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, 1996
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 behalf of the Plan by the undersigned thereunto duly authorized.
MICHAELS STORES, INC.
EMPLOYEES 401(K) PLAN
Date: July 17, 1996 By: ____________________
R. Don Morris
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 material changes in the
__________________________
provisions of the 401(k) Plan during the fiscal year ending January 31, 1996
("fiscal 1995").
Changes in Investment Policy. There were no changes in the investment
____________________________
policy of the 401(k) Plan during fiscal 1995.
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, 1996, there were 3,048
_______________________
employees participating in the 401(k) Plan.
Administration of the Plan. The 401(k) Plan is administered by an
__________________________
Administration Committee currently consisting of one person, an employee of
the Employer, appointed by the Employer's Board of Directors. The member of
the Administration Committee serves at the discretion of the Board of
Directors without compensation for services. The member of the
Administration Committee is:
R. Don Morris Executive Vice President and
Chief Financial Officer,
Michaels Stores, Inc.
-1-
<PAGE>
The address of the member 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 in a
________________________
trust and managed by a trustee ("Trustee"), who may be an employee of the
Company. At present, the same individual who serves as the Administration
Committee also serves as the Trustee. The Company furnishes the 401(k) Plan
with employee dishonesty insurance coverage, to comply with ERISA, in the amount
of $500,000 covering the Trustee and others who handle funds of the 401(k) Plan.
The Company also furnishes coverage under an employee benefit liability
endorsement in the amount of $1,000,000. The Trustee receives no compensation
from the 401(k) Plan.
Reports to Participating Employees. Each participant and retired
__________________________________
participant having an interest in the 401(k) Plan receive quarterly
statements of their 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
_____________________ ________
Item 27a-Assets Held for
Investment Purposes 1 F-12
Item 27d-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
______________________________
Administration Committee
Michaels Stores, Inc. Employees 401(k) Plan
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, 1996 and 1995, 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 Administration Committee.
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, 1996 and 1995, 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, 1996
(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, as amended, 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 plan benefits
and changes in net assets available for plan benefits of 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
June 21, 1996
F-1
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
STATEMENT OF
NET ASSETS AVAILABLE FOR PLAN BENEFITS
January 31, 1996
(In thousands)
<TABLE>
<CAPTION>
Fund information
_________________________________________________
Inter-
Growth mediate
American Fund of Bond Fund
General Balanced America of America
Subfund Subfund Subfund Subfund Subtotal
_______ ________ _______ __________ ________
ASSETS
______
<S> <C> <C> <C> <C> <C>
Investment in Michaels
Stores, Inc. common stock $4,438 $ 4,438
Investment in mutual funds $1,617 $2,772 $2,946 7,335
Participant loans
receivable 536 74 105 208 923
Contributions receivable:
Participants 149 77 117 59 402
Employer 415 - - - 415
______ ______ ______ ______ _______
564 77 117 59 817
Interfund due to/(from) 1,516 (215) (417) (543) 341
Cash 644 - - - 644
______ ______ ______ ______ _______
Net assets available for
plan benefits $7,698 $1,553 $2,577 $2,670 $14,498
______ ______ ______ ______ _______
______ ______ ______ ______ _______
</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, 1996
(In thousands)
<TABLE>
<CAPTION>
Fund information
________________________________________________
Investment New
Previous Company of Perspec-
Page America tive
Subtotal Subfund Subfund Total
________ __________ ________ _____
ASSETS
______
<S> <C> <C> <C> <C>
Investment in Michaels
Stores, Inc. common
stock $ 4,438 $ 4,438
Investment in mutual
funds 7,335 $2,756 $1,597 11,688
Participant loans
receivable 923 74 7 1,004
Contributions receivable:
Participants 402 100 80 582
Employer 415 - - 415
_______ ______ ______ _______
817 100 80 997
Interfund due to/(from) 341 (233) (108) -
Cash 644 - - 644
Net assets available for
plan benefits $14,498 $2,697 $1,576 $18,771
_______ ______ ______ _______
</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, 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
_______ ________ _______ __________ ________
ASSETS
______
<S> <C> <C> <C> <C> <C>
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-3 (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
________ _________ ________ __________ _______
ASSETS
______
<S> <C> <C> <C> <C> <C>
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-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, 1996
(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 $ 84 $ 6 $ 11 $ 20 $ 121
Dividends - 50 24 174 248
Net appreciation
(depreciation) in fair
value of investments (7,048) 244 531 141 (6,132)
_______ _____ _____ _____ _______
(6,964) 300 566 335 (5,763)
Contributions:
Participants 859 389 548 324 2,120
Employer 1,442 - - - 1,442
Interfund transfers 493 239 289 475 1,496
_______ ____ _____ _____ _______
Total additions (4,170) 928 1,403 1,134 (705)
Distributions
to participants (1,305) (162) (205) (356) (2,028)
_______ ____ ____ _____ _______
Net increase
(decrease) (5,475) 766 1,198 778 (2,733)
Net assets available
for plan benefits:
Beginning of year 13,173 787 1,379 1,892 17,231
_______ ______ ______ ______ _______
End of year $ 7,698 $1,553 $2,577 $2,670 $14,498
_______ ______ ______ ______ _______
_______ ______ ______ ______ _______
</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, 1996
(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 $ 121 $ 7 $ 3 $ 37 $ 168
Dividends 248 159 27 - 434
Net appreciation
(depreciation) in
fair value of
investments (6,132) 438 201 - (5,493)
_______ ______ ______ ______ _______
(5,763) 604 231 37 (4,891)
Contributions:
Participants 2,120 523 430 - 3,073
Employer 1,442 - - - 1,442
Interfund transfers 1,496 350 351 (2,197) -
_______ ______ ______ ______ _______
Total additions (705) 1,477 1,012 (2,160) (376)
Distributions
to participants 2,028) (265) (231) (848) (3,372)
_______ ______ ______ ______ _______
Net increase
(decrease) (2,733) 1,212 781 (3,008) (3,748)
Net assets available
for plan benefits:
Beginning of year 17,231 1,485 795 3,008 22,519
_______ ______ ______ ______ _______
End of year $14,498 $2,697 $1,576 $ - $18,771
_______ ______ ______ ______ _______
_______ ______ ______ ______ _______
</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, 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-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, 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-5 (2 of 2)
<PAGE>
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996
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, as amended ("ERISA"). The following is a brief
description of the Plan. Participants should refer to the plan document
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 their 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 ($9,500 in 1996 and $9,240
in 1995). 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 in the Plan,
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 $54,000 and $47,000 were
applied against Employer Matching Contributions to the Plan for the
years ended January 31, 1996 and 1995, respectively.
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) which have been selected by the Plan's Investment
Committee:
(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.
(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.
(c) Growth Fund of America Subfund - a mutual fund investing in
domestic growth equities seeking growth of capital.
(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.
(e) Investment Company of America Subfund - a mutual fund
investing in common stocks seeking long term growth of capital and
income.
(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.
(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, and
investment balances were re-directed by the participants to the
investment options available, including the General Subfund.
F-7
<PAGE>
Administration of the Plan - The Plan is administered by an
__________________________
Administration Committee consisting of one person, an employee of the
Employer, appointed by the Employer's Board of Directors. The member of
the Administration Committee serves at the discretion of the Board of
Directors without compensation for 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 allocated to the
participants' accounts monthly 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 nonforfeitable at all times.
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 a qualified plan under Section 401(a) of
_________________
the Internal Revenue Code ("Code") and the related trust is exempt from
federal income tax under Section 501(a) of the Code. An application for
a favorable determination letter has been filed and is pending with the
Internal Revenue Service. The Administration Committee believes that
the Plan is designed and currently operated in compliance with the
applicable requirements of the Code.
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.
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.
F-8
<PAGE>
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. Investments in
guaranteed investment contracts of Transamerica Life Companies are
valued at contract value which represents cost plus accrued interest.
Security transactions are recorded on a trade date basis.
Contributions and interest income are recorded on the accrual basis.
Use of estimates
________________
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-9
<PAGE>
3. Investments
___________
Investments at January 31, 1996, are as follows:
<TABLE>
<CAPTION>
Number (In thousands)
of shares Market
_________ ______
<S> <C> <C>
Michaels Stores, Inc. common stock 348,039 $ 4,438
American Mutual Funds:
American Balanced Fund 112,523 1,617
The Growth Fund of America 88,456 2,772
Intermediate Bond Fund of America 213,823 2,946
The Investment Company of America 123,744 2,756
New Perspective Fund 95,083 1,597
_______
$16,126
_______
_______
</TABLE>
Investments at January 31, 1995, are as follows:
<TABLE>
<CAPTION>
Number (In thousands)
of shares Market
_________ ______
<S> <C> <C>
Michaels Stores, Inc. common stock 455,925 $15,045
American Mutual Funds:
American Balanced Fund 74,404 913
The Growth Fund of America 63,181 1,630
Intermediate Bond Fund of America 162,589 2,120
The Investment Company of America 84,973 1,524
New Perspective Fund 49,241 699
Guaranteed investment contracts 1,813
_______
$23,744
_______
_______
</TABLE>
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 $160,000 and $90,000,
respectively, for administrative and accounting fees on behalf of the Plan
during fiscal 1995 and 1994, respectively.
During fiscal 1995, the Plan transferred 107,886 shares of the
Employer's common stock to the Employer in settlement of a series of arms-
length sales of shares pursuant to which the Employer had previously remitted
approximately $3,560,000 to the Plan to fund amounts withdrawn by terminating
participants from the General Subfund. During fiscal 1994, the Plan sold
35,000 shares of the Employer's common stock and realized proceeds of
approximately $1,514,000.
F-10
<PAGE>
5. Differences Between Financial Statements and Form 5500:
______________________________________________________
The following is a reconciliation of net assets available for plan benefits
per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
(In thousands)
Year Ended Year Ended
January 31, January 31,
1996 1995
__________ ___________
<S> <C> <C>
Net assets available for plan
benefits per the financial
statements $18,771 $22,519
Amounts allocated to withdrawn
participants (468) (1,599)
_______ _______
Net assets available for plan
benefits per the Form 5500 $18,303 $20,920
_______ _______
_______ _______
</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
January 31,
1996
___________
<S> <C>
Distributions to participants
per the financial statements $3,372
Add: Amounts allocated to withdrawn
participants at January 31, 1996 468
Less: Amounts allocated to withdrawn
participants at January 31, 1995 (1,599)
______
Distributions to participants
per the Form 5500 $2,241
______
______
</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
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
January 31, 1996
<TABLE>
<CAPTION>
(In thousands)
Identity of Issue, Description
Borrower, Lessor of Current
or Similar Party Investment Cost Value
__________________ ___________ ____ _______
<S> <C> <C> <C>
*Michaels Stores, Inc.
common stock 348,039 shares $ 3,025 $ 4,438
American Mutual Funds:
American Balanced Fund 112,523 shares 1,435 1,617
The Growth Fund of America 88,456 shares 2,389 2,772
Intermediate Bond Fund
of America 213,823 shares 2,957 2,946
The Investment Company
of America 123,744 shares 2,359 2,756
New Perspective Fund 95,083 shares 1,488 1,597
Merrill Lynch Cash Management
money market fund 644,044 shares 644 644
*Participant loans Interest rates
receivable range from 7% to
10% with maturities
from February, 1996
to September, 2005 - 1,004
_______ _______
$14,297 $17,774
_______ _______
_______ _______
</TABLE>
* Indicates party-in-interest to the Plan.
F-12
<PAGE>
Schedule 2
__________
MICHAELS STORES, INC. EMPLOYEES 401(K) PLAN
ITEM 27d - REPORTABLE TRANSACTIONS
Year Ended January 31, 1996
<TABLE>
<CAPTION>
(In thousands)
_______________________________________
Number of
transactions
_______________ Purchase Sales Cost of Net
Description of assets Purchases Sales Price price assets sold gain(loss)
_____________________ _________ _____ ________ _____ ___________ __________
Category i - Individual securities transaction in excess of 5% of the Plan
__________________________________________________________________________
assets at February 1, 1995
_________________________
<S> <C> <C> <C> <C> <C> <C>
Michaels Stores, Inc.
common stock - 1 - $3,560 $ 610 $2,950
Transamerica Life Companies
guaranteed investment
contracts - 1 - $1,823 $1,947 $ (124)
Category iii - Series of securities transactions in excess of 5% of the Plan
____________________________________________________________________________
assets at February 1, 1995
__________________________
American Mutual Funds:
Intermediate Bond Fund
of America 24 2 $920 $242 $ 235 $ (7)
</TABLE>
There were no category ii or iv reportable transactions during fiscal 1995.
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 June 21, 1996, with respect to the financial statements
and supplemental schedules of the Michaels Stores, Inc. Employees 401(k) Plan
included in this Annual Report (Form 11-K) for the year ended January 31, 1996.
ERNST & YOUNG LLP
Dallas, Texas
July 16, 1996
F-14
