Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
4-May-13 | 21-May-13 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'MICHAELS STORES INC | ' |
Entity Central Index Key | '0000740670 | ' |
Document Type | '10-Q/A | ' |
Document Period End Date | 4-May-13 | ' |
Amendment Flag | 'true | ' |
Amendment Description | 'Michaels Stores, Inc. ("Company") is filing this Amendment No. 1 ("Form 10-Q/A") to its Quarterly Report on Form 10-Q for the quarter ended May 4, 2013, filed with the Securities and Exchange Commission ("SEC") on May 24, 2013 (the "Form 10-Q"), for the purpose of correcting historical share-based compensation expense caused by the Company's repurchase of shares that had not been held for at least six months 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 unaudited interim consolidated financial statements for the three month periods ended May 4, 2013 and April 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. As a result, the Company is also restating its financial statements for the three months ended May 4, 2013 and April 28, 2012. The non-cash impact to share-based compensation cost for the three months ended May 4, 2013 and April 28, 2012, was $5 million ($3, net of tax) million and $3 million ($1, net of tax) million, respectively. As part of the restatement, the Company also recorded other adjustments related to merchandise inventories and the reserve for closed facilities which were previously determined to be immaterial to the respective periods. In total, the adjustments resulted in a decline of net income by $1 million for the three months ended May 4, 2013, and $2 million for the three months ended April 28, 2012. | ' |
Current Fiscal Year End Date | '--02-01 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 118,687,391 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | 4-May-13 | Feb. 02, 2013 | Apr. 28, 2012 |
In Millions, unless otherwise specified | |||
Current assets: | ' | ' | ' |
Cash and equivalents | $55 | $56 | $385 |
Merchandise inventories | 843 | 862 | 880 |
Prepaid expenses and other | 85 | 86 | 77 |
Deferred income taxes | 37 | 37 | 42 |
Income tax receivable | 8 | 3 | 5 |
Total current assets | 1,028 | 1,044 | 1,389 |
Property and equipment, at cost | 1,527 | 1,502 | 1,405 |
Less accumulated depreciation and amortization | -1,186 | -1,164 | -1,095 |
Property and equipment, net | 341 | 338 | 310 |
Goodwill | 94 | 94 | 95 |
Debt issuance costs, net of accumulated amortization of $52, $54, and $78, respectively | 42 | 46 | 55 |
Deferred income taxes | 28 | 30 | 31 |
Other assets | 2 | 3 | 4 |
Total non-current assets | 166 | 173 | 185 |
Total assets | 1,535 | 1,555 | 1,884 |
Current liabilities: | ' | ' | ' |
Accounts payable | 232 | 263 | 280 |
Accrued liabilities and other | 300 | 367 | 388 |
Share based compensation liability | 36 | 35 | 28 |
Current portion of long-term debt | 198 | 150 | 127 |
Deferred income taxes | 4 | 4 | 1 |
Income taxes payable | 27 | 37 | 27 |
Total current liabilities | 797 | 856 | 851 |
Long-term debt | 2,887 | 2,891 | 3,363 |
Deferred income taxes | 2 | 2 | 11 |
Share based compensation liability | 28 | 27 | 22 |
Other long-term liabilities | 79 | 83 | 85 |
Total long-term liabilities | 2,996 | 3,003 | 3,481 |
Total liabilities | 3,793 | 3,859 | 4,332 |
Commitments and contingencies | ' | ' | ' |
Stockholders' deficit: | ' | ' | ' |
Common Stock, $0.10 par value, 220,000,000 shares authorized; 118,417,069 shares issued and outstanding at May 4, 2013; 118,414,727 shares issued and outstanding at February 2, 2013; 118,420,253 shares issued and outstanding at April 28, 2012 | 12 | 12 | 12 |
Additional paid-in capital | 38 | 37 | 40 |
Accumulated deficit | -2,313 | -2,359 | -2,508 |
Accumulated other comprehensive income | 5 | 6 | 8 |
Total stockholders' deficit | -2,258 | -2,304 | -2,448 |
Total liabilities and stockholders' deficit | $1,535 | $1,555 | $1,884 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | 4-May-13 | Feb. 02, 2013 | Apr. 28, 2012 |
In Millions, except Share data, unless otherwise specified | |||
CONSOLIDATED BALANCE SHEETS | ' | ' | ' |
Debt issuance costs, accumulated amortization (in dollars) | $52 | $54 | $78 |
Common Stock, par value (in dollars per share) | $0.10 | $0.10 | $0.10 |
Common Stock, shares authorized | 220,000,000 | 220,000,000 | 220,000,000 |
Common Stock, shares issued | 118,417,069 | 118,414,727 | 118,420,253 |
Common Stock, shares outstanding | 118,417,069 | 118,414,727 | 118,420,253 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' |
Net sales | $993 | $978 |
Cost of sales and occupancy expense | 584 | 567 |
Gross profit | 409 | 411 |
Selling, general, and administrative expense | 272 | 259 |
Share-based compensation | 3 | 4 |
Related party expenses | 4 | 3 |
Store pre-opening costs | 2 | 1 |
Operating income | 128 | 144 |
Interest expense | 47 | 66 |
Refinancing costs and losses on early extinguishment of debt | 7 | ' |
Other (income) and expense, net | ' | -1 |
Income before income taxes | 74 | 79 |
Provision for income taxes | 28 | 28 |
Net income | 46 | 51 |
Other comprehensive income, net of tax: | ' | ' |
Foreign currency translation adjustment and other | -1 | 2 |
Comprehensive income | $45 | $53 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 |
Operating activities: | ' | ' |
Net income | $46 | $51 |
Adjustments: | ' | ' |
Depreciation and amortization | 25 | 24 |
Share-based compensation | 4 | 4 |
Debt issuance costs amortization | 2 | 4 |
Refinancing costs expensed and losses on early extinguishment of debt | 7 | ' |
Changes in assets and liabilities: | ' | ' |
Merchandise inventories | 20 | -33 |
Prepaid expenses and other | 1 | 3 |
Accounts payable | -14 | -15 |
Accrued interest | -30 | 37 |
Accrued liabilities and other | -41 | -37 |
Income taxes | -14 | 3 |
Other long-term liabilities | -4 | ' |
Net cash provided by operating activities | 2 | 41 |
Investing activities: | ' | ' |
Additions to property and equipment | -22 | -18 |
Net cash used in investing activities | -22 | -18 |
Financing activities: | ' | ' |
Redemption of senior subordinated notes due 2016 | -142 | ' |
Borrowings on asset-based revolving credit facility | 306 | ' |
Payments on asset-based revolving credit facility | -125 | ' |
Payment of capital leases | -1 | ' |
Change in cash overdraft | -19 | -9 |
Net cash provided by (used in) financing activities | 19 | -9 |
Net (decrease) increase in cash and equivalents | -1 | 14 |
Cash and equivalents at beginning of period | 56 | 371 |
Cash and equivalents at end of period | 55 | 385 |
Supplemental Cash Flow Information: | ' | ' |
Cash paid for interest | 75 | 25 |
Cash paid for income taxes | $44 | $24 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
4-May-13 | |
Summary of Significant Accounting Policies | ' |
Summary of Significant Accounting Policies | ' |
Note 1. Summary of Significant Accounting Policies | |
Basis of Presentation | |
The consolidated financial statements include the accounts of Michaels Stores, Inc. and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. 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. | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 2, 2013. | |
The balance sheet at February 2, 2013 has been derived from the restated audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. | |
In the opinion of management, all adjustments (consisting of normal recurring accruals and other items) considered necessary for a fair presentation have been included. | |
Because of the seasonal nature of our business, the results of operations for the quarter ended May 4, 2013 are not indicative of the results to be expected for the entire year. | |
We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. All references herein to “fiscal 2013” relate to the 52 weeks ending February 1, 2014, and all references to”fiscal 2012” relate to the 53 weeks ended February 2, 2013. In addition, all references herein to “the first quarter of fiscal 2013” relate to the 13 weeks ended May 4, 2013, and all references to “the first quarter of fiscal 2012” relate to the 13 weeks ended April 28, 2012. | |
Recent Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, an amendment to Accounting Standards Codification (“ASC”) 220, Comprehensive Income. ASU No. 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other items not reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. This standard, which is prospective, is effective for reporting periods beginning after December 15, 2012, with earlier adoption permitted. We adopted all requirements of this standard on February 3, 2013, the beginning of fiscal 2013. |
Restatement_Sharebased_Compens
Restatement - Share-based Compensation | 3 Months Ended | |||||||||||||
4-May-13 | ||||||||||||||
Restatement - Share-based Compensation | ' | |||||||||||||
Restatement - Share-based Compensation | ' | |||||||||||||
Note 2. Restatement — Share-based Compensation | ||||||||||||||
The Company has determined its previously issued unaudited interim consolidated financial statements for the three month periods ended May 4, 2013 and April 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. As a result, the Company is also restating its financial statements for the three months ended May 4, 2013 and April 28, 2012. The impact to share-based compensation cost for the three months ended May 4, 2013 and April 28, 2012, was $5 million ($3, net of tax) and $3 million ($1, net of tax), respectively. As part of the restatement, the Company also recorded other adjustments related to merchandise inventories and the reserve for closed facilities which were previously determined to be immaterial to the respective periods. In total, the adjustments resulted in a decline of Net income by $1 million for the three months ended May 4, 2013, and $2 million for the three months ended April 28, 2012. | ||||||||||||||
The following footnotes have been restated: | ||||||||||||||
· Note 6 — Income Taxes | ||||||||||||||
· Note 8 — Segments and Geographic Information | ||||||||||||||
· Note 10 — Condensed Consolidating Financial Information | ||||||||||||||
The following tables illustrate the correction as associated with certain line items in the unaudited interim consolidated financial statements (amounts in millions): | ||||||||||||||
Consolidated Balance Sheet | ||||||||||||||
May 4, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 842 | $ | 2 | $ | (1 | ) | $ | 843 | |||||
Total current assets | 1,027 | 2 | (1 | ) | 1,028 | |||||||||
Deferred income taxes | 13 | 15 | — | 28 | ||||||||||
Total non-current assets | 151 | 15 | — | 166 | ||||||||||
Share-based compensation liability | — | 36 | — | 36 | ||||||||||
Income taxes payable | 31 | (4 | ) | — | 27 | |||||||||
Total current liabilities | 765 | 32 | — | 797 | ||||||||||
Share-based compensation liability | — | 28 | — | 28 | ||||||||||
Total long-term liabilities | 2,968 | 28 | — | 2,996 | ||||||||||
Additional paid-in capital | 48 | (10 | ) | — | 38 | |||||||||
Accumulated deficit | (2,279 | ) | (33 | ) | (1 | ) | (2,313 | ) | ||||||
Total stockholders’ deficit | (2,214 | ) | (43 | ) | (1 | ) | (2,258 | ) | ||||||
Consolidated Balance Sheet | ||||||||||||||
April 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 874 | $ | 6 | $ | — | $ | 880 | ||||||
Total current assets | 1,383 | 6 | — | 1,389 | ||||||||||
Deferred income taxes | 18 | 13 | — | 31 | ||||||||||
Total non-current assets | 172 | 13 | — | 185 | ||||||||||
Share-based compensation liability | — | 28 | — | 28 | ||||||||||
Income taxes payable | 28 | (1 | ) | — | 27 | |||||||||
Total current liabilities | 824 | 27 | — | 851 | ||||||||||
Share-based compensation liability | — | 22 | — | 22 | ||||||||||
Total long-term liabilities | 3,459 | 22 | — | 3,481 | ||||||||||
Additional paid-in capital | 49 | (9 | ) | — | 40 | |||||||||
Accumulated deficit | (2,487 | ) | (21 | ) | — | (2,508 | ) | |||||||
Total stockholders’ deficit | (2,418 | ) | (30 | ) | — | (2,448 | ) | |||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 586 | $ | 1 | $ | (3 | ) | $ | 584 | |||||
Gross Profit | 407 | (1 | ) | 3 | 409 | |||||||||
Selling, general and administrative expense | 271 | 1 | — | 272 | ||||||||||
Share-based compensation | — | 3 | — | 3 | ||||||||||
Operating income | 130 | (5 | ) | 3 | 128 | |||||||||
Income before income taxes | 76 | (5 | ) | 3 | 74 | |||||||||
Provision for income taxes | 29 | (2 | ) | 1 | 28 | |||||||||
Net income | 47 | (3 | ) | 2 | 46 | |||||||||
Comprehensive income | 46 | (3 | ) | 2 | 45 | |||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Quarter Ended April 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 566 | $ | — | $ | 1 | $ | 567 | ||||||
Gross Profit | 412 | — | (1 | ) | 411 | |||||||||
Selling, general and administrative expense | 260 | (1 | ) | — | 259 | |||||||||
Share-based compensation | — | 4 | — | 4 | ||||||||||
Operating income | 148 | (3 | ) | (1 | ) | 144 | ||||||||
Income before income taxes | 83 | (3 | ) | (1 | ) | 79 | ||||||||
Provision for income taxes | 30 | (2 | ) | — | 28 | |||||||||
Net income | 53 | (1 | ) | (1 | ) | 51 | ||||||||
Comprehensive income | 55 | (1 | ) | (1 | ) | 53 | ||||||||
Cash Flow Data | ||||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 47 | (3 | ) | 2 | $ | 46 | |||||||
Share-based compensation | (1 | ) | 5 | — | 4 | |||||||||
Merchandise inventories | 23 | — | (3 | ) | 20 | |||||||||
Accrued liabilities and other | (39 | ) | (2 | ) | — | (41 | ) | |||||||
Income taxes | (15 | ) | — | 1 | (14 | ) | ||||||||
Cash Flow Data | ||||||||||||||
Quarter Ended April 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 53 | (1 | ) | (1 | ) | $ | 51 | ||||||
Share-based compensation | 1 | 3 | — | 4 | ||||||||||
Merchandise inventories | (34 | ) | — | 1 | (33 | ) | ||||||||
Income taxes | 5 | (2 | ) | –– | 3 | |||||||||
Debt
Debt | 3 Months Ended | ||||||||||||
4-May-13 | |||||||||||||
Debt | ' | ||||||||||||
Debt | ' | ||||||||||||
Note 3. Debt | |||||||||||||
Our outstanding debt is detailed in the table below. We were in compliance with the terms and conditions of all debt agreements for all periods presented. | |||||||||||||
May 4, 2013 | February 2, 2013 | April 28, 2012 | Interest Rate | ||||||||||
(in millions) | |||||||||||||
Senior secured term loan | $ | 1,640 | $ | 1,640 | $ | 1,996 | Variable | ||||||
Senior notes | 1,007 | 1,007 | 795 | 7.75% | |||||||||
Senior subordinated notes | 256 | 393 | 393 | 11.38% | |||||||||
Subordinated discount notes | — | — | 306 | 13.00% | |||||||||
Asset-based revolving credit facility | 182 | 1 | — | Variable | |||||||||
Total debt | 3,085 | 3,041 | 3,490 | ||||||||||
Less current portion | 198 | 150 | 127 | ||||||||||
Long-term debt | $ | 2,887 | $ | 2,891 | $ | 3,363 | |||||||
113/8% Senior Subordinated Notes due 2016 | |||||||||||||
On January 28, 2013, we caused to be delivered to the holders of our outstanding 113/8% Senior Subordinated Notes due November 1, 2016 (the “Senior Subordinated Notes”) an irrevocable notice relating to the redemption of $137 million in aggregate principal amount of the Senior Subordinated Notes. 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 Debt, we recorded a loss on early extinguishment of debt of approximately $7 million related to the partial 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. | |||||||||||||
Restated Revolving Credit Facility | |||||||||||||
As of May 4, 2013, the borrowing base of our restated senior secured asset-based revolving credit facility (“the Restated Revolving Credit Facility”) was $650 million, of which we had $182 million in borrowings, $62 million of outstanding letters of credit and the unused borrowing capacity was $406 million. |
Comprehensive_Income
Comprehensive Income | 3 Months Ended | ||||
4-May-13 | |||||
Comprehensive Income | ' | ||||
Comprehensive Income | ' | ||||
Note 4. Comprehensive Income | |||||
Accumulated other comprehensive income, net of tax, is reflected in the Consolidated Balance Sheets as follows: | |||||
Foreign Currency | |||||
Translation | |||||
and Other | |||||
(in millions) | |||||
Balance at February 2, 2013 | $ | 6 | |||
Foreign currency translation adjustment and other | (1 | ) | |||
Balance at May 4, 2013 | $ | 5 |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||
4-May-13 | ||||||||
Fair Value Measurements | ' | |||||||
Fair Value Measurements | ' | |||||||
Note 5. Fair Value Measurements | ||||||||
As defined in ASC 820, Fair Value Measurements and Disclosures, 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. | ||||||||
We apply fair value techniques on a non-recurring basis for the establishment of potential impairment loss related to goodwill pursuant to ASC 350, Intangibles—Goodwill and Other and determining the fair value of long-lived assets pursuant to ASC 360, Property, Plant, and Equipment. During the quarter ended May 4, 2013, there were no events or changes in circumstances indicating the carrying amounts of our goodwill or long-lived assets may not be recoverable. | ||||||||
The table below provides the carrying and fair values of our senior secured term loan facility (“Restated Term Loan Credit Facility”), our 73/4% Senior Notes that mature in 2018 (“2018 Senior Notes”) and our Senior Subordinated Notes, (together, with our 2018 Senior Notes, “our notes” ) as of May 4, 2013. The fair value of our Restated Term Loan Credit Facility was determined based on quoted market prices of similar instruments 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 | $ | 1,661 | ||||
Senior notes | 1,007 | 1,100 | ||||||
Senior subordinated notes | 256 | 269 | ||||||
Income_Taxes
Income Taxes | 3 Months Ended |
4-May-13 | |
Income Taxes | ' |
Income Taxes | ' |
Note 6. Income Taxes | |
The effective tax rate was 37.8% for the first quarter of fiscal 2013. The effective tax rate was 35.4% for the first quarter of fiscal 2012. The current year tax rate is higher than the prior year tax rate due primarily to the prior year favorable impact related to our reserve for uncertain tax positions. We currently estimate our annualized effective tax rate for fiscal 2013 to be 37.7%. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
4-May-13 | |
Commitments and Contingencies | ' |
Commitments and Contingencies | ' |
Note 7. Commitments and Contingencies | |
We are involved in ongoing legal and regulatory proceedings. Other than those described in the following paragraphs, there were no material changes to our disclosures of commitments and contingencies from our Annual Report on Form 10-K for the fiscal year ended February 2, 2013. | |
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. We have entered into settlement agreements with virtually all of the individual plaintiffs for an amount that will not 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 sought 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 class-wide settlement with plaintiffs and the Court granted final approval on April 22, 2013. The settlement will not have a material effect on our consolidated financial statements. | |
Consumer Class Action Claims | |
California 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. The parties mediated the matter in March and a tentative settlement has been reached for an amount that will not have a material effect on our consolidated financial statements. | |
Massachusetts Zip Code Claims | |
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 Massachusetts statute regarding the collection of personally identification information in connection with a credit card transaction. On March 11, 2013, the Massachusetts Supreme Judicial Court ruled on certified questions on the interpretation of the statute and remanded the case to the U.S. District Court for further proceedings. Following the Judicial Court’s decision, an additional purported class action lawsuit asserting the same allegations in Tyler was filed in the U.S. District Court-District of Massachusetts by Susan D’Esposito, and the two cases have been consolidated. We believe we have meritorious defenses to the claims 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 is claiming violation of Ohio law ORC 1345.01 et seq., unjust enrichment and fraud. The plaintiff has alleged damages, penalties and fees not to exceed $5 million, exclusive of interest and costs. 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. | |
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. | |
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 alleging 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. A number of additional purported class action lawsuits significantly mirroring the claims in the Ramundo complaint were filed against the Company, and subsequently these cases and the Ramundo case were consolidated and transferred to the Northern District of Illinois. | |
On August 20, 2012, we reached a tentative class-wide settlement with plaintiffs for an amount that will not have a material effect on our consolidated financial statements and the Court granted final approval on April 17, 2013. | |
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, as well as other matters previously disclosed in the Company’s filings with the Securities and Exchange Commission (“SEC”), 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 or as previously disclosed in the Company’s filings with the SEC, 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. |
Segments_and_Geographic_Inform
Segments and Geographic Information | 3 Months Ended | ||||||||||
4-May-13 | |||||||||||
Segments and Geographic Information | ' | ||||||||||
Segments and Geographic Information | ' | ||||||||||
Note 8. Segments and Geographic Information | |||||||||||
We consider our Michaels — U.S., Michaels — Canada, Aaron Brothers and online scrapbooking business operations 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, and 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 May 4, 2013, the online scrapbooking business 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 online scrapbooking operating segment exceeds 10% of the consolidated amounts. | |||||||||||
Our sales and assets by country are as follows: | |||||||||||
Quarter Ended | |||||||||||
May 4, 2013 | April 28, 2012 | ||||||||||
(in millions) | |||||||||||
Net Sales: | |||||||||||
United States | $ | 899 | $ | 891 | |||||||
Canada | 94 | 87 | |||||||||
Consolidated Total | $ | 993 | $ | 978 | |||||||
May 4, 2013 | February 2, 2013 | April 28, 2012 | |||||||||
(Restated) | (Restated) | (Restated) | |||||||||
(in millions) | |||||||||||
Total Assets: | |||||||||||
United States | $ | 1,443 | $ | 1,446 | $ | 1,769 | |||||
Canada | 92 | 109 | 115 | ||||||||
Consolidated Total | $ | 1,535 | $ | 1,555 | $ | 1,884 | |||||
Our chief operating decision makers evaluate historical operating performance, plan and forecast future periods’ operating performance based on earnings before interest, income taxes, depreciation, amortization, and refinancing costs and losses on early extinguishment of debt (“EBITDA (excluding refinancing costs and losses on early extinguishment of debt)”). We believe EBITDA (excluding refinancing costs and losses on early extinguishment of debt) represents the financial measure that more 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 are based on EBITDA (excluding refinancing costs and losses on early extinguishment of debt). A reconciliation of EBITDA (excluding refinancing costs and losses on early extinguishment of debt) to Net income is presented below. | |||||||||||
Quarter Ended | |||||||||||
May 4, 2013 | April 28, 2012 | ||||||||||
Restated | |||||||||||
(in millions) | |||||||||||
Net income | $ | 46 | $ | 51 | |||||||
Interest expense | 47 | 66 | |||||||||
Refinancing costs and losses on early extinguishments of debt | 7 | — | |||||||||
Provision for income taxes | 28 | 28 | |||||||||
Depreciation and amortization | 25 | 24 | |||||||||
EBITDA (excluding refinancing costs and losses on early extinguishments of debt) | $ | 153 | $ | 169 |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
4-May-13 | |
Related Party Transactions | ' |
Related Party Transactions | ' |
Note 9. Related Party Transactions | |
We pay annual management fees to Bain Capital Partners, LLC (“Bain Capital”) and The Blackstone Group L.P. (“The Blackstone Group” and, together with Bain Capital, the “Sponsors”) and Highfields Capital Management LP in the amount of $12 million and $1 million, respectively. We recognized $4 million and $3 million of expense related to annual management fees during the first quarter of fiscal 2013 and fiscal 2012, respectively. These expenses are included in related party expenses on the Consolidated Statements of Comprehensive Income. | |
Bain Capital owns a majority equity position in LogicSource, an external vendor we utilize for print procurement services. Payments associated with this vendor during each of the first quarters of fiscal 2013 and fiscal 2012 were $1 million and $2 million, respectively. These expenses are included in Selling, general and administrative expense on the Consolidated Statements of Comprehensive Income. | |
The Blackstone Group owns a majority equity position in Brixmor Properties Group, a vendor we utilize to lease certain properties. Payments associated with this vendor during each of the first quarters of fiscal 2013 and fiscal 2012 were $1 million. These expenses are included in Cost of sales and occupancy expense in the Consolidated Statements of Comprehensive Income. | |
The Blackstone Group owns a majority equity position in RGIS, an external vendor we utilize to count our store inventory. Payments associated with this vendor during the first quarters of fiscal 2013 and fiscal 2012 were $1 million and $2 million, respectively. These expenses are included in Selling, general and administrative expense on 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 the first quarter of fiscal 2013 and fiscal 2012 were $6 million and $5 million, respectively. These expenses are recognized in cost of sales as the sales are recorded. | |
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 May 4, 2013, affiliates of The Blackstone Group held $34 million of our senior secured term loan. |
Condensed_Consolidating_Financ
Condensed Consolidating Financial Information | 3 Months Ended | |||||||||||||
4-May-13 | ||||||||||||||
Condensed Consolidating Financial Information | ' | |||||||||||||
Condensed Consolidating Financial Information | ' | |||||||||||||
Note 10. Condensed Consolidating Financial Information | ||||||||||||||
All obligations of Michaels Stores, Inc. under our notes, the Restated Revolving Credit Facility and the Rested Term Loan 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 May 4, 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 Balance Sheet | ||||||||||||||
May 4, 2013 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 32 | $ | 23 | $ | — | $ | 55 | ||||||
Merchandise inventories | 588 | 255 | — | 843 | ||||||||||
Intercompany receivables | — | 442 | (442 | ) | — | |||||||||
Other | 108 | 22 | — | 130 | ||||||||||
Total current assets | 728 | 742 | (442 | ) | 1,028 | |||||||||
Property and equipment, net | 272 | 69 | — | 341 | ||||||||||
Goodwill | 94 | — | — | 94 | ||||||||||
Investment in subsidiaries | 430 | — | (430 | ) | — | |||||||||
Other assets | 69 | 3 | — | 72 | ||||||||||
Total assets | $ | 1,593 | $ | 814 | $ | (872 | ) | $ | 1,535 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 4 | $ | 228 | $ | — | $ | 232 | ||||||
Accrued liabilities and other | 177 | 123 | — | 300 | ||||||||||
Share-based compensation | 23 | 13 | — | 36 | ||||||||||
Current portion of long-term debt | 198 | — | — | 198 | ||||||||||
Intercompany payable | 442 | — | (442 | ) | — | |||||||||
Other | 31 | — | — | 31 | ||||||||||
Total current liabilities | 875 | 364 | (442 | ) | 797 | |||||||||
Long-term debt | 2,887 | — | — | 2,887 | ||||||||||
Share-based compensation | 19 | 9 | — | 28 | ||||||||||
Other long-term liabilities | 70 | 11 | — | 81 | ||||||||||
Total stockholders’ deficit | (2,258 | ) | 430 | (430 | ) | (2,258 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 1,593 | $ | 814 | $ | (872 | ) | $ | 1,535 | |||||
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 | ||||||||||
Shared 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 | |||||
Supplemental Condensed Consolidating Balance Sheet | ||||||||||||||
April 28, 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 372 | $ | 13 | $ | — | $ | 385 | ||||||
Merchandise inventories | 577 | 303 | — | 880 | ||||||||||
Intercompany receivables | — | 570 | (570 | ) | — | |||||||||
Other | 104 | 20 | — | 124 | ||||||||||
Total current assets | 1,053 | 906 | (570 | ) | 1,389 | |||||||||
Property and equipment, net | 250 | 60 | — | 310 | ||||||||||
Goodwill | 95 | — | — | 95 | ||||||||||
Investment in subsidiaries | 552 | — | (552 | ) | — | |||||||||
Other assets | 87 | 3 | — | 90 | ||||||||||
Total assets | $ | 2,037 | $ | 969 | $ | (1,122 | ) | $ | 1,884 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 10 | $ | 270 | $ | — | $ | 280 | ||||||
Accrued liabilities and other | 269 | 119 | — | 388 | ||||||||||
Share based compensation liability | 18 | 10 | — | 28 | ||||||||||
Current portion of long-term debt | 127 | — | — | 127 | ||||||||||
Intercompany payable | 570 | — | (570 | ) | — | |||||||||
Other | 28 | — | — | 28 | ||||||||||
Total current liabilities | 1,022 | 399 | (570 | ) | 851 | |||||||||
Long-term debt | 3,363 | — | — | 3,363 | ||||||||||
Share based compensation liability | 15 | 7 | — | 22 | ||||||||||
Other long-term liabilities | 85 | 11 | — | 96 | ||||||||||
Total stockholders’ deficit | (2,448 | ) | 552 | (552 | ) | (2,448 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 2,037 | $ | 969 | $ | (1,122 | ) | $ | 1,884 | |||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 869 | $ | 547 | $ | (423 | ) | $ | 993 | |||||
Cost of sales and occupancy expense | 555 | 452 | (423 | ) | 584 | |||||||||
Gross profit | 314 | 95 | — | 409 | ||||||||||
Selling, general, and administrative expense | 234 | 38 | — | 272 | ||||||||||
Share-based compensation | 2 | 1 | — | 3 | ||||||||||
Related party expenses | 4 | — | — | 4 | ||||||||||
Store pre-opening costs | 2 | — | — | 2 | ||||||||||
Operating income | 72 | 56 | — | 128 | ||||||||||
Interest expense | 47 | — | — | 47 | ||||||||||
Refinancing costs and losses on early extinguishment of debt | 7 | — | — | 7 | ||||||||||
Intercompany charges (income) | 13 | (13 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 69 | — | (69 | ) | — | |||||||||
Income before income taxes | 74 | 69 | (69 | ) | 74 | |||||||||
Provision for income taxes | 28 | 26 | (26 | ) | 28 | |||||||||
Net income | 46 | 43 | (43 | ) | 46 | |||||||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment and other | (1 | ) | — | — | (1 | ) | ||||||||
Comprehensive income | $ | 45 | $ | 43 | $ | (43 | ) | $ | 45 | |||||
Supplemental Condensed Consolidating Statement of Comprehensive Income | ||||||||||||||
Quarter Ended April 28, 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 861 | $ | 549 | $ | (432 | ) | $ | 978 | |||||
Cost of sales and occupancy expense | 537 | 462 | (432 | ) | 567 | |||||||||
Gross profit | 324 | 87 | — | 411 | ||||||||||
Selling, general, and administrative expense | 224 | 35 | — | 259 | ||||||||||
Share-based compensation | 4 | — | — | 4 | ||||||||||
Related party expenses | 3 | — | — | 3 | ||||||||||
Store pre-opening costs | 1 | — | — | 1 | ||||||||||
Operating income | 92 | 52 | — | 144 | ||||||||||
Interest expense | 66 | — | — | 66 | ||||||||||
Other (income) and expense, net | (1 | ) | — | — | (1 | ) | ||||||||
Intercompany charges (income) | 17 | (17 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 69 | — | (69 | ) | — | |||||||||
Income before income taxes | 79 | 69 | (69 | ) | 79 | |||||||||
Provision for income taxes | 28 | 25 | (25 | ) | 28 | |||||||||
Net income | 51 | 44 | (44 | ) | 51 | |||||||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment and other | 2 | — | — | 2 | ||||||||||
Comprehensive income | $ | 53 | $ | 44 | $ | (44 | ) | $ | 53 | |||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(in millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | (8 | ) | $ | 34 | $ | (24 | ) | $ | 2 | ||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (16 | ) | (6 | ) | — | (22 | ) | |||||||
Net cash used in investing activities | (16 | ) | (6 | ) | — | (22 | ) | |||||||
Financing activities: | ||||||||||||||
Net repayments of short-term debt | 39 | — | — | 39 | ||||||||||
Intercompany dividends | — | (24 | ) | 24 | — | |||||||||
Other financing activities | (20 | ) | — | — | (20 | ) | ||||||||
Net cash used in financing activities | 19 | (24 | ) | 24 | 19 | |||||||||
Decrease in cash and equivalents | (5 | ) | 4 | — | (1 | ) | ||||||||
Beginning cash and equivalents | 37 | 19 | — | 56 | ||||||||||
Ending cash and equivalents | $ | 32 | $ | 23 | $ | — | $ | 55 | ||||||
Supplemental Condensed Consolidating Statement of Cash Flows | ||||||||||||||
Quarter Ended April 28, 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(in millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 33 | $ | 25 | $ | (17 | ) | $ | 41 | |||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (15 | ) | (3 | ) | — | (18 | ) | |||||||
Net cash used in investing activities | (15 | ) | (3 | ) | — | (18 | ) | |||||||
Financing activities: | ||||||||||||||
Intercompany dividends | — | (17 | ) | 17 | — | |||||||||
Other financing activities | (9 | ) | — | — | (9 | ) | ||||||||
Net cash used in financing activities | (9 | ) | (17 | ) | 17 | (9 | ) | |||||||
Increase in cash and equivalents | 9 | 5 | — | 14 | ||||||||||
Beginning cash and equivalents | 363 | 8 | — | 371 | ||||||||||
Ending cash and equivalents | $ | 372 | $ | 13 | $ | — | $ | 385 | ||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
4-May-13 | |
Summary of Significant Accounting Policies | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The consolidated financial statements include the accounts of Michaels Stores, Inc. and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. 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. | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 2, 2013. | |
The balance sheet at February 2, 2013 has been derived from the restated audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. | |
In the opinion of management, all adjustments (consisting of normal recurring accruals and other items) considered necessary for a fair presentation have been included. | |
Because of the seasonal nature of our business, the results of operations for the quarter ended May 4, 2013 are not indicative of the results to be expected for the entire year. | |
We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. All references herein to “fiscal 2013” relate to the 52 weeks ending February 1, 2014, and all references to”fiscal 2012” relate to the 53 weeks ended February 2, 2013. In addition, all references herein to “the first quarter of fiscal 2013” relate to the 13 weeks ended May 4, 2013, and all references to “the first quarter of fiscal 2012” relate to the 13 weeks ended April 28, 2012. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, an amendment to Accounting Standards Codification (“ASC”) 220, Comprehensive Income. ASU No. 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other items not reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. This standard, which is prospective, is effective for reporting periods beginning after December 15, 2012, with earlier adoption permitted. We adopted all requirements of this standard on February 3, 2013, the beginning of fiscal 2013. |
Restatement_Sharebased_Compens1
Restatement - Share-based Compensation (Tables) | 3 Months Ended | |||||||||||||
4-May-13 | ||||||||||||||
Restatement - Share-based Compensation | ' | |||||||||||||
Schedule of corrections as associated with certain line items in the unaudited interim consolidated financial statements | ' | |||||||||||||
The following tables illustrate the correction as associated with certain line items in the unaudited interim consolidated financial statements (amounts in millions): | ||||||||||||||
Consolidated Balance Sheet | ||||||||||||||
May 4, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 842 | $ | 2 | $ | (1 | ) | $ | 843 | |||||
Total current assets | 1,027 | 2 | (1 | ) | 1,028 | |||||||||
Deferred income taxes | 13 | 15 | — | 28 | ||||||||||
Total non-current assets | 151 | 15 | — | 166 | ||||||||||
Share-based compensation liability | — | 36 | — | 36 | ||||||||||
Income taxes payable | 31 | (4 | ) | — | 27 | |||||||||
Total current liabilities | 765 | 32 | — | 797 | ||||||||||
Share-based compensation liability | — | 28 | — | 28 | ||||||||||
Total long-term liabilities | 2,968 | 28 | — | 2,996 | ||||||||||
Additional paid-in capital | 48 | (10 | ) | — | 38 | |||||||||
Accumulated deficit | (2,279 | ) | (33 | ) | (1 | ) | (2,313 | ) | ||||||
Total stockholders’ deficit | (2,214 | ) | (43 | ) | (1 | ) | (2,258 | ) | ||||||
April 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Merchandise inventories | $ | 874 | $ | 6 | $ | — | $ | 880 | ||||||
Total current assets | 1,383 | 6 | — | 1,389 | ||||||||||
Deferred income taxes | 18 | 13 | — | 31 | ||||||||||
Total non-current assets | 172 | 13 | — | 185 | ||||||||||
Share-based compensation liability | — | 28 | — | 28 | ||||||||||
Income taxes payable | 28 | (1 | ) | — | 27 | |||||||||
Total current liabilities | 824 | 27 | — | 851 | ||||||||||
Share-based compensation liability | — | 22 | — | 22 | ||||||||||
Total long-term liabilities | 3,459 | 22 | — | 3,481 | ||||||||||
Additional paid-in capital | 49 | (9 | ) | — | 40 | |||||||||
Accumulated deficit | (2,487 | ) | (21 | ) | — | (2,508 | ) | |||||||
Total stockholders’ deficit | (2,418 | ) | (30 | ) | — | (2,448 | ) | |||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 586 | $ | 1 | $ | (3 | ) | $ | 584 | |||||
Gross Profit | 407 | (1 | ) | 3 | 409 | |||||||||
Selling, general and administrative expense | 271 | 1 | — | 272 | ||||||||||
Share-based compensation | — | 3 | — | 3 | ||||||||||
Operating income | 130 | (5 | ) | 3 | 128 | |||||||||
Income before income taxes | 76 | (5 | ) | 3 | 74 | |||||||||
Provision for income taxes | 29 | (2 | ) | 1 | 28 | |||||||||
Net income | 47 | (3 | ) | 2 | 46 | |||||||||
Comprehensive income | 46 | (3 | ) | 2 | 45 | |||||||||
Quarter Ended April 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Cost of sales and occupancy expense | $ | 566 | $ | — | $ | 1 | $ | 567 | ||||||
Gross Profit | 412 | — | (1 | ) | 411 | |||||||||
Selling, general and administrative expense | 260 | (1 | ) | — | 259 | |||||||||
Share-based compensation | — | 4 | — | 4 | ||||||||||
Operating income | 148 | (3 | ) | (1 | ) | 144 | ||||||||
Income before income taxes | 83 | (3 | ) | (1 | ) | 79 | ||||||||
Provision for income taxes | 30 | (2 | ) | — | 28 | |||||||||
Net income | 53 | (1 | ) | (1 | ) | 51 | ||||||||
Comprehensive income | 55 | (1 | ) | (1 | ) | 53 | ||||||||
Cash Flow Data | ||||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 47 | (3 | ) | 2 | $ | 46 | |||||||
Share-based compensation | (1 | ) | 5 | — | 4 | |||||||||
Merchandise inventories | 23 | — | (3 | ) | 20 | |||||||||
Accrued liabilities and other | (39 | ) | (2 | ) | — | (41 | ) | |||||||
Income taxes | (15 | ) | — | 1 | (14 | ) | ||||||||
Quarter Ended April 28, 2012 | ||||||||||||||
As | Share-based | Other | As | |||||||||||
Reported | compensation | Adjustments | Restated | |||||||||||
Adjustment | ||||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | 53 | (1 | ) | (1 | ) | $ | 51 | ||||||
Share-based compensation | 1 | 3 | — | 4 | ||||||||||
Merchandise inventories | (34 | ) | — | 1 | (33 | ) | ||||||||
Income taxes | 5 | (2 | ) | –– | 3 | |||||||||
Debt_Tables
Debt (Tables) | 3 Months Ended | ||||||||||||
4-May-13 | |||||||||||||
Debt | ' | ||||||||||||
Schedule of outstanding debt | ' | ||||||||||||
May 4, 2013 | February 2, 2013 | April 28, 2012 | Interest Rate | ||||||||||
(in millions) | |||||||||||||
Senior secured term loan | $ | 1,640 | $ | 1,640 | $ | 1,996 | Variable | ||||||
Senior notes | 1,007 | 1,007 | 795 | 7.75% | |||||||||
Senior subordinated notes | 256 | 393 | 393 | 11.38% | |||||||||
Subordinated discount notes | — | — | 306 | 13.00% | |||||||||
Asset-based revolving credit facility | 182 | 1 | — | Variable | |||||||||
Total debt | 3,085 | 3,041 | 3,490 | ||||||||||
Less current portion | 198 | 150 | 127 | ||||||||||
Long-term debt | $ | 2,887 | $ | 2,891 | $ | 3,363 |
Comprehensive_Income_Tables
Comprehensive Income (Tables) | 3 Months Ended | ||||
4-May-13 | |||||
Comprehensive Income | ' | ||||
Schedule of accumulated other comprehensive income, net of tax | ' | ||||
Foreign Currency | |||||
Translation | |||||
and Other | |||||
(in millions) | |||||
Balance at February 2, 2013 | $ | 6 | |||
Foreign currency translation adjustment and other | (1 | ) | |||
Balance at May 4, 2013 | $ | 5 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||
4-May-13 | ||||||||
Fair Value Measurements | ' | |||||||
Schedule of carrying and fair values of debt | ' | |||||||
Carrying Value | Fair Value | |||||||
(in millions) | ||||||||
Senior secured term loan | $ | 1,640 | $ | 1,661 | ||||
Senior notes | 1,007 | 1,100 | ||||||
Senior subordinated notes | 256 | 269 | ||||||
Segments_and_Geographic_Inform1
Segments and Geographic Information (Tables) | 3 Months Ended | ||||||||||
4-May-13 | |||||||||||
Segments and Geographic Information | ' | ||||||||||
Schedule of sales and assets by country | ' | ||||||||||
Quarter Ended | |||||||||||
May 4, 2013 | April 28, 2012 | ||||||||||
(in millions) | |||||||||||
Net Sales: | |||||||||||
United States | $ | 899 | $ | 891 | |||||||
Canada | 94 | 87 | |||||||||
Consolidated Total | $ | 993 | $ | 978 | |||||||
May 4, 2013 | February 2, 2013 | April 28, 2012 | |||||||||
(Restated) | (Restated) | (Restated) | |||||||||
(in millions) | |||||||||||
Total Assets: | |||||||||||
United States | $ | 1,443 | $ | 1,446 | $ | 1,769 | |||||
Canada | 92 | 109 | 115 | ||||||||
Consolidated Total | $ | 1,535 | $ | 1,555 | $ | 1,884 | |||||
Schedule of reconciliation of EBITDA (excluding refinancing costs and losses on early extinguishment of debt) to Net income | ' | ||||||||||
Quarter Ended | |||||||||||
May 4, 2013 | April 28, 2012 | ||||||||||
Restated | |||||||||||
(in millions) | |||||||||||
Net income | $ | 46 | $ | 51 | |||||||
Interest expense | 47 | 66 | |||||||||
Refinancing costs and losses on early extinguishments of debt | 7 | — | |||||||||
Provision for income taxes | 28 | 28 | |||||||||
Depreciation and amortization | 25 | 24 | |||||||||
EBITDA (excluding refinancing costs and losses on early extinguishments of debt) | $ | 153 | $ | 169 |
Condensed_Consolidating_Financ1
Condensed Consolidating Financial Information (Tables) | 3 Months Ended | |||||||||||||
4-May-13 | ||||||||||||||
Condensed Consolidating Financial Information | ' | |||||||||||||
Schedule of Supplemental Condensed Consolidating Balance Sheet | ' | |||||||||||||
May 4, 2013 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 32 | $ | 23 | $ | — | $ | 55 | ||||||
Merchandise inventories | 588 | 255 | — | 843 | ||||||||||
Intercompany receivables | — | 442 | (442 | ) | — | |||||||||
Other | 108 | 22 | — | 130 | ||||||||||
Total current assets | 728 | 742 | (442 | ) | 1,028 | |||||||||
Property and equipment, net | 272 | 69 | — | 341 | ||||||||||
Goodwill | 94 | — | — | 94 | ||||||||||
Investment in subsidiaries | 430 | — | (430 | ) | — | |||||||||
Other assets | 69 | 3 | — | 72 | ||||||||||
Total assets | $ | 1,593 | $ | 814 | $ | (872 | ) | $ | 1,535 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 4 | $ | 228 | $ | — | $ | 232 | ||||||
Accrued liabilities and other | 177 | 123 | — | 300 | ||||||||||
Share-based compensation | 23 | 13 | — | 36 | ||||||||||
Current portion of long-term debt | 198 | — | — | 198 | ||||||||||
Intercompany payable | 442 | — | (442 | ) | — | |||||||||
Other | 31 | — | — | 31 | ||||||||||
Total current liabilities | 875 | 364 | (442 | ) | 797 | |||||||||
Long-term debt | 2,887 | — | — | 2,887 | ||||||||||
Share-based compensation | 19 | 9 | — | 28 | ||||||||||
Other long-term liabilities | 70 | 11 | — | 81 | ||||||||||
Total stockholders’ deficit | (2,258 | ) | 430 | (430 | ) | (2,258 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 1,593 | $ | 814 | $ | (872 | ) | $ | 1,535 | |||||
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 | ||||||||||
Shared 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 | |||||
April 28, 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 372 | $ | 13 | $ | — | $ | 385 | ||||||
Merchandise inventories | 577 | 303 | — | 880 | ||||||||||
Intercompany receivables | — | 570 | (570 | ) | — | |||||||||
Other | 104 | 20 | — | 124 | ||||||||||
Total current assets | 1,053 | 906 | (570 | ) | 1,389 | |||||||||
Property and equipment, net | 250 | 60 | — | 310 | ||||||||||
Goodwill | 95 | — | — | 95 | ||||||||||
Investment in subsidiaries | 552 | — | (552 | ) | — | |||||||||
Other assets | 87 | 3 | — | 90 | ||||||||||
Total assets | $ | 2,037 | $ | 969 | $ | (1,122 | ) | $ | 1,884 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 10 | $ | 270 | $ | — | $ | 280 | ||||||
Accrued liabilities and other | 269 | 119 | — | 388 | ||||||||||
Share based compensation liability | 18 | 10 | — | 28 | ||||||||||
Current portion of long-term debt | 127 | — | — | 127 | ||||||||||
Intercompany payable | 570 | — | (570 | ) | — | |||||||||
Other | 28 | — | — | 28 | ||||||||||
Total current liabilities | 1,022 | 399 | (570 | ) | 851 | |||||||||
Long-term debt | 3,363 | — | — | 3,363 | ||||||||||
Share based compensation liability | 15 | 7 | — | 22 | ||||||||||
Other long-term liabilities | 85 | 11 | — | 96 | ||||||||||
Total stockholders’ deficit | (2,448 | ) | 552 | (552 | ) | (2,448 | ) | |||||||
Total liabilities and stockholders’ deficit | $ | 2,037 | $ | 969 | $ | (1,122 | ) | $ | 1,884 | |||||
Schedule of Supplemental Condensed Consolidating Statement of Comprehensive Income | ' | |||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 869 | $ | 547 | $ | (423 | ) | $ | 993 | |||||
Cost of sales and occupancy expense | 555 | 452 | (423 | ) | 584 | |||||||||
Gross profit | 314 | 95 | — | 409 | ||||||||||
Selling, general, and administrative expense | 234 | 38 | — | 272 | ||||||||||
Share-based compensation | 2 | 1 | — | 3 | ||||||||||
Related party expenses | 4 | — | — | 4 | ||||||||||
Store pre-opening costs | 2 | — | — | 2 | ||||||||||
Operating income | 72 | 56 | — | 128 | ||||||||||
Interest expense | 47 | — | — | 47 | ||||||||||
Refinancing costs and losses on early extinguishment of debt | 7 | — | — | 7 | ||||||||||
Intercompany charges (income) | 13 | (13 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 69 | — | (69 | ) | — | |||||||||
Income before income taxes | 74 | 69 | (69 | ) | 74 | |||||||||
Provision for income taxes | 28 | 26 | (26 | ) | 28 | |||||||||
Net income | 46 | 43 | (43 | ) | 46 | |||||||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment and other | (1 | ) | — | — | (1 | ) | ||||||||
Comprehensive income | $ | 45 | $ | 43 | $ | (43 | ) | $ | 45 | |||||
Quarter Ended April 28, 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(Restated) | (Restated) | (Restated) | (Restated) | |||||||||||
(in millions) | ||||||||||||||
Net sales | $ | 861 | $ | 549 | $ | (432 | ) | $ | 978 | |||||
Cost of sales and occupancy expense | 537 | 462 | (432 | ) | 567 | |||||||||
Gross profit | 324 | 87 | — | 411 | ||||||||||
Selling, general, and administrative expense | 224 | 35 | — | 259 | ||||||||||
Share-based compensation | 4 | — | — | 4 | ||||||||||
Related party expenses | 3 | — | — | 3 | ||||||||||
Store pre-opening costs | 1 | — | — | 1 | ||||||||||
Operating income | 92 | 52 | — | 144 | ||||||||||
Interest expense | 66 | — | — | 66 | ||||||||||
Other (income) and expense, net | (1 | ) | — | — | (1 | ) | ||||||||
Intercompany charges (income) | 17 | (17 | ) | — | — | |||||||||
Equity in earnings of subsidiaries | 69 | — | (69 | ) | — | |||||||||
Income before income taxes | 79 | 69 | (69 | ) | 79 | |||||||||
Provision for income taxes | 28 | 25 | (25 | ) | 28 | |||||||||
Net income | 51 | 44 | (44 | ) | 51 | |||||||||
Other comprehensive income, net of tax: | ||||||||||||||
Foreign currency translation adjustment and other | 2 | — | — | 2 | ||||||||||
Comprehensive income | $ | 53 | $ | 44 | $ | (44 | ) | $ | 53 | |||||
Schedule of Supplemental Condensed Consolidating Statement of Cash Flows | ' | |||||||||||||
Quarter Ended May 4, 2013 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(in millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | (8 | ) | $ | 34 | $ | (24 | ) | $ | 2 | ||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (16 | ) | (6 | ) | — | (22 | ) | |||||||
Net cash used in investing activities | (16 | ) | (6 | ) | — | (22 | ) | |||||||
Financing activities: | ||||||||||||||
Net repayments of short-term debt | 39 | — | — | 39 | ||||||||||
Intercompany dividends | — | (24 | ) | 24 | — | |||||||||
Other financing activities | (20 | ) | — | — | (20 | ) | ||||||||
Net cash used in financing activities | 19 | (24 | ) | 24 | 19 | |||||||||
Decrease in cash and equivalents | (5 | ) | 4 | — | (1 | ) | ||||||||
Beginning cash and equivalents | 37 | 19 | — | 56 | ||||||||||
Ending cash and equivalents | $ | 32 | $ | 23 | $ | — | $ | 55 | ||||||
Quarter Ended April 28, 2012 | ||||||||||||||
Parent | Guarantor | Eliminations | Consolidated | |||||||||||
Company | Subsidiaries | |||||||||||||
(in millions) | ||||||||||||||
Operating activities: | ||||||||||||||
Net cash provided by operating activities | $ | 33 | $ | 25 | $ | (17 | ) | $ | 41 | |||||
Investing activities: | ||||||||||||||
Cash paid for property and equipment | (15 | ) | (3 | ) | — | (18 | ) | |||||||
Net cash used in investing activities | (15 | ) | (3 | ) | — | (18 | ) | |||||||
Financing activities: | ||||||||||||||
Intercompany dividends | — | (17 | ) | 17 | — | |||||||||
Other financing activities | (9 | ) | — | — | (9 | ) | ||||||||
Net cash used in financing activities | (9 | ) | (17 | ) | 17 | (9 | ) | |||||||
Increase in cash and equivalents | 9 | 5 | — | 14 | ||||||||||
Beginning cash and equivalents | 363 | 8 | — | 371 | ||||||||||
Ending cash and equivalents | $ | 372 | $ | 13 | $ | — | $ | 385 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 12 Months Ended | ||
4-May-13 | Apr. 28, 2012 | Feb. 01, 2014 | Feb. 02, 2013 | |
item | item | item | item | |
Fiscal year | ' | ' | ' | ' |
Number of weeks in a fiscal year | 13 | 13 | 52 | 53 |
Restatement_Sharebased_Compens2
Restatement - Share-based Compensation (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 | Feb. 02, 2013 |
Net income | $46 | $51 | ' |
Consolidated Balance Sheet | ' | ' | ' |
Merchandise inventories | 843 | 880 | 862 |
Total current assets | 1,028 | 1,389 | 1,044 |
Deferred income taxes | 28 | 31 | 30 |
Total non-current assets | 166 | 185 | 173 |
Share-based compensation liability | 36 | 28 | 35 |
Income taxes payable | 27 | 27 | 37 |
Total current liabilities | 797 | 851 | 856 |
Share-based compensation liability | 28 | 22 | 27 |
Total long-term liabilities | 2,996 | 3,481 | 3,003 |
Additional paid-in capital | 38 | 40 | 37 |
Accumulated deficit | -2,313 | -2,508 | -2,359 |
Total stockholders' deficit | -2,258 | -2,448 | -2,304 |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Cost of sales and occupancy expense | 584 | 567 | ' |
Gross Profit | 409 | 411 | ' |
Selling, general and administrative expense | 272 | 259 | ' |
Share-based compensation | 3 | 4 | ' |
Operating income | 128 | 144 | ' |
Income before income taxes | 74 | 79 | ' |
Provision for income taxes | 28 | 28 | ' |
Net income | 46 | 51 | ' |
Comprehensive income | 45 | 53 | ' |
Operating Activities: | ' | ' | ' |
Net income | 46 | 51 | ' |
Share-based compensation | 4 | 4 | ' |
Merchandise inventories | 20 | -33 | ' |
Accrued liabilities and other | -41 | -37 | ' |
Income taxes | -14 | 3 | ' |
As Reported | ' | ' | ' |
Net income | 47 | 53 | ' |
Consolidated Balance Sheet | ' | ' | ' |
Merchandise inventories | 842 | 874 | ' |
Total current assets | 1,027 | 1,383 | ' |
Deferred income taxes | 13 | 18 | ' |
Total non-current assets | 151 | 172 | ' |
Income taxes payable | 31 | 28 | ' |
Total current liabilities | 765 | 824 | ' |
Total long-term liabilities | 2,968 | 3,459 | ' |
Additional paid-in capital | 48 | 49 | ' |
Accumulated deficit | -2,279 | -2,487 | ' |
Total stockholders' deficit | -2,214 | -2,418 | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Cost of sales and occupancy expense | 586 | 566 | ' |
Gross Profit | 407 | 412 | ' |
Selling, general and administrative expense | 271 | 260 | ' |
Operating income | 130 | 148 | ' |
Income before income taxes | 76 | 83 | ' |
Provision for income taxes | 29 | 30 | ' |
Net income | 47 | 53 | ' |
Comprehensive income | 46 | 55 | ' |
Operating Activities: | ' | ' | ' |
Net income | 47 | 53 | ' |
Share-based compensation | -1 | 1 | ' |
Merchandise inventories | 23 | -34 | ' |
Accrued liabilities and other | -39 | ' | ' |
Income taxes | -15 | 5 | ' |
Restatement Adjustment | ' | ' | ' |
Net income | -1 | -2 | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Net income | -1 | -2 | ' |
Operating Activities: | ' | ' | ' |
Net income | -1 | -2 | ' |
Restatement Adjustment | Share-based compensation Adjustment | ' | ' | ' |
Net income | -3 | -1 | ' |
Consolidated Balance Sheet | ' | ' | ' |
Merchandise inventories | 2 | 6 | ' |
Total current assets | 2 | 6 | ' |
Deferred income taxes | 15 | 13 | ' |
Total non-current assets | 15 | 13 | ' |
Share-based compensation liability | 36 | 28 | ' |
Income taxes payable | -4 | -1 | ' |
Total current liabilities | 32 | 27 | ' |
Share-based compensation liability | 28 | 22 | ' |
Total long-term liabilities | 28 | 22 | ' |
Additional paid-in capital | -10 | -9 | ' |
Accumulated deficit | -33 | -21 | ' |
Total stockholders' deficit | -43 | -30 | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Cost of sales and occupancy expense | 1 | ' | ' |
Gross Profit | -1 | ' | ' |
Selling, general and administrative expense | 1 | -1 | ' |
Share-based compensation | 3 | 4 | ' |
Operating income | -5 | -3 | ' |
Income before income taxes | -5 | -3 | ' |
Provision for income taxes | -2 | -2 | ' |
Net income | -3 | -1 | ' |
Comprehensive income | -3 | -1 | ' |
Operating Activities: | ' | ' | ' |
Net income | -3 | -1 | ' |
Share-based compensation | 5 | 3 | ' |
Accrued liabilities and other | -2 | ' | ' |
Income taxes | ' | -2 | ' |
Restatement Adjustment | Other Adjustments | ' | ' | ' |
Net income | 2 | -1 | ' |
Consolidated Balance Sheet | ' | ' | ' |
Merchandise inventories | -1 | ' | ' |
Total current assets | -1 | ' | ' |
Accumulated deficit | -1 | ' | ' |
Total stockholders' deficit | -1 | ' | ' |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Cost of sales and occupancy expense | -3 | 1 | ' |
Gross Profit | 3 | -1 | ' |
Operating income | 3 | -1 | ' |
Income before income taxes | 3 | -1 | ' |
Provision for income taxes | 1 | ' | ' |
Net income | 2 | -1 | ' |
Comprehensive income | 2 | -1 | ' |
Operating Activities: | ' | ' | ' |
Net income | 2 | -1 | ' |
Merchandise inventories | -3 | 1 | ' |
Income taxes | $1 | ' | ' |
Debt_Details
Debt (Details) (USD $) | 4-May-13 | Feb. 02, 2013 | Jan. 28, 2013 | Apr. 28, 2012 |
In Millions, unless otherwise specified | ||||
Debt | ' | ' | ' | ' |
Total debt | $3,085 | $3,041 | ' | $3,490 |
Less current portion | 198 | 150 | ' | 127 |
Long-term debt | 2,887 | 2,891 | ' | 3,363 |
Senior secured term loan | ' | ' | ' | ' |
Debt | ' | ' | ' | ' |
Total debt | 1,640 | 1,640 | ' | 1,996 |
Senior notes | ' | ' | ' | ' |
Debt | ' | ' | ' | ' |
Total debt | 1,007 | 1,007 | ' | 795 |
Interest rate (as a percent) | 7.75% | ' | ' | ' |
Senior subordinated notes | ' | ' | ' | ' |
Debt | ' | ' | ' | ' |
Total debt | 256 | 393 | ' | 393 |
Interest rate (as a percent) | 11.38% | ' | 11.38% | ' |
Subordinated discount notes | ' | ' | ' | ' |
Debt | ' | ' | ' | ' |
Total debt | ' | ' | ' | 306 |
Interest rate (as a percent) | ' | ' | ' | 13.00% |
Asset-based revolving credit facility | ' | ' | ' | ' |
Debt | ' | ' | ' | ' |
Total debt | $182 | $1 | ' | ' |
Debt_Details_2
Debt (Details 2) (USD $) | 3 Months Ended | 0 Months Ended | ||
In Millions, unless otherwise specified | 4-May-13 | Feb. 27, 2013 | 4-May-13 | Jan. 28, 2013 |
11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | 11 3/8% Senior Subordinated Notes due 2016 | ||
Debt | ' | ' | ' | ' |
Stated interest rate (as a percent) | ' | ' | 11.38% | 11.38% |
Aggregate principal amount of debt instrument for which the entity delivered an irrevocable notice relating to the redemption | ' | ' | ' | $137 |
Principal amount of notes repurchased | ' | 137 | ' | ' |
Redemption price of debt instrument as a percentage of principal amount | ' | 103.79% | ' | ' |
Loss related to the early extinguishment of the repurchased notes | 7 | 7 | ' | ' |
Redemption premiums included in loss on extinguishment of debt | ' | 5 | ' | ' |
Unamortized debt issuance costs written-off related to loss on early extinguishment of debt | ' | $2 | ' | ' |
Debt_Details_3
Debt (Details 3) (Restated Revolving Credit Facility, USD $) | 4-May-13 |
In Millions, unless otherwise specified | |
Restated Revolving Credit Facility | ' |
Asset-based Revolving Credit Facility | ' |
Borrowing base amount | $650 |
Outstanding borrowings | 182 |
Outstanding letters of credit | 62 |
Unused borrowing capacity | $406 |
Comprehensive_Income_Details
Comprehensive Income (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 |
Comprehensive Income | ' | ' |
Balance at the beginning of the period | $6 | ' |
Foreign currency translation adjustment and other | -1 | 2 |
Balance at the end of the period | $5 | $8 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 4-May-13 |
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 | 256 |
Fair Value | Senior secured term loan | ' |
Fair Value Measurements | ' |
Long-term loans and notes | 1,661 |
Fair Value | Senior notes | ' |
Fair Value Measurements | ' |
Long-term loans and notes | 1,100 |
Fair Value | Senior subordinated notes | ' |
Fair Value Measurements | ' |
Long-term loans and notes | $269 |
Income_Taxes_Details
Income Taxes (Details) | 3 Months Ended | 12 Months Ended | |
4-May-13 | Apr. 28, 2012 | Feb. 01, 2014 | |
Annualized Estimate | |||
Effective tax rate from continuing operations | ' | ' | ' |
Effective tax rate (as a percent) | 37.80% | 35.40% | 37.70% |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 4-May-13 | Mar. 20, 2009 | 4-May-13 | Jan. 29, 2011 | Feb. 10, 2011 | 4-May-13 | Apr. 30, 2012 | 18-May-11 | 4-May-13 | Jan. 28, 2012 | 3-May-11 |
In Millions, unless otherwise specified | 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 | Zip Code Claims | Zip Code Claims | Pricing and Promotion | Payment Card Terminal Tampering | Payment Card Terminal Tampering | Payment Card Terminal Tampering | Payment Card Terminal Tampering | ||
item | item | item | item | item | Maximum | item | item | item | item | ||
Commitments and Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate estimate of possible loss | $14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments and Contingencies | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of plaintiffs | ' | 114 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of additional plaintiffs | ' | ' | 15 | 8 | ' | ' | ' | ' | ' | ' | ' |
Additional purported class action lawsuits | ' | ' | ' | 2 | 3 | ' | ' | 2 | 4 | ' | ' |
Number of cases subject to the consolidation order | ' | ' | ' | ' | ' | 2 | ' | ' | 4 | ' | ' |
Damages, penalties and fees sought by plaintiff | ' | ' | ' | ' | ' | ' | $5 | ' | ' | ' | ' |
Number of payment card terminals tampered | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 90 |
Number of payment card terminals removed and replaced | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,100 | ' |
Segments_and_Geographic_Inform2
Segments and Geographic Information (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 | Feb. 02, 2013 |
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 online scrapbooking operating segment exceeds 10% of the consolidated amounts | 2 | ' | ' |
Sales and assets by country | ' | ' | ' |
Net sales | $993 | $978 | ' |
Total Assets | 1,535 | 1,884 | 1,555 |
United States | ' | ' | ' |
Sales and assets by country | ' | ' | ' |
Net sales | 899 | 891 | ' |
Total Assets | 1,443 | 1,769 | 1,446 |
Canada | ' | ' | ' |
Sales and assets by country | ' | ' | ' |
Net sales | 94 | 87 | ' |
Total Assets | $92 | $115 | $109 |
Segments_and_Geographic_Inform3
Segments and Geographic Information (Details 2) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 |
Segment and Geographic Information | ' | ' |
Net income | $46 | $51 |
Interest expense | 47 | 66 |
Refinancing costs and losses on early extinguishment of debt | 7 | ' |
Provision for income taxes | 28 | 28 |
Depreciation and amortization | 25 | 24 |
Reporting segment | ' | ' |
Segment and Geographic Information | ' | ' |
Net income | 46 | 51 |
Interest expense | 47 | 66 |
Refinancing costs and losses on early extinguishment of debt | 7 | ' |
Provision for income taxes | 28 | 28 |
Depreciation and amortization | 25 | 24 |
EBITDA (excluding refinancing costs and losses on early extinguishments of debt) | $153 | $169 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 | Feb. 02, 2013 |
Related Party Transactions | ' | ' | ' |
Expenses recognized | $4 | $3 | ' |
Long-term debt held | 3,085 | 3,490 | 3,041 |
Bain Capital Partners, LLC | Print procurement services received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 1 | 2 | ' |
The Blackstone Group | Senior secured term loan | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Long-term debt held | 34 | ' | ' |
The Blackstone Group | Lease services of certain properties from a vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 1 | 1 | ' |
The Blackstone Group | Store inventory counting services received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 1 | 2 | ' |
The Blackstone Group | Candy-type items in stores received from an external vendor | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Expenses recognized | 6 | 5 | ' |
The Sponsors | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Annual management fees | 12 | ' | ' |
Highfields Capital Management LP | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Annual management fees | $1 | ' | ' |
Condensed_Consolidating_Financ2
Condensed Consolidating Financial Information (Details) (USD $) | 4-May-13 | Feb. 02, 2013 | Apr. 28, 2012 | Jan. 28, 2012 |
In Millions, unless otherwise specified | ||||
Current assets: | ' | ' | ' | ' |
Cash and equivalents | $55 | $56 | $385 | $371 |
Merchandise inventories | 843 | 862 | 880 | ' |
Other | 130 | 126 | 124 | ' |
Total current assets | 1,028 | 1,044 | 1,389 | ' |
Property and equipment, net | 341 | 338 | 310 | ' |
Goodwill | 94 | 94 | 95 | ' |
Other assets | 72 | 79 | 90 | ' |
Total assets | 1,535 | 1,555 | 1,884 | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 232 | 263 | 280 | ' |
Accrued liabilities and other | 300 | 367 | 388 | ' |
Share based compensation liability | 36 | 35 | 28 | ' |
Current portion of long-term debt | 198 | 150 | 127 | ' |
Other | 31 | 41 | 28 | ' |
Total current liabilities | 797 | 856 | 851 | ' |
Long-term debt | 2,887 | 2,891 | 3,363 | ' |
Other long-term liabilities | 81 | 85 | 96 | ' |
Share based compensation liability | 28 | 27 | 22 | ' |
Total stockholders' deficit | -2,258 | -2,304 | -2,448 | ' |
Total liabilities and stockholders' deficit | 1,535 | 1,555 | 1,884 | ' |
Parent Company | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and equivalents | 32 | 37 | 372 | 363 |
Merchandise inventories | 588 | 591 | 577 | ' |
Other | 108 | 105 | 104 | ' |
Total current assets | 728 | 733 | 1,053 | ' |
Property and equipment, net | 272 | 271 | 250 | ' |
Goodwill | 94 | 94 | 95 | ' |
Investment in subsidiaries | 430 | 284 | 552 | ' |
Other assets | 69 | 76 | 87 | ' |
Total assets | 1,593 | 1,458 | 2,037 | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 4 | 5 | 10 | ' |
Accrued liabilities and other | 177 | 235 | 269 | ' |
Share based compensation liability | 23 | 22 | 18 | ' |
Current portion of long-term debt | 198 | 150 | 127 | ' |
Intercompany payable | 442 | 329 | 570 | ' |
Other | 31 | 36 | 28 | ' |
Total current liabilities | 875 | 777 | 1,022 | ' |
Long-term debt | 2,887 | 2,891 | 3,363 | ' |
Other long-term liabilities | 70 | 73 | 85 | ' |
Share based compensation liability | 19 | 21 | 15 | ' |
Total stockholders' deficit | -2,258 | -2,304 | -2,448 | ' |
Total liabilities and stockholders' deficit | 1,593 | 1,458 | 2,037 | ' |
Guarantor Subsidiaries | ' | ' | ' | ' |
Percentage of equity ownership owned | 100.00% | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and equivalents | 23 | 19 | 13 | 8 |
Merchandise inventories | 255 | 271 | 303 | ' |
Intercompany receivables | 442 | 329 | 570 | ' |
Other | 22 | 21 | 20 | ' |
Total current assets | 742 | 640 | 906 | ' |
Property and equipment, net | 69 | 67 | 60 | ' |
Other assets | 3 | 3 | 3 | ' |
Total assets | 814 | 710 | 969 | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 228 | 258 | 270 | ' |
Accrued liabilities and other | 123 | 132 | 119 | ' |
Share based compensation liability | 13 | 13 | 10 | ' |
Other | ' | 5 | ' | ' |
Total current liabilities | 364 | 408 | 399 | ' |
Other long-term liabilities | 11 | 12 | 11 | ' |
Share based compensation liability | 9 | 6 | 7 | ' |
Total stockholders' deficit | 430 | 284 | 552 | ' |
Total liabilities and stockholders' deficit | 814 | 710 | 969 | ' |
Eliminations | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Intercompany receivables | -442 | -329 | -570 | ' |
Total current assets | -442 | -329 | -570 | ' |
Investment in subsidiaries | -430 | -284 | -552 | ' |
Total assets | -872 | -613 | -1,122 | ' |
Current liabilities: | ' | ' | ' | ' |
Intercompany payable | -442 | -329 | -570 | ' |
Total current liabilities | -442 | -329 | -570 | ' |
Total stockholders' deficit | -430 | -284 | -552 | ' |
Total liabilities and stockholders' deficit | ($872) | ($613) | ($1,122) | ' |
Condensed_Consolidating_Financ3
Condensed Consolidating Financial Information (Details 2) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 |
Net sales | $993 | $978 |
Cost of sales and occupancy expense | 584 | 567 |
Gross profit | 409 | 411 |
Selling, general, and administrative expense | 272 | 259 |
Share-based compensation | 3 | 4 |
Related party expenses | 4 | 3 |
Store pre-opening costs | 2 | 1 |
Operating income | 128 | 144 |
Interest expense | 47 | 66 |
Refinancing costs and losses on early extinguishment of debt | 7 | ' |
Other (income) and expense, net | ' | -1 |
Income before income taxes | 74 | 79 |
Provision for income taxes | 28 | 28 |
Net income | 46 | 51 |
Other comprehensive income, net of tax: | ' | ' |
Foreign currency translation adjustment and other | -1 | 2 |
Comprehensive income | 45 | 53 |
Parent Company | ' | ' |
Net sales | 869 | 861 |
Cost of sales and occupancy expense | 555 | 537 |
Gross profit | 314 | 324 |
Selling, general, and administrative expense | 234 | 224 |
Share-based compensation | 2 | 4 |
Related party expenses | 4 | 3 |
Store pre-opening costs | 2 | 1 |
Operating income | 72 | 92 |
Interest expense | 47 | 66 |
Refinancing costs and losses on early extinguishment of debt | 7 | ' |
Other (income) and expense, net | ' | -1 |
Intercompany charges (income) | 13 | 17 |
Equity in earnings of subsidiaries | 69 | 69 |
Income before income taxes | 74 | 79 |
Provision for income taxes | 28 | 28 |
Net income | 46 | 51 |
Other comprehensive income, net of tax: | ' | ' |
Foreign currency translation adjustment and other | -1 | 2 |
Comprehensive income | 45 | 53 |
Guarantor Subsidiaries | ' | ' |
Net sales | 547 | 549 |
Cost of sales and occupancy expense | 452 | 462 |
Gross profit | 95 | 87 |
Selling, general, and administrative expense | 38 | 35 |
Share-based compensation | 1 | ' |
Operating income | 56 | 52 |
Intercompany charges (income) | -13 | -17 |
Income before income taxes | 69 | 69 |
Provision for income taxes | 26 | 25 |
Net income | 43 | 44 |
Other comprehensive income, net of tax: | ' | ' |
Comprehensive income | 43 | 44 |
Eliminations | ' | ' |
Net sales | -423 | -432 |
Cost of sales and occupancy expense | -423 | -432 |
Equity in earnings of subsidiaries | -69 | -69 |
Income before income taxes | -69 | -69 |
Provision for income taxes | -26 | -25 |
Net income | -43 | -44 |
Other comprehensive income, net of tax: | ' | ' |
Comprehensive income | ($43) | ($44) |
Condensed_Consolidating_Financ4
Condensed Consolidating Financial Information (Details 3) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | 4-May-13 | Apr. 28, 2012 |
Operating activities: | ' | ' |
Net cash provided by operating activities | $2 | $41 |
Investing activities: | ' | ' |
Cash paid for property and equipment | -22 | -18 |
Net cash used in investing activities | -22 | -18 |
Financing activities: | ' | ' |
Net repayments of short-term debt | 39 | ' |
Other financing activities | -20 | -9 |
Net cash provided by (used in) financing activities | 19 | -9 |
Net (decrease) increase in cash and equivalents | -1 | 14 |
Cash and equivalents at beginning of period | 56 | 371 |
Cash and equivalents at end of period | 55 | 385 |
Parent Company | ' | ' |
Operating activities: | ' | ' |
Net cash provided by operating activities | -8 | 33 |
Investing activities: | ' | ' |
Cash paid for property and equipment | -16 | -15 |
Net cash used in investing activities | -16 | -15 |
Financing activities: | ' | ' |
Net repayments of short-term debt | 39 | ' |
Other financing activities | -20 | -9 |
Net cash provided by (used in) financing activities | 19 | -9 |
Net (decrease) increase in cash and equivalents | -5 | 9 |
Cash and equivalents at beginning of period | 37 | 363 |
Cash and equivalents at end of period | 32 | 372 |
Guarantor Subsidiaries | ' | ' |
Operating activities: | ' | ' |
Net cash provided by operating activities | 34 | 25 |
Investing activities: | ' | ' |
Cash paid for property and equipment | -6 | -3 |
Net cash used in investing activities | -6 | -3 |
Financing activities: | ' | ' |
Intercompany dividends | -24 | -17 |
Net cash provided by (used in) financing activities | -24 | -17 |
Net (decrease) increase in cash and equivalents | 4 | 5 |
Cash and equivalents at beginning of period | 19 | 8 |
Cash and equivalents at end of period | 23 | 13 |
Eliminations | ' | ' |
Operating activities: | ' | ' |
Net cash provided by operating activities | -24 | -17 |
Financing activities: | ' | ' |
Intercompany dividends | 24 | 17 |
Net cash provided by (used in) financing activities | $24 | $17 |