Segments and Geographic Information

3 Months Ended

May 03, 2014

Segments and Geographic Information

Segments and Geographic Information

Note 7.  Segments and Geographic Information

We consider our Michaels - U.S., Michaels - Canada and Aaron Brothers to be our operating segments for purposes of determining reportable segments based on the criteria of ASC 280, Segment Reporting (“ASC 280”). 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.

Our sales and assets by country are as follows:

	Quarter Ended
	May 3, 2014		May 4, 2013
	(in millions)
Net Sales:
United States	$	952	$	899
Canada	100		94
Consolidated Total	$	1,052	$	993

	May 3, 2014		February 1, 2014		May 4, 2013
	(in millions)
Total Assets:
United States	$	1,588	$	1,678	$	1,421
Canada	116		123		114
Consolidated Total	$	1,704	$	1,801	$	1,535

Our chief operating decision makers evaluate historical operating performance, plan and forecast future periods’ operating performance based on operating income and 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 these metrics more closely reflect the operating effectiveness of factors over which management has control. A reconciliation of Net income to EBITDA (excluding refinancing costs and losses on early extinguishment of debt) is presented below.

	Quarter Ended
	May 3, 2014		May 4, 2013
	(in millions)
Net income	$	56	$	46
Interest expense	41		47
Provision for income taxes	42		28
Refinancing costs and losses on early extinguishments of debt	—		7
Depreciation and amortization	27		25
EBITDA (excluding refinancing costs and losses on early extinguishments of debt)	$	166	$	153