EXHIBIT 99.1
Non-Cash Charge for Early Refinancing Drives Midas to First Quarter
Loss of $0.16 Per Share
ITASCA, Ill.--(BUSINESS WIRE)--May 6, 2004--Midas, Inc.,
(NYSE:MDS) reported a net loss of $2.6 million--or $0.16 per diluted
share--for its first quarter ended April 3, 2004. These results
include a pre-tax loss on early extinguishment of debt of $4.7
million--or $0.18 per diluted share, as a result of the early
refinancing of its debt in mid-March.
The $4.7 million charge represents the non-cash write-off of
unamortized debt discount and financing fees related to its retired
debt. Midas would have produced net income of $0.02 per diluted share
for the quarter without the effects of the loss on early
extinguishment of debt. This compares to a net loss of $0.43 per
diluted share in the first quarter of 2003.
"We are pleased with our first quarter results," said Alan D.
Feldman, Midas' president and chief executive officer. "These results
indicate that our plan to transform Midas by exiting parts
distribution to focus on the profitable franchising business is
working. Midas is on track to continue producing positive operating
income."
"The North American system reported its fourth consecutive quarter
of positive comparable shop sales with an increase of 1.2 percent,"
Feldman said. "We are seeing positive results from the efforts by
Midas dealers and the company working together to enhance our market
position in brakes and exhaust and to grow the service offering at
Midas shops by adding maintenance, tires and a commercial fleet
program."
2004 First Quarter Results
Sales and revenues for the first quarter of 2004 were $46.9
million, compared to $74.5 million last year. The significant decline
is due to the company's withdrawal from the parts distribution
business during the second half of 2003. Last year's first quarter
revenues included wholesale sales from Midas' 12 regional distribution
centers and 77 Parts Warehouse, Inc. (PWI) quick-delivery sites, all
of which are now closed.
Royalties and license fees were $14.5 million in 2004, up from
$13.8 million in the first quarter last year. Real estate revenue was
$9.1 million this quarter, up slightly from $9.0 million in 2003. The
improvements are the result of the increase in comparable store sales,
which affects both royalties and rental income.
Retail sales at Midas' company-operated shops were $8.6 million
for the first quarter of this year, compared to $11.7 million in 2003.
Midas operated 73 company shops during the first quarter of 2004
compared to an average of 106 during the first quarter last year.
Replacement part sales and product royalties were $14.1 million
for the first quarter of 2004, down from $39.6 million last year.
Because of the significant transformation of the Midas system supply
chain, revenue comparisons for this part of the business are not
meaningful.
Selling, general and administrative (SG & A) expenses for the
quarter were $22.0 million, compared to $37.3 million last year,
primarily as a result of exiting the parts distribution business.
The company produced first quarter operating income of $5.3
million--the first quarterly operating income since the third quarter
of 2002. This compares to an operating loss of $5.2 million in the
first quarter last year.
Following the refinancing in March 2004, the company reduced its
debt by approximately $9 million, primarily by using cash that was
previously held to maintain liquidity under the prior debt agreements.
Midas' interest expense was $5.1 million for the first quarter as
the company operated under its old debt agreements for the majority of
the quarter. Midas estimates that interest expense for the remainder
of 2004 will be between $2.5 million and $3.0 million per quarter,
down more than $2.0 million per quarter from the first quarter of
2004.
Midas recorded a first quarter tax benefit of $1.6 million,
compared to a $4.1 million tax benefit last year. The company does not
expect to pay Federal income taxes until the end of the decade because
of net operating loss carry forwards generated in the prior year.
"Midas is a much improved company versus a year ago, with our
successful transition out of the parts distribution business, our debt
down more than $50 million from the first quarter of 2003, new
financing in place with significantly lower interest rates and early
signs of profitable growth in retail sales at Midas shops in North
America," Feldman said.
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 more
than 2,600 franchised, licensed and company-owned Midas shops in 19
countries, including nearly 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 2003 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In millions, except for earnings per share)
(Unaudited)
For the quarter
ended fiscal March
-----------------------
2004 2003
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(13 Weeks) (13 Weeks)
Sales and revenues:
Franchise royalties and license fees $ 14.5 $ 13.8
Real estate revenues 9.1 9.0
Company-operated shop retail sales 8.6 11.7
Replacement part sales and product royalties 14.1 39.6
Other 0.6 0.4
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Total sales and revenues 46.9 74.5
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Cost of sales and revenues:
Real estate cost of revenues 5.5 5.1
Company-operated shop cost of sales 1.5 2.6
Replacement part cost of sales 10.5 28.1
Warranty expense 2.1 2.9
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Total cost of sales and revenues 19.6 38.7
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Gross profit 27.3 35.8
Selling, general, and administrative expenses 22.0 37.3
Business transformation charges -- 3.7
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Operating income (loss) 5.3 (5.2)
Interest expense (5.1) (4.3)
Loss on early extinguishment of debt (4.7) (1.4)
Other income, net 0.3 0.4
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Loss before income tax benefit (4.2) (10.5)
Income tax benefit (1.6) (4.1)
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Net loss $ (2.6) $ (6.4)
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Loss per share:
Basic $ (0.16) $ (0.43)
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Diluted $ (0.16) $ (0.43)
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Average number of shares:
Common shares outstanding 15.3 15.0
Common stock warrants 0.3 --
---------- ----------
Shares applicable to basic earnings 15.6 15.0
Equivalent shares on outstanding stock
options -- --
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Shares applicable to diluted earnings 15.6 15.0
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Capital expenditures $ 0.3 $ 1.0
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MIDAS, INC.
CONDENSED BALANCE SHEETS
(In millions)
Fiscal Fiscal
March December
2004 2003
----------- ---------
(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $ 0.6 $ 7.4
Receivables, net 42.5 41.4
Inventories, net 14.5 14.5
Deferred income taxes 13.4 13.9
Other current assets 7.0 9.9
---------- ----------
Total current assets 78.0 87.1
Property and equipment, net 128.8 131.7
Intangible assets 0.3 0.3
Deferred income taxes 59.5 56.1
Other assets 6.6 8.2
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Total assets $273.2 $283.4
========== ==========
Liabilities and equity:
Current liabilities:
Current portion of long-term obligations $ 10.5 $ 8.0
Accounts payable 16.9 13.7
Accrued expenses 45.1 47.5
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Total current liabilities 72.5 69.2
Long-term debt 74.4 85.2
Obligations under capital leases 5.8 6.5
Finance lease obligation 37.4 37.5
Accrued warranty 33.5 33.8
Other liabilities 14.6 15.1
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Total liabilities 238.2 247.3
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Shareholders' equity:
Common stock ($.001 par value, 100 million
shares authorized, 17.5 million
shares issued) and paid-in capital 22.7 23.8
Treasury stock, at cost (2.1 million
shares and 2.2 million shares) (47.2) (49.6)
Unamortized restricted stock awards (0.9) (1.3)
Retained income 72.2 74.8
Cumulative other comprehensive loss (11.8) (11.6)
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Total shareholders' equity 35.0 36.1
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Total liabilities and equity $273.2 $283.4
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CONTACT: Midas, Inc.
Bob Troyer, 630-438-3016