<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------- ----------
Commission file number 0-11822
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
MICHAELS STORES, INC.
5931 Campus Circle Drive, Irving, Texas 75063
P.O. Box 619566, DFW, Texas 75261-9566
Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees have duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
MICHAELS STORES, INC.
EMPLOYEES 401(K) PLAN
Date: August 11, 1995 By: /s/ Donald C. Toby
------------------
Donald C. Toby
Trustee
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
In February 1987, Michaels Stores, Inc. (the "Company") established
the Michaels Stores, Inc. Employees 401(k) Plan (the "401(k) Plan"). The
fiscal year of the 401(k) Plan is February 1 to the following January 31.
The name of the issuer of the securities held pursuant to the 401(k) Plan and
the address of its principal executive office is Michaels Stores, Inc., 5931
Campus Circle Drive, Irving, Texas 75063, P.O. Box 619566, DFW, Texas 75261-
9566.
Changes in the 401(k) Plan. There were no changes in the
provisions of the 401(k) Plan during the fiscal year ending January 31, 1995
("Fiscal 1994").
Changes in Investment Policy. There were no changes in the
investment policy of the 401(k) Plan during Fiscal 1994.
Contributions Under the 401(k) Plan. The Company makes annual
employer matching contributions to the 401(k) Plan for the account of each
participating employee in an amount equal to $.50 for each $1.00 of salary
reduction contributed by such employee, up to a maximum Company contribution
equal to 3% of the employee's compensation.
Participating Employees. As of January 31, 1995, there were 2,377
employees participating in the 401(k) Plan.
Administration of the Plan. The 401(k) Plan is administered by an
Administration Committee consisting of two persons, both employees of the
Employer, appointed by the Employer's Board of Directors. The members of the
Administration Committee serve at the discretion of the Board of Directors
without compensation for their services. The members of the Administration
Committee are:
R. Don Morris Executive Vice President and
Chief Financial Officer,
Michaels Stores, Inc.
Donald C. Toby Vice President-Personnel,
Michaels Stores, Inc.
-1-
<PAGE>
The address of each of the members of the Administration Committee
listed above is Michaels Stores, Inc., 5931 Campus Circle Drive, Irving,
Texas 75063, P.O. Box 619566, DFW, Texas 75261-9566. The Administration
Committee directs the operation of the 401(k) Plan and may make
administrative and procedural regulations. Certain administrative functions
may be delegated to officers or employees of the Company. Administration
Committee members, officers and employees do not receive compensation from
the 401(k) Plan.
Custodian of Investments. The assets of the 401(k) Plan are held
by a trust and managed by trustees ("Trustees"), who may be employees of the
Company. At present, the members of the Administration Committee also serve
as the Trustees. The Company furnishes the 401(k) Plan with a fidelity bond
in the amount of $1,000,000 covering the Trustees. The Trustees receive no
compensation from the 401(k) Plan.
Reports to Participating Employees. Each participant and retired
participant having an interest in the 401(k) Plan receives quarterly
statements of his or her accounts each plan year.
-2-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
Report of Independent Auditors F-1
------------------------------
Financial Statements:
--------------------
Statements of Net Assets Available for Plan Benefits F-2 to F-3
Statements of Changes in Net Assets Available for
Plan Benefits F-4 to F-5
Notes to Financial Statements F-6 to F-11
Supplemental Schedule: Schedule
--------------------- --------
Assets Held for Investment Purposes 1 F-12
Reportable Transactions 2 F-13
Consent of Independent Auditors F-14
-------------------------------
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions which are prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
-3-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
------------------------------
Board of Directors
Michaels Stores, Inc.
We have audited the accompanying statements of net assets available
for plan benefits of Michaels Stores, Inc. Employees 401(k) Plan
(the Plan) as of January 31, 1995 and 1994, and the related
statements of changes in net assets available for plan benefits for
the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of the Plan at January 31, 1995 and 1994, and the changes
in its net assets available for plan benefits for the years then
ended, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying
supplemental schedules of Assets Held for Investment Purposes as of
January 31, 1995 (Schedule 1) and Reportable Transactions for the
year then ended (Schedule 2) are presented for purposes of
complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic
financial statements. The fund information in the statements of net
assets available for plan benefits and the statements of changes in
net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available
for benefits and changes in net assets available for plan benefits
for each fund. The supplemental schedules and fund information
have been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial
statements taken as a whole.
ERNST & YOUNG LLP
Dallas, Texas
August 11, 1995
F-1
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
STATEMENT OF
NET ASSETS AVAILABLE FOR PLAN BENEFITS
January 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Fund information
-----------------------------------------------------
Inter-
Growth mediate
American Fund of Bond Fund
General Balanced America of America
Subfund Subfund Subfund Subfund Subtotal
------- -------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Investment in Michaels
Stores, Inc. common stock $15,045 $15,045
Investment in mutual funds $913 $1,630 $2,120 4,663
Other investments - - - - -
Participant loans receivable 455 34 98 203 790
Contributions receivable
(payable):
Participants 102 30 45 36 213
Employer (3,560) - - - (3,560)
------- ---- ------ ------ --------
(3,458) 30 45 36 (3,347)
Interfund due to/(from) 1,131 (190) (394) (467) 80
Cash - - - - -
------- ---- ------ ------ -------
Net assets available for
plan benefits $13,173 $787 $1,379 $1,892 $17,231
======= ==== ====== ====== =======
</TABLE>
See accompanying notes.
F-2 (1 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
STATEMENT OF
NET ASSETS AVAILABLE FOR PLAN BENEFITS
January 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Fund information
-------------------------------------------
Investment New
Previous Company of Perspec- Leewards
Page America tive Conversion
Subtotal Subfund Subfund Subfund Total
-------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Investment in Michaels
Stores, Inc. common
stock $15,045 $15,045
Investment in mutual
funds 4,663 $1,524 $699 6,886
Other investments - - - $1,813 1,813
Participant loans
receivable 790 50 3 - 843
Contributions receivable
(payable):
Participants 213 50 34 - 297
Employer (3,560) - - - (3,560)
------- ------ ---- ----- -------
(3,347) 50 34 - (3,263)
Interfund due to/(from) 80 (139) 59 - -
Cash - - - 1,195 1,195
------- ------ ---- ------ -------
Net assets available for
plan benefits $17,231 $1,485 $795 $3,008 $22,519
======= ====== ==== ====== =======
</TABLE>
See accompanying notes.
F-2 (2 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
STATEMENT OF
NET ASSETS AVAILABLE FOR PLAN BENEFITS
January 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Fund information
-------------------------------------------------
Inter-
Growth mediate
American Fund of Bond Fund
General Balanced America of America
Subfund Subfund Subfund Subfund Subtotal
------- -------- ------- ---------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Investment in Michaels
Stores, Inc. common stock $15,832 $15,832
Investment in mutual funds $420 $ 748 $1,731 2,899
Participant loans receivable 331 30 110 161 632
Contributions receivable
(payable):
Participants 79 21 29 32 161
Employer (1,751) - - - (1,751)
------- ---- ------ ------ -------
(1,672) 21 29 32 (1,590)
Interfund due to/(from) (1,046) 209 345 31 (461)
Cash 318 - - - 318
------- ---- ------ ------ -------
Net assets available for
plan benefits $13,763 $680 $1,232 $1,955 $17,630
======= ==== ====== ====== =======
</TABLE>
See accompanying notes.
F-3 (1 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
STATEMENT OF
NET ASSETS AVAILABLE FOR PLAN BENEFITS
January 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Fund information
-----------------------------------
Investment
Previous Company of New
Page America Perspective
Subtotal Subfund Subfund Total
-------- ---------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
------
Investment in Michaels
Stores, Inc. common stock $15,832 $15,832
Investment in mutual funds 2,899 $ 953 $249 4,101
Participant loans receivable 632 51 6 689
Contributions receivable
(payable):
Participants 161 23 11 195
Employer (1,751) - - (1,751)
------- ------ ---- --------
(1,590) 23 11 (1,556)
Interfund due to/(from) (461) 269 192 -
Cash 318 - - 318
------- ------ ---- -------
Net assets available for
plan benefits $17,630 $1,296 $458 $19,384
======= ====== ==== =======
</TABLE>
See accompanying notes.
F-3 (2 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
STATEMENT OF CHANGES IN
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Year Ended January 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Fund information
-------------------------------------------------------
Inter-
mediate
Growth Bond
American Fund of Fund of
General Balanced America America
Subfund Subfund Subfund Subfund Subtotal
------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ 42 $ 3 $ 9 $ 15 $ 69
Dividends - 26 10 128 164
Net appreciation
(depreciation) in
fair value of
investments 727 (11) 1 (167) 550
------- ---- ----- ------ -------
769 18 20 (24) 783
Contributions:
Participants 885 244 374 305 1,808
Employer 803 - - - 803
Rollover of acquired
company plan - - - - -
Interfund transfers (116) (32) 18 (90) (220)
------- ---- ----- ------ -------
Total additions 2,341 230 412 191 3,174
Distributions to
participants (2,931) (123) (265) (254) (3,573)
------- ---- ----- ------ -------
Net increase
(decrease) (590) 107 147 (63) (399)
Net assets available
for plan benefits:
Beginning of year 13,763 680 1,232 1,955 17,630
------- ---- ------ ------ -------
End of year $13,173 $787 $1,379 $1,892 $17,231
======= ==== ====== ====== =======
</TABLE>
See accompanying notes.
F-4 (1 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
STATEMENT OF CHANGES IN
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Year Ended January 31, 1995
(In thousands)
<TABLE>
<CAPTION>
Fund information
---------------------------------------------
Investment
Previous Co. of New Leewards
Page America Perspective Conversion
Subtotal Subfund Subfund Subfund Total
-------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ 69 $ 5 $ 2 $ 20 $ 96
Dividends 164 30 8 - 202
Net appreciation
(depreciation) in
fair value of
investments 550 (34) (14) - 502
------- ------ ------ ------ -------
783 1 (4) 20 800
Contributions:
Participants 1,808 351 248 - 2,407
Employer 803 - - - 803
Rollover of acquired
company plan - - - 2,988 2,988
Interfund transfers (220) (4) 224 - -
------- ------ ------ ------ -------
Total additions 3,174 348 468 3,008 6,998
Distributions to
participants (3,573) (159) (131) - (3,863)
------- ------ ------ ------ -------
Net increase
(decrease) (399) 189 337 3,008 3,135
Net assets available
for plan benefits:
Beginning of year 17,630 1,296 458 - 19,384
------- ------ ------ ------ -------
End of year $17,231 $1,485 $ 795 $3,008 $22,519
======= ====== ====== ====== =======
</TABLE>
See accompanying notes.
F-4 (2 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
STATEMENT OF CHANGES IN
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Year Ended January 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Fund information
-------------------------------------------------
Inter-
Growth mediate
American Fund of Bond Fund
General Balanced America of America
Subfund Subfund Subfund Subfund Subtotal
------- -------- ------- ---------- --------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ 24 $ 2 $ 5 $ 11 $ 42
Dividends - 18 3 114 135
Net appreciation
(depreciation) in fair
value of investments (678) 30 96 19 (533)
------- ---- ------ ------ -------
(654) 50 104 144 (356)
Contributions:
Participants 780 220 292 304 1,596
Employer 459 - - - 459
Interfund transfers (146) 52 73 (51) (72)
------- ---- ------ ------ -------
Total additions 439 322 469 397 1,627
Distributions
to participants (2,722) (110) (132) (402) (3,366)
------- ---- ------ ------ -------
Net increase
(decrease) (2,283) 212 337 (5) (1,739)
Net assets available
for plan benefits:
Beginning of year 16,046 468 895 1,960 19,369
------- ---- ------ ------ -------
End of year $13,763 $680 $1,232 $1,955 $17,630
======= ==== ====== ====== =======
</TABLE>
See accompanying notes.
F-5 (1 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
STATEMENT OF CHANGES IN
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Year Ended January 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Fund information
-----------------------------------
Investment
Previous Co. of New
Page America Perspective
Subtotal Subfund Subfund Total
-------- -------- ----------- ------
<S> <C> <C> <C> <C>
Investment income:
Interest $ 42 $ 5 $ 1 $ 48
Dividends 135 22 3 160
Net appreciation
(depreciation) in
fair value of
investments (533) 95 56 (382)
------- ------ ---- ------
(356) 122 60 (174)
Contributions:
Participants 1,596 282 85 1,963
Employer 459 - - 459
Interfund transfers (72) 1 71 -
------- ------ ---- ------
Total additions 1,627 405 216 2,248
Distributions
to participants (3,366) (247) (31) (3,644)
------- ------ ---- -------
Net increase
(decrease) (1,739) 158 185 (1,396)
Net assets available
for plan benefits:
Beginning of year 19,369 1,138 273 20,780
------- ------ ---- -------
End of year $17,630 $1,296 $458 $19,384
======= ====== ==== =======
</TABLE>
See accompanying notes.
F-5 (2 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
1. Description of the Plan and Basis of Presentation
-------------------------------------------------
The Michaels Stores, Inc. Employees 401(k) Plan (the "Plan") became
effective on February 1, 1987, for eligible employees of Michaels
Stores, Inc. (the "Employer" or the "Company"). The Plan is a defined
contribution plan designed to comply with the Employee Retirement Income
Security Act of 1974 ("ERISA"). The following is a brief description of
the Plan. Participants should refer to the plan agreement for complete
information regarding the Plan.
Merger of Leewards' Plan - Effective January 1, 1995, the Leewards
Profit Sharing and 401 (k) Plan (the "Leewards' Plan") was merged with
and into the Plan. The net assets of the Leewards' Plan are included in
the accompanying statement of net assets available for plan benefits at
January 31, 1995. Changes in Leewards' Plan's net assets available for
plan benefits prior to the date of the merger are not included in the
accompanying statements of changes in net assets available for plan
benefits.
Participation - Employees become eligible to participate in the
Plan once they have reached the age of 21 and have completed 1,000 hours
of service during the previous twelve months. Eligible employees who
desire to participate in the Plan must elect to participate on the form
or forms provided by the Plan's Administration Committee and authorize
the Employer to make payroll deductions for contributions to the Plan.
Contributions - Each participant may elect to have his/her salary
reduced, in increments of whole percents, at a minimum of 1% up to a
maximum of 15% of the participant's considered compensation, as defined
by the Plan, and have the Employer contribute to the Plan the amount of
such reduction ("Salary Reduction Contribution"). A participant's
Salary Reduction Contribution may not exceed an amount determined by the
Internal Revenue Service each calendar year ($9,240 in 1995 and 1994).
Each participant may also elect to make voluntary, after-tax
contributions at a minimum of 1% up to a maximum of 10% of the
participant's considered compensation ("Employee Contributions"). In
addition, the Employer is required to make an annual contribution
("Employer Matching Contribution") to the account of each participant in
an amount equal to 50% of the participant's Salary Reduction
Contribution up to a maximum of 6% of such participant's considered
compensation. The annual Employer Matching Contribution may not exceed
3% of such participant's total considered compensation for the year.
F-6
<PAGE>
Employer Matching Contributions are net of forfeitures, as defined, and
are to be deposited no later than the date on which the Employer files
its federal income tax return for such year, including any extensions
which have been granted. Forfeitures of $47,000 and $266,000 were
applied against Employer Matching Contributions to the Plan for the
years ended January 31, 1995 and 1994, respectively. During 1994 and
1993, Employer Matching Contributions exceeded the amount required under
the Plan document by $1,809,000 and $1,500,000, respectively. The
excess contributions are attributable to unsecured advances made for the
payment of benefits in accordance with the terms of the Plan. These
excess contributions will be used to satisfy 1995 and a portion of 1996
Employer Matching Contributions.
The Plan provides for, among other things, an Investment Committee to
direct Plan investments held in trust and managed by trustees (the
"Trustees"), all employees of the Employer, appointed by the Board of
Directors of the Employer. Participants may elect investment of their
Salary Reduction Contributions and Employee Contributions in one of or
in a combination of any four of the following investment options (except
the Leewards Conversion Subfund):
(a) General Subfund - consists of investments in the common
stock of the Employer and idle cash utilized to purchase
Employer common stock. All Employer Matching Contributions
are invested in the General Subfund. At January 31, 1995,
1,174 employees participated in this subfund.
(b) American Balanced Subfund - a mutual fund investing in
both domestic growth and income producing securities seeking
conservation of capital, current income, and long term growth
of both capital and income. At January 31, 1995, 520
employees participated in this subfund.
(c) Growth Fund of America Subfund - a mutual fund investing
in domestic growth equities seeking growth of capital. At
January 31, 1995, 759 employees participated in this subfund.
(d) Intermediate Bond Fund of America Subfund - a mutual
fund investing in intermediate term investment grade
corporate bonds and government instruments seeking current
income and preservation of capital. At January 31, 1995, 507
employees participated in this subfund.
(e) Investment Company of America Subfund - a mutual fund
investing in common stocks seeking long term growth of
capital and income. At January 31, 1995, 710 employees
participated in this subfund.
(f) New Perspective Subfund - a mutual fund investing in
both domestic and foreign securities, including both equity
and debt instruments, seeking long term growth of capital.
At January 31, 1995, 479 employees participated in this
subfund.
F-7
<PAGE>
(g) Leewards Conversion Subfund - consists of investments with an
insurance company in a guaranteed investment contract and a money
market account. In March 1995 the investments were liquidated,
less a $124,000 contract fee, and investment balances were re-
directed by the participants to the investment options available,
including the General Subfund. At January 31, 1995, 745 employees
held funds remaining in the Leewards Conversion Subfund.
Administration of the Plan - The Plan is administered by an
Administration Committee consisting of two persons, both employees of
the Employer, appointed by the Employer's Board of Directors. The
members of the Administration Committee serve at the discretion of the
Board of Directors without compensation for their services.
A separate account is maintained for each participant. The account
balances for participants are adjusted periodically as follows:
(a) Salary Reduction Contributions and Employee Contributions and any
withdrawals are allocated on a monthly basis.
(b) Employer Matching Contributions are allocated to participants'
accounts quarterly on January 31, April 30, July 31 and October 31.
(c) Income and gains and losses from investments are also allocated to
the participants' accounts quarterly determined by the percentage which
the participant's account balance at the end of the period bears to the
total of all participants' account balances at that date.
Vesting - Participants become partially vested in the Employer Matching
Contributions (including investment income and gains and losses thereon)
at the rate of: 20% after two years of service; 40% after three years;
60% after four years; and 80% after five years. Employer Matching
Contributions vest 100% upon completing six years of service (five years
of service for individuals employed before May 1, 1992); attaining the
age of 65; becoming disabled; or death. Salary Reduction Contributions
and Employee Contributions are 100% vested and are nonforfeitable.
Withdrawals - Upon death, disability or termination of employment with
the Company, participants are entitled to the vested portion of Employer
Matching Contributions and 100% of Salary Reduction Contributions and
Employee Contributions.
Income tax status - The Plan is designed to be a qualified plan under
Section 401(a) of the Internal Revenue Code ("Code") and exempt from
federal income tax under Section 501(a) of the Code. The Plan has not
yet received a favorable determination letter from the Internal Revenue
Service as to the qualification for tax exempt status; however, a
favorable determination letter is expected.
F-8
<PAGE>
Salary Reduction Contributions and Employer Matching Contributions are
not included in the participant's gross income for federal income tax
purposes in the year such contributions are made. A participant will
not be subject to federal income taxes with respect to these
contributions until the amounts are withdrawn or distributed. Employee
Contributions are not excluded from a participant's gross income for
federal income tax purposes in the year such contributions are made.
Termination of the Plan - While the Employer has not expressed any
intent to discontinue the Plan, the Employer may terminate the Plan at
any time. In the event the Plan is terminated, the participants would
become fully vested, and the net assets would be distributed to
participants in proportion to their account balances.
2. Summary of significant accounting policies
------------------------------------------
Investments in the common stock of the Employer are valued at the last
reported sales price on the last business day of the Plan year as
reported on the NASDAQ National Market System. Investments in the
mutual funds of American Funds Service Company are valued at the last
reported net asset value (NAV) on the last business day of the Plan year
as reported on the NASDAQ automated quotation system.
Security transactions are recorded on a trade date basis.
Contributions and interest income are recorded on the accrual basis.
F-9
<PAGE>
3. Investments
-----------
Investments at January 31, 1995, are as follows:
<TABLE>
<CAPTION>
Number (In thousands)
of shares Cost Market
--------- ------- -------
<S> <C> <C> <C>
Michaels Stores, Inc. common stock 455,925 $ 3,635 $15,045
American Mutual Funds:
American Balanced Fund 74,404 911 913
The Growth Fund of America 63,181 1,567 1,630
Intermediate Bond Fund of America 162,589 2,280 2,120
The Investment Company of America 84,973 1,531 1,524
New Perspective Fund 49,241 698 699
Guaranteed investment contracts 1,813 1,813
------- -------
$12,435 $23,744
======= =======
</TABLE>
The net unrealized appreciation in fair value of investments was determined
as follows:
<TABLE>
<CAPTION>
(In thousands)
Unrealized
Investments, Investments, Appreciation
at cost at market (Depreciation)
------------ ------------ --------------
<S> <C> <C> <C>
January 31, 1995 $12,435 $23,744 $11,309
Less: January 31, 1994 7,682 19,933 12,251
------- ------- -------
Net unrealized appreciation in
fair value of investments $ 4,753 $ 3,811 $ (942)
======= ======= =======
</TABLE>
Investments at January 31, 1994, are as follows:
<TABLE>
<CAPTION>
Number (In thousands)
of shares Cost Market
--------- ------ -------
<S> <C> <C> <C>
Michaels Stores, Inc. common stock 490,925 $3,852 $15,832
American Mutual Funds:
American Balanced Fund 32,632 404 420
The Growth Fund of America 27,274 625 748
Intermediate Bond Fund of America 120,568 1,724 1,731
The Investment Company of America 49,259 879 953
New Perspective Fund 15,924 198 249
------ -------
$7,682 $19,933
====== =======
</TABLE>
<TABLE>
<CAPTION>
(In thousands)
Unrealized
Investments, Investments, Appreciation
at cost at market (Depreciation)
------------ ------------ --------------
<S> <C> <C> <C>
January 31, 1994 $7,682 $19,933 $12,251
Less: January 31, 1993 6,886 19,608 12,722
------ ------- -------
Net unrealized appreciation in
fair value of investments $ 796 $ 325 $ (471)
====== ======= ======
</TABLE>
F-10
<PAGE>
4. Related party transactions
--------------------------
Under the terms of the Plan, all expenses and fees of the Plan
are to be paid by the Employer. The Employer paid approximately
$90,000 and $70,000, respectively, for administrative and
accounting fees on behalf of the Plan during fiscal 1994 and 1993,
respectively.
During fiscal 1994, the Plan sold 35,000 shares of the
Employer's common stock and realized proceeds of approximately
$1,514,000. During fiscal 1993, the Plan purchased 11,319 shares
of the Employer's common stock at a cost of approximately $324,000.
5. Differences Between Financial Statements and Form 5500:
------------------------------------------------------
The following is a reconciliation of net assets available for
benefits per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
(In thousands)
Year Ended Year Ended
January 31, January 31,
1995 1994
----------- -----------
<S> <C> <C>
Net assets available for benefits
per the financial statements $22,519 $19,384
Amounts allocated to withdrawn
participants (1,599) (1,184)
------- -------
Net assets available for benefits
per the Form 5500 $20,920 $18,200
======= =======
</TABLE>
The following is a reconciliation of distributions paid to
participants per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
(In thousands)
Year Ended Year Ended
January 31, January 31,
1995 1994
----------- -----------
<S> <C> <C>
Distributions paid to participants
per the financial statements $3,863 $3,644
Add: Amounts allocated to withdrawn
participants at January 31, 1995
and 1994, respectively 1,599 1,184
Less: Amounts allocated to withdrawn
participants at January 31, 1994
and 1993, respectively (1,184) (800)
------ ------
Distributions paid to participants
per the Form 5500 $4,278 $4,028
====== ======
</TABLE>
Amounts allocated to withdrawn participants are recorded on the
Form 5500 for termination distributions that have been processed
and approved for payment prior to year-end but not yet paid.
F-11
<PAGE>
Schedule 1
----------
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
January 31, 1995
<TABLE>
<CAPTION>
(In thousands)
Number of Fair
Description Shares Cost Value
----------- --------- ------- -------
<S> <C> <C> <C>
Michaels Stores, Inc.
common stock 455,925 $ 3,635 $15,045
American Mutual Funds:
American Balanced Fund 74,404 911 913
The Growth Fund of America 63,181 1,567 1,630
Intermediate Bond Fund
of America 162,589 2,280 2,120
The Investment Company
of America 84,973 1,531 1,524
New Perspective Fund 49,241 698 699
Guaranteed investment
contracts 1,813 1,813
Participant loans
receivable (Interest
rates range from 7% to 9.5%
with maturities from February,
1995 to November, 2004) 843 843
------- -------
$13,278 $24,587
======= =======
</TABLE>
F-12
<PAGE>
Schedule 2
----------
MICHAELS STORES, INC. EMPLOYEES 401 (K) PLAN
REPORTABLE TRANSACTIONS
Year Ended January 31, 1995
<TABLE>
<CAPTION>
Number of (In thousands)
transactions ----------------------------------------
--------------- Purchase Sales Cost of Net
Description of assets Purchases Sales price price assets sold gain(loss)
--------- ----- -------- ----- ----------- ----------
Category iii - Series of securities transactions in excess of 5% of the Plan
----------------------------------------------------------------------------
assets at February 1, 1994
--------------------------
<S> <C> <C> <C> <C> <C> <C>
Michaels Stores, Inc.
common stock - 6 $ - $1,514 $ 216 $ 1,298
</TABLE>
There were no category i, ii or iv reportable transactions during 1994.
F-13
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-11985) pertaining to the Michaels
Stores, Inc. Employees 401(k) Plan and in the related Prospectus
and in the Registration Statement (Form S-8 No. 33-21573)
pertaining to the Moskatel's Inc. Savings/Retirement Plan and in
the related Prospectus of our report dated August 11, 1995, with
respect to the financial statements and schedules of the Michaels
Stores, Inc. Employees 401(k) Plan included in this Annual Report
(Form ll-K) for the year ended January 31, 1995.
ERNST & YOUNG LLP
Dallas, Texas
August 11, 1995
F-14
