##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 WASHINGTON, DC 20549
     FORM 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    April 29, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    to   Commission file number
    001-09338
     MICHAELS STORES, INC.
   Delaware

75-1943604(State or other jurisdiction of
    incorporation or organization)

(I.R.S. employer
    identification number)   8000 Bent Branch Drive
 Irving, Texas 75063
 P.O. Box 619566
 DFW, Texas
    75261-9566
   (972) 409-1300
       þ o
  Rule 12b-2
  þ o o
  Rule 12b-2 o þ
    Shares Outstanding as ofTitle

June 9, 2006Common Stock, par value $.10 per
    share

132,137,792




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##### 



MICHAELS
    STORES, INC.FORM 10-Q
  Part IFINANCIAL
    INFORMATIONItem 1.


Financial
    StatementsConsolidated
    Balance Sheets at April 29, 2006, January 28, 2006,
    and April 30, 2005 (unaudited)


3Consolidated
    Statements of Income for the quarter ended April 29, 2006
    and April 30, 2005 (unaudited)


4Consolidated
    Statements of Cash Flows for the quarter ended April 29,
    2006 and April 30, 2005 (unaudited)


5Notes to
    Consolidated Financial Statements (unaudited)


6Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


17Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


24Item 4.


Controls and
    Procedures


24Part IIOTHER
    INFORMATIONItem 1.


Legal
    Proceedings


25Item 2.


Unregistered
    Sales of Equity Securities and Use of Proceeds


29Item 6.


Exhibits


30Signatures


31Forms of Award Agreements under 2005 Incentive Compensation PlanForm of Change in Control Severance AgreementChange in Control Retention Bonus PlanFiscal Year 2006 Bonus Plan EnhancementCertifications of Jeffrey N. Boyer Pursuant to Section 302Certifications of Gregory A. Sandfort Pursuant to Section 302Certification Pursuant to Section 906   2




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##### Table of Contents



MICHAELS
    STORES, INC.
 Part IFINANCIAL INFORMATION
  Item 1.
    Financial
    Statements.  MICHAELS
    STORES, INC.
 CONSOLIDATED BALANCE SHEETS  (In thousands, except share data)
  (Unaudited)
  April 29,


January 28,


April 30,2006


2006


2005ASSETSCurrent assets:Cash and equivalents

$
441,843


$
452,449


$
558,546Merchandise inventories


795,047



784,032



835,765Prepaid expenses and other


46,397



44,042



26,999Deferred and prepaid income taxes


34,156



34,125



64,669Total current assets


1,317,443



1,314,648



1,485,979Property and equipment, at
    cost


1,046,956



1,011,201



936,091Less accumulated depreciation


(611,495
)


(586,382
)


(525,555
)435,461



424,819



410,536Goodwill


115,839



115,839



115,839Other assets


23,082



20,249



19,136138,921



136,088



134,975Total assets

$
1,891,825


$
1,875,555


$
2,031,490LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
267,154


$
193,595


$
269,684Accrued liabilities and other


226,541



282,499



227,053Income taxes payable


15,730



20,672



Total current liabilities


509,425



496,766



496,73791/4% Senior
    Notes due 2009










200,000Deferred income taxes


2,791



2,803



26,848Other long-term
    liabilities


89,098



88,637



79,359Total long-term liabilities


91,889



91,440



306,207601,314



588,206



802,944Commitments and contingenciesStockholders
    equity:Preferred Stock, $0.10 par
    value, 2,000,000 shares authorized; none issued










Common Stock, $0.10 par value,
    350,000,000 shares authorized; 134,841,303 shares
    issued and 132,074,903 shares outstanding at April 29,
    2006, 133,821,417 shares issued and 132,986,517 shares
    outstanding at January 28, 2006, and
    135,293,468 shares issued and outstanding at April 30,
    2005


13,484



13,382



13,529Additional paid-in capital


416,052



386,627



425,432Retained earnings


946,980



907,773



781,333Treasury Stock
    (2,766,400 shares at April 29, 2006,
    834,900 shares at January 28, 2006, and none at
    April 30, 2005)


(94,127
)


(27,944
)


Accumulated other comprehensive
    income


8,122



7,511



8,252Total stockholders equity


1,290,511



1,287,349



1,228,546Total liabilities and
    stockholders equity

$
1,891,825


$
1,875,555


$
2,031,490    3




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##### Table of Contents



MICHAELS
    STORES, INC.
 CONSOLIDATED STATEMENTS OF INCOME  (In thousands, except per share data)
  (Unaudited)
  Quarter EndedApril 29,


April 30,2006


2005Net sales

$
832,481


$
821,016Cost of sales and occupancy expense


512,041



503,204Gross profit


320,440



317,812Selling, general, and
    administrative expense


241,736



227,894Store pre-opening costs


1,437



2,739Operating income


77,267



87,179Interest expense


172



5,089Other (income) and expense, net


(7,162
)


(2,680
)Income before income taxes and
    cumulative effect of accounting change


84,257



84,770Provision for income taxes


31,807



32,216Income before cumulative effect
    of accounting change


52,450



52,554Cumulative effect of accounting
    change, net of income tax of $54.2 million






88,488Net income (loss)

$
52,450


$
(35,934
)Basic earnings (loss) per
    common share:Income before cumulative effect of
    accounting change

$
0.40


$
0.39Cumulative effect of accounting
    change, net of income tax






0.65Net income (loss)

$
0.40


$
(0.26
)Diluted earnings (loss) per
    common share:Income before cumulative effect of
    accounting change

$
0.39


$
0.38Cumulative effect of accounting
    change, net of income tax






0.64Net income (loss)

$
0.39


$
(0.26
)Dividends declared per common share

$
0.10


$
0.07    4




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##### Table of Contents



MICHAELS
    STORES, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS



(In thousands)



(Unaudited) Quarter EndedApril 29,


April 30,2006


2005Operating activities:Net income (loss)

$
52,450


$
(35,934
)Adjustments:Depreciation


27,341



23,680Amortization


115



99Share-based compensation


5,568



4,478Tax benefits from stock options
    exercised


(8,203
)


(7,349
)Non-cash charge for the cumulative
    effect of accounting change






142,723Other


2



254Changes in assets and liabilities:Merchandise inventories


(10,964
)


(41,972
)Prepaid expenses and other


(2,689
)


(386
)Deferred income taxes and other


(3,199
)


(5,148
)Accounts payable


60,874



13,418Accrued liabilities and other


(19,615
)


(3,128
)Income taxes payable


3,261



(48,330
)Other long-term liabilities


1,526



6,982Net cash provided by operating
    activities


106,467



49,387Investing activities:Additions to property and equipment


(38,920
)


(27,488
)Purchases of short-term investments






(226
)Sales of short-term investments






50,605Net proceeds from sales of
    property and equipment


6



Net cash (used in) provided by
    investing activities


(38,914
)


22,891Financing activities:Cash dividends paid to stockholders


(26,625
)


(19,045
)Repurchase of Common Stock


(66,182
)


(52,363
)Proceeds from stock options
    exercised


14,876



13,262Tax benefits from stock options
    exercised


8,203



7,349Proceeds from issuance of Common
    Stock and other


1,095



1,213Change in cash overdraft.


(9,526
)


Net cash used in financing
    activities


(78,159
)


(49,584
)Net (decrease) increase in cash
    and equivalents


(10,606
)


22,694Cash and equivalents at
    beginning of period


452,449



535,852Cash and equivalents at end of
    period

$
441,843


$
558,546    5




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##### Table of Contents



MICHAELS
    STORES, INC.



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS



For the
    Quarter Ended April 29, 2006



(Unaudited)  Note 1.
    Basis of
    Presentation 
   Form 10-Q Regulation S-X.
  Form 10-K
      Note 2.
    Changes
    in Accounting 
 Form 10-K, Share-Based Payment Form 10-Q, Form 10-K.
 6




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
   Note 2.
    Changes
    in Accounting (Continued)     Quarter Ended April 30,
    2005As previously


WAC


SFAS No. 123(R)


Asreported


Adjustments


Adjustments


restated(In thousands)Balance SheetMerchandise inventories

$
964,177


$
(128,412
)

$



$
835,765Deferred and prepaid income taxes


22,027



42,642







64,669Other assets


17,434







1,702



19,136Income taxes payable


6,155



(6,155
)






Additional paid-in capital


420,954







4,478



425,432Retained earnings


863,800



(79,691
)


(2,776
)


781,333Accumulated other comprehensive
    income


8,176



76







8,252Statement of Cash
    FlowsNet income


46,533



(79,691
)


(2,776
)


(35,934
)Share-based compensation expense










4,478



4,478Non-cash charge for the cumulative
    effect of accounting change






142,723







142,723Merchandise inventories


(27,782
)


(14,190
)






(41,972
)Deferred income taxes and other


(3,446
)






(1,702
)


(5,148
)Income taxes payable


512



(48,842
)






(48,330
)Tax benefit from stock options
    exercised (a reclassification from operating activities to
    financing activities)










7,349



7,349   7




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 3.
    Earnings
    per Share 
   Quarter EndedApril 29,


April 30,2006


2005(In thousands, except per share
    data)Numerator:Income before cumulative effect of
    accounting change

$
52,450


$
52,554Cumulative effect of accounting
    change, net of income tax






88,488Net income (loss)

$
52,450


$
(35,934
)Denominator:Denominator for basic earnings per
    common shareweighted average shares


132,399



136,018Effect of dilutive securities:Employee stock options


2,218



2,417Denominator for diluted earnings
    per common shareweighted average shares adjusted for
    dilutive securities


134,617



138,435Basic earnings (loss) per
    common share:Income before cumulative effect of
    accounting change

$
0.40


$
0.39Cumulative effect of accounting
    change, net of income tax






0.65Net income (loss)

$
0.40


$
(0.26
)Diluted earnings (loss) per
    common share:Income before cumulative effect of
    accounting change

$
0.39


$
0.38Cumulative effect of accounting
    change, net of income tax






0.64Net income (loss)

$
0.39


$
(0.26
)      Note 4.
    Share-Based
    Compensation 
  8




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
   Note 4.
    Share-Based
    Compensation (Continued)     Note 5.
    Debt 
 91/4% Senior
    Notes due 2009
  1 4
  Credit
    Agreement
       9




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 6.
    Comprehensive
    Income (Loss) 
   Quarter EndedApril 29,


April 30,2006


2005(In thousands)Net income (loss)

$
52,450


$
(35,934
)Other comprehensive income:Foreign currency translation
    adjustment and other


611



2,854Comprehensive income (loss)

$
53,061


$
(33,080
)   Note 7.
    Commitments
    and Contingencies Derivative
    Claims
       10




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 7.
    Commitments and Contingencies (Continued)    Cotton
    Claim
    Clark
    Claim
   11




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 7.
    Commitments and Contingencies (Continued)   Morris
    Claim
    Olivas
    Claim
    Governmental
    Inquiries and Related Matters
  non-U.S. trusts
    and/or non-U.S. trusts. and/or and/or
 12




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 7.
    Commitments and Contingencies (Continued)  non-U.S. trusts
  non-U.S. trusts, Rule 13d-3, non-U.S. trusts
  non-U.S. trusts
  non-U.S. trusts
  Derivative Claims
  Internal
    Review of Stock Options Practices
   13




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 7.
    Commitments and Contingencies (Continued)        Accounting for
    Stock Issued to Employees Form 10-K Form 10-K
        General
   14




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
   Note 8.
    Segments Disclosures About Segments of an
    Enterprise and Related Information.
    Net Sales


Operating Income


Total Assets(In thousands)Quarter ended April 29,
    2006:United States

$
778,356


$
68,576


$
1,808,567Canada


54,125



8,691



83,258Consolidated Total

$
832,481


$
77,267


$
1,891,825Quarter ended April 30,
    2005:United States

$
776,900


$
82,029


$
1,971,499Canada


44,116



5,150



59,991Consolidated Total

$
821,016


$
87,179


$
2,031,490     Note 9.
    Exploration
    of Strategic Alternatives    15




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##### Table of Contents



MICHAELS
    STORES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  For the
    Quarter Ended April 29, 2006
 (Unaudited)
  Note 9.
    Exploration of Strategic Alternatives (Continued)    Note 10.
    Subsequent
    Event  16




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.    Disclosure
    Regarding Forward-Looking Information
  Form 10-Q. Form 10-Q, Form 10-K
  
    our ability to remain competitive in the areas of merchandise
    quality, price, breadth of selection, customer service, and
    convenience;
    our ability to anticipate
    and/or react
    to changes in customer demand and preferences for products and
    supplies used in creative activities and the related potential
    impact to merchandise inventories in categories that represent a
    significant portion of our business;
    changes in consumer confidence resulting in a reduction in
    consumer spending on items perceived to be discretionary;
    unexpected consumer responses to our promotional programs;
    unusual weather conditions;
    the execution and management of our store growth, including new
    concepts, the impact of new competitor stores in locations near
    our existing stores, and the availability of acceptable real
    estate locations for new store openings;
    the effective optimization and maintenance of our perpetual
    inventory and automated replenishment systems and related
    impacts to inventory levels;
    the identification and implementation of enhancements to our
    supply chain to enable us to distribute additional SKUs through
    our distribution centers;
    delays in the receipt of merchandise ordered from suppliers due
    to vendor payment delays associated with recently implemented
    systems or delays in connection with either the manufacture or
    shipment of such merchandise;
    transportation delays (including dock strikes and other work
    stoppages) and increases in transportation costs due to fuel
    surcharges and transportation regulations;
    restrictive actions by foreign governments or changes in United
    States laws and regulations affecting imports or domestic
    distribution;
    significant increases in inflation or commodity prices, such as
    petroleum, natural gas, electricity, steel, and paper, which may
    adversely affect our costs, including cost of merchandise;
    significant increases in tariffs or duties levied on imports
    which may limit the a6vailability of certain merchandise from
    our foreign suppliers;
    changes in political, economic, and social conditions;
    significant fluctuations in exchange rates; 17




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##### Table of Contents




    financial difficulties of any of our key vendors, suppliers, or
    insurance providers;
    the design and implementation of new management information
    systems as well as the maintenance and enhancement of existing
    systems, particularly in light of our continued store growth and
    the addition of new concepts;
    our ability to maintain the security of electronic and other
    confidential information;
    our ability to maintain effective internal controls over our
    newly implemented financial reporting system;
    our ability to comply with the terms and restrictions of our
    Credit Agreement;
    our exploration of strategic alternatives;
    our ability to attract and retain qualified personnel to
    successfully execute our operating plans;
    the seasonality of the retail business; and
    other factors as set forth in our Annual Report on
    Form 10-K
    for the fiscal year ended January 28, 2006, particularly in
    Critical Accounting Policies and Estimates and
    Risk Factors, and in our other Securities and
    Exchange Commission filings.  Form 10-Q
  General
     Quarter EndedApril 29,


April 30,2006


2005Michaels stores:Retail stores open at beginning of
    period


885



844Retail stores opened during the
    period


17



14Retail stores opened (relocations)
    during the period


3



8Retail stores closed during the
    period


(3
)


(1
)Retail stores closed (relocations)
    during the period


(3
)


(8
)Retail stores open at end of period


899



857Aaron Brothers
    stores:Retail stores open at beginning of
    period


166



164Retail stores opened during the
    period






1Retail stores closed during the
    period


(1
)


Retail stores open at end of period


165



165Recollections stores:Retail stores open at beginning of
    period


11



8Retail stores opened during the
    period






1Retail stores open at end of period


11



9 18




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##### Table of Contents



Quarter EndedApril 29,


April 30,2006


2005Star Decorators Wholesale
    stores:Wholesale stores open at beginning
    of period


4



3Wholesale stores opened during the
    period






1Wholesale stores open at end of
    period


4



4Total store count at end of period


1,079



1,035Other operating data:Average inventory per Michaels
    store(1)

$
821


$
909Comparable store sales (decrease)
    increase(2)


(3.0
)%


7.8
%     (1)
    
    Average inventory per Michaels store calculation excludes our
    Aaron Brothers, Recollections, and Star Decorators Wholesale
    stores.(2)
    
    Comparable store sales (decrease) increase represents the
    increase or decrease in net sales for stores open the same
    number of months in the indicated period and the comparable
    period of the previous year, including stores that were
    relocated or expanded during either period. A store is deemed to
    become comparable in its 14th month of operation in order
    to eliminate grand opening sales distortions. A store
    temporarily closed more than 2 weeks due to a catastrophic
    event is not considered comparable during the month it closed.
    If a store is closed longer than 2 weeks but less than
    2 months, it becomes comparable in the month in which it
    reopens, subject to a mid-month convention. A store closed
    longer than 2 months becomes comparable in its
    14th month of operation after its reopening.  Results
    of Operations
    Quarter EndedApril 29,


April 30,2006


2005Net sales


100.0
%


100.0
%Cost of sales and occupancy expense


61.5



61.3Gross profit


38.5



38.7Selling, general, and
    administrative expense


29.0



27.8Store pre-opening costs


0.2



0.3Operating income


9.3



10.6Interest expense


0.0



0.6Other (income) and expense, net


(0.8
)


(0.3
)Income before income taxes and
    cumulative effect of accounting change


10.1



10.3Provision for income taxes


3.8



3.9Income before cumulative effect
    of accounting change


6.3



6.4Cumulative effect of accounting
    change, net of income tax






10.8Net income


6.3
%


(4.4
)%  19




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##### Table of Contents



Quarter
    Ended April 29, 2006 Compared to the Quarter Ended
    April 30, 2006
  Net Sales 12-month
    Cost of Sales and Occupancy Expense
    Selling, General, and Administrative
    Expense
     20




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##### Table of Contents



Operating Income
  Interest Expense 1 4
  Other Income
  Provision for Income Taxes
  Cumulative Effect of Accounting Change
  Net Income
  Liquidity
    and Capital Resources
    day-to-day
  Cash Flow
    from Operating Activities
     21




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##### Table of Contents



Cash Flow
    used in Investing Activities
   Three Months EndedApril 29,


April, 302006(1)


2005(2)(In thousands)New and relocated stores and
    stores not yet opened

$
8,590


$
13,597Existing stores


15,159



5,766Distribution system expansion


3,815



904Information systems


10,343



6,266Corporate and other


1,013



955$
38,920


$
27,488     (1)
    
    In the first quarter of fiscal 2006, we incurred capital
    expenditures related to the opening of 17 Michaels stores and
    the relocation of three Michaels stores. Capital expenditures
    for existing stores for the first quarter of fiscal 2006
    increased $9.4 million over the first quarter of fiscal
    2005 primarily due to incremental expenditures associated with
    our store standardization/remodel program.(2)
    
    In the first quarter of fiscal 2005, we incurred capital
    expenditures related to the opening of 14 Michaels, one Aaron
    Brothers, one Recollections, and one Star Decorators Wholesale
    store, and the relocation of eight Michaels stores.    Cash Flow
    used in Financing Activities
      Shares





SharesAuthorized for


Shares


Available forRepurchase


Repurchased


RepurchaseDecember 5, 2000 repurchase
    plan (variable portion)


72,510



(72,509
)


1
(1)December 6, 2005 repurchase
    plan


5,000,000



(2,428,688
)


2,571,312
(2)5,072,510



(2,501,197
)


2,571,313     (1)
    
    Our Board of Directors provided that proceeds of the exercise of
    options under our 2001 General Stock Option Plan may be used to
    repurchase shares under the 2000 repurchase plan and that the
    maximum number of shares authorized to be repurchased under the
    2000 repurchase plan may be increased to the extent necessary to
    so use the proceeds from such option exercises. In fiscal years
    2005 and 2004, we repurchased and subsequently retired
    17,958 shares and 54,551 shares of our Common Stock,
    respectively, at average prices of $40.93 and $27.03 per
    share, respectively, using proceeds from exercises of stock
    options granted under the 2001 General Stock Option plan.(2)
    
    In the first quarter of fiscal 2006, we repurchased
    approximately 1.9 million shares of our Common Stock
    authorized to be repurchased under the December 2005 repurchase
    plan at an average price of $34.26 per share and, as a
    result, we had approximately 2.6 million shares available
    for repurchase under the plan as of April 29, 2006. We hold
    the repurchased shares as Treasury Stock. 22




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##### Table of Contents



Debt
  1 4
      Recent
    Accounting Pronouncements
  Accounting Changes and Error Corrections. Accounting Changes Reporting Accounting Changes in
    Interim Financial Statements.
 23




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##### Table of Contents



Recent
    Events
      Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk.    Item 4.
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-Q.
  Change in
    Internal Control Over Financial Reporting
    Rules 13a-15(f)
 24




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##### Table of Contents



MICHAELS
    STORES, INC.
    Part IIOTHER INFORMATION  Item 1.
    Legal
    Proceedings.  Derivative
    Claims
       25




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##### Table of Contents



Cotton
    Claim
    Clark
    Claim
    Morris
    Claim
    Olivas
    Claim
   26




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##### Table of Contents



Governmental
    Inquiries and Related Matters
  non-U.S. trusts
    and/or non-U.S. trusts. and/or and/or non-U.S. trusts
  non-U.S. trusts, Rule 13d-3, non-U.S. trusts
  non-U.S. trusts
  non-U.S. trusts
   27




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##### Table of Contents



Derivative Claims
  Internal
    Review of Stock Option Practices
        Accounting for
    Stock Issued to Employees Form 10-K Form 10-K,
     28




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##### Table of Contents



General
    Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.        Issuer
    Purchases of Equity Securities
  Total Number


Maximumof Shares


Number ofPurchased as


Shares ThatPart of Publicly


May Yet BeTotal Number


Average


Announced


Purchasedof Shares


Price Paid


Plans or


Under the PlansPurchased(1)


per Share


Programs(1)


or Programs(2)January 29, 2006 through
    February 25, 2006


647,700



31.95



647,700



3,855,113February 26, 2006 through
    April 1, 2006


484,400



32.48



484,400



3,370,713April 2, 2006 through
    April 29, 2006


799,400



37.22



799,400



2,571,313Total


1,931,500


$
34.26



1,931,500



2,571,313     (1)
    
    Shares repurchased during the first quarter were under the
    December 6, 2005 repurchase plan and are held as Treasury
    shares.(2)
    
    As of January 28, 2006, we had used the entire fixed
    portion of the authority originally provided in the 2000
    repurchase plan. No repurchases from proceeds of stock option
    exercises under the 2001 General Stock Option Plan were made in
    the first quarter of fiscal 2006 since there were no additional
    options exercised under the 2001 General Stock Option Plan
    during that quarter. As of April 29, 2006, we had
    2,571,312 shares available for repurchase under the
    December 6, 2005 repurchase plan. 29




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##### Table of Contents



Item 6.
    Exhibits.    ExhibitNumber

Description of Exhibit10
.1

Forms of Award Agreements under
    the Registrants 2005 Incentive Compensation Plan (filed
    herewith).10
.2

Form of Change in Control
    Severance Agreement (filed herewith).10
.3

Change in Control Retention Bonus
    Plan (filed herewith).10
.4

Fiscal Year 2006 Bonus Plan
    Enhancement (filed herewith).31
.1

Certifications of Jeffrey N. Boyer
    pursuant to §302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith).31
.2

Certifications of Gregory A.
    Sandfort pursuant to §302 of the Sarbanes-Oxley Act of 2002
    (filed herewith).32
.1

Certification pursuant to
    18 U.S.C. §1350, as adopted pursuant to §906 of
    the Sarbanes-Oxley Act of 2002 (filed herewith).  30




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##### Table of Contents



MICHAELS
    STORES, INC.
    SIGNATURES      By:
    /s/  Jeffrey
    N. Boyer         31




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##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Description of Exhibit10
.1

Forms of Award Agreements under
    the Registrants 2005 Incentive Compensation Plan (filed
    herewith).10
.2

Form of Change in Control
    Severance Agreement (filed herewith).10
.3

Change in Control Retention Bonus
    Plan (filed herewith).10
.4

Fiscal Year 2006 Bonus Plan
    Enhancement (filed herewith).31
.1

Certifications of Jeffrey N. Boyer
    pursuant to §302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith).31
.2

Certifications of Gregory A.
    Sandfort pursuant to §302 of the Sarbanes-Oxley Act of 2002
    (filed herewith).32
.1

Certification pursuant to
    18 U.S.C. §1350, as adopted pursuant to §906 of
    the Sarbanes-Oxley Act of 2002 (filed herewith).