EX-99.1
2
a5093011ex99-1.txt
EXHIBIT 99.1

                                                                    Exhibit 99.1

            Midas Reports 2005 Earnings of $0.13 Per Share
 after $0.52 Per Share in Special Items to Complete Exit from Exhaust
                    Manufacturing and Distribution

    ITASCA, Ill.--(BUSINESS WIRE)--March 2, 2006--Midas, Inc.
(NYSE:MDS) reported net income of $2.2 million--or $0.13 per diluted
share--for its fiscal year ended Dec. 31, 2005, after special items
related to the company's exit from the exhaust manufacturing and
distribution business.
    Fiscal 2005 net income was negatively affected by $3.1 million of
operating losses related to the wind-down of the exhaust manufacturing
business. The company also recorded business transformation charges of
$12.3 million for asset write-downs, severance and other items related
to exiting exhaust manufacturing and distribution, and a gain of $2.8
million for the continuing amortization of the gain from the sale of
the company's exhaust warehouse in Chicago.
    Excluding the exhaust manufacturing and distribution items, the
company earned $0.65 per diluted share, which represents a non-GAAP
earnings per diluted share measure. This compares to $0.56 per diluted
share in 2004 on the same non-GAAP basis, when exhaust operating
losses were $3.7 million, business transformation charges were $1.2
million, and the gain from asset sales was $0.6 million.
    For the fourth quarter, Midas reported net income of $0.6
million--or $0.04 per diluted share--after exhaust manufacturing and
distribution related items of $1.6 million. This included $1.2 million
of exhaust operating losses during the quarter, $1.2 million of
business transformation charges, and a gain of $0.8 million from the
sale of the Chicago exhaust warehouse. Midas also recorded a loss of
$0.3 million during the quarter on the early extinguishment of debt as
part of its refinancing in late October.
    Excluding the exhaust manufacturing and distribution items and the
loss on debt extinguishment, the company earned $0.11 per diluted
share during the fourth quarter of 2005, which represents a non-GAAP
earnings per diluted share measure.

    Business transformation update

    "We successfully completed significant steps in our strategic
transformation during 2005, by closing down our exhaust manufacturing
plant in Hartford, Wisc. in the third quarter, and completing the
conversion of the U.S. Midas system from Midas manufactured exhaust to
ArvinMeritor (NYSE: ARM) manufactured exhaust," said Alan D. Feldman,
Midas' president and chief executive officer.
    "A similar transition to Walker manufactured exhaust will be
completed in Canada by the end of the first quarter, and we will be
able to finally close our exhaust warehouse and close the book on our
legacy manufacturing and distribution business," Feldman said.
    Midas expects to incur an operating loss in its exhaust business
of approximately $1.0 million in the first quarter of 2006, after
which the losses will end. No further exhaust-related restructuring
charges are expected, although the company will realize gains in the
first quarter of 2006 of approximately $1.7 million related to the
disposal of exhaust related machinery and equipment, and $1.8 million
related to the final recognition of the gain from the sale of the
Chicago exhaust warehouse. The company also expects to realize a gain
from the eventual sale of the real estate related to its former
manufacturing facility in Hartford.
    Midas previously announced that it had expected a special charge
of up to $4.0 million in the fourth quarter of fiscal 2005 to cover
Midas' contribution to a North American Midas shop appearance upgrade
program. After careful consideration it was determined that this
charge will be taken as shops complete the image upgrade, which will
result in special charges over the course of 2006 and 2007.

    Retail sales continue to grow

    "Midas recorded its 11th consecutive quarter of comparable shop
retail sales increases in the U.S. and North American shops were up by
1.8 percent for the quarter," Feldman said. "Retail sales were up 2.5
percent during the first half of 2005, but slowed somewhat in the
second half's challenging retail environment."
    For the year, comparable shop retail sales at U.S. Midas shops
were up 2.4 percent, compared to a full-year increase of 2.7 percent
in 2004.
    Midas shops in Canada recorded comparable shop increases of 2.1
percent for 2005, their first full-year increase since 2001. This
included a comparable shops sales increase of 5.3 percent in the
fourth quarter.
    "Although fourth quarter sales were depressed by several factors,
we continue to be encouraged by the overall improvements in retail
sales at the shop level," Feldman said. "Sales of tires and related
services increased approximately 40 percent in U.S. shops last year
and now account for nearly four percent of the typical shop's sales
mix. Maintenance sales were up by approximately 15 percent for 2005.
    "Our marketing and operational focus in 2006 will be on brake
sales, which declined by 3.8 percent last year as the Midas system
worked to add maintenance services as a new core category," he said.
"With maintenance services now in place, we can return to the
successful brake focus of prior years."
    Feldman said that the 69 company-owned shops recorded their
seventh consecutive quarter of comparable shop sales improvement,
finishing up 2.8 percent for the fourth quarter and 6.1 percent for
all of 2005.

    Shop count


                         U.S     U.S. Co.   Canada     Other
                     Franchised   Owned   Franchised   Int'l    Total

 Shop count at
  beginning of fiscal
  year                  1,542        73       219       801    2,635
 Shops opened              11         -         -        38       49
 Shops permanently
  closed                  (41)        -        (5)      (28)     (74)
 Net refranchising          4        (4)        -         -        -

                     -------------------------------------------------
 Shop count at end of
  fiscal year           1,516        69       214       811    2,610
                     -------------------------------------------------


    Total shop count declined slightly, as 49 shops were opened during
the year, but 74 were closed. The company lowered the company-operated
shop count in the U.S. by refranchising a net of 4 units, and plans to
continue to refranchise units in fiscal 2006.
    "We spent 2005 rebuilding our store development infrastructure in
North America, and are now ready to increase the number of annual shop
openings," Feldman said. "We have rolled-out a new shop opening
incentive program for 2006 and 2007, that includes up to a $35,000
investment in the new store by Midas, Inc. These costs will be more
than offset by incremental franchise fees and royalties."
    Midas expects the shop count to stabilize in 2006 and to grow
beginning in 2007.

    Continued strong cash flow

    Net cash provided by operating activities was $11.3 million for
the year. This amount includes $5.8 million of cash outlays for
business transformation costs and changes in assets and liabilities
that used $9.7 million of cash. Excluding these items, cash flow from
operating activities was $26.8 million in 2005 compared to $25.7
million in 2004, which represents a non-GAAP measure.
    As of December 31, 2005, the company had a remaining liability for
business transformation costs of $4.3 million, most of which will be
paid in fiscal 2006. Changes in assets and liabilities will be a
source of cash in 2006 as a result of the final liquidation of exhaust
inventories and receivables.

    2005 Fourth Quarter and Full-Year Results

    Sales and revenues for the fourth quarter were $44.0 million, down
from $47.3 million in 2004. Full-year sales and revenues were $192.5
million, down from $197.5 million the previous year. Declines for both
the quarter and full-year are due to lower sales of replacement parts
because of the exit from the exhaust business.
    Royalties and license fees were $14.9 million for the quarter and
$64.5 million for the year, up from $14.6 million and $62.5 million
for the same periods in 2004.
    Real estate revenues were $9.0 million in the fourth quarter and
$36.0 million for the year, compared to $9.2 million and $36.5
million, respectively, in the previous year.
    Company-owned retail sales at 69 shops in the United States were
$8.7 million for the fourth quarter and $37.0 million for the year,
compared to $9.0 million for the quarter and $36.1 million for all of
2004. The fourth quarter decrease was due to fewer shops compared to
the prior year because of refranchising.
    Replacement part sales and product royalties were $10.5 million in
the fourth quarter and $51.7 million for the year, down from $13.7
million in the fourth quarter and $59.7 million for the previous year
as a result of exiting the exhaust business.
    Selling, general and administrative expenses (SG&A) were $22.6
million for the fourth quarter and $91.0 million for the year, down
from $24.6 million and $92.8 million, respectively, for the same
periods in 2004. The unallocated portion of SG&A was $33.0 million in
2005.
    Operating income was $2.5 million for the fourth quarter and $9.8
million for the year, after the effects of special exhaust-related
charges of $1.2 million and $12.3 million, respectively.
    In 2004, Midas' operating income was $2.3 million for the quarter
and $20.0 million for the year, after special charges of $1.2 million
for the quarter and the year.
    Interest expense in 2005 was $2.6 million for the fourth quarter
and $10.0 million for the year, compared to $2.5 million for the
quarter and $12.7 million, respectively, in 2004. The company's bank
debt at the end of the fourth quarter was $65.0 million.
    Midas recorded an income tax expense of $1.0 million for the full
year, although the company does not expect to pay a significant amount
of cash income taxes until the end of the decade because of net
operating loss carry-forwards of approximately $110 million generated
in previous years.
    During the fourth quarter, Midas purchased 412,833 shares of its
common stock at an average price of $19.98 per share, primarily as
part of a $25 million share repurchase plan announced in November
2004. For all of 2005, Midas purchased a total of 734,026 shares at an
average price of $21.01 per share.

    2006 Outlook

    "Midas made significant progress in completing our transformation
during 2005, to exit from the parts distribution business, to
reposition our business model as a franchisor, to grow retail sales,
to secure supply chain alliances that ensure continuing high quality
parts for Midas shops, to restructure our debt into an unsecured $110
million revolving credit facility, and to strengthen the company's
balance sheet," Feldman said.
    "We will continue to build on this progress in 2006, as we focus
on growing our core retail businesses, while executing in a consistent
'One Midas' manner throughout the Midas system," he said.
    Midas expects 2006 full-year revenues of approximately $180
million, and operating income of between $29 and $31 million,
excluding the effects of any remaining exhaust-related revenues,
operating losses or special items, as well as shop image upgrade
payments and incremental stock compensation expense under SFAS 123R.
This improvement in profitability translates into an operating margin
of between 16 and 17 percent, up from a comparable 14.8 percent in
2005. The company will adopt the provisions of SFAS 123R in the first
quarter of fiscal 2006, and expects incremental non-cash annual
expense of approximately $2.2 million.
    Full year gross margins are expected to be approximately 64
percent, while total SG&A is expected to be between $84 and $86
million, excluding the incremental SFAS 123R expenses described above.
Included in this amount is depreciation and amortization of
approximately $10.5 million and unallocated SG&A of approximately $31
million.
    The company expects full-year interest expense of approximately
$9.0 million and capital spending of $3.5 million. Any spending on the
new shop incentive program would be in addition to this $3.5 million
estimate.
    "With our transformation nearly complete, we now have a clearer
focus on our SG&A expenses going forward," Feldman said. "We expect to
be able to reduce our SG&A by a total of $12.0 million over the next
three years, with half of that decrease in fiscal 2006. This reduction
is before the impact of the required expensing of stock options and
any changes in the company-operated shop business."
    Feldman said the reductions will come from job consolidations,
expense control and the elimination of exhaust-related expenses.
    Midas expects cash flow from operating activities of between $27
and $30 million in 2006, after providing for changes in working
capital and cash outlays for business transformation costs. Midas
expects to use a portion of this cash flow to complete the remaining
$10.1 million share repurchase program currently authorized by the
Board of Directors.

    Midas is one of the world's largest providers of automotive
service, offering brake, exhaust, maintenance, tires, steering and
suspension services at more than 2,600 franchised, licensed and
company-owned Midas shops in 19 countries, including 1,800 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 2004 annual report of Form 10-K.


                              MIDAS, INC.
            CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
             (In millions, except for earnings per share)


                             For the quarter       For the 12 months
                          ended fiscal December  ended fiscal December
                          ---------------------  ---------------------
                             2005       2004        2005       2004
                          ---------- ----------  ---------- ----------
                          (13 weeks) (13 weeks)  (52 Weeks) (52 Weeks)

Sales and revenues:
  Franchise royalties and
   license fees               $14.9      $14.6       $64.5      $62.5
  Real estate revenues          9.0        9.2        36.0       36.5
  Company-operated shop
   retail sales                 8.7        9.0        37.0       36.1
  Replacement part sales
   and product royalties       10.5       13.7        51.7       59.7
  Other                         0.9        0.8         3.3        2.7
                          ---------- ----------  ---------- ----------
      Total sales and
       revenues                44.0       47.3       192.5      197.5
                          ---------- ----------  ---------- ----------

Cost of sales and
 revenues:
  Real estate cost of
   revenues                     5.8        5.9        22.4       22.4
  Company-operated shop
   cost of sales                2.1        2.3         8.7        7.6
  Replacement part cost of
   sales                        9.1       11.1        42.2       46.5
  Warranty expense              0.7      ( 0.1)        6.1        7.0
  Business transformation
   charges (inventory
   related)                     1.1        0.4         5.2        0.4
                          ---------- ----------  ---------- ----------
      Total cost of sales
       and revenues            18.8       19.6        84.6       83.9
                          ---------- ----------  ---------- ----------

      Gross profit             25.2       27.7       107.9      113.6

Selling, general, and
 administrative expenses       22.6       24.6        91.0       92.8
Business transformation
 charges                        0.1        0.8         7.1        0.8
                          ---------- ----------  ---------- ----------

      Operating income          2.5        2.3         9.8       20.0

Interest expense              ( 2.6)     ( 2.5)     ( 10.0)    ( 12.7)
Loss on early
 extinguishment of debt       ( 0.3)        --       ( 0.3)     ( 4.7)
Gain on sale of assets,
 net                            0.8        0.6         2.8        0.6
Other income, net               0.3         --         0.9        0.4
                          ---------- ----------  ---------- ----------

      Income before income
       taxes                    0.7        0.4         3.2        3.6
Income tax expense
 (benefit)                      0.1      ( 1.6)        1.0      ( 0.5)
                          ---------- ----------  ---------- ----------

      Net income               $0.6       $2.0        $2.2       $4.1
                          ========== ==========  ========== ==========

Earnings per share:
  Basic                       $0.04      $0.13       $0.14      $0.26
                          ========== ==========  ========== ==========
  Diluted                     $0.04      $0.12       $0.13      $0.26
                          ========== ==========  ========== ==========


Average number of shares:
  Common shares
   outstanding                 15.5       15.6        15.7       15.4
  Common stock warrants         0.1        0.1         0.1        0.2
                          ---------- ----------  ---------- ----------
  Shares applicable to
   basic earnings              15.6       15.7        15.8       15.6
  Equivalent shares on
   outstanding stock
   awards                       0.6        0.6         0.7        0.6
                          ---------- ----------  ---------- ----------
  Shares applicable to
   diluted earnings            16.2       16.3        16.5       16.2
                          ========== ==========  ========== ==========


Capital expenditures           $1.5       $1.3        $3.4       $2.1
                          ========== ==========  ========== ==========



                              MIDAS, INC.
                       CONDENSED BALANCE SHEETS
                             (In millions)

                                               Fiscal        Fiscal
                                              December      December
                                                2005          2004
                                             -----------   -----------
                                             (Unaudited)
Assets:
Current assets:
   Cash and cash equivalents                       $1.4          $0.9
   Receivables, net                                33.5          33.4
   Inventories, net                                 6.8          12.2
   Deferred income taxes                            9.1           9.0
   Other current assets                             6.5           6.8
                                             -----------   -----------
      Total current assets                         57.3          62.3
Property and equipment, net                       104.6         117.4
Deferred income taxes                              59.5          62.2
Other assets                                       17.8          10.1
                                             -----------   -----------
      Total assets                               $239.2        $252.0
                                             ===========   ===========

Liabilities and equity:
Current liabilities:
   Current portion of long-term obligations        $1.9          $7.9
   Accounts payable                                13.6          16.1
   Accrued expenses                                31.7          32.5
                                             -----------   -----------
      Total current liabilities                    47.2          56.5
Long-term debt                                     65.0          63.0
Obligations under capital leases                    4.1           5.1
Finance lease obligation                           35.9          36.7
Accrued warranty                                   30.7          32.1
Other liabilities                                   6.8           9.7
                                             -----------   -----------
      Total liabilities                           189.7         203.1
                                             -----------   -----------

Shareholders' equity:
 Common stock ($.001 par value, 100 million
  shares authorized, 17.7 million and 17.6
  million shares issued) and paid-in capital       19.8          21.4
   Treasury stock, at cost (2.0 million
    shares and 1.8 million shares)                (45.0)        (41.2)
   Unamortized restricted stock awards             (4.2)         (2.2)
   Retained income                                 81.1          78.9
   Cumulative other comprehensive loss             (2.2)         (8.0)
                                             -----------   -----------
      Total shareholders' equity                   49.5          48.9
                                             -----------   -----------
      Total liabilities and shareholders'
       equity                                    $239.2        $252.0
                                             ===========   ===========




    CONTACT: Midas, Inc.
             Bob Troyer, 630-438-3016




The following information was filed by Midas Inc (MDS) on Thursday, March 2, 2006 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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