Segments and Geographic Information

3 Months Ended

May 04, 2013

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