SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 26, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 01-13409
MIDAS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-4180556
(State or Other Jurisdiction of (I.RS. Employer Identification No.)
Incorporation or Organization)
1300 Arlington Heights Road Itasca, Illinois 60143
(Address of principal executive offices) (Zip Code)
(630) 438-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The registrant had 16,359,390 shares of common stock outstanding as of June 26,
1999.
MIDAS, INC.
CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statement
Condensed Statements of Operations
Condensed Balance Sheets
Condensed Statements of Cash Flows
Condensed Statement of Changes in Shareholders' Equity
Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
Item 2(a) Summary of Amendment to Agreement
SIGNATURE
PART 1. FINANCIAL INFORMATION
Item 1: Financial Statements
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except for earnings and dividends per share)
For the quarter For the six months
ended June ended June
---------- ----------
1999 1998 1999 1998
---- ---- ---- ----
(13 Weeks) (13 Weeks) (26 Weeks) (27 Weeks)
Sales and revenues........................................... $ 98.5 $141.8 $183.2 $273.0
Cost of sales and revenues................................... 53.0 67.9 97.9 130.1
Selling, general, and administrative expenses................ 24.3 52.2 51.6 109.5
------ ------ ------ ------
Operating income.......................................... 21.2 21.7 33.7 33.4
------ ------ ------ ------
Whitman charges.............................................. - - - ( 1.1)
------ ------ ------ ------
Interest expense:
Whitman.................................................... - - - ( 0.5)
Other...................................................... ( 2.1) ( 3.4) ( 4.3) ( 6.7)
------ ------ ------ ------
Total interest expense.................................... ( 2.1) ( 3.4) ( 4.3) ( 7.2)
------ ------ ------ ------
Other income (expense), net.................................. 1.4 0.4 1.9 0.8
------ ------ ------ ------
Income before taxes....................................... 20.5 18.7 31.3 25.9
Income taxes................................................. 8.2 7.5 12.5 10.5
------ ------ ------ ------
Net income................................................... $ 12.3 $ 11.2 $ 18.8 $ 15.4
====== ====== ====== ======
Earnings per share:
Basic...................................................... $ .74 $ .66 $ 1.12 $ .91
====== ====== ====== ======
Diluted.................................................... $ .72 $ .65 $ 1.09 $ .89
====== ====== ====== ======
Dividends per common share................................... $ .02 $ .02 $ .04 $ .02
====== ====== ====== ======
Average number of shares
Common shares outstanding.................................. 16.6 16.9 16.7 16.9
Equivalent shares on outstanding stock options............. .5 .3 .6 .3
------ ------ ------ ------
Shares applicable to diluted earnings...................... 17.1 17.2 17.3 17.2
====== ====== ====== ======
See notes to condensed financial statements.
1
MIDAS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In millions)
June December
1999 1998
---- ----
Assets:
Current assets:
Cash and cash equivalents............................................ $ 9.8 $ 36.9
Receivables, net..................................................... 54.7 39.4
Inventories.......................................................... 65.9 63.2
Other current assets................................................. 24.5 24.8
------ ------
Total current assets............................................... 154.9 164.3
Property and equipment, net............................................ 145.1 142.8
Intangible assets, net................................................. 0.1 2.1
Other assets........................................................... 18.1 16.1
------ ------
Total assets....................................................... $318.2 $325.3
====== ======
Liabilities and Equity:
Current liabilities:
Short-term debt...................................................... $ 1.7 $ 1.6
Accounts and dividends payable...................................... 31.5 19.5
Accrued expenses..................................................... 35.0 42.2
------ ------
Total current liabilities.......................................... 68.2 63.3
Long-term debt......................................................... 101.4 102.2
Obligations under capital leases....................................... 9.6 10.8
Deferred income taxes and other liabilities............................ 28.2 25.6
------ ------
Total liabilities.................................................. 207.4 201.9
------ ------
Shareholders' equity:
Common stock ($.001 par value, 100 million shares
authorized, 17.3 million shares issued - June 1999 and
17.0 million shares issued - December 1998) and paid-in capital..... 27.0 27.1
Treasury stock (.9 million shares - June 1999 and
.2 million shares - December 1998, at cost)......................... (29.6) (4.2)
Notes receivable from common stock sold to officers.................. (6.1) -
Retained income...................................................... 125.0 106.9
Accumulated other comprehensive income (loss)........................ (5.5) (6.4)
------ ------
Total shareholders' equity........................................... 110.8 123.4
------ ------
Total liabilities and equity........................................ $318.2 $325.3
====== ======
See notes to condensed financial statements.
2
MIDAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
For the six months
Ended June
1999 1998
---- ----
Cash flows from operating activities:
Net income................................................... $ 18.8 $ 15.4
Adjustments reconciling net income to
net cash provided by operating activities:
Depreciation and amortization.............................. 5.7 8.6
Cash outlays for business transformation costs............. (7.2) (12.6)
Changes in assets and liabilities........................... (2.2) 19.6
------ -------
Net cash provided (used) by operating activities.............. 15.1 31.0
------ -------
Cash flows from investing activities:
Capital investments......................................... (12.6) (9.5)
Proceeds from sales of property and equipment............... 5.4 18.4
------ -------
Net cash provided (used) in investing activities.............. (7.2) 8.9
------ -------
Cash flows from financing activities:
Long-term debt incurred..................................... - 291.4
Short-term borrowings....................................... - 5.0
Long-term debt repayments................................... (0.6) (142.8)
Payment of obligations under capital leases................. (0.3) (0.4)
Cash received for common stock.............................. 6.7 1.0
Cash paid for treasury shares............................... (40.1) (2.6)
Net increase (decrease) in loans and
advances from Whitman...................................... - (55.5)
Dividends paid to shareholders.............................. (0.7) -
Dividends paid to Whitman................................... - (137.6)
------ -------
Net cash provided (used) by financing activities.............. (35.0) (41.5)
------ -------
Effect of exchange rate changes on
Cash and cash equivalents.................................... - (0.1)
------ -------
Net change in cash and cash equivalents....................... (27.1) (1.7)
Cash and cash equivalents at beginning of period.............. 36.9 12.5
------ -------
Cash and cash equivalents at end of period.................... $ 9.8 $ 10.8
====== =======
See notes to condensed financial statements.
3
MIDAS, INC.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
(In millions)
Notes
receivable
Common from Accumulated
stock and common Compre- compre-
paid-in Treasury stock sold hensive Retained hensive
capital stock to officers income earnings income
------- ----- ----------- ------ -------- ------
December 1998...................... $27.1 $ (4.2) $ - $106.9 $(6.4)
Common shares issued under
management stock incentive plan... 6.1 - (6.1) - -
Purchase of treasury shares........ - (40.1) - - -
Stock option transactions.......... (6.2) 14.7 - - -
Net income......................... - - - $18.8 18.8 -
Other comprehensive income
Foreign currency translation
adjustments....................... - - - 0.9 - 0.9
-----
Comprehensive income............... - - - $19.7 - -
=====
Dividends to shareholders.......... - - - (0.7) -
----- ------ ----- ------ -----
June 1999.......................... $27.0 $(29.6) $(6.1) $125.0 $(5.5)
===== ====== ===== ====== =====
Number of Shares
----------------
Common Treasury
stock issued stock
------------ -----
December 1998................................... 17.0 (0.2)
Common shares issued under
management stock incentive plan................ 0.3 -
Purchase of treasury shares..................... - (1.2)
Stock option transactions....................... - 0.5
---- ----
June 1999....................................... 17.3 (0.9)
==== ====
See notes to condensed financial statements.
4
MIDAS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. Financial Statement Presentation
The condensed interim period financial statements presented herein do not
include all of the information and disclosures customarily provided in annual
financial statements and they have not been audited, as permitted by the rules
and regulations of the Securities and Exchange Commission. The condensed
interim period financial statements should be read in conjunction with the
annual financial statements included in the annual report on Form 10-K. The
results of operations for interim periods are not necessarily indicative of the
results that may be achieved on an annual basis.
The unaudited condensed financial statements present the consolidated financial
information for Midas, Inc. and its wholly-owned subsidiaries ("Midas" or the
"Company"). Midas became an independent, publicly held company on January 30,
1998 as the result of a spin-off by Whitman Corporation ("Whitman"). The
unaudited condensed financial statements for the quarters ended June 26, 1999
and June 27, 1998 both cover a 13-week period, while the six months ended June
26, 1999 cover a 26-week period compared to a 27-week period for the six months
ended June 27, 1998.
NOTE 2. Supplemental Cash Flow Activity
Net cash provided by operating activities reflect cash payments and receipts for
interest and taxes as follows (in millions):
For the six months
ended June
----------
1999 1998
---- -----
Interest paid - Whitman.......................... $ - $ 1.0
Interest paid - other............................ 4.4 4.4
Income tax (refunds)............................. (0.4) (3.7)
Income taxes paid................................ 10.4 4.6
NOTE 3. Inventories
Inventories, summarized by major classification, were as follows (in millions):
June December
1999 1998
---- ----
(Unaudited)
Raw materials $ 2.7 $ 2.5
Work in process 1.0 1.2
Finished goods 62.2 59.5
----- -----
$65.9 $63.2
===== =====
NOTE 4. Segment Reporting
As noted in the Company's 1998 annual report segment disclosure, Midas operates
in a single business segment, that is an operator of a North American (United
States and Canada) franchise and wholesale parts distribution network and a
licensor of Midas trademarks and know-how outside of North America. Sales by
major product categories for the segment are included in Management's Discussion
and Analysis of Results of Operations.
5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
Introduction:
In anticipation of the January 30, 1998 spin-off from Whitman, Midas
entities entered into three debt agreements in January 1998. Midas, Inc. and
its wholly-owned subsidiary, Midas International Corporation, entered into a
five-year, unsecured revolving credit facility with a syndicate of commercial
banks and financial institutions that enable the Company to borrow funds at
variable interest rates on a revolving credit basis up to an aggregate principal
amount of $200 million. Midas International Corporation also entered into a
seven-year $50 million unsecured term loan arrangement with an institutional
investor. Also in January 1998, Midas France S.A. entered into a 100 million
French franc, five-year amortizing term loan.
In January 1998, in order to settle its Whitman obligations of $210 million
($137.6 million dividend and $72.4 million of intercompany loans and advances),
and to provide for working capital on and after the spin-off, Midas
International Corporation borrowed $150 million under the revolving credit
facility and $50 million under the term loan, while Midas France S.A. borrowed
100 million French francs ($16.4 million) under the French term loan.
As a result of the spin-off related transactions noted above, the Company's
total debt to capitalization increased from 24.4% at December 1997 to 68.5% at
the quarter ended March 1998.
On April 15,1998, Midas arranged a private placement of $75 million in
unsecured debt at a fixed rate of 6.89% with an investment grade (BBB) rating.
The maturity date of the debt is April 15, 2005. The proceeds were used to
retire the $50 million term loan and $25 million in bank debt.
In October 1998, Midas, Inc. and Magneti Marelli, S.p.A., a member of the
Fiat Group, formed a strategic alliance to develop the Midas program in the
business of fast auto service repair in Europe and South America. As part of
the alliance, Midas sold its interests in Europe and South America to Magneti
Marelli for $100 million in October 1998, and entered into a long-term license
agreement. Midas will also receive on-going royalties throughout the term of
the license agreement, as the shops in Europe will continue to operate using the
Midas name.
During the last three-quarters of 1998, the Company used a portion of the
proceeds realized from the sale of Europe and the franchising of North America
company-operated shops to retire $99.0 million of short and long-term debt.
This reduction in debt lowered the Company's debt to capitalization from 61.3%
at the end of June 1998, to 48.2% at December 1998. At the end of June 1999,
the debt to capitalization ratio increased to 50.4% as shareholders' equity
decreased as the result of treasury stock purchases under a common stock
repurchase plan approved by the Company's Board of Directors in the first
quarter of 1999.
6
1999 Activity:
The Company generated net cash flows from operating activities of $15.1
million and $31.0 million for the six months ended June 1999 and 1998,
respectively. The year-over-year decline was due to a normal seasonal increase
in working capital in 1999 compared to a decline one year ago as a result of the
franchising of company-operated shops and closing of low return wholesale
product distribution points.
Investing activities used $7.2 million in cash in the first six months of
1999 and provided $8.9 million during first half of 1998. During the six months
of 1998 the Company franchised a number of company-operated shops in conjunction
with the strategic initiative to focus on franchising activities. This activity
provided $18.4 million in proceeds from asset sales in 1998 and $5.4 million in
1999.
Net cash used by financing activities was $35.0 million and $41.5 million
for the six months ended June 1999 and 1998, respectively. The primary factor
in the 1999 activity was $40.1 million used to repurchase common stock.
Midas' cash and cash equivalents totaled $9.8 million at June 1999 compared
to $10.8 million at June 1998, respectively.
Midas management believes that cash flows from operations and unused
amounts available under the revolving credit facility will be sufficient to
satisfy Midas' future working capital, capital investment, share repurchase and
other financing requirements for the foreseeable future.
7
RESULTS OF OPERATIONS
1999 Second Quarter Compared with 1998 Second Quarter.
In order to execute the Company's business strategy, which is to become a
focused and efficient operator of a North American franchisee and wholesale
parts distribution network and a licensor of Midas trademarks and know-how
outside North America, the Company undertook a number of initiatives in 1997 and
1998 that significantly affected the Company's financial statements. The most
significant of these actions were the sale of Midas Europe and the franchising
of virtually all of the company-operated shops in North America.
The following is a summary of the Company's sales and revenues for the
quarter ended June 1999 and June 1998, respectively: ($ Millions)
Percent Percent
1999 to total 1998 to total
---- -------- ---- --------
Replacement parts sales............ $66.5 67.5% $ 70.3 49.6%
Company-operated shop retail sales. 3.0 3.0 40.3 28.4
Royalties and license fees......... 18.3 18.6 19.4 13.7
Real estate rental revenues........ 10.0 10.2 9.4 6.6
Other.............................. 0.7 0.7 2.4 1.7
----- ----- ------ -----
Sales and revenues................. $98.5 100.0% $141.8 100.0%
===== ===== ====== =====
Replacement parts sales decreased $3.8 million or 5.4% during the second
quarter versus one year ago. The primary factors in this decline were: a
decrease in demand for exhaust products, a reduction in selling prices to
customers representing a pass-through of vendor price reductions granted to the
Company, and the closing of several low return distribution points.
Retail sales from company-operated shops decreased $37.3 million or 93% in
the quarter due to a combination of: the sale of Midas Europe which operated 190
company-owned shops and the franchising of 160 company-operated shops in North
America since December 1997.
Royalties and license fees decreased $1.1 million or 5.7% in the quarter
principally due to the sale of Midas Europe. In 1998 the Company realized a 5%
royalty on all franchisee sales. Under the license agreement entered into with
the purchaser of Midas Europe, the Company earns a 2.5% royalty on all retail
sales in Europe.
Real estate rental revenues increased $0.6 million or 6.4% in the quarter
versus one year ago due to the leasing of former company-operated shop real
estate to franchisees.
Other sales and revenues declined principally due to the sale of Midas
Europe.
In the aggregate, second quarter sales and revenues declined $43.3 million
or 30.5% to $98.5 million versus $141.8 million in the year ago quarter.
Cost of sales and revenues for the quarter declined $14.9 million or 21.9%
from 1998 to $53.0 million. $12.1 million of the decrease was due to the sale
of Midas Europe in 1998 and the franchising of company-operated shops. The
remainder of the decrease was due to lower replacement parts sales. Cost of
sales and revenues as a percent to sales and revenues, increased from 47.9% in
the quarter ended June 1998 to 53.8% in the current quarter. The increase in
cost of sales and revenues as a percent to sales and revenues was due almost
entirely to the sharp decline in the number of company-operated shops, which
carried a substantially higher gross margin designed to recover the relatively
higher labor and other operating expenses of a retail operation.
8
Selling, general and administrative expenses for the quarter declined $27.9
million or 53.4% from 1998 to $24.3 million. The sale of Midas Europe and the
franchising of company-operated shops in North America reduced selling, general
and administrative expenses by $28.1 million for the quarter. Selling, general
and administrative expenses in the quarter represented 24.7% of sales and
revenues versus 36.8% in the year ago quarter. This decline was due to the sale
of Midas Europe and to a sharp decline in the number of company-operated shops,
which carried a substantially higher operating expense component than the
ongoing business.
Operating income for the quarter decreased $0.5 million or 2.3% from 1998
to $21.2 million. The operating income margin for the quarter was 21.5% as
compared to 15.3% in the second quarter one year ago. The improvement in
operating income margin was due to a combination of the sale of Midas Europe and
the franchising of company-operated shops in North America.
Interest expense for the quarter declined $1.3 million or 38.2% from 1998
to $2.1 million. The decline in interest expense was due to a reduction in
long-term debt over the past 12 months.
Other income for the quarter was $1.0 above last year. This increase was
the result of an additional $1.0 million gain from the finalization of the sale
of Midas Europe to Magneti Marelli, S.p.A.
Six months ended June 1999 Compared with the Six months ended June 1998
The following is a summary of the Company's sales and revenues for the six
months ended June 1999 and June 1998, respectively: ($ Millions)
Percent Percent
1999 To total 1998 to total
---- -------- ---- --------
Replacement parts sales............ $120.1 65.6% $130.9 47.9%
Company-operated shop retail sales. 7.8 4.2 83.7 30.7
Royalties and license fees......... 34.0 18.6 36.2 13.3
Real estate rental revenues........ 19.9 10.9 18.3 6.7
Other.............................. 1.4 0.7 3.9 1.4
------ ----- ------ -----
Sales and revenues................. $183.2 100.0% $273.0 100.0%
====== ===== ====== =====
Replacement parts sales decreased $10.8 million or 8.3% during the first
six months of 1999 versus one year ago. The primary factors in this decline
were: a decrease in demand for exhaust products, 26 weeks of operations in 1999
versus 27 weeks in 1998, a reduction in selling prices to customers representing
a pass-through of vendor price reductions granted to the Company, and the
closing of several low return distribution points.
Retail sales from company-operated shops decreased $75.9 million or 91%
during the first six months of 1999 versus a year ago. The decrease was due to
a combination of: the sale of Midas Europe, which owned and operated 190 company
shops, and the franchising of 160 company-operated shops in North America since
December 1997.
Royalties and license fees decreased $2.2 million or 6.1% during the first
six months of 1999 compared to 1998 due to the sale of Midas Europe. In 1998
the Company realized a 5% royalty on all franchisee sales. Under the license
agreement entered into with the purchaser of Midas Europe, the Company earns a
2.5% royalty on all retail sales in Europe.
9
Real estate rental revenues increased $1.6 million or 8.7% during the first
six months versus one year ago due to the leasing of former company-operated
shop real estate to franchisees.
Other sales and revenues declined principally due to the sale of Midas
Europe.
In the aggregate, sales and revenues for the first half of 1999 declined
$89.8 million or 32.9% to $183.2 million versus $273.0 million a year ago.
Cost of sales and revenues for the first six months of 1999 declined $32.2
million or 24.8% from 1998 to $97.9 million. $24.6 million, or 76% of the
decrease was due to the sale of Midas Europe in 1998 and the franchising of
company-operated shops in North America. The remainder of the decrease was due
to lower replacement parts sales. Cost of sales and revenues as a percent to
sales and revenues, increased from 47.7% in the six months ended June 1998 to
53.4% in the current six month period. This percentage increase was due almost
entirely to the sharp decline in the number of company-operated shops, which
carried a substantially lower cost of sales component than the remaining
business.
Selling, general and administrative expenses for the six months ended June
1999 declined $57.9 million or 52.9% from 1998 to $51.6 million. $59.1 million
of the decline was due to the sale of Midas Europe and the franchising of
company-operated shops in North America. Selling, general and administrative
expenses for the six months ended June 1999 represented 28.2% of sales and
revenues versus 40.1% a year ago. This decline was due to the sale of Midas
Europe and to a sharp decline in the number of company-operated shops, which
carried a substantially higher operating expense component than the ongoing
business.
Operating income for the six months ended June 1999 increased $0.3 million
or 0.9% from 1998 to $33.7 million. The operating income margin for the first
half of 1999 was 18.4% compared to 12.2% a year ago. The improvement in
operating income margin was due to a combination of the sale of Midas Europe and
the franchising of company-operated shops in North America.
Interest expense for the six months declined $2.9 million or 40.3% from
1998 to $4.3 million. The decline in interest expense was the result of a
reduction in long-term debt.
Other income for the six months was $1.1 above last year primarily because
of the previously noted $1.0 million gain on the finalization of the sale of
Midas Europe.
10
Year 2000 Update
In 1997, the Company instituted a Year 2000 project to evaluate and
remediate Year 2000 issues. The project was divided into three sections:
. The Company's computer hardware, hardware operating systems and
application software.
. Franchisee computer hardware and application software, including point of
sale hardware and software.
. Supplier computer systems.
The Company's State of Readiness. With respect to the Company's
application hardware, hardware operating systems and application software,
substantial progress has been made, utilizing both internal and external
resources in remediating those systems deemed not to be Year 2000 compliant.
Management expects that by September 1999 all of the Company's internal computer
systems will be Year 2000 compliant.
With respect to franchisee systems, the Company has conducted surveys and
engaged in discussions with current franchisee systems vendors and it has been
determined that a substantial number of the franchisee systems are not Year 2000
compliant. The Company is working with third party vendors to ensure
compliance. Management believes that in the fourth quarter of 1999
substantially all of the franchisee systems will be Year 2000 compliant.
With respect to the Company's suppliers, the Company initiated discussions
with major suppliers in the fourth quarter of 1998 to determine their state of
readiness and/or plans to become Year 2000 compliant and believes that virtually
all will be 2000 compliant by year end.
The Cost to Address the Company's Year 2000 Issues. Through June 1999, the
Company has spent approximately $4.1 million in connection with the Year 2000
project. Management estimates that an additional $0.6 million will be required
to be spent to ensure all of the Company's systems are Year 2000 compliant.
Management is unable to project at this time the cost to the Company, if any, of
ensuring that substantially all franchisee systems are Year 2000 compliant.
The Risks Associated with the Company's Year 2000 Issues. The failure to
correct a material Year 2000 problem could result in an interruption in, or a
failure of, normal business activities and operations. Such interruptions or
failures could materially and adversely affect the Company's results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of franchisees and third-party suppliers, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company's results of operations, liquidity or
financial condition. The Year 2000 project is expected to significantly reduce
the Company's level of uncertainty about the Year 2000 problem. The Company
believes that the Year 2000 project should reduce the possibility of significant
interruptions of normal operations.
Contingency Plans. The Company has not developed contingency plans as of
this date. The Company has engaged a third party to assess the Company's
readiness for the Year 2000 issue. Should progress in completing the Year 2000
project fall behind schedule, a contingency plan will be developed.
11
FORWARD LOOKING STATEMENTS
This report contains, and certain of the Company's other public documents
and statements and oral statements contain and will contain, forward-looking
statements that reflect management's current assumptions and estimates of future
performance and economic conditions using information currently available. Such
statements are made in reliance upon the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The Company cautions investors that
any forward-looking statements are subject to risks and uncertainties that may
cause actual results and future trends to differ materially from those
projected, stated, or implied by the forward-looking statements.
The Company's results of operations and the forward-looking statements
could be affected by, among others things: general economic conditions in the
markets in which the Company operates; economic developments that have a
particularly adverse effect on one or more of the markets served by the Company;
the ability to execute management's internal operating plans; the timing and
magnitude of capital expenditures; economic and market conditions in the U.S.
and worldwide; currency exchange rates; changes in consumer spending levels and
demand for new products and services; cost and availability of raw materials;
and overall competitive activities. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
12
PART II. OTHER INFORMATION
Item 2(a): Summary of Amendment to Rights Agreement
On May 12, 1999, the Company and First Chicago Trust Company of New York
(the "Rights Agent") amended the Rights Agreement dated as of December 31, 1997
(the "Rights Agreement"), between the Company and the Rights Agent.
The amendment (i) reduces from 15% to 13.0% the beneficial ownership
threshold that results in a person becoming an Acquiring Person under the Rights
Agreement (excluding any holder of between 13.0% and 15% of the Company's Common
Stock as of May 12, 1999, so long as, with limited exceptions, such holder does
not become the holder of additional shares) and (ii) reduces from 15% to 13.0%
the percentage relating to a tender or exchange offer that will result in a
distribution of rights under the Rights Agreement.
The preceding description is not intended to serve as a summary of the
terms of the Rights. A more complete summary of the terms of the Rights, as
amended, is contained in the Company's Registration Statement on Form 10/A No.4
that was filed by the Company with the SEC on May 12, 1999. A copy of the
amendment to the Rights Agreement was filed as an exhibit to that Form 10/A
Registration Statement. A copy of the Rights Agreement (including the
amendment) is available free of charge from the Rights Agent.
Exhibit 27, Financial Data Schedule, was filed only electronically with the
Securities Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 6, 1999 By: /s/ EDWIN A. GRELL
-----------------------------------
Edwin A. Grell
Vice President and Controller
(As Chief Accounting Officer and Duly
Authorized Officer of Midas, Inc.)
13