Segments and Geographic Information

9 Months Ended

Nov. 02, 2013

Note 9. 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. During the second quarter of 2013, the online scrapbooking business was discontinued; as an operating segment, it is immaterial to the financial statements as a whole.

Our sales and assets by country are as follows:

	Quarter Ended				Nine Months Ended
	November 2, 2013		October 27, 2012		November 2, 2013		October 27, 2012
	(in millions)
Net Sales:
United States	$	1,013	$	915	$	2,731	$	2,617
Canada	105		99		284		267
Consolidated Total	$	1,118	$	1,014	$	3,015	$	2,884

	November 2, 2013		February 2, 2013		October 27, 2012
			(Restated)		(Restated)
	(in millions)
Total Assets:
United States	$	1,728	$	1,446	$	1,777
Canada	138		109		140
Consolidated Total	$	1,866	$	1,555	$	1,917

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				Nine Months Ended
	November 2, 2013		October 27, 2012		November 2, 2013		October 27, 2012
			(Restated)				(Restated)
	(in millions)
Net income	$	58	$	35	$	121	$	95
Interest expense	45		60		137		187
Refinancing costs and losses on early extinguishments of debt	—		3		7		3
Provision for income taxes	32		19		68		53
Depreciation and amortization	24		25		74		71
EBITDA (excluding refinancing costs and losses on early extinguishments of debt)	$	159	$	142	$	407	$	409

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 131

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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-Section 50

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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

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Reference 8: http://www.xbrl.org/2003/role/presentationRef

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Reference 9: http://www.xbrl.org/2003/role/presentationRef

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Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

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Reference 12: http://www.xbrl.org/2003/role/presentationRef

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Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 15: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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+ Details

MICHAELS STORES INC 10-Q