additional Interest, if any, to the applicable date of redemption, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings (as defined in the Senior Indenture); provided that at least 50% of the sum of the aggregate principal amount of the Senior Notes originally issued under the Senior Indenture and any Senior Notes that are issued under the Senior Indenture after the issue date remains outstanding immediately after the occurrence of each such redemption; and provided further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering. | ||||||||||||||||||||
Upon a change in control we are required to offer to purchase all of the Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest. | ||||||||||||||||||||
The Senior Indenture contains covenants limiting, among other things, the Company’s ability and the ability of the Company’s restricted subsidiaries to: | ||||||||||||||||||||
· incur additional debt. | ||||||||||||||||||||
· pay dividends or distributions on the Company’s capital stock or repurchase the Company’s capital stock. | ||||||||||||||||||||
· issue stock of subsidiaries. | ||||||||||||||||||||
· make certain investments. | ||||||||||||||||||||
· create liens on the Company’s assets to secure debt. | ||||||||||||||||||||
· enter into transactions with affiliates. | ||||||||||||||||||||
· merge or consolidate with another company. | ||||||||||||||||||||
· sell or otherwise transfer assets. | ||||||||||||||||||||
The Senior Indenture also provides for events of default, which, if certain of them occur, would permit the trustee under the Senior Indenture or holders of at least 25% in principal amount of the then outstanding Senior Notes to declare the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately. | ||||||||||||||||||||
In accordance with ASC 470, we are amortizing $19 million in debt issuance costs, including $4 million capitalized in fiscal 2012, as interest expense over the life of the 2018 Senior Notes. | ||||||||||||||||||||
113/8% Senior Subordinated Notes due 2016 | ||||||||||||||||||||
On October 31, 2006, we issued $400 million in principal amount of 113/8% Senior Subordinated Notes due November 1, 2016 (the “Senior Subordinated Notes”). Interest is payable semi-annually in arrears on each May 1 and November 1, commencing on May 1, 2007. The Senior Subordinated Notes are guaranteed, jointly and severally, fully and unconditionally, on an unsecured senior subordinated basis, by each of our subsidiaries that guarantee indebtedness under our Senior Secured Credit Facilities. | ||||||||||||||||||||
The Senior Subordinated Notes and the guarantees thereof are our and the guarantors’ unsecured senior subordinated obligations and (i) are subordinated in right of payment to all of our and the guarantors’ existing and future senior debt, including the Senior Secured Credit Facilities and the Senior Notes; (ii) rank equally in right of payment to all of our and the guarantors’ future senior subordinated debt; (iii) are effectively subordinated to all of our and the guarantors’ existing and future secured debt (including the Senior Secured Credit Facilities) to the extent of the value of the assets securing such debt; and (iv) rank senior in right of payment to all of our and the guarantors’ existing and future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Subordinated Notes, including the Subordinated Discount Notes. | ||||||||||||||||||||
During fiscal 2011, we completed open market repurchases of our outstanding Senior Subordinated Notes totaling $7 million. Pursuant to the terms of the repurchases, we agreed to pay the holders of the Senior Subordinated Notes face value plus a purchase premium. In accordance with ASC 470, we recorded a loss related to the early extinguishment of the repurchased Senior Subordinated Notes, which was immaterial to the Consolidated Financial Statements. | ||||||||||||||||||||
On and after November 1, 2011, we may redeem all or part of the Senior Subordinated Notes, upon notice, at the redemption prices (expressed as percentages of principal amount of the Senior Subordinated Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon to the applicable date of redemption if redeemed during the twelve-month period beginning on November 1 of each of the years indicated below: | ||||||||||||||||||||
Year | Percentage | |||||||||||||||||||
2012 | 103.792 | % | ||||||||||||||||||
2013 | 101.896 | % | ||||||||||||||||||
2014 and thereafter | 100 | % | ||||||||||||||||||
Upon a change in control, we are required to offer to purchase all of the Senior Subordinated Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest. The indenture governing the Senior Subordinated Notes contains restrictive covenants and events of default substantially similar to those of the Senior Notes described above. | ||||||||||||||||||||
On January 28, 2013, we delivered to the holders of our outstanding Senior Subordinated Notes an irrevocable notice of redemption of $137 million in aggregate principal amount of Senior Subordinated Notes. Subsequent to the end of the period, on February 27, 2013, we redeemed the $137 million of Senior Subordinated Notes at a redemption price equal to 103.792%. In accordance with ASC 470, we will record a loss on early extinguishment of debt of approximately $7 million related to the redemption of our Senior Subordinated Notes. The $7 million loss is comprised of a $5 million redemption premium and $2 million to write off related debt issuance costs. | ||||||||||||||||||||
13% Subordinated Discount Notes due 2016 | ||||||||||||||||||||
On October 31, 2006, we issued $469 million in principal amount at maturity of 13% Subordinated Discount Notes due on November 1, 2016 (“the Subordinated Discount Notes” and together with the Senior Notes and the Senior Subordinated Notes, the “Notes”). No cash interest was payable on the Subordinated Discount Notes prior to November 1, 2011. Beginning on November 1, 2011, cash interest accrues and is payable semi-annually in arrears on each May 1 and November 1 (the first cash interest payment date is May 1, 2012). The Subordinated Discount Notes are guaranteed, jointly and severally, fully and unconditionally, on an unsecured subordinated basis, by each of our subsidiaries that guarantee indebtedness under our Senior Secured Credit Facilities. | ||||||||||||||||||||
The Subordinated Discount Notes and the guarantees thereof are our and the guarantors’ unsecured subordinated obligations and (i) are subordinated in right of payment to all of our and the guarantors’ existing and future senior debt (including the Senior Secured Credit Facilities, the Senior Notes and the Senior Subordinated Notes); and (ii) are effectively subordinated to all of our and the guarantors’ secured debt (including the Senior Secured Credit Facilities) to the extent of the value of the assets securing such debt. | ||||||||||||||||||||
During fiscal 2011, we completed open market repurchases of our outstanding Subordinated Discount Notes totaling $163 million face value, or $155 million accreted value. Pursuant to the terms of the repurchases, we agreed to pay the holders of the Subordinated Discount Notes face value plus a purchase premium. | ||||||||||||||||||||
In accordance with ASC 470, we recorded a loss of $18 million during fiscal 2011 related to the early extinguishment of the repurchased Subordinated Discount Notes. The $18 million loss is comprised of $11 million to recognize the unrealized interest accretion and the write off of related debt issuance costs, as well as $7 million in purchase premiums. | ||||||||||||||||||||
On and after November 1, 2011, we may redeem all or part of the Subordinated Discount Notes, upon notice, at the redemption prices (expressed as percentages of Accreted Value (as defined in the indenture governing the Subordinated Discount Notes) of the Subordinated Discount Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon (to the extent not already included in Accreted Value) as of the applicable date of redemption (if redeemed during the twelve-month period beginning on November 1 of each of the years indicated below: | ||||||||||||||||||||
Year | Percentage | |||||||||||||||||||
2012 | 104.333 | % | ||||||||||||||||||
2013 | 102.167 | % | ||||||||||||||||||
2014 and thereafter | 100 | % | ||||||||||||||||||
Beginning on November 1, 2011, cash interest began accruing on the Subordinated Discount Notes and was payable semi-annually in arrears on each May 1 and November 1 (the first cash interest payment was May 1, 2012). On May 1, 2012, as required pursuant to the indenture (“Subordinated Discount Notes Indenture”) governing our Subordinated Discount Notes, we redeemed that portion of each Subordinated Discount Note outstanding on such date equal to the amount sufficient, but not in excess of the amount necessary, to ensure that such Subordinated Discount Note will not be an applicable high yield discount obligation (“AHYDO”) within the meaning of Section 163(i)(1) of the Internal Revenue Code of 1986, as amended (the “AHYDO Amount”). These redemptions were at a price equal to 100% of the Accreted Value (as defined in the Subordinated Discount Notes Indenture) of such portion as of the date of redemption. The aggregate payment of $127 million made on May 1, 2012, was required to ensure the Subordinated Discount Notes would not be AHYDO instruments. | ||||||||||||||||||||
On October 1, 2012, we delivered to the holders of our outstanding Subordinated Discount Notes an irrevocable notice of redemption relating to the redemption of all of our outstanding Subordinated Discount Notes. On November 1, 2012, we redeemed a portion of the Subordinated Discount Notes equal to the AHYDO Amount (as defined in the Subordinated Discount Notes Indenture) at a redemption price equal to 100% and the remaining Subordinated Discount Notes at a redemption price equal to 104.333%. In accordance with ASC 470, we recorded a loss on early extinguishment of debt of approximately $11 million related to the redemption of our Subordinated Discount Notes. The $11 million loss is comprised of an $8 million redemption premium and $3 million to write off related debt issuance costs. | ||||||||||||||||||||
Restated Revolving Credit Facility | ||||||||||||||||||||
On February 18, 2010, we entered into an agreement to amend and restate various terms of the then existing asset-based Revolving Credit Facility, dated as of October 31, 2006 (as so amended and restated, the “senior secured asset-based Revolving Credit Facility”). On September 17, 2012, we entered into a second amended and restated credit agreement (the “Restated Credit Agreement”) to amend various terms of our senior secured asset-based Revolving Credit Facility. The Restated Credit Agreement, together with related security, guarantee and other agreements, is referred to as the “Restated Revolving Credit Facility”. | ||||||||||||||||||||
The Restated Revolving Credit Facility provides for senior secured financing of up to $650 million, subject to a borrowing base, maturing on September 17, 2017 (the “ABL Maturity Date”). The borrowing base under the Restated Revolving Credit Facility equals the sum of (i) 90% of eligible credit card receivables and debit card receivables, plus (ii) 90% of the appraised net orderly liquidation value of eligible inventory, plus (iii) the lesser of (x) 90% of the appraised net orderly liquidation value of inventory supported by eligible letters of credit and (y) 90% of the face amount of eligible letters of credit supported by eligible letters of credit, minus (iv) certain reserves. | ||||||||||||||||||||
The Restated Revolving Credit Facility provides us with the right to request up to $200 million of additional commitments under the Restated Revolving Credit Facility. The lenders under the Restated Revolving Credit Facility will not be under any obligation to provide any such additional commitments, and any increase in commitments is subject to customary conditions precedent. If we were to request any such additional commitments, and the existing lenders or new lenders were to agree to provide such commitments, the facility size could be increased to up to $850 million, but our ability to borrow under the Restated Revolving Credit Facility would still be limited by the borrowing base. | ||||||||||||||||||||
Borrowings under the Restated Revolving Credit Facility bear interest at a rate per annum equal to, at our option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Wells Fargo, (2) the federal funds effective rate plus 0.50% and (3) LIBOR subject to certain adjustments plus 1.00% or (b) LIBOR subject to certain adjustments, in each case plus an applicable margin. The initial applicable margin is (a) 0.75% for prime rate borrowings and 1.75% for LIBOR borrowings. The applicable margin is subject to adjustment each fiscal quarter based on the excess availability under the Restated Revolving Credit Facility. Same-day borrowings bear interest at the base rate plus the applicable margin. | ||||||||||||||||||||
We are required to pay a commitment fee on the unutilized commitments under the Restated Revolving Credit Facility, which initially is 0.375% per annum. The commitment fee is subject to adjustment each fiscal quarter. If average daily excess availability is less than or equal to 50% of the total commitments, the commitment fee will be 0.25% per annum, and if average daily excess availability is greater than 50% of the total commitments, the commitment fee will be 0.375%. In addition, we must pay customary letter of credit fees and agency fees. | ||||||||||||||||||||
If, at any time, the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Restated Revolving Credit Facility exceeds the lesser of (i) the commitment amount and (ii) the borrowing base (the “Loan Cap”), we will be required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. If excess availability under the Restated Revolving Credit Facility is less than (i) 12.5% of the Loan Cap for five consecutive business days, or (ii) $65 million at any time, or if certain events of default have occurred, we will be required to repay outstanding loans and cash collateralize letters of credit with the cash we are required to deposit daily in a collection account maintained with the agent under the Restated Revolving Credit Facility. Excess availability under the Restated Revolving Credit Facility means the lesser of the Loan Cap minus the outstanding credit extensions. We may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time without premium or penalty other than customary breakage costs with respect to LIBOR loans. There is no scheduled amortization under the Restated Revolving Credit Facility; the principal amount of the loans outstanding is due and payable in full on the ABL Maturity Date. | ||||||||||||||||||||
From the time when we have excess availability less than the greater of (a) 10% of the Loan Cap and (b) $50 million, until the time when we have excess availability greater than the greater of (a) 10% of the Loan Cap and (b) $50 million for 30 consecutive days, the Restated Revolving Credit Facility will require us to maintain a consolidated fixed charge coverage ratio of at least 1.0 to 1.0. The Restated Revolving Credit Facility also contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default (including change of control and cross-default to material indebtedness). | ||||||||||||||||||||
In accordance with ASC 470, we recorded a loss on early extinguishment of debt in fiscal 2012 of approximately $2 million to write off debt issuance costs related to the Restated Revolving Credit Facility, with the remaining $7 million of unamortized debt issuance costs being amortized over the revised life. In addition, we capitalized $4 million of debt issuance costs in fiscal 2012 associated with the execution of the Restated Revolving Credit Facility that is being amortized as interest expense over the life of the Restated Revolving Credit Facility. | ||||||||||||||||||||
As of February 2, 2013 and January 28, 2012, the borrowing base was $650 million and $670 million, respectively, of which we had availability of $587 million and $615 million, respectively. Borrowing capacity is available for letters of credit and borrowings on same-day notice. Outstanding letters of credit as of February 2, 2013 totaled $70 million, of which $62 million relate to standby letters of credit. | ||||||||||||||||||||
10% Senior Notes due 2014 | ||||||||||||||||||||
During fiscal 2010, we commenced a tender offer and consent solicitation related to 10% Senior Notes due 2014 (“2014 Senior Notes”), which resulted in the redemption of all remaining outstanding 2014 Senior Notes. The redemption price was equal to 105.5% for approximately $659 million of 2014 Senior Notes with the remaining $91 million redeemed at a price equal to 105%. In accordance with ASC 470 we recorded a loss of $53 million related to the early extinguishment of our 2014 Senior Notes. The $53 million loss is comprised of $41 million tender and call premiums and the write-off of $12 million for the remaining unamortized debt issuance costs. | ||||||||||||||||||||
Comprehensive_Income
Comprehensive Income | 12 Months Ended | ||||
Feb. 02, 2013 | |||||
Comprehensive Income | ' | ||||
Comprehensive Income | ' | ||||
Note 5. Comprehensive Income | |||||
Accumulated other comprehensive income, net of tax, is reflected in the Consolidated Balance Sheets as follows: | |||||
Foreign Currency | |||||
Translation & | |||||
Other | |||||
(In millions) | |||||
Balance at January 30, 2010 | $ | 6 | |||
Foreign currency translation adjustment | 1 | ||||
Balance at January 29, 2011 | 7 | ||||
Foreign currency translation adjustment | (1 | ) | |||
Balance at January 28, 2012 | 6 | ||||
Foreign currency translation adjustment | — | ||||
Balance at February 2, 2013 | $ | 6 | |||
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||||
Feb. 02, 2013 | ||||||||||||||
Income Taxes | ' | |||||||||||||
Income Taxes | ' | |||||||||||||
Note 6. Income Taxes | ||||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities as of the respective year-end balance sheets are as follows: | ||||||||||||||
Deferred Tax Asset (Liability) | ||||||||||||||
February 2, 2013 | January 28, 2012 | |||||||||||||
Current | Noncurrent | Current | Noncurrent | |||||||||||
(In millions) | ||||||||||||||
(Restated) | ||||||||||||||
Net operating loss, general business credit, foreign tax credit and alternative minimum tax credit carryforwards | $ | — | $ | 10 | $ | — | $ | 14 | ||||||
Merchandise inventories | (12 | ) | — | (9 | ) | — | ||||||||
Accrued expenses | 13 | 1 | 12 | 1 | ||||||||||
State income taxes | (1 | ) | 3 | 1 | 3 | |||||||||
Vacation accrual | 7 | — | 7 | — | ||||||||||
Share-based compensation | — | 29 | — | 25 | ||||||||||
Deferred rent | 2 | 14 | — | 16 | ||||||||||
Other deferred tax assets | 4 | 3 | 6 | 4 | ||||||||||
State valuation allowance | — | (10 | ) | — | (14 | ) | ||||||||
Bonus accrual | — | 3 | 6 | — | ||||||||||
Gift cards | 4 | — | 4 | — | ||||||||||
Property and equipment | — | (29 | ) | — | (33 | ) | ||||||||
Foreign taxes | 1 | — | — | — | ||||||||||
Workers’ compensation | 19 | — | 17 | — | ||||||||||
Cancellation of debt income | — | (39 | ) | — | (39 | ) | ||||||||
Original issue discount related to cancellation of debt income | — | 41 | — | 41 | ||||||||||
Other deferred tax liabilities | (4 | ) | 2 | (3 | ) | — | ||||||||
$ | 33 | $ | 28 | $ | 41 | $ | 18 | |||||||
Net deferred tax assets | $ | 61 | $ | 59 | ||||||||||
The federal, state and international income tax provision is as follows: | ||||||||||||||
Fiscal Year | ||||||||||||||
2012 | 2011 | 2010 | ||||||||||||
(In millions) | ||||||||||||||
Federal: | ||||||||||||||
Current | $ | 92 | $ | 46 | $ | 45 | ||||||||
Deferred | (7 | ) | 18 | (21 | ) | |||||||||
Total federal income tax provision | 85 | 64 | 24 | |||||||||||
State: | ||||||||||||||
Current | 10 | 13 | 9 | |||||||||||
Deferred | 1 | 1 | (4 | ) | ||||||||||
Total state income tax provision | 11 | 14 | 5 | |||||||||||
International: | ||||||||||||||
Current | 20 | 22 | 17 | |||||||||||
Deferred | (1 | ) | — | — | ||||||||||
Total international income tax provision | 19 | 22 | 17 | |||||||||||
Total income tax provision | $ | 115 | $ | 100 | $ | 46 | ||||||||
The reconciliation between the actual income tax provision and the income tax provision calculated by applying the federal statutory tax rate is as follows: | ||||||||||||||
Fiscal Year | ||||||||||||||
2012 | 2011 | 2010 | ||||||||||||
(In millions) | ||||||||||||||
Income tax provision at statutory rate | $ | 111 | $ | 91 | $ | 52 | ||||||||
State income taxes, net of federal income tax effect | 6 | 7 | 2 | |||||||||||
Federal tax credits | — | (2 | ) | (2 | ) | |||||||||
Unrecognized tax benefits | (1 | ) | 1 | (4 | ) | |||||||||
State valuation allowance | — | — | 1 | |||||||||||
Other | (1 | ) | 3 | (3 | ) | |||||||||
Total income tax provision | $ | 115 | $ | 100 | $ | 46 | ||||||||
At February 2, 2013, we had state net operating loss carryforwards to reduce future taxable income of approximately $10 million, net of federal tax benefits, expiring at various dates between fiscal 2013 and fiscal 2032. The valuation allowance related to state net operating loss carryforwards was decreased to $10 million in fiscal 2012 due to the expiration of state net operating losses, and offsets to increased unrecognized tax benefits (liabilities). We believe it is more likely than not that we will be unable to realize these amounts. | ||||||||||||||
Uncertain Tax Positions | ||||||||||||||
We operate in a number of tax jurisdictions and are subject to examination of our income tax returns by tax authorities in those jurisdictions who may challenge any item on these tax returns. Because the tax matters challenged by tax authorities are typically complex, the ultimate outcome of these challenges is uncertain. | ||||||||||||||
In accordance with ASC 740, Income Taxes, we recognize the benefits of uncertain tax positions in our financial statements only after determining a more likely than not probability that the uncertain tax positions will be sustained. A reconciliation of unrecognized tax benefits from the end of fiscal year 2011 through the end of fiscal 2012 is as follows: | ||||||||||||||
Fiscal Year | ||||||||||||||
2012 | ||||||||||||||
(In millions) | ||||||||||||||
Balance at January 28, 2012 | $ | 11 | ||||||||||||
Additions based on tax positions related to the current year | 1 | |||||||||||||
Additions for tax positions related to prior years | 1 | |||||||||||||
Reductions for expiration of statute of limitations | (3 | ) | ||||||||||||
Settlements with taxing authorities | (3 | ) | ||||||||||||
Balance at February 2, 2013 | $ | 7 | ||||||||||||
In fiscal 2012, we released $7 million of valuation allowance against certain state net operating loss carryforwards to offset an increase of $7 million unrecognized tax benefit (liability) recorded as part of our deferred tax assets (liabilities). These unrecognized tax benefits are associated with the tax positions taken in the tax years that resulted in the net operating loss carry-forwards. | ||||||||||||||
Included in the balance of unrecognized tax benefits at February 2, 2013, is $6 million in unrecognized tax benefits, the recognition of which would have an effect on the effective tax rate. This amount differs from the gross unrecognized tax benefits presented in the table above due to the increase in U.S. federal income taxes which would occur upon recognition of penalties and interest from uncertain tax positions, offset by the state tax benefits included therein. | ||||||||||||||
Our policy is to classify all income tax related interest and penalties as income tax expense. During the year ended February 2, 2013, we recognized a benefit of $2 million in income tax interest and penalties. As of February 2, 2013, our accrual for potential payments of interest and penalties was $2 million. | ||||||||||||||
We identified our federal return, Canadian tax return, and state returns in California, Florida, Illinois, Michigan, New York, North Carolina, Pennsylvania, and Texas as “major” jurisdictions. The periods subject to examination for our federal return are fiscal 2009 to present, fiscal 2007 to present for our Canadian returns, and fiscal 2006 to present for all major state tax returns. The pretax income from foreign operations for fiscal 2012, fiscal 2011, and fiscal 2010 was $52 million, $51 million, and $52 million, respectively. | ||||||||||||||
ShareBased_Compensation_Restat
Share-Based Compensation - Restated | 12 Months Ended | |||||||||||
Feb. 02, 2013 | ||||||||||||
Share-Based Compensation - Restated | ' | |||||||||||
Share-Based Compensation - Restated | ' | |||||||||||
Note 7. Share-Based Compensation — Restated | ||||||||||||
The 2006 Equity Incentive Plan (“2006 Plan”) provides for the grant of share-based awards exercisable for up to 14.2 million shares of common stock. Generally, awards vest ratably over four or five years and expire eight years from the grant date. Prior to third quarter 2011, we issued new shares of our common stock to satisfy share issuance upon option exercises. During fiscal 2011, we satisfied option exercises with the issuance of new shares but also allowed such shares to be net cash settled at the request of the former employee. Consequently, in the third quarter of fiscal 2011, management determined that the pattern of purchasing immature shares modified the classification of outstanding awards to liability awards. Share-based compensation expense was $21 million for fiscal 2012, $41 million for fiscal 2011 and $8 million for fiscal 2010 which is recognized in Cost of sales and occupancy and Share- based compensation. | ||||||||||||
The fair value of options issued prior to the third quarter of fiscal 2011 was recognized as compensation expense at their grant date fair value. When the Company’s options were modified to liability awards, the grant date fair value of the options outstanding prior to the third quarter of fiscal 2011 was the minimum expense the Company recognized each period. For the years ended February 2, 2013 and January 28, 2012, the Company, under ASC 718’s guidance on liability awards, recognized incremental share-based compensation expense using the Black-Scholes option valuation model’s fair value as of the end of each reporting period. The following assumptions were used to estimate the fair value of options granted during the year in fiscal 2010 as well the fair value of liability awards as of the end of fiscal 2012 and fiscal 2011. | ||||||||||||
Fiscal Year | ||||||||||||
Assumptions (1) | 2012 | 2011 | 2010 | |||||||||
Risk-free interest rates (2) | 0.1% - 1.1% | 0.1% - 1.3% | 1.5% - 2.5% | |||||||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | |||||||||
Expected volatility rates of our common stock (3) | 29.0% - 35.2% | 30.7% - 37.8% | 39.4% - 41.5% | |||||||||
Expected life of options (in years) (4) | 1.0 - 5.0 | 1.0 - 5.0 | 5.0 - 8.0 | |||||||||
Weighted average fair value of options (5) | $ | 8.46 | $ | 10.07 | $ | 4.52 | ||||||
(1) Forfeitures were estimated based on historical experience and anticipated events. | ||||||||||||
(2) Based on constant maturity interest rates for U.S. Treasury instruments with terms consistent with the expected lives of the awards. | ||||||||||||
(3) We considered both the historical volatility as well as implied volatilities from the exchange-traded options on the common stock of a peer group of companies. | ||||||||||||
(4) Expected lives were based on an analysis of historical exercise and post-vesting employment termination behavior. Since fair value was remeasured at the end of the year in 2011 and 2012, the expected life was adjusted based on the remaining life of the options. | ||||||||||||
(5) The Company’s 2012, 2011 and 2010 common stock valuations relied on projections of our future performance, estimates of our weighted average cost of capital, and metrics based on the performance of a peer group of similar companies, including valuation multiples and stock price volatility. The fair value of equity per share utilized in our calculation ranged from $24.09 to $25.08 in fiscal 2012, $15.22 to $17.95 in fiscal 2011, and $11.55 to $14.47 in fiscal 2010. For fiscal 2012 and 2011, the weighted average fair value of options was re-valued under liability accounting as of the end of the fiscal year for all options granted during the fiscal year. For fiscal 2010, the weighted average fair value of options is as of the grant date for options granted during fiscal 2010. | ||||||||||||
As of February 2, 2013, there were 9.1 million stock option awards outstanding. In addition, as of February 2, 2013, there were a total of 339,263 shares of restricted stock outstanding, of which 311,659 are vested. Under the 2006 Plan, there are 4.1 million shares of common stock remaining available for grant. The table below sets forth a summary of stock option activity for the year ended February 2, 2013. | ||||||||||||
Number of | Weighted-Average | Weighted-Average | Aggregate | |||||||||
Shares | Exercise Price | Remaining | Intrinsic Value | |||||||||
(In millions) | Contractual Term | (In millions) | ||||||||||
(In years) | ||||||||||||
Outstanding at January 28, 2012 | 10.6 | $ | 15.52 | |||||||||
Granted | 0.3 | 24.68 | ||||||||||
Exercised | (0.4 | ) | 16.17 | |||||||||
Cancelled/Forfeited | (1.4 | ) | 15.48 | |||||||||
Outstanding at February 2, 2013 | 9.1 | $ | 15.86 | 4.6 | $ | 101 | ||||||
Vested and Exercisable at February 2, 2013 | 5.9 | $ | 15.58 | 4.1 | $ | 67 | ||||||
The total fair value of options that vested during fiscal 2012, fiscal 2011, and fiscal 2010 was $30 million, $25 million and $2 million, respectively. The intrinsic value for options that vested during 2012, fiscal 2011 and fiscal 2010 was $22 million, $17 million and $5 million, respectively. The intrinsic value for options exercised was $5 million in fiscal 2012 and less than $1 million in fiscal 2011 and fiscal 2010. As of the beginning of fiscal 2012, there were 6.1 million nonvested options with a weighted average fair value of $10.73 per share. As of the end of fiscal 2012, there were 3.2 million nonvested options with a weighted average fair value of $12.01 per share. During fiscal 2012, there were 1.9 million options that vested and 1.4 million options that were cancelled with a weighted-average fair value of $11.88 and $10.20 per share, respectively. | ||||||||||||
As of February 2, 2013, compensation cost not yet recognized related to nonvested awards totaled $25 million and is expected to be recognized over a weighted average period of 2.2 years. Share-based liabilities paid in fiscal 2011 were less than $1 million and in fiscal 2012 were $3 million. To the extent the actual forfeiture rate is different from what we have anticipated, share-based compensation related to these awards will be different from our expectations. | ||||||||||||
Derivative_Instruments
Derivative Instruments | 12 Months Ended |
Feb. 02, 2013 | |
Derivative Instruments | ' |
Derivative Instruments | ' |
Note 8. Derivative Instruments | |
We are exposed to fluctuations in interest rates on our Restated Term Loan Credit Facility. During the first quarter of fiscal 2009, we purchased an interest rate derivative with the objective to cap our exposure to interest rate increases on our senior secured term loan facility that result from fluctuations in the three-month LIBOR (the “cap”). The cap limits our interest exposure on a notional value of $2.0 billion to the lesser of the three-month LIBOR rate or 7.0%. The term of the cap extends to the first quarter of fiscal 2015. The interest rate cap does not qualify for cash flow hedge accounting under ASC 815, Derivatives and Hedging. The fair value of the cap as of February 2, 2013 and January 28, 2012 was immaterial and is included in Other assets on the Consolidated Balance Sheets. The change in fair value of the cap for the years resulted in an immaterial loss in fiscal 2012, a loss of $5 million in fiscal 2011 and a loss of $12 million in fiscal 2010. These amounts are recorded in Other (income) and expense, net in the Consolidated Statements of Comprehensive Income. | |
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | |||||||
Feb. 02, 2013 | ||||||||
Fair Value Measurements | ' | |||||||
Fair Value Measurements | ' | |||||||
Note 9. Fair Value Measurements | ||||||||
As defined in ASC 820, Fair Value Measurements, 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 | ||||||||
In fiscal 2009, we purchased an interest rate derivative with the objective to cap our exposure to interest rate increases on our senior secured term loan facility that result from fluctuations in the three-month LIBOR. The interest rate cap is measured using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the interest rate cap is determined using the market methodology of discounting the future expected variable cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These factors are considered Level 2 inputs within the fair value hierarchy. As of February 2, 2013, the fair value of the cap was immaterial. See Note 8 for additional information on our derivative instruments. | ||||||||
In 2010, the Company acquired Scrap HD, an online scrapbooking business. In connection with the acquisition, there was a contingent cash obligation based on operating performance through fiscal 2012. As a result of negative operating results, we estimated the fair value of ScrapHD to be zero as of February 2, 2013, which resulted in a reduction in the fair value of our contingent consideration liability from an immaterial amount as of January 28, 2012 to zero as of February 2, 2013. The minimal gain from the change in the fair value of the contingent consideration is recorded in Selling, general, and administrative expense on the Consolidated Statements of Comprehensive Income. Due to the previously discussed factors, we recorded an impairment charge in fiscal 2012 of $7 million for long-lived assets associated with our online scrapbooking business and a goodwill impairment charge of $1 million, which represents the carrying amount of ScrapHD’s goodwill. | ||||||||
Long-lived assets held for use consists of our stores tested for impairment as a result of our impairment review, as more fully described in Note 1. The inputs used to measure the fair value of these long-lived are considered Level 3 inputs within the fair value hierarchy. As a result of our impairment review, we did not record an impairment charge in fiscal 2012, and recorded less than $1 million in impairment charges in fiscal 2011 and fiscal 2010. | ||||||||
We have also performed the required impairment review related to goodwill, as more fully described in Note 1, for our Michaels reporting unit. Based on our review at February 2, 2013, we do not believe it is more likely than not that the carrying amount of our Michaels reporting unit exceeds its fair value. | ||||||||
The table below provides the carrying and fair values of our senior secured term loan and notes as of February 2, 2013. The fair value of our senior secured term loan was determined based on quoted market prices which are considered Level 2 inputs within the fair value hierarchy. The fair value of our notes was determined based on recent trades which are considered Level 1 inputs within the fair value hierarchy. | ||||||||
Carrying Value | Fair Value | |||||||
(In millions) | ||||||||
Senior secured term loan | $ | 1,640 | $ | 1,655 | ||||
Senior notes | 1,007 | 1,101 | ||||||
Senior subordinated notes | 393 | 412 | ||||||
Retirement_Plans
Retirement Plans | 12 Months Ended |
Feb. 02, 2013 | |
Retirement Plans | ' |
Retirement Plans | ' |
Note 10. Retirement Plans | |
We sponsor a 401(k) Savings Plan for our eligible employees and certain of our subsidiaries. Participation in the 401(k) Savings Plan is voluntary and available to any employee who is 21 years of age and has completed 500 hours of service in a six-month eligibility period. Participants may elect to contribute up to 80% of their compensation on a pre-tax basis and up to 10% on an after-tax basis. In accordance with the provisions of the 401(k) Savings Plan, we make a matching cash contribution to the account of each participant in an amount equal to 50% of the participant’s pre-tax contributions that do not exceed 6% of the participant’s considered compensation for the year. Matching contributions, and the actual earnings thereon, vest to the participants based on years of service, with 100% vesting after three years. Our matching contribution expense, net of forfeitures, was $4 million in fiscal 2012 and fiscal 2011 and $3 million in fiscal 2010. | |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Feb. 02, 2013 | |||||
Commitments and Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
Note 11. Commitments and Contingencies | |||||
Commitments | |||||
We operate stores and use distribution centers, office facilities, and equipment that are generally leased under non-cancelable operating leases, the majority of which provide for renewal options. Future minimum annual rental commitments for all non-cancelable operating leases as of February 2, 2013 are as follows (in millions): | |||||
For the fiscal year: | Operating Leases | ||||
2013 | $ | 377 | |||
2014 | 330 | ||||
2015 | 272 | ||||
2016 | 221 | ||||
2017 | 165 | ||||
Thereafter | 366 | ||||
Total minimum rental commitments | $ | 1,731 | |||
Rent expense applicable to non-cancelable operating leases was $355 million, $345 million, and $327 million, in fiscal 2012, 2011, and 2010, respectively. | |||||
Employee Claims | |||||
Adams Claim | |||||
On March 20, 2009, 114 individuals commenced an action against the Company styled Adams, et al. v. Michaels Stores, Inc. in the U.S. District Court for the Central District of California. The complaint was later amended to add 15 additional plaintiffs. In 2010, two additional lawsuits making the same allegations were filed in the Central District Court by eight additional plaintiffs, styled Borgen, et al. v. Michaels Stores, Inc. and Langstaff v. Michaels Stores, Inc., and were later consolidated with the Adams suit. The Adams consolidated suit (“Adams”) alleges that the plaintiffs, certain former and current store managers in California, were improperly classified as exempt employees and, as such, Michaels failed to pay overtime wages, provide meal and rest periods (or compensation in lieu thereof), accurately record hours worked and provide itemized employee wage statements. The Adams suit additionally alleges that the foregoing conduct was in breach of California’s unfair competition law. The plaintiffs seek injunctive relief, damages for unpaid wages, penalties, restitution, interest, and attorneys’ fees and costs. A number of the individual plaintiff claims have been settled for immaterial amounts. A bench trial on one of the plaintiff’s cases occurred in December 2010. The Court has orally advised that Michaels was successful at trial, but has not yet provided its decision in writing. We believe we have meritorious defenses and intend to defend the remaining individual claims vigorously. We do not believe the resolution of these cases will have a material effect on our consolidated financial statements. | |||||
Ragano Claim | |||||
On July 11, 2011, the Company was served with a lawsuit filed in the California Superior Court in and for the County of San Mateo by Anita Ragano, as a purported class action proceeding on behalf of herself and all current and former hourly retail employees employed by Michaels stores in California. We removed the matter to the U.S. District Court for the Northern District of California on August 9, 2011. The complaint was subsequently amended to add an additional named plaintiff, Terri McDonald. The lawsuit alleges that Michaels stores failed to pay all wages and overtime, failed to provide its hourly employees with adequate meal and rest breaks (or compensation in lieu thereof), failed to timely pay final wages, unlawfully withheld wages and failed to provide accurate wage statements and further alleges that the foregoing conduct was in breach of various laws, including California’s unfair competition law. The plaintiffs seek injunctive relief, compensatory damages, meal and rest break penalties, waiting time penalties, interest, and attorneys’ fees and costs. On August 10, 2012, we reached a tentative class-wide settlement with plaintiffs and the Court granted preliminary approval on October 26, 2012. A final approval hearing is scheduled for April 5, 2013. The settlement, if approval is granted, will not have a material effect on our consolidated financial statements, and was accrued as of February 2, 2013. | |||||
Rea Claim | |||||
On September 15, 2011, the Company was served with a lawsuit filed in the California Superior Court in and for the County of Orange (“Superior Court”) by four former store managers as a purported class action proceeding on behalf of themselves and certain former and current store managers employed by Michaels stores in California. The lawsuit alleges that the Company stores improperly classified its store managers as exempt employees and as such failed to pay all wages, overtime, waiting time penalties and failed to provide accurate wage statements. The lawsuit also alleges that the foregoing conduct was in breach of various laws, including California’s unfair competition law. The plaintiffs have pled less than five million dollars in damages, penalties, costs of suit and attorneys’ fees, exclusive of interest. 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. | |||||
Tijero and Godfrey Consolidated Claim | |||||
On February 12, 2010, the Company and its wholly owned subsidiary, Aaron Brothers, was served with a lawsuit filed in the California Superior Court in and for the County of Alameda by Jose Tijero, a former assistant manager for Aaron Brothers, as a purported class action proceeding on behalf of himself and all current and former hourly retail employees employed by Aaron Brothers in California. On July 12, 2010, Aaron Brothers was served with a lawsuit filed in the California Superior Court in and for the County of Orange by Amanda Godfrey, a former Aaron Brothers’ hourly employee alleging similar allegations as in the Tijero suit. On October 15, 2010, the cases were consolidated against Aaron Brothers and re-filed in the U.S. District Court—Northern District of California. These suits allege that Aaron Brothers failed to pay all wages and overtime, failed to provide its hourly employees with adequate meal and rest breaks (or compensation in lieu thereof), failed to timely pay final wages, unlawfully withheld wages and failed to provide accurate wage statements and further alleges that the foregoing conduct was in breach of various laws, including California’s unfair competition law. The plaintiff seeks injunctive relief, compensatory damages, meal and rest break penalties, waiting time penalties, interest, and attorneys’ fees and costs. On April 4, 2012, we reached a class-wide settlement with plaintiffs that is subject to the Court’s approval. The Court has denied the approval of the settlement, without prejudice, however, a renewed motion seeking approval of the settlement has been filed. The settlement, if approved, will not have a material effect on our consolidated financial statements, and was accrued as of February 2, 2013. | |||||
Irene Barreras Claim | |||||
On July 24, 2012, Irene Barreras, a former employee, filed a purported class action proceeding against Michaels Stores, Inc. in the Superior Court of the State of California for the County of Alameda (“Alameda Superior Court”), alleging unfair business competition and unjust enrichment, wrongful termination, disability discrimination, failure to prevent discrimination, failure to engage in the interactive process, and failure to accommodate mental or physical disabilities. The suit is brought on Ms. Barreras’ behalf and on behalf of a class of all retail store employees who were terminated from July 24, 2008 to the present, allegedly due to Michaels refusal to engage in the interactive process with, or provide accommodations to, the terminated employees who did not meet the qualifications for medical leaves. The plaintiff seeks injunctive relief, compensatory damages, punitive damages, consequential damages, general damages, interest, attorneys’ fees and costs. On August 24, 2012, we removed the case to the United States District Court, Northern District of California. Plaintiffs’ deadline to file its Motion for Class Certification is September 25, 2013.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. | |||||
Consumer Class Action Claims | |||||
Zip Code Claims | |||||
On August 15, 2008, Linda Carson, a consumer, filed a purported class action proceeding against Michaels Stores, Inc. in the Superior Court of California, County of San Diego (“San Diego Superior Court”), on behalf of herself and all similarly-situated California consumers. The Carson lawsuit alleges that Michaels unlawfully requested and recorded personally identifiable information (i.e., her zip code) as part of a credit card transaction. The plaintiff sought statutory penalties, costs, interest, and attorneys’ fees. We contested certification of this claim as a class action and filed a motion to dismiss the claim. On March 9, 2009, the Court dismissed the case with prejudice. The plaintiff appealed this decision to the California Court of Appeals for the Fourth District, San Diego. On July 22, 2010, the Court of Appeals upheld the dismissal of the case. The plaintiff appealed this decision to the Supreme Court of California (“California Supreme Court”). On September 29, 2010, the California Supreme Court granted the plaintiff’s petition for review; however, it stayed any further proceedings in the case until another similar zip code case pending before the court, Pineda v. Williams-Sonoma, was decided. On February 10, 2011, the California Supreme Court ruled, in the Williams-Sonoma case, that zip codes are personally identifiable information and therefore the Song-Beverly Credit Card Act of 1971, as amended (“Song Act”), prohibits businesses from requesting or requiring zip codes in connection with a credit card transaction. On or about April 6, 2011, the Supreme Court transferred the Carson case back to the Court of Appeals with directions to the Court to reconsider its decision in light of the Pineda decision. Upon reconsideration, the Court of Appeals remanded the case back to the San Diego Superior Court on May 31, 2011. | |||||
Additionally, since the California Supreme Court decision on February 10, 2011, three additional purported class action lawsuits alleging violations of the Song Act have been filed against the Company: Carolyn Austin v. Michaels Stores, Inc. and Tiffany Heon v. Michaels Stores, Inc., both in the San Diego Superior Court and Sandra A. Rubinstein v. Michaels Stores, Inc. in the Superior Court of California, County of Los Angeles, Central Division. The Rubinstein case was transferred to the San Diego Superior Court. An order coordinating the cases has been entered and plaintiffs filed a Consolidated Complaint on April 24, 2012. Plaintiffs seek damages, civil penalties, common settlement fund recovery, attorney fees, costs of suit and prejudgment interest. | |||||
Also, relying in part on the California Supreme Court decision, an additional purported class action lawsuit was filed on May 20, 2011 against the Company: Melissa Tyler v. Michaels Stores, Inc. in the U.S. District Court-District of Massachusetts, alleging violation of a similar Massachusetts statute regarding the collection of personally identifiable information in connection with a credit card transaction. A hearing was held on October 20, 2011 on our Motion to Dismiss the claims. On January 6, 2012, the Court granted our Motion to Dismiss. The Court thereafter certified questions of law to the Massachusetts Supreme Judicial Court regarding the interpretation of the Statute. On March 11, 2013, the District Court’s dismissal of the action was reversed and it was remanded back to the District Court for further proceedings. | |||||
We intend to vigorously defend each of these zip code claim cases and we are unable, at this time, to estimate a range of loss, if any. | |||||
Pricing and Promotion | |||||
On April 30, 2012, William J. Henry, a consumer, filed a purported class action proceeding against Michaels Stores, Inc. in the Court of Common Pleas, Lake County, Ohio, on behalf of himself and all similarly-situated Ohio consumers who purchased framing products and/or services from Michaels during weeks where Michaels was advertising a discount for framing products and/or services. The lawsuit alleges that Michaels advertised discounts on its framing products and/or services without actually providing a discount to its customers. The plaintiff claims violation of Ohio law ORC 1345.01 et seq., breach of contract, unjust enrichment and fraud. The plaintiff has alleged damages, penalties and fees not to exceed $5 million, exclusive of interest and costs. We filed a Motion to Dismiss on July 3, 2012. On October 23, 2012, the Court granted our Motion to Dismiss, in part, dismissing the Plaintiff’s breach of contract claim and denying the motion as to the other claims. A trial is scheduled for February 2014. We believe we have meritorious defenses and intend to defend the lawsuit vigorously. We do not believe the resolution of this lawsuit will have a material effect on our consolidated financial statements. | |||||
Website Tracking and Coding | |||||
On June 19, 2012, Jerome Jurgens, a citizen of Missouri, filed a purported class action proceeding against Michaels Stores, Inc. in the 25th Judicial Circuit Court, Phelps County, Missouri, on behalf of himself, Wendy Poepsel and all other similarly-situated Missouri individuals who, on or after June 19, 2007, accessed the Michaels website and had Flash cookies attach to their computers. Plaintiffs allege that Michaels, through the use of its website, makes use of cookies in order to ascertain user’s web browsing habits. Specifically, the plaintiffs allege violations of the Missouri Computer Tampering and Merchandising Practices Act statutes, as well as common law claims of conversion, trespass to chattels, invasion of privacy and unjust enrichment are alleging damages, penalties and fees not to exceed $5 million, inclusive of costs and attorneys’ fees. We filed a Motion to Dismiss on August 8, 2012, which was subsequently denied. Trial is to commence in September 2013. We believe we have meritorious defenses and intend to defend the lawsuit vigorously. Michaels has tendered the matter to a vendor and the vendor has accepted the indemnity and defense of the case. | |||||
Data Breach Claims | |||||
Payment Card Terminal Tampering | |||||
On May 3, 2011, we were advised by the U.S. Secret Service that they were investigating certain fraudulent debit card transactions that occurred on accounts that had been used for legitimate purchases in selected Michaels stores. A subsequent internal investigation revealed that approximately 90 payment card terminals in certain Michaels stores had been physically tampered with, potentially resulting in customer debit and credit card information to be compromised. We have since removed and replaced approximately 7,100 payment card terminals comparable to the identified tampered payment card terminals from our Michaels stores. The Company continues to cooperate with various governmental entities and law enforcement authorities in investigating the payment card terminal tampering, but we do not know the full extent of any fraudulent use of such information. | |||||
On May 18, 2011, Brandi F. Ramundo, a consumer, filed a purported class action proceeding against Michaels Stores, Inc. in the U.S. District Court for the Northern District of Illinois, on behalf of herself and all similarly- situated U.S. consumers. The Ramundo lawsuit alleges that Michaels failed to take commercially reasonable steps to protect consumer financial data, and was in breach of contract and laws, including the Federal Stored Communications Act and the Illinois Consumer Fraud and Deceptive Practices Act. The plaintiff seeks compensatory, statutory and punitive damages, costs, credit card fraud monitoring services, interest and attorneys’ fees. Subsequently two additional purported class action lawsuits significantly mirroring the claims in the Ramundo complaint were filed against the Company: Mary Allen v. Michaels Stores, Inc., and Kimberly Siprut v. Michaels Stores, Inc., both in the U.S. District Court for the Northern District of Illinois. On June 8, 2011, an order was entered consolidating these matters, which also provided for consolidation of all related actions subsequently filed in or transferred to the Northern District of Illinois. On July 8, 2011, a Consolidated Amended Class Action Complaint styled In Re Michaels Stores Pin Pad Litigation (“In Re Michaels Stores Consolidated Complaint”) was filed in the U.S. District Court for the Northern District of Illinois. On August 8, 2011, we filed a Motion to Dismiss the In Re Michaels Stores Consolidated Complaint. On November 23, 2011, the Court dismissed the Stored Communications Act and negligence claims under Illinois law, but denied the motion as to the breach of implied contract and Illinois Consumer Fraud and Deceptive Practices Act claims. | |||||
Four other substantially similar putative class action lawsuits have also been filed. Jeremy Williams v. Michaels Stores, Inc. and Fred Sherry v. Michaels Stores, Inc., were filed in the U.S. District Court for the Northern District of Illinois. Sara Rosenfeld and Ilana Soffer v. Michaels Stores, Inc. and Lori Wilson v. Michaels Stores, Inc. were both filed in New Jersey state court, removed to the United States District Court for the District of New Jersey, and transferred to the United States District Court for the Northern District of Illinois. The New Jersey cases assert negligence and New Jersey Consumer Fraud Act claims. All four cases are subject to the consolidation order. The Court has held that Michaels is not required to respond to those complaints. | |||||
On August 20, 2012, we reached a tentative class-wide settlement with plaintiffs and the Court granted preliminary approval of the settlement on December 19, 2012. A final approval hearing is scheduled for April 4, 2013. The settlement, will not have a material effect on our consolidated financial statements, and was accrued as of February 2, 2013. | |||||
Governmental Inquiries and Related Matters | |||||
Non-U.S. Trust Inquiry | |||||
In early 2005, the District Attorney’s office of the County of New York and the SEC opened inquiries concerning non-U.S. trusts that directly or indirectly held shares of Michaels Common Stock and Common Stock options. On July 29, 2010, the SEC filed a civil enforcement action in federal district court for the Southern District of New York against Charles Wyly, Sam Wyly, the Wylys’ attorney - Michael French, and others alleging, among other things, violations of various federal securities laws, including those governing ownership reporting and trading of securities, in connection with the non-U.S. trusts and their subsidiaries. Additional information may be obtained at the SEC’s website. Sam Wyly, the estate of Charles Wyly and Mr. French, also a former director of the Company, have requested indemnification from the Company for certain legal costs with respect to these matters. The Company has resolved all claims with regards to Sam Wyly and the estate of Charles Wyly for an immaterial amount. | |||||
On April 12, 2012, Mr. French filed a lawsuit against the Company and the non-U.S. trusts in the District Court of Dallas County, Texas. The matter was dismissed as to the non-U.S. trusts. Mr. French seeks damages from the Company for breach of contract, attorneys’ fees and costs related to the Company’s alleged indemnification obligations to Mr. French and attorneys’ fees and costs related to the lawsuit. We believe we have meritorious defenses and intend to defend the claims vigorously. We do not believe the resolution of this case will have a material effect on our Consolidated Financial Statements. | |||||
General | |||||
In addition to the litigation discussed above, we are, and in the future, may be 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. | |||||
ASC 450, Contingencies, governs the disclosure and recognition of loss contingencies, including potential losses from litigation and regulatory matters. It imposes different requirements for the recognition and disclosure of loss contingencies based on the likelihood of occurrence of the contingent future event or events. It distinguishes among degrees of likelihood using the following three terms: “probable”, meaning that “the future event or events are likely to occur”; “remote”, meaning that “the chance of the future event or events occurring is slight”; and “reasonably possible”, meaning that “the chance of the future event or events occurring is more than remote but less than likely”. In accordance with ASC 450, the Company accrues for a loss contingency when we conclude that the likelihood of a loss is probable and the amount of the loss can be reasonably estimated. When the loss cannot be reasonably estimated we estimate the range of amounts, and if no amount in the range constitutes a better estimate than any other amount, we accrue for the amount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but the loss we incur may be significantly greater than or less than the amount we have accrued. We disclose loss contingencies if there is at least a reasonable possibility that a material loss has been incurred. No accrual or disclosure is required for losses that are remote. | |||||
For some of the matters disclosed above, the Company is currently able to estimate a reasonably possible loss or range of loss in excess of amounts accrued (if any). For some of the matters included within this estimation, an accrual has been made because a loss is believed to be both probable and reasonably estimable, but an exposure to loss exists in excess of the amount accrued; in these cases, the estimate reflects the reasonably possible range of loss in excess of the accrued amount. For other matters included within this estimation, no accrual has been made because a loss, although estimable, is believed to be reasonably possible, but not probable; in these cases the estimate reflects the reasonably possible loss or range of loss within the ranges identified. For the various ranges identified, the aggregate of these estimated amounts is approximately $14 million, which is also inclusive of amounts accrued by the Company. | |||||
For other matters disclosed above, the Company is not currently able to estimate the reasonably possible loss or range of loss, and has indicated such. Many of these matters remain in preliminary stages (even in some cases where a substantial period of time has passed since the commencement of the matter), with few or no substantive legal decisions by the court defining the scope of the claims, the class (if any), or the potentially available damages, and fact discovery is still in progress or has not yet begun. For all these reasons, the Company cannot at this time estimate the reasonably possible loss or range of loss, if any, for these matters. | |||||
It is the opinion of the Company’s management, based on current knowledge and after taking into account its current legal accruals, the eventual outcome of all matters described in this Note would not be likely to have a material impact on the consolidated financial condition of the Company. Nonetheless, given the substantial or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of such matters, an adverse outcome in certain of these matters could, from time to time, have a material effect on the Company’s consolidated results of operations or cash flows in particular quarterly or annual periods. | |||||
Concentration_of_Credit_Risk
Concentration of Credit Risk | 12 Months Ended |
Feb. 02, 2013 | |
Concentration of Credit Risk | ' |
Concentration of Credit Risk | ' |
Note 12. Concentration of Credit Risk | |
We periodically invest our excess cash and equivalents in money market funds and trusts, which are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other financial or government institution. We also deposit a portion of our cash and equivalents with numerous federally-insured financial institutions, the balances of which often exceed $250,000. The Federal Deposit Insurance Corporation insures each account up to a maximum of $250,000 of the aggregate account balance with each institution. We believe counterparty default risk is low as we only use financial institutions with investment grade ratings or funds and trusts that invest in securities with investment grade ratings and that possess the necessary liquidity to satisfy our redemption needs. | |
We invest cash balances in excess of operating requirements primarily in money market mutual funds and short-term interest-bearing securities, generally with maturities of 90 days or less. Due to the short-term nature of our investments, the fair value of our cash and equivalents at February 2, 2013 approximated carrying value. | |
We have market risk exposure arising from changes in interest rates on our Senior Secured Credit Facilities. The interest rates on our Senior Secured Credit Facilities will reprice periodically, which will impact our earnings and cash flow. The interest rates on our Senior Notes, Senior Subordinated Notes, and Subordinated Discount Notes are fixed. Based on our overall interest rate exposure to variable rate debt outstanding as of February 2, 2013, a 1% increase or decrease in interest rates would increase or decrease income before income taxes by approximately $16 million. A 1% increase or decrease in interest rates would decrease or increase the fair value of our long-term fixed rate debt by approximately $21 million. A change in interest rates would not materially affect the fair value of our variable rate debt as the debt reprices periodically. | |
Segments_and_Geographic_Inform
Segments and Geographic Information | 12 Months Ended | ||||||||||
Feb. 02, 2013 | |||||||||||
Segments and Geographic Information | ' | ||||||||||
Segments and Geographic Information | ' | ||||||||||
Note 13. Segments and Geographic Information | |||||||||||
We consider our Michaels—U.S., Michaels—Canada, Aaron Brothers and ScrapHD to be our operating segments for purposes of determining reportable segments based on the criteria of ASC 280, Segment Reporting. We determined that our Michaels—U.S., Michaels—Canada, Aaron Brothers operating segments have similar economic characteristics and meet the aggregation criteria set forth in ASC 280. Therefore, we combine those operating segments into one reporting segment. As of February 2, 2013, the ScrapHD operating segment was immaterial to the financial statements as a whole. Accordingly, we will report in two reportable segments if Net sales, Operating income or loss, or Total assets of the ScrapHD operating segment exceeds 10% of the consolidated amounts. | |||||||||||
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in Note 1. | |||||||||||
Our sales and assets by country are as follows: | |||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
(In millions) | |||||||||||
Net Sales: | |||||||||||
United States | $ | 3,989 | $ | 3,825 | $ | 3,673 | |||||
Canada | 419 | 385 | 358 | ||||||||
Consolidated Total | $ | 4,408 | $ | 4,210 | $ | 4,031 | |||||
Total Assets (Restated): | |||||||||||
United States | $ | 1,446 | $ | 1,744 | $ | 1,699 | |||||
Canada | 109 | 94 | 81 | ||||||||
Consolidated Total | $ | 1,555 | $ | 1,838 | $ | 1,780 | |||||
We present assets based on their physical, geographic location. Certain assets located in the U.S. are also used to support our Canadian operations, but we do not allocate these assets to Canada. | |||||||||||
Our Consolidated Net sales by major product categories are as follows: | |||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
General and children’s crafts | $ | 2,082 | $ | 1,908 | $ | 1,791 | |||||
Home décor and seasonal | 890 | 837 | 805 | ||||||||
Framing | 836 | 804 | 794 | ||||||||
Scrapbooking | 600 | 661 | 641 | ||||||||
$ | 4,408 | $ | 4,210 | $ | 4,031 | ||||||
Our chief operating decision makers evaluate historical operating performance and plan and forecast future periods’ operating performance based on earnings before interest, income taxes, depreciation, amortization and refinancing costs and losses on early extinguishments of debt (“EBITDA (excluding refinancing costs and losses on early extinguishments of debt)”). We believe EBITDA (excluding refinancing costs and losses on early extinguishments of debt) represents the financial measure that most closely reflects the operating effectiveness of factors over which management has control. As such, an element of base incentive compensation targets for certain management personnel is based on EBITDA (excluding refinancing costs and losses on early extinguishments of debt). A reconciliation of EBITDA (excluding refinancing costs and losses on early extinguishments of debt) to Net income is presented below. | |||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
Restated | Restated | ||||||||||
Net income | $ | 200 | $ | 157 | $ | 103 | |||||
Interest expense | 245 | 254 | 276 | ||||||||
Refinancing costs and losses on early extinguishments of debt | 33 | 18 | 53 | ||||||||
Provision for income taxes | 115 | 100 | 46 | ||||||||
Depreciation and amortization | 97 | 101 | 103 | ||||||||
EBITDA (excluding refinancing costs and losses on early extinguishments of debt) | $ | 690 | $ | 630 | $ | 581 | |||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Feb. 02, 2013 | |
Related Party Transactions | ' |
Related Party Transactions | ' |
Note 14. Related Party Transactions | |
We pay annual management fees to the Sponsors in the amount of $12 million and an annual management fee to Highfields Capital Management L.P. in the amount of $1 million. We recognized $13 million of expense in fiscal 2012 and fiscal 2011 and $14 million of expense in fiscal 2010 related to annual management fees and reimbursement of out-of-pocket expenses. | |
Bain Capital owns a majority equity position in Unisource, an external vendor we utilized to print our circular advertisements. During the first quarter of fiscal 2011, we stopped utilizing this vendor for these services. Payments associated with this vendor during fiscal 2011 and fiscal 2010 were $6 million and $39 million, respectively, and are included in Selling, general and administrative expense in the Consolidated Statements of Comprehensive Income. | |
Bain Capital owns a majority equity position in LogicSource, an external vendor we began utilizing for print procurement services during the first quarter of fiscal 2011. Payments associated with this vendor during each of fiscal 2012 and 2011 were $5 million. These expenses are included in Selling, general and administrative expense in the Consolidated Statements of Comprehensive Income. | |
The Blackstone Group owns a majority equity position in RGIS, an external vendor we utilize to count our store inventory. Payments associated with this vendor during each of fiscal 2012, 2011, and fiscal 2010 were $6 million, and are included in Selling, general and administrative expense in the Consolidated Statements of Comprehensive Income. | |
The Blackstone Group owns a majority equity position in Vistar, an external vendor we utilize for all of the candy-type items in our stores. Payments associated with this vendor during fiscal 2012, 2011, and fiscal 2010 were $24 million, $20 million, and $19 million, respectively, and are recognized in cost of sales as the sales are incurred. | |
The Blackstone Group owns a partial equity position in Hilton Hotels, an external vendor we utilize for hospitality services. Payments associated with this vendor during each of fiscal 2012, 2011 and fiscal 2010 were $1 million, and are included in Selling, general, and administrative expense in the Consolidated Statements of Comprehensive Income. | |
During the second quarter of fiscal 2011, The Blackstone Group acquired a majority equity position in Brixmor Properties Group, a vendor we utilize to lease certain properties. Payments associated with this vendor during fiscal 2012 and 2011 were $5 million and $3 million, respectively. These expenses are included in Cost of sales and occupancy expense in the Consolidated Statements of Comprehensive Income. | |
Our current directors (other than Jill A. Greenthal) 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 February 2, 2013, affiliates of The Blackstone Group held $30 million of our Restated Term Loan Credit Facility. | |
The Company periodically provides officers of Michaels Stores, Inc. and its subsidiaries the opportunity to purchase shares of our common stock. There were no shares sold to officers during fiscal 2012, fiscal 2011, and fiscal 2010. During fiscal 2012 and fiscal 2011, we repurchased 14,667 shares and 192,001 shares from officers who are no longer with the Company. There were no shares repurchased during fiscal 2010. | |
Condensed_Consolidating_Financ
Condensed Consolidating Financial Information | 12 Months Ended | |||||||||||||
Feb. 02, 2013 | ||||||||||||||
Condensed Consolidating Financial Information | ' | |||||||||||||
Condensed Consolidating Financial Information | ' | |||||||||||||
Note 15. Condensed Consolidating Financial Information | ||||||||||||||
All obligations of Michaels Stores, Inc. under the Senior notes, Senior Subordinated Notes, Subordinated Discount Notes, Restated Term Loan Credit Facility, and Restated Revolving Credit Facility are guaranteed by each of our subsidiaries other than Aaron Brothers Card Services, LLC, Artistree of Canada, ULC, and Michaels Stores of Puerto Rico, LLC. As of February 2, 2013, the financial statements of Aaron Brothers Card Services, LLC, Artistree of Canada, ULC, and Michaels Stores of Puerto Rico, LLC were immaterial. Each subsidiary guarantor is 100% owned by the parent and all guarantees are joint and several and full and unconditional. | ||||||||||||||
The following condensed consolidating financial information represents the financial information of Michaels Stores, Inc. and its wholly-owned subsidiary guarantors, prepared on the equity basis of accounting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows, or financial position had the subsidiary guarantors operated as independent entities. | ||||||||||||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Fiscal Year 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Net sales | $ | 3,848 | $ | 2,544 | $ | (1,984 | ) | $ | 4,408 | |||||
Cost of sales and occupancy expense | 2,473 | 2,154 | (1,984 | ) | 2,643 | |||||||||
Gross profit | 1,375 | 390 | — | 1,765 | ||||||||||
Selling, general, and administrative expense | 980 | 152 | — | 1,132 | ||||||||||
Share-based compensation | 12 | 3 | — | 15 | ||||||||||
Impairment of intangible assets | 8 | — | — | 8 | ||||||||||
Related party expenses | 13 | — | — | 13 | ||||||||||
Store pre-opening costs | 4 | 1 | — | 5 | ||||||||||
Operating income | 358 | 234 | — | 592 | ||||||||||
Interest expense | 245 | — | — | 245 | ||||||||||
Refinancing costs and losses on early extinguishments of debt | 33 | — | — | 33 | ||||||||||
Other (income) and expense, net | — | (1 | ) | — | (1 | ) | ||||||||
Intercompany charges (income) | 76 | (76 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 311 | — | (311 | ) | — | |||||||||
Income before income taxes | 315 | 311 | (311 | ) | 315 | |||||||||
Provision for income taxes | 115 | 114 | (114 | ) | 115 | |||||||||
Net income | 200 | 197 | (197 | ) | 200 | |||||||||
Comprehensive income | $ | 200 | $ | 197 | $ | (197 | ) | $ | 200 | |||||
(1) As Restated — See Note 2 “Restatement Share-based Compensation” on Notes to Consolidated Financial Statements. | ||||||||||||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Fiscal Year 2011 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Net sales | $ | 3,684 | $ | 2,369 | $ | (1,843 | ) | $ | 4,210 | |||||
Cost of sales and occupancy expense | 2,389 | 1,986 | (1,843 | ) | 2,532 | |||||||||
Gross profit | 1,295 | 383 | — | 1,678 | ||||||||||
Selling, general, and administrative expense | 945 | 145 | — | 1,090 | ||||||||||
Share-based compensation | 28 | 5 | — | 33 | ||||||||||
Related party expenses | 13 | — | — | 13 | ||||||||||
Store pre-opening costs | 3 | 1 | — | 4 | ||||||||||
Operating income | 306 | 232 | — | 538 | ||||||||||
Interest expense | 254 | — | — | 254 | ||||||||||
Refinancing costs and losses on early extinguishments of debt | 18 | — | — | 18 | ||||||||||
Other (income) and expense, net | 5 | 4 | — | 9 | ||||||||||
Intercompany charges (income) | 73 | (73 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 301 | — | (301 | ) | — | |||||||||
Income before income taxes | 257 | 301 | (301 | ) | 257 | |||||||||
Provision for income taxes | 100 | 117 | (117 | ) | 100 | |||||||||
Net income | $ | 157 | $ | 184 | $ | (184 | ) | $ | 157 | |||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment | (1 | ) | — | — | (1 | ) | ||||||||
Comprehensive income | $ | 156 | $ | 184 | $ | (184 | ) | $ | 156 | |||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Fiscal Year 2010 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(In millions) | ||||||||||||||
Net sales | $ | 3,530 | $ | 2,294 | $ | (1,793 | ) | $ | 4,031 | |||||
Cost of sales and occupancy expense | 2,341 | 1,919 | (1,793 | ) | 2,467 | |||||||||
Gross profit | 1,189 | 375 | — | 1,564 | ||||||||||
Selling, general, and administrative expense | 912 | 139 | — | 1,051 | ||||||||||
Share-based compensation | 7 | 1 | — | 8 | ||||||||||
Related party expenses | 14 | — | — | 14 | ||||||||||
Store pre-opening costs | 3 | — | — | 3 | ||||||||||
Operating income | 253 | 235 | — | 488 | ||||||||||
Interest expense | 276 | — | — | 276 | ||||||||||
Refinancing costs and losses on early extinguishments of debt | 53 | — | — | 53 | ||||||||||
Other (income) and expense, net | 12 | (2 | ) | — | 10 | |||||||||
Intercompany charges (income) | 73 | (73 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 310 | — | (310 | ) | — | |||||||||
Income before income taxes | 149 | 310 | (310 | ) | 149 | |||||||||
Provision for income taxes | 46 | 107 | (107 | ) | 46 | |||||||||
Net income | $ | 103 | $ | 203 | $ | (203 | ) | $ | 103 | |||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment | 1 | — | — | 1 | ||||||||||
Comprehensive income | $ | 104 | $ | 203 | $ | (203 | ) | $ | 104 | |||||
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||
February 2, 2013 | ||||||||||||||
Parent Company | Guarantor | Eliminations | Consolidated | |||||||||||
Subsidiaries | ||||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 37 | $ | 19 | $ | — | $ | 56 | ||||||
Merchandise inventories | 591 | 271 | — | 862 | ||||||||||
Intercompany receivables | — | 329 | (329 | ) | — | |||||||||
Other | 105 | 21 | — | 126 | ||||||||||
Total current assets | 733 | 640 | (329 | ) | 1,044 | |||||||||
Property and equipment, net | 271 | 67 | — | 338 | ||||||||||
Goodwill, net | 94 | — | — | 94 | ||||||||||
Investment in subsidiaries | 284 | — | (284 | ) | — | |||||||||
Other assets | 76 | 3 | — | 79 | ||||||||||
Total assets | $ | 1,458 | $ | 710 | $ | (613 | ) | $ | 1,555 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | 5 | 258 | — | 263 | ||||||||||
Accrued liabilities and other | 235 | 132 | — | 367 | ||||||||||
Share-based Compensation | 22 | 13 | 35 | |||||||||||
Current portion of long-term debt | 150 | — | — | 150 | ||||||||||
Intercompany payable | 329 | — | (329 | ) | — | |||||||||
Other | 36 | 5 | — | 41 | ||||||||||
Total current liabilities | 777 | 408 | (329 | ) | 856 | |||||||||
Long-term debt | 2,891 | — | — | 2,891 | ||||||||||
Other long-term liabilities | 73 | 12 | — | 85 | ||||||||||
Share-based Compensation | 21 | 6 | 27 | |||||||||||
Total stockholders’ deficit | (2,304 | ) | 284 | (284 | ) | (2,304 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 1,458 | $ | 710 | $ | (613 | ) | $ | 1,555 | |||||
(1) As Restated — See Note 2 “Restatement Share-based Compensation” on Notes to Consolidated Financial Statements. | ||||||||||||||
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||
January 28, 2012 | ||||||||||||||
Parent Company | Guarantor | Eliminations | Consolidated | |||||||||||
Subsidiaries | ||||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 363 | $ | 8 | $ | — | $ | 371 | ||||||
Merchandise inventories | 555 | 290 | — | 845 | ||||||||||
Intercompany receivables | — | 470 | (470 | ) | — | |||||||||
Other | 103 | 20 | — | 123 | ||||||||||
Total current assets | 1,021 | 788 | (470 | ) | 1,339 | |||||||||
Property and equipment, net | 249 | 63 | — | 312 | ||||||||||
Goodwill, net | 95 | — | — | 95 | ||||||||||
Investment in subsidiaries | 402 | — | (402 | ) | — | |||||||||
Other assets | 89 | 3 | — | 92 | ||||||||||
Total assets | $ | 1,856 | $ | 854 | $ | (872 | ) | $ | 1,838 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 9 | $ | 292 | $ | — | $ | 301 | ||||||
Accrued liabilities and other | 256 | 133 | — | 389 | ||||||||||
Share-based compensation | 16 | 9 | — | 25 | ||||||||||
Current portion of long-term debt | 127 | — | — | 127 | ||||||||||
Intercompany payable | 470 | — | (470 | ) | — | |||||||||
Other | 18 | 1 | — | 19 | ||||||||||
Total current liabilities | 896 | 435 | (470 | ) | 861 | |||||||||
Long-term debt | 3,363 | — | — | 3,363 | ||||||||||
Share-based compensation | 13 | 6 | 19 | |||||||||||
Other long-term liabilities | 85 | 11 | — | 96 | ||||||||||
Total stockholders’ deficit | (2,501 | ) | 402 | (402 | ) | (2,501 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 1,856 | $ | 854 | $ | (872 | ) | $ | 1,838 | |||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Fiscal Year 2012 | ||||||||||||||
Parent | Guarantor | |||||||||||||
Company | Subsidiaries | Eliminations | Consolidated | |||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 269 | $ | 453 | $ | (423 | ) | $ | 299 | |||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (105 | ) | (19 | ) | — | (124 | ) | |||||||
Net cash used in investing activities | (105 | ) | (19 | ) | — | (124 | ) | |||||||
Financing activities: | ||||||||||||||
Net repayments of long-term debt | (457 | ) | — | — | (457 | ) | ||||||||
Intercompany dividends | — | (423 | ) | 423 | — | |||||||||
Other financing activities | (33 | ) | — | — | (33 | ) | ||||||||
Net cash provided by financing activities | (490 | ) | (423 | ) | 423 | (490 | ) | |||||||
Increase in cash and equivalents | (326 | ) | 11 | — | (315 | ) | ||||||||
Beginning cash and equivalents | 363 | 8 | — | 371 | ||||||||||
Ending cash and equivalents | $ | 37 | $ | 19 | $ | — | $ | 56 | ||||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Fiscal Year 2011 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 390 | $ | 234 | $ | (215 | ) | $ | 409 | |||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (88 | ) | (21 | ) | — | (109 | ) | |||||||
Net cash used in investing activities | (88 | ) | (21 | ) | — | (109 | ) | |||||||
Financing activities: | ||||||||||||||
Net repayments of long-term debt | (227 | ) | — | — | (227 | ) | ||||||||
Intercompany dividends | — | (215 | ) | 215 | — | |||||||||
Other financing activities | (21 | ) | — | — | (21 | ) | ||||||||
Net cash provided by financing activities | (248 | ) | (215 | ) | 215 | (248 | ) | |||||||
Increase in cash and equivalents | 54 | (2 | ) | — | 52 | |||||||||
Beginning cash and equivalents | 309 | 10 | — | 319 | ||||||||||
Ending cash and equivalents | $ | 363 | $ | 8 | $ | — | $ | 371 | ||||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Fiscal Year 2010 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(In millions) | ||||||||||||||
Operating Activities: | ||||||||||||||
Net cash provided by operating activities | $ | 426 | $ | 301 | $ | (289 | ) | $ | 438 | |||||
Investing Activities: | ||||||||||||||
Cost of business acquisition | (2 | ) | — | — | (2 | ) | ||||||||
Cash paid for property and equipment | (69 | ) | (12 | ) | — | (81 | ) | |||||||
Net cash used in investing activities | (71 | ) | (12 | ) | — | (83 | ) | |||||||
Financing Activities: | ||||||||||||||
Net repayments of long-term debt | (225 | ) | — | — | (225 | ) | ||||||||
Intercompany dividends | — | (289 | ) | 289 | — | |||||||||
Other financing activities | (28 | ) | — | — | (28 | ) | ||||||||
Net cash used in financing activities | (253 | ) | (289 | ) | 289 | (253 | ) | |||||||
Increase in cash and equivalents | 102 | — | — | 102 | ||||||||||
Beginning cash and equivalents | 207 | 10 | — | 217 | ||||||||||
Ending cash and equivalents | $ | 309 | $ | 10 | $ | — | $ | 319 | ||||||
Subsequent_Event
Subsequent Event | 12 Months Ended |
Feb. 02, 2013 | |
Subsequent Event | ' |
Subsequent Event | ' |
Note 16. Subsequent Event (unaudited) | |
In July 2013, Michaels was reorganized into a holding company structure (“Reorganization”). The Michaels Companies, Inc. (“Parent”), Michaels FinCo Holdings, LLC (“FinCo Holdings”), Michaels FinCo, Inc. (“ FinCo Inc”) and Michaels Funding, Inc. (“Holdings”) and Michaels Stores Merger Co, Inc. (“MergerCo”) were formed in connection with the Reorganization: (i) MergerCo was merged with and into Michaels with Michaels being the surviving corporation; (ii) each share of Michaels’ common stock was converted into the right to receive one share of Parent common stock, subject to the same vesting conditions, if any, as applied to the share so converted, and each such share of Michaels’ common stock was cancelled and retired and ceased to exist; and (iii) each option to purchase one or more shares of common stock of Michaels was assumed by Parent and converted into an option to purchase an equivalent number of shares of common stock of Parent with the remaining terms of each such option remaining unchanged except as was necessary to reflect the Reorganization. Approximately 118 million shares of Michaels’ common stock were converted into Parent common stock. The Michaels’ shares were then cancelled and retired and an amount equal to the par value of the original shares was transferred from the common stock account to paid-in capital. Michaels then issued 100 shares of stock with a $0.10 par value to Holdings. In addition, common stock issued and outstanding and additional paid-in capital for February 2, 2013 and July 28, 2012 on the Consolidated Balance Sheets have been adjusted to reflect this transaction as if it happened prior to those dates. | |
As a result of the Reorganization, FinCo Holdings is wholly owned by the Parent. FinCo Inc and Holdings are wholly owned by FinCo Holdings. Michaels is wholly owned by Holdings. | |
Subsequent to the Reorganization, on July 29, 2013, FinCo Holdings and FinCo Inc issued $800 million aggregate principal amount of 7.50%/8.25% PIK Toggle Notes due 2018 (“PIK Notes”). The PIK Notes were issued in a private transaction. Interest payments on the PIK Notes are due February 1 and August 1 of each year until maturity. The first two interest payments and the last interest payment are required to be paid entirely in cash. All other interest payments must be made in cash, except that all or a portion of the interest on the PIK Notes may be paid by increasing the principal amount of the outstanding PIK Notes or by issuing additional PIK Notes depending on the amount of cash dividends that can be paid by the Company under our credit agreements governing our Senior Secured Credit Facilities, the terms of the indentures governing our outstanding notes and the terms of our other indebtedness outstanding at the time. The proceeds from the debt issuance were about $782 million, after deducting the initial purchasers’ discount and estimated fees and expenses. FinCo Holdings distributed the net proceeds to Parent and the proceeds were used to fund a cash dividend to the Parent’s equity and equity-award holders and pay related fees and expenses. | |
The PIK Notes are senior unsecured obligations of FinCo Holdings and FinCo Inc and are not guaranteed by the Company or any of the Company’s subsidiaries. In addition, neither the PIK Notes nor the dividend transaction is reflected in the financial statements of the Company. If interest on the PIK Notes is paid in cash, annual interest payments will total $60 million or a total of approximately $301 million from July 29, 2013 until August, 1, 2018, the maturity date. Any cash interest payments will be funded by the Company through a cash dividend to Holdings. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||
Feb. 02, 2013 | |||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Fiscal year | ' | ||||||||||
Fiscal Year | |||||||||||
We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. References to fiscal year mean the year in which that fiscal year began. Fiscal 2012 ended on February 2, 2013, fiscal 2011 ended on January 28, 2012, and fiscal 2010 ended on January 29, 2011. Fiscal 2012 contained 53 weeks, while fiscal 2011 and fiscal 2010 each contained 52 weeks. | |||||||||||
Consolidation | ' | ||||||||||
Consolidation | |||||||||||
Our Consolidated Financial Statements include the accounts of Michaels Stores, Inc. and all wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. | |||||||||||
Estimates | ' | ||||||||||
Estimates | |||||||||||
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. | |||||||||||
Foreign Currency Translation | ' | ||||||||||
Foreign Currency Translation | |||||||||||
The functional currency of our Canadian operations is the Canadian dollar. Translation adjustments result from translating our Canadian subsidiary’s financial statements into U.S. dollars. Balance sheet accounts are translated at exchange rates in effect at the balance sheet date. Income statement accounts are translated at average exchange rates during the year. Translation adjustments are recorded as a component of Accumulated other comprehensive income in our Consolidated Statements of Stockholders’ Deficit. Transaction gains and losses are recorded as a part of Other (income) and expense, net in our Consolidated Statements of Comprehensive Income. The cumulative translation adjustment in fiscal 2012 was $7 million, net of deferred taxes of $1 million, while in fiscal 2011, the cumulative translation adjustment was $6 million, net of deferred taxes of $5 million. In fiscal 2012, fiscal 2011, and fiscal 2010, we recorded transaction gains of $1 million, transaction losses of $4 million and transaction gains of $2 million, respectively, related to foreign currency exchange rates. | |||||||||||
Cash and Equivalents | ' | ||||||||||
Cash and Equivalents | |||||||||||
Cash and equivalents are comprised of cash, money market mutual funds, and short-term interest bearing securities with original maturities of three months or less and $22 million of credit card clearing accounts as of February 2, 2013 and January 28, 2012. Cash equivalents are carried at cost, which approximates fair value. We record interest income earned from our cash and equivalents as a component of other (income) and expense, net, in our financial statements. In fiscal 2012, fiscal 2011 and fiscal 2010, we had a nominal amount of interest income. | |||||||||||
Merchandise Inventories | ' | ||||||||||
Merchandise Inventories | |||||||||||
Merchandise inventories are valued at the lower of cost or market, with cost determined using a weighted average method. Cost is calculated based upon the purchase price of an item at the time it is received by us, and also includes the cost of warehousing, handling, purchasing, and importing, as well as inbound and outbound transportation, partially offset by vendor allowances. This net inventory cost is recognized through Cost of sales when the inventory is sold. It is impractical for us to assign specific allocated overhead costs and vendor allowances to individual units of inventory. As such, to match net inventory costs against the related revenues, we estimate the net inventory costs to be deferred and recognized each period as the inventory is sold. | |||||||||||
Vendor allowances, which primarily represent volume rebates and cooperative advertising funds, are recorded as a reduction to the cost of the merchandise inventories and a subsequent reduction in Cost of sales when the inventory is sold. We generally earn vendor allowances as a percentage of certain merchandise purchases with no minimum purchase requirements. Typically, our vendor allowance programs extend for a period of 12 months. We recognized vendor allowances of $110 million, or 2.5% of Net sales, in fiscal 2012, $115 million, or 2.7% of Net sales, in fiscal 2011, and $112 million, or 2.8% of Net sales, in fiscal 2010. During the three fiscal years ended February 2, 2013, the number of vendors from which vendor allowances were received ranged from approximately 650 to 670. | |||||||||||
We utilize perpetual inventory records to value inventory in our stores. Physical inventory counts are performed in a significant number of stores during each fiscal quarter by a third party inventory counting service, with substantially all stores open longer than one year subject to at least one count each fiscal year. We adjust our perpetual records based on the results of the physical counts. We maintain a provision for estimated shrinkage based on the actual historical results of our physical inventories. We compare our estimates to the actual results of the physical inventory counts as they are taken and adjust the shrink estimates accordingly. We also evaluate our merchandise to ensure that the expected net realizable value of the merchandise held at the end of a fiscal period exceeds cost. In the event that the expected net realizable value is less than cost, we reduce the value of that inventory accordingly. | |||||||||||
We routinely identify merchandise that requires some price reduction to accelerate sales of the product. The need for this reduction is generally attributable to clearance of seasonal merchandise or product that is being displaced from its assigned location in the store to make room for new merchandise. Additional SKUs that are candidates for repricing are identified using our perpetual inventory data. In each case, the appropriate repricing is determined at our corporate office. Price changes are transmitted electronically to the store and instructions are provided to our stores regarding product placement, signage, and display to ensure the product is effectively cleared. | |||||||||||
Property and Equipment | ' | ||||||||||
Property and Equipment | |||||||||||
Property and equipment is recorded at cost. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. Amortization of property under capital leases is on a straight-line basis over the lease term and is included in depreciation expense. We expense repairs and maintenance costs as incurred. We capitalize and depreciate significant renewals or betterments that substantially extend the life of the asset. Useful lives are generally estimated as follows (in years): | |||||||||||
Buildings | 30 | ||||||||||
Leasehold improvements | 10 | * | |||||||||
Fixtures and equipment | 8 | ||||||||||
Computer equipment | 5 | ||||||||||
* We amortize leasehold improvements over the lesser of 10 years or the remaining lease term of the underlying facility. | |||||||||||
Capitalized Software Costs | ' | ||||||||||
Capitalized Software Costs | |||||||||||
We capitalize certain costs related to the acquisition and development of internal use software that is expected to benefit future periods. These costs are being amortized on a straight-line basis over the estimated useful life, which is generally five years. As of February 2, 2013 and January 28, 2012, we had unamortized capitalized software costs of $86 million and $74 million, respectively. These amounts are included in Property and equipment, net on the Consolidated Balance Sheets. Amortization of capitalized software costs totaled approximately $36 million, $30 million, and $14 million in fiscal 2012, fiscal 2011 and fiscal 2010, respectively. | |||||||||||
Goodwill | ' | ||||||||||
Goodwill | |||||||||||
Under the provisions of Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other, we review goodwill for impairment each year in the fourth quarter, or more frequently if required. In conducting our impairment review, we elect to first perform a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) the fair values of our reporting units are less than its carrying value. Factors used in our qualitative assessment include, but are not limited to, macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, company and reporting unit specific events, and the margin between the fair value and carrying value of each reporting unit in recent valuations. | |||||||||||
If, after assessing the totality of events or circumstances such as those described above, we determine that it is more likely than not that the fair value of our reporting unit is greater than its carrying amount, no further action is required. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we will compare each reporting unit’s carrying value to its estimated fair value, determined through estimated discounted future cash flows and market-based methodologies. If the carrying value exceeds the estimated fair value, we determine the fair value of all assets and liabilities of the reporting unit, including the implied fair value of goodwill. If the carrying value of goodwill exceeds the implied fair value, we recognize an impairment charge equal to the difference. There are assumptions and estimates underlying the determination of fair value and any resulting impairment loss. Significant changes in these assumptions, or another estimate using different, but still reasonable, assumptions could produce different results. During fiscal 2012, we recognized an impairment charge of $1 million for our online scrapbooking business (“ScrapHD”) goodwill. See Note 9 to our Consolidated Financial Statement for further information. During fiscal 2011 and fiscal 2010, there was no impairment charge taken on our goodwill. | |||||||||||
Impairment of Long-Lived Assets | ' | ||||||||||
Impairment of Long-Lived Assets | |||||||||||
We evaluate long-lived assets, other than goodwill and assets with indefinite lives, for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Our evaluation compares the carrying value of the assets with their estimated future undiscounted cash flows. If it is determined that an impairment loss has occurred, the loss would be recognized during that period based on the estimated fair value of the assets. Our impairment analysis contains management assumptions about key variables including sales, growth rate, gross margin, payroll and other controllable expenses. If actual results differ from these estimates, we may be exposed to additional impairment losses that may be material. | |||||||||||
Reserve for Closed Facilities | ' | ||||||||||
Reserve for Closed Facilities | |||||||||||
We maintain a reserve for future rental obligations, carrying costs, and other closing costs related to closed facilities, primarily closed and relocated stores. In accordance with ASC 420, Exit or Disposal Cost Obligations, we recognize exit costs for any store closures at the time the store is closed. Such costs are recorded within the Cost of sales and occupancy expense line item on our Consolidated Statements of Comprehensive Income. | |||||||||||
The cost of closing a store or facility is recorded at the estimated fair value of expected cash flows which we calculate as the lesser of the present value of future rental obligations remaining under the lease (less estimated sublease rental income) or the lease termination fee. The determination of the reserves is dependent on our ability to make reasonable estimates of costs to be incurred post-closure and of rental income to be received from subleases. In planning our store closures, we generally try to time our exits as close to the lease termination date as possible to minimize any remaining lease obligation. | |||||||||||
The following is a detail of account activity related to closed facilities: | |||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
(In millions) | |||||||||||
Balance at beginning of fiscal year | $ | 9 | $ | 5 | $ | 7 | |||||
Additions charged to costs and expenses | 5 | 7 | — | ||||||||
Payment of rental obligations and other | (6 | ) | (3 | ) | (2 | ) | |||||
Balance at end of fiscal year | $ | 8 | $ | 9 | $ | 5 | |||||
Insurance Liabilities | ' | ||||||||||
Insurance Liabilities | |||||||||||
We have insurance coverage for losses in excess of self-insurance limits for medical liability, general liability and workers’ compensation claims. Health care reserves are based on actual claims experience and an estimate of claims incurred but not reported. Reserves for general liability and workers’ compensation are determined through the use of actuarial studies. Due to the significant judgments and estimates utilized for determining these reserves, they are subject to a high degree of variability. In the event our insurance carriers are unable to pay claims submitted to them, we would record a liability for such estimated payments we expect to incur. | |||||||||||
Revenue Recognition | ' | ||||||||||
Revenue Recognition | |||||||||||
Revenue from sales of our merchandise is recognized when the customer takes possession of the merchandise. Revenue is presented net of point-of-sale coupons, discounts, and sales taxes collected. Sales related to custom framing are recognized when the order is picked up by the customer. We deferred 10 days of custom framing revenue at the end of fiscal 2012 and 13 days of custom framing revenue at the end of fiscal 2011 and fiscal 2010. Our deferral is an estimate based on the number of days for manufacturing, in-store assembly, and customer pick-up. As of February 2, 2013 and January 28, 2012, our deferred framing revenue was approximately $8 million and $10 million, respectively. | |||||||||||
We allow for merchandise to be returned under most circumstances and provide a reserve for estimated returns. We use historical customer return behavior to estimate our reserve requirements. As of February 2, 2013 and January 28, 2012, our sales returns reserve was approximately $3 million. | |||||||||||
We record a gift card liability on the date we issue the gift card to the customer. We record revenue and reduce the gift card liability as the customer redeems the gift card. The deferred revenue associated with outstanding gift cards increased $3 million from $30 million at January 28, 2012, to $33 million at February 2, 2013. We escheat the value of unredeemed gift cards where required by law. Any remaining liabilities not subject to escheatment are evaluated to determine whether the likelihood of the gift card being redeemed is remote (gift card breakage). We recognize gift card breakage as revenue, by applying our estimate of the rate of gift card breakage over the period of estimated performance. Our estimates of the gift card breakage rate are applied to the estimated amount of gift cards that are expected to go unused, that are not subject to escheatment, and are based on customers’ historical redemption rates and patterns, which may not be indicative of future redemption rates and patterns. We recognized revenue of approximately $3 million in fiscal 2012, $1 million in fiscal 2011, and $3 million in fiscal 2010, related to such gift card balances. | |||||||||||
Costs of Sales and Occupancy Expenses | ' | ||||||||||
Costs of Sales and Occupancy Expenses | |||||||||||
Included in our Costs of sales are the following: | |||||||||||
· purchase price of merchandise, net of vendor allowances and rebates. | |||||||||||
· inbound freight, inspection costs, duties and import agent commissions. | |||||||||||
· warehousing, handling, and transportation costs (including internal transfer costs such as distribution center-to-store freight costs) and purchasing and receiving costs. | |||||||||||
· share-based compensation costs for those employees involved in preparing inventory for sale. | |||||||||||
Costs of sales are included in merchandise inventories and expensed as the merchandise is sold. | |||||||||||
Included in our occupancy expenses are the following costs which are recognized as period costs as described below: | |||||||||||
· store expenses such as rent, insurance, taxes, common area maintenance, utilities, repairs and maintenance. | |||||||||||
· amortization of store buildings and leasehold improvements. | |||||||||||
· store closure costs. | |||||||||||
· store remodel costs. | |||||||||||
We record rent expense ratably over the term of the lease beginning with the date we take possession of or control the physical access to the premises. We record leasehold improvement reimbursements as a liability and ratably adjust the liability as a reduction to rent expense over the lease term beginning with the date we take possession of or control the physical access to the premises. At times, we receive landlord reimbursements for leasehold improvements made during the lease term, which we record as a liability and ratably adjust as a reduction to rent expense over the remaining lease term. | |||||||||||
Selling, General, and Administrative Costs | ' | ||||||||||
Selling, General, and Administrative Costs | |||||||||||
Included in our selling, general, and administrative costs are store personnel costs (including share-based compensation), store operating expenses, advertising expenses, store depreciation expense, and corporate overhead costs. | |||||||||||
Advertising costs are expensed in the period in which the advertising first occurs. Our cooperative advertising allowances are accounted for as a reduction in the purchase price of merchandise since an obligation to advertise specific product does not exist in our cooperative advertising arrangements. | |||||||||||
Advertising expenses were $179 million, $183 million, and $172 million for fiscal 2012, 2011, and 2010, respectively. | |||||||||||
Store Pre-Opening Costs | ' | ||||||||||
Store Pre-Opening Costs | |||||||||||
We expense all start-up activity costs as incurred. Rent expense incurred prior to the store opening is recorded in Cost of sales and occupancy expense on our Consolidated Statements of Comprehensive Income. | |||||||||||
Income Taxes | ' | ||||||||||
Income Taxes | |||||||||||
We record income tax expense using the liability method for taxes and are subject to income tax in many jurisdictions, including the U.S., various states and localities, and Canada. A current tax liability or asset is recognized for the estimated taxes payable or refundable on the tax returns for the current year and a deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized. In evaluating our ability to realize our deferred tax asset, we considered the following sources of future taxable income: | |||||||||||
· future reversals of existing taxable temporary differences. | |||||||||||
· future taxable income, exclusive of reversing temporary differences and carryforwards. | |||||||||||
· taxable income in prior carryback years. | |||||||||||
· tax-planning strategies. | |||||||||||
Our evaluation regarding whether a valuation allowance is required or should be adjusted also considers, among other things, the nature, frequency, and severity of recent losses, forecasts of future profitability and the duration of statutory carryforward periods. Our forecasts of future profitability represents our best estimate of these future events. After conducting this assessment, the valuation allowance recorded against our deferred tax assets was $10 million and $14 million as of February 2, 2013 and January 28, 2012, respectively. If actual results differ from estimated results or if we adjust these assumptions in the future, we may need to adjust our deferred tax assets or liabilities, which could impact our effective tax rate. | |||||||||||
The amount of income taxes we pay is subject to ongoing audits in the taxing jurisdictions in which we operate. During these audits, the taxing authorities may challenge items on our tax returns. Because the tax matters challenged by tax authorities are typically complex, the ultimate outcome of these challenges is uncertain. We recognize tax benefits for uncertain positions only to the extent that we believe it is more likely than not that the tax position will be sustained. Our future results may include favorable or unfavorable adjustments to our unrecognized tax benefits due to closure of income tax audits, new regulatory or judicial pronouncements, or other relevant events. As a result, our effective tax rate may fluctuate significantly on a quarterly and annual basis. | |||||||||||
Share-Based Compensation | ' | ||||||||||
Share-Based Compensation | |||||||||||
ASC 718, Stock Compensation, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements. We determined that our employee stock options should be recorded under the liability accounting guidance of ASC 718, as of the third quarter of 2011. As such, we recognized share-based compensation based on the fair value of our option awards. Expense for unvested options is recognized ratably over the requisite service period. We estimate the fair value of stock option awards using a Black-Scholes option value model. | |||||||||||
We report excess tax benefits as a cash inflow in the financing section of our Statement of Cash Flows and would record a tax deficiency, if any, as a cash outflow from operating activities. For fiscal 2012, fiscal 2011, and fiscal 2010, we did not have any tax benefits or tax deficiencies associated with share-based awards. | |||||||||||
Recent Accounting Pronouncements | ' | ||||||||||
Recent Accounting Pronouncements | |||||||||||
In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs,” an amendment to ASC topic 820, “Fair Value Measurements.” ASU 2011-04 conforms certain sections of ASC 820 to International Financial Reporting Standards in order to provide a single converged guidance on the measurement of fair value. The ASU also requires new quantitative and qualitative disclosures about the sensitivity of recurring Level 3 measurement disclosures, as well as transfers between Level 1 and Level 2 of the fair value hierarchy. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. We adopted all requirements of ASU 2011-04 on January 29, 2012, with no material impact on our consolidated financial statements. | |||||||||||
In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income,” an amendment to ASC topic 220, “Comprehensive Income.” ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. In December 2011, the FASB issued ASU No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” which deferred the provisions in ASU 2011-05 requiring reclassification adjustments out of other comprehensive income to be presented on the face of the financial statements. The other portions of ASU 2011-05 remain unchanged. These standards, which must be applied retroactively, are effective for interim and annual periods beginning after December 15, 2011, with earlier adoption permitted. We adopted all requirements of these standards on January 29, 2012, the beginning of our 2012 fiscal year. | |||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||
Feb. 02, 2013 | |||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Schedule of estimated useful lives of assets | ' | ||||||||||
Useful lives are generally estimated as follows (in years): | |||||||||||
Buildings | 30 | ||||||||||
Leasehold improvements | 10 | * | |||||||||
Fixtures and equipment | 8 | ||||||||||
Computer equipment | 5 | ||||||||||
* We amortize leasehold improvements over the lesser of 10 years or the remaining lease term of the underlying facility. | |||||||||||
Schedule of account activity related to closed facilities | ' | ||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
(In millions) | |||||||||||
Balance at beginning of fiscal year | $ | 9 | $ | 5 | $ | 7 | |||||
Additions charged to costs and expenses | 5 | 7 | — | ||||||||
Payment of rental obligations and other | (6 | ) | (3 | ) | (2 | ) | |||||
Balance at end of fiscal year | $ | 8 | $ | 9 | $ | 5 | |||||
Restatement_Sharebased_Compens1
Restatement - Share-based Compensation (Tables) | 12 Months Ended | |||||||||||||
Feb. 02, 2013 | ||||||||||||||
Restatement - Share-based Compensation | ' | |||||||||||||
Schedule of corrections as associated with certain line items in the financial statements | ' | |||||||||||||
The following tables illustrate the corrections as associated with certain line items in the financial statements (amounts in millions): | ||||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Fiscal 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 2,632 | $ | 6 | $ | 5 | $ | 2,643 | ||||||
Gross Profit | 1,776 | (6 | ) | (5 | ) | 1,765 | ||||||||
Selling, general and administrative expense | 1,135 | (3 | ) | — | 1,132 | |||||||||
Share-based compensation | — | 15 | — | 15 | ||||||||||
Operating income | 615 | (18 | ) | (5 | ) | 592 | ||||||||
Income before income taxes | 338 | (18 | ) | (5 | ) | 315 | ||||||||
Provision for income taxes | 124 | (7 | ) | (2 | ) | 115 | ||||||||
Net income | 214 | (11 | ) | (3 | ) | 200 | ||||||||
Comprehensive income | 214 | (11 | ) | (3 | ) | 200 | ||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Fiscal 2011 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 2,526 | $ | 7 | $ | (1 | ) | $ | 2,532 | |||||
Gross Profit | 1,684 | (7 | ) | 1 | 1,678 | |||||||||
Selling, general and administrative expense | 1,098 | (8 | ) | — | 1,090 | |||||||||
Share-based compensation | — | 33 | — | 33 | ||||||||||
Operating income | 569 | (32 | ) | 1 | 538 | |||||||||
Income before income taxes | 288 | (32 | ) | 1 | 257 | |||||||||
Provision for income taxes | 112 | (12 | ) | — | 100 | |||||||||
Net income | 176 | (20 | ) | 1 | 157 | |||||||||
Comprehensive income | 175 | (20 | ) | 1 | 156 | |||||||||
Consolidated Balance Sheet | ||||||||||||||
As of February 2, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 865 | $ | 1 | $ | (4 | ) | $ | 862 | |||||
Total current assets | 1,047 | 1 | (4 | ) | 1,044 | |||||||||
Deferred income taxes | 13 | 17 | — | 30 | ||||||||||
Total non-current assets | 156 | 17 | — | 173 | ||||||||||
Share-based compensation liability | — | 35 | — | 35 | ||||||||||
Income taxes payable | 40 | (1 | ) | (2 | ) | 37 | ||||||||
Total current liabilities | 824 | 34 | (2 | ) | 856 | |||||||||
Share-based compensation liability | — | 27 | — | 27 | ||||||||||
Total long-term liabilities | 2,976 | 27 | — | 3,003 | ||||||||||
Additional paid-in capital | 49 | (12 | ) | — | 37 | |||||||||
Accumulated deficit | (2,326 | ) | (31 | ) | (2 | ) | (2,359 | ) | ||||||
Total stockholders’ deficit | (2,259 | ) | (43 | ) | (2 | ) | (2,304 | ) | ||||||
Consolidated Balance Sheet | ||||||||||||||
As of January 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 840 | $ | 4 | $ | 1 | $ | 845 | ||||||
Total current assets | 1,334 | 4 | 1 | 1,339 | ||||||||||
Deferred income taxes | 18 | 11 | — | 29 | ||||||||||
Total non-current assets | 176 | 11 | — | 187 | ||||||||||
Share-based compensation liability | — | 25 | — | 25 | ||||||||||
Income taxes payable | 19 | (1 | ) | — | 18 | |||||||||
Total current liabilities | 837 | 24 | — | 861 | ||||||||||
Share-based compensation liability | — | 19 | — | 19 | ||||||||||
Total long-term liabilities | 3,459 | 19 | — | 3,478 | ||||||||||
Additional paid-in capital | 48 | (8 | ) | — | 40 | |||||||||
Accumulated deficit | (2,540 | ) | (20 | ) | 1 | (2,559 | ) | |||||||
Total stockholders’ deficit | (2,474 | ) | (28 | ) | 1 | (2,501 | ) | |||||||
Cash Flow Data | ||||||||||||||
Fiscal 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 214 | (11 | ) | (3 | ) | $ | 200 | ||||||
Share-based compensation | 5 | 16 | — | 21 | ||||||||||
Merchandise inventories | (25 | ) | 5 | (1 | ) | (21 | ) | |||||||
Deferred income taxes | 2 | (4 | ) | — | (2 | ) | ||||||||
Accrued liabilities and other | (12 | ) | (4 | ) | — | (16 | ) | |||||||
Income taxes | 19 | (1 | ) | — | 18 | |||||||||
Net cash provided by operating activities | 302 | 1 | (4 | ) | 299 | |||||||||
Net cash used in financing activities | (493 | ) | 3 | — | (490 | ) | ||||||||
Cash Flow Data | ||||||||||||||
Fiscal 2011 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 176 | (20 | ) | 1 | $ | 157 | |||||||
Share-based compensation | 9 | 32 | — | 41 | ||||||||||
Merchandise inventories | (14 | ) | (4 | ) | (1 | ) | (19 | ) | ||||||
Deferred income taxes | 32 | (11 | ) | — | 21 | |||||||||
Net cash provided by operating activities | 413 | (4 | ) | — | 409 | |||||||||
Net cash used in financing activities | (252 | ) | 4 | — | (248 | ) | ||||||||
Detail_of_Certain_Balance_Shee1
Detail of Certain Balance Sheet Accounts (Tables) | 12 Months Ended | |||||||
Feb. 02, 2013 | ||||||||
Detail of Certain Balance Sheet Accounts | ' | |||||||
Schedule of property and equipment | ' | |||||||
February 2, | January 28, | |||||||
2013 | 2012 | |||||||
(In millions) | ||||||||
Property and equipment: | ||||||||
Land and buildings | $ | 2 | $ | 2 | ||||
Fixtures and equipment | 863 | 820 | ||||||
Capitalized software | 264 | 228 | ||||||
Leasehold improvements | 373 | 341 | ||||||
$ | 1,502 | $ | 1,391 | |||||
Schedule of accrued liabilities and other | ' | |||||||
February 2, | January 28, | |||||||
2013 | 2012 | |||||||
(In millions) | ||||||||
Accrued liabilities and other: | ||||||||
Salaries, bonuses, and other payroll-related costs | $ | 94 | $ | 110 | ||||
Insurance liabilities | 71 | 67 | ||||||
Accrued interest | 33 | 43 | ||||||
Taxes, other than income and payroll | 51 | 64 | ||||||
Gift certificate and gift card liability | 33 | 30 | ||||||
Other | 85 | 75 | ||||||
$ | 367 | $ | 389 |
Debt_Tables
Debt (Tables) | 12 Months Ended | |||||||||||||||||||
Feb. 02, 2013 | ||||||||||||||||||||
Debt | ' | |||||||||||||||||||
Schedule of outstanding debt | ' | |||||||||||||||||||
Interest Rate | Fiscal 2012 | Fiscal 2011 | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Senior secured term loan | Variable | $ | 1,640 | $ | 1,996 | |||||||||||||||
Senior notes | 7.75% | 1,007 | 795 | |||||||||||||||||
Senior subordinated notes | 11.38% | 393 | 393 | |||||||||||||||||
Subordinated discount notes | 13.00% | — | 306 | |||||||||||||||||
Asset-based revolving | ||||||||||||||||||||
credit facility | Variable | 1 | — | |||||||||||||||||
Total debt | 3,041 | 3,490 | ||||||||||||||||||
Less current portion | 150 | 127 | ||||||||||||||||||
Long-term debt | $ | 2,891 | $ | 3,363 | ||||||||||||||||
Schedule of expected amortization expense pertaining to the deferred financing costs | ' | |||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | |||||||||||||||
Amortization expense | $ | 9 | $ | 9 | $ | 9 | $ | 9 | $ | 7 | $ | 3 | ||||||||
Schedule of aggregate amounts of scheduled maturities of debt | ' | |||||||||||||||||||
Fiscal Year | Amount | |||||||||||||||||||
(In millions) | ||||||||||||||||||||
2013 | 150 | |||||||||||||||||||
2014 | 16 | |||||||||||||||||||
2015 | 17 | |||||||||||||||||||
2016 | 272 | |||||||||||||||||||
2017 | 16 | |||||||||||||||||||
Thereafter | 2,562 | |||||||||||||||||||
Total debt payments | 3,033 | |||||||||||||||||||
Plus unrealized premium amortization | 12 | |||||||||||||||||||
Less unrealized discount accretion | (4 | ) | ||||||||||||||||||
Total debt balance as of February 2, 2013 | $ | 3,041 | ||||||||||||||||||
Senior notes due 2018 | ' | |||||||||||||||||||
Debt | ' | |||||||||||||||||||
Schedule of percentages of principal amount at which notes may be redeemed, by applicable redemption dates | ' | |||||||||||||||||||
Year | Percentage | |||||||||||||||||||
2014 | 103.875 | % | ||||||||||||||||||
2015 | 101.938 | % | ||||||||||||||||||
2016 and thereafter | 100 | % | ||||||||||||||||||
Senior subordinated notes | ' | |||||||||||||||||||
Debt | ' | |||||||||||||||||||
Schedule of percentages of principal amount at which notes may be redeemed, by applicable redemption dates | ' | |||||||||||||||||||
Year | Percentage | |||||||||||||||||||
2012 | 103.792 | % | ||||||||||||||||||
2013 | 101.896 | % | ||||||||||||||||||
2014 and thereafter | 100 | % | ||||||||||||||||||
Subordinated discount notes | ' | |||||||||||||||||||
Debt | ' | |||||||||||||||||||
Schedule of percentages of principal amount at which notes may be redeemed, by applicable redemption dates | ' | |||||||||||||||||||
Year | Percentage | |||||||||||||||||||
2012 | 104.333 | % | ||||||||||||||||||
2013 | 102.167 | % | ||||||||||||||||||
2014 and thereafter | 100 | % | ||||||||||||||||||
Comprehensive_Income_Tables
Comprehensive Income (Tables) | 12 Months Ended | ||||
Feb. 02, 2013 | |||||
Comprehensive Income | ' | ||||
Schedule of accumulated other comprehensive income, net of tax | ' | ||||
Foreign Currency | |||||
Translation & | |||||
Other | |||||
(In millions) | |||||
Balance at January 30, 2010 | $ | 6 | |||
Foreign currency translation adjustment | 1 | ||||
Balance at January 29, 2011 | 7 | ||||
Foreign currency translation adjustment | (1 | ) | |||
Balance at January 28, 2012 | 6 | ||||
Foreign currency translation adjustment | — | ||||
Balance at February 2, 2013 | $ | 6 | |||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||||
Feb. 02, 2013 | ||||||||||||||
Income Taxes | ' | |||||||||||||
Schedule of significant components of deferred tax assets and liabilities | ' | |||||||||||||
Deferred Tax Asset (Liability) | ||||||||||||||
February 2, 2013 | January 28, 2012 | |||||||||||||
Current | Noncurrent | Current | Noncurrent | |||||||||||
(In millions) | ||||||||||||||
(Restated) | ||||||||||||||
Net operating loss, general business credit, foreign tax credit and alternative minimum tax credit carryforwards | $ | — | $ | 10 | $ | — | $ | 14 | ||||||
Merchandise inventories | (12 | ) | — | (9 | ) | — | ||||||||
Accrued expenses | 13 | 1 | 12 | 1 | ||||||||||
State income taxes | (1 | ) | 3 | 1 | 3 | |||||||||
Vacation accrual | 7 | — | 7 | — | ||||||||||
Share-based compensation | — | 29 | — | 25 | ||||||||||
Deferred rent | 2 | 14 | — | 16 | ||||||||||
Other deferred tax assets | 4 | 3 | 6 | 4 | ||||||||||
State valuation allowance | — | (10 | ) | — | (14 | ) | ||||||||
Bonus accrual | — | 3 | 6 | — | ||||||||||
Gift cards | 4 | — | 4 | — | ||||||||||
Property and equipment | — | (29 | ) | — | (33 | ) | ||||||||
Foreign taxes | 1 | — | — | — | ||||||||||
Workers’ compensation | 19 | — | 17 | — | ||||||||||
Cancellation of debt income | — | (39 | ) | — | (39 | ) | ||||||||
Original issue discount related to cancellation of debt income | — | 41 | — | 41 | ||||||||||
Other deferred tax liabilities | (4 | ) | 2 | (3 | ) | — | ||||||||
$ | 33 | $ | 28 | $ | 41 | $ | 18 | |||||||
Net deferred tax assets | $ | 61 | $ | 59 | ||||||||||
Schedule of federal, state and international income tax provision | ' | |||||||||||||
Fiscal Year | ||||||||||||||
2012 | 2011 | 2010 | ||||||||||||
(In millions) | ||||||||||||||
Federal: | ||||||||||||||
Current | $ | 92 | $ | 46 | $ | 45 | ||||||||
Deferred | (7 | ) | 18 | (21 | ) | |||||||||
Total federal income tax provision | 85 | 64 | 24 | |||||||||||
State: | ||||||||||||||
Current | 10 | 13 | 9 | |||||||||||
Deferred | 1 | 1 | (4 | ) | ||||||||||
Total state income tax provision | 11 | 14 | 5 | |||||||||||
International: | ||||||||||||||
Current | 20 | 22 | 17 | |||||||||||
Deferred | (1 | ) | — | — | ||||||||||
Total international income tax provision | 19 | 22 | 17 | |||||||||||
Total income tax provision | $ | 115 | $ | 100 | $ | 46 | ||||||||
Schedule of reconciliation between the actual income tax provision and the income tax provision (benefit) calculated by applying the federal statutory tax rate | ' | |||||||||||||
Fiscal Year | ||||||||||||||
2012 | 2011 | 2010 | ||||||||||||
(In millions) | ||||||||||||||
Income tax provision at statutory rate | $ | 111 | $ | 91 | $ | 52 | ||||||||
State income taxes, net of federal income tax effect | 6 | 7 | 2 | |||||||||||
Federal tax credits | — | (2 | ) | (2 | ) | |||||||||
Unrecognized tax benefits | (1 | ) | 1 | (4 | ) | |||||||||
State valuation allowance | — | — | 1 | |||||||||||
Other | (1 | ) | 3 | (3 | ) | |||||||||
Total income tax provision | $ | 115 | $ | 100 | $ | 46 | ||||||||
Schedule of reconciliation of unrecognized tax benefits | ' | |||||||||||||
Fiscal Year | ||||||||||||||
2012 | ||||||||||||||
(In millions) | ||||||||||||||
Balance at January 28, 2012 | $ | 11 | ||||||||||||
Additions based on tax positions related to the current year | 1 | |||||||||||||
Additions for tax positions related to prior years | 1 | |||||||||||||
Reductions for expiration of statute of limitations | (3 | ) | ||||||||||||
Settlements with taxing authorities | (3 | ) | ||||||||||||
Balance at February 2, 2013 | $ | 7 | ||||||||||||
ShareBased_Compensation_Restat1
Share-Based Compensation - Restated (Tables) | 12 Months Ended | |||||||||||
Feb. 02, 2013 | ||||||||||||
Share-Based Compensation - Restated | ' | |||||||||||
Schedule of assumptions used to estimate the fair value of options granted | ' | |||||||||||
Fiscal Year | ||||||||||||
Assumptions (1) | 2012 | 2011 | 2010 | |||||||||
Risk-free interest rates (2) | 0.1% - 1.1% | 0.1% - 1.3% | 1.5% - 2.5% | |||||||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | |||||||||
Expected volatility rates of our common stock (3) | 29.0% - 35.2% | 30.7% - 37.8% | 39.4% - 41.5% | |||||||||
Expected life of options (in years) (4) | 1.0 - 5.0 | 1.0 - 5.0 | 5.0 - 8.0 | |||||||||
Weighted average fair value of options (5) | $ | 8.46 | $ | 10.07 | $ | 4.52 | ||||||
(1) Forfeitures were estimated based on historical experience and anticipated events. | ||||||||||||
(2) Based on constant maturity interest rates for U.S. Treasury instruments with terms consistent with the expected lives of the awards. | ||||||||||||
(3) We considered both the historical volatility as well as implied volatilities from the exchange-traded options on the common stock of a peer group of companies. | ||||||||||||
(4) Expected lives were based on an analysis of historical exercise and post-vesting employment termination behavior. Since fair value was remeasured at the end of the year in 2011 and 2012, the expected life was adjusted based on the remaining life of the options. | ||||||||||||
(5) The Company’s 2012, 2011 and 2010 common stock valuations relied on projections of our future performance, estimates of our weighted average cost of capital, and metrics based on the performance of a peer group of similar companies, including valuation multiples and stock price volatility. The fair value of equity per share utilized in our calculation ranged from $24.09 to $25.08 in fiscal 2012, $15.22 to $17.95 in fiscal 2011, and $11.55 to $14.47 in fiscal 2010. For fiscal 2012 and 2011, the weighted average fair value of options was re-valued under liability accounting as of the end of the fiscal year for all options granted during the fiscal year. For fiscal 2010, the weighted average fair value of options is as of the grant date for options granted during fiscal 2010. | ||||||||||||
Schedule of summary of stock option activity | ' | |||||||||||
Number of | Weighted-Average | Weighted-Average | Aggregate | |||||||||
Shares | Exercise Price | Remaining | Intrinsic Value | |||||||||
(In millions) | Contractual Term | (In millions) | ||||||||||
(In years) | ||||||||||||
Outstanding at January 28, 2012 | 10.6 | $ | 15.52 | |||||||||
Granted | 0.3 | 24.68 | ||||||||||
Exercised | (0.4 | ) | 16.17 | |||||||||
Cancelled/Forfeited | (1.4 | ) | 15.48 | |||||||||
Outstanding at February 2, 2013 | 9.1 | $ | 15.86 | 4.6 | $ | 101 | ||||||
Vested and Exercisable at February 2, 2013 | 5.9 | $ | 15.58 | 4.1 | $ | 67 | ||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | |||||||
Feb. 02, 2013 | ||||||||
Fair Value Measurements | ' | |||||||
Schedule of carrying and fair values of loan and notes | ' | |||||||
Carrying Value | Fair Value | |||||||
(In millions) | ||||||||
Senior secured term loan | $ | 1,640 | $ | 1,655 | ||||
Senior notes | 1,007 | 1,101 | ||||||
Senior subordinated notes | 393 | 412 | ||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Feb. 02, 2013 | |||||
Commitments and Contingencies | ' | ||||
Schedule of future minimum annual rental commitments for all non-cancelable operating leases | ' | ||||
Future minimum annual rental commitments for all non-cancelable operating leases as of February 2, 2013 are as follows (in millions): | |||||
For the fiscal year: | Operating Leases | ||||
2013 | $ | 377 | |||
2014 | 330 | ||||
2015 | 272 | ||||
2016 | 221 | ||||
2017 | 165 | ||||
Thereafter | 366 | ||||
Total minimum rental commitments | $ | 1,731 | |||
Segments_and_Geographic_Inform1
Segments and Geographic Information (Tables) | 12 Months Ended | ||||||||||
Feb. 02, 2013 | |||||||||||
Segments and Geographic Information | ' | ||||||||||
Schedule of sales and assets by country | ' | ||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
(In millions) | |||||||||||
Net Sales: | |||||||||||
United States | $ | 3,989 | $ | 3,825 | $ | 3,673 | |||||
Canada | 419 | 385 | 358 | ||||||||
Consolidated Total | $ | 4,408 | $ | 4,210 | $ | 4,031 | |||||
Total Assets (Restated): | |||||||||||
United States | $ | 1,446 | $ | 1,744 | $ | 1,699 | |||||
Canada | 109 | 94 | 81 | ||||||||
Consolidated Total | $ | 1,555 | $ | 1,838 | $ | 1,780 | |||||
Schedule of consolidated Net sales by major product categories | ' | ||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
General and children’s crafts | $ | 2,082 | $ | 1,908 | $ | 1,791 | |||||
Home décor and seasonal | 890 | 837 | 805 | ||||||||
Framing | 836 | 804 | 794 | ||||||||
Scrapbooking | 600 | 661 | 641 | ||||||||
$ | 4,408 | $ | 4,210 | $ | 4,031 | ||||||
Schedule of reconciliation of EBITDA (excluding refinancing costs and losses on early extinguishments of debt) to Net income | ' | ||||||||||
Fiscal Year | |||||||||||
2012 | 2011 | 2010 | |||||||||
Restated | Restated | ||||||||||
Net income | $ | 200 | $ | 157 | $ | 103 | |||||
Interest expense | 245 | 254 | 276 | ||||||||
Refinancing costs and losses on early extinguishments of debt | 33 | 18 | 53 | ||||||||
Provision for income taxes | 115 | 100 | 46 | ||||||||
Depreciation and amortization | 97 | 101 | 103 | ||||||||
EBITDA (excluding refinancing costs and losses on early extinguishments of debt) | $ | 690 | $ | 630 | $ | 581 |
Condensed_Consolidating_Financ1
Condensed Consolidating Financial Information (Tables) | 12 Months Ended | |||||||||||||
Feb. 02, 2013 | ||||||||||||||
Condensed Consolidating Financial Information | ' | |||||||||||||
Schedule of Supplemental Condensed Consolidating Statement of Comprehensive Income | ' | |||||||||||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Fiscal Year 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Net sales | $ | 3,848 | $ | 2,544 | $ | (1,984 | ) | $ | 4,408 | |||||
Cost of sales and occupancy expense | 2,473 | 2,154 | (1,984 | ) | 2,643 | |||||||||
Gross profit | 1,375 | 390 | — | 1,765 | ||||||||||
Selling, general, and administrative expense | 980 | 152 | — | 1,132 | ||||||||||
Share-based compensation | 12 | 3 | — | 15 | ||||||||||
Impairment of intangible assets | 8 | — | — | 8 | ||||||||||
Related party expenses | 13 | — | — | 13 | ||||||||||
Store pre-opening costs | 4 | 1 | — | 5 | ||||||||||
Operating income | 358 | 234 | — | 592 | ||||||||||
Interest expense | 245 | — | — | 245 | ||||||||||
Refinancing costs and losses on early extinguishments of debt | 33 | — | — | 33 | ||||||||||
Other (income) and expense, net | — | (1 | ) | — | (1 | ) | ||||||||
Intercompany charges (income) | 76 | (76 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 311 | — | (311 | ) | — | |||||||||
Income before income taxes | 315 | 311 | (311 | ) | 315 | |||||||||
Provision for income taxes | 115 | 114 | (114 | ) | 115 | |||||||||
Net income | 200 | 197 | (197 | ) | 200 | |||||||||
Comprehensive income | $ | 200 | $ | 197 | $ | (197 | ) | $ | 200 | |||||
(1) As Restated — See Note 2 “Restatement Share-based Compensation” on Notes to Consolidated Financial Statements. | ||||||||||||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Fiscal Year 2011 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Net sales | $ | 3,684 | $ | 2,369 | $ | (1,843 | ) | $ | 4,210 | |||||
Cost of sales and occupancy expense | 2,389 | 1,986 | (1,843 | ) | 2,532 | |||||||||
Gross profit | 1,295 | 383 | — | 1,678 | ||||||||||
Selling, general, and administrative expense | 945 | 145 | — | 1,090 | ||||||||||
Share-based compensation | 28 | 5 | — | 33 | ||||||||||
Related party expenses | 13 | — | — | 13 | ||||||||||
Store pre-opening costs | 3 | 1 | — | 4 | ||||||||||
Operating income | 306 | 232 | — | 538 | ||||||||||
Interest expense | 254 | — | — | 254 | ||||||||||
Refinancing costs and losses on early extinguishments of debt | 18 | — | — | 18 | ||||||||||
Other (income) and expense, net | 5 | 4 | — | 9 | ||||||||||
Intercompany charges (income) | 73 | (73 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 301 | — | (301 | ) | — | |||||||||
Income before income taxes | 257 | 301 | (301 | ) | 257 | |||||||||
Provision for income taxes | 100 | 117 | (117 | ) | 100 | |||||||||
Net income | $ | 157 | $ | 184 | $ | (184 | ) | $ | 157 | |||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment | (1 | ) | — | — | (1 | ) | ||||||||
Comprehensive income | $ | 156 | $ | 184 | $ | (184 | ) | $ | 156 | |||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Fiscal Year 2010 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(In millions) | ||||||||||||||
Net sales | $ | 3,530 | $ | 2,294 | $ | (1,793 | ) | $ | 4,031 | |||||
Cost of sales and occupancy expense | 2,341 | 1,919 | (1,793 | ) | 2,467 | |||||||||
Gross profit | 1,189 | 375 | — | 1,564 | ||||||||||
Selling, general, and administrative expense | 912 | 139 | — | 1,051 | ||||||||||
Share-based compensation | 7 | 1 | — | 8 | ||||||||||
Related party expenses | 14 | — | — | 14 | ||||||||||
Store pre-opening costs | 3 | — | — | 3 | ||||||||||
Operating income | 253 | 235 | — | 488 | ||||||||||
Interest expense | 276 | — | — | 276 | ||||||||||
Refinancing costs and losses on early extinguishments of debt | 53 | — | — | 53 | ||||||||||
Other (income) and expense, net | 12 | (2 | ) | — | 10 | |||||||||
Intercompany charges (income) | 73 | (73 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 310 | — | (310 | ) | — | |||||||||
Income before income taxes | 149 | 310 | (310 | ) | 149 | |||||||||
Provision for income taxes | 46 | 107 | (107 | ) | 46 | |||||||||
Net income | $ | 103 | $ | 203 | $ | (203 | ) | $ | 103 | |||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment | 1 | — | — | 1 | ||||||||||
Comprehensive income | $ | 104 | $ | 203 | $ | (203 | ) | $ | 104 | |||||
Schedule of Supplemental Condensed Consolidating Balance Sheet | ' | |||||||||||||
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||
February 2, 2013 | ||||||||||||||
Parent Company | Guarantor | Eliminations | Consolidated | |||||||||||
Subsidiaries | ||||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 37 | $ | 19 | $ | — | $ | 56 | ||||||
Merchandise inventories | 591 | 271 | — | 862 | ||||||||||
Intercompany receivables | — | 329 | (329 | ) | — | |||||||||
Other | 105 | 21 | — | 126 | ||||||||||
Total current assets | 733 | 640 | (329 | ) | 1,044 | |||||||||
Property and equipment, net | 271 | 67 | — | 338 | ||||||||||
Goodwill, net | 94 | — | — | 94 | ||||||||||
Investment in subsidiaries | 284 | — | (284 | ) | — | |||||||||
Other assets | 76 | 3 | — | 79 | ||||||||||
Total assets | $ | 1,458 | $ | 710 | $ | (613 | ) | $ | 1,555 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | 5 | 258 | — | 263 | ||||||||||
Accrued liabilities and other | 235 | 132 | — | 367 | ||||||||||
Share-based Compensation | 22 | 13 | 35 | |||||||||||
Current portion of long-term debt | 150 | — | — | 150 | ||||||||||
Intercompany payable | 329 | — | (329 | ) | — | |||||||||
Other | 36 | 5 | — | 41 | ||||||||||
Total current liabilities | 777 | 408 | (329 | ) | 856 | |||||||||
Long-term debt | 2,891 | — | — | 2,891 | ||||||||||
Other long-term liabilities | 73 | 12 | — | 85 | ||||||||||
Share-based Compensation | 21 | 6 | 27 | |||||||||||
Total stockholders’ deficit | (2,304 | ) | 284 | (284 | ) | (2,304 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 1,458 | $ | 710 | $ | (613 | ) | $ | 1,555 | |||||
(1) As Restated — See Note 2 “Restatement Share-based Compensation” on Notes to Consolidated Financial Statements. | ||||||||||||||
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||
January 28, 2012 | ||||||||||||||
Parent Company | Guarantor | Eliminations | Consolidated | |||||||||||
Subsidiaries | ||||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 363 | $ | 8 | $ | — | $ | 371 | ||||||
Merchandise inventories | 555 | 290 | — | 845 | ||||||||||
Intercompany receivables | — | 470 | (470 | ) | — | |||||||||
Other | 103 | 20 | — | 123 | ||||||||||
Total current assets | 1,021 | 788 | (470 | ) | 1,339 | |||||||||
Property and equipment, net | 249 | 63 | — | 312 | ||||||||||
Goodwill, net | 95 | — | — | 95 | ||||||||||
Investment in subsidiaries | 402 | — | (402 | ) | — | |||||||||
Other assets | 89 | 3 | — | 92 | ||||||||||
Total assets | $ | 1,856 | $ | 854 | $ | (872 | ) | $ | 1,838 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 9 | $ | 292 | $ | — | $ | 301 | ||||||
Accrued liabilities and other | 256 | 133 | — | 389 | ||||||||||
Share-based compensation | 16 | 9 | — | 25 | ||||||||||
Current portion of long-term debt | 127 | — | — | 127 | ||||||||||
Intercompany payable | 470 | — | (470 | ) | — | |||||||||
Other | 18 | 1 | — | 19 | ||||||||||
Total current liabilities | 896 | 435 | (470 | ) | 861 | |||||||||
Long-term debt | 3,363 | — | — | 3,363 | ||||||||||
Share-based compensation | 13 | 6 | 19 | |||||||||||
Other long-term liabilities | 85 | 11 | — | 96 | ||||||||||
Total stockholders’ deficit | (2,501 | ) | 402 | (402 | ) | (2,501 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 1,856 | $ | 854 | $ | (872 | ) | $ | 1,838 | |||||
Schedule of Supplemental Condensed Consolidating Statement of Cash Flows | ' | |||||||||||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Fiscal Year 2012 | ||||||||||||||
Parent | Guarantor | |||||||||||||
Company | Subsidiaries | Eliminations | Consolidated | |||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 269 | $ | 453 | $ | (423 | ) | $ | 299 | |||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (105 | ) | (19 | ) | — | (124 | ) | |||||||
Net cash used in investing activities | (105 | ) | (19 | ) | — | (124 | ) | |||||||
Financing activities: | ||||||||||||||
Net repayments of long-term debt | (457 | ) | — | — | (457 | ) | ||||||||
Intercompany dividends | — | (423 | ) | 423 | — | |||||||||
Other financing activities | (33 | ) | — | — | (33 | ) | ||||||||
Net cash provided by financing activities | (490 | ) | (423 | ) | 423 | (490 | ) | |||||||
Increase in cash and equivalents | (326 | ) | 11 | — | (315 | ) | ||||||||
Beginning cash and equivalents | 363 | 8 | — | 371 | ||||||||||
Ending cash and equivalents | $ | 37 | $ | 19 | $ | — | $ | 56 | ||||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Fiscal Year 2011 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | ||||||||||||||
(In millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 390 | $ | 234 | $ | (215 | ) | $ | 409 | |||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (88 | ) | (21 | ) | — | (109 | ) | |||||||
Net cash used in investing activities | (88 | ) | (21 | ) | — | (109 | ) | |||||||
Financing activities: | ||||||||||||||
Net repayments of long-term debt | (227 | ) | — | — | (227 | ) | ||||||||
Intercompany dividends | — | (215 | ) | 215 | — | |||||||||
Other financing activities | (21 | ) | — | — | (21 | ) | ||||||||
Net cash provided by financing activities | (248 | ) | (215 | ) | 215 | (248 | ) | |||||||
Increase in cash and equivalents | 54 | (2 | ) | — | 52 | |||||||||
Beginning cash and equivalents | 309 | 10 | — | 319 | ||||||||||
Ending cash and equivalents | $ | 363 | $ | 8 | $ | — | $ | 371 | ||||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Fiscal Year 2010 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(In millions) | ||||||||||||||
Operating Activities: | ||||||||||||||
Net cash provided by operating activities | $ | 426 | $ | 301 | $ | (289 | ) | $ | 438 | |||||
Investing Activities: | ||||||||||||||
Cost of business acquisition | (2 | ) | — | — | (2 | ) | ||||||||
Cash paid for property and equipment | (69 | ) | (12 | ) | — | (81 | ) | |||||||
Net cash used in investing activities | (71 | ) | (12 | ) | — | (83 | ) | |||||||
Financing Activities: | ||||||||||||||
Net repayments of long-term debt | (225 | ) | — | — | (225 | ) | ||||||||
Intercompany dividends | — | (289 | ) | 289 | — | |||||||||
Other financing activities | (28 | ) | — | — | (28 | ) | ||||||||
Net cash used in financing activities | (253 | ) | (289 | ) | 289 | (253 | ) | |||||||
Increase in cash and equivalents | 102 | — | — | 102 | ||||||||||
Beginning cash and equivalents | 207 | 10 | — | 217 | ||||||||||
Ending cash and equivalents | $ | 309 | $ | 10 | $ | — | $ | 319 | ||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Jan. 30, 2010 |
item | item | item | ||
Summary of Significant Accounting Policies | ' | ' | ' | ' |
Number of states in which the entity operates | 49 | ' | ' | ' |
Fiscal year | ' | ' | ' | ' |
Number of weeks in a fiscal year | 53 | 52 | 52 | ' |
Foreign Currency Translation | ' | ' | ' | ' |
Cumulative translation adjustment | $6 | $6 | $7 | $6 |
Deferred taxes relating to foreign currency translation | 1 | 5 | ' | ' |
Foreign currency exchange gains (losses) | 1 | -4 | 2 | ' |
Cash and Equivalents | ' | ' | ' | ' |
Credit card clearing accounts | 22 | 22 | ' | ' |
Merchandise Inventories | ' | ' | ' | ' |
Period of vendor allowance programs | '12 months | ' | ' | ' |
Vendor allowances recognized | $110 | $115 | $112 | ' |
Vendor allowances as a percentage of net sales | 2.50% | 2.70% | 2.80% | ' |
Minimum open period of the stores subject to which physical inventory counts are performed | '1 year | ' | ' | ' |
Minimum number of physical inventory counts in a fiscal year | 1 | ' | ' | ' |
Minimum | ' | ' | ' | ' |
Fiscal year | ' | ' | ' | ' |
Number of weeks in a fiscal year | 52 | ' | ' | ' |
Merchandise Inventories | ' | ' | ' | ' |
Number of vendors from which vendor allowances were received | 650 | ' | ' | ' |
Maximum | ' | ' | ' | ' |
Fiscal year | ' | ' | ' | ' |
Number of weeks in a fiscal year | 53 | ' | ' | ' |
Merchandise Inventories | ' | ' | ' | ' |
Number of vendors from which vendor allowances were received | 670 | ' | ' | ' |
Aaron Brothers, Inc. | ' | ' | ' | ' |
Summary of Significant Accounting Policies | ' | ' | ' | ' |
Number of states in which the entity operates | 9 | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Buildings | ' | ' | ' |
Property and equipment | ' | ' | ' |
Estimated useful lives of assets | '30 years | ' | ' |
Leasehold improvements | ' | ' | ' |
Property and equipment | ' | ' | ' |
Estimated useful lives of assets | '10 years | ' | ' |
Fixtures and equipment | ' | ' | ' |
Property and equipment | ' | ' | ' |
Estimated useful lives of assets | '8 years | ' | ' |
Computer equipment | ' | ' | ' |
Property and equipment | ' | ' | ' |
Estimated useful lives of assets | '5 years | ' | ' |
Capitalized Software Costs | ' | ' | ' |
Property and equipment | ' | ' | ' |
Estimated useful lives of assets | '5 years | ' | ' |
Unamortized capitalized software costs | $86 | $74 | ' |
Amortization of capitalized software costs | $36 | $30 | $14 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Account activity related to closed facilities | ' | ' | ' |
Balance at beginning of fiscal year | $9 | $5 | $7 |
Additions charged to costs and expenses | 5 | 7 | ' |
Payment of rental obligations and other | -6 | -3 | -2 |
Balance at end of fiscal year | 8 | 9 | 5 |
Revenue Recognition | ' | ' | ' |
Deferral period of customer framing revenue | '10 days | '13 days | '13 days |
Deferred framing revenue | 8 | 10 | ' |
Sales returns reserve | 3 | 3 | ' |
Increase in deferred revenue associated with outstanding gift cards | 3 | ' | ' |
Deferred revenue associated with outstanding gift cards | 33 | 30 | ' |
Revenue recognized from gift card breakage | 3 | 1 | 3 |
Selling, General, and Administrative Costs | ' | ' | ' |
Advertising expenses | 179 | 183 | 172 |
Income Taxes | ' | ' | ' |
Valuation allowance recorded against deferred tax assets | 10 | 14 | ' |
ScrapHD | ' | ' | ' |
Goodwill | ' | ' | ' |
Impairment charge for goodwill | $1 | ' | ' |
Restatement_Sharebased_Compens2
Restatement - Share-based Compensation (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||
Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Jan. 30, 2010 | |
Decline in net income due to other restatement adjustments | ' | ' | ' | ' | ' | ' | ' | ' | $14,000,000 | $19,000,000 | ' | ' |
Impact to share-based compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | 18,000,000 | 32,000,000 | ' | ' |
Impact to share-based compensation expense, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 11,000,000 | 20,000,000 | ' | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of sales and occupancy expense | 907,000,000 | 613,000,000 | 556,000,000 | 567,000,000 | 843,000,000 | 600,000,000 | 529,000,000 | 560,000,000 | 2,643,000,000 | 2,532,000,000 | 2,467,000,000 | ' |
Gross Profit | 617,000,000 | 401,000,000 | 336,000,000 | 411,000,000 | 561,000,000 | 396,000,000 | 328,000,000 | 393,000,000 | 1,765,000,000 | 1,678,000,000 | 1,564,000,000 | ' |
Selling, general, and administrative expense | 345,000,000 | 276,000,000 | 252,000,000 | 259,000,000 | 322,000,000 | 277,000,000 | 239,000,000 | 252,000,000 | 1,132,000,000 | 1,090,000,000 | 1,051,000,000 | ' |
Share-based compensation | 6,000,000 | 2,000,000 | 3,000,000 | 4,000,000 | 15,000,000 | 14,000,000 | 2,000,000 | 2,000,000 | 15,000,000 | 33,000,000 | 8,000,000 | ' |
Operating income | 255,000,000 | 117,000,000 | 76,000,000 | 144,000,000 | 221,000,000 | 100,000,000 | 82,000,000 | 135,000,000 | 592,000,000 | 538,000,000 | 488,000,000 | ' |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 315,000,000 | 257,000,000 | 149,000,000 | ' |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 115,000,000 | 100,000,000 | 46,000,000 | ' |
Net income | 105,000,000 | 35,000,000 | 9,000,000 | 51,000,000 | 88,000,000 | 22,000,000 | 10,000,000 | 37,000,000 | 200,000,000 | 157,000,000 | 103,000,000 | ' |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 200,000,000 | 156,000,000 | 104,000,000 | ' |
Consolidated Balance Sheet | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Merchandise inventories | 862,000,000 | ' | ' | ' | 845,000,000 | ' | ' | ' | 862,000,000 | 845,000,000 | ' | ' |
Total current assets | 1,044,000,000 | ' | ' | ' | 1,339,000,000 | ' | ' | ' | 1,044,000,000 | 1,339,000,000 | ' | ' |
Deferred income taxes | 30,000,000 | ' | ' | ' | 29,000,000 | ' | ' | ' | 30,000,000 | 29,000,000 | ' | ' |
Total non-current assets | 173,000,000 | ' | ' | ' | 187,000,000 | ' | ' | ' | 173,000,000 | 187,000,000 | ' | ' |
Share-based compensation liability | 35,000,000 | ' | ' | ' | 25,000,000 | ' | ' | ' | 35,000,000 | 25,000,000 | ' | ' |
Income taxes payable | 37,000,000 | ' | ' | ' | 18,000,000 | ' | ' | ' | 37,000,000 | 18,000,000 | ' | ' |
Total current liabilities | 856,000,000 | ' | ' | ' | 861,000,000 | ' | ' | ' | 856,000,000 | 861,000,000 | ' | ' |
Share-based compensation liability | 27,000,000 | ' | ' | ' | 19,000,000 | ' | ' | ' | 27,000,000 | 19,000,000 | ' | ' |
Total long-term liabilities | 3,003,000,000 | ' | ' | ' | 3,478,000,000 | ' | ' | ' | 3,003,000,000 | 3,478,000,000 | ' | ' |
Additional paid-in capital | 37,000,000 | ' | ' | ' | 40,000,000 | ' | ' | ' | 37,000,000 | 40,000,000 | ' | ' |
Accumulated deficit | -2,359,000,000 | ' | ' | ' | -2,559,000,000 | ' | ' | ' | -2,359,000,000 | -2,559,000,000 | ' | ' |
Total stockholders' deficit | -2,304,000,000 | ' | ' | ' | -2,501,000,000 | ' | ' | ' | -2,304,000,000 | -2,501,000,000 | -2,654,000,000 | -2,766,000,000 |
Operating Activities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | 105,000,000 | 35,000,000 | 9,000,000 | 51,000,000 | 88,000,000 | 22,000,000 | 10,000,000 | 37,000,000 | 200,000,000 | 157,000,000 | 103,000,000 | ' |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | 21,000,000 | 41,000,000 | 8,000,000 | ' |
Merchandise inventories | ' | ' | ' | ' | ' | ' | ' | ' | -21,000,000 | -19,000,000 | 47,000,000 | ' |
Deferred income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -2,000,000 | 21,000,000 | -28,000,000 | ' |
Accrued liabilities and other | ' | ' | ' | ' | ' | ' | ' | ' | -16,000,000 | 0 | 31,000,000 | ' |
Income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 18,000,000 | 0 | 16,000,000 | ' |
Net cash provided by operating activities | ' | ' | ' | ' | ' | ' | ' | ' | 299,000,000 | 409,000,000 | 438,000,000 | ' |
Net cash used in financing activities | ' | ' | ' | ' | ' | ' | ' | ' | -490,000,000 | -248,000,000 | -253,000,000 | ' |
Maximum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of immature shares | ' | ' | ' | ' | ' | ' | ' | ' | '6 months | ' | ' | ' |
As Reported | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of sales and occupancy expense | 902,000,000 | 611,000,000 | 553,000,000 | 566,000,000 | 843,000,000 | 594,000,000 | 529,000,000 | 560,000,000 | 2,632,000,000 | 2,526,000,000 | ' | ' |
Gross Profit | 622,000,000 | 403,000,000 | 339,000,000 | 412,000,000 | 561,000,000 | 402,000,000 | 328,000,000 | 393,000,000 | 1,776,000,000 | 1,684,000,000 | ' | ' |
Selling, general, and administrative expense | 345,000,000 | 278,000,000 | 252,000,000 | 260,000,000 | 324,000,000 | 279,000,000 | 241,000,000 | 254,000,000 | 1,135,000,000 | 1,098,000,000 | ' | ' |
Operating income | 266,000,000 | 119,000,000 | 82,000,000 | 148,000,000 | 234,000,000 | 118,000,000 | 82,000,000 | 135,000,000 | 615,000,000 | 569,000,000 | ' | ' |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 338,000,000 | 288,000,000 | ' | ' |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 124,000,000 | 112,000,000 | ' | ' |
Net income | 112,000,000 | 36,000,000 | 13,000,000 | 53,000,000 | 97,000,000 | 32,000,000 | 10,000,000 | 37,000,000 | 214,000,000 | 176,000,000 | ' | ' |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 214,000,000 | 175,000,000 | ' | ' |
Consolidated Balance Sheet | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Merchandise inventories | 865,000,000 | ' | ' | ' | 840,000,000 | ' | ' | ' | 865,000,000 | 840,000,000 | ' | ' |
Total current assets | 1,047,000,000 | ' | ' | ' | 1,334,000,000 | ' | ' | ' | 1,047,000,000 | 1,334,000,000 | ' | ' |
Deferred income taxes | 13,000,000 | ' | ' | ' | 18,000,000 | ' | ' | ' | 13,000,000 | 18,000,000 | ' | ' |
Total non-current assets | 156,000,000 | ' | ' | ' | 176,000,000 | ' | ' | ' | 156,000,000 | 176,000,000 | ' | ' |
Income taxes payable | 40,000,000 | ' | ' | ' | 19,000,000 | ' | ' | ' | 40,000,000 | 19,000,000 | ' | ' |
Total current liabilities | 824,000,000 | ' | ' | ' | 837,000,000 | ' | ' | ' | 824,000,000 | 837,000,000 | ' | ' |
Total long-term liabilities | 2,976,000,000 | ' | ' | ' | 3,459,000,000 | ' | ' | ' | 2,976,000,000 | 3,459,000,000 | ' | ' |
Additional paid-in capital | 49,000,000 | ' | ' | ' | 48,000,000 | ' | ' | ' | 49,000,000 | 48,000,000 | ' | ' |
Accumulated deficit | -2,326,000,000 | ' | ' | ' | -2,540,000,000 | ' | ' | ' | -2,326,000,000 | -2,540,000,000 | ' | ' |
Total stockholders' deficit | -2,259,000,000 | ' | ' | ' | -2,474,000,000 | ' | ' | ' | -2,259,000,000 | -2,474,000,000 | ' | ' |
Operating Activities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | 112,000,000 | 36,000,000 | 13,000,000 | 53,000,000 | 97,000,000 | 32,000,000 | 10,000,000 | 37,000,000 | 214,000,000 | 176,000,000 | ' | ' |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | 9,000,000 | ' | ' |
Merchandise inventories | ' | ' | ' | ' | ' | ' | ' | ' | -25,000,000 | -14,000,000 | ' | ' |
Deferred income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | 32,000,000 | ' | ' |
Accrued liabilities and other | ' | ' | ' | ' | ' | ' | ' | ' | -12,000,000 | ' | ' | ' |
Income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 19,000,000 | ' | ' | ' |
Net cash provided by operating activities | ' | ' | ' | ' | ' | ' | ' | ' | 302,000,000 | 413,000,000 | ' | ' |
Net cash used in financing activities | ' | ' | ' | ' | ' | ' | ' | ' | -493,000,000 | -252,000,000 | ' | ' |
Restatement adjustment | Share-based compensation Adjustment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of sales and occupancy expense | ' | ' | ' | ' | ' | ' | ' | ' | 6,000,000 | 7,000,000 | ' | ' |
Gross Profit | ' | ' | ' | ' | ' | ' | ' | ' | -6,000,000 | -7,000,000 | ' | ' |
Selling, general, and administrative expense | ' | ' | ' | ' | ' | ' | ' | ' | -3,000,000 | -8,000,000 | ' | ' |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | 15,000,000 | 33,000,000 | ' | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | -18,000,000 | -32,000,000 | ' | ' |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -18,000,000 | -32,000,000 | ' | ' |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -7,000,000 | -12,000,000 | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | -11,000,000 | -20,000,000 | ' | ' |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | -11,000,000 | -20,000,000 | ' | ' |
Consolidated Balance Sheet | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Merchandise inventories | 1,000,000 | ' | ' | ' | 4,000,000 | ' | ' | ' | 1,000,000 | 4,000,000 | ' | ' |
Total current assets | 1,000,000 | ' | ' | ' | 4,000,000 | ' | ' | ' | 1,000,000 | 4,000,000 | ' | ' |
Deferred income taxes | 17,000,000 | ' | ' | ' | 11,000,000 | ' | ' | ' | 17,000,000 | 11,000,000 | ' | ' |
Total non-current assets | 17,000,000 | ' | ' | ' | 11,000,000 | ' | ' | ' | 17,000,000 | 11,000,000 | ' | ' |
Share-based compensation liability | 35,000,000 | ' | ' | ' | 25,000,000 | ' | ' | ' | 35,000,000 | 25,000,000 | ' | ' |
Income taxes payable | -1,000,000 | ' | ' | ' | -1,000,000 | ' | ' | ' | -1,000,000 | -1,000,000 | ' | ' |
Total current liabilities | 34,000,000 | ' | ' | ' | 24,000,000 | ' | ' | ' | 34,000,000 | 24,000,000 | ' | ' |
Share-based compensation liability | 27,000,000 | ' | ' | ' | 19,000,000 | ' | ' | ' | 27,000,000 | 19,000,000 | ' | ' |
Total long-term liabilities | 27,000,000 | ' | ' | ' | 19,000,000 | ' | ' | ' | 27,000,000 | 19,000,000 | ' | ' |
Additional paid-in capital | -12,000,000 | ' | ' | ' | -8,000,000 | ' | ' | ' | -12,000,000 | -8,000,000 | ' | ' |
Accumulated deficit | -31,000,000 | ' | ' | ' | -20,000,000 | ' | ' | ' | -31,000,000 | -20,000,000 | ' | ' |
Total stockholders' deficit | -43,000,000 | ' | ' | ' | -28,000,000 | ' | ' | ' | -43,000,000 | -28,000,000 | ' | ' |
Operating Activities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | -11,000,000 | -20,000,000 | ' | ' |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | 16,000,000 | 32,000,000 | ' | ' |
Merchandise inventories | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | -4,000,000 | ' | ' |
Deferred income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -4,000,000 | -11,000,000 | ' | ' |
Accrued liabilities and other | ' | ' | ' | ' | ' | ' | ' | ' | -4,000,000 | ' | ' | ' |
Income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -1,000,000 | ' | ' | ' |
Net cash provided by operating activities | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | -4,000,000 | ' | ' |
Net cash used in financing activities | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | 4,000,000 | ' | ' |
Restatement adjustment | Other Adjustments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of sales and occupancy expense | ' | ' | ' | ' | ' | ' | ' | ' | 5,000,000 | -1,000,000 | ' | ' |
Gross Profit | ' | ' | ' | ' | ' | ' | ' | ' | -5,000,000 | 1,000,000 | ' | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | -5,000,000 | 1,000,000 | ' | ' |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -5,000,000 | 1,000,000 | ' | ' |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -2,000,000 | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | -3,000,000 | 1,000,000 | ' | ' |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | -3,000,000 | 1,000,000 | ' | ' |
Consolidated Balance Sheet | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Merchandise inventories | -4,000,000 | ' | ' | ' | 1,000,000 | ' | ' | ' | -4,000,000 | 1,000,000 | ' | ' |
Total current assets | -4,000,000 | ' | ' | ' | 1,000,000 | ' | ' | ' | -4,000,000 | 1,000,000 | ' | ' |
Income taxes payable | -2,000,000 | ' | ' | ' | ' | ' | ' | ' | -2,000,000 | ' | ' | ' |
Total current liabilities | -2,000,000 | ' | ' | ' | ' | ' | ' | ' | -2,000,000 | ' | ' | ' |
Accumulated deficit | -2,000,000 | ' | ' | ' | 1,000,000 | ' | ' | ' | -2,000,000 | 1,000,000 | ' | ' |
Total stockholders' deficit | -2,000,000 | ' | ' | ' | 1,000,000 | ' | ' | ' | -2,000,000 | 1,000,000 | ' | ' |
Operating Activities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | -3,000,000 | 1,000,000 | ' | ' |
Merchandise inventories | ' | ' | ' | ' | ' | ' | ' | ' | -1,000,000 | -1,000,000 | ' | ' |
Net cash provided by operating activities | ' | ' | ' | ' | ' | ' | ' | ' | ($4,000,000) | ' | ' | ' |
Detail_of_Certain_Balance_Shee2
Detail of Certain Balance Sheet Accounts (Details) (USD $) | Feb. 02, 2013 | Jan. 28, 2012 |
In Millions, unless otherwise specified | ||
Property and equipment | ' | ' |
Property and equipment, at cost | $1,502 | $1,391 |
Accrued liabilities and other: | ' | ' |
Salaries, bonuses, and other payroll-related costs | 94 | 110 |
Insurance liabilities | 71 | 67 |
Accrued interest | 33 | 43 |
Taxes, other than income and payroll | 51 | 64 |
Gift certificate and gift card liability | 33 | 30 |
Other | 85 | 75 |
Accrued liabilities and other | 367 | 389 |
Land and buildings | ' | ' |
Property and equipment | ' | ' |
Property and equipment, at cost | 2 | 2 |
Fixtures and equipment | ' | ' |
Property and equipment | ' | ' |
Property and equipment, at cost | 863 | 820 |
Capitalized software | ' | ' |
Property and equipment | ' | ' |
Property and equipment, at cost | 264 | 228 |
Leasehold improvements | ' | ' |
Property and equipment | ' | ' |
Property and equipment, at cost | $373 | $341 |
Debt_Details
Debt (Details) (USD $) | Feb. 02, 2013 | Jan. 28, 2012 |
In Millions, unless otherwise specified | ||
Debt | ' | ' |
Total debt | $3,041 | $3,490 |
Less current portion | 150 | 127 |
Long-term debt | 2,891 | 3,363 |
Senior secured term loan | ' | ' |
Debt | ' | ' |
Total debt | 1,640 | 1,996 |
Senior notes | ' | ' |
Debt | ' | ' |
Total debt | 1,007 | 795 |
Interest rate (as a percent) | 7.75% | ' |
Senior subordinated notes | ' | ' |
Debt | ' | ' |
Total debt | 393 | 393 |
Interest rate (as a percent) | 11.38% | ' |
Subordinated discount notes | ' | ' |
Debt | ' | ' |
Total debt | ' | 306 |
Interest rate (as a percent) | ' | 13.00% |
Asset-based revolving credit facility | ' | ' |
Debt | ' | ' |
Total debt | $1 | ' |
Debt_Details_2
Debt (Details 2) (USD $) | Feb. 02, 2013 | Jan. 28, 2012 | Feb. 02, 2013 | Feb. 02, 2013 |
In Millions, unless otherwise specified | Minimum | Maximum | ||
Debt | ' | ' | ' | ' |
Capitalized costs, net of write-offs, related to issuance of various debt instruments | $100 | ' | ' | ' |
Term of debt agreement | ' | ' | '5 years | '10 years |
Expected amortization expense pertaining to the deferred financing costs | ' | ' | ' | ' |
2013 | 9 | ' | ' | ' |
2014 | 9 | ' | ' | ' |
2015 | 9 | ' | ' | ' |
2016 | 9 | ' | ' | ' |
2017 | 7 | ' | ' | ' |
Thereafter | 3 | ' | ' | ' |
Aggregate amounts of scheduled maturities of debt | ' | ' | ' | ' |
2013 | 150 | ' | ' | ' |
2014 | 16 | ' | ' | ' |
2015 | 17 | ' | ' | ' |
2016 | 272 | ' | ' | ' |
2017 | 16 | ' | ' | ' |
Thereafter | 2,562 | ' | ' | ' |
Total debt payments | 3,033 | ' | ' | ' |
Plus unrealized premium amortization | 12 | ' | ' | ' |
Less unrealized discount accretion | -4 | ' | ' | ' |
Total debt balance as of February 2, 2013 | $3,041 | $3,490 | ' | ' |
Weighted average interest rate of the current portion of long-term debt | 10.69% | 13.00% | ' | ' |
Debt_Details_3
Debt (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||
Feb. 02, 2013 | Oct. 27, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Feb. 02, 2013 | Feb. 02, 2013 | Jan. 28, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Oct. 31, 2006 | Feb. 02, 2013 | Jan. 28, 2013 | Nov. 05, 2009 | Dec. 15, 2011 | Feb. 02, 2013 | Dec. 15, 2011 | Feb. 02, 2013 | |
LIBOR | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Restated Term Loan Credit Facility | Senior Secured Term Loan Facility | Senior Secured Term Loan Facility | Senior Secured Term Loan Facility | B-2 Term Loans | B-3 Term Loans | B-1 Term Loans | B-1 Term Loans | B-2 and B-3 Term Loans | ||||||||||
Maximum | Consolidated Leverage Ratio, Scenario One | Consolidated Leverage Ratio, Scenario One | Consolidated Leverage Ratio, Scenario Two | Consolidated Leverage Ratio, Scenario Two | Consolidated Leverage Ratio, Scenario Three | Consolidated Leverage Ratio, Scenario Three | Base rate using prime rate of Deutsche Bank | Base rate using federal funds effective rate | Base rate using LIBOR | LIBOR | ||||||||||||||||||||
Minimum | Maximum | Maximum | ||||||||||||||||||||||||||||
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount borrowed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,400,000,000 | ' | ' | ' | ' | ' | ' | ' |
Outstanding balance for which the maturity date was extended | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000,000 | 619,000,000 | ' | ' | ' |
Outstanding balance for which the original maturity date was kept | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 501,000,000 | ' |
Repayment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 501,000,000 | ' | ' |
Refinancing costs and losses on early extinguishments of debt | 30,000,000 | 3,000,000 | 2,000,000 | 1,000,000 | 4,000,000 | 11,000,000 | 33,000,000 | 18,000,000 | 53,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,000,000 | ' | ' | ' | 2,000,000 | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,640,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum amount of additional term loans which the entity has the right to request | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum consolidated secured debt ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance costs that are being amortized as interest expense | 100,000,000 | ' | ' | ' | ' | ' | 100,000,000 | ' | ' | ' | ' | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'prime rate of Deutsche Bank | 'federal funds effective rate | 'LIBOR | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' |
Basis spread on variable interest rate basis (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Margin added to reference rate for the variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.75% | 1.75% | 1.75% | 2.75% | ' | ' | ' | ' | ' | ' | ' | ' |
Decrease to applicable margin based on the entity's consolidated secured debt ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% | 0.25% | 0.25% | 0.25% | ' | ' | ' | ' | ' | ' | ' | ' |
Prepayment requirement as a percentage of net proceeds of any debt issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepayment requirement as a percentage of excess cash flows | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | 25.00% | ' | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total leverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6 | ' | 6 | ' | 5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepayment requirement as a percentage of principal amount, for certain asset sales or casualty events | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repricing transaction prepayment fee (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Scheduled quarterly payments as a percentage of the original principal amount of the term loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period of scheduled quarterly payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '6 years 9 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated secured debt ratio, maturity date acceleration trigger | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum aggregate outstanding principal allowable on senior notes per debt covenant | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum increase in effective yield for any future extension (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% |
Refinancing costs | ' | ' | ' | ' | ' | ' | 12,000,000 | ' | ' | ' | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized debt issuance costs to be amortized over the revised life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $9,000,000 | ' | ' | ' | ' | ' |
Debt_Details_4
Debt (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Feb. 02, 2013 | Oct. 21, 2010 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 27, 2013 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 28, 2013 | Oct. 31, 2006 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Nov. 01, 2012 | 1-May-12 | Feb. 02, 2013 | Jan. 28, 2012 | Oct. 31, 2006 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Sep. 27, 2012 |
Senior note | Senior note | Senior note | Senior note | Senior note | Senior note | Senior note | Senior note | Senior note | Senior note | Senior note | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | 13% Subordinated Discount Notes due 2016 | Additional Senior Notes | ||||||||||
Minimum | Maximum | Prior to November 1, 2014 | Prior to November 1, 2013 | Prior to November 1, 2013 | Prior to November 1, 2013 | Twelve-month period beginning November 1, 2014 | Twelve-month period beginning November 1, 2015 | Twelve-month period beginning November 1, 2016 and thereafter | Twelve-month period beginning November 1, 2012 | Twelve-month period beginning November 1, 2013 | Twelve-month period beginning November 1, 2014 and thereafter | Twelve-month period beginning November 1, 2012 | Twelve-month period beginning November 1, 2013 | Twelve-month period beginning November 1, 2014 and thereafter | |||||||||||||||||||||||
Minimum | Maximum | ||||||||||||||||||||||||||||||||||||
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount of notes issued | ' | ' | $200 | ' | ' | ' | ' | $200 | ' | ' | $800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $400 | ' | ' | ' | ' | ' | ' | ' | $469 | ' | ' | ' | $200 |
Interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13.00% | ' | ' | ' | ' | ' |
Issue price as a percentage of face value (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 99.26% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 106.25% |
Effective interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.88% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.50% |
Period after the date of issuance to have the Exchange Offer Registration Statement declared effective | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '360 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount of notes repurchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 137 | ' | 7 | ' | ' | ' | ' | ' | ' | ' | ' | 163 | ' | ' | ' | ' | ' |
Accreted value of notes repurchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 155 | ' | ' | ' | ' | ' |
Loss related to the early extinguishment of the repurchased notes | 30 | 3 | 2 | 1 | 4 | 11 | 33 | 18 | 53 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 | ' | ' | ' | ' | ' | ' | ' | 11 | ' | ' | 18 | ' | ' | ' | ' | ' |
Recognition of unrealized interest accretion and write off of debt issuance costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11 | ' | ' | ' | ' | ' |
Purchase premiums included in loss on extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5 | ' | ' | ' | ' | ' | ' | ' | 8 | ' | ' | 7 | ' | ' | ' | ' | ' |
Redemption price of debt instrument as a percentage of principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | 103.88% | 101.94% | 100.00% | 103.79% | ' | ' | ' | ' | 103.79% | 101.90% | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of the aggregate principal amount that may be redeemed with proceeds from equity offerings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of the aggregate principal amount that remain outstanding after each redemption with proceeds from equity offerings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price as a percentage of principal amount, if using proceeds of equity offerings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 107.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption period following the receipt of proceeds from equity offerings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '90 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of aggregate principal amount at which notes may be required to be repurchased in the event of change of control | ' | ' | ' | ' | ' | ' | ' | ' | ' | 101.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 101.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate principal amount of debt instrument for which the entity delivered an irrevocable notice of redemption | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 137 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized debt issuance costs written-off related to loss on early extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of principal amount held by holders to declare notes due and payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance costs amortization | ' | ' | ' | ' | ' | ' | 14 | 17 | 20 | 19 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance costs that are being amortized as interest expense | 100 | ' | ' | ' | ' | ' | 100 | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price of debt instrument as a percentage of the accreted value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 104.33% | 102.17% | 100.00% | ' |
Redemption price of debt instrument as a percentage of the accreted value to prevent AHYDO | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' |
Aggregate payment related to notes | ' | ' | ' | ' | ' | ' | $315 | $170 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $127 | ' | ' | ' | ' | ' | ' | ' |
Redemption price of amount equal to AHYDO amount as a percentage of principal | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price of the remaining balance as a percentage of principal | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 104.33% | ' | ' | ' | ' | ' | ' | ' | ' |
Debt_Details_5
Debt (Details 5) (USD $) | 3 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Sep. 17, 2012 | Jan. 28, 2012 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Feb. 02, 2013 |
Maximum | Asset-based Revolving Credit Facility - Same day borrowings | Asset-based Revolving Credit Facility - Same day borrowings | Standby letters of credit | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | Restated Revolving Credit Facility | ||||||||||
LIBOR | LIBOR | Base rate using LIBOR | LIBOR | Base rate | Base rate using LIBOR | Prime rate of Wells Fargo | Federal funds effective rate | LIBOR rate | Minimum | Maximum | ||||||||||||||
Asset-based Revolving Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $650 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of eligible credit card receivables and debit card receivables to determine borrowing base | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of appraised net orderly liquidation value of eligible inventory to determine borrowing base | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of appraised net orderly liquidation value of eligible inventory and eligible letters of credit to determine borrowing base | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of face value of eligible letters of credit supported by eligible letters of credit to determine borrowing base | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity, optional additional commitments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity once expanded | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 850 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Variable interest rate basis, reference rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | 'prime rate of Wells Fargo | 'federal funds effective rate | 'LIBOR | ' | ' |
Margin added to reference rate for the variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | 0.75% | 0.50% | 1.75% | ' | ' |
Variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | 'LIBOR | 'base rate | ' | ' | ' | ' | ' | ' |
Basis spread on variable interest rate basis (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Initial commitment fee on the unutilized commitments (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average daily excess availability as a percentage of total commitments for lower commitment fee on the unutilized commitments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee on the unutilized commitments if average daily excess availability is less than or equal to the specified percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average daily excess availability as a percentage of total commitments for higher commitment fee on the unutilized commitments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fee on the unutilized commitments if average daily excess availability is greater than the specified percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess availability as a percentage of loan cap for repayment of outstanding loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.50% |
Period of excess availability as a percentage of loan cap for repayment of outstanding loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess availability for repayment of outstanding loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Excess availability as a percentage of loan cap for maintaining specified consolidated fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% |
Excess availability for maintaining specified consolidated fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50 |
Excess availability as a percentage of loan cap for specified period for maintaining specified consolidated fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' |
Excess availability for specified period for maintaining specified consolidated fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50 | ' |
Period of excess availability as a percentage of loan cap for maintaining specified consolidated fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '30 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated fixed charge coverage ratio required to be maintained | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' |
Loss related to the early extinguishment of the repurchased notes | 30 | 3 | 2 | 1 | 4 | 11 | 33 | 18 | 53 | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt issuance costs that are being amortized as interest expense | 100 | ' | ' | ' | ' | ' | 100 | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized debt issuance costs to be amortized over the revised life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowing base amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 650 | ' | 670 | ' | ' | ' | ' | ' | ' | ' | ' |
Availability of borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 587 | ' | 615 | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding letters of credit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $62 | $70 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt_Details_6
Debt (Details 6) (USD $) | 3 Months Ended | 12 Months Ended | |||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss related to the early extinguishment of the repurchased notes | $30 | $3 | $2 | $1 | $4 | $11 | $33 | $18 | $53 |
Senior notes due 2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% |
Loss related to the early extinguishment of the repurchased notes | ' | ' | ' | ' | ' | ' | ' | ' | 53 |
Tender and call premiums related to loss on early extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | 41 |
Unamortized debt issuance costs written-off related to loss on early extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | 12 |
Senior notes due 2014 | Redemption price of 105.5% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price of debt instrument as a percentage of principal amount | ' | ' | ' | ' | ' | ' | ' | ' | 105.50% |
Principal amount of notes redeemed | ' | ' | ' | ' | ' | ' | ' | ' | 659 |
Senior notes due 2014 | Redemption price of 105% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price of debt instrument as a percentage of principal amount | ' | ' | ' | ' | ' | ' | ' | ' | 105.00% |
Principal amount of notes redeemed | ' | ' | ' | ' | ' | ' | ' | ' | $91 |
Comprehensive_Income_Details
Comprehensive Income (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jan. 28, 2012 | Jan. 29, 2011 | Feb. 02, 2013 |
Comprehensive Income | ' | ' | ' |
Foreign Currency Translation & Other, balance at the beginning of the period | $7 | $6 | $6 |
Foreign currency translation adjustment | -1 | 1 | ' |
Foreign Currency Translation & Other, balance at the end of the period | $6 | $7 | $6 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Significant Components of Deferred Tax Asset (Liability) | ' | ' | ' |
Net deferred tax assets, current | $33 | $41 | ' |
Net deferred tax assets, noncurrent | 28 | 18 | ' |
Net deferred tax assets | 61 | 59 | ' |
Federal: | ' | ' | ' |
Current | 92 | 46 | 45 |
Deferred | -7 | 18 | -21 |
Total federal income tax provision | 85 | 64 | 24 |
State: | ' | ' | ' |
Current | 10 | 13 | 9 |
Deferred | 1 | 1 | -4 |
Total state income tax provision | 11 | 14 | 5 |
International: | ' | ' | ' |
Current | 20 | 22 | 17 |
Deferred | -1 | ' | ' |
Total international income tax provision | 19 | 22 | 17 |
Total income tax provision | 115 | 100 | 46 |
Reconciliation of income tax provision | ' | ' | ' |
Income tax provision at statutory rate | 111 | 91 | 52 |
State income taxes, net of federal income tax effect | 6 | 7 | 2 |
Federal tax credits | ' | -2 | -2 |
Unrecognized tax benefits | -1 | 1 | -4 |
State valuation allowance | ' | ' | 1 |
Other | -1 | 3 | -3 |
Total income tax provision | 115 | 100 | 46 |
Current | ' | ' | ' |
Significant Components of Deferred Tax Asset (Liability) | ' | ' | ' |
Merchandise inventories | -12 | -9 | ' |
Accrued expenses | 13 | 12 | ' |
State income taxes | -1 | 1 | ' |
Vacation accrual | 7 | 7 | ' |
Deferred rent | 2 | ' | ' |
Other deferred tax assets | 4 | 6 | ' |
Bonus accrual | ' | 6 | ' |
Gift cards | 4 | 4 | ' |
Foreign taxes | 1 | ' | ' |
Workers' compensation | 19 | 17 | ' |
Other deferred tax liabilities | -4 | -3 | ' |
Noncurrent | ' | ' | ' |
Significant Components of Deferred Tax Asset (Liability) | ' | ' | ' |
Net operating loss, general business credit, foreign tax credit and alternative minimum tax credit carryforwards | 10 | 14 | ' |
Accrued expenses | 1 | 1 | ' |
State income taxes | 3 | 3 | ' |
Share-based compensation | 29 | 25 | ' |
Deferred rent | 14 | 16 | ' |
Other deferred tax assets | 3 | 4 | ' |
State valuation allowance | -10 | -14 | ' |
Bonus accrual | 3 | ' | ' |
Property and equipment | -29 | -33 | ' |
Cancellation of debt income | -39 | -39 | ' |
Original issue discount related to cancellation of debt income | 41 | 41 | ' |
Other deferred tax liabilities | $2 | ' | ' |
Income_Taxes_Details_2
Income Taxes (Details 2) (State, USD $) | Feb. 02, 2013 |
In Millions, unless otherwise specified | |
State | ' |
Operating loss carryforwards | ' |
Net operating loss carryforwards | $10 |
Valuation allowance related to net operating loss carryforwards | $10 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Uncertain Tax Positions | ' | ' | ' |
Balance at the beginning of the period | $11 | ' | ' |
Additions based on tax positions related to the current year | 1 | ' | ' |
Additions for tax positions related to prior years | 1 | ' | ' |
Reductions for expiration of statute of limitations | -3 | ' | ' |
Settlements with taxing authorities | -3 | ' | ' |
Balance at the end of the period | 7 | 11 | ' |
Unrecognized tax benefits | ' | ' | ' |
Amount of valuation allowance against certain state net operating loss carryforward released | 7 | ' | ' |
Amount of unrecognized tax benefit (liability) recorded as part of the deferred tax assets (liabilities) | 7 | ' | ' |
Unrecognized tax benefits that would effect effective tax rate, if recognized | 6 | ' | ' |
Income tax interest and penalties expense | 2 | ' | ' |
Accrual for potential payments of interest and penalties | 2 | ' | ' |
Pretax income from foreign operations | $52 | $51 | $52 |
ShareBased_Compensation_Restat2
Share-Based Compensation - Restated (Details) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Share-Based Compensation | ' | ' | ' |
Maximum number of shares authorized | 14,200,000 | ' | ' |
Expiration period | '8 years | ' | ' |
Share-based compensation expense (in dollars) | $21 | $41 | $8 |
Awards granted under 2006 Plan | ' | ' | ' |
Shares of Common Stock remaining available for grant | 4,100,000 | ' | ' |
Minimum | ' | ' | ' |
Share-Based Compensation | ' | ' | ' |
Vesting period | '4 years | ' | ' |
Maximum | ' | ' | ' |
Share-Based Compensation | ' | ' | ' |
Vesting period | '5 years | ' | ' |
Stock options | ' | ' | ' |
Assumptions used to estimate the fair value of options granted | ' | ' | ' |
Risk-free interest rates, minimum (as a percent) | 0.10% | 0.10% | 1.50% |
Risk-free interest rates, maximum (as a percent) | 1.10% | 1.30% | 2.50% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Expected volatility rates of our common stock, minimum (as a percent) | 29.00% | 30.70% | 39.40% |
Expected volatility rates of our common stock, maximum (as a percent) | 35.20% | 37.80% | 41.50% |
Weighted average fair value of options (in dollars per share) | $8.46 | $10.07 | $4.52 |
Awards granted under 2006 Plan | ' | ' | ' |
Number of stock option awards outstanding (in shares) | 9,100,000 | 10,600,000 | ' |
Stock options | Minimum | ' | ' | ' |
Assumptions used to estimate the fair value of options granted | ' | ' | ' |
Expected life of options | '1 year | '1 year | '5 years |
Fair value of equity per share (in dollars per share) | $24.09 | $15.22 | $11.55 |
Stock options | Maximum | ' | ' | ' |
Assumptions used to estimate the fair value of options granted | ' | ' | ' |
Expected life of options | '5 years | '5 years | '8 years |
Fair value of equity per share (in dollars per share) | $25.08 | $17.95 | $14.47 |
Restricted stock | ' | ' | ' |
Awards granted under 2006 Plan | ' | ' | ' |
Number of restricted stock outstanding (in shares) | 339,263 | ' | ' |
Number of restricted stock vested (in shares) | 311,659 | ' | ' |
ShareBased_Compensation_Restat3
Share-Based Compensation - Restated (Details 2) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Weighted average grant date fair value | ' | ' | ' |
Share-based liabilities paid | $3 | ' | ' |
Unrecognized compensation expense | ' | ' | ' |
Compensation cost not yet recognized related to nonvested awards (in dollars) | 25 | ' | ' |
Weighted-average period for recognition of compensation cost | '2 years 2 months 12 days | ' | ' |
Maximum | ' | ' | ' |
Weighted average grant date fair value | ' | ' | ' |
Share-based liabilities paid | ' | 1 | ' |
Stock options | ' | ' | ' |
Number of Shares | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | 10,600,000 | ' | ' |
Granted (in shares) | 300,000 | ' | ' |
Exercised (in shares) | -400,000 | ' | ' |
Cancelled/Forfeited (in shares) | -1,400,000 | ' | ' |
Outstanding at the end of the period (in shares) | 9,100,000 | 10,600,000 | ' |
Vested and Exercisable at the end of the period (in shares) | 5,900,000 | ' | ' |
Weighted-Average Exercise Price | ' | ' | ' |
Outstanding nonvested at the beginning of the period (in dollars per share) | $15.52 | ' | ' |
Granted (in dollars per share) | $24.68 | ' | ' |
Exercised (in dollars per share) | $16.17 | ' | ' |
Cancelled/Forfeited (in dollars per share) | $15.48 | ' | ' |
Outstanding at the end of the period (in dollars per share) | $15.86 | $15.52 | ' |
Vested and Exercisable at the end of the period (in dollars per share) | $15.58 | ' | ' |
Weighted-Average Remaining Contractual Term | ' | ' | ' |
Outstanding at the end of the period | '4 years 7 months 6 days | ' | ' |
Vested and Exercisable at the end of the period | '4 years 1 month 6 days | ' | ' |
Aggregate Intrinsic Value | ' | ' | ' |
Outstanding at the end of the period (in dollars) | 101 | ' | ' |
Vested and Exercisable at the end of the period (in dollars) | 67 | ' | ' |
Additional disclosures relating to options vested | ' | ' | ' |
Total fair value of options that vested (in dollars) | 30 | 25 | 2 |
Intrinsic value for options that vested (in dollars) | 22 | 17 | 5 |
Intrinsic value for options exercised (in dollars) | 5 | ' | ' |
Nonvested options | ' | ' | ' |
Outstanding at beginning of period (in shares) | 6,100,000 | ' | ' |
Vested (in shares) | 1,900,000 | ' | ' |
Cancelled (in shares) | 1,400,000 | ' | ' |
Outstanding at end of period (in shares) | 3,200,000 | 6,100,000 | ' |
Weighted average grant date fair value | ' | ' | ' |
Outstanding at beginning of period (in dollars per share) | $10.73 | ' | ' |
Vested (in dollars per share) | $11.88 | ' | ' |
Cancelled (in dollars per share) | $10.20 | ' | ' |
Outstanding at end of period (in dollars per share) | $12.01 | $10.73 | ' |
Stock options | Maximum | ' | ' | ' |
Additional disclosures relating to options vested | ' | ' | ' |
Intrinsic value for options exercised (in dollars) | ' | $1 | $1 |
Derivative_Instruments_Details
Derivative Instruments (Details) (Interest Rate Cap, USD $) | 12 Months Ended | |||
Jan. 28, 2012 | Jan. 29, 2011 | Feb. 02, 2013 | Feb. 02, 2013 | |
Senior secured term loan | Senior secured term loan | |||
Maximum | ||||
Derivative Instruments | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | 'three month LIBOR | ' |
Notional value | ' | ' | $2,000,000,000 | ' |
Fixed interest rate (as a percent) | ' | ' | ' | 7.00% |
Gain (Loss) due to change in fair value | $5,000,000 | $12,000,000 | ' | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Maximum | ' | ' | ' |
Fair Value Measurements | ' | ' | ' |
Impairment charges for long-lived assets | $1 | $1 | $1 |
ScrapHD | ' | ' | ' |
Fair Value Measurements | ' | ' | ' |
Impairment charges for long-lived assets | 7 | ' | ' |
Goodwill impairment charge | 1 | ' | ' |
Contingent consideration | ' | ' | ' |
Fair Value Measurements | ' | ' | ' |
Fair value | $0 | ' | ' |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | Feb. 02, 2013 |
In Millions, unless otherwise specified | |
Carrying Value | Senior secured term loan | ' |
Fair Value Measurements | ' |
Long-term loans and notes | $1,640 |
Carrying Value | Senior notes | ' |
Fair Value Measurements | ' |
Long-term loans and notes | 1,007 |
Carrying Value | Senior subordinated notes | ' |
Fair Value Measurements | ' |
Long-term loans and notes | 393 |
Fair Value | Senior secured term loan | ' |
Fair Value Measurements | ' |
Long-term loans and notes | 1,655 |
Fair Value | Senior notes | ' |
Fair Value Measurements | ' |
Long-term loans and notes | 1,101 |
Fair Value | Senior subordinated notes | ' |
Fair Value Measurements | ' |
Long-term loans and notes | $412 |
Retirement_Plans_Details
Retirement Plans (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
item | |||
Retirement Plans | ' | ' | ' |
Age of the employees eligible to participate in the defined contribution plan | 21 | ' | ' |
Completion of hours of service of the employees eligible to participate in the defined contribution plan (in hour) | 500 | ' | ' |
Eligibility period for completion of eligible service hours | '6 months | ' | ' |
Maximum employees contribution as percentage of their compensation on a pre-tax basis | 80.00% | ' | ' |
Maximum employees contribution as percentage of their compensation on an after-tax basis | 10.00% | ' | ' |
Matching contribution by employer as a percentage of participant's pre-tax contributions | 50.00% | ' | ' |
Matching contribution by employer as a maximum percentage of participant's considered compensation | 6.00% | ' | ' |
Vesting percentage of matching contributions | 100.00% | ' | ' |
Vesting period of matching contributions | '3 years | ' | ' |
Matching contribution expense, net of forfeitures | $4 | $4 | $3 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | ||
Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | |
Future minimum annual rental commitments for all noncancelable operating leases | ' | ' | ' |
2013 | $377,000 | ' | ' |
2014 | 330,000 | ' | ' |
2015 | 272,000 | ' | ' |
2016 | 221,000 | ' | ' |
2017 | 165,000 | ' | ' |
Thereafter | 366,000 | ' | ' |
Total minimum rental commitments | 1,731,000 | ' | ' |
Rent expense applicable to non-cancelable operating leases | $355,000,000 | $345,000,000 | $327,000,000 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | Feb. 02, 2013 | Mar. 20, 2009 | Dec. 31, 2010 | Feb. 02, 2013 | Jan. 29, 2011 | Sep. 15, 2011 | Apr. 30, 2012 | Jun. 30, 2012 | Feb. 10, 2011 | 18-May-11 | Feb. 02, 2013 | Jan. 28, 2012 | 3-May-11 |
In Millions, unless otherwise specified | Employee Claims | Employee Claims | Employee Claims | Employee Claims | Employee Claims | Consumer Class Action Claims | Consumer Class Action Claims | Consumer Class Action Claims | Consumer Class Action Claims | Consumer Class Action Claims | Consumer Class Action Claims | Consumer Class Action Claims | |
Adams Claim | Adams Claim | Adams Claim | Adams Claim | Rea Claim | Pricing and Promotion | Website Tracking and Coding | Zip Code Claims | Payment Card Terminal Tampering | Payment Card Terminal Tampering | Payment Card Terminal Tampering | Payment Card Terminal Tampering | ||
item | item | item | item | item | Maximum | Maximum | item | item | item | item | item | ||
Commitments and Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of plaintiffs | ' | 114 | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' |
Damages, penalties and fees sought by plaintiff | ' | ' | ' | ' | ' | ' | $5 | $5 | ' | ' | ' | ' | ' |
Number of additional plaintiffs | ' | ' | ' | 15 | 8 | ' | ' | ' | ' | ' | ' | ' | ' |
Additional purported class action lawsuits | ' | ' | ' | ' | 2 | ' | ' | ' | 3 | 2 | 4 | ' | ' |
Number of payment card terminals tampered | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90 |
Number of cases subject to the consolidation order | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' |
Number of payment card terminals removed and replaced | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,100 | ' |
Number of plaintiff's case had bench trial occurred | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate estimate of possible loss | $14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration_of_Credit_Risk_D
Concentration of Credit Risk (Details) (USD $) | 12 Months Ended |
Feb. 02, 2013 | |
Concentration risk | ' |
Percentage of increase or decrease in interest rates affecting income before income taxes | 1.00% |
Amount of effect of one percent increase or decrease in interest rates on income before income taxes | $16,000,000 |
Percentage of increase or decrease in interest rates affecting fair value of long-term fixed rate debt | 1.00% |
Amount of effect of one percent increase or decrease in interest rates on fair value of long-term fixed rate debt | 21,000,000 |
Minimum | ' |
Concentration risk | ' |
Balance deposited with federally-insured financial institutions | 250,000 |
Maximum | ' |
Concentration risk | ' |
Aggregate account balance is subjected to be insured by the Federal Deposit Insurance Corporation | $250,000 |
Segments_and_Geographic_Inform2
Segments and Geographic Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
item | |||||||||||
Segments and Geographic Information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of reportable segments | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' |
Number of reportable segments if net sales, operating income or loss, or total assets of the ScrapHD operating segment exceeds 10% of the consolidated amounts | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' |
Sales and assets by country | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | $1,524 | $1,014 | $892 | $978 | $1,404 | $996 | $857 | $953 | $4,408 | $4,210 | $4,031 |
Total Assets (Restated) | 1,555 | ' | ' | ' | 1,838 | ' | ' | ' | 1,555 | 1,838 | 1,780 |
United States | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sales and assets by country | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | 3,989 | 3,825 | 3,673 |
Total Assets (Restated) | 1,446 | ' | ' | ' | 1,744 | ' | ' | ' | 1,446 | 1,744 | 1,699 |
Canada | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sales and assets by country | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | 419 | 385 | 358 |
Total Assets (Restated) | $109 | ' | ' | ' | $94 | ' | ' | ' | $109 | $94 | $81 |
Segments_and_Geographic_Inform3
Segments and Geographic Information (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Consolidated net sales by major product categories | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales | $1,524 | $1,014 | $892 | $978 | $1,404 | $996 | $857 | $953 | $4,408 | $4,210 | $4,031 |
General and children's crafts | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales by major product categories | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales | ' | ' | ' | ' | ' | ' | ' | ' | 2,082 | 1,908 | 1,791 |
Home decor and seasonal | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales by major product categories | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales | ' | ' | ' | ' | ' | ' | ' | ' | 890 | 837 | 805 |
Framing | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales by major product categories | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales | ' | ' | ' | ' | ' | ' | ' | ' | 836 | 804 | 794 |
Scrapbooking | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales by major product categories | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated net sales | ' | ' | ' | ' | ' | ' | ' | ' | $600 | $661 | $641 |
Segments_and_Geographic_Inform4
Segments and Geographic Information (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Segment and Geographic Information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | $105 | $35 | $9 | $51 | $88 | $22 | $10 | $37 | $200 | $157 | $103 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 245 | 254 | 276 |
Refinancing costs and losses on early extinguishments of debt | 30 | 3 | ' | ' | 2 | 1 | 4 | 11 | 33 | 18 | 53 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 115 | 100 | 46 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 97 | 101 | 103 |
Reporting segment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Segment and Geographic Information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | 200 | 157 | 103 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 245 | 254 | 276 |
Refinancing costs and losses on early extinguishments of debt | ' | ' | ' | ' | ' | ' | ' | ' | 33 | 18 | 53 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 115 | 100 | 46 |
Depreciation and amortization | ' | ' | ' | ' | ' | ' | ' | ' | 97 | 101 | 103 |
EBITDA (excluding refinancing costs and losses on early extinguishments of debt) | ' | ' | ' | ' | ' | ' | ' | ' | $690 | $630 | $581 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Related Party Transactions | ' | ' | ' |
Expenses recognized | $13 | $13 | $14 |
Long-term debt held | 3,041 | 3,490 | ' |
Bain Capital Partners, LLC | Printing of circular advertisement services received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | ' | 6 | 39 |
Bain Capital Partners, LLC | Print procurement services received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 5 | 5 | ' |
The Blackstone Group | Senior secured term loan | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Long-term debt held | 30 | ' | ' |
The Blackstone Group | Store inventory counting services received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 6 | 6 | 6 |
The Blackstone Group | Candy-type items in stores received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 24 | 20 | 19 |
The Blackstone Group | Hospitality services received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 1 | 1 | 1 |
The Blackstone Group | Lease services of certain properties from a vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 5 | 3 | ' |
The Sponsors | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Annual management fees | 12 | ' | ' |
Highfields Capital Management LP | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Annual management fees | $1 | ' | ' |
Officers no longer with the company | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Number of shares repurchased | 14,667 | 192,001 | ' |
Condensed_Consolidating_Financ2
Condensed Consolidating Financial Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Net sales | $1,524 | $1,014 | $892 | $978 | $1,404 | $996 | $857 | $953 | $4,408 | $4,210 | $4,031 |
Cost of sales and occupancy expense | 907 | 613 | 556 | 567 | 843 | 600 | 529 | 560 | 2,643 | 2,532 | 2,467 |
Gross profit | 617 | 401 | 336 | 411 | 561 | 396 | 328 | 393 | 1,765 | 1,678 | 1,564 |
Selling, general, and administrative expense | 345 | 276 | 252 | 259 | 322 | 277 | 239 | 252 | 1,132 | 1,090 | 1,051 |
Share-based compensation | 6 | 2 | 3 | 4 | 15 | 14 | 2 | 2 | 15 | 33 | 8 |
Impairment of intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | 8 | ' | ' |
Related party expenses | ' | ' | ' | ' | ' | ' | ' | ' | 13 | 13 | 14 |
Store pre-opening costs | ' | ' | ' | ' | ' | ' | ' | ' | 5 | 4 | 3 |
Operating income | 255 | 117 | 76 | 144 | 221 | 100 | 82 | 135 | 592 | 538 | 488 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 245 | 254 | 276 |
Refinancing costs and losses on early extinguishments of debt | 30 | 3 | ' | ' | 2 | 1 | 4 | 11 | 33 | 18 | 53 |
Other (income) and expense, net | ' | ' | ' | ' | ' | ' | ' | ' | -1 | 9 | 10 |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 315 | 257 | 149 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 115 | 100 | 46 |
Net income | 105 | 35 | 9 | 51 | 88 | 22 | 10 | 37 | 200 | 157 | 103 |
Other comprehensive income, net of tax: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1 | 1 |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 200 | 156 | 104 |
Parent Company | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | 3,848 | 3,684 | 3,530 |
Cost of sales and occupancy expense | ' | ' | ' | ' | ' | ' | ' | ' | 2,473 | 2,389 | 2,341 |
Gross profit | ' | ' | ' | ' | ' | ' | ' | ' | 1,375 | 1,295 | 1,189 |
Selling, general, and administrative expense | ' | ' | ' | ' | ' | ' | ' | ' | 980 | 945 | 912 |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | 12 | 28 | 7 |
Impairment of intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | 8 | ' | ' |
Related party expenses | ' | ' | ' | ' | ' | ' | ' | ' | 13 | 13 | 14 |
Store pre-opening costs | ' | ' | ' | ' | ' | ' | ' | ' | 4 | 3 | 3 |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | 358 | 306 | 253 |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 245 | 254 | 276 |
Refinancing costs and losses on early extinguishments of debt | ' | ' | ' | ' | ' | ' | ' | ' | 33 | 18 | 53 |
Other (income) and expense, net | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5 | 12 |
Intercompany charges (income) | ' | ' | ' | ' | ' | ' | ' | ' | 76 | 73 | 73 |
Equity in earnings of subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | 311 | 301 | 310 |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 315 | 257 | 149 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 115 | 100 | 46 |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | 200 | 157 | 103 |
Other comprehensive income, net of tax: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign currency translation adjustment | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1 | 1 |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 200 | 156 | 104 |
Guarantor Subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of equity ownership owned | 100.00% | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | 2,544 | 2,369 | 2,294 |
Cost of sales and occupancy expense | ' | ' | ' | ' | ' | ' | ' | ' | 2,154 | 1,986 | 1,919 |
Gross profit | ' | ' | ' | ' | ' | ' | ' | ' | 390 | 383 | 375 |
Selling, general, and administrative expense | ' | ' | ' | ' | ' | ' | ' | ' | 152 | 145 | 139 |
Share-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | 3 | 5 | 1 |
Store pre-opening costs | ' | ' | ' | ' | ' | ' | ' | ' | 1 | 1 | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | 234 | 232 | 235 |
Other (income) and expense, net | ' | ' | ' | ' | ' | ' | ' | ' | -1 | 4 | -2 |
Intercompany charges (income) | ' | ' | ' | ' | ' | ' | ' | ' | -76 | -73 | -73 |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 311 | 301 | 310 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 114 | 117 | 107 |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | 197 | 184 | 203 |
Other comprehensive income, net of tax: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | 197 | 184 | 203 |
Eliminations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | ' | ' | ' | ' | ' | ' | ' | ' | -1,984 | -1,843 | -1,793 |
Cost of sales and occupancy expense | ' | ' | ' | ' | ' | ' | ' | ' | -1,984 | -1,843 | -1,793 |
Equity in earnings of subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | -311 | -301 | -310 |
Income before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -311 | -301 | -310 |
Provision for income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -114 | -117 | -107 |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | -197 | -184 | -203 |
Other comprehensive income, net of tax: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | ($197) | ($184) | ($203) |
Condensed_Consolidating_Financ3
Condensed Consolidating Financial Information (Details 2) (USD $) | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Jan. 30, 2010 |
Current assets: | ' | ' | ' | ' |
Cash and equivalents | $56,000,000 | $371,000,000 | $319,000,000 | $217,000,000 |
Merchandise inventories | 862,000,000 | 845,000,000 | ' | ' |
Other | 126,000,000 | 123,000,000 | ' | ' |
Total current assets | 1,044,000,000 | 1,339,000,000 | ' | ' |
Property and equipment, net | 338,000,000 | 312,000,000 | ' | ' |
Goodwill, net | 94,000,000 | 95,000,000 | ' | ' |
Other assets | 79,000,000 | 92,000,000 | ' | ' |
Total assets | 1,555,000,000 | 1,838,000,000 | 1,780,000,000 | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 263,000,000 | 301,000,000 | ' | ' |
Accrued liabilities and other | 367,000,000 | 389,000,000 | ' | ' |
Share-based Compensation | 35,000,000 | 25,000,000 | ' | ' |
Current portion of long-term debt | 150,000,000 | 127,000,000 | ' | ' |
Other | 41,000,000 | 19,000,000 | ' | ' |
Total current liabilities | 856,000,000 | 861,000,000 | ' | ' |
Long-term debt | 2,891,000,000 | 3,363,000,000 | ' | ' |
Other long-term liabilities | 85,000,000 | 96,000,000 | ' | ' |
Share-based Compensation | 27,000,000 | 19,000,000 | ' | ' |
Total stockholders' deficit | -2,304,000,000 | -2,501,000,000 | -2,654,000,000 | -2,766,000,000 |
Total liabilities and stockholders' deficit | 1,555,000,000 | 1,838,000,000 | ' | ' |
Parent Company | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and equivalents | 37,000,000 | 363,000,000 | 309,000,000 | 207,000,000 |
Merchandise inventories | 591,000,000 | 555,000,000 | ' | ' |
Other | 105,000,000 | 103,000,000 | ' | ' |
Total current assets | 733,000,000 | 1,021,000,000 | ' | ' |
Property and equipment, net | 271,000,000 | 249,000,000 | ' | ' |
Goodwill, net | 94,000,000 | 95,000,000 | ' | ' |
Investment in subsidiaries | 284,000,000 | 402,000,000 | ' | ' |
Other assets | 76,000,000 | 89,000,000 | ' | ' |
Total assets | 1,458,000,000 | 1,856,000,000 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 5,000,000 | 9,000,000 | ' | ' |
Accrued liabilities and other | 235,000,000 | 256,000,000 | ' | ' |
Share-based Compensation | 22,000,000 | 16,000,000 | ' | ' |
Current portion of long-term debt | 150,000,000 | 127,000,000 | ' | ' |
Intercompany payable | 329,000,000 | 470,000,000 | ' | ' |
Other | 36,000,000 | 18,000,000 | ' | ' |
Total current liabilities | 777,000,000 | 896,000,000 | ' | ' |
Long-term debt | 2,891,000,000 | 3,363,000,000 | ' | ' |
Other long-term liabilities | 73,000,000 | 85,000,000 | ' | ' |
Share-based Compensation | 21,000,000 | 13,000,000 | ' | ' |
Total stockholders' deficit | -2,304,000,000 | -2,501,000,000 | ' | ' |
Total liabilities and stockholders' deficit | 1,458,000,000 | 1,856,000,000 | ' | ' |
Guarantor Subsidiaries | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and equivalents | 19,000,000 | 8,000,000 | 10,000,000 | 10,000,000 |
Merchandise inventories | 271,000,000 | 290,000,000 | ' | ' |
Intercompany receivables | 329,000,000 | 470,000,000 | ' | ' |
Other | 21,000,000 | 20,000,000 | ' | ' |
Total current assets | 640,000,000 | 788,000,000 | ' | ' |
Property and equipment, net | 67,000,000 | 63,000,000 | ' | ' |
Other assets | 3,000,000 | 3,000,000 | ' | ' |
Total assets | 710,000,000 | 854,000,000 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 258,000,000 | 292,000,000 | ' | ' |
Accrued liabilities and other | 132,000,000 | 133,000,000 | ' | ' |
Share-based Compensation | 13,000,000 | 9,000,000 | ' | ' |
Other | 5,000,000 | 1,000,000 | ' | ' |
Total current liabilities | 408,000,000 | 435,000,000 | ' | ' |
Other long-term liabilities | 12,000,000 | 11,000,000 | ' | ' |
Share-based Compensation | 6,000,000 | 6,000,000 | ' | ' |
Total stockholders' deficit | 284,000,000 | 402,000,000 | ' | ' |
Total liabilities and stockholders' deficit | 710,000,000 | 854,000,000 | ' | ' |
Eliminations | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Intercompany receivables | -329,000,000 | -470,000,000 | ' | ' |
Total current assets | -329,000,000 | -470,000,000 | ' | ' |
Investment in subsidiaries | -284,000,000 | -402,000,000 | ' | ' |
Total assets | -613,000,000 | -872,000,000 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Intercompany payable | -329,000,000 | -470,000,000 | ' | ' |
Total current liabilities | -329,000,000 | -470,000,000 | ' | ' |
Total stockholders' deficit | -284,000,000 | -402,000,000 | ' | ' |
Total liabilities and stockholders' deficit | ($613,000,000) | ($872,000,000) | ' | ' |
Condensed_Consolidating_Financ4
Condensed Consolidating Financial Information (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Operating activities: | ' | ' | ' |
Net cash provided by operating activities | $299 | $409 | $438 |
Investing activities: | ' | ' | ' |
Cost of business acquisition | ' | ' | -2 |
Cash paid for property and equipment | -124 | -109 | -81 |
Net cash used in investing activities | -124 | -109 | -83 |
Financing activities: | ' | ' | ' |
Net repayments of long-term debt | -457 | -227 | -225 |
Other financing activities | -33 | -21 | -28 |
Net cash used in financing activities | -490 | -248 | -253 |
Net (decrease) increase in cash and equivalents | -315 | 52 | 102 |
Cash and equivalents at beginning of period | 371 | 319 | 217 |
Cash and equivalents at end of period | 56 | 371 | 319 |
Parent Company | ' | ' | ' |
Operating activities: | ' | ' | ' |
Net cash provided by operating activities | 269 | 390 | 426 |
Investing activities: | ' | ' | ' |
Cost of business acquisition | ' | ' | -2 |
Cash paid for property and equipment | -105 | -88 | -69 |
Net cash used in investing activities | -105 | -88 | -71 |
Financing activities: | ' | ' | ' |
Net repayments of long-term debt | -457 | -227 | -225 |
Other financing activities | -33 | -21 | -28 |
Net cash used in financing activities | -490 | -248 | -253 |
Net (decrease) increase in cash and equivalents | -326 | 54 | 102 |
Cash and equivalents at beginning of period | 363 | 309 | 207 |
Cash and equivalents at end of period | 37 | 363 | 309 |
Guarantor Subsidiaries | ' | ' | ' |
Operating activities: | ' | ' | ' |
Net cash provided by operating activities | 453 | 234 | 301 |
Investing activities: | ' | ' | ' |
Cash paid for property and equipment | -19 | -21 | -12 |
Net cash used in investing activities | -19 | -21 | -12 |
Financing activities: | ' | ' | ' |
Intercompany dividends | -423 | -215 | -289 |
Net cash used in financing activities | -423 | -215 | -289 |
Net (decrease) increase in cash and equivalents | 11 | -2 | ' |
Cash and equivalents at beginning of period | 8 | 10 | 10 |
Cash and equivalents at end of period | 19 | 8 | 10 |
Eliminations | ' | ' | ' |
Operating activities: | ' | ' | ' |
Net cash provided by operating activities | -423 | -215 | -289 |
Financing activities: | ' | ' | ' |
Intercompany dividends | 423 | 215 | 289 |
Net cash used in financing activities | $423 | $215 | $289 |
Subsequent_Event_Details
Subsequent Event (Details) (USD $) | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 | Jul. 29, 2013 | Jul. 31, 2013 |
In Millions, except Share data, unless otherwise specified | Subsequent Event | Subsequent Event | |||
PIK Notes | Michaels Companies, Inc. | ||||
item | |||||
Subsequent event | ' | ' | ' | ' | ' |
Number of shares of common stock for which rights to receive available | ' | ' | ' | ' | 1 |
Number of shares of common stock of which options assumed | ' | ' | ' | ' | 1 |
Number of shares of common stock converted into Parent common stock | ' | ' | ' | ' | 118,000,000 |
Shares issued | 118,414,727 | 118,265,885 | 118,419,850 | ' | 100 |
Common Stock, par value (in dollars per share) | $0.10 | $0.10 | ' | ' | $0.10 |
Principal amount of notes issued | ' | $200 | ' | $800 | ' |
PIK interest rate one (as a percent) | ' | ' | ' | 7.50% | ' |
PIK interest rate two (as a percent) | ' | ' | ' | 8.25% | ' |
Number of interest payments to be paid entirely in cash | ' | ' | ' | 3 | ' |
Proceeds from debt after discount, fees and expenses | ' | ' | ' | 782 | ' |
Annual interest payments | ' | ' | ' | 60 | ' |
Total interest payments | ' | ' | ' | $301 | ' |
UNAUDITED_SUPPLEMENTAL_QUARTER
UNAUDITED SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Feb. 02, 2013 | Oct. 27, 2012 | Jul. 28, 2012 | Apr. 28, 2012 | Jan. 28, 2012 | Oct. 29, 2011 | Jul. 30, 2011 | Apr. 30, 2011 | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
Net sales | $1,524 | $1,014 | $892 | $978 | $1,404 | $996 | $857 | $953 | $4,408 | $4,210 | $4,031 |
Cost of sales and occupancy expense | 907 | 613 | 556 | 567 | 843 | 600 | 529 | 560 | 2,643 | 2,532 | 2,467 |
Gross profit | 617 | 401 | 336 | 411 | 561 | 396 | 328 | 393 | 1,765 | 1,678 | 1,564 |
Selling, general, and administrative expense | 345 | 276 | 252 | 259 | 322 | 277 | 239 | 252 | 1,132 | 1,090 | 1,051 |
Share-based compensation | 6 | 2 | 3 | 4 | 15 | 14 | 2 | 2 | 15 | 33 | 8 |
Operating income | 255 | 117 | 76 | 144 | 221 | 100 | 82 | 135 | 592 | 538 | 488 |
Refinancing costs and losses on early extinguishments of debt | 30 | 3 | ' | ' | 2 | 1 | 4 | 11 | 33 | 18 | 53 |
Net income | 105 | 35 | 9 | 51 | 88 | 22 | 10 | 37 | 200 | 157 | 103 |
As Reported | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net sales | 1,524 | 1,014 | 892 | 978 | 1,404 | 996 | 857 | 953 | ' | ' | ' |
Cost of sales and occupancy expense | 902 | 611 | 553 | 566 | 843 | 594 | 529 | 560 | 2,632 | 2,526 | ' |
Gross profit | 622 | 403 | 339 | 412 | 561 | 402 | 328 | 393 | 1,776 | 1,684 | ' |
Selling, general, and administrative expense | 345 | 278 | 252 | 260 | 324 | 279 | 241 | 254 | 1,135 | 1,098 | ' |
Operating income | 266 | 119 | 82 | 148 | 234 | 118 | 82 | 135 | 615 | 569 | ' |
Refinancing costs and losses on early extinguishments of debt | 30 | 3 | ' | ' | 2 | 1 | 4 | 11 | ' | ' | ' |
Net income | $112 | $36 | $13 | $53 | $97 | $32 | $10 | $37 | $214 | $176 | ' |
UNAUDITED_SUPPLEMENTAL_QUARTER1
UNAUDITED SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Feb. 02, 2013 | Jan. 28, 2012 | Jan. 29, 2011 |
item | item | item | |
Debt | ' | ' | ' |
Number of weeks in a fiscal year | 53 | 52 | 52 |
Number of weeks in a fiscal quarter | 13 | ' | ' |
Number of weeks after the end of previous fiscal year | 13 | ' | ' |
Number of weeks in the fourth quarter in case of a 53-week fiscal year | 14 | ' | ' |
Senior subordinated notes | ' | ' | ' |
Debt | ' | ' | ' |
Face value of extinguished debt | ' | 7 | ' |
Subordinated discount notes | ' | ' | ' |
Debt | ' | ' | ' |
Face value of extinguished debt | ' | 163 | ' |
Accreted value of outstanding debt | ' | 155 | ' |
Minimum | ' | ' | ' |
Debt | ' | ' | ' |
Number of weeks in a fiscal year | 52 | ' | ' |
Maximum | ' | ' | ' |
Debt | ' | ' | ' |
Number of weeks in a fiscal year | 53 | ' | ' |