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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 10-K

(Mark
One)

  [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 30, 2000

                                      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         (Employer Identification No.)
    Incorporation or Organization)

     1300 Arlington Heights Road,                       60143
           Itasca, Illinois                           (Zip Code)
    (Address of Principal Executive
               Offices)

                                (630) 438-3000
             (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
            Title of Each Class              Name of Each Exchange on Which Registered
            -------------------              -----------------------------------------
<S>                                         <C>
       Common Stock, par value $.001                  New York Stock Exchange
      Preferred Stock Purchase Rights                 New York Stock Exchange
</TABLE>

Securities registered pursuant to Section 12(g) of the Act: None

   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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S) 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of the Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [_]

   As of March 19, 2001, the aggregate market value of the Registrant's voting
common equity held by non-affiliates was $205,753,615 (based on closing sale
price of $14.18 on March 19 , 2001, as reported for the New York Stock
Exchange-Composite Transactions).

   The number of shares of the Registrant's Common Stock, $.001 par value per
share, outstanding as of March 19, 2001 was 14,972,562.

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<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

PART I
                                                                                                      Page
                                                                                                      ----
<S>    <C>                                                                                            <C>
 1.    Business......................................................................................   1

 2.    Properties....................................................................................   6

 3.    Legal Proceedings.............................................................................   6

 4.    Submission of Matters to a Vote of Security Holders...........................................   6

PART II

 5.    Market for Registrant's Common Equity and Related Stockholder Matters.........................   7

 6.    Selected Financial Data.......................................................................   7

 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.........   8

 7A.   Quantitative and Qualitative Disclosures About Market Risk....................................  13

 8.    Financial Statements and Supplementary Data...................................................  13

 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........  13

PART III

10.    Directors and Executive Officers of the Registrant............................................  13

11.    Executive Compensation........................................................................  15

12.    Security Ownership of Certain Beneficial Owners and Management................................  15

13.    Certain Relationships and Related Transactions................................................  15

PART IV

14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K..............................  15

Exhibit Index........................................................................................  15

Signatures...........................................................................................  17
</TABLE>
<PAGE>

                                    PART I

Item 1. Business

Background

   Midas, Inc. ("Midas" or the "Company") was incorporated under the laws of
the State of Delaware on August 29, 1997. At the time of its incorporation,
the Company was a wholly-owned subsidiary of Whitman Corporation, a Delaware
corporation ("Whitman").

   On January 30, 1998 (the "Distribution Date"), Whitman distributed (the
"Distribution" or "Spin-off") all of the issued and outstanding shares of
common stock, par value $.001 per share, of the Company (the "Midas Common
Stock") to the shareholders of record of Whitman's common stock as of January
16, 1998. The Distribution was made pursuant to the terms of a Distribution
and Indemnity Agreement (the "Distribution Agreement") dated as of December
31, 1997 by and among Whitman, the Company and Midas International
Corporation, a Delaware corporation ("Midas International") a wholly-owned
subsidiary of the Company.

   Pursuant to the Distribution Agreement and prior to the Distribution Date,
the Company and Whitman executed a series of steps in order to separate from
Whitman any assets related to the business of Midas. Such steps involved,
among other things, the transfer to Midas from Whitman of Midas International
and all of the non-U.S. businesses conducted by Midas International which were
previously held by a Netherlands company owned by Whitman. As a result of the
Distribution, Midas became an independent public company.

   Midas has been engaged in the retail automotive repair business since 1954,
and has granted franchises for and operated Midas shops since 1956. Midas
International Corporation was incorporated in Delaware in 1959. Midas'
principal executive offices are located at 1300 Arlington Heights Road,
Itasca, Illinois 60143 and its telephone number is (630) 438-3000.

Overview

   Shops operating under the Midas brand provide services in the U.S., Canada,
France and other locations in Europe, Australia, the Middle East, Latin
America and the Caribbean. These shops are operated by the Company, its
franchisees and licensees and offer exhaust, brake, suspension, air
conditioning and maintenance services. As of December 30, 2000, there were
2,735 Midas shops worldwide, of which 2,037 were located in the U.S. and
Canada (hereinafter referred to as "North America"). As used herein, the term
"company-operated shop" means a shop operated by Midas and excludes shops
operated by franchisees or licensees.

   The Company manufactures and sells Midas brand products for resale at Midas
shops and manufactures exhaust products under the IPC brand name for sale to
distributors. The Company's domestic manufacturing plant produces
approximately 1,800 different types of mufflers, and approximately 200
specialty exhaust pipes to service over 1,000 makes and models of automobiles.
The Company also manufactures and sells shop equipment under the Huth
trademark. Additional automotive aftermarket parts such as shock absorbers,
brakes, suspension, steering and front-end parts are purchased from
manufacturers and resold at wholesale to franchised Midas shops. Midas Realty
Corporation, a Midas subsidiary ("Midas Realty"), selects, leases, acquires
and constructs sites for Midas shops.

Market Overview

   Increased technological complexity and durability of vehicles have been the
dominant forces in the evolution of the automotive repair industry since the
1970s. As a result, the types of service providers, as well as the type and
frequency of repairs being performed, have changed. The total number of
service outlets in the U.S. has been declining over the past 15 years. The
largest decrease is attributable to a reduction in the number of local service
stations offering automotive repair. As the number of service stations
offering automotive repair has decreased, more sophisticated service providers
have emerged. The number of independent maintenance and repair shops and large
automotive repair chains has increased slightly. In addition, automobile
companies and dealers are more aggressively pursuing repair business by
separating repair shops from showrooms and offering more convenient service.

                                       1
<PAGE>

   The technological sophistication of modern automobiles has also affected
the types of service needed over the lifetime of a vehicle. In general, the
automotive aftermarket has grown as the number of vehicles in operation, the
average age of these vehicles and the annual number of miles driven per
vehicle have increased. However, this aftermarket growth is limited by
improved vehicle durability. Vehicles are now assembled with more durable
parts, such as stainless steel exhaust systems, and suspension parts such as
shock absorbers and struts are now more technologically advanced. As a result,
the services performed over the lifetime of today's vehicles are more likely
to be maintenance services and light repair work.

   Beginning in 1996, the Company began to experience declines in earnings and
returns on assets and equity. These trends were due to a combination of
slowing growth, increasing operating expenses and an expanding asset base. The
Company also began to experience declines in sales and revenues from certain
business activities including substantial declines in exhaust sales at both
the retail and wholesale level due to the automobile manufacturers' use of
non-corrosive stainless steel exhaust systems. These trends, coupled with an
expected substantial increase in the Company's long-term debt as a result of
the Spin-off of Midas as an independent company by Whitman Corporation, led
management to conduct an in-depth review of current strategies and potential
alternative strategies to reverse these trends.

   Forthcoming from this strategic review and later refinements was a business
strategy to: devote the Company's management and financial resources to
becoming a focused and efficient operator of a North American franchise
network, licensing Midas trademarks outside North America, improving
relationships with franchisees, improving the efficiency of the wholesale
replacement part distribution system, reducing operating expenses and
redeploying assets by franchising company-operated shops. The strategy also
called for the introduction of new Midas products and services at the retail
level to offset the declines in the exhaust business.

   In 1998, the Company reached an agreement with Magneti Marelli, S.p.A., a
member of the Fiat Group, to form a strategic alliance to accelerate the
development of the Midas system in Europe and South America. Midas management
concluded that Magneti Marelli had the financial and human resources to
accelerate the development of the Midas business in Europe and South America
at a much faster pace than the Company. Midas management also concluded that
the proceeds from a transaction with Magneti Marelli could provide the Company
with additional financial resources which would enable the Company to
accelerate the execution of its strategic plan. Accordingly, Midas sold its
interests in Europe and South America to Magneti Marelli for $100 million in
October 1998, and entered into a licensing agreement for the Midas trademarks
and know-how as a part of the transaction.

   In 1999, the Company concluded the disposition of all but one of its North
American company-operated shops. A total of 168 shops were either refranchised
or closed, with the Company realizing gross proceeds of approximately $29
million. In December 1999, the Company acquired nine shops from a franchisee
bringing the North American company-operated shop count up to ten. The Company
may from time to time acquire additional North American shops from franchisees
as they become available on an opportunistic basis.

   In 2000, the Company completed the sale of its Australian operations, which
consisted of a network of 91 franchised and 12 company-operated shops.

   In May 2000, the Company began an aggressive marketing effort to launch the
New Midas. This program incorporates an updated shop appearance, expansion of
services to include climate control and general maintenance, and new
operational standards for building long-term relationships with customers. The
approximately 2,700 Midas shops currently in operation worldwide offer some or
all of the following services: exhaust, brake, suspension, air conditioning,
batteries and a number of other routine maintenance services. The Company's
business strategy is to continue to expand these service offerings in the
future.

   During 2000, Midas established Parts Warehouse, Inc. ("PWI"), a network of
small, quick delivery sites to distribute parts to Midas dealers and to
customers outside the Midas system. As part of this strategy, the Company
acquired 27 climate control distribution centers in two separate acquisitions
during 2000, and reconfigured many of these sites to add new products. As of
fiscal year-end a total of 29 of these sites were open, and an additional 19
were added in the first two months of 2001.

                                       2
<PAGE>

   The business transformation process and the resulting costs associated with
this strategy are discussed in Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and in Note 3 to the
Financial Statements.

Franchises and the Midas System

   Midas has developed a system for the establishment and operation of Midas
shops that is used in franchised and licensed shops worldwide. This system
includes site selection, shop construction and layout, equipment selection and
installation, purchasing and inventory control methods, accounting methods,
merchandising, advertising, sales and promotional techniques, installation
techniques, personnel training and other matters relating to the efficient and
successful operation of Midas shops and the maintenance of high standards of
quality.

   Midas identifies and qualifies franchisees through a well-organized
recruitment program in each region of the world in which it operates.
Franchisees are qualified based primarily upon a candidate's financial
suitability and operational experience, among other criteria. Midas also
considers a franchisee's ability to work within the Midas franchise system.
Each franchisee enters into a standard franchise and trademark agreement with
Midas. The franchise and trademark agreement varies by country but these
variances do not substantially alter the franchise arrangement. The following
summarizes portions of the franchise and trademark agreement used in the U.S.
(the "U.S. Franchise Agreement").

   Term and Fees; Estimated Costs; Royalty Payments. The initial term of the
U.S. Franchise Agreement, as well as most Midas franchise and trademark
agreements throughout the world, is twenty years. The U.S. Franchise Agreement
may be terminated by the franchisee upon thirty days written notice. In most
instances in the U.S., Midas retains, through real estate agreements between
franchisees and Midas Realty (described below), the ability to occupy a site
in the event of a termination of the applicable franchise and trademark
agreement in order to assure that the site may continue to be operated as a
Midas shop.

   An initial franchise fee is charged upon execution of a franchise and
trademark agreement. In opening a Midas shop, a franchisee makes additional
expenditures relating to fixtures, machinery and equipment and initial product
inventory. None of the fees and expenses is financed by Midas and, with the
exception of a portion of the initial franchise fee, none is refundable.

   Franchisees pay Midas monthly royalties based on a percentage of sales. As
described more fully below, in most countries in which Midas does business, it
is obligated to use one-half of the royalty payments it receives for
advertising.

   Realty Agreements. Since the mid-1970s, Midas has required each U.S.
franchisee to enter into an agreement with Midas Realty giving Midas Realty
the ability to occupy a site in the event of a termination of the related
franchise and trademark agreement in order to ensure that the site may
continue to be operated as a Midas shop if Midas chooses. The agreement with
Midas Realty remains in effect throughout the term of the related franchise
and trademark agreement. When Midas Realty owns the real estate or has the
primary lease on a Midas shop, the franchisee is required to lease or sublease
the Midas shop from Midas Realty. If the franchisee owns the real estate, the
franchisee is required to provide Midas with real estate control through one
of two alternative means. The first alternative provides for the lease by the
franchisee to Midas Realty of the premises, which in turn leases the premises
back to the franchisee. So long as the franchisee continues to be both the
landowner and the franchisee of that shop, no rent is exchanged between the
franchisee and Midas Realty. If the real estate is sold to a third party or if
the franchised Midas shop is sold to a new franchisee to whom the sublease is
assigned, Midas Realty will then collect rent from the franchisee and pay rent
to the landowner. Under the second alternative the franchisee enters into a
conditional option to lease with Midas Realty which grants Midas Realty the
option to lease the premises in the event that the related franchise agreement
is terminated. If the franchisee leases real estate from a third-party upon
which the Midas shop is located, Midas requires that the franchisee grant to
Midas Realty a conditional assignment of the lease to take effect upon the
termination of the related franchise and trademark agreement. Approximately
82% of existing North American franchised Midas shops are subject to various
forms of agreements with Midas. See Note 10 to the Financial Statements of
Midas included in this annual report.

                                       3
<PAGE>

   Sites and Site Selection. Midas assists franchisee candidates by
identifying and developing a site on which a Midas shop will be constructed.
Midas may also approve or disapprove of a site located by the candidate. Midas
approves a particular site based upon a review of the demographic
characteristics of the site, traffic counts and patterns, population patterns,
income statistics, parking, competition, proximity of other businesses and
other commercial criteria.

   Training. Franchisees are required to complete the Midas initial training
program. The first part of the program includes a minimum of three weeks
observing a franchised Midas shop in operation as well as completion of a
self-training program. The second part of the initial training program is held
at a Midas training center and lasts at least three weeks. Supplemental
training sessions are also offered by Midas at certain regional facilities.
Midas also makes training materials available and conducts training seminars
in the field.

   Machinery, Fixtures, Inventory and Other Goods. Midas recommends shop
equipment such as lifts, alignment equipment, lathes, racking and tools
necessary to outfit a Midas shop for operation, which can be purchased from
Midas or from other sources. In North America, franchisees are required to
purchase from Midas a sufficient quantity of Midas brand and Midas warranted
products, principally mufflers, shock absorbers, struts and brake pads and
shoes, adequate to meet the public demand for genuine Midas products and to
promptly fill customers' requests for replacement under the terms of various
Midas warranties. Midas is the sole supplier of these warranted parts. Other
products, which are not warranted, are also sold by Midas.

   Warranty Program. An important feature of the Midas system is the
requirement that the retail customer be provided a written warranty from Midas
on certain Midas products that will be honored at all Midas shops. Each Midas
shop is required to honor such warranties in accordance with their terms and
with policies as issued from time to time by Midas.

   Advertising. Midas is obligated to use one-half of the royalty payments it
receives from franchisees for advertising placed during the calendar year the
royalties are received or during the following calendar year. Midas directs
all use of advertising funds, and all decisions regarding the creative
concepts and materials used, whether national, regional or local advertising
will be used, the particular media and advertising content, and the
advertising agencies to be used are controlled by Midas. Midas administers
cooperative advertising programs for its franchisees. In addition, Midas
incurs advertising costs that are included in its selling, general and
administrative expenses.

   International Midas Dealers Association. The International Midas Dealers
Association (the "IMDA") is an independent association of Midas franchisees.
Approximately 76% of the Midas franchisees in North America belong to the
IMDA. Midas' management communicates on a regular basis with IMDA
representatives and various IMDA committees to solicit franchisee input.

Proprietary Information

   Midas holds various patents, trademarks, trade names and copyrights, none
of which, other than the Midas name, are considered by Midas to be material to
its financial condition and results of operations. Midas vigorously defends
the Midas name throughout the world and the name is registered as a trademark
in more than 80 countries in addition to the U.S. Midas also owns certain
trade secrets including product catalogs, price lists, training manuals and
inventory systems.

Manufacturing and Resale Operations

   Midas manufactures and resells parts for the North American automotive
aftermarket. These products include mufflers and specialty exhaust pipes
manufactured by Midas at its Hartford, Wisconsin facility, and shock
absorbers, brakes, suspension, steering and front-end parts purchased and
resold by Midas. Due to the overall decline in exhaust market demand, Midas
closed its exhaust and tube manufacturing plant in Bedford Park, Illinois on
October 1, 1999 and formed a strategic alliance with Arvin Industries to
allocate the Bedford Park production between Arvin and Midas' Hartford plant.

                                       4
<PAGE>

   The automotive aftermarket parts are sold at wholesale to Midas franchised
shops and are required to be stocked by Midas franchisees in order to serve
the demand for genuine Midas parts. Midas IPC and Huth brand products are also
manufactured at its Hartford facilities. Midas manufacturing facilities have
limited backlogs of unprocessed orders.

   Midas purchases the raw materials for the products it manufactures,
primarily steel and packaging, from various suppliers through both long-term
and short-term contracts, depending upon anticipated market conditions. Midas
purchases products for resale from various suppliers through contracts that
generally range from one to three years in duration. These raw materials and
products are available from multiple suppliers, and Midas has not experienced
any significant shortages. Midas believes it enjoys good relationships with
its suppliers.

Competition

   The automotive repair industry is highly competitive and fragmented, and
the number, size and strength of competitors vary from region to region.
Midas' primary competitors include national, regional and local specialty
chains, both franchised and company-operated, car dealerships, independent
repair shops and service bays operated by mass merchandisers. Certain of these
competitors are well-capitalized and a number of them have instituted
expansion plans. Midas believes that competition in the industry is primarily
based on customer service and reputation, shop location, name awareness and
price. Midas believes that it generally has a favorable competitive position
with respect to each of these variables.

Customers

   The Midas business is not dependent upon a single customer or small group
of customers.

Seasonality

   Midas experiences the greatest demand for its services in the second and
third quarters of the year, with approximately 56% of annual sales and
revenues occurring during that period in fiscal 2000 compared to 54% in both
fiscal 1999 and 1998. Excluding the effects of unusual items such as gains on
asset sales and special charges, second and third quarter net income
represented 72% of the annual net income in fiscal 2000, compared to 64% in
fiscal 1999 and 70% in fiscal 1998. The Company expects the seasonality of its
quarterly earnings will continue.

Regulatory Compliance

   Franchising Matters. Midas is subject to a variety of federal and state
laws governing franchise sales and marketing and franchise trade practices.
Applicable laws and regulations generally require disclosure of business
information in connection with the sale of franchises. Certain state
regulations also affect the ability of the franchisor to revoke or refuse to
renew a franchise. Midas deals with franchisees in good faith and seeks to
comply with regulatory requirements. From time to time Midas and one or more
franchisees may become involved in a dispute regarding the franchise
relationship, including, among other things, payment of royalties, location of
shops, advertising, purchase of Midas products by franchisees, compliance with
Midas system standards and franchise renewal criteria. There can be no
assurance that compliance problems will not be encountered from time to time,
or that material disputes with one or more franchisees will not arise.

   Consumer Protection Matters. National automotive repair chains have been
the subject of investigations and reports by consumer protection agencies and
the Attorneys General of various states. Publicity in connection with such
investigations can have an adverse effect on the financial condition and
results of operations of a company. In addition to such investigations, state
and local governments have enacted numerous consumer protection laws. Midas
has instituted procedures, including uniform standards of service to be
followed by all Midas shops, to improve customer satisfaction, which also aids
in regulatory compliance.

                                       5
<PAGE>

   Environmental and Occupational Safety Matters. Midas shops handle used
automotive oils and certain solvents that are disposed of by licensed third-
party contractors. As a result, Midas is subject to a number of federal, state
and local laws designed to protect the environment. Midas, through its
company-operated shops, is also subject to regulation regarding the
installation of catalytic converters. In addition to environmental laws, Midas
is subject to the Federal Occupational Safety and Health Act and other laws
regulating safety and health. Midas maintains a program to facilitate
compliance with these laws, the costs of which are not material to its
financial condition and results of operations.

Employees

   As of December 30, 2000 Midas had approximately 1,400 employees, including
approximately 460 who were covered by collective bargaining agreements. Labor
contracts with respect to groups of approximately 35, 280, and 145 employees
expire in 2001, 2002 and 2003, respectively. Midas considers its relationships
with employees to be generally satisfactory. Midas franchisees hire and are
responsible for their own employees.

Item 2. Properties

   Midas owns one manufacturing facility (200,000 square feet) and leases an
additional 20,000 square feet of space in Hartford, Wisconsin. The Company
closed its manufacturing facility in Bedford Park, Illinois (180,000 square
feet) in October, 1999 and finalized the sale of that facility during the
first quarter of fiscal 2000. In addition, Midas leases office space in
Itasca, Illinois, where its corporate headquarters are located, and owns two
and leases sixty warehouses in North America. Fifty-two of these warehouses
are part of Midas' PWI strategy. These PWI facilities average 5,000 square
feet and have a lease term ranging from one to five years plus option periods.

   Midas relocated its corporate headquarters to Itasca, Illinois in fiscal
1999 and subleased its former headquarters in Chicago. As part of the ongoing
reconfiguration of its North American distribution network, the Company closed
3 warehouses during fiscal 1999 and 2 warehouses during fiscal 2000.

   Midas owns and leases real estate in various communities thoughout the
United States that it leases and sub-leases to franchisees. As of December 30,
2000, the Company owned and leased a total of 674 sites.

Item 3. Legal Proceedings

   Neither Midas nor any of its subsidiaries are currently involved in any
material legal proceedings. Midas has certain contingent liabilities arising
from various pending claims and litigation related to a number of matters.
While the amount of liability that may result from these matters cannot be
determined, in the opinion of Midas counsel, the ultimate liability will not
materially affect the financial position or results of operations of Midas.

Item 4. Submission of Matters to a Vote of Security Holders

   None.

                                       6
<PAGE>

                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

   The Midas Common Stock is listed on the New York Stock Exchange ("NYSE")
under the symbol "MDS". As of February 28, 2001, there were 7,321 holders of
record of the Common Stock.

<TABLE>
<CAPTION>
                                                                       Dividends
                                                          High   Low   Declared
                                                         ------ ------ ---------
      <S>                                                <C>    <C>    <C>
      Fiscal 2000
        1st Quarter..................................... $25.58 $19.98   $.02
        2nd Quarter.....................................  26.16  19.76    .02
        3rd Quarter.....................................  21.44  13.98    .02
        4th Quarter.....................................  15.10  11.50    .02
      Fiscal 1999
        1st Quarter..................................... $35.54 $29.28   $.02
        2nd Quarter.....................................  35.16  24.96    .02
        3rd Quarter.....................................  29.32  21.73    .02
        4th Quarter.....................................  24.10  17.98    .02
</TABLE>

   Effective January 1, 2001, the Company changed from making quarterly
dividend payments to making a single annual dividend payment.

Item 6. Selected Financial Data

                             SUMMARY OF OPERATIONS

   The following table presents selected historical financial information of
Midas. The information set forth below should be read in conjunction with Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements of Midas and the notes thereto. The
operating results data set forth below for fiscal years 2000, 1999 and 1998
and the balance sheet data as of the end of fiscal 2000 and 1999 are derived
from, and are qualified by reference to, the audited financial statements of
Midas included herein, and should be read in conjunction with those financial
statements and the notes thereto. The operating results data for fiscal years
1997 and 1996 and the balance sheet data as of the end of fiscal 1998, 1997
and 1996 are derived from audited financial statements of Midas not included
herein.

   The historical financial information presented below may not necessarily
reflect future results of operations or financial position of Midas or what
the results of operations or financial position of Midas would actually have
been had Midas operated as an independent company during the periods prior to
its Spin-off on January 30, 1998.

<TABLE>
<CAPTION>
Fiscal Year                             2000    1999    1998    1997     1996
-----------                            ------  ------  ------  ------   ------
                                        (In millions, except share data)
<S>                                    <C>     <C>     <C>     <C>      <C>
Operating results data:
Sales and revenues.................... $346.2  $355.5  $513.8  $591.0   $598.9
Operating income before business
 transformation costs(a)..............   45.1    68.2    69.6    66.8     78.0
Operating margin before business
 transformation costs(a)..............   13.0%   19.2%   13.5%   11.3%    13.0%
Operating income (loss)............... $ 45.1  $ 68.4  $ 13.9  $ (0.8)  $ 78.0
Income (loss) before income taxes.....   41.1    62.9    40.0   (27.1)    51.6
Net income (loss).....................   30.5    38.4    28.2   (23.5)    30.4
Earnings (loss) per share--diluted
 (pro forma in 1997)(b)............... $ 1.96  $ 2.28  $ 1.63  $(1.21)
Balance sheet data:
Total assets.......................... $321.7  $305.9  $325.3  $443.1   $482.7
Obligations under capital leases and
 long-term debt.......................  113.0   112.1   114.6    19.9     14.4
Loans and advances from Whitman.......    --      --      --     55.5     77.2
Total shareholders' equity............  128.4   114.6   123.4   234.1    277.1
Return on average shareholders'
 equity...............................   24.3%   32.1%   23.0%   (8.8)%   11.4%
</TABLE>

                                       7
<PAGE>

--------
(a) Business transformation costs are described in Note 3 to the Financial
    Statements.
(b) Earnings per share information is presented for fiscal 1997 through fiscal
    2000 only because the Spin-off from Whitman occurred in early 1998. In
    accordance with Securities and Exchange Commission regulations, pro forma
    earnings per share information is presented for the year preceding the
    Spin-off. Such information is based on the assumption that the 17.0
    million shares distributed in the Spin-off had been outstanding throughout
    1997, and gives effect to changes in capital and other costs that would
    have been incurred by Midas as an independent publicly held company,
    rather than as a subsidiary of Whitman.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

   The following table presents, for the fiscal periods indicated, selected
financial information as a percentage of total sales and revenues.

<TABLE>
<CAPTION>
                                                              Percentage of
                                                                Sales and
                                                                Revenues
                                                            -------------------
   Fiscal Year                                              2000   1999   1998
   -----------                                              -----  -----  -----
   <S>                                                      <C>    <C>    <C>
   Replacement parts sales.................................  67.7%  65.9%  48.5%
   Company-operated shop retail sales......................   1.7    3.0   28.6
   Royalties and license fees..............................  18.9   19.2   14.3
   Real estate rental revenues.............................  11.3   11.3    7.3
   Other...................................................   0.4    0.6    1.3
                                                            -----  -----  -----
     Sales and revenues.................................... 100.0  100.0  100.0
   Cost of sales and revenues..............................  54.9   53.8   46.7
   Selling, general and administrative expenses............  32.1   27.0   39.8
                                                            -----  -----  -----
   Operating income before business transformation costs...  13.0   19.2   13.5
   Business transformation costs...........................   --     --    10.8
                                                            -----  -----  -----
   Operating income........................................  13.0   19.2    2.7
   Other income, net.......................................   1.2    0.9    7.6
   Interest expense........................................  (2.3)  (2.4)  (2.5)
                                                            -----  -----  -----
   Income before income taxes..............................  11.9   17.7    7.8
   Income taxes............................................  (3.1)  (6.9)  (2.3)
                                                            -----  -----  -----
     Net income............................................   8.8%  10.8%   5.5%
                                                            =====  =====  =====
</TABLE>

Introduction

   Beginning in 1996, the Company began to experience declines in earnings and
returns on assets and equity. These trends were due to a combination of
slowing growth, increasing operating expenses and an expanding asset base. The
Company also began to experience declines in sales and revenues from certain
business activities including substantial declines in exhaust sales at both
the retail and wholesale level due to the automobile manufacturers' use of
non-corrosive stainless steel exhaust systems. These trends, coupled with an
expected substantial increase in the Company's long-term debt as a result of
the Spin-off of Midas as an independent company by Whitman Corporation, led
management to conduct an in-depth review of current strategies and potential
alternative strategies to reverse these trends.

   Forthcoming from this strategic review and later refinements was a business
strategy to: devote the Company's management and financial resources to
becoming a focused and efficient operator of a North American franchise
network, licensing Midas trademarks outside North America, improving
relationships with franchisees, improving the efficiency of the wholesale
replacement part distribution system, reducing operating expenses and
redeploying assets by franchising company-operated shops. The strategy also
called for the introduction of new Midas products and services at the retail
level to offset the declines in the exhaust business.

   In 1998, the Company reached an agreement with Magneti Marelli, S.p.A., a
member of the Fiat Group, to form a strategic alliance to accelerate the
development of the Midas system in Europe and South America. Midas management
concluded that Magneti Marelli had the financial and human resources to
accelerate the

                                       8
<PAGE>

development of the Midas business in Europe and South America at a much faster
pace than the Company. Midas management also concluded that the proceeds from
a transaction with Magneti Marelli could provide the Company with additional
financial resources which would enable the Company to accelerate the execution
of its strategic plan. Accordingly, Midas sold its interests in Europe and
South America to Magneti Marelli for $100 million in October 1998, and entered
into a licensing agreement for the Midas trademarks and know-how as a part of
the transaction.

   In 1999, the Company concluded the disposition of all but one of its North
American company-operated shops. A total of 168 shops were either refranchised
or closed, with the Company realizing gross proceeds of approximately $29
million. In December 1999, the Company acquired nine shops from a franchisee
bringing the North American company-operated shop count up to ten. The Company
may from time to time acquire additional North American shops from franchisees
as they become available on an opportunistic basis.

   In 2000, the Company completed the sale of its Australian operations, which
consisted of a network of 91 franchised and 12 company-operated shops.

   This business transformation process resulted in business transformation
costs of $67.6 million in fiscal 1997 and $55.7 million in fiscal 1998. The
fiscal 1997 amount included $35.5 million related to the disposition of
company-operated shops, $12.5 million of asset write-downs to recognize
impairments, $12.2 million related to changes to the U.S. franchise
advertising and return programs, and $7.4 million in severance and other
costs.

   The 1998 business transformation expense of $55.7 million included $32.3
million in franchisee incentive payments, $2.1 million related to the
disposition of company-operated shops, $7.0 million to relocate the corporate
office, $8.1 million to consolidate the North American distribution system and
Canadian administration function, and $6.2 million of severance and other
costs.

   Because of changes in the Company's business strategy, the mix of
franchised, licensed and company-operated shops has changed substantially
since 1997. The method of operation of the shops in operation at the end of
fiscal 2000, 1999, 1998 and 1997 is presented below.

Midas Retail Shops

<TABLE>
<CAPTION>
      Fiscal Year End                                    2000  1999  1998  1997
      ---------------                                    ----- ----- ----- -----
      <S>                                                <C>   <C>   <C>   <C>
      Franchised and licensed........................... 2,725 2,689 2,674 2,341
      Company-operated..................................    10    22    58   377
                                                         ----- ----- ----- -----
        Total........................................... 2,735 2,711 2,732 2,718
                                                         ===== ===== ===== =====
</TABLE>

   Although the total number of shops in operation remained relatively
constant over the past 4 years, the number of shops operated by the Company
declined by 367 shops since the end of fiscal 1997, and the number of shops
operating under a franchise or license agreement increased by 384 shops. This
shift in the type of shop operation reflects the sale of shops in Europe and
Australia, and the strategy to refranchise company-operated shops in North
America.

   In May 2000, the Company began an aggressive marketing effort to launch the
New Midas. This program incorporates an updated shop appearance, expansion of
services to include climate control and general maintenance, and new
operational standards for building long-term relationships with customers. The
approximately 2,700 Midas shops currently in operation worldwide offer some or
all of the following services: exhaust, brake, suspension, air conditioning,
batteries and a number of other routine maintenance services. The Company's
business strategy is to continue to expand these service offerings in the
future.

   During 2000, Midas established Parts Warehouse, Inc. ("PWI"), a network of
small, quick delivery sites to distribute parts to Midas dealers and to
customers outside the Midas system. As part of this strategy, the Company
acquired 27 climate control distribution centers in two separate acquisitions
during 2000, and reconfigured many of these sites to add new products. As of
fiscal year-end a total of 29 of these sites were open, and an additional 19
were added in the first two months of 2001.

                                       9
<PAGE>

   The business strategy of focusing the Company on growing the North American
franchisee and distribution network is expected to have a significant impact
on the future sources of revenue for the Company.

Fiscal Reporting Periods

   Fiscal year 2000 was comprised of 52 weeks, while fiscal 1999 and 1998 were
each comprised of 53 weeks.

Results of Operations--Fiscal 2000 Compared to Fiscal 1999

   Sales and revenues for fiscal 2000 declined $9.3 million or 2.6% from
fiscal 1999 to $346.2 million. Half of this decrease was due to a decrease in
the average number of shops operated by the Company from 1999 to 2000, while
the balance of the decrease was the result of slight declines in royalties and
license fees, real estate rental revenues and other revenues. Replacement part
sales were $234.4 million in both 2000 and 1999. Lower shipments of exhaust
and brake products in fiscal 2000 were offset by sales through the Company's
new PWI distribution channels.

   Cost of sales and revenues for fiscal 2000 decreased $1.2 million or 0.6%
versus fiscal 1999. Costs of sales and revenues as a percent of total sales
and revenues increased from 53.8% in fiscal 1999 to 54.9% in fiscal 2000. This
increase as a percent of sales was due to the reduction in high-margin retail
sales from company-operated shops and the relatively lower margins associated
with the Company's new product lines.

   Selling, general and administrative expenses for fiscal 2000 increased
$15.0 million or 15.6% from fiscal 1999 to $111.1 million. The fiscal 2000
costs include a $4.8 million fourth quarter charge to increase the allowance
for bad debts due to the Chapter 11 bankruptcy filing of two multi-shop
franchisees. Fiscal 2000 also includes a $3.0 million fourth quarter charge to
implement a program to reduce ongoing employee-related operating costs. The
Company also incurred additional advertising costs of $6.2 million to help
educate consumers about Midas' expanded service offerings as well as
additional costs to operate the new PWI distribution locations. These
increases in operating expenses were partially offset by a $6.2 million gain
resulting from the termination of the Company-funded retiree medical plan, a
reduction in the average number of company-operated shops, and the
consolidation of the Canadian administration functions into the U.S. As a
result of these factors, selling, general and administrative expenses as a
percentage of total sales and revenues increased from 27.0% in fiscal 1999 to
32.1% in fiscal 2000.

   As a result of the above changes, operating income declined $23.3 million
from $68.4 million in fiscal 1999 to $45.1 million in fiscal 2000. These
changes caused a decrease in operating income margin from 19.2% in fiscal 1999
to 13.0% in fiscal 2000.

   Interest expense declined slightly from $8.6 million in fiscal 1999 to $8.1
million in fiscal 2000.

   Income tax expense for fiscal 2000 includes a non-recurring benefit of $5.5
million related to the disposition of the Company's Australian operations. As
a result, the Company's effective tax rate decreased from 39.0% in fiscal 1999
to 25.8% in fiscal 2000.

   As a result of the above items, net income decreased $7.9 million from
$38.4 million in fiscal 1999 to $30.5 million in fiscal 2000.

Results of Operations--Fiscal 1999 Compared to Fiscal 1998

   Sales and revenues for fiscal 1999 declined $158.3 million or 30.8% from
fiscal 1998 to $355.5 million. Approximately $146.5 million or 92.5% of the
decrease was due to the sale of the Company's European operations and the
elimination of retail sales from company-operated shops which were franchised,
sold or licensed during fiscal 1999 and fiscal 1998 as part of the Company's
strategy to dispose of company-operated shops. The remainder of the decrease
in fiscal 1999 sales was attributable to a decline in retail demand for
replacement exhaust products due to automobile manufacturers' use of non-
corrosive stainless steel exhaust systems, which drove a decline in exhaust
sales at the wholesale level.

                                      10
<PAGE>

   Cost of sales and revenues for fiscal 1999 decreased $48.7 million or 20.3%
versus fiscal 1998 due to a combination of the franchising and licensing of
company-operated shops, lower wholesale exhaust parts sales, and lower
wholesale parts costs. Costs of sales and revenues as a percent of total sales
and revenues increased 7.1 percentage points to 53.8% in fiscal 1999 due
primarily to the reduction in retail sales from company-operated shops which
carried a relatively higher gross margin to cover service and other costs at
the retail level.

   Selling, general and administrative expenses for fiscal 1999 decreased
$108.2 million or 53.0% from fiscal 1998 to $96.1 million. Approximately
$103.8 million of this reduction was related to the sale of the Company's
European operations and the franchising and licensing of company-operated
shops, while the balance was due to the Company's cost reduction program. As a
percentage of total sales and revenues, selling, general and administrative
expenses declined from 39.8% in fiscal 1998 to 27.0% in fiscal 1999. This
decrease was primarily due to the franchising of company-operated shops which
carry a higher operating expense ratio, and the fiscal 1998 cost reduction
program.

   The Company recorded business transformation activity in both fiscal 1999
and fiscal 1998. Total charges of $55.7 million were recorded in fiscal 1998,
while fiscal 1999 reflects a net credit of $0.2 million. This activity is
described above under "Introduction" and in Note 3 to the Financial
Statements.

   Operating income was $68.4 million in fiscal 1999 versus $13.9 million in
fiscal 1998. Both years were impacted by business transformation costs as
previously noted. Excluding these costs, operating income remained relatively
constant at $68.2 million in fiscal 1999 versus $69.6 million in fiscal 1998.
Excluding business transformation costs from both years, the operating income
margin improved substantially from 13.5% in fiscal 1998 to 19.2% in fiscal
1999.

   Interest expense declined $4.1 million from $12.7 million in fiscal 1998 to
$8.6 million in fiscal 1999. This reduction is the result of the repayment
during fiscal 1998 of approximately $120 million of the debt that was
outstanding at the time of the Spin-off from Whitman.

   The Company's effective tax rate was 39.0% in fiscal 1999 versus an
effective tax rate of 29.5% in fiscal 1998. The lower rate in fiscal 1998 was
the result of the lower non-U.S. effective tax rate on the sale of the
Company's European operations.

   As a result of the above items, net income increased $10.2 million from
$28.2 million in fiscal 1998 to $38.4 million in fiscal 1999.

Liquidity, Financial Condition and Capital Resources

   Following is a summary of the Company's cash flows from operating,
investing and financing activities for fiscal 2000 and 1999, respectively (in
millions):

<TABLE>
<CAPTION>
      Fiscal Year                                                2000    1999
      -----------                                               ------  ------
      <S>                                                       <C>     <C>
      Net cash provided by operating activities................ $ 23.4  $ 36.7
      Net cash used in investing activities....................  (17.1)   (8.4)
      Net cash used in financing activities....................  (17.6)  (52.1)
                                                                ------  ------
      Net change in cash and cash equivalents.................. $(11.3) $(23.8)
                                                                ======  ======
</TABLE>

   Midas has historically funded its operations and capital expenditures
through cash flow from operations. At fiscal year end 2000, the Company had
cash and cash equivalents of $1.8 million and working capital of $68.6
million. At fiscal year end 1999, the Company had cash and cash equivalents of
$13.1 million and working capital of $84.6 million. The $11.3 million decrease
in cash and cash equivalents and the $16.0 million decrease in working capital
are the result of the decision to repurchase 961,400 shares of the Company's
common stock during fiscal 2000, at a cost of $18.7 million. Outstanding
borrowings under the Company's $200 million line of credit were $24 million at
the end of fiscal 2000 compared to $25 million at the end of fiscal 1999.

                                      11
<PAGE>

   Net cash provided by operating activities was $23.4 million in fiscal 2000
compared with $36.7 million in fiscal 1999. The year-over-year decrease of
$13.3 million was the result of lower earnings and higher inventory levels
needed to support the Company's expanded product offering and PWI warehouse
expansion strategy.

   Investing activities used $17.1 million in cash during fiscal 2000 compared
with $8.4 million during fiscal 1999. During 2000, the Company paid a total of
$7.6 million to acquire 27 climate control distribution locations as part of
its PWI strategy. The Company plans to add several hundred of these PWI
locations in North America over the next three years at an average investment
of approximately $300,000 per location. The Company also invested $19.9
million in fiscal 2000 primarily related to the Company's ongoing management
information systems projects, compared with $19.2 million in fiscal 1999.
These capital investments were partially offset by proceeds from the sale of
assets of $10.4 million in fiscal 2000 and $10.8 million in fiscal 1999. The
fiscal 2000 amount includes proceeds of $5.6 million from the sale of a former
manufacturing facility and $1.8 million related to the sale of the Company's
Australian operations. The fiscal 1999 amount includes approximately $3.0
million from the sale of exhaust manufacturing machinery and equipment while
the balance is related to the sale, licensing and franchising of company-
operated shops.

   Net cash used in financing activities was $17.6 million in fiscal 2000
compared with $52.1 million in fiscal 1999. This $34.5 million reduction was
primarily the result of a $37.8 million decrease in treasury stock
repurchases, partially offset by lower cash received for common stock option
transactions. During fiscal 2000, the Company paid $18.7 million for treasury
shares and received $2.0 million on stock option transactions. In fiscal 1999,
the Company paid $56.5 million for treasury shares and received $7.2 million
on stock option transactions.

   The Company's Board of Directors has authorized a share repurchase plan for
up to 5.0 million of the Company's common shares. Since its inception in
fiscal 1999, the Company has repurchased a total of 3.3 million shares at an
aggregate price of approximately $84.9 million. Although it is not the
Company's current intention to do so, purchases of additional shares may be
made from time to time depending upon market conditions.

   The Company believes that cash generated from operations and availability
under its line of credit will be adequate to fund the growth in working
capital and capital expenditures necessary to support planned increases in
sales for the foreseeable future.

Impact of New Accounting Standards

   In June, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133, as amended by
SFAS Nos. 137 and 138, requires companies to record derivatives on the balance
sheet as assets and liabilities, measured at fair value. The accounting
treatment of gains or losses resulting from changes in the values of those
derivatives is dependent on the use of the derivative and whether it qualifies
for hedge accounting. The Company is required to comply with SFAS No. 133, as
amended, in fiscal year 2001 and estimates its adoption will not have a
material effect on the financial statements.

Forward Looking Statements

   This report contains, and certain of the Company's other public documents
and statements and oral statements contain and will contain, forward-looking
statements that reflect management's current assumptions and estimates of
future performance and economic conditions using information currently
available. Such statements are made in reliance upon the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
Company cautions investors that any forward-looking statements are subject to
risks and uncertainties that may cause actual results and future trends to
differ materially from those projected, stated, or implied by the forward-
looking statements.

   The Company's results of operations and the forward-looking statements
could be affected by, among others things: general economic conditions in the
markets in which the Company operates; economic developments that have a
particularly adverse effect on one or more of the markets served by the
Company; the ability to execute

                                      12
<PAGE>

management's internal operating plans; the timing and magnitude of capital
expenditures; economic and market conditions in the U.S. and worldwide;
currency exchange rates; changes in consumer spending levels and demand for
new products and services; cost and availability of raw materials; and overall
competitive activities. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

   The Company is subject to certain market risks, including foreign currency
and interest rates. The Company uses a variety of practices to manage these
market risks, including, when considered appropriate, derivative financial
instruments. The Company uses derivative financial instruments only for risk
management and does not use them for trading or speculative purposes. The
Company is exposed to potential gains or losses from foreign currency
fluctuations affecting net investments and earnings denominated in foreign
currencies. The Company's primary exposure is to changes in exchange rates for
the U.S. dollar versus the Canadian dollar.

   Interest rate risk is managed through a combination of fixed rate debt and
variable short-term borrowings with varying maturities. The Company is exposed
to credit risk on certain assets, primarily accounts receivable. The Company
provides credit to customers in the ordinary course of business and performs
ongoing credit evaluations. Concentrations of credit risk with respect to
trade receivables are limited due to the large number of customers comprising
the Company's customer base. The Company believes its allowance for doubtful
accounts is sufficient to cover customer credit risk.

Item 8. Financial Statements and Supplementary Data

   See Index to Financial Statements on page F-1

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

   Not applicable.

                                   PART III

Item 10. Directors and Executive Officers of the Registrant

   Information required by this item is set forth under the headings "Proposal
1: Election Of Directors" and "Beneficial Ownership of Common Stock--Section
16 (a) Beneficial Ownership Reporting Compliance" in the Company's proxy
statement (the "2001 Proxy Statement") for the Annual Meeting of Shareholders
to be held on May 10, 2001, and is incorporated herein by reference.

   Information with respect to those individuals who serve as executive
officers of the Company is set forth below.

<TABLE>
<CAPTION>
 Name, Age and Position                    Background and Experience
 ----------------------                    -------------------------
 <C>                           <S>
 Wendel H. Province (53) ....  Mr. Province has served as Chairman and Chief
  Chairman and                 Executive Officer of Midas since January 1998.
  Chief Executive Officer      He joined The Pep Boys--Manny, Moe & Jack in
                               1989 as Senior Vice President of Merchandising,
                               eventually becoming Executive Vice President and
                               Chief Operating Officer of Pep Boys. Mr.
                               Province's entire career has been in the
                               automotive service industry, having previously
                               served as Senior Vice President of Whitlock
                               Corporation and Vice President of AutoZone, Inc.

 R. Lee Barclay (58).........  Mr. Barclay joined Midas in 1980 as Vice
  Executive Vice President     President-Controller. He became Vice President
  and                          and Chief Financial Officer in 1982, and has
  Chief Financial Officer      served in his present position since 1989. He
  Chief                        spent eight years with Price Waterhouse in the
                               1970's.
</TABLE>


                                      13
<PAGE>

<TABLE>
<CAPTION>
 Name, Age and Position                    Background and Experience
 ----------------------                    -------------------------
 <C>                           <S>
 Ronald J. McEvoy (53).......  Mr. McEvoy has served in his current position
  Executive Vice President     since he joined Midas in September 1998. His
  and                          career in the retail industry spans more than 25
  Information Officer          years. He has held a variety of management and
                               information technology positions at May
                               Department Stores, Carter Hawley Hale, British
                               American Tobacco and Fred Meyer. He most
                               recently served as Senior Vice President and
                               Chief Information Officer at The Pep Boys.

 Gary B. Vonk (47)...........  Mr. Vonk joined Midas in January 2001. He was
  Executive Vice President     most recently President and Chief Executive
  and                          Officer of PowerSports, Inc., a Florida-based
  Chief Operating Officer      network of recreational vehicle dealerships.
                               Prior to that time, Mr. Vonk was President of
                               Crescent Jewelers of Oakland, California, and
                               President of Snappy Car Rental of Tulsa,
                               Oklahoma. Previously, Mr. Vonk was Vice
                               President of the southern division of Pep Boys
                               and he held executive management positions at
                               Thrifty Drug Stores of Los Angeles and at TG&Y
                               Stores of Oklahoma City.

 Carl R. Daniels Jr. (47)....  Mr. Daniels joined Midas in February 2000. He
  Senior Vice President--      most recently was Senior Vice President of
  Logistics                    Logistics at Pamida, Inc., a subsidiary of
                               ShopKo. He previously served in senior logistics
                               management posts at other retail chains,
                               including Boscov's, Associated Dry Goods and
                               Joseph Magnin.

 William M. Guzik (41) ......  Mr. Guzik joined Midas in December 1999. From
  Senior Vice President--      1995 to 1999, Mr. Guzik served as Chief
  Controller                   Financial Officer of Delray Farms, LLC, a start-
                               up grocery retailer located in Chicago,
                               Illinois. From 1993 to 1995, Mr. Guzik served as
                               Vice President and Chief Financial Officer of JG
                               Industries, Inc., a publicly-traded, diversified
                               retailer. Prior to that, Mr. Guzik spent 11
                               years with Coopers & Lybrand, L.L.P.

 D. Bruce Hutchison (51).....  Mr. Hutchison joined Midas in August 1998. His
  Senior Vice President--      25-year marketing career includes launching,
  Marketing                    building and revitalizing national brands such
                               as Mr. Goodwrench, Pontiac, Cadillac, RCA,
                               ProScan and GE. Mr. Hutchison began at D'Arcy
                               Masius Benton & Bowles advertising in 1974 and
                               rose to Vice President before joining RCA in
                               1986. He most recently served as Vice President,
                               Advertising and Market Research at Thomson
                               Multimedia (RCA, GE and ProScan).

 Gerard M. Klaisle (47)......  Mr. Klaisle has served as Senior Vice
  Senior Vice President--      President--Human Resources of Midas since 1997.
  Human Resources              From 1987 to 1997 he was Midas' Vice President--
                               Human Resources for U.S. operations. He joined
                               Midas in 1982.

 Steve D. Shaneyfelt (44)....  Mr. Shaneyfelt joined Midas in June 2000. From
  Senior Vice President--      1989 to 2000, Mr. Shaneyfelt served in several
  Merchandising and General    management positions at Pep Boys, most recently
  Manager of PWI               as Vice President of Sales. Prior to Pep Boys,
                               Mr. Shaneyfelt spent 15 years in various
                               management positions in the automotive division
                               of K-Mart Corporation.

 Robert H. Sorensen (54).....  Mr. Sorensen joined Midas in 1995. From 1990 to
  Senior Vice President,       1995, Mr. Sorensen was a partner with the law
  General Counsel & Secretary  firm of Kaufman, Chaiken & Sorensen. Prior to
                               1990, he served as chief legal officer with
                               Rollins, Inc. and Burger King Corporation.

 John A. Warzecha (52).......  Mr. Warzecha served as Vice President and
  Senior Vice President--      General Manager of Midas' company-operated shops
  Franchise Operations         from 1989 to 1993 and as Senior Vice President--
                               U.S. Franchise Operations from 1993 to 1997. He
                               joined Midas in 1973.
</TABLE>


                                       14
<PAGE>

<TABLE>
<CAPTION>
 Name, Age and Position                   Background and Experience
 ----------------------                   -------------------------
 <C>                           <S>
 Christian C. Pappas (41)....  Mr. Pappas joined Midas in 1997. From 1995 to
  Vice President--Treasurer    1997, Mr. Pappas served as Assistant Treasurer
                               of U.S. Robotics. From 1991 to 1995, he served
                               in several positions at Sara Lee Corporation,
                               his last position being Director--Domestic
                               Treasury. Prior to 1991, Mr. Pappas served in
                               various financial positions at Premark
                               International, Inc. and Centel Corporation.
</TABLE>

Item 11. Executive Compensation

   Information required by this item is set forth under the headings "Election
of Directors--Compensation of Directors" and "Executive Compensation and Other
Information" (other than "Report on Executive Compensation" and "Performance
Graph") in the 2001 Proxy Statement, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

   Information required by this item is set forth under the heading
"Beneficial Ownership of Common Stock" in the 2001 Proxy Statement, and is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

   Information required by this item is set forth under the heading
"Indebtedness of Management" in the 2001 Proxy Statement, and is incorporated
herein by reference.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

  (a) 1. Financial Statements

   See Index to Financial Statements on Page F-1.

   2. Financial Statement Schedules

   See Index to Financial Statements on Page F-1.

   (b) Reports on Form 8-K

   No Report on Form 8-K was filed by the Registrant during the quarter ended
December 30, 2000.

   (c) Exhibits

<TABLE>
<CAPTION>
 Exhibit No.                             Description
 -----------                             -----------
 <C>         <S>
   3(i).1    Certificate of Incorporation (incorporated by reference to Exhibit
             3(i).1 to Midas, Inc. Registration Statement on Form 10/A No. 3
             (Post-Effective Amendment No. 1) (Commission File No. 1-13409)
             (the "Form 10")).
   3(i).2    Certificate of Amendment of the Certificate of Incorporation,
             dated December 30, 1997 (incorporated by reference to Exhibit
             3(i).2 to the Form 10).
   3(ii)     By-Laws (as amended December 31, 1997) (incorporated by reference
             to Exhibit 4.4 to Midas, Inc. Registration Statement on Form S-8
             relating to its Retirement Savings Plans (Registration No. 333-
             44625) (the "RSP Form S-8")).
   4.1       Certificate of Designation of Series A Junior Participating
             Preferred Stock (incorporated by reference to Exhibit 4.3 to the
             RSP Form S-8).
</TABLE>


                                      15
<PAGE>

<TABLE>
<CAPTION>
 Exhibit No.                             Description
 -----------                             -----------
 <C>         <S>
  4.2        Rights Agreement, dated as of December 31, 1997, between Midas,
             Inc. and First Chicago Trust Company of New York (incorporated by
             reference to Exhibit 4.5 to the RSP Form S-8).
  4.4        $200,000,000 Credit Agreement, dated as of January 22, 1998, among
             Midas, Inc. and Midas International Corporation, as Borrowers, the
             Lenders Named Therein, The First National Bank of Chicago, as
             Administrative Agent, and Credit Suisse First Boston, as Co-Agent
             (incorporated by reference to Exhibit 4.1 to the Midas, Inc.
             Quarterly Report on Form 10Q for the quarterly period ended June
             27, 1998).
  4.5        Amendment No. 1, dated as of April 3, 1998, to $200,000,000 Credit
             Agreement dated as of January 22, 1998 (incorporated by reference
             to Exhibit 4.2 to the Midas, Inc. Quarterly Report on Form 10Q for
             the quarterly period ended June 27, 1998).
  4.6        Midas International Corporation $75,000,000 Note and Guarantee
             Agreement, dated as of April 15, 1998 (incorporated by reference
             to Exhibit 4.3 to the Midas, Inc. Quarterly Report on Form 10Q for
             the quarterly period ended June 27, 1998).
  4.7        First Amendment to Rights Agreement, dated as of May 12, 1999,
             between Midas, Inc. and First Chicago Trust Company of New York
             (incorporated by reference to Exhibit to the Midas, Inc.
             Registration Statement on Form 10/A No.4).
 10.1        Distribution and Indemnity Agreement dated as of December 31, 1997
             among Midas, Inc., Midas International Corporation and Whitman
             Corporation (incorporated by reference to Exhibit 2.1 to Midas,
             Inc. Current Report on Form 8-K dated January 30, 1998 (the "Form
             8-K")).
 10.2        Tax Sharing Agreement dated as of December 31, 1997 among Midas,
             Inc., Midas International Corporation and Whitman Corporation
             (incorporated by reference to Exhibit 2.2 to the Form 8-K).
 10.3*       Stock Incentive Plan (incorporated by reference to Exhibit 4.4 to
             Midas, Inc. Registration Statement on Form S-8 relating to its
             Stock Incentive Plan (Registration No. 333-44797)).
 10.4*       Form of Option Agreement (incorporated by reference to Exhibit
             10.4 to the Midas, Inc. Annual Report on Form 10-K for the year
             ended December 26, 1998).
 10.5*       Form of Restricted Stock Award (incorporated by reference to
             Exhibit 10.5 to the Midas, Inc. Annual Report on Form 10-K for the
             year ended December 20, 1997 (File No. 01-13409)).
 10.6*       Form of Change in Control Agreement (incorporated by reference to
             Exhibit 10.5 to the Midas, Inc.'s Registration Statement on Form
             10/A No.1 (Commission File No. 01-13409)).
 10.8*       Form of Restricted Stock Agreement and promissory note.
             (incorporated by reference to Exhibit 10.8 to the Midas, Inc.
             Annual Report on Form 10-K for the year ended December 26, 1998).
 10.9*       Post-retirement Agreement with Chief Financial Officer.
 21          Subsidiaries of Midas, Inc.
 23          Consent of KPMG LLP.
 27          Financial Data Schedule.
</TABLE>
--------
*  Management Compensatory Plan or Contract

                                       16
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, this 23rd day of
March 2001.

                                          Midas, Inc.

                                                  /s/ R. Lee Barclay
                                          By:__________________________________
                                                      R. Lee Barclay
                                            Executive Vice President and Chief
                                                     Financial Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
indicated on behalf of the Registrant, this 23rd day of March 2001.

<TABLE>
<CAPTION>
                 Signature                                     Title
                 ---------                                     -----


<S>                                         <C>
        /s/ Wendel H. Province              Chairman and Chief Executive Officer and
___________________________________________   Director (principal executive officer)
            Wendel H. Province

          /s/ R. Lee Barclay                Executive Vice President and Chief
___________________________________________   Financial Officer (principal financial
              R. Lee Barclay                  officer)

         /s/ William M. Guzik               Senior Vice President--Controller
___________________________________________   (principal accounting officer)
             William M. Guzik

          /s/ Herbert M. Baum               Director
___________________________________________
              Herbert M. Baum

         /s/ Thomas L. Bindley              Director
___________________________________________
             Thomas L. Bindley

          /s/ Archie R. Dykes               Director
___________________________________________
              Archie R. Dykes

       /s/ Jarobin Gilbert, Jr.             Director
___________________________________________
           Jarobin Gilbert, Jr.

        /s/ Robert R. Schoeberl             Director
___________________________________________
            Robert R. Schoeberl
</TABLE>

                                      17
<PAGE>

                                     MIDAS
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                         <C>
Report of Management....................................................... F-2

Independent Auditors' Report............................................... F-3

Statements of Operations for fiscal years 2000, 1999 and 1998.............. F-4

Balance Sheets as of fiscal year end 2000 and 1999......................... F-5

Statements of Cash Flows for fiscal years 2000, 1999 and 1998.............. F-6

Statements of Changes in Shareholders' Equity for fiscal years 2000, 1999
 and 1998.................................................................. F-7

Notes to the Financial Statements.......................................... F-8
</TABLE>

   Financial statement schedules are omitted because they are not applicable
or the required information is presented in the financial statements or
related notes.

                                      F-1
<PAGE>

                             REPORT OF MANAGEMENT

   Midas management has prepared the accompanying financial statements and
related information included herein for fiscal years 2000, 1999, and 1998. The
report of KPMG LLP, the Company's independent auditors, on those financial
statements is included herein. The primary responsibility for the integrity of
the financial information included in this annual report rests with
management. Such information was prepared in accordance with accounting
principles generally accepted in the United States of America as appropriate
in the circumstances based on our best estimates and judgements.

   Midas maintains internal accounting control systems which are adequate to
provide reasonable assurance that assets are safeguarded from loss or
unauthorized use and which produce records adequate for preparation of
financial information. The system and controls and compliance therewith are
reviewed by a program of internal audits and by our independent auditors.
There are limits inherent in all systems of internal accounting control
including the recognition that the cost of such a system should not exceed the
benefits to be derived. We believe the Company's system provides this
appropriate balance.

   The Audit Committee of the Board of Directors is responsible for, among
other things, considering the appointment of the independent auditors for the
Company, reviewing with the auditors the plan and scope of the audit and audit
fees, monitoring the adequacy of reporting and internal controls and meeting
periodically with internal and independent auditors. The membership of the
Committee consists of independent Directors. At periodic meetings, the Audit
Committee discusses audit and financial reporting matters and the internal
audit function with representatives of financial management and with
representatives from KPMG LLP.
R. Lee Barclay
Executive Vice President & Chief Financial Officer
February 15, 2001

                                      F-2
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
 Midas, Inc.

   We have audited the accompanying balance sheets of Midas as of fiscal year
end 2000 and 1999 and the related statements of operations, cash flows, and
changes in shareholders' equity for each of the fiscal years 2000, 1999, and
1998. These financial statements are the responsibility of Midas' management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Midas as of fiscal year
end 2000 and 1999, and the results of operations and cash flows for fiscal
years 2000, 1999, and 1998 in conformity with accounting principles generally
accepted in the United States of America.

                                          KPMG LLP

Chicago, Illinois
February 15, 2001

                                      F-3
<PAGE>

                                     MIDAS
                            STATEMENTS OF OPERATIONS
           (In millions, except for earnings and dividends per share)

<TABLE>
<CAPTION>
Fiscal Year                                               2000    1999    1998
-----------                                              ------  ------  ------
<S>                                                      <C>     <C>     <C>
Sales and revenues...................................... $346.2  $355.5  $513.8
Cost of sales and revenues..............................  190.0   191.2   239.9
Selling, general, and administrative expenses...........  111.1    96.1   204.3
Business transformation costs...........................    --     (0.2)   55.7
                                                         ------  ------  ------
  Operating income......................................   45.1    68.4    13.9
Gain on sale of European operations.....................    --      --     38.0
Whitman charges.........................................    --      --     (1.1)
Interest expense........................................   (8.1)   (8.6)  (12.7)
Other income, net.......................................    4.1     3.1     1.9
                                                         ------  ------  ------
  Income before income taxes............................   41.1    62.9    40.0
Income taxes............................................   10.6    24.5    11.8
                                                         ------  ------  ------
  Net income............................................ $ 30.5  $ 38.4  $ 28.2
                                                         ======  ======  ======
Earnings per share:
  Basic................................................. $ 1.98  $ 2.33  $ 1.67
                                                         ======  ======  ======
  Diluted............................................... $ 1.96  $ 2.28  $ 1.63
                                                         ======  ======  ======
Dividends per common share.............................. $  .08  $  .08  $  .06
                                                         ======  ======  ======
Average number of shares
  Common shares outstanding.............................   15.4    16.4    16.9
  Equivalent shares on outstanding stock options........    0.1     0.4     0.4
                                                         ------  ------  ------
  Shares applicable to diluted earnings.................   15.5    16.8    17.3
                                                         ======  ======  ======
</TABLE>



                See accompanying notes to financial statements.

                                      F-4
<PAGE>

                                     MIDAS
                                 BALANCE SHEETS
                                 (In millions)

<TABLE>
<CAPTION>
Fiscal Year End                                                  2000    1999
---------------                                                 ------  ------
<S>                                                             <C>     <C>
Assets:
Current assets:
  Cash and cash equivalents.................................... $  1.8  $ 13.1
  Receivables, net.............................................   45.6    43.5
  Inventories..................................................   76.9    63.5
  Other current assets.........................................   24.3    20.7
                                                                ------  ------
    Total current assets.......................................  148.6   140.8
Property and equipment, net....................................  149.9   140.5
Other assets...................................................   23.2    24.6
                                                                ------  ------
    Total assets............................................... $321.7  $305.9
                                                                ======  ======

Liabilities and equity:
Current liabilities:
  Short-term debt.............................................. $  3.2  $  --
  Current portion of long-term obligations.....................   16.6     1.8
  Accounts and dividends payable...............................   31.3    26.4
  Accrued expenses.............................................   28.9    28.0
                                                                ------  ------
    Total current liabilities..................................   80.0    56.2
Long-term debt.................................................   84.1   101.0
Obligations under capital leases...............................    9.1     9.3
Deferred income taxes and other liabilities....................   20.1    24.8
                                                                ------  ------
    Total liabilities..........................................  193.3   191.3
                                                                ------  ------
Shareholders' equity:
  Common stock ($.001 par value, 100 million shares authorized,
   17.3 million shares issued) and paid-in capital.............   24.6    26.8
  Treasury stock, at cost (2.3 million shares and 1.6 million
   shares).....................................................  (55.6)  (44.9)
  Notes receivable from common stock sold to officers..........   (6.1)   (6.1)
  Unamortized restricted stock award...........................   (1.8)    --
  Retained income..............................................  173.2   144.0
  Cumulative other comprehensive income (loss).................   (5.9)   (5.2)
                                                                ------  ------
    Total shareholders' equity.................................  128.4   114.6
                                                                ------  ------
    Total liabilities and equity............................... $321.7  $305.9
                                                                ======  ======
</TABLE>


                See accompanying notes to financial statements.

                                      F-5
<PAGE>

                                     MIDAS
                            STATEMENTS OF CASH FLOWS
                                 (In millions)

<TABLE>
<CAPTION>
Fiscal Year                                               2000   1999    1998
-----------                                               -----  -----  ------
<S>                                                       <C>    <C>    <C>
Cash flows from operating activities:
Net income............................................... $30.5  $38.4  $ 28.2
Adjustments reconciling net income to net cash provided
 by operating activities:
  Depreciation and amortization..........................  10.6   10.4    17.0
  Business transformation costs..........................   --    (0.2)   55.7
  Cash outlays for business transformation costs.........  (4.5) (13.2)  (58.4)
  Gain on sale of assets.................................  (4.2)  (1.0)    --
  Gain on sale of European operations....................   --     --    (38.0)
  Deferred income taxes..................................   4.1    5.3    (0.2)
  Changes in assets and liabilities, exclusive of effects
   of acquisitions and dispositions:
    Receivables..........................................  (1.3)  (4.1)    4.8
    Inventories..........................................  (7.7)  (0.3)   (2.0)
    Accounts and dividends payable.......................   1.9    6.9     4.2
    Accrued expenses.....................................   3.3   (8.2)    5.8
    Other................................................  (9.3)   2.7     4.2
                                                          -----  -----  ------
Net cash provided by operating activities................  23.4   36.7    21.3
                                                          -----  -----  ------
Cash flows from investing activities:
Capital investments...................................... (19.9) (19.2)  (11.0)
Cash paid for acquired businesses........................  (7.6)   --      --
Proceeds from sale of European operations................   --     --     86.8
Proceeds from sales of assets............................  10.4   10.8    30.3
                                                          -----  -----  ------
Net cash provided by (used in) investing activities...... (17.1)  (8.4)  106.1
                                                          -----  -----  ------
Cash flows from financing activities:
Net increase in short-term debt..........................   3.2    --      --
Payment of obligations under capital leases..............  (0.7)  (0.6)   (1.8)
Long-term debt incurred..................................   --     --    291.4
Long-term debt repayments................................  (2.1)  (0.9) (192.6)
Cash received for common stock...........................   2.0    7.2     3.8
Cash paid for treasury shares............................ (18.7) (56.5)   (9.8)
Net decrease in loans and advances from Whitman..........   --     --    (55.5)
Dividend paid to Whitman.................................   --     --   (137.6)
Dividends paid to shareholders...........................  (1.3)  (1.3)   (0.9)
                                                          -----  -----  ------
Net cash used in financing activities.................... (17.6) (52.1) (103.0)
                                                          -----  -----  ------
Net change in cash and cash equivalents.................. (11.3) (23.8)   24.4
Cash and cash equivalents at beginning of period.........  13.1   36.9    12.5
                                                          -----  -----  ------
Cash and cash equivalents at end of period............... $ 1.8  $13.1  $ 36.9
                                                          =====  =====  ======
</TABLE>

                See accompanying notes to financial statements.

                                      F-6
<PAGE>

                                     MIDAS
                 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (In millions)

<TABLE>
<CAPTION>
                                                                 Comprehensive
                                        Combined                     Income
                                    Capital Accounts Retained  ------------------
                                       of Whitman    Earnings  Current Cumulative
                                    ---------------- --------  ------- ----------
<S>                                 <C>              <C>       <C>     <C>
Fiscal year end 1997..............       $26.6       $ 217.3             $ (9.8)
Net income........................         --            0.4    $ 0.4        --
Other comprehensive income--
 foreign currency translation
 adjustments......................         --            --      (1.3)     (1.3)
Capital contribution from Whitman.         0.6           --       --        --
Dividend paid to Whitman..........         --         (137.6)     --        --
                                         -----       -------    -----    ------
Balances prior to Spin-off........       $27.2       $  80.1    $(0.9)   $(11.1)
                                         =====       =======    =====    ======
</TABLE>

<TABLE>
<CAPTION>
                           Common Stock
                                And             Treasury     Notes Receivable                        Comprehensive
                          Paid-in Capital         Stock            From       Unamortized                Income
                          -----------------   -------------    Common Stock   Restricted  Retained ------------------
                          Shares   Amount     Shares Amount  Sold to Officers Stock Award Earnings Current Cumulative
                          -------  --------   ------ ------  ---------------- ----------- -------- ------- ----------
<S>                       <C>      <C>        <C>    <C>     <C>              <C>         <C>      <C>     <C>
Initial capitalization
 of Midas...............      17.0    $27.2     --    $ --        $ --           $ --      $ 80.1   $(0.9)   $(11.1)
Purchase of treasury
 shares.................       --       --     (0.4)   (9.8)        --             --         --      --        --
Stock option
 transactions...........       --      (0.1)    0.2     5.6         --             --         --      --        --
Net income..............       --       --      --      --          --             --        27.8    27.8       --
Other comprehensive
 income
 --foreign currency
  translation
  adjustments...........       --       --      --      --          --             --         --      4.7       4.7
                                                                                                    -----
Comprehensive income....       --       --      --      --          --             --         --    $31.6       --
                                                                                                    =====
Dividends paid to
 shareholders...........       --       --      --      --          --             --        (1.0)              --
                           ------- --------    ----  ------       -----          -----     ------            ------
Fiscal year end 1998....      17.0     27.1    (0.2)   (4.2)        --             --       106.9              (6.4)
Common shares issued
 under management stock
 incentive plan.........       0.3      6.1     --      --         (6.1)           --         --      --        --
Purchase of treasury
 shares.................       --       --     (1.9)  (56.5)        --             --         --      --        --
Stock option
 transactions...........       --      (6.4)    0.5    15.8         --             --         --      --        --
Net income..............       --       --      --      --          --             --        38.4   $38.4       --
Other comprehensive
 income
 --foreign currency
  translation
  adjustments...........       --       --      --      --          --             --         --      1.2       1.2
                                                                                                    -----
Comprehensive income....       --       --      --      --          --             --         --    $39.6       --
                                                                                                    =====
Dividends paid to
 shareholders...........       --       --      --      --          --             --        (1.3)              --
                           ------- --------    ----  ------       -----          -----     ------            ------
Fiscal year end 1999....      17.3     26.8    (1.6)  (44.9)       (6.1)           --       144.0              (5.2)
Restricted stock award..       --      (1.2)    0.1     3.5         --            (2.3)       --      --        --
Purchase of treasury
 shares.................       --       --     (0.9)  (18.7)        --             --         --      --        --
Stock option
 transactions...........       --      (1.0)    0.1     4.5         --             --         --      --        --
Amortization of
 restricted stock award.       --       --      --      --          --             0.5        --      --        --
Net income..............       --       --      --      --          --             --        30.5   $30.5       --
Other comprehensive
 income
 --foreign currency
  translation
  adjustments...........       --       --      --      --          --             --         --     (0.7)     (0.7)
                                                                                                    -----
Comprehensive income....       --       --      --      --          --             --         --    $29.8       --
                                                                                                    =====
Dividends paid to
 shareholders...........       --       --      --      --          --             --        (1.3)              --
                           ------- --------    ----  ------       -----          -----     ------            ------
Fiscal year end 2000....      17.3 $   24.6    (2.3) $(55.6)      $(6.1)         $(1.8)    $173.2            $ (5.9)
                           ======= ========    ====  ======       =====          =====     ======            ======
</TABLE>

                See accompanying notes to financial statements.

                                      F-7
<PAGE>

                                     MIDAS

                         NOTES TO FINANCIAL STATEMENTS

(1) Introduction

 Basis of Presentation

   Midas, Inc. became an independent, publicly held company on January 30,
1998 as a result of its spin-off ("Spin-off") from Whitman Corporation
("Whitman"). Prior to that time, the companies that comprise Midas, Inc. were
direct or indirect wholly-owned subsidiaries of Whitman. For the period prior
to the Spin-off, the financial statements are presented on a combined basis;
for subsequent periods, they are presented on a consolidated basis. As
required by the context, "Midas" or the "Company" refers to Midas, Inc. and
subsidiaries or to the group of companies that became wholly-owned
subsidiaries of Midas, Inc. in conjunction with the Spin-off.

 Common Stock and Paid-in Capital at Spin-off Date

   The combined capital accounts of Whitman were recorded as common stock and
paid-in capital of Midas as of the date of the Spin-off. In January 1998,
Midas settled its Whitman obligations of $210 million, which consisted of a
$137.6 million dividend and $72.4 million of intercompany loans and advances.

(2) Summary of Significant Accounting Policies

 Nature of Business

   Midas provides retail automotive services principally through franchised or
licensed shops in the U.S., Canada, Europe and other countries. Midas also
manufactures exhaust system components and purchases other automotive
aftermarket replacement parts for distribution to North American franchisees
and other automotive aftermarket customers.

 Fiscal Periods

   Fiscal year 2000 ended on December 30, 2000 and consisted of 52 weeks. The
1999 and 1998 fiscal years ended on January 1, 2000 and December 26, 1998,
respectively, and each consisted of 53 weeks.

 Foreign Currency Translation and Transactions

   All assets and liabilities of non-U.S. operations are translated into U.S.
dollars using exchange rates as of the end of each fiscal period. Income and
expense items are translated at average exchange rates prevailing during each
fiscal period. The resulting translation adjustments are recorded as a
component of shareholders' equity. Gains and losses from foreign currency
transactions are included in net earnings.

 Cash and Cash Equivalents

   Cash and cash equivalents consist of deposits with banks and financial
institutions which are unrestricted as to withdrawal or use, and which have an
original maturity of three months or less.

 Fair Value of Financial Instruments

   Midas' financial instruments include cash and cash equivalents,
receivables, short-term debt, accounts payable, and long-term debt. The
carrying value of long-term debt exceeded its fair value by approximately $2.0
million as of fiscal year end 2000 and $2.3 million as of fiscal year end
1999. The carrying amounts of the other assets and liabilities approximate
fair values because of the short maturities of those instruments.

                                      F-8
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


 Inventories

   Inventories are valued at the lower of cost, determined using the first-in,
first-out method, or net realizable value.

 Property and Equipment

   Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method and includes amortization of assets held under
capital leases. When property is sold or retired, the cost and accumulated
depreciation are eliminated from the accounts and gains or losses are recorded
in the statement of operations.

   Expenditures for maintenance and repairs are expensed as incurred. The
approximate ranges of annual deprecation rates are 2% to 10% for buildings and
improvements, 8% to 20% for machinery and equipment, and 14% to 33% for
computer software and hardware.

 Carrying Values of Long-lived Assets

   Midas evaluates the carrying values of its long-lived assets to be held and
used in the business by reviewing undiscounted cash flows by operating unit.
Such evaluations are performed whenever events and circumstances indicate that
the carrying amount of an asset may not be recoverable. If the sum of the
projected undiscounted cash flows over the remaining lives of the related
assets does not exceed the carrying values of the assets, the carrying values
are adjusted for the differences between the fair values and the carrying
values.

 Revenue Recognition

   Product sales are recognized as revenues at the time products are shipped,
at which time provision is made for estimated product returns. Sales and
revenues of company-operated shops are recognized when customer vehicles are
repaired or serviced.

   Revenues derived from initial franchise fees are recognized when the
franchised shop opens. Costs related to securing initial franchise agreements
and performing the required services under such agreements are charged to
expense as incurred. Franchise renewal fees are recognized when the renewal
period commences. Royalties are recognized in the periods that correspond to
the periods when retail sales and revenues are recognized by franchisees.

   Selected products carry warranties ranging from one year to the lifetime of
a vehicle, so long as the original retail customer owns the vehicle. Midas
estimates and records the net costs related to its warranty program as
required, in the period the sales are reported, based on its historical
experience.

 Stock-Based Compensation

   The company uses the intrinsic value method of accounting for its stock-
based compensation plans.

 Advertising

   Advertising costs are expensed as incurred.

 Use of Estimates

   Management has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and disclosures of contingencies to
prepare the financial statements in conformity with accounting

                                      F-9
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

principles generally accepted in the United States of America. Actual results
likely differ from these estimates, but management believes that such
differences are immaterial.

(3) Business Transformation

   In fiscal 1997, the Company began a process to transform itself from a
worldwide operator of both franchised and company-operated shops to a focused
and efficient operator of a North American franchise and wholesale parts
distribution network and a licensor of Midas trademarks and know-how outside
of North America. Within North America, the business transformation process
included changing consumer perceptions about Midas and the products and
services offered, improving relationships with franchisees and redeploying
assets to improve returns.

   During fiscal 1998, the Company recognized the costs associated with the
final phase of this process resulting in a pre-tax expense of $55.7 million.
During fiscal 1999, the Company recognized a pre-tax benefit of $0.2 million
to reflect the final accounting for the costs of this program. No business
transformation costs were recorded in fiscal 2000. The fiscal 1998 and 1999
costs associated with the business transformation process are summarized as
follows (in millions):

<TABLE>
<CAPTION>
      Fiscal Year                                                 1999    1998
      -----------                                                 -----  ------
      <S>                                                         <C>    <C>
      Franchisee incentive payments.............................. $ --   $ 32.3
      Disposition of company-operated shops......................  (0.1)    2.1
      Corporate office relocation................................   --      7.0
      Integration of Canadian administration function............   --      4.0
      Consolidation of North American distribution system........  (1.2)    4.1
      Asset write-downs to recognize impairments.................   --      4.2
      Severance and other costs..................................   1.1     2.0
                                                                  -----  ------
        Business transformation costs before taxes...............  (0.2)   55.7
      Income taxes (benefit).....................................   0.1   (20.9)
                                                                  -----  ------
        Business transformation costs, net of taxes.............. $(0.1) $ 34.8
                                                                  =====  ======
</TABLE>

   In the aggregate, business transformation costs resulted in asset write-
downs of $9.5 million in fiscal 1998. Cash outlays, including outlays for
costs accrued in 1997, were $58.4 million in fiscal 1998, $13.2 million in
fiscal 1999, and $4.5 million in fiscal 2000. Remaining short-term business
transformation liabilities of $2.5 million are classified in accrued expenses
while the remaining long-term liabilities of $7.9 million are classified in
other liabilities.

(4) Strategic Alliance

   Midas, Inc. and Magneti Marelli, S.p.A., a member of the Fiat Group, formed
a strategic alliance to develop the Midas program in the business of fast auto
service repair in Europe and South America.

   As part of the alliance, Midas sold its interests in its European
operations to Magneti Marelli on October 30, 1998 and entered into a long-term
license agreement for which Midas received $100 million. Midas will also
receive on-going royalties throughout the term of the license agreement, as
the automotive service shops in Europe that were sold will continue to operate
using the Midas name.

   The fiscal 1998 gain on sale of the European operations was $38.0 million
before taxes, or $28.1 million after taxes.

                                     F-10
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


(5) Debt Agreements

   Long-term debt consisted of the following (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                              2000   1999
      ---------------                                             ------ ------
      <S>                                                         <C>    <C>
      Unsecured credit facility.................................. $ 24.0 $ 25.0
      Unsecured debt.............................................   75.0   75.0
      Notes payable, due 2001 and 2002, 9.5% interest rate.......    1.0    2.1
                                                                  ------ ------
        Total debt...............................................  100.0  102.1
        Less amounts due within one year.........................   15.9    1.1
                                                                  ------ ------
        Long-term debt........................................... $ 84.1 $101.0
                                                                  ====== ======
</TABLE>

   The Company has entered into a five-year, unsecured revolving credit
facility with a syndicate of commercial banks and financial institutions that
enables the Company to borrow funds at variable interest rates on a revolving
credit basis up to an aggregate principal amount of $200 million. This
facility expires in January 2003. The Company also has $75 million of
unsecured debt outstanding with a fixed rate of 6.89%. This debt carries an
investment grade (BBB) rating. Annual principal payments of $15 million are
due beginning April 15, 2001 with the final maturity on April 15, 2005.

   These debt agreements require maintenance of certain financial covenants
including minimum net worth. The Company is in compliance with these
covenants.

   The Company also has uncommitted and unsecured lines of credit relating to
its domestic and Canadian operations totaling approximately $15.4 million.
These lines of credit were established to meet the Company's day-to-day cash
management needs. As of fiscal year end 2000, a total of $3.2 million was
outstanding under these lines of credit.

(6) Supplemental Balance Sheet and Cash Flow Information

 Receivables

   Receivables are stated net of allowance for doubtful accounts of $6.7
million at fiscal year end 2000 and $1.8 million at fiscal year end 1999.

 Inventories

   Inventories consisted of the following (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                               2000  1999
      ---------------                                               ----- -----
      <S>                                                           <C>   <C>
      Raw materials and work in process............................ $ 4.7 $ 4.5
      Finished goods...............................................  72.2  59.0
                                                                    ----- -----
                                                                    $76.9 $63.5
                                                                    ===== =====
</TABLE>

 Other Current Assets

   Other current assets consisted of the following (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                               2000  1999
      ---------------                                               ----- -----
      <S>                                                           <C>   <C>
      Income taxes receivable...................................... $ 7.0 $ 2.7
      Deferred income taxes........................................   8.1   9.2
      Other........................................................   9.2   8.8
                                                                    ----- -----
                                                                    $24.3 $20.7
                                                                    ===== =====
</TABLE>

                                     F-11
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


 Property and Equipment

   Property and equipment consisted of the following (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                             2000    1999
      ---------------                                            ------  ------
      <S>                                                        <C>     <C>
      Land...................................................... $ 46.9  $ 47.8
      Buildings and improvements................................  113.7   113.4
      Machinery and equipment...................................   90.0    70.9
                                                                 ------  ------
        Total property and equipment............................  250.6   232.1
      Accumulated depreciation.................................. (100.7)  (91.6)
                                                                 ------  ------
        Property and equipment, net............................. $149.9  $140.5
                                                                 ======  ======
</TABLE>

 Accrued Expenses

   Accrued expenses consisted of the following (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                               2000  1999
      ---------------                                               ----- -----
      <S>                                                           <C>   <C>
      Salaries and wages........................................... $ 2.6 $ 1.9
      Taxes other than income taxes................................   3.4   2.8
      Advertising..................................................   6.0   5.2
      Accrued business transformation costs........................   2.5   5.7
      Sales return allowance.......................................   4.2   5.0
      Other........................................................  10.2   7.4
                                                                    ----- -----
                                                                    $28.9 $28.0
                                                                    ===== =====
</TABLE>

 Supplemental Cash Flow Information

   Net cash provided by operating activities includes cash payments for
interest and income taxes as follows (in millions):

<TABLE>
<CAPTION>
      Fiscal Year                                              2000  1999  1998
      -----------                                              ----- ----- -----
      <S>                                                      <C>   <C>   <C>
      Interest paid........................................... $ 8.4 $ 8.6 $11.4
      Income taxes paid.......................................  10.5  16.4  11.0
</TABLE>

(7) Advertising

   Under the terms of its franchise agreements, Midas is obligated to use one-
half of the royalty payments received from franchisees for advertising
expenditures. Amounts received from franchisees are recorded as liabilities
until disbursed. Midas also administers cooperative advertising programs under
which amounts received from franchisees are recorded as liabilities until they
are disbursed. Aggregate expenditures under these programs by Midas' North
American operations amounted to $66.9 million, $62.2 million, and $58.9
million in fiscal 2000, 1999, and 1998, respectively.

   Midas also incurs certain advertising costs that are included in selling,
general and administrative expenses, which amounted to $10.8 million, $3.4
million, and $13.6 million in fiscal 2000, 1999, and 1998, respectively.

                                     F-12
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


(8) Income Taxes

   Income tax expense consisted of the following (in millions):

<TABLE>
<CAPTION>
      Fiscal Year                                            2000  1999   1998
      -----------                                            ----- -----  -----
      <S>                                                    <C>   <C>    <C>
      Current:
        U.S. Federal........................................ $ 4.1 $13.2  $ 6.5
        Non-U.S.............................................   1.5   1.6    4.1
        U.S. state and local................................   0.9   4.4    1.4
                                                             ----- -----  -----
          Total current.....................................   6.5  19.2   12.0
                                                             ----- -----  -----
      Deferred:
        U.S. Federal........................................   3.0   5.7   (0.4)
        Non-U.S.............................................   0.4   1.2   (1.3)
        U.S. state and local................................   0.7  (1.6)   1.5
                                                             ----- -----  -----
          Total deferred....................................   4.1   5.3   (0.2)
                                                             ----- -----  -----
          Income taxes...................................... $10.6 $24.5  $11.8
                                                             ===== =====  =====
</TABLE>

   The items which gave rise to differences between the income taxes in the
statements of operations and the income taxes computed at the U.S. statutory
rate are summarized as follows:

<TABLE>
<CAPTION>
      Fiscal Year                                           2000   1999  1998
      -----------                                           -----  ----  -----
      <S>                                                   <C>    <C>   <C>
      Income tax expense computed at U.S. statutory rate...  35.0% 35.0%  35.0%
      U.S. state and local taxes, net of U.S. Federal
       income tax benefits.................................   2.4   2.9    4.7
      Higher non-U.S. effective tax rates..................   2.4   1.9    2.5
      U.S. tax benefit on the disposition of Australian
       operations.......................................... (12.2)  --     --
      Lower non-U.S. effective tax rates on sale of
       European operations.................................   --    --   (12.2)
      Non-deductible expenses..............................   0.3   0.2   (2.0)
      Other items, net.....................................  (2.1) (1.0)   1.5
                                                            -----  ----  -----
        Income taxes.......................................  25.8% 39.0%  29.5%
                                                            =====  ====  =====
</TABLE>

   Pretax income from non-U.S. operations amounted to $2.6 million, $4.5
million, and $18.2 million in fiscal 2000, 1999 and 1998, respectively.
Historically, Midas' practice has been to reinvest its earnings in its non-
U.S. subsidiaries. For the sale of its European operations, the Company
repatriated the earnings associated with those operations in 1999. The Company
has not recognized U.S. income taxes on the unremitted earnings of its
Canadian operations, since foreign tax credits for Canadian income taxes will
significantly reduce or eliminate any U.S. tax liability.

                                     F-13
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


   Deferred income taxes are created by "temporary differences" between
amounts of assets and liabilities for financial reporting purposes and such
amounts as reported under income tax regulations. Deferred tax assets and
liabilities consisted of (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                              2000   1999
      ---------------                                              -----  -----
      <S>                                                          <C>    <C>
      Deferred tax assets attributable to:
        Employee benefits and vacation accruals................... $ 2.9  $ 3.7
        Capitalized leases........................................   1.1    1.1
        Business transformation costs.............................   4.8    7.0
        Other items...............................................   7.9    7.6
                                                                   -----  -----
      Total deferred tax assets...................................  16.7   19.4
                                                                   -----  -----
      Deferred tax liabilities attributable to:
        Depreciation and amortization.............................  (5.2)  (5.0)
        Pension plan expense......................................  (4.7)  (4.2)
        Other items...............................................  (5.0)  (5.0)
                                                                   -----  -----
      Total deferred tax liabilities.............................. (14.9) (14.2)
                                                                   -----  -----
      Net deferred tax assets..................................... $ 1.8  $ 5.2
                                                                   =====  =====
      Net deferred tax assets included in:
        Other current assets...................................... $ 8.1  $ 9.2
        Deferred income taxes and other liabilities...............  (6.3)  (4.0)
                                                                   -----  -----
      Net deferred tax assets..................................... $ 1.8  $ 5.2
                                                                   =====  =====
</TABLE>

   Management believes it is more likely than not that all deferred tax assets
will be realized and, accordingly, no valuation allowance has been recorded.

(9) Franchise Agreements

   Midas' franchise agreements generally cover a 20-year period and provide
for renewals. A franchise agreement can be canceled by Midas only in the event
a franchisee fails to comply with the provisions of the agreement. Franchise
agreements provide for initial and renewal fees and continuing royalty
payments based on a percentage of sales.

   Worldwide shops in operation as of fiscal year end consisted of
(unaudited):

<TABLE>
<CAPTION>
      Fiscal Year End                                          2000  1999  1998
      ---------------                                          ----- ----- -----
      <S>                                                      <C>   <C>   <C>
      Franchised and licensed................................. 2,725 2,689 2,674
      Company-operated........................................    10    22    58
                                                               ----- ----- -----
        Total................................................. 2,735 2,711 2,732
                                                               ===== ===== =====
</TABLE>

(10) Leases

   Control of the real estate used by Midas shops is a fundamental strength of
the Midas program. Midas employs a number of methods to ensure continued
dedication of the real estate to the Midas program. Midas leases real estate
that is subleased to franchisees and owns real estate in the U.S. that is
leased to franchisees. Midas has also entered into contingent operating lease
agreements that are described below. At fiscal year end 2000, approximately
82% of real estate associated with North American shops was controlled by
Midas, using one of these methods.

                                     F-14
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


 Leased Real Estate

   Gross rent expense applicable to operating leases relates to rentals of
shops, distribution facilities, corporate administration facilities and other
miscellaneous items. Gross rent expense, the sublease rental income from
franchisees that reduced gross rent expense, and the resulting net rent
expense for fiscal 2000, 1999 and 1998 are presented below (in millions):

<TABLE>
<CAPTION>
      Fiscal Year                                              2000  1999  1998
      -----------                                              ----- ----- -----
      <S>                                                      <C>   <C>   <C>
      Gross rent expense...................................... $25.7 $22.6 $27.2
      Sublease rental income..................................  25.0  22.4  20.7
                                                               ----- ----- -----
        Net rent expense...................................... $ 0.7 $ 0.2 $ 6.5
                                                               ===== ===== =====
</TABLE>

   Substantially all of Midas' operating leases provide that Midas pay taxes,
maintenance, insurance, and certain other operating expenses. The subleases
with franchisees contain provisions for Midas to recover such costs.

   At fiscal year end 2000, annual minimum rental payments due under capital
and operating leases that have initial or remaining noncancelable terms in
excess of one year, along with sublease rental income on real estate due under
noncancelable subleases were as follows (in millions):

<TABLE>
<CAPTION>
                                              Capital Operating Sublease
                                              Leases   Leases   Rentals   Total
                                              ------- --------- --------  -----
      <S>                                     <C>     <C>       <C>       <C>
      2001...................................  $ 1.7   $ 28.3   $ (21.8)  $ 8.2
      2002...................................    1.7     26.6     (20.9)    7.4
      2003...................................    1.7     25.1     (18.8)    8.0
      2004...................................    1.7     23.0     (17.1)    7.6
      2005...................................    1.6     21.1     (15.1)    7.6
      Thereafter.............................    7.1     65.8     (54.3)   18.6
                                               -----   ------   -------   -----
      Total minimum lease payments...........   15.5   $189.9   $(148.0)  $57.4
                                                       ======   =======   =====
      Less imputed interest..................    5.7
                                               -----
      Present value of minimum lease
       payments..............................    9.8
      Less current portion...................    0.7
                                               -----
        Obligations under capital leases--
         noncurrent..........................  $ 9.1
                                               =====
</TABLE>

   At fiscal year end 2000 and 1999, the net book value of property under
capital leases included in the balance sheets amounted to $6.7 million and
$7.2 million, respectively.

 Real Estate Owned by Midas and Leased to Franchisees

   Midas owns real estate located in various communities throughout the U.S.
that is leased to franchisees under operating lease agreements. Substantially
all leases are for initial terms of 20 years and provide for minimum and
contingent rentals.

                                     F-15
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


   Real estate leased to franchisees and included in the balance sheets
consisted of (in millions):

<TABLE>
<CAPTION>
      Fiscal Year End                                             2000    1999
      ---------------                                            ------  ------
      <S>                                                        <C>     <C>
      Land...................................................... $ 45.9  $ 45.9
      Buildings and improvements................................   82.9    82.2
                                                                 ------  ------
        Total property and equipment............................  128.8   128.1
      Accumulated depreciation..................................  (32.5)  (30.3)
                                                                 ------  ------
        Property and equipment, net............................. $ 96.3  $ 97.8
                                                                 ======  ======
</TABLE>

   Rental income on owned real estate for fiscal 2000 was $15.7 million,
compared to $17.0 million in fiscal 1999 and $17.4 million in fiscal 1998.
Minimum future lease payments to be received are as follows (in millions):

<TABLE>
      <S>                                                                 <C>
      2001............................................................... $ 14.7
      2002...............................................................   13.3
      2003...............................................................   11.9
      2004...............................................................   10.8
      2005...............................................................    9.4
      Thereafter.........................................................   73.9
                                                                          ------
                                                                          $134.0
                                                                          ======
</TABLE>

 Contingent Operating Lease Agreements

   Midas has entered into contingent operating lease agreements covering real
estate that is leased by U.S. and Canadian franchisees from parties that are
directly or indirectly related to the franchisees.

   At December 30, 2000, 112 shops were covered by these contingent operating
lease agreements, under which Midas could be required, under certain limited
circumstances, to begin making rental payments with respect to individual shop
locations. The average annual shop rental is $46 thousand with an average
remaining term of approximately 6 years.

   Management believes that, individually and in the aggregate, any potential
difference that might arise under these contingent lease agreements between
the rental expense and the rental income from future subleases would not
materially affect the financial position or results of operations of Midas.

(11) Pension and Postretirement Plans

 Defined Benefit Pension Plans and Other Postretirement Plans

   Substantially all North American employees are covered under various
defined benefit pension plans sponsored and funded by Midas. Plans covering
salaried employees provide pension benefits based on years of service, and
generally are limited to a maximum of 20% of the employees' average annual
compensation during the five years preceding retirement. Plans covering hourly
employees generally provide benefits of stated amounts for each year of
service. Plan assets are invested primarily in common stocks, corporate bonds,
and government securities.

   Midas has historically also provided certain life and health care benefits
to substantially all former U.S. salaried employees who retired prior to July
1989 and selected other employees in the U.S. and Canada. During fiscal 2000,
the Company terminated this company-funded plan and employees participating in
the plan were

                                     F-16
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)

given an enhanced pension benefit. As a result of these actions, the
postretirement medical and life insurance plan obligations were eliminated
resulting in a one-time gain of $6.2 million. Partially offsetting this gain
was a $2.0 million expense to increase the Company's salaried pension
liability to reflect the cost of the enhanced pension benefits.

   Net periodic pension and postretirement cost for fiscal 2000, 1999 and 1998
are presented in the following table (in millions):

<TABLE>
<CAPTION>
                                                             Postretirement
                                       Pension Benefits         Benefits
                                       -------------------  -------------------
                                       2000   1999   1998   2000   1999   1998
                                       -----  -----  -----  -----  -----  -----
   <S>                                 <C>    <C>    <C>    <C>    <C>    <C>
   Service cost benefits.............  $ 1.2  $ 1.7  $ 1.8  $ --   $ --   $ --
   Interest cost on projected benefit
    obligation.......................    2.7    2.7    2.7    0.1    0.1    0.2
   Actual return on assets...........   (5.3)  (4.7)  (4.4)   --     --     --
   Net amortization and deferral.....   (0.8)   --     0.1   (0.2)  (0.3)  (0.3)
                                       -----  -----  -----  -----  -----  -----
     Total net periodic cost
      (credit).......................  $(2.2) $(0.3) $ 0.2  $(0.1) $(0.2) $(0.1)
                                       =====  =====  =====  =====  =====  =====
</TABLE>

   The principal economic assumptions used in the determination of net
periodic pension and postretirement cost included the following:

<TABLE>
<CAPTION>
                                                                  2000 1999 1998
                                                                  ---- ---- ----
   <S>                                                            <C>  <C>  <C>
   Discount rate................................................. 7.5% 6.5% 7.0%
   Expected long-term rate of return on assets................... 9.5% 9.5% 9.5%
   Rate of increase in compensation levels....................... 5.0% 4.0% 4.5%
</TABLE>

   The changes in the projected benefit obligations for fiscal 2000 and fiscal
1999 were as follows:

<TABLE>
<CAPTION>
                                                  Pension     Postretirement
                                                 Benefits        Benefits
                                                ------------  ----------------
                                                2000   1999    2000     1999
                                                -----  -----  -------  -------
   <S>                                          <C>    <C>    <C>      <C>
   Benefit obligations as of the beginning of
    the year................................... $40.2  $45.3  $   2.0  $   2.3
   Change in foreign currency exchange rates...  (0.2)   0.4      --       --
   Service cost................................   1.2    1.7      --       --
   Interest cost...............................   2.7    2.7      0.1      0.1
   Participants' contributions.................   --     --       0.1      0.1
   Actuarial (gain) loss.......................  (2.6)  (5.4)     --      (0.3)
   Business transformation divestitures........  (0.9)  (2.4)     --       --
   Termination of retiree life and medical
    plan.......................................   --     --      (1.9)     --
   Enhanced pension benefits replacing retiree
    life and medical plan......................   2.0    --       --       --
   Benefits paid and expenses..................  (3.4)  (2.1)    (0.2)    (0.2)
                                                -----  -----  -------  -------
     Benefit obligations as of the end of the
      year..................................... $39.0  $40.2  $   0.1  $   2.0
                                                =====  =====  =======  =======
</TABLE>

                                     F-17
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


   The changes in the fair market value of the plan assets for fiscal 2000 and
fiscal 1999 were as follows:

<TABLE>
<CAPTION>
                                                  Pension     Postretirement
                                                 Benefits        Benefits
                                                ------------  ----------------
                                                2000   1999    2000     1999
                                                -----  -----  -------  -------
   <S>                                          <C>    <C>    <C>      <C>
   Fair value of assets as of the beginning of
    the year..................................  $62.9  $54.3  $   --   $   --
   Change in foreign currency exchange rates..   (0.3)   0.4      --       --
   Actual return on plan assets...............    8.8   10.1      --       --
   Employer contributions.....................    0.1    0.2      0.1      0.1
   Participants' contributions................    --     --       0.1      0.1
   Benefits paid and expenses.................   (3.4)  (2.1)    (0.2)    (0.2)
                                                -----  -----  -------  -------
     Fair value of assets as of the end of the
      year....................................  $68.1  $62.9  $   --   $   --
                                                =====  =====  =======  =======
</TABLE>

   Pension costs are funded in amounts not less than minimum levels required
by regulation. The following table reconciles the pension plans and
postretirement plans funded status to the amounts recognized in other
noncurrent assets (liabilities) in Midas' balance sheets as of fiscal year end
2000 and 1999 (in millions):

<TABLE>
<CAPTION>
                                               Pension      Postretirement
                                              Benefits         Benefits
                                            --------------  ----------------
                                             2000    1999    2000     1999
                                            ------  ------  -------  -------
   <S>                                      <C>     <C>     <C>      <C>
   Actuarial present value of benefit
    obligation (measured as of September
    30):
     Projected benefit obligation.......... $(39.0) $(40.2) $  (0.1) $  (2.0)
     Plan assets at fair market value
      (measured as of September 30)........   68.1    62.9      --       --
                                            ------  ------  -------  -------
   Plan assets in excess of (less than)
    projected benefit obligation...........   29.1    22.7     (0.1)    (2.0)
   Unrecognized net asset at transition....   (0.6)   (0.8)     --       --
   Unrecognized prior service costs........    1.3     1.5      --       --
   Unrecognized net gain...................  (19.2)  (12.9)     --      (4.6)
                                            ------  ------  -------  -------
     Prepaid (accrued) pension cost
      recognized on balance sheets......... $ 10.6  $ 10.5  $  (0.1) $  (6.6)
                                            ======  ======  =======  =======
</TABLE>

   The principal economic assumptions used in determining the above benefit
obligations were discount rates of 7.75% in fiscal 2000 and 7.5% in fiscal
1999, and rates of increase in future compensation levels of 5.25% in fiscal
2000 and 5.0% in fiscal 1999.

 Defined Contribution Plans

   Substantially all U.S. salaried employees, certain U.S. hourly employees,
and certain Canadian employees participate in voluntary, contributory defined
contribution plans to which Midas makes full or partial matching
contributions. Midas' matching contributions to these plans amounted to $1.1
million, $1.4 million, and $1.7 million in fiscal 2000, 1999 and 1998,
respectively. Midas' cost for the associated nonqualified plan was $0.1
million in fiscal 2000, $0.2 million in fiscal 1999 and $0.1 million in fiscal
1998.

 Multi-employer Pension Plan

   Midas participates in a multi-employer pension plan, which provides
benefits to certain unionized employees. Amounts contributed to this plan
totaled $0.3 million in fiscal 2000, $0.2 million in fiscal 1999, and $0.3
million in fiscal 1998.

                                     F-18
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


(12) Stock-Based Compensation

 Stock Options

   In connection with the Spin-off, Midas adopted, and Whitman, as then sole
shareholder of Midas, Inc., approved the Midas 1998 Stock Incentive Plan (the
"Plan"). The Plan authorizes the issuance of up to 3,106,886 shares of Midas
common stock pursuant to the exercise of incentive stock options, non-
qualified stock options and stock appreciation rights and the grant of
restricted stock and performance awards. In addition, Midas reserved 10,000
shares for issuance upon the grant of stock awards.

   On the date of the Spin-off, outstanding stock options granted under the
Whitman stock option plan were replaced with non-qualified Midas, Inc. stock
options of equivalent value, with necessary adjustments being made to the
number and exercise price of the Midas options to preserve the economic spread
of the prior Whitman options. Options granted pursuant to the Plan are
generally exercisable over a period of three or five years commencing one year
after the date of grant. The following table summarizes information regarding
the outstanding stock options as of December 30, 2000.

<TABLE>
<CAPTION>
                   Options Outstanding                        Options Exercisable
   -----------------------------------------------------------------------------------
   Range of                              Weighted-Average
   Exercise             Weighted-Average  Remaining Life  Exercisable Weighted-Average
    Prices     Shares    Exercise Price     (in years)      Shares     Exercise Price
   --------   --------- ---------------- ---------------- ----------- ----------------
   <S>        <C>       <C>              <C>              <C>         <C>
   $ 9.81-
    $14.88      536,045       5.4             $14.36         305,045       $13.97
    15.65-
     18.50      574,891       6.4              16.15         452,420        16.06
    20.00-
     24.95      805,000       5.8              23.19         253,328        23.05
    25.95-
     34.66       50,000       6.5              29.87          17,000        29.10
              ---------                                    ---------
              1,965,936                                    1,027,793
              =========                                    =========
</TABLE>

   The stock option activity since the Spin-off is summarized as follows:

<TABLE>
<CAPTION>
                                                        Number of  Option Price
                                                         Shares       Ranges
                                                        ---------  -------------
   <S>                                                  <C>        <C>
   Outstanding at Spin-off............................  2,106,886  $ 7.35-$16.39
   Granted............................................    784,774   15.65- 28.00
   Exercised..........................................   (288,086)   7.35- 15.83
   Cancelled and forfeited............................   (359,073)  11.41- 15.83
                                                        ---------
   Outstanding at fiscal year end 1998................  2,244,501    7.35- 28.00
   Granted............................................    370,000   24.95- 34.66
   Exercised..........................................   (757,923)   7.35- 20.25
   Cancelled and forfeited............................    (52,728)  14.42- 25.95
                                                        ---------
   Outstanding at fiscal year end 1999................  1,803,850    9.81- 34.66
   Granted............................................    311,500   14.00- 22.94
   Exercised..........................................   (130,100)  11.41- 22.00
   Cancelled and forfeited............................    (19,314)  15.65- 28.00
                                                        ---------
   Outstanding at fiscal year end 2000................  1,965,936    9.81- 34.66
                                                        =========
</TABLE>

 Restricted Stock

   During fiscal 2000, the Company granted 100,000 shares of restricted stock
to its chief executive officer. These shares vest in four equal annual amounts
beginning February 2001.

                                     F-19
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


   During fiscal 1998, the Company granted options to purchase 276,565 shares
of restricted stock to certain of its officers. The options were granted at
the market price of the stock on the date of the grant, and are reflected in
the above table. During fiscal 1999, all 276,565 options were exercised at a
combined price of approximately $6.1 million. In connection with the purchase
of these shares and in accordance with the terms of the grant, the holders of
the restricted stock became indebted to Midas in the aggregate amount of $6.1
million. Such loans bear interest at 6.0% per annum, and have a four-year term
that is accelerated no later than one month after termination of employment.
The Company has agreed to waive interest that accrues while Midas employs the
borrower. The notes receivable are reflected as a reduction of shareholders'
equity in the accompanying balance sheet as of fiscal year end 2000 and 1999.

 Other

   The Company accounts for its stock-based compensation plans using the
intrinsic value method of accounting. An alternative to the intrinsic value
method is the fair value method. Had the Company used the fair value method,
pro forma net income and earnings per share would have been:

<TABLE>
<CAPTION>
      Fiscal Year                                             2000  1999  1998
      -----------                                             ----- ----- -----
      <S>                                                     <C>   <C>   <C>
      Net income (in millions)
        As reported.......................................... $30.5 $38.4 $28.2
        Pro forma............................................  28.7  37.0  27.4
      Basic earnings per share
        As reported.......................................... $1.98 $2.33 $1.67
        Pro forma............................................  1.86  2.25  1.62
      Diluted earnings per share
        As reported.......................................... $1.96 $2.28 $1.63
        Pro forma............................................  1.86  2.25  1.62
</TABLE>

   The weighted average estimated fair value of the options granted in fiscal
2000, 1999 and 1998 was $10.74, $13.93 and $11.82, respectively, based on the
Black-Scholes valuation model using the following assumptions:

<TABLE>
<CAPTION>
      Fiscal Year                                           2000   1999   1998
      -----------                                           -----  -----  -----
      <S>                                                   <C>    <C>    <C>
      Risk-free interest rate..............................   6.5%   6.5%   6.5%
      Dividend yield.......................................   0.0%   0.0%   0.0%
      Expected volatility.................................. 33.25% 33.25% 33.25%
      Expected life in years...............................     8      8      8
</TABLE>

(13) Shareholder Rights Agreement and Series A Junior Participating Preferred
Stock

   In fiscal 1997, Midas adopted a Rights Agreement providing for the issuance
of one Preferred Stock Purchase Right (a "Right") with each share of Midas
common stock. Each Right entitles the registered holder to purchase from Midas
one one-hundredth of a share of Series A Junior Participating Preferred Stock
(a "Preferred Share") at a price of $150 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The Rights will become
exercisable on the Rights Distribution Date, which is the earlier of the tenth
day following a public announcement that a person(s) has acquired beneficial
ownership of 13% or more of the Midas common stock (an "Acquiring Person"), or
ten business days after the commencement of a tender offer or exchange offer
that would result in a person(s) acquiring beneficial ownership of 13% or more
of the outstanding shares of Midas common stock.

                                     F-20
<PAGE>

                                     MIDAS

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


   If a person becomes an Acquiring Person, each Right holder (other than the
Acquiring Person) will be entitled to receive, upon exercise of the Right, a
number of shares of Midas common stock having a market value of two times the
exercise price of the Right. If Midas is acquired in a merger or other
business combination, each Right holder (other than the Acquiring Person) will
be entitled to receive, upon exercise of a Right, a number of the acquiring
Company's common shares having a market value at that time of two times the
exercise price of the Right.

   In general, Midas can redeem all the Rights for one cent per Right at any
time until 10 days following the first public announcement that a person has
become an Acquiring Person. The Midas Board of Directors, without the consent
of the holders of the Rights, is also authorized to reduce the stock ownership
thresholds to 10 percent or increase them to not more than 20 percent. The
Rights will expire on December 31, 2007. Until a Right is exercised, the
holder of a Right (merely by being a Right holder) will have no rights as a
shareholder of Midas, including voting or dividend rights.

   Each Preferred Share will be entitled to a minimum preferential quarterly
dividend payment of $1.00 per share, but will be entitled to an aggregate
dividend of 100 times the dividend declared per share of Midas common stock.
Each Preferred Share will have 100 votes, voting together with the Midas
common stock. In the event of a merger or other transaction in which shares of
common stock of the Company are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per share of Midas common
stock.

   The Company has 20 million authorized shares of Series A Junior
Participating Preferred Stock. There are no Series A Junior Participating
Preferred Stock issued or outstanding.

(14) Contingencies

   In connection with the disposition of U.S. company-operated shops, certain
franchises entered into 101 financing agreements with a third party lender. If
the franchisees fail to make required payments, Midas is contingently liable
for a portion of the losses that would be incurred by the lender. As of
December 30, 2000, Midas' maximum loss exposure is approximately $5.2 million.
In fiscal 2000, Midas incurred a loss of $0.1 million in connection with this
program; no losses were incurred in fiscal 1999 or 1998.

   Midas has certain contingent liabilities arising from various pending
claims and litigation related to a number of matters. While the amount of
liability that may result from these matters cannot be determined, in the
opinion of Midas' counsel, the ultimate liability will not materially affect
the financial position or results of operations of Midas.

(15) Business Segment Information

   Midas operates in a single business segment and provides retail automotive
services principally through franchised shops located in North America (United
States and Canada) and through franchised and licensed shops in international
markets. During fiscal 1999, the Company completed its disposition of company-
operated shops, primarily through the franchising activities in the United
States and Canada and the sale of the European operations described in Note 4.
Foreign currency gains and losses were not significant. Sales to any single
customer were less than five percent of sales and revenues in each of the
years presented. Midas' U.S. operations export products to and receive
royalties from franchisees located in Central America. Such sales and revenues
amounted to less than one percent of U.S. sales and revenues in each of the
fiscal years presented.

                                     F-21
<PAGE>

                                     MIDAS

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


   The following tables present financial information for each of the principal
geographic areas in which the Company operates. Sales and revenues are
attributed to geographic areas based on the location of customers.

<TABLE>
<CAPTION>
                                                            Sales and Revenues
                                                           --------------------
      Fiscal Year                                           2000   1999   1998
      -----------                                          ------ ------ ------
                                                              (in millions)
      <S>                                                  <C>    <C>    <C>
      North American Operations:
        U.S............................................... $300.1 $301.8 $354.7
        Canada............................................   38.3   40.7   47.9
                                                           ------ ------ ------
        Total North America...............................  338.4  342.5  402.6
      International Operations............................    7.8   13.0  111.2
                                                           ------ ------ ------
      Total............................................... $346.2 $355.5 $513.8
                                                           ====== ====== ======
<CAPTION>
                                                           Identifiable Assets
                                                           --------------------
      Fiscal Year End                                       2000   1999   1998
      ---------------                                      ------ ------ ------
                                                              (in millions)
      <S>                                                  <C>    <C>    <C>
      North American Operations:
        U.S............................................... $293.5 $277.0 $298.7
        Canada............................................   27.5   28.3   23.6
                                                           ------ ------ ------
        Total North America...............................  321.0  305.3  322.3
      International Operations............................    0.7    0.6    3.0
                                                           ------ ------ ------
        Total............................................. $321.7 $305.9 $325.3
                                                           ====== ====== ======
</TABLE>

(16) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                           First  Second   Third  Fourth   Full
                                          Quarter Quarter Quarter Quarter  Year
                                          ------- ------- ------- ------- ------
                                           (in millions, except per share data)
      <S>                                 <C>     <C>     <C>     <C>     <C>
      Fiscal 2000
        Sales and revenues...............  $78.6   $98.4   $94.3   $74.9  $346.2
        Net income.......................    7.5    12.4    12.0    (1.4)   30.5
        Earnings per share--diluted......  $ .47   $ .78   $ .78   $(.10) $ 1.96
      Fiscal 1999
        Sales and revenues...............  $84.7   $98.5   $92.4   $79.9  $355.5
        Net income.......................    6.5    12.3    12.2     7.4    38.4
        Earnings per share--diluted......  $ .37   $ .72   $ .73   $ .46  $ 2.28
</TABLE>

   The sum of earnings per share for the quarters may not equal the full year
amount due to rounding and the impact of changes in the average shares
outstanding.

                                      F-22