##### 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 1934 
|                                                      
|For the quarterly period ended April 30, 2005         
|                                                      
|OR                                                    
|                                                      
|o                                                      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|                                                      
|For 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


þ o




|                                       |  |                         
|-------------------------------------- |  | ------------------------
|                                       |  | Shares Outstanding as of
|Title                                  |  | June 6, 2005            
|                                       |  |                         
|Common Stock, par value $.10 per share |  | 135,587,110             









---










MICHAELS STORES, INC.


FORM 10-Q


Part IFINANCIAL INFORMATION


|                                       |  |                                                                                                                     |  |   
|-------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | --
|Item 1.                                |  | Financial Statements                                                                                                |  |   
|                                       |  | Consolidated Balance Sheets at
    April 30, 2005, January 29, 2005, and May 1, 2004
    (unaudited)                |  | 3 
|                                       |  | Consolidated Statements of Income for the
    three months ended April 30, 2005 and May 1, 2004
    (unaudited)     |  | 4 
|                                       |  | Consolidated Statements of Cash Flows for
    the three months ended April 30, 2005 and May 1, 2004
    (unaudited) |  | 5 
|                                       |  | Notes to Consolidated Financial Statements
    (unaudited)                                                          |  | 6 
|Item 2.                                |  | Managements Discussion and
    Analysis of Financial Condition and Results of Operations                           |  | 13
|Item 3.                                |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                      |  | 20
|Item 4.                                |  | Controls and Procedures                                                                                             |  | 20
|Part IIOTHER
    INFORMATION         
|Item 1.                                |  | Legal Proceedings                                                                                                   |  | 21
|Item 2.                                |  | Unregistered Sales of Equity Securities
    and Use of Proceeds                                                     |  | 22
|Item 6.                                |  | Exhibits                                                                                                            |  | 23
|Signatures                             |  | 24                                                                                                                 
|Certifications Pursuant to Section 302
|Certifications Pursuant to Section 302
|Certification 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 30,                   |           |         | January 29, |   |           | May 1,  |          
|                                           |                                                                                                                                                                                                           | 2005                        |           |         | 2005        |   |           | 2004    |          
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|ASSETS                                     |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |           |   |           |        
|Current assets:                            |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |           |   |           |        
|                                           | Cash and equivalents                                                                                                                                                                                      |                             | $         | 558,546 |             |   | $         | 535,852 |           |   | $         | 381,352 |          
|                                           | Short-term investments                                                                                                                                                                                    |                             |           |        |             |   |           | 50,379  |           |   |           |        |          
|                                           | Merchandise inventories                                                                                                                                                                                   |                             |           | 964,177 |             |   |           | 936,395 |           |   |           | 906,655 |          
|                                           | Prepaid expenses and other                                                                                                                                                                                |                             |           | 26,999  |             |   |           | 26,613  |           |   |           | 40,031  |          
|                                           | Deferred income taxes                                                                                                                                                                                     |                             |           | 22,027  |             |   |           | 22,032  |           |   |           | 20,990  |          
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           | Total current assets        |           |         | 1,571,749   |   |           |         | 1,571,271 |   |           |         | 1,349,028 | 
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|Property and equipment, at cost            |                                                                                                                                                                                                           |                             | 936,091   |         |             |   | 913,174   |         |           |   | 825,928   |        
|Less accumulated depreciation              |                                                                                                                                                                                                           |                             | (525,555  | )       |             |   | (506,193  | )       |           |   | (434,257  | )      
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           |                             | 410,536   |         |             |   | 406,981   |         |           |   | 391,671   |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|Goodwill                                   |                                                                                                                                                                                                           |                             | 115,839   |         |             |   | 115,839   |         |           |   | 115,839   |        
|Other assets                               |                                                                                                                                                                                                           |                             | 17,434    |         |             |   | 17,569    |         |           |   | 14,850    |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           |                             | 133,273   |         |             |   | 133,408   |         |           |   | 130,689   |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|Total assets                               |                                                                                                                                                                                                           | $                           | 2,115,558 |         |             | $ | 2,111,660 |         |           | $ | 1,871,388 |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                          
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |           |   |           |        
|Current liabilities:                       |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |           |   |           |        
|                                           | Accounts payable                                                                                                                                                                                          |                             | $         | 269,684 |             |   | $         | 256,266 |           |   | $         | 214,454 |          
|                                           | Accrued liabilities and other                                                                                                                                                                             |                             |           | 227,053 |             |   |           | 242,682 |           |   |           | 190,040 |          
|                                           | Income taxes payable                                                                                                                                                                                      |                             |           | 6,155   |             |   |           | 12,992  |           |   |           |        |          
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           | Total current liabilities   |           |         | 502,892     |   |           |         | 511,940   |   |           |         | 404,494   | 
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|91/4% Senior
    Notes due 2009            |                                                                                                                                                                                                           |                             | 200,000   |         |             |   | 200,000   |         |           |   | 200,000   |        
|Deferred income taxes                      |                                                                                                                                                                                                           |                             | 26,848    |         |             |   | 30,355    |         |           |   | 28,241    |        
|Other long-term liabilities                |                                                                                                                                                                                                           |                             | 79,359    |         |             |   | 72,200    |         |           |   | 38,184    |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           | Total long-term liabilities |           |         | 306,207     |   |           |         | 302,555   |   |           |         | 266,425   | 
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           |                             | 809,099   |         |             |   | 814,495   |         |           |   | 670,919   |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|Commitments and contingencies              |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |           |   |           |        
|Stockholders 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; shares issued and outstanding of 135,293,468 at
    April 30, 2005, 135,726,717 at January 29, 2005, and
    137,173,338 at May 1, 2004 |                             |           | 13,529  |             |   |           | 13,573  |           |   |           | 13,717  |          
|                                           | Additional paid-in capital                                                                                                                                                                                |                             |           | 420,954 |             |   |           | 451,449 |           |   |           | 503,684 |          
|                                           | Retained earnings                                                                                                                                                                                         |                             |           | 863,800 |             |   |           | 826,821 |           |   |           | 681,477 |          
|                                           | Accumulated other comprehensive income                                                                                                                                                                    |                             |           | 8,176   |             |   |           | 5,322   |           |   |           | 1,591   |          
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|                                           |                                                                                                                                                                                                           | Total stockholders equity  |           |         | 1,306,459   |   |           |         | 1,297,165 |   |           |         | 1,200,469 | 
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          
|Total liabilities and stockholders equity |                                                                                                                                                                                                           | $                           | 2,115,558 |         |             | $ | 2,111,660 |         |           | $ | 1,871,388 |        
|                                           |                                                                                                                                                                                                           |                             |           |         |             |   |           |         |          



3



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##### Table of Contents






MICHAELS STORES, INC.


CONSOLIDATED STATEMENTS OF INCOME


(In thousands, except per share data)


(Unaudited)


|                                             |         |               |         |      |        |   |         |      | 
|-------------------------------------------- | ------- | ------------- | ------- | ---- | ------ | - | ------- | ---- | 
|                                             |         | Quarter Ended |        
|                                             |         |               |        
|                                             |         | April 30,     |         |      | May 1, |  
|                                             |         | 2005          |         |      | 2004   |  
|                                             |         |               |         |      |        |  
|Net sales                                    |         | $             | 821,016 |      |        | $ | 725,852 |     
|Cost of sales and occupancy expense          |         |               | 516,336 |      |        |   | 465,628 |     
|                                             |         |               |         |      |        |  
|Gross profit                                 |         |               | 304,680 |      |        |   | 260,224 |     
|Selling, general, and administrative expense |         |               | 224,470 |      |        |   | 205,701 |     
|Store pre-opening costs                      |         |               | 2,739   |      |        |   | 2,483   |     
|                                             |         |               |         |      |        |  
|Operating income                             |         |               | 77,471  |      |        |   | 52,040  |     
|Interest expense                             |         |               | 5,090   |      |        |   | 5,328   |     
|Other (income) and expense, net              |         |               | (2,680  | )    |        |   | (789    | )   
|                                             |         |               |         |      |        |  
|Income before income taxes                   |         |               | 75,061  |      |        |   | 47,501  |     
|Provision for income taxes                   |         |               | 28,528  |      |        |   | 18,169  |     
|                                             |         |               |         |      |        |  
|Net income                                   |         | $             | 46,533  |      |        | $ | 29,332  |     
|                                             |         |               |         |      |        |  
|Earnings per common share:                   |         |               |         |      |        |   |         |     
|                                             | Basic   |               | $       | 0.34 |        |   | $       | 0.21 | 
|                                             |         |               |         |      |        |  
|                                             | Diluted |               | $       | 0.33 |        |   | $       | 0.21 | 
|                                             |         |               |         |      |        |  
|Dividends per common share                   |         | $             | 0.07    |      |        | $ | 0.06    |     
|                                             |         |               |         |      |        |  



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MICHAELS STORES, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


(Unaudited)


|                                            |                                                   |                                    |                                 |                                                     |        |         |         |         |        |         |         |  
|------------------------------------------- | ------------------------------------------------- | ---------------------------------- | ------------------------------- | --------------------------------------------------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | -
|                                            |                                                   | Quarter Ended                      |                                
|                                            |                                                   |                                    |                                
|                                            |                                                   | April 30,                          |                                 |                                                     | May 1, |        
|                                            |                                                   | 2005                               |                                 |                                                     | 2004   |        
|                                            |                                                   |                                    |                                 |                                                     |        |        
|Operating activities:                       |                                                   |                                    |                                 |                                                     |        |         |         |        
|                                            | Net income                                        |                                    | $                               | 46,533                                              |        |         | $       | 29,332  |       
|                                            | Adjustments:                                      |                                    |                                 |                                                     |        |         |         |         |       
|                                            |                                                   | Depreciation                       |                                 |                                                     | 23,680 |         |         |         | 21,678 |        
|                                            |                                                   | Amortization                       |                                 |                                                     | 99     |         |         |         | 98     |        
|                                            |                                                   | Other                              |                                 |                                                     | 254    |         |         |         | 291    |        
|                                            |                                                   | Changes in assets and liabilities: |                                 |                                                     |        |         |         |         |        |        
|                                            |                                                   |                                    | Merchandise inventories         |                                                     |        | (27,782 | )       |         |        | (13,732 | )      
|                                            |                                                   |                                    | Prepaid expenses and other      |                                                     |        | (386    | )       |         |        | (10,833 | )      
|                                            |                                                   |                                    | Deferred income taxes and other |                                                     |        | (3,446  | )       |         |        | (461    | )      
|                                            |                                                   |                                    | Accounts payable                |                                                     |        | 13,418  |         |         |        | 41,746  |        
|                                            |                                                   |                                    | Accrued liabilities and other   |                                                     |        | (12,614 | )       |         |        | (6,660  | )      
|                                            |                                                   |                                    | Income taxes payable            |                                                     |        | 512     |         |         |        | 3,588   |        
|                                            |                                                   |                                    | Other long-term liabilities     |                                                     |        | 6,982   |         |         |        | 1,380   |        
|                                            |                                                   |                                    |                                 |                                                     |        |        
|                                            |                                                   |                                    |                                 | Net cash provided by operating activities           |        |         | 47,250  |         |        |         | 66,427  |  
|                                            |                                                   |                                    |                                 |                                                     |        |        
|Investing activities:                       |                                                   |                                    |                                 |                                                     |        |         |         |        
|                                            | Additions to property and equipment               |                                    |                                 | (27,488                                             | )      |         |         | (25,834 | )     
|                                            | Purchases of short-term investments               |                                    |                                 | (226                                                | )      |         |         |        |       
|                                            | Sales of short-term investments                   |                                    |                                 | 50,605                                              |        |         |         |        |       
|                                            | Net proceeds from sales of property and equipment |                                    |                                 |                                                    |        |         |         | 9       |       
|                                            |                                                   |                                    |                                 |                                                     |        |        
|                                            |                                                   |                                    |                                 | Net cash provided by (used in) investing activities |        |         | 22,891  |         |        |         | (25,825 | )
|                                            |                                                   |                                    |                                 |                                                     |        |        
|Financing activities:                       |                                                   |                                    |                                 |                                                     |        |         |         |        
|                                            | Cash dividends paid to stockholders               |                                    |                                 | (9,559                                              | )      |         |         | (8,220  | )     
|                                            | Repurchase of Common Stock                        |                                    |                                 | (52,363                                             | )      |         |         | (7,798  | )     
|                                            | Proceeds from stock options exercised             |                                    |                                 | 13,262                                              |        |         |         | 14,236  |       
|                                            | Proceeds from issuance of Common Stock and other  |                                    |                                 | 1,213                                               |        |         |         | 707     |       
|                                            |                                                   |                                    |                                 |                                                     |        |        
|                                            |                                                   |                                    |                                 | Net cash used in financing activities               |        |         | (47,447 | )       |        |         | (1,075  | )
|                                            |                                                   |                                    |                                 |                                                     |        |        
|Net increase in cash and equivalents        |                                                   |                                    | 22,694                          |                                                     |        |         | 39,527  |        
|Cash and equivalents at beginning of period |                                                   |                                    | 535,852                         |                                                     |        |         | 341,825 |        
|                                            |                                                   |                                    |                                 |                                                     |        |        
|Cash and equivalents at end of period       |                                                   | $                                  | 558,546                         |                                                     |        | $       | 381,352 |        
|                                            |                                                   |                                    |                                 |                                                     |        |        



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MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For the Quarter Ended April 30, 2005


(Unaudited)




|        |                      
|------- | ---------------------
|Note 1. | Basis of Presentation











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MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


For the Quarter Ended April 30, 2005


(Unaudited)


Note 2.     Earnings per
Share




|                           |                                                                                                                |                           |   |         |        |  |   |         |       | 
|-------------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------------- | - | ------- | ------ |  | - | ------- | ----- | 
|                           |                                                                                                                | Quarter Ended             |  
|                           |                                                                                                                |                           |  
|                           |                                                                                                                | April 30,                 |   |         | May 1, | 
|                           |                                                                                                                | 2005                      |   |         | 2004   | 
|                           |                                                                                                                |                           |   |         |        | 
|                           |                                                                                                                | (In thousands, except per |  
|                           |                                                                                                                | share data)               |  
|Numerator:                 |                                                                                                                |                           |   |         |        |  |   |        
|                           | Net income                                                                                                     |                           | $ | 46,533  |        |  | $ | 29,332  |      
|                           |                                                                                                                |                           |   |         |        | 
|Denominator:               |                                                                                                                |                           |   |         |        |  |   |        
|                           | Denominator for basic earnings per common share-weighted average
    shares                                    |                           |   | 136,018 |        |  |   | 136,562 |      
|                           | Effect of dilutive securities:                                                                                 |                           |   |         |        |  |   |         |      
|                           |                                                                                                                | Employee stock options    |   |         | 3,215  |  |   |         | 3,130 | 
|                           |                                                                                                                |                           |   |         |        | 
|                           | Denominator for diluted earnings per common share-weighted
    average shares adjusted for dilutive securities |                           |   | 139,233 |        |  |   | 139,692 |      
|                           |                                                                                                                |                           |   |         |        | 
|Earnings per common share: |                                                                                                                |                           |   |         |        |  |   |        
|                           | Basic                                                                                                          |                           | $ | 0.34    |        |  | $ | 0.21    |      
|                           |                                                                                                                |                           |   |         |        | 
|                           | Diluted                                                                                                        |                           | $ | 0.33    |        |  | $ | 0.21    |      
|                           |                                                                                                                |                           |   |         |        | 





|        |                         
|------- | ------------------------
|Note 3. | Stock-Based Compensation

Accounting for Stock Issued to Employees


Accounting for
Stock-Based Compensation Accounting for Stock-Based CompensationTransition and
Disclosure


7



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##### Table of Contents



MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


For the Quarter Ended April 30, 2005


(Unaudited)




|        |                                     
|------- | ------------------------------------
|Note 3. | Stock-Based Compensation (Continued)



|                                               |                                                             |                           |        |         |          |   |        |         | 
|---------------------------------------------- | ----------------------------------------------------------- | ------------------------- | ------ | ------- | -------- | - | ------ | ------- | 
|                                               |                                                             | Quarter Ended             |       
|                                               |                                                             |                           |       
|                                               |                                                             | April 30,                 |        |         | May 1,   |  
|                                               |                                                             | 2005                      |        |         | 2004 (1) |  
|                                               |                                                             |                           |        |         |          |  
|                                               |                                                             | (In thousands, except per |       
|                                               |                                                             | share data)               |       
|Net income, as reported                        |                                                             | $                         | 46,533 |         |          | $ | 29,332 |        
|Stock-based employee compensation cost:        |                                                             |                           |        |         |          |   |        |        
|                                               | As if the fair value method were applied, net of income tax |                           |        | 2,776   |          |   |        | 2,598   | 
|                                               |                                                             |                           |        |         |          |  
|Pro forma net income                           |                                                             | $                         | 43,757 |         |          | $ | 26,734 |        
|                                               |                                                             |                           |        |         |          |  
|Earnings per common share, as reported:        |                                                             |                           |        |         |          |   |        |        
|                                               | Basic                                                       |                           | $      | 0.34    |          |   | $      | 0.21    | 
|                                               |                                                             |                           |        |         |          |  
|                                               | Diluted                                                     |                           | $      | 0.33    |          |   | $      | 0.21    | 
|                                               |                                                             |                           |        |         |          |  
|Pro forma earnings per common share:           |                                                             |                           |        |         |          |   |        |        
|                                               | Basic                                                       |                           | $      | 0.32    |          |   | $      | 0.20    | 
|                                               |                                                             |                           |        |         |          |  
|                                               | Diluted                                                     |                           | $      | 0.32    |          |   | $      | 0.19    | 
|                                               |                                                             |                           |        |         |          |  
|Pro forma weighted average shares outstanding: |                                                             |                           |        |         |          |   |        |        
|                                               | Basic                                                       |                           |        | 136,018 |          |   |        | 136,562 | 
|                                               | Diluted                                                     |                           |        | 138,435 |          |   |        | 138,680 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The pro forma information for the quarter ended May 1, 2004
    was revised based on the results of managements review of
    prior years calculations. The impacts to the pro forma
    information resulting from the difference between previously
    reported stock-based employee compensation cost, net of tax, and
    the revised presentation are as follows: a decrease in
    stock-based employee compensation cost, net of tax, and a
    corresponding increase in pro forma net income of $791,000; an
    increase in pro forma diluted weighted average shares
    outstanding of 48 thousand; and an increase in pro forma basic
    earnings per share of $0.01.

Note 4.     Debt


91/4% Senior
Notes due 2009


1 4


8



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MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


For the Quarter Ended April 30, 2005


(Unaudited)




Note 4.     Debt (Continued)


Credit Agreement






Note 5.     Comprehensive
Income




|                                   |                                                   |                |        |       |        |   |        |        |  
|---------------------------------- | ------------------------------------------------- | -------------- | ------ | ----- | ------ | - | ------ | ------ | -
|                                   |                                                   | Quarter Ended  |       
|                                   |                                                   |                |       
|                                   |                                                   | April 30,      |        |       | May 1, |  
|                                   |                                                   | 2005           |        |       | 2004   |  
|                                   |                                                   |                |        |       |        |  
|                                   |                                                   | (In thousands) |       
|Net income                         |                                                   | $              | 46,533 |       |        | $ | 29,332 |       
|Other comprehensive income (loss): |                                                   |                |        |       |        |   |        |       
|                                   | Foreign currency translation adjustment and other |                |        | 2,854 |        |   |        | (2,632 | )
|                                   |                                                   |                |        |       |        |  
|Comprehensive income               |                                                   | $              | 49,387 |       |        | $ | 26,700 |       
|                                   |                                                   |                |        |       |        |  



|        |                  
|------- | -----------------
|Note 6. | Legal Proceedings

Stockholder Class Actions




9



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##### Table of Contents



MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


For the Quarter Ended April 30, 2005


(Unaudited)


Note 6.                             Legal
Proceedings (Continued)


dismiss the amended consolidated complaint, the plaintiffs
filed a notice of voluntary dismissal May 13, 2005. The
Court issued an order on May 18, 2005 dismissing the case
in its entirety without prejudice.


Derivative Claims






Cotton Claim




General




10



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##### Table of Contents



MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


For the Quarter Ended April 30, 2005


(Unaudited)




|        |         
|------- | --------
|Note 7. | Segments

Disclosures About Segments of an
Enterprise and Related Information.




|                              |  |                |         |  |                  |   |        |              |  |   |           | 
|----------------------------- |  | -------------- | ------- |  | ---------------- | - | ------ | ------------ |  | - | --------- | 
|                              |  | Net Sales      |         |  | Operating Income |   |        | Total Assets | 
|                              |  |                |         |  |                  |   |        |              | 
|                              |  | (In thousands) |        
|Quarter ended April 30, 2005: |  |                |         |  |                  |   |        |              |  |   |           | 
|United States                 |  | $              | 776,900 |  |                  | $ | 71,925 |              |  | $ | 2,044,432 | 
|Canada                        |  |                | 44,116  |  |                  |   | 5,546  |              |  |   | 71,126    | 
|                              |  |                |         |  |                  |   |        |              | 
|Consolidated Total            |  | $              | 821,016 |  |                  | $ | 77,471 |              |  | $ | 2,115,558 | 
|                              |  |                |         |  |                  |   |        |              | 
|Quarter ended May 1, 2004:    |  |                |         |  |                  |   |        |              |  |   |           | 
|United States                 |  | $              | 689,425 |  |                  | $ | 47,654 |              |  | $ | 1,813,439 | 
|Canada                        |  |                | 36,427  |  |                  |   | 4,386  |              |  |   | 57,949    | 
|                              |  |                |         |  |                  |   |        |              | 
|Consolidated Total            |  | $              | 725,852 |  |                  | $ | 52,040 |              |  | $ | 1,871,388 | 
|                              |  |                |         |  |                  |   |        |              | 





|        |                                 
|------- | --------------------------------
|Note 8. | Recent Accounting Pronouncements

Stock-Based Compensation


Share-Based
Payment Accounting for Stock-Based Compensation. Accounting for Stock Issued to Employees Statement of Cash Flows




11



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##### Table of Contents



MICHAELS STORES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


For the Quarter Ended April 30, 2005


(Unaudited)




|        |                                             
|------- | --------------------------------------------
|Note 8. | Recent Accounting Pronouncements (Continued)





Inventory Costs


Inventory Costs




|        |                                                         
|------- | --------------------------------------------------------
|Note 9. | Certain Issues Under the Securities Exchange Act of 1934







|         |                 
|-------- | ----------------
|Note 10. | Subsequent Event

1 4


12



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|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations.



Disclosure Regarding Forward-Looking Information






| |   |                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;                                                                                                                                                                  
| |  | the execution and management of our store growth, including new
    concepts, 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 evaluate our ability to distribute
    additional SKUs through our distribution centers;                                                                                                    
| |  | delays in the receipt of merchandise ordered from our suppliers
    due to 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;                                                                                                                                           
| |  | material increases in inflation or commodity prices, such as
    petroleum, steel, and paper;                                                                                                                                                                                             
| |  | material increases in tariffs or duties levied on imports which
    may limit the availability of certain merchandise from our
    foreign suppliers;                                                                                                                                     
| |  | changes in political, economic, and social conditions;                                                                                                                                                                                                                                    
| |  | significant fluctuations in exchange rates;                                                                                                                                                                                                                                               
| |  | financial difficulties of any of our key vendors, suppliers, and
    service 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 comply with the terms and restrictions of our
    Credit Agreement;                                                                                                                                                                                                        
| |  | the seasonality of the retail business; and                                                                                                                                                                                                                                               

13



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| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | other factors as set forth in our Annual Report on
    Form 10-K for the fiscal year ended January 29, 2005,
    particularly in Critical Accounting Policies and
    Estimates and Risk Factors, and in our other
    Securities and Exchange Commission filings.



General








|                                   |                                                      |               |       |       |        |  |     |       |  
|---------------------------------- | ---------------------------------------------------- | ------------- | ----- | ----- | ------ |  | --- | ----- | -
|                                   |                                                      | Quarter Ended |      
|                                   |                                                      |               |      
|                                   |                                                      | April 30,     |       |       | May 1, | 
|                                   |                                                      | 2005          |       |       | 2004   | 
|                                   |                                                      |               |       |       |        | 
|Michaels stores:                   |                                                      |               |       |       |        |  |     |      
|                                   | Retail stores open at beginning of period            |               |       | 844   |        |  |     | 804   |  
|                                   | Retail stores opened during the period               |               |       | 14    |        |  |     | 14    |  
|                                   | Retail stores opened (relocations) during the period |               |       | 8     |        |  |     | 12    |  
|                                   | Retail stores closed during the period               |               |       | (1    | )      |  |     |      |  
|                                   | Retail stores closed (relocations) during the period |               |       | (8    | )      |  |     | (12   | )
|                                   |                                                      |               |       |       |        | 
|                                   | Retail stores open at end of period                  |               |       | 857   |        |  |     | 818   |  
|Aaron Brothers stores:             |                                                      |               |       |       |        |  |     |      
|                                   | Retail stores open at beginning of period            |               |       | 164   |        |  |     | 158   |  
|                                   | Retail stores opened during the period               |               |       | 1     |        |  |     |      |  
|                                   |                                                      |               |       |       |        | 
|                                   | Retail stores open at end of period                  |               |       | 165   |        |  |     | 158   |  
|Recollections stores:              |                                                      |               |       |       |        |  |     |      
|                                   | Retail stores open at beginning of period            |               |       | 8     |        |  |     | 2     |  
|                                   | Retail stores opened during the period               |               |       | 1     |        |  |     |      |  
|                                   |                                                      |               |       |       |        | 
|                                   | Retail stores open at end of period                  |               |       | 9     |        |  |     | 2     |  
|Star Wholesale stores:             |                                                      |               |       |       |        |  |     |      
|                                   | Wholesale stores open at beginning of period         |               |       | 3     |        |  |     | 3     |  
|                                   | Wholesale stores opened during the period            |               |       | 1     |        |  |     |      |  
|                                   |                                                      |               |       |       |        | 
|                                   | Wholesale stores open at end of period               |               |       | 4     |        |  |     | 3     |  
|                                   |                                                      |               |       |       |        | 
|Total store count at end of period |                                                      |               | 1,035 |       |        |  | 981 |      
|                                   |                                                      |               |       |       |        | 
|Other operating data:              |                                                      |               |       |       |        |  |     |      
|                                   | Average inventory per Michaels store(1)              |               | $     | 1,035 |        |  | $   | 1,026 |  
|                                   | Comparable store sales increase(2)                   |               |       | 7.8   | %      |  |     | 5.9   | %






|    |                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Average inventory per Michaels store calculation excludes Aaron
    Brothers, Recollections, and Star Wholesale stores.                                                                                            
|(2) | Comparable store sales increase represents the increase 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

14



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##### Table of Contents



| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

Results of Operations




|                                             |  |               |       |   |        |  |       |  
|-------------------------------------------- |  | ------------- | ----- | - | ------ |  | ----- | -
|                                             |  | Quarter Ended |      
|                                             |  |               |      
|                                             |  | April 30,     |       |   | May 1, | 
|                                             |  | 2005          |       |   | 2004   | 
|                                             |  |               |       |   |        | 
|Net sales                                    |  |               | 100.0 | % |        |  | 100.0 | %
|Cost of sales and occupancy expense          |  |               | 62.9  |   |        |  | 64.2  |  
|                                             |  |               |       |   |        | 
|Gross profit                                 |  |               | 37.1  |   |        |  | 35.8  |  
|Selling, general, and administrative expense |  |               | 27.4  |   |        |  | 28.3  |  
|Store pre-opening costs                      |  |               | 0.3   |   |        |  | 0.3   |  
|                                             |  |               |       |   |        | 
|Operating income                             |  |               | 9.4   |   |        |  | 7.2   |  
|Interest expense                             |  |               | 0.6   |   |        |  | 0.8   |  
|Other (income) and expense, net              |  |               | (0.3  | ) |        |  | (0.1  | )
|                                             |  |               |       |   |        | 
|Income before income taxes                   |  |               | 9.1   |   |        |  | 6.5   |  
|Provision for income taxes                   |  |               | 3.4   |   |        |  | 2.5   |  
|                                             |  |               |       |   |        | 
|Net income                                   |  |               | 5.7   | % |        |  | 4.0   | %
|                                             |  |               |       |   |        | 

Quarter Ended April 30, 2005 Compared to the Quarter
Ended May 1, 2004


Net Sales




Cost of Sales and Occupancy Expense




15



---



##### Table of Contents





Selling, General, and Administrative Expense




Provision for Income Taxes


Net Income


Liquidity and Capital Resources






Cash Flow from Operating Activities




16



---



##### Table of Contents





Cash Flow from Investing Activities




|                                                   |  |                |        |  |         |   |        | 
|-------------------------------------------------- |  | -------------- | ------ |  | ------- | - | ------ | 
|                                                   |  | Quarter Ended  |       
|                                                   |  |                |       
|                                                   |  | April 30,      |        |  | May 1,  |  
|                                                   |  | 2005(1)        |        |  | 2004(2) |  
|                                                   |  |                |        |  |         |  
|                                                   |  | (In thousands) |       
|New and relocated stores and stores not yet opened |  | $              | 13,597 |  |         | $ | 12,758 | 
|Existing stores                                    |  |                | 5,766  |  |         |   | 1,864  | 
|Distribution system expansion                      |  |                | 904    |  |         |   | 5,558  | 
|Information systems                                |  |                | 6,266  |  |         |   | 4,859  | 
|Corporate and other                                |  |                | 955    |  |         |   | 795    | 
|                                                   |  |                |        |  |         |  
|                                                   |  | $              | 27,488 |  |         | $ | 25,834 | 
|                                                   |  |                |        |  |         |  






|    |                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 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 Wholesale store, and
    the relocation of eight Michaels stores.
|(2) | In the first quarter of fiscal 2004, we incurred capital
    expenditures related to the opening of 14 and the relocation of
    12 Michaels stores and the completion of our New Lenox,
    Illinois distribution center.                





Cash Flow from Financing Activities




17



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##### Table of Contents





|                                                    |  |                |            |  |             |  |            |               |  |  |           |    
|--------------------------------------------------- |  | -------------- | ---------- |  | ----------- |  | ---------- | ------------- |  |  | --------- | ---
|                                                    |  | Shares         |            |  |             |  | Shares     |              
|                                                    |  | Authorized for |            |  | Shares      |  |            | Available for | 
|                                                    |  | Repurchase     |            |  | Repurchased |  |            | Repurchase    | 
|                                                    |  |                |            |  |             |  |            |               | 
|December 5, 2000 repurchase plan (variable portion) |  |                | 54,552     |  |             |  | (54,551    | )             |  |  | 1         | (1)
|June 18, 2003 repurchase plan                       |  |                | 2,000,000  |  |             |  | (2,000,000 | )             |  |  |          | (2)
|February 2, 2004 repurchase plan                    |  |                | 5,000,000  |  |             |  | (4,573,946 | )             |  |  | 426,054   | (3)
|March 15, 2005 repurchase plan                      |  |                | 3,000,000  |  |             |  |           |               |  |  | 3,000,000 | (4)
|                                                    |  |                |            |  |             |  |            |               | 
|                                                    |  |                | 10,054,552 |  |             |  | (6,628,497 | )             |  |  | 3,426,055 |    
|                                                    |  |                |            |  |             |  |            |               | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 2004,
    we repurchased and subsequently retired 54,551 shares of
    our Common Stock at an average price of $27.03 per share
    using proceeds from exercises of stock options granted under the
    2001 General Stock Option Plan that were exercised during fiscal
    2004.
|(2) | As of the end of fiscal 2004, we repurchased and subsequently
    retired the 2.0 million shares of our Common Stock
    authorized under the 2003 repurchase plan at an average price of
    $22.69 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(3) | In the first quarter of fiscal 2005, we repurchased and
    subsequently retired approximately 1.5 million shares of
    our Common Stock authorized to be repurchased under the 2004
    repurchase plan at an average price of $35.52 per share. As
    a result of these repurchases, and those made in the prior
    fiscal year, we have 426,054 shares available for
    repurchase under the plan as of April 30, 2005.                                                                                                                                                                                                                                                                   
|(4) | On March 15, 2005, our Board of Directors authorized an
    additional repurchase plan for up to 3.0 million shares of
    our outstanding Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         





Debt


1 4




18



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##### Table of Contents







General




Recent Accounting Pronouncements


Stock-Based Compensation


Share-Based
Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees Statement of Cash Flows






19



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##### Table of Contents



Inventory Costs


Inventory Costs







|        |                                                                
|------- | ---------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures About Market
    Risk.

1 4







|        |                         
|------- | ------------------------
|Item 4. | Controls and Procedures.

Evaluation of Disclosure Controls and Procedures




Change in Internal Control Over Financial Reporting




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##### Table of Contents



MICHAELS STORES, INC.





Part IIOTHER INFORMATION







|        |                   
|------- | ------------------
|Item 1. | Legal Proceedings.



| |                          
| | -------------------------
| | Stockholder Class Actions





| |                  
| | -----------------
| | Derivative Claims







| |             
| | ------------
| | Cotton Claim



21



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##### Table of Contents







| |        
| | -------
| | General








|        |                                                                 
|------- | ----------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and Use of
    Proceeds.







Issuer Purchases of Equity Securities


|                                           |  |              |           |  |            |                  |       |             |             |  |             |  |  |  |           | 
|------------------------------------------ |  | ------------ | --------- |  | ---------- | ---------------- | ----- | ----------- | ----------- |  | ----------- |  |  |  | --------- | 
|                                           |  |              |           |  |            |                  |       | Maximum     |            
|                                           |  |              |           |  |            | Total Number     |       |             | Number of   | 
|                                           |  |              |           |  |            | of Shares        |       |             | Shares That | 
|                                           |  |              |           |  |            | Purchased as     |       |             | May yet be  | 
|                                           |  |              |           |  |            | Part of Publicly |       |             | Purchased   | 
|                                           |  | Total Number |           |  | Average    |                  |       | Announced   |             |  | under the   | 
|                                           |  | of Shares    |           |  | Price Paid |                  |       | Plans or    |             |  | Plans or    | 
|                                           |  | Purchased(1) |           |  | per Share  |                  |       | Programs(1) |             |  | Programs(2) | 
|                                           |  |              |           |  |            |                  |       |             |             |  |             | 
|January 30, 2005 through February 26, 2005 |  |              |          |  |            | $                |      |             |             |  |            |  |  |  | 4,900,252 | 
|February 27, 2005 through April 2, 2005    |  |              |          |  |            |                  |      |             |             |  |            |  |  |  | 4,900,252 | 
|April 3, 2005 through April 30, 2005       |  |              | 1,474,197 |  |            |                  | 35.52 |             |             |  | 1,474,197   |  |  |  | 3,426,055 | 
|                                           |  |              |           |  |            |                  |       |             |             |  |             | 
|Total                                      |  |              | 1,474,197 |  |            | $                | 35.52 |             |             |  | 1,474,197   |  |  |  | 3,426,055 | 
|                                           |  |              |           |  |            |                  |       |             |             |  |             | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Repurchased and subsequently retired 1,474,197 shares under
    the 2004 repurchase plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(2) | Under our 2000 repurchase plan, the Board of Directors
    authorized us to repurchase up to 4.0 million shares of our
    outstanding Common Stock, with the ability to increase the
    maximum number of shares authorized to be repurchased under the
    plan to the extent necessary to use the proceeds from stock
    options exercised under our 2001 General Stock Option Plan to
    make repurchases. We have used the entire 4.0 million share
    fixed portion of the authority originally provided in the 2000
    repurchase plan. As of April 30, 2005, we had 426,054 and
    3,000,000 shares available for repurchase under the 2004
    and 2005 repurchase plans, respectively.

22



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##### Table of Contents








|        |          
|------- | ---------
|Item 6. | Exhibits.

|     |  |                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Fiscal Year 2005 Bonus Plan for R. Michael Rouleau (previously
    filed as Exhibit 10.1 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338). 
|10.2 |  | Fiscal Year 2005 Bonus Plan for Jeffrey N. Boyer (previously
    filed as Exhibit 10.2 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).   
|10.3 |  | Fiscal Year 2005 Bonus Plan for Edward F. Sadler (previously
    filed as Exhibit 10.3 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).   
|10.4 |  | Fiscal Year 2005 Bonus Plan for Gregory A. Sandfort (previously
    filed as Exhibit 10.4 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).
|10.5 |  | Fiscal Year 2005 Bonus Plan for Douglas B. Sullivan (previously
    filed as Exhibit 10.5 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).
|31.1 |  | Certifications of R. Michael Rouleau pursuant to §302 of
    the Sarbanes-Oxley Act of 2002 (filed herewith).                                                            
|31.2 |  | Certifications of Jeffrey N. Boyer 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).                                       

23



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##### Table of Contents



MICHAELS STORES, INC.





SIGNATURES






| |                      
| | ---------------------
| | MICHAELS STORES, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ Jeffrey N. Boyer

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Jeffrey N. Boyer                                 
| | Executive Vice President Chief Financial Officer
| | (Principal Financial Officer)                    



24



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##### Table of Contents



INDEX TO EXHIBITS


|        |      |                        |  |                                                                                                                                                                          
|------- | ---- | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                       
|Number  |      | Description of Exhibit
|        |      |                       
|        | 10.1 |                        |  | Fiscal Year 2005 Bonus Plan for R. Michael Rouleau (previously
    filed as Exhibit 10.1 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338). 
|        | 10.2 |                        |  | Fiscal Year 2005 Bonus Plan for Jeffrey N. Boyer (previously
    filed as Exhibit 10.2 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).   
|        | 10.3 |                        |  | Fiscal Year 2005 Bonus Plan for Edward F. Sadler (previously
    filed as Exhibit 10.3 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).   
|        | 10.4 |                        |  | Fiscal Year 2005 Bonus Plan for Gregory A. Sandfort (previously
    filed as Exhibit 10.4 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).
|        | 10.5 |                        |  | Fiscal Year 2005 Bonus Plan for Douglas B. Sullivan (previously
    filed as Exhibit 10.5 to Form 8-K filed by Registrant
    on April 13, 2005, SEC File No. 001-09338).
|        | 31.1 |                        |  | Certifications of R. Michael Rouleau pursuant to §302 of
    the Sarbanes-Oxley Act of 2002 (filed herewith).                                                            
|        | 31.2 |                        |  | Certifications of Jeffrey N. Boyer 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).                                       

25