CONDENSED CONSOLIDATED FINANCIAL INFORMATION

3 Months Ended

May 02, 2020

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

11. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

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

Michaels Stores, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

	May 2,		February 1,		May 4,
ASSETS	2020		2020		2019
Current assets:
Cash and equivalents	$	926,037	$	409,173	$	245,944
Merchandise inventories		1,110,760		1,097,109		1,101,729
Prepaid expenses and other current assets		74,682		92,601		101,423
Total current assets		2,111,479		1,598,883		1,449,096
Property and equipment, net		420,263		430,432		433,882
Operating lease assets		1,576,877		1,610,013		1,613,719
Goodwill		94,290		94,290		112,069
Other intangible assets, net		64,511		66,417		16,960
Other assets		39,273		37,146		52,647
Total assets	$	4,306,693	$	3,837,181	$	3,678,373
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	443,911	$	476,298	$	406,947
Accrued liabilities and other		338,730		346,657		353,961
Current portion of operating lease liabilities		347,068		306,796		300,489
Current portion of long-term debt		624,900		24,900		24,900
Income taxes payable		9,378		41,236		55,339
Total current liabilities		1,763,987		1,195,887		1,141,636
Long-term debt		2,639,051		2,644,460		2,675,602
Long-term operating lease liabilities		1,327,997		1,357,821		1,380,175
Other liabilities		146,605		141,582		125,761
Total stockholders’ deficit		(1,570,947)		(1,502,569)		(1,644,801)
Total liabilities and stockholders’ deficit	$	4,306,693	$	3,837,181	$	3,678,373

Michaels Stores, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(in thousands)

	13 Weeks Ended
	May 2,		May 4,
	2020		2019
Net sales	$	799,888	$	1,093,720
Cost of sales and occupancy expense		578,066		676,080
Gross profit		221,822		417,640
Selling, general and administrative		281,105		320,387
Restructure charges		—		3,087
Store pre-opening costs		1,159		1,226
Operating (loss) income		(60,442)		92,940
Interest and other expense, net		35,201		40,469
(Loss) income before income taxes		(95,643)		52,471
Income taxes		(32,317)		14,624
Net (loss) income	$	(63,326)	$	37,847
Other comprehensive (loss) income, net of tax:
Foreign currency and cash flow hedges		(14,336)		(4,826)
Comprehensive (loss) income	$	(77,662)	$	33,021

Michaels Stores, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

	13 Weeks Ended
	May 2,		May 4,
	2020		2019
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(55,930)	$	32,162
Cash flows from investing activities:
Additions to property and equipment		(21,856)		(25,101)
Proceeds from sale of building		875		—
Net cash used in investing activities		(20,981)		(25,101)
Cash flows from financing activities:
Net repayments of debt		(6,225)		(6,225)
Net borrowings of debt		600,000		—
Net cash provided by (used in) financing activities		593,775		(6,225)
Net change in cash and equivalents		516,864		836
Cash and equivalents at beginning of period		409,173		245,108
Cash and equivalents at end of period	$	926,037	$	245,944