CONDENSED CONSOLIDATED FINANCIAL INFORMATION

12 Months Ended

Feb. 01, 2020

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

15. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Our debt covenants restrict MSI, and certain subsidiaries of MSI, from various activities including the incurrence of additional debt, payment of dividends and the repurchase of MSI’s capital stock (subject to certain exceptions), among other things. The following condensed consolidated financial information represents the financial information of MSI and its wholly-owned subsidiaries subject to these restrictions. The information is presented in accordance with the requirements of Rule 12-04 under the SEC’s Regulation S-X.

Michaels Stores, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

	February 1,		February 2,
ASSETS	2020		2019
Current assets:
Cash and equivalents	$	409,173	$	245,108
Merchandise inventories		1,097,109		1,108,715
Prepaid expenses and other current assets		92,601		160,767
Total current assets		1,598,883		1,514,590
Property and equipment, net		430,432		439,077
Operating lease assets		1,610,013		—
Goodwill		94,290		112,069
Other intangible assets, net		66,417		17,238
Other assets		37,146		44,429
Total assets	$	3,837,181	$	2,127,403
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	476,298	$	485,004
Accrued liabilities and other		346,657		378,313
Current portion of operating lease liabilities		306,796		—
Current portion of long-term debt		24,900		24,900
Other current liabilities		41,236		43,907
Total current liabilities		1,195,887		932,124
Long-term debt		2,644,460		2,681,000
Long-term operating lease liabilities		1,357,821		—
Other liabilities		141,582		199,705
Total stockholders’ deficit		(1,502,569)		(1,685,426)
Total liabilities and stockholders’ deficit	$	3,837,181	$	2,127,403

Michaels Stores, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

	Fiscal Year
	2019		2018		2017
Net sales	$	5,072,037	$	5,271,944	$	5,361,960
Cost of sales and occupancy expense		3,199,780		3,248,276		3,233,171
Gross profit		1,872,257		2,023,668		2,128,789
Selling, general and administrative		1,303,350		1,350,371		1,389,334
Restructure and impairment charges		48,332		104,238		—
Store pre-opening costs		4,608		4,417		2,999
Operating income		515,967		564,642		736,456
Interest and other expense		156,682		146,572		129,657
Income before income taxes		359,285		418,070		606,799
Income taxes		85,995		97,751		215,820
Net income	$	273,290	$	320,319	$	390,979
Other comprehensive income, net of tax:
Foreign currency and interest rate swaps		(8,273)		(10,898)		10,564
Comprehensive income	$	265,017	$	309,421	$	401,543

Michaels Stores, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Fiscal Year
	2019		2018		2017
Cash flows from operating activities:
Net cash provided by operating activities	$	490,732	$	443,275	$	535,544
Cash flows from investing activities:
Additions to property and equipment		(120,545)		(145,387)		(127,830)
Acquisition of intangible assets		(58,000)		—		—
Net cash used in investing activities		(178,545)		(145,387)		(127,830)
Cash flows from financing activities:
Net repayments of debt		(558,100)		(380,300)		(413,325)
Net borrowings of debt		523,200		355,400		382,200
Payment of dividend to Michaels Funding, Inc.		(105,060)		(451,892)		(245,514)
Payment of debt refinancing costs		(8,162)		(1,117)		—
Net cash used in financing activities		(148,122)		(477,909)		(276,639)
Net change in cash and equivalents		164,065		(180,021)		131,075
Cash and equivalents at beginning of period		245,108		425,129		294,054
Cash and equivalents at end of period	$	409,173	$	245,108	$	425,129