SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 3, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) 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 Incorporation or Organization ) |
(I.R.S. Employer Identification No.) | |
| 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 or 15 (d) 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 ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2). Yes x No ¨
The number of shares of the Registrant’s Common Stock, $.001 par value per share, outstanding as of May 4, 2004 was 15,443,458.
PART I. FINANCIAL INFORMATION
Item 1: Condensed Financial Statements
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except for earnings per share)
| For the quarter ended fiscal March |
||||||||
| 2004 |
2003 |
|||||||
| (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 | ||||||
| Total sales and revenues |
46.9 | 74.5 | ||||||
| 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 | ||||||
| Total cost of sales and revenues |
19.6 | 38.7 | ||||||
| Gross profit |
27.3 | 35.8 | ||||||
| Selling, general, and administrative expenses |
22.0 | 37.3 | ||||||
| Business transformation charges |
— | 3.7 | ||||||
| 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 | ||||||
| Loss before income tax benefit |
(4.2 | ) | (10.5 | ) | ||||
| Income tax benefit |
(1.6 | ) | (4.1 | ) | ||||
| Net loss |
$ | (2.6 | ) | $ | (6.4 | ) | ||
| Loss per share: |
||||||||
| Basic |
$ | (0.16 | ) | $ | (0.43 | ) | ||
| Diluted |
$ | (0.16 | ) | $ | (0.43 | ) | ||
| 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 |
— | — | ||||||
| Shares applicable to diluted earnings |
15.6 | 15.0 | ||||||
See notes to condensed financial statements.
1
MIDAS, INC.
CONDENSED BALANCE SHEETS
(In millions)
| Fiscal 2004 |
Fiscal December 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 | ||||||
| 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 | ||||||
| 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 | ||||||
| Total liabilities |
238.2 | 247.3 | ||||||
| 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 | ) | ||||
| Total shareholders’ equity |
35.0 | 36.1 | ||||||
| Total liabilities and equity |
$ | 273.2 | $ | 283.4 | ||||
See notes to condensed financial statements.
2
MIDAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
| For the quarter ended fiscal March |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (2.6 | ) | $ | (6.4 | ) | ||
| Adjustments reconciling net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
3.3 | 4.7 | ||||||
| Amortization of debt discount and financing fees |
1.9 | 0.8 | ||||||
| Business transformation charges |
— | 3.7 | ||||||
| Loss on early extinguishment of debt |
4.7 | 1.4 | ||||||
| Cash outlays for business transformation costs |
(4.0 | ) | (3.5 | ) | ||||
| Deferred income taxes |
(2.9 | ) | (0.2 | ) | ||||
| Changes in assets and liabilities, exclusive of effects of business transformation charges, acquisitions and dispositions |
5.8 | (0.2 | ) | |||||
| Net cash provided by operating activities |
6.2 | 0.3 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital investments |
(0.3 | ) | (1.0 | ) | ||||
| Cash paid for acquired businesses |
(0.4 | ) | (0.4 | ) | ||||
| Proceeds from sales of assets |
— | 3.7 | ||||||
| Net cash provided by (used in) investing activities |
(0.7 | ) | 2.3 | |||||
| Cash flows from financing activities: |
||||||||
| Net decrease in long-term debt |
(10.9 | ) | (0.6 | ) | ||||
| Issuance of stock warrants in connection with refinancing |
— | 5.0 | ||||||
| Cash payments for debt financing fees |
(2.1 | ) | (4.8 | ) | ||||
| Payment of obligations under capital leases |
(0.6 | ) | (0.2 | ) | ||||
| Payment of obligations under finance lease |
(0.1 | ) | (0.2 | ) | ||||
| Cash received for common stock |
1.7 | — | ||||||
| Cash paid for treasury shares |
(0.3 | ) | (0.1 | ) | ||||
| Net cash used in financing activities |
(12.3 | ) | (0.9 | ) | ||||
| Net change in cash and cash equivalents |
(6.8 | ) | 1.7 | |||||
| Cash and cash equivalents at beginning of period |
7.4 | 0.5 | ||||||
| Cash and cash equivalents at end of period |
$ | 0.6 | $ | 2.2 | ||||
See notes to condensed financial statements.
3
MIDAS, INC.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(In millions)
| Common Stock Paid-in Capital |
Treasury Stock |
Unamortized |
Retained |
Comprehensive Income (Loss) |
|||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Current |
Cumulative |
||||||||||||||||||||||||
| Fiscal year end 2003 |
17.5 | $ | 23.8 | (2.2 | ) | $ | (49.6 | ) | $ | (1.3 | ) | $ | 74.8 | $ | (11.6 | ) | |||||||||||||
| Purchase of treasury shares |
— | — | — | (0.3 | ) | — | — | — | |||||||||||||||||||||
| Forfeiture of restricted stock awards |
— | — | — | (0.1 | ) | 0.1 | — | — | |||||||||||||||||||||
| Stock option transactions |
— | (1.1 | ) | 0.1 | 2.8 | — | — | — | |||||||||||||||||||||
| Amortization of restricted stock awards |
— | — | — | — | 0.3 | — | — | ||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (2.6 | ) | $ | (2.6 | ) | — | ||||||||||||||||||
| Other comprehensive income (loss) —foreign currency translation adjustments |
— | — | |||||||||||||||||||||||||||