Exhibit 99.1
Midas Reports First Quarter Loss of $0.43 Per Share after Special Charge
ITASCA, Ill.--(BUSINESS WIRE)--April 30, 2003--Midas, Inc., (NYSE:
MDS) reported a loss of $6.4 million--or $0.43 per diluted share--for
its first quarter ended March 29, 2003. The company recorded a pre-tax
charge of $5.1 million--or $0.20 per diluted share--during the quarter
for ongoing restructuring actions.
Midas reported net income of $1.7 million--or $0.12 per share--in
the first quarter of 2002.
"The first quarter results were anticipated and, in a large part,
are the reason for the restructuring actions we announced previously,"
said Alan D. Feldman, Midas' president and chief executive officer.
"We are rapidly exiting the wholesale distribution business and parts
of our company shop operations so that we can position Midas to grow
our profitable franchising and real estate businesses."
Midas announced in early April that it is exiting its wholesale
distribution business and that it is entering into supply agreements
with AutoZone in the United States and Uni-Select in Canada to
distribute parts to 1,900 Midas shops throughout North America for
both weekly replenishment and just-in-time parts deliveries.
Midas will exit the parts distribution business by the end of
2003. The company will close all but one of its 12 regional
distribution centers in North America and will sell or close all of
its remaining Parts Warehouse, Inc. (PWI) quick-delivery sites. One
distribution center will remain open to support Midas' exhaust
manufacturing plant in Hartford, Wisc. The Midas distribution center
in Atlanta will be the first to close during June, followed by others
at three-to-four week intervals through December.
Midas also announced in January that it would close or sell its
network of 77 PWI locations and that it would reduce the number of
company-operated shops from 111 to a core group of shops in several
key markets.
"We are making excellent progress in the steps to position the
company for profitability. So far in 2003, Midas has closed or sold 45
PWI sites and closed or re-franchised 21 company-operated shops,"
Feldman said.
"We are working diligently to move the responsibility for parts
distribution to AutoZone and Uni-Select," he said. "Committees made up
of Midas dealers, and representatives from Midas, AutoZone and
Uni-Select are working through the many details of systems, logistics,
product availability, warranties and communications to ensure a smooth
transition."
2003 First Quarter Results
Sales and revenues for the first quarter 2003 were $74.5 million,
compared to $81.4 million last year. The decline is primarily the
result of the reduced number of PWI units in operation during the
quarter, comparable store sales declines at PWI and company-operated
shops, as well as lower exhaust sales through the company's IPC
channel.
Royalties and license fees were $13.6 million in 2003, down from
$14.4 million in the first quarter last year. Real estate revenue was
$9.0 million this quarter, down from $9.4 million in 2002. The
declines are the result of fewer operating Midas shops and a
system-wide comparable store sales decline of 2.0 percent in the first
quarter, which affects both royalties and rental income.
Wholesale parts sales were $39.6 million for the first quarter of
2003, down from $43.4 million last year. Retail sales at
company-operated shops were $11.7 million for the first quarter of
this year, compared to $13.8 million in 2002.
Selling, general and distribution (SG & D) expenses for the
quarter were $37.3 million, compared to $35.1 million last year. The
prior year amount benefited from an advertising credit of $3.0 million
carried over from previous years. The company reported an operating
loss of $6.6 million for the quarter, after the special charge of $5.1
million for separation expenses for field and headquarters employees,
as well as fees and expenses related to the refinancing of the
company's debt.
In late March, Midas completed a comprehensive restructuring of
its debt with the company's existing lenders, which provided a total
of $172.5 million in a revolving line of credit and term loans.
"The year 2003 will be one of transition for Midas, as we continue
efforts to exit the wholesale business and to focus on enhancing our
retail presence in the marketplace," Feldman said.
"Results from a recently completed comprehensive consumer research
project are the foundation we are using to shape the company's retail
strategy of excellence in exhaust, brakes and maintenance services,"
Feldman said.
Feldman said that Midas expects to see positive results from its
strategy to focus on the franchising and real estate businesses in
2004. There will be continuing special charges throughout 2003 for
ongoing restructuring activities. This includes a substantial charge
that will be taken during the second quarter related to exiting the
wholesale business and the resulting establishment of an accrual to
cover outstanding warranties on Midas lifetime-warranted products, the
closing of distribution centers, the closing and re-franchising of
company-operated shops and resulting employment reductions in the
field and at company headquarters.
Midas is one of the world's largest providers of automotive
service, offering exhaust, brake, steering and suspension services, as
well as batteries, climate control and maintenance services at 2,700
franchised, licensed and company-owned Midas shops in 19 countries,
including 1,900 in the United States and Canada.
NOTE: This news release contains certain forward-looking
statements that are based on management's beliefs as well as
assumptions made by and information currently available to management.
Such statements are subject to risks and uncertainties, both known and
unknown, that could cause actual results, performance or achievement
to vary materially from those expressed or implied in the
forward-looking statements. The company may experience significant
fluctuations in future results, performance or achievements due to a
number of economic, competitive, governmental, technological or other
factors. Additional information with respect to these and other
factors, which could materially affect the company and its operations,
is included in the company's filings with the Securities and Exchange
Commission, including the company's 2002 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In millions, except for earnings and dividends per share)
(Unaudited)
For the quarter
ended fiscal
March
2003 2002
---------------
(13 (13
Weeks) Weeks)
Sales and revenues $74.5 $81.4
Cost of sales and revenues 38.7 40.9
---------------
Gross profit 35.8 40.5
Selling, general, and distribution expenses 37.3 35.1
Business transformation charges 5.1 0.0
---------------
Operating income (loss) ( 6.6) 5.4
Interest expense ( 4.3) ( 2.6)
Other income, net 0.4 0.0
---------------
Income (loss) before income taxes ( 10.5) 2.8
Income taxes (benefit) ( 4.1) 1.1
---------------
Net income (loss) $( 6.4) $1.7
===============
Earnings (loss) per share:
Basic $( 0.43) $0.12
===============
Diluted $( 0.43) $0.12
===============
Average number of shares
Common shares outstanding 15.0 15.0
Equivalent shares on outstanding stock options 0.1 0.0
---------------
Shares applicable to diluted earnings 15.1 15.0
===============
EBITDA
Operating income (loss) excluding business
transformation charges ( 1.5) 5.4
Other income, net 0.4 0.0
Depreciation and amortization 4.7 4.2
---------------
$3.6 $9.6
===============
Capital expenditures and cash paid for acquired
businesses $1.4 $4.8
===============
MIDAS, INC.
RESULTS OF OPERATIONS
First Quarter 2003 Compared with First Quarter 2002
(Unaudited)
The following is a summary of the Company's sales and revenues for
the first quarter of fiscal 2003 and 2002, respectively: ($ Millions)
Percent Percent
to to
2003 Total 2002 Total
--------------------------
Replacement parts sales $39.6 53.2% $43.4 53.3%
Company-operated shop retail sales 11.7 15.7 13.8 16.9
Royalties and license fees 13.6 18.2 14.4 17.7
Real estate rental revenues 9.0 12.1 9.4 11.6
Other 0.6 0.8 0.4 0.5
--------------------------
Sales and revenues $74.5 100.0% $81.4 100.0%
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CONTACT: Midas, Inc.
Bob Troyer, 630/438-3016