Exhibit 99.1
Midas Delivers Solid Results and Returns To Profitability
ITASCA, Ill.--(BUSINESS WIRE)--Aug. 5, 2004--Midas, Inc.
(NYSE:MDS):
-- Second quarter net income of $2.6 million--or $0.16 per share
-- U. S. comparable store retail sales up for fifth consecutive
quarter
-- Interest expense down 65 percent from second quarter of 2003
Midas, Inc. (NYSE:MDS) reported net income of $2.6 million--or
$0.16 per diluted share--for the second quarter ended July 3, 2004,
the company's first quarterly net income since the third quarter of
2002.
Last year, Midas reported a second quarter loss of $32.7
million--or $2.10 per diluted share--after business transformation
charges of $50.8 million--or $1.99 per share--for establishment of an
accrual for warranty obligations, asset write-downs and employee
severance costs related to the company's shutdown of its wholesale
distribution system.
"The significant progress Midas has made over the past 18 months
and these positive results demonstrate that our plan to transform
Midas into a profitable franchise retail business is working," said
Alan D. Feldman, Midas' president and chief executive officer.
Midas reported a comparable shop sales increase of 1.4 percent in
the second quarter in its North American shops, as the U. S. shops
reported their fifth consecutive quarter of increases.
"These positive trends in retail sales are the result of our
continued focus on our core brake business, resulting in an increase
in brake sales of five percent for both the second quarter and first
half," Feldman said. "Additionally, we are making excellent progress
on programs we are developing with our dealers to add maintenance,
tires and commercial fleet to our service mix."
During the quarter, Midas officially launched its new
Bridgestone/Firestone tire program in local market meetings with
dealers and in training sessions for shop employees. More than 750
Midas shops are now selling Bridgestone/Firestone tires.
"The net income during the second quarter is the result of the
company's comprehensive efforts to eliminate unprofitable operations,
to increase revenues in the profitable components of our business and
to reduce the company's operating expenses," Feldman said.
"Importantly, because of our reduced debt level and our first quarter
refinancing at significantly lower interest rates, our interest
expense for the second quarter was $2.5 million, down more than 65
percent from $7.3 million last year.
2004 Second Quarter and First Half Results
Royalties and license fees were $16.8 million for the quarter and
$31.3 million for the first half, up from $16.5 million and $30.3
million, respectively, last year. Real estate revenues were $9.0
million for the quarter and $18.1 million for the first half, compared
to $8.9 million and $17.9 million last year.
Retail sales at Midas' 73 company-operated shops were $9.3 million
for the quarter and $17.9 million for the first half, down from $11.2
million and $22.9 million, respectively, last year when Midas operated
an average of 94 shops during the first half. On a comparable shop
basis, retail sales at company-operated shops increased 1.6 percent in
the second quarter.
Replacement part sales and product royalties were $16.2 million
for the quarter and $30.3 million for the first half, down from $40.8
million and $80.4 million in the same periods last year. Because of
the significant changes in the supply chain during the past year,
year-over-year revenue comparisons are not meaningful for the
replacement parts business.
Overall sales and revenues for the second quarter of 2004 were
$52.0 million and $98.9 million for the six months, compared to $77.9
million and $152.4 million for the same periods in 2003. Last year's
revenues included wholesale sales from Midas' regional distribution
centers and Parts Warehouse, Inc. (PWI) quick-delivery sites, all of
which are now closed.
Selling, general and administrative (SG & A) expenses were $23.4
million for the quarter and $45.4 million for the first six months,
down from $36.5 million and $73.8 million, respectively, last year.
The declines are primarily the result of exiting the parts
distribution business.
Second quarter operating income was $6.5 million and $11.8 million
for the first half, compared to operating losses of $46.7 million in
the quarter and $51.9 million in the first half of last year. The 2003
operating results were negatively affected by significant business
transformation charges.
Operating margin for the second quarter of 2004 was 12.5 percent,
up from 11.3 percent in the first quarter.
"We are encouraged by the trends we are experiencing in operating
results," Feldman said. "Midas shops in North America are seeing
positive momentum in retail sales and profitability as we continue to
grow our brake business and enhance our service offering to include
tires, maintenance and fleet."
Midas is one of the world's largest providers of automotive
service, offering exhaust, brake, steering and suspension services, as
well as maintenance services, tires and batteries 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 (Unaudited)
(In millions, except for earnings per share)
For the quarter For the six months
ended fiscal June ended fiscal June
-----------------------------------------
2004 2003 2004 2003
-----------------------------------------
(13 weeks)(13 weeks) (26 Weeks)(26 Weeks)
Sales and revenues:
Franchise royalties and
license fees $16.8 $16.5 $31.3 $30.3
Real estate revenues 9.0 8.9 18.1 17.9
Company-operated shop
retail sales 9.3 11.2 17.9 22.9
Replacement part sales and
product royalties 16.2 40.8 30.3 80.4
Other 0.7 0.5 1.3 0.9
-----------------------------------------
Total sales and
revenues 52.0 77.9 98.9 152.4
-----------------------------------------
Cost of sales and revenues:
Real estate cost of
revenues 5.5 5.2 11.0 10.3
Company-operated shop cost
of sales 1.8 2.4 3.3 5.0
Replacement part cost of
sales 12.4 26.4 22.9 54.5
Warranty expense 2.4 3.3 4.5 6.2
Business transformation
charges (warranty reserve) -- 33.3 -- 33.3
Business transformation
charges (inventory write-
down) -- 8.6 -- 8.6
-----------------------------------------
Total cost of sales and
revenues 22.1 79.2 41.7 117.9
-----------------------------------------
Gross profit (loss) 29.9 ( 1.3) 57.2 34.5
Selling, general, and
administrative expenses 23.4 36.5 45.4 73.8
Business transformation
charges -- 8.9 -- 12.6
-----------------------------------------
Operating income (loss) 6.5 ( 46.7) 11.8 ( 51.9)
Interest expense ( 2.5) ( 7.3) ( 7.6) ( 11.6)
Loss on early extinguishment
of debt -- -- ( 4.7) ( 1.4)
Other income, net 0.2 0.5 0.5 0.9
-----------------------------------------
Income (loss) before
income tax expense
(benefit) 4.2 ( 53.5) -- ( 64.0)
Income tax expense (benefit) 1.6 ( 20.8) -- ( 24.9)
-----------------------------------------
Net income (loss) $2.6 $( 32.7) $-- $( 39.1)
=========================================
Earnings (loss) per share:
Basic $0.16 $( 2.10) $0.00 $( 2.55)
=========================================
Diluted $0.16 $( 2.10) $0.00 $( 2.55)
=========================================
Average number of shares:
Common shares outstanding 15.3 15.1 15.2 15.0
Common stock warrants 0.3 0.5 0.3 0.3
-----------------------------------------
Shares applicable to basic
earnings 15.6 15.6 15.5 15.3
Equivalent shares on
outstanding stock awards 0.6 -- 0.6 --
-----------------------------------------
Shares applicable to
diluted earnings 16.2 15.6 16.1 15.3
=========================================
Capital expenditures $0.1 $0.4 $0.4 $1.4
=========================================
MIDAS, INC.
CONDENSED BALANCE SHEETS
(In millions)
Fiscal Fiscal
June December
2004 2003
---- ----
(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $0.6 $7.4
Receivables, net 39.9 38.0
Inventories, net 12.7 14.5
Deferred income taxes 10.9 13.9
Other current assets 10.5 9.9
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Total current assets 74.6 83.7
Property and equipment, net 125.4 131.7
Intangible assets 0.3 0.3
Deferred income taxes 58.4 56.1
Other assets 8.9 11.6
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Total assets $267.6 $283.4
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Liabilities and equity:
Current liabilities:
Current portion of long-term obligations $11.8 $8.0
Accounts payable 14.4 13.7
Accrued expenses 39.7 47.5
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Total current liabilities 65.9 69.2
Long-term debt 72.9 85.2
Obligations under capital leases 5.6 6.5
Finance lease obligation 37.2 37.5
Accrued warranty 33.5 33.8
Other liabilities 12.4 15.1
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Total liabilities 227.5 247.3
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Shareholders' equity:
Common stock ($.001 par value, 100 million
shares authorized, 17.5 million shares
issued) and paid-in capital 22.0 23.8
Treasury stock, at cost (1.8 million shares
and 2.2 million shares) (42.3) (49.6)
Unamortized restricted stock awards (2.5) (1.3)
Retained income 74.8 74.8
Cumulative other comprehensive loss (11.9) (11.6)
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Total shareholders' equity 40.1 36.1
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Total liabilities and equity $267.6 $283.4
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CONTACT: Midas, Inc.
Bob Troyer, 630-438-3016
www.midasinc.com