---

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---

FORM 10-Q



---



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 01-13409



---

MIDAS, INC.

(Exact Name of Registrant as Specified in its Charter)



---



|                                                                |  |                                     
|--------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                        |  | 36-4180556                          
|(State or Other Jurisdiction of Incorporation or Organization ) |  | (I.R.S. Employer Identification No.)
|                                                                | 
|1300 Arlington Heights Road, Itasca, Illinois                   |  | 60143                               
|(Address of Principal Executive Offices)                        |  | (Zip Code)                          

(630) 438-3000

(Registrants telephone number, including area code)



---

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    YES  x    NO ̈

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer, as defined in Rule 12b-2 of
the Exchange Act.

Large Accelerated Filer ̈Accelerated Filer  x            Non-Accelerated Filer ̈

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Exchange
Act)    YES ̈NO  x

The number of shares of the Registrants Common Stock, $.001 par value per share, outstanding as of October 27, 2006 was 15,330,397.



---



---

PART I. FINANCIAL INFORMATION

Item 1: Condensed Financial Statements

MIDAS, INC.

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

(In millions, except for earnings per share)



|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|------------------------------------------------------ |  | ------------------------------------- | ---- | - | ----------------------------------------- | - | ---- | ---------- |  | - | ---------- | - |  | - | ----- | -
|                                                       |  | For the quarterended fiscal September |      |   | For the nine monthsended fiscal September |  
|                                                       |  | 2006                                  |      |   | 2005                                      |   |      | 2006       |  |   | 2005       |  
|                                                       |  | (13 weeks)                            |      |   | (13 weeks)                                |   |      | (39 weeks) |  |   | (39 weeks) |  
|Sales and revenues:                                    |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Franchise royalties and license fees                   |  | $                                     | 16.6 |   |                                           | $ | 16.8 |            |  | $ | 48.7       |   |  | $ | 49.6  |  
|Real estate revenues                                   |  |                                       | 9.1  |   |                                           |   | 9.1  |            |  |   | 27.3       |   |  |   | 27.0  |  
|Company-operated shop retail sales                     |  |                                       | 10.8 |   |                                           |   | 9.6  |            |  |   | 30.8       |   |  |   | 28.3  |  
|Replacement part sales and product royalties           |  |                                       | 7.8  |   |                                           |   | 12.4 |            |  |   | 23.3       |   |  |   | 41.2  |  
|Other                                                  |  |                                       | 1.0  |   |                                           |   | 0.8  |            |  |   | 2.9        |   |  |   | 2.4   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Total sales and revenues                               |  |                                       | 45.3 |   |                                           |   | 48.7 |            |  |   | 133.0      |   |  |   | 148.5 |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Cost of sales and revenues:                            |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Real estate cost of revenues                           |  |                                       | 5.4  |   |                                           |   | 5.4  |            |  |   | 16.7       |   |  |   | 16.6  |  
|Company-operated shop cost of sales                    |  |                                       | 2.7  |   |                                           |   | 2.2  |            |  |   | 7.4        |   |  |   | 6.6   |  
|Replacement part cost of sales                         |  |                                       | 6.4  |   |                                           |   | 10.3 |            |  |   | 19.3       |   |  |   | 33.1  |  
|Warranty expense                                       |  |                                       | 1.4  |   |                                           |   | 1.7  |            |  |   | 4.3        |   |  |   | 5.4   |  
|Business transformation charges (inventory write-down) |  |                                       |     |   |                                           |   |     |            |  |   |           |   |  |   | 4.1   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Total cost of sales and revenues                       |  |                                       | 15.9 |   |                                           |   | 19.6 |            |  |   | 47.7       |   |  |   | 65.8  |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Gross profit                                           |  |                                       | 29.4 |   |                                           |   | 29.1 |            |  |   | 85.3       |   |  |   | 82.7  |  
|Selling, general, and administrative expenses          |  |                                       | 21.4 |   |                                           |   | 22.9 |            |  |   | 65.8       |   |  |   | 68.4  |  
|Gain on sale of assets                                 |  |                                       |     |   |                                           |   | (0.1 | )          |  |   | (3.4       | ) |  |   | (2.0  | )
|Business transformation charges                        |  |                                       | 0.4  |   |                                           |   | 1.5  |            |  |   | 0.9        |   |  |   | 7.0   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Operating income                                       |  |                                       | 7.6  |   |                                           |   | 4.8  |            |  |   | 22.0       |   |  |   | 9.3   |  
|Interest expense                                       |  |                                       | (2.3 | ) |                                           |   | (2.4 | )          |  |   | (6.8       | ) |  |   | (7.4  | )
|Other income, net                                      |  |                                       | 0.3  |   |                                           |   |     |            |  |   | 0.8        |   |  |   | 0.6   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Income before income taxes                             |  |                                       | 5.6  |   |                                           |   | 2.4  |            |  |   | 16.0       |   |  |   | 2.5   |  
|Income tax expense                                     |  |                                       | 3.2  |   |                                           |   | 0.9  |            |  |   | 7.2        |   |  |   | 0.9   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Net income                                             |  | $                                     | 2.4  |   |                                           | $ | 1.5  |            |  | $ | 8.8        |   |  | $ | 1.6   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Earnings per share:                                    |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Basic                                                  |  | $                                     | 0.16 |   |                                           | $ | 0.09 |            |  | $ | 0.58       |   |  | $ | 0.10  |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Diluted                                                |  | $                                     | 0.16 |   |                                           | $ | 0.09 |            |  | $ | 0.56       |   |  | $ | 0.09  |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Average number of shares:                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Common shares outstanding                              |  |                                       | 15.0 |   |                                           |   | 15.8 |            |  |   | 15.2       |   |  |   | 15.8  |  
|Common stock warrants                                  |  |                                       | 0.1  |   |                                           |   | 0.1  |            |  |   | 0.1        |   |  |   | 0.1   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Shares applicable to basic earnings                    |  |                                       | 15.1 |   |                                           |   | 15.9 |            |  |   | 15.3       |   |  |   | 15.9  |  
|Equivalent shares on outstanding stock awards          |  |                                       | 0.4  |   |                                           |   | 0.7  |            |  |   | 0.3        |   |  |   | 0.7   |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Shares applicable to diluted earnings                  |  |                                       | 15.5 |   |                                           |   | 16.6 |            |  |   | 15.6       |   |  |   | 16.6  |  
|                                                       |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  

See notes to condensed financial statements.



1



---

MIDAS, INC.

CONDENSED BALANCE SHEETS

(In millions, except per share data)



|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ----- | - | ------------------ | - | ----- | -
|                                                                                                                                      |  | FiscalSeptember2006 |       |   | FiscalDecember2005 |  
|                                                                                                                                      |  | (Unaudited)         |       |   |                    |  
|Assets:                                                                                                                               |  |                     |       |   |                    |   |       |  
|Current assets:                                                                                                                       |  |                     |       |   |                    |   |       |  
|Cash and cash equivalents                                                                                                             |  | $                   | 1.3   |   |                    | $ | 1.4   |  
|Receivables, net                                                                                                                      |  |                     | 30.8  |   |                    |   | 33.5  |  
|Inventories, net                                                                                                                      |  |                     | 3.5   |   |                    |   | 6.8   |  
|Deferred income taxes                                                                                                                 |  |                     | 8.0   |   |                    |   | 9.1   |  
|Prepaid assets                                                                                                                        |  |                     | 3.7   |   |                    |   | 3.3   |  
|Other current assets                                                                                                                  |  |                     | 3.4   |   |                    |   | 3.2   |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Total current assets                                                                                                                  |  |                     | 50.7  |   |                    |   | 57.3  |  
|Property and equipment, net                                                                                                           |  |                     | 100.8 |   |                    |   | 104.6 |  
|Intangible assets, net                                                                                                                |  |                     | 1.6   |   |                    |   |      |  
|Deferred income taxes                                                                                                                 |  |                     | 54.2  |   |                    |   | 59.5  |  
|Other assets                                                                                                                          |  |                     | 17.0  |   |                    |   | 17.8  |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Total assets                                                                                                                          |  | $                   | 224.3 |   |                    | $ | 239.2 |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Liabilities and equity:                                                                                                               |  |                     |       |   |                    |   |       |  
|Current liabilities:                                                                                                                  |  |                     |       |   |                    |   |       |  
|Current portion of long-term obligations                                                                                              |  | $                   | 2.0   |   |                    | $ | 1.9   |  
|Accounts payable                                                                                                                      |  |                     | 12.3  |   |                    |   | 13.6  |  
|Accrued expenses                                                                                                                      |  |                     | 25.9  |   |                    |   | 31.7  |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Total current liabilities                                                                                                             |  |                     | 40.2  |   |                    |   | 47.2  |  
|Long-term debt                                                                                                                        |  |                     | 62.2  |   |                    |   | 65.0  |  
|Obligations under capital leases                                                                                                      |  |                     | 3.3   |   |                    |   | 4.1   |  
|Finance lease obligation                                                                                                              |  |                     | 34.2  |   |                    |   | 35.9  |  
|Accrued warranty                                                                                                                      |  |                     | 30.1  |   |                    |   | 30.7  |  
|Other liabilities                                                                                                                     |  |                     | 4.8   |   |                    |   | 6.8   |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Total liabilities                                                                                                                     |  |                     | 174.8 |   |                    |   | 189.7 |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Shareholders equity:                                                                                                                 |  |                     |       |   |                    |   |       |  
|Common stock ($.001 par value, 100 million shares authorized, 17.7 million shares and 17.7 million shares issued) and paid-in
capital |  |                     | 12.3  |   |                    |   | 19.8  |  
|Treasury stock, at cost (2.4 million shares and 2.0 million shares)                                                                   |  |                     | (51.2 | ) |                    |   | (45.0 | )
|Unamortized restricted stock awards                                                                                                   |  |                     |      |   |                    |   | (4.2  | )
|Retained income                                                                                                                       |  |                     | 89.9  |   |                    |   | 81.1  |  
|Cumulative other comprehensive loss                                                                                                   |  |                     | (1.5  | ) |                    |   | (2.2  | )
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Total shareholders equity                                                                                                            |  |                     | 49.5  |   |                    |   | 49.5  |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  
|Total liabilities and shareholders equity                                                                                            |  | $                   | 224.3 |   |                    | $ | 239.2 |  
|                                                                                                                                      |  |                     |       |   |                    |   |       |  

See notes to condensed financial statements.



2



---

MIDAS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)



|                                                                                                                          |  |                                           |       |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                                                          |  | For the nine monthsended fiscal September |      
|                                                                                                                          |  | 2006                                      |       |   | 2005 |  
|Cash flows from operating activities:                                                                                     |  |                                           |       |   |      |   |       |  
|Net income                                                                                                                |  | $                                         | 8.8   |   |      | $ | 1.6   |  
|Adjustments reconciling net income to net cash provided by operating activities:                                          |  |                                           |       |   |      |   |       |  
|Depreciation and amortization                                                                                             |  |                                           | 6.8   |   |      |   | 8.0   |  
|Stock based compensation                                                                                                  |  |                                           | 2.6   |   |      |   | 1.2   |  
|Amortization of financing fees and change in debt swap valuation                                                          |  |                                           | 0.4   |   |      |   | 0.6   |  
|Business transformation charges                                                                                           |  |                                           | 0.9   |   |      |   | 7.0   |  
|Business transformation charges (inventory write-down)                                                                    |  |                                           |      |   |      |   | 4.1   |  
|Gain on sale of assets                                                                                                    |  |                                           | (3.4  | ) |      |   | (2.0  | )
|Deferred income taxes                                                                                                     |  |                                           | 6.1   |   |      |   | (0.9  | )
|Cash outlays for business transformation costs                                                                            |  |                                           | (4.8  | ) |      |   | (3.9  | )
|Changes in assets and liabilities, exclusive of effects of business transformation charges, acquisitions and dispositions |  |                                           | 2.9   |   |      |   | (8.9  | )
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net cash provided by operating activities                                                                                 |  |                                           | 20.3  |   |      |   | 6.8   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Cash flows from investing activities:                                                                                     |  |                                           |       |   |      |   |       |  
|Capital investments                                                                                                       |  |                                           | (2.9  | ) |      |   | (1.9  | )
|Cash paid for acquired businesses                                                                                         |  |                                           | (1.4  | ) |      |   |      |  
|Proceeds from sales of assets                                                                                             |  |                                           | 1.1   |   |      |   | 8.5   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net cash provided by (used in) investing activities                                                                       |  |                                           | (3.2  | ) |      |   | 6.6   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Cash flows from financing activities:                                                                                     |  |                                           |       |   |      |   |       |  
|Principal payments of long-term debt                                                                                      |  |                                           |      |   |      |   | (7.9  | )
|Net borrowings (repayments) under revolving lines of credit                                                               |  |                                           | (2.8  | ) |      |   | 3.9   |  
|Payment of principal obligations under capital leases                                                                     |  |                                           | (0.7  | ) |      |   | (0.8  | )
|Payment of principal obligations under finance lease                                                                      |  |                                           | (0.7  | ) |      |   | (0.6  | )
|Decrease in outstanding checks                                                                                            |  |                                           | (1.5  | ) |      |   | (4.3  | )
|Cash received for common stock                                                                                            |  |                                           | 1.8   |   |      |   | 4.6   |  
|Cash paid for treasury shares                                                                                             |  |                                           | (13.3 | ) |      |   | (7.2  | )
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net cash used in financing activities                                                                                     |  |                                           | (17.2 | ) |      |   | (12.3 | )
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                   |  |                                           | (0.1  | ) |      |   | 1.1   |  
|Cash and cash equivalents at beginning of period                                                                          |  |                                           | 1.4   |   |      |   | 0.9   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Cash and cash equivalents at end of period                                                                                |  | $                                         | 1.3   |   |      | $ | 2.0   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  

See notes to condensed financial statements.



3



---

MIDAS, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)

(In millions)



|                                                       |  |                                 |  |        |                |   |        |                                     |   |        |                 |       |                            |  |         |      |            |  |   |      |  |   |     |  |   |      |  
|------------------------------------------------------ |  | ------------------------------- |  | ------ | -------------- | - | ------ | ----------------------------------- | - | ------ | --------------- | ----- | -------------------------- |  | ------- | ---- | ---------- |  | - | ---- |  | - | --- |  | - | ---- | -
|                                                       |  | Common StockAnd Paid-in Capital |  |        | Treasury Stock |   |        | Unamortized Restricted Stock Awards |   |        | Retained Income |       | ComprehensiveIncome (Loss) | 
|                                                       |  | Shares                          |  | Amount |                |   | Shares |                                     |   | Amount |                 |       |                            |  | Current |      | Cumulative | 
|Fiscal year end 2005                                   |  | 17.7                            |  | $      | 19.8           |   |        | (2.0                                | ) |        | $               | (45.0 | )                          |  | $       | (4.2 | )          |  | $ | 81.1 |  |   |     |  | $ | (2.2 | )
|Eliminate remaining deferred compensation (a)          |  |                                |  |        | (4.2           | ) |        |                                    |   |        |                 |      |                            |  |         | 4.2  |            |  |   |     |  |   |     |  |   |     |  
|Purchase of treasury shares                            |  |                                |  |        |               |   |        | (0.7                                | ) |        |                 | (13.6 | )                          |  |         |     |            |  |   |     |  |   |     |  |   |     |  
|Stock option transactions                              |  |                                |  |        | (0.9           | ) |        | 0.1                                 |   |        |                 | 2.7   |                            |  |         |     |            |  |   |     |  |   |     |  |   |     |  
|Restricted stock awards                                |  |                                |  |        | (4.8           | ) |        | 0.2                                 |   |        |                 | 4.8   |                            |  |         |     |            |  |   |     |  |   |     |  |   |     |  
|Forfeiture of restricted stock awards                  |  |                                |  |        | 0.1            |   |        |                                    |   |        |                 | (0.1  | )                          |  |         |     |            |  |   |     |  |   |     |  |   |     |  
|Stock based compensation                               |  |                                |  |        | 2.6            |   |        |                                    |   |        |                 |      |                            |  |         |     |            |  |   |     |  |   |     |  |   |     |  
|Tax effect of restricted stock vesting                 |  |                                |  |        | (0.3           | ) |        |                                    |   |        |                 |      |                            |  |         |     |            |  |   |     |  |   |     |  |   |     |  
|Net income                                             |  |                                |  |        |               |   |        |                                    |   |        |                 |      |                            |  |         |     |            |  |   | 8.8  |  | $ | 8.8 |  |   |     |  
|Other comprehensive income                             |  |                                 |  |        |                |   |        |                                     |   |        |                 |       |                            |  |         |      |            |  |   |      |  |   |     |  |   |      |  
| foreign currency translation                         |  |                                |  |        |               |   |        |                                    |   |        |                 |      |                            |  |         |     |            |  |   |     |  |   | 0.6 |  |   | 0.6  |  
| gain on derivative financial instruments, net of tax |  |                                |  |        |               |   |        |                                    |   |        |                 |      |                            |  |         |     |            |  |   |     |  |   | 0.1 |  |   | 0.1  |  
|                                                       |  |                                 |  |        |                |   |        |                                     |   |        |                 |       |                            |  |         |      |            |  |   |      |  |   |     |  |   |      |  
|Comprehensive income                                   |  |                                |  |        |               |   |        |                                    |   |        |                 |      |                            |  |         |     |            |  |   |     |  | $ | 9.5 |  |   |     |  
|                                                       |  |                                 |  |        |                |   |        |                                     |   |        |                 |       |                            |  |         |      |            |  |   |      |  |   |     |  |   |      |  
|Fiscal third quarter end 2006                          |  | 17.7                            |  | $      | 12.3           |   |        | (2.4                                | ) |        | $               | (51.2 | )                          |  | $       |     |            |  | $ | 89.9 |  |   |     |  | $ | (1.5 | )
|                                                       |  |                                 |  |        |                |   |        |                                     |   |        |                 |       |                            |  |         |      |            |  |   |      |  |   |     |  |   |      |  

---

|(a) | On January 1, 2006, the Company adopted the provisions of SFAS No. 123R using the modified prospective method. Under the modified prospective method, contra-equity
accounts related to unearned or deferred compensation for awards previously accounted for pursuant to APB 25 are eliminated against paid-in capital.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See notes to condensed financial statements.



4



---

MIDAS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

1. Financial Statement
Presentation

The condensed interim period financial statements presented herein do not include all of the information and disclosures
customarily provided in annual financial statements and they have not been audited, as permitted by the rules and regulations of the Securities and Exchange Commission. The condensed interim period financial statements should be read in conjunction
with the annual financial statements included in the annual report on Form 10-K for the fiscal year ended December 31, 2005. In the opinion of management, these financial statements have been prepared in conformity with accounting principles
generally accepted in the United States and reflect all adjustments necessary for a fair statement of the results of operations and cash flows for the interim periods ended September 30, 2006 (third quarter fiscal 2006) and
October 1, 2005 (third quarter fiscal 2005) and of its financial position as of September 30, 2006. All such adjustments are of a normal recurring nature. The results of operations for the third quarter of fiscal 2006 and 2005
are not necessarily indicative of the results of operations for the full year.

The unaudited condensed financial statements present the
consolidated financial information for Midas, Inc. and its wholly-owned subsidiaries (Midas or the Company). The unaudited condensed financial statements for the quarters ended September 30, 2006 and October 1, 2005
both cover a 13-week period. All significant inter-company balances and transactions have been eliminated in consolidation.

Certain
reclassifications have been made to the previously reported fiscal 2005 financial statements in order to provide consistency with the fiscal 2006 results. These reclassifications did not affect previously reported income before income taxes, net
income or earnings per share.

Basic and diluted earnings per share were calculated based on the following share counts (in millions):



|                                           |  |                                       |  |                                           |  |      |  |     
|------------------------------------------ |  | ------------------------------------- |  | ----------------------------------------- |  | ---- |  | ----
|                                           |  | For the quarterended fiscal September |  | For the nine monthsended fiscal September
|                                           |  | 2006                                  |  | 2005                                      |  | 2006 |  | 2005
|Weighted-average common shares outstanding |  | 15.0                                  |  | 15.8                                      |  | 15.2 |  | 15.8
|Common stock warrants                      |  | 0.1                                   |  | 0.1                                       |  | 0.1  |  | 0.1 
|                                           |  |                                       |  |                                           |  |      |  |     
|Shares applicable to basic earnings        |  | 15.1                                  |  | 15.9                                      |  | 15.3 |  | 15.9
|Effect of dilutive stock awards            |  | 0.4                                   |  | 0.7                                       |  | 0.3  |  | 0.7 
|                                           |  |                                       |  |                                           |  |      |  |     
|Shares applicable to diluted earnings      |  | 15.5                                  |  | 16.6                                      |  | 15.6 |  | 16.6
|                                           |  |                                       |  |                                           |  |      |  |     
|Potential common share equivalents:        |  |                                       |  |                                           |  |      |  |     
|Stock options                              |  | 1.4                                   |  | 1.3                                       |  | 1.4  |  | 1.3 

2. Supplemental Cash Flow Activity

Net cash flows from operating activities reflect cash payments and receipts for interest and taxes as follows (in millions):



|                   |  |                                           |      |   |      |   |      |  
|------------------ |  | ----------------------------------------- | ---- | - | ---- | - | ---- | -
|                   |  | For the nine monthsended fiscal September |     
|                   |  | 2006                                      |      |   | 2005 |  
|Interest paid      |  | $                                         | 6.3  |   |      | $ | 6.5  |  
|Income tax refunds |  |                                           | (0.2 | ) |      |   | (0.3 | )
|Income taxes paid  |  |                                           | 0.8  |   |      |   | 1.0  |  

The acquisition of certain company-operated shops resulted in non-cash reductions of accounts
receivable of approximately $1.9 million and $0.5 million during the first nine months of fiscal 2006 and 2005, respectively.



5



---

3. Inventories

Inventories were composed of finished goods, net of reserves, in both the quarter ended September 30, 2006 and the year ended December 31, 2005.

4. Business Transformation Activities

The Company is in the process of transforming its business. As part of the Companys business transformation, management has developed and implemented strategic initiatives that it believes will enhance its
long-term competitive position. The Company believes these initiatives will enable it to reduce costs and enhance sustainable profitability while delivering critical products and services to its customers. These initiatives include the closure and
re-franchising of certain company-operated shops, the redesign of the Companys wholesale parts distribution network, the exit from exhaust manufacturing and distribution, and the reduction of administrative expenses related to former operating
activities. The implementation of these initiatives has had and will continue to have the effect of lowering overall Company revenues and expenses compared to the prior year. Furthermore, the implementation of the Companys strategic
initiatives has resulted in the Company recording substantial business transformation charges in prior fiscal years to reflect the write-down of assets, the disposition of lease agreements, severance costs, and other related expenses.

In connection with Midas ongoing retail transformation, the Company recently developed a major update to its retail shop image. The new image
program incorporates changes to internal shop appearance and merchandising, as well as a significant redesign of the Midas shop façade. Midas management believes the new image will better showcase the Companys expansion into new
services, enhance efforts to educate customers and significantly increase the visibility and curb appeal of the typical Midas shop. The Company expects a majority of Midas shops throughout North America to adopt the new shop image. In order to
encourage Midas dealers to adopt this new image during 2006 and 2007, the Company is offering to provide a subsidy of up to $2,600 per shop. As a result, Midas management expects that the implementation of this program will result in additional
business transformation costs each quarter during fiscal 2006 and 2007. Midas believes the total charges will be approximately $4 million.

The fiscal 2006 activity to date affecting the accrual for business transformation charges was as follows (shown in millions):



|                                |  |             |      |   |                               |   |      |                                          |  |   |                                         |   |  |                                              |      |       |  |   |     |  |   |      |  
|------------------------------- |  | ----------- | ---- | - | ----------------------------- | - | ---- | ---------------------------------------- |  | - | --------------------------------------- | - |  | -------------------------------------------- | ---- | ----- |  | - | --- |  | - | ---- | -
|                                |  | ImageUpdate |      |   | Exit fromExhaustManufacturing |   |      | Rationalizationof Company-Operated Shops |  |   | Redesign ofWholesaleDistributionNetwork |   |  | AdministrativeCosts,Severance andOther Costs |      | Total | 
|Balance at December 31, 2005    |  | $           |     |   |                               | $ | 3.2  |                                          |  | $ | 0.3                                     |   |  | $                                            | 0.7  |       |  | $ | 0.1 |  | $ | 4.3  |  
|Business transformation charges |  |             | 1.1  |   |                               |   | (0.2 | )                                        |  |   |                                        |   |  |                                              |     |       |  |   |    |  |   | 0.9  |  
|Cash payments                   |  |             | (1.1 | ) |                               |   | (2.9 | )                                        |  |   | (0.1                                    | ) |  |                                              | (0.7 | )     |  |   |    |  |   | (4.8 | )
|Non-cash utilization            |  |             |     |   |                               |   | 0.2  |                                          |  |   |                                        |   |  |                                              |     |       |  |   |    |  |   | 0.2  |  
|                                |  |             |      |   |                               |   |      |                                          |  |   |                                         |   |  |                                              |      |       |  |   |     |  |   |      |  
|Balance at September 30, 2006   |  | $           |     |   |                               | $ | 0.3  |                                          |  | $ | 0.2                                     |   |  | $                                            |     |       |  | $ | 0.1 |  | $ | 0.6  |  
|                                |  |             |      |   |                               |   |      |                                          |  |   |                                         |   |  |                                              |      |       |  |   |     |  |   |      |  

The above accrual balance for business transformation charges is reflected in the Companys
balance sheet on the Accrued expenses line.

5. Debt Agreements

On March 16, 2004, the Company entered into a three-year, $115 million credit facility to refinance its existing credit facility. This credit
facility was initially comprised of a $55 million revolving credit facility and a $60 million term loan. The facility was secured by substantially all of the assets of the Company and was set to expire on March 16, 2007. Interest on the $55
million revolving loan was initially payable monthly at LIBOR plus 3.25%. Interest on the $60 million term loan was initially payable monthly at LIBOR plus 3.5%. The interest rates floated based on the underlying rate of LIBOR and the Companys
leverage. The facility required maintenance of certain financial covenants including maximum allowable leverage and minimum tangible net worth. In addition, the agreement restricted capital expenditures and prohibited treasury stock purchases and
the payment of dividends.



6



---

On November 5, 2004, the Company amended its March 2004 credit agreement to reduce the required
principal amortization under the term loan, remove certain restrictive covenants, and reduce interest rates. As amended, the term loan required quarterly principal payments of $1.5 million and mandated prepayment of debt with the proceeds generated
from the liquidation of assets in connection with the Companys ongoing restructuring. The amendment also eased the Companys restrictions on capital expenditures, allowed for stock repurchases and dividend payments, and reduced the
interest rate on both the term loan and revolving loan by 50 basis points.

On October 27, 2005, the Company entered into a new
five-year, unsecured $110 million revolving credit facility that further reduced interest rates, eliminated scheduled principal payments and significantly increased the Companys capacity to make treasury stock repurchases and dividend
payments. The new credit facility was initially expandable to $140 million at the Companys discretion with lender approval. Interest on the new revolving loan was initially payable monthly at LIBOR plus 2.0%. The interest rate floats based on
the underlying rate of LIBOR and the Companys leverage. This facility requires maintenance of certain financial covenants including maximum allowable leverage and minimum tangible net worth.

On September 15, 2006, the Company amended its October 2005 revolving credit facility. The amended facility is now expandable to $165 million at the
Companys discretion with lender approval. As a result of the amendment, the Companys borrowing cost was reduced by 50 basis points. Currently, the interest rate on the Companys revolving loan borrowings is priced at LIBOR plus
1.25%. In addition, the amendment eliminated restrictions on treasury stock repurchases, dividends and acquisitions.

In April 2004, the
Company entered into an interest rate swap arrangement to convert $40 million in senior bank debt from a floating rate to a fixed rate by locking-in LIBOR at 2.76% for the three-year term of the agreement. The outstanding amount of the swap is
reduced by $2.5 million each quarter until the end of the three-year term. As of September 30, 2006, approximately $16.3 million of this interest rate swap remained outstanding. In November 2005, an additional $20 million in senior bank debt
was converted from floating rate to fixed rate by locking-in LIBOR at 4.89% for a five year period with no scheduled reduction.

The April
2004 swap arrangement has been designated as a cash flow hedge and was evaluated to be ineffective subsequent to the Companys October 2005 refinancing. As a result, the change in the fair value is reflected on the statement of operations as
interest expense. The November 2005 swap arrangement has been designated as a cash flow hedge and was evaluated to be highly effective. As a result, the change in the fair value is recorded in other comprehensive income as a gain or loss on
derivative financial instruments. As of September 30, 2006, the fair value of these instruments was an asset of approximately $0.2 million.

As of September 30, 2006, a total of $62.2 million was outstanding under the revolving credit facility. As of December 31, 2005, a total of $65.0 million was outstanding under the revolving credit facility.

6. Pension Plans

Certain
Midas employees are covered under various defined benefit pension plans sponsored and funded by Midas. Plans covering salaried and hourly corporate 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. Plan assets are invested primarily in common stocks, corporate bonds, and government securities. The Company does not expect to make material
contributions to the various plans in fiscal 2006.

The components of net periodic pension cost recognized for the interim periods are
presented in the following table (in millions):



|                                              |  |                                       |      |   |                                           |   |      |      |  |   |      |   |  |   |      |  
|--------------------------------------------- |  | ------------------------------------- | ---- | - | ----------------------------------------- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                              |  | For the quarterended fiscal September |      |   | For the nine monthsended fiscal September |  
|                                              |  | 2006                                  |      |   | 2005                                      |   |      | 2006 |  |   | 2005 |  
|Service cost  benefits                       |  | $                                     | 0.3  |   |                                           | $ | 0.2  |      |  | $ | 0.9  |   |  | $ | 0.7  |  
|Interest cost on projected benefit obligation |  |                                       | 0.7  |   |                                           |   | 0.8  |      |  |   | 2.1  |   |  |   | 2.2  |  
|Expected return on assets                     |  |                                       | (1.1 | ) |                                           |   | (1.0 | )    |  |   | (3.3 | ) |  |   | (3.1 | )
|Net amortization and deferral                 |  |                                       | 0.2  |   |                                           |   | 0.1  |      |  |   | 0.6  |   |  |   | 0.5  |  
|                                              |  |                                       |      |   |                                           |   |      |      |  |   |      |   |  |   |      |  
|Total net periodic pension cost               |  | $                                     | 0.1  |   |                                           | $ | 0.1  |      |  | $ | 0.3  |   |  | $ | 0.3  |  
|                                              |  |                                       |      |   |                                           |   |      |      |  |   |      |   |  |   |      |  



7



---

During the third quarter of fiscal 2006 approximately $2.6 million was distributed pursuant to the
partial wind-up of the Canadian Salaried Pension Plan. These funds were distributed from plan assets and had no impact on the Companys financial statements or cash flow.

Midas also participated in a multi-employer pension plan, which provides benefits to certain former unionized employees. Contributions of approximately
$145,000 were made to this plan for the nine months ended September 30, 2006. A final contribution of approximately $20,000 will be paid in the fourth quarter of fiscal 2006.

7. Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board issued Statement No. 123R, Share-Based Payment (SFAS No. 123R or the Statement). This Statement is a revision of
Statement No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
No. 25), and its related implementation guidance. On January 1, 2006, the Company adopted the provisions of SFAS No. 123R using the Modified Prospective Application method. SFAS No. 123R focuses primarily on
accounting for transactions in which an entity obtains employee services in share-based payment transactions. The Statement requires entities to recognize compensation expense for awards of equity instruments to employees based on the grant-date
fair value of those awards (with limited exceptions). SFAS No. 123R also requires the benefits of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as
prescribed under the prior accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods after adoption. Total cash flow remains unchanged from what would have been reported under prior
accounting rules.

Prior to the adoption of SFAS No. 123R, the Company applied the intrinsic-value-based method in accordance
with APB No. 25 to account for its employee stock options and share purchase rights. Accordingly, no compensation expense was recognized for share purchase rights granted in connection with the issuance of stock options under the Companys
stock incentive plans; however, compensation expense was recognized in connection with the issuance of restricted shares. The adoption of SFAS No. 123R primarily resulted in a change in the method of recognizing the fair value of
share-based compensation and estimating forfeitures for all unvested awards. Specifically, the adoption of SFAS No. 123R resulted in recording compensation expense for employee stock options. The Company records an expense for outstanding
unvested stock awards based on the grant-date fair value of those awards. The fair value of stock option awards has been determined using the Black-Scholes option pricing model and the Modified Prospective Application method of adoption as allowed
under SFAS No. 123R.

The following table shows the effect of adopting SFAS No. 123R on selected reported items (As
Reported) and what those items would have been under previous guidance under APB No. 25 (in millions):



|                                    |  |                                             |      |                                                |   |             |  |                 |      |  |   |      |  
|----------------------------------- |  | ------------------------------------------- | ---- | ---------------------------------------------- | - | ----------- |  | --------------- | ---- |  | - | ---- | -
|                                    |  | For the quarter ended fiscal September 2006 |      | For the nine monthsended fiscal September 2006 |  
|                                    |  | AsReported                                  |      | Under APBNo. 25                                |   | As Reported |  | Under APBNo. 25 |     
|Statement of Operations:            |  |                                             |      |                                                |   |             |  |                 |      |  |   |      |  
|Operating income                    |  | $                                           | 7.6  |                                                | $ | 8.0         |  | $               | 22.0 |  | $ | 23.6 |  
|Income before income taxes          |  |                                             | 5.6  |                                                |   | 6.0         |  |                 | 16.0 |  |   | 17.6 |  
|Net income                          |  |                                             | 2.4  |                                                |   | 2.7         |  |                 | 8.8  |  |   | 9.7  |  
|                                    |  |                                             |      |                                               
|Earnings per share:                 |  |                                             |      |                                                |   |             |  |                 |      |  |   |      |  
|Basic                               |  | $                                           | 0.16 |                                                | $ | 0.17        |  | $               | 0.58 |  | $ | 0.64 |  
|Diluted                             |  |                                             | 0.16 |                                                |   | 0.17        |  |                 | 0.56 |  |   | 0.62 |  
|                                    |  |                                             |      |                                               
|Balance Sheet:                      |  |                                             |      |                                                |   |             |  |                 |      |  |   |      |  
|Common stock and paid-in capital    |  |                                             |      |                                                |   |             |  | $               | 12.3 |  | $ | 18.6 |  
|Unamortized restricted stock awards |  |                                             |      |                                                |   |             |  |                 |     |  |   | (7.9 | )

The Company did not record an excess tax benefit in the first nine months of fiscal 2006;
therefore, there is no impact on cash flows from operating activities or cash flows from financing activities in the Statement of Cash Flows. Under the



8



---

Modified Prospective Application method, contra-equity accounts related to unearned or deferred compensation for awards previously accounted for pursuant to
APB 25 are eliminated against paid-in capital.

Results for fiscal 2005 have not been restated. Had compensation expense for employee stock
options granted under the stock option plan been determined based on a fair-value method at the grant date consistent with SFAS No. 123R, the Companys net income and earnings per share for the third quarter and nine months ended
October 1, 2005 would have been reduced to the pro forma amounts indicated below (in millions):



|                                                                                     |  |                                           |      |   |                                                |   |      |  
|------------------------------------------------------------------------------------ |  | ----------------------------------------- | ---- | - | ---------------------------------------------- | - | ---- | -
|                                                                                     |  | For the quarterended fiscalSeptember 2005 |      |   | For the nine months ended fiscalSeptember 2005 |  
|Net income                                                                           |  |                                           |      |   |                                                |   |      |  
|As reported                                                                          |  | $                                         | 1.5  |   |                                                | $ | 1.6  |  
|Plus: stock-based compensation expense included in reported net income, net of taxes |  |                                           | 0.2  |   |                                                |   | 0.7  |  
|Less: fair value impact of employee stock compensation, net of taxes                 |  |                                           | (0.5 | ) |                                                |   | (1.7 | )
|                                                                                     |  |                                           |      |   |                                                |   |      |  
|Pro forma                                                                            |  | $                                         | 1.2  |   |                                                | $ | 0.6  |  
|                                                                                     |  |                                           |      |   |                                                |   |      |  
|Basic earnings per share                                                             |  |                                           |      |   |                                                |   |      |  
|As reported                                                                          |  | $                                         | 0.09 |   |                                                | $ | 0.10 |  
|Pro forma                                                                            |  |                                           | 0.07 |   |                                                |   | 0.04 |  
|                                                                                     |  |                                          
|Diluted earnings per share                                                           |  |                                           |      |   |                                                |   |      |  
|As reported                                                                          |  | $                                         | 0.09 |   |                                                | $ | 0.09 |  
|Pro forma                                                                            |  |                                           | 0.07 |   |                                                |   | 0.03 |  

Stock Options

The Midas Stock Incentive Plan, the Midas Treasury Stock Plan and the Midas Directors Deferred Compensation Plan (the Plans) authorize the issuance of up to 4,806,886 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. Options granted pursuant to the Plans generally vest over a period of three to five years commencing one year after the date of grant. It is the Companys policy to issue shares out of treasury when options are exercised. The following
table summarizes information regarding the outstanding stock options as of September 30, 2006:



|                                    |  |                 |   |  |                     |  |                                |       |                                                     |     |                                         |   |     
|----------------------------------- |  | --------------- | - |  | ------------------- |  | ------------------------------ | ----- | --------------------------------------------------- | --- | --------------------------------------- | - | ----
|                                    |  | Number ofShares |   |  | Option Price Ranges |  | Weighted AverageExercise Price |       | Weighted AverageRemainingContractual Term(in years) |     | Aggregate Intrinsic Value (in millions)
|Outstanding at fiscal year end 2005 |  | 1,745,148       |   |  | $6.77 $34.66       |  | $                              | 13.13 |                                                     |     |                                         |   |     
|Exercised                           |  | (122,005        | ) |  | 7.20 18.65         |  |                                | 14.91 |                                                     |     |                                         |   |     
|Granted                             |  | 98,000          |   |  | 21.74 21.74        |  |                                | 21.74 |                                                     |     |                                         |   |     
|Cancelled and forfeited             |  | (39,352         | ) |  | 8.09 22.17         |  |                                | 14.89 |                                                     |     |                                         |   |     
|                                    |  |                 |   |  |                     |  |                                |       |                                                     |     |                                         |   |     
|Outstanding at September 30, 2006   |  | 1,681,791       |   |  | 6.77 34.66         |  |                                | 13.47 |                                                     | 6.2 |                                         | $ | 10.4
|                                    |  |                 |   |  |                     |  |                                |       |                                                     |     |                                         |   |     
|Exercisable at September 30, 2006   |  | 893,661         |   |  | 6.77 34.66         |  |                                | 12.68 |                                                     | 5.1 |                                         | $ | 4.6 
|                                    |  |                 |   |  |                     |  |                                |       |                                                     |     |                                         |   |     

Additional information pertaining to option activity during the quarter and nine months ended
fiscal September 2006 and 2005 was as follows (in millions):



|                                           |  |                                       |   |                                           |   |      |  |      |     |  |   |    
|------------------------------------------ |  | ------------------------------------- | - | ----------------------------------------- | - | ---- |  | ---- | --- |  | - | ---
|                                           |  | For the quarterended fiscal September |   | For the nine monthsended fiscal September
|                                           |  | 2006                                  |   | 2005                                      |   | 2006 |  | 2005
|Weighted average grant-date fair value of: |  |                                       |   |                                           |   |      |  |      |     |  |   |    
|Stock options granted                      |  | $                                     |  |                                           | $ |     |  | $    | 0.9 |  | $ | 0.9
|Stock options exercised                    |  |                                       |  |                                           |   | 0.4  |  |      | 0.8 |  |   | 2.2
|Stock options vested                       |  |                                       |  |                                           |   |     |  |      | 1.3 |  |   | 1.3



9



---

The weighted average estimated fair value of the options granted in the nine months ended September 2006
and 2005 was $9.04 and $8.76, respectively, based on the Black-Scholes valuation model using the following assumptions:



|                        |  |       |   |      |       |   |      | 
|----------------------- |  | ----- | - | ---- | ----- | - | ---- | 
|Fiscal Year             |  |       |   | 2006 |       |   | 2005 | 
|Risk-free interest rate |  | 5.02  | % |      | 3.80  | %
|Dividend yield          |  | 0.0   | % |      | 0.0   | %
|Expected volatility     |  | 29.78 | % |      | 33.00 | %
|Expected life in years  |  | 6.50  |   |      | 6.00  |  

As of September 30, 2006, there was $4.3 million in stock option compensation expense related
to unvested awards not yet recognized, which is expected to be recognized over a weighted-average period of 3.4 years.

Restricted Stock

From time to time the Company grants shares of restricted stock to certain of its officers and directors. This restricted stock
generally vests at the five or seven year anniversary, with provisions for accelerated vesting upon the occurrence of certain pre-determined events. The fair value of these grants is equal to the stock price on the date of the grant. Activity for
restricted shares, including the non-vested restricted shares outstanding and the weighted average grant-date fair value of those restricted shares is shown in the table below:



|                                            |  |                           |   |  |                                     |        |  
|------------------------------------------- |  | ------------------------- | - |  | ----------------------------------- | ------ | -
|                                            |  | Number ofRestrictedShares |   |  | WeightedAverageGrant-DateFair Value |       
|Non-vested balance as of December 31, 2005  |  | 293,411                   |   |  | $                                   | 17.88  |  
|Granted                                     |  | 218,500                   |   |  |                                     | 21.74  |  
|Vested                                      |  | (10,000                   | ) |  |                                     | 8.83   |  
|Forfeited                                   |  | (6,333                    | ) |  |                                     | (21.43 | )
|                                            |  |                           |   |  |                                     |        |  
|Non-vested balance as of September 30, 2006 |  | 495,578                   |   |  |                                     | 19.72  |  
|                                            |  |                           |   |  |                                     |        |  

As of September 30, 2006 there was $7.9 million of unamortized restricted stock compensation
included in paid-in capital, which is expected to be recognized over a weighted average period of 5.0 years.

Common Stock Warrants

On March 27, 2003, the Company issued 1.0 million warrants valued at $5.0 million in connection with its 2003 debt
restructuring. On January 5, 2004, 500,000 of these warrants were automatically cancelled because the Company met certain financial objectives contained in the warrant agreements. As of September 30, 2006 a total of 52,593 warrants
remained outstanding. The exercise price of the warrants is $0.01, and the warrants are exercisable at any time up to March 27, 2013. Any warrants that remain unexercised at March 27, 2013 are automatically exercised as of that date.

8. Warranty

Customers are provided a written warranty from Midas on certain products purchased from Midas shops in North America, namely brake friction, mufflers, shocks and struts. The warranty will be honored at any Midas shop in North America and is
valid for the lifetime of the vehicle, but is voided if the vehicle is sold. The Company maintains a warranty accrual to cover the estimated future liability associated with outstanding warranties. The Company determines the estimated value of
outstanding warranty claims based on: 1) an estimate of the percentage of all warranted products sold and registered in prior periods at retail that are likely to be redeemed; and 2) an estimate of the cost of redemption of each future warranty
claim on a current cost basis. These estimates are computed using actual historical registration and redemption data as well as actual cost information on current redemptions.

Year-to-date warranty activity through the first nine months of fiscal 2006 is summarized as follows (in millions):



|                                                             |  |   |      |  
|------------------------------------------------------------ |  | - | ---- | -
|Accrued warranty at beginning of period                      |  | $ | 35.4 |  
|Warranty expense                                             |  |   | 4.3  |  
|Changes in foreign currency exchange rate                    |  |   | 0.2  |  
|Warranty credit issued to franchisees (warranty claims paid) |  |   | (5.1 | )
|                                                             |  |   |      |  
|Accrued warranty at end of period                            |  |   | 34.8 |  
|Less current portion (included in accrued expenses)          |  |   | (4.7 | )
|                                                             |  |   |      |  
|Accrued warranty  non-current                               |  | $ | 30.1 |  
|                                                             |  |   |      |  



10



---

9. Sale of Assets

In March 2005, in connection with the Companys planned exit from exhaust manufacturing, the Company sold its Huth equipment manufacturing operations
and recorded a gain of $0.8 million. Also in March 2005, the Company sold its Chicago distribution center and leased it back for a period of 24 months. The facility continued to be used by Midas as its sole exhaust distribution center until Midas
completed its exit from the exhaust distribution business in March 2006, at which point the Company had no continuing involvement with the facility. The lease required monthly payments of $33,186 and was subject to unilateral cancellation by Midas
after the first year with at least 90 days notice. The lease also required Midas to surrender approximately 51% of the square footage of the facility to the landlord by the first anniversary of the lease.

The sale of this facility resulted in a gain of $4.5 million, all of which was initially deferred. This gain was recognized quarterly based upon the
square footage being occupied by Midas and the expected lease term for that space. This resulted in approximately 51% of the gain being recognized over 12 months and the remaining 49% scheduled to be recognized over 24 months. When the entire
facility was turned back to the landlord ahead of schedule in the first quarter of 2006, the remaining gain was recognized at that time. As a result of the above, the Company recognized a gain of $1.8 million in the first quarter of fiscal 2006.

During the first quarter of fiscal 2006, the Company also completed the sale of all remaining manufacturing related equipment which
resulted in a gain of approximately $1.6 million. The Company expects to sell the real estate related to its vacant Hartford manufacturing facility during fiscal 2007.

10. Correction of Error

In
November 2006, the Company discovered errors in its 2004 and 2005 income tax expense calculations of $0.4 million and $0.5 million, respectively. These errors resulted from the Company treating the 2004 and 2005 compensation expense of its chief
executive officer as fully deductible, when in fact the deductibility was limited to $1 million per year under section 162(m) of the Internal Revenue Code. The correction of these errors resulted in a $0.9 million adjustment to Midas income
tax expense in the third quarter of 2006, a $1.2 million reduction of the deferred income tax asset, and a $0.3 million reduction of common stock and paid-in capital. This adjustment to income tax expense was made in the third quarter of fiscal 2006
because the impact on the financial statements was not material. Because the Company has a significant net operating loss carryforward, this correction to the calculation of income tax expense for prior periods does not affect the amount of cash
income taxes the Company will pay in fiscal 2006.



11



---

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

RESULTS OF OPERATIONS

During fiscal
2003, Midas developed and began to implement a plan to dramatically restructure the Companys operations and re-direct the Companys strategic focus towards the Midas retail system. This plan is intended to transform the Company by
improving profitability, enhancing the competitive position of the Midas retail system, strengthening the Companys balance sheet and reducing future capital requirements. This transformation encompasses fundamental changes in the way Midas
dealers are supplied with Midas brand products and other replacement auto parts, a re-definition of the service relationship between Midas dealers and their customers, and a shift in the way the Company approaches its relationship with Midas
franchisees.

During 2003, the Company outsourced the wholesale distribution of Midas brand products and other replacement parts, closed
all but one of the Companys regional distribution centers, disposed of its PWI quick-delivery distribution locations through sale or closure, closed or re-franchised 34 company-operated shops, and significantly reduced corporate administrative
overhead. In connection with the Companys ongoing transformation, management determined that exhaust manufacturing and distribution no longer represented a strategic fit for the Companys evolving retail-focused business model. In May
2005, the Company entered into an agreement appointing AutoZone, Inc. as the exclusively endorsed supplier of Arvin brand exhaust products to Midas shops in the U.S. Midas also entered into an agreement with ArvinMeritor to sell certain IPC-branded
exhaust assets. In December 2005, the Company announced a similar exhaust supply agreement in Canada with Uni-Select, establishing it as the exclusively endorsed supplier of Walker brand exhaust products to Midas shops in Canada. As a result of
these agreements, Midas ceased production at its Hartford, Wisconsin exhaust manufacturing plant during the third quarter of fiscal 2005. Midas continued to operate its exhaust distribution warehouse in Chicago, Illinois during the first quarter of
2006 in order to provide Midas brand exhaust products to Midas dealers in Canada prior to their final conversion to the new exhaust supply program. During the first quarter of fiscal 2006, all remaining exhaust inventory and equipment was sold and
liquidated and the Chicago exhaust distribution warehouse was closed. In connection with the above described business transformation activities, the Company recorded business transformation charges of approximately $177 million from fiscal 2002
through 2005.

The Companys recently completed exit from exhaust manufacturing and distribution will have the effect of further
reducing overall Company revenues and expenses compared to historical levels, and will increase the Companys operating margin. The Companys vacant Hartford, WI factory is the one asset that remains from the former exhaust manufacturing
and distribution operation. Midas is currently seeking buyers for this facility and expects to ultimately record a gain upon the sale of this facility.

The Midas business transformation, and the resulting changes to the way the Company does business, will continue through fiscal 2006 and beyond. In connection with Midas ongoing retail transformation, the
Company recently developed a major update to its retail shop image. The new image program incorporates changes to internal shop appearance and merchandising, as well as a significant redesign of the Midas shop façade. Midas management
believes the new image will better showcase the Companys expansion into new services, enhance efforts to educate customers and significantly increase the visibility and curb appeal of the typical Midas shop. The Company expects a majority of
Midas shops throughout North America to adopt the new shop image. In order to encourage Midas dealers to adopt this new image during 2006 and 2007, the Company is offering to provide a subsidy of up to $2,600 per shop. As a result, Midas management
expects that the implementation of this program will result in additional business transformation costs each quarter during fiscal 2006 and 2007. Midas believes the total charges will be approximately $4 million.

The ultimate objective of the Midas business transformation was established in 2003 and is reflected in Midas 2010 vision of 4-3-2-1.
Midas management is working towards achieving:



| | (4) | 40% increase in Midas shop sales on a same-store basis.
| | --- | -------------------------------------------------------



| | (3) | Three core services: brakes, exhaust and maintenance.
| | --- | -----------------------------------------------------



| | (2) | Doubling of Midas dealer profits.
| | --- | ---------------------------------



| | (1) | One Midas: the Company and Midas dealers working together as one in support of the retail system.
| | --- | -------------------------------------------------------------------------------------------------

With these goals in mind, Midas management is committed to the Companys mission of becoming the most trusted professional and first choice for
customers auto service needs.



12



---

Third Quarter Fiscal 2006 Compared with Third Quarter Fiscal 2005

The following is a summary of the Companys sales and revenues for the third quarter of fiscal 2006 and 2005: ($ in millions)



|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ---- | --------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2006 |      | Percentto Total |       |   | 2005 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 16.6 |                 | 36.7  | % |      | $ | 16.8            |  | 34.5  | %
|Real estate revenues                         |  |      | 9.1  |                 | 20.1  |   |      |   | 9.1             |  | 18.7  |  
|Company-operated shop retail sales           |  |      | 10.8 |                 | 23.8  |   |      |   | 9.6             |  | 19.7  |  
|Replacement part sales and product royalties |  |      | 7.8  |                 | 17.2  |   |      |   | 12.4            |  | 25.5  |  
|Other                                        |  |      | 1.0  |                 | 2.2   |   |      |   | 0.8             |  | 1.6   |  
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 45.3 |                 | 100.0 | % |      | $ | 48.7            |  | 100.0 | %
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  

Total sales and revenues for the third quarter of fiscal 2006 decreased $3.4 million, or 7.0%,
from the third quarter of fiscal 2005 to $45.3 million, primarily due to the exit from the exhaust business as discussed below. Within the retail auto service business, royalty revenues and license fees decreased $0.2 million, or 1.2%, from the
third quarter of fiscal 2005. This decrease was primarily driven by a 1.1% comparable shop decline in system-wide Midas retail sales and fewer shops in operation, partially offset by higher international royalties and a more favorable exchange rate
on Canadian royalty revenue. The comparable shop retail sales decline was due to weak U.S. retail sales of brakes and exhaust. The Company believes that high gasoline prices and the related consumer uncertainty caused consumers to delay big ticket
repair expenditures over the past two quarters. As gas prices declined in late August and September, the Companys comparable shop sales results in the U.S. improved significantly relative to the prior five months.

Sales from company-operated shops increased $1.2 million, or 12.5%, above the third quarter of fiscal 2005. The sales increase primarily reflects an
increase in number of shops in operation, as well as an increase in comparable shop sales of 1.2%. As of September 30, 2006, there were 75 company-operated shops compared to 69 shops as of October 1, 2005. Revenues from real estate leases
were flat to the prior year at $9.1 million. Higher revenues from scheduled rent increases and a more favorable exchange rate on Canadian rental income were offset by a net reduction in the number of shops subject to real estate rental agreements
and lower revenues from sales-based rental agreements.

Replacement part sales and product royalties decreased $4.6 million to $7.8 million
from $12.4 million in the third quarter of fiscal 2005. Product royalties primarily reflect royalties earned on the sale of parts to Midas dealers by AutoZone, NAPA and CarQuest in the U.S. and Uni-Select, NAPA and CarQuest in Canada. The decrease
primarily reflects a $5.7 million reduction in revenues from exhaust distribution as a result of the Companys exit from that business. In addition, product royalty revenues declined as a result of reduced purchases of product from Company
suppliers by Midas dealers and a scheduled reduction in the contractual royalty rates earned from both AutoZone and Uni-Select. These declines were partially offset by an increase in sales of tires, batteries and shop equipment to Midas dealers
through the Companys alliances with certain supply chain partners.

The Companys gross profit margin increased to 64.9% in the
third quarter of fiscal 2006 from 59.8% in the third quarter of fiscal 2005. The year-over-year improvement in gross margin reflects a more favorable sales mix in which a higher percentage of revenues came from franchise royalties and
company-operated shops, and a lower percentage of revenues were derived from lower margin replacement part (wholesale) sales. The Companys current wholesale operation involves primarily the reselling of Bridgestone-Firestone tires,
Interstate batteries and shop equipment to Midas dealers at a small mark-up that is primarily intended to cover the cost of administering these merchandise programs. In addition, warranty expense declined $0.3 million to $1.4 million, or 3.1% of
total sales for the third quarter of fiscal 2006, compared to $1.7 million, or 3.5% of total sales in the third quarter of fiscal 2005. The decline in warranty expense is the result of the Companys vendors assuming responsibility for the
warranty on certain products, lower retail sales of exhaust and brakes, and a reduction in the warranty redemption and reimbursement rate for brakes.

Selling, general and administrative expenses for the third quarter of fiscal 2006 decreased $1.5 million, or 6.6%, from the third quarter of fiscal 2005 to $21.4 million. The decrease in expenses primarily reflects a
$1.1 million reduction in operating expenses related to the distribution of exhaust and a $1.3 million decrease in administrative and franchising overhead expense. These savings were partially offset by an increase of $0.3 million in
company-operated shop expenses due to an increase in the number of shops in operation and an increase of $0.5 million for stock option expense as a result of adopting new accounting rules regarding accounting for stock options (SFAS No. 123R).
No expenses for stock options were recorded in the third quarter of fiscal 2005.



13



---

During the third quarter of fiscal 2006, the Company recorded business transformation charges of $0.4
million primarily driven by the Companys partial funding of the rollout of a new shop image for Midas dealers. During the third quarter of fiscal 2005, business transformation charges of $1.5 million were recorded in selling, general and
administrative expense to reflect expenses for the Companys exit from exhaust manufacturing and distribution.

As a result of the
above changes, operating income increased $2.8 million to $7.6 million in the third quarter of fiscal 2006 from $4.8 million in the third quarter of fiscal 2005. Excluding the impact of the above described business transformation charges and gains
on sale, operating income for the third quarter of fiscal 2006 was $8.0 million compared to $6.2 million for the third quarter of fiscal 2005. Excluding the impact of business transformation charges and gains on sale, operating income margin
increased to 17.7% in the third quarter of fiscal 2006 from 12.7% in the third quarter of fiscal 2005. The improvement in operating margin primarily reflects the elimination of operating losses in the Companys exhaust distribution operation
and savings on corporate overhead expense, which more than offset the impact of $0.5 million in additional expense incurred in connection with the adoption of SFAS No. 123R.

Interest expense decreased from $2.4 million in the third quarter of fiscal 2005 to $2.3 million in third quarter of fiscal 2006 primarily as a result of
a reduction in the amortization of financing fees and a lower average debt level, which offset higher interest rates on the companies revolving facility borrowings.

Other income increased to $0.3 million in the third quarter of fiscal 2006 from nil in the third quarter of fiscal 2005 due to greater income from interest on dealer receivables and reduced foreign currency exchange
losses in 2006. Other income consists primarily of interest income on overdue customer accounts and foreign currency exchange gains or losses.

The Companys effective tax rate was 56.7% in the third quarter of fiscal 2006 compared to 37.5% in the third quarter of fiscal 2005. The increase in the effective tax rate was primarily due to the third quarter 2006 correction of an
error in fiscal 2004 and 2005 income tax expense. The adjustment was made in the third quarter of fiscal 2006 because the impact on the financial statements was not material. Because the Company has a significant net operating loss carryforward,
this correction to the calculation of income tax expense for prior periods does not affect the amount of cash income taxes the Company will pay in fiscal 2006.

As a result of the above items, net income increased $0.9 million from net income of $1.5 million in the third quarter of fiscal 2005 to net income of $2.4 million in the third quarter of fiscal 2006.

Nine Months Ended Fiscal 2006 Compared with Nine Months Ended Fiscal 2005

The following is a summary of the Companys sales and revenues for the first nine months of fiscal 2006 and 2005: ($ in millions)



|                                             |  |      |       |                 |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ----- | --------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2006 |       | Percentto Total |       |   | 2005 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 48.7  |                 | 36.6  | % |      | $ | 49.6            |  | 33.4  | %
|Real estate revenues                         |  |      | 27.3  |                 | 20.5  |   |      |   | 27.0            |  | 18.2  |  
|Company-operated shop retail sales           |  |      | 30.8  |                 | 23.2  |   |      |   | 28.3            |  | 19.1  |  
|Replacement part sales and product royalties |  |      | 23.3  |                 | 17.5  |   |      |   | 41.2            |  | 27.7  |  
|Other                                        |  |      | 2.9   |                 | 2.2   |   |      |   | 2.4             |  | 1.6   |  
|                                             |  |      |       |                 |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 133.0 |                 | 100.0 | % |      | $ | 148.5           |  | 100.0 | %
|                                             |  |      |       |                 |       |   |      |   |                 |  |       |  

Total sales and revenues for the first nine months of fiscal 2006 decreased $15.5 million, or
10.4%, from the first nine months of fiscal 2005 to $133.0 million. Within the retail auto service business, royalty revenues and license fees decreased $0.9 million, or 1.8%, from the first nine months of fiscal 2005. This decrease was primarily
driven by a 1.1% comparable shop decline in system-wide Midas retail sales, fewer shops in operation and the anniversarying of the one-time recognition of royalties from certain delinquent Canadian franchises during the first nine months of fiscal
2005. These were partially offset by higher international royalties and a more favorable exchange rate on Canadian royalty revenue. Sales from company-operated shops increased $2.5 million, or 8.8%, above the first nine months of fiscal 2005. The
sales increase primarily reflects an increase in comparable shop sales of 2.5% and an increase in average number of shops in operation. As of September 30, 2006, there were 75 company-operated shops compared to 69 shops as of October 1,
2005. Revenues from real estate leases increased slightly to $27.3 million as higher revenues from scheduled rent increases and a more favorable exchange rate on Canadian rental income more than offset a net reduction in the number of shops subject
to real estate rental agreements and lower revenues from sales-based rental agreements.



14



---

Replacement part sales and product royalties decreased $17.9 million to $23.3 million from $41.2 million
in the first nine months of fiscal 2005. The decrease primarily reflects a $19.1 million reduction in revenues from exhaust distribution as a result of the Companys exit from that business. In addition, product royalty revenues declined as a
result of reduced purchases of product from Company suppliers by Midas dealers and a scheduled reduction in the contractual royalty rates earned from both AutoZone and Uni-Select. These declines were partially offset by an increase in sales of tires
to Midas dealers through the Companys alliance with Bridgestone-Firestone.

The Companys gross profit margin increased to 64.1%
in the first nine months of fiscal 2006 from 55.7% in the first nine months of fiscal 2005. During the first nine months of fiscal 2005, the Company recorded business transformation charges to cost of sales and revenues to write-down the value of
certain exhaust inventory to its net realizable value. Excluding these business transformation charges, the Companys gross profit in the first nine months of fiscal 2005 was 58.5%. The year-over-year improvement in gross margin reflects a more
favorable sales mix in which a higher percentage of revenues came from franchise royalties and company-operated shops, and a lower percentage of revenues were derived from lower margin wholesale sales. In addition, warranty expense declined $1.1
million to $4.3 million, or 3.2% of total sales for the first nine months of fiscal 2006, compared to $5.4 million, or 3.6% of total sales in the first nine months of fiscal 2005. The decline in warranty expense is the result of the Companys
vendors assuming responsibility for the warranty on certain products, lower retail sales of exhaust and brakes, and a reduction in the warranty redemption and reimbursement rate for brakes.

Selling, general and administrative expenses for the first nine months of fiscal 2006 decreased $2.6 million, or 3.8%, from the first nine months of
fiscal 2005 to $65.8 million. The decrease in expenses primarily reflects a $2.6 million reduction in operating expenses related to the distribution of exhaust and a $2.0 million decrease in administrative and franchising overhead expense. The
improvement in administrative overhead expense was achieved even as the Company incurred $1.5 million in expenses in connection with hosting the Midas 50thanniversary convention. These savings were partially offset by a $0.4 million increase in company-operated shop expenses reflecting more shops in operation and an increase of $1.6 million for stock
option expense as a result of adopting new accounting rules regarding accounting for stock options (SFAS No. 123R). No expenses for stock options were recorded in the first nine months of fiscal 2005.

During the first nine months of fiscal 2006, the Company recorded business transformation charges of $0.9 million in connection with the Companys
partial funding of the rollout of a new shop image for Midas dealers. During the first nine months of fiscal 2005, business transformation charges of $7.0 million were recorded in selling, general and administrative expense primarily to reflect
expenses for the Companys exit from exhaust manufacturing and distribution.

During the first nine months of fiscal 2006, the Company
recorded a $3.4 million gain on sale of assets. This included the recognition of the remaining $1.8 million deferred gain from the March 2005 sale of the Companys Chicago warehouse, and a $1.6 million gain on the sale of equipment liquidated
in connection with the Companys exit from exhaust manufacturing. During the first nine months of fiscal 2005, the Company recognized gains on sale of $2.0 million, comprised of $1.9 million due to the amortization of a $4.5 million gain on
sale of the Companys former Chicago exhaust warehouse (sold and leased-back in March 2005), $0.8 million to reflect the sale of the Companys Huth exhaust equipment manufacturing operation and a $0.7 million loss on disposition of certain
exhaust assets.

As a result of the above changes, operating income increased $12.7 million to $22.0 million in the first nine months of
fiscal 2006 from $9.3 million in the first nine months of fiscal 2005. Excluding the impact of the above described business transformation charges and gains on sale, operating income for the first nine months of fiscal 2006 was $19.5 million
compared to $18.4 million for the first nine months of fiscal 2005. Excluding the impact of business transformation charges and gains on sale, operating income margin increased to 14.7% in the first nine months of fiscal 2006 from 12.4% in the first
nine months of fiscal 2005. The improvement in operating margin primarily reflects the elimination of operating losses in the Companys exhaust distribution operation and savings on corporate overhead expense, which more than offset the impact
of $1.6 million in additional expense incurred in connection with the adoption of SFAS No. 123R.

Interest expense decreased from $7.4
million in the first nine months of fiscal 2005 to $6.8 million in first nine months of fiscal 2006 primarily as a result of a reduction in the amortization of financing fees and a lower average debt level.

Other income increased from $0.6 million in the first nine months of fiscal 2005 to $0.8 million in the first nine months of fiscal 2006 due to greater
income from interest on dealer receivables. Other income consists primarily of interest income on overdue customer accounts and foreign currency exchange gains or losses.

The Companys effective tax rate was 44.8% in the first nine months of fiscal 2006 compared to 37.3% in the first nine months of fiscal 2005. The increase in the effective tax rate was primarily due to the 2006
correction of an error in fiscal 2004 and 2005 income tax expense. The adjustment was made in the third quarter of fiscal 2006 because the impact



15



---

on the financial statements was not material. Because the Company has a significant net operating loss carryforward, this correction to the calculation of
income tax expense for prior periods does not affect the amount of cash income taxes the Company will pay in fiscal 2006.

As a result of
the above items, net income increased $7.2 million from net income of $1.6 million in the first nine months of fiscal 2005 to net income of $8.8 million in the first nine months of fiscal 2006.

LIQUIDITY AND CAPITAL RESOURCES

Following is a
summary of the Companys cash flows from operating, investing and financing activities for the first nine months of fiscal 2006 and 2005, respectively (in millions):



|                                                                                                                                        |  |      |       |   |      |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                                                                                                                        |  | 2006 |       |   | 2005 |  
|Cash provided by operating activities before cash outlays for business transformation costs and total changes in assets and
liabilities |  | $    | 22.2  |   |      | $ | 19.6  |  
|Cash outlays for business transformation costs                                                                                          |  |      | (4.8  | ) |      |   | (3.9  | )
|Total changes in assets and liabilities                                                                                                 |  |      | 2.9   |   |      |   | (8.9  | )
|                                                                                                                                        |  |      |       |   |      |   |       |  
|Net cash provided by operating activities                                                                                               |  |      | 20.3  |   |      |   | 6.8   |  
|Net cash provided by (used in) investing activities                                                                                     |  |      | (3.2  | ) |      |   | 6.6   |  
|Net cash used in financing activities                                                                                                   |  |      | (17.2 | ) |      |   | (12.3 | )
|                                                                                                                                        |  |      |       |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                                 |  | $    | (0.1  | ) |      | $ | 1.1   |  
|                                                                                                                                        |  |      |       |   |      |   |       |  

The Companys cash management system permits the Company to make daily borrowings and
repayments on its revolving line of credit. This allows Midas to minimize interest expense and to maintain a cash balance close to zero. Midas cash and cash equivalents decreased $0.1 million in the first nine months of fiscal 2006.

The Companys operating activities provided net cash of $20.3 million during the first nine months of fiscal 2006 compared to $6.8
million in the first nine months of fiscal 2005. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash from operating activities increased from $19.6 million in the first nine months of fiscal 2005 to
$22.2 million in the first nine months of fiscal 2006 primarily because of the increase in net income. Cash outlays for business transformation costs increased from $3.9 million in the first nine months of fiscal 2005 to $4.8 million in the first
nine months of fiscal 2006. Cash outlays for business transformation costs in the first nine months of fiscal 2006 were primarily related to the Companys exit from the exhaust manufacturing and distribution business and the update of its
retail shop image, while cash outlays in the first nine months of fiscal 2005 were primarily related to the shutdown of the Companys wholesale parts distribution network as well as the exit from exhaust manufacturing and distribution. As of
September 30, 2006, the Company has a remaining liability for business transformation charges of $0.6 million, the majority of which will be paid during the fourth quarter.

Changes in assets and liabilities swung from an $8.9 million use of cash in the first nine months of fiscal 2005 to a $2.9 million source of cash in the
first nine months of fiscal 2006. The $11.8 million change was primarily due to a decline in inventories in the first nine months of fiscal 2006 as a result of the final liquidation of exhaust inventory, a delay in the timing of advertising
payments, a smaller seasonal increase in accounts receivable due to the exit from the exhaust manufacturing business, a smaller decrease in accounts payable in the first nine months of fiscal 2006 than in the first nine months of fiscal 2005, and a
decrease in long term notes receivable in the first nine months of 2006 compared to an increase in the first nine months of 2005 in connection with the 2005 conversion of certain overdue dealer receivables to notes, partially offset by a $1.0
million reduction of the Companys finance lease obligation. The reduction in the finance lease obligation was the result of the sale by Realty Income Corporation of one of the 77 properties Midas sold in the 2002 sale and lease-back
transaction. The sale eliminates the Companys obligation under the finance lease arrangement for this property and resulted in a $0.6 million gain.

Investing activities used $3.2 million of cash during the first nine months of fiscal 2006 compared to providing $6.6 million of cash during the first nine months of fiscal 2005. Fiscal 2006 investing activities
primarily consisted of $2.9 million in systems development projects, company shop equipment additions and other capital expenditures, $1.4 million paid in conjunction with the acquisition of six Midas shops and other assets from Midas dealers and
$1.1 million in cash generated as the result of the sale of the remaining exhaust manufacturing assets. Fiscal 2005 investing activities primarily consisted of $1.9 million in systems development projects and other capital expenditures and $8.5
million in cash generated as the result of asset sales. The asset sales in 2005 included the sale and leaseback of the Companys remaining distribution facility in Chicago, the sale of the Companys Huth exhaust equipment manufacturing
operation and the re-franchising of six company-operated shops.



16



---

Net cash used in financing activities was $17.2 million in the first nine months of fiscal 2006, compared
to net cash used of $12.3 million in the first nine months of fiscal 2005. During the first nine months of fiscal 2006, the Company reduced total debt by $4.2 million, reduced outstanding checks by $1.5 million, paid $13.3 million to repurchase
shares of the Companys common stock and received $1.8 million in cash from the exercise of outstanding stock options. In the first nine months of fiscal 2005, the Company reduced total debt by $5.4 million, reduced outstanding checks by $4.3
million, paid $7.2 million to repurchase shares of the Companys common stock and received $4.6 million in cash from the exercise of outstanding stock options.

On March 16, 2004, the Company entered into a three-year, $115 million credit facility to refinance its existing credit facility. This credit facility was initially comprised of a $55 million revolving credit
facility and a $60 million term loan. The facility was secured by substantially all of the assets of the Company and was set to expire on March 16, 2007. Interest on the $55 million revolving loan was initially payable monthly at LIBOR plus
3.25%. Interest on the $60 million term loan was initially payable monthly at LIBOR plus 3.5%. The interest rates floated based on the underlying rate of LIBOR and the Companys leverage. The facility required maintenance of certain financial
covenants including maximum allowable leverage and minimum tangible net worth. In addition, the agreement restricted capital expenditures and prohibited treasury stock purchases and the payment of dividends.

On November 5, 2004, the Company amended its March 2004 credit agreement to reduce the required principal amortization under the term loan, remove
certain restrictive covenants, and reduce interest rates. As amended, the term loan required quarterly principal payments of $1.5 million and mandated prepayment of debt with the proceeds generated from the liquidation of assets in connection with
the Companys ongoing restructuring. The amendment also eased the Companys restrictions on capital expenditures, allowed for stock repurchases and dividend payments, and reduced the interest rate on both the term loan and revolving loan
by 50 basis points.

On October 27, 2005, the Company entered into a new five-year, unsecured $110 million revolving credit facility
that further reduced interest rates, eliminated scheduled principal payments and significantly increased the Companys capacity to make treasury stock repurchases and dividend payments. The new credit facility was initially expandable to $140
million at the Companys discretion with lender approval. Interest on the new revolving loan was initially payable monthly at LIBOR plus 2.0%. The interest rate floats based on the underlying rate of LIBOR and the Companys leverage. This
facility requires maintenance of certain financial covenants including maximum allowable leverage and minimum tangible net worth.

On
September 15, 2006, the Company amended its October 2005 revolving credit facility. The amended facility is now expandable to $165 million at the Companys discretion with lender approval. As a result of the amendment, the Companys
borrowing cost was reduced by 50 basis points. Currently, the interest rate on the Companys revolving loan borrowings is priced at LIBOR plus 1.25%. In addition, the amendment eliminated restrictions on treasury stock repurchases, dividends
and acquisitions.

In April 2004, the Company entered into an interest rate swap arrangement to convert $40 million in senior bank debt
from a floating rate to a fixed rate by locking-in LIBOR at 2.76% for the three-year term of the agreement. The outstanding amount of the swap is reduced by $2.5 million each quarter until the end of the three-year term. As of September 30,
2006, approximately $16.3 million of this interest rate swap remained outstanding. In November 2005, an additional $20 million in senior bank debt was converted from floating rate to fixed rate by locking-in LIBOR at 4.89% for a five year period
with no scheduled reduction.

On November 9, 2004, the Midas Board of Directors authorized a share repurchase program to begin in
fiscal 2005 for up to $25 million of the Companys outstanding common stock. On May 9, 2006, the Midas Board of Directors authorized a $25 million increase in the share repurchase program. The Company intends to repurchase shares from time
to time in the open market and in privately negotiated transactions, depending upon market and business conditions. The Company has paid approximately $28.1 million for shares acquired under this program since the buyback program was first
initiated.

The Company believes that cash generated from operations and availability under the current debt agreement provides sufficient
liquidity to finance operations and execute strategic initiatives for at least the next 12 months.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America, management must make a variety of decisions which impact the reported amounts and related



17



---

disclosures. Such decisions include the selection of the appropriate accounting principles to be applied, the assumptions on which to base accounting
estimates, and the consistent application of those accounting principles. Due to the type of industry in which the Company operates and the nature of its business, and the Companys existing business transformation process, the following
accounting policies are those that management believes are most important to the portrayal of the Companys financial condition and results and that require managements most difficult, subjective or complex judgments, often as a result of
the need to make estimates about the effect of matters that are inherently uncertain.

Valuation of Warranty Liabilities

Customers are provided a written warranty from Midas on certain products purchased from Midas shops in North America, namely brake
friction, mufflers, shocks and struts. The warranty will be honored at any Midas shop in North America and is valid for the lifetime of the vehicle, but is voided if the vehicle is sold. The Company maintains a warranty accrual to cover the
estimated future liability associated with outstanding warranties. The Company determines the estimated value of outstanding warranty claims based on: 1) an estimate of the percentage of all warranted products sold and registered in prior periods at
retail that are likely to be redeemed; and 2) an estimate of the cost of redemption of each future warranty claim on a current cost basis. These estimates are computed using actual historical registration and redemption data as well as actual cost
information on current redemptions. An increase of one percentage point in the estimated percentage of warranted products likely to be redeemed in the U.S. would have the effect of changing Midas December 31, 2005 outstanding U.S.
warranty liability by $4.4 million. A change in the estimated current cost of warranty redemptions of one dollar would have the effect of changing Midas outstanding U.S. warranty liability by $1.7 million.

Valuation of Receivables

The
Company records receivables due from its franchisees and other customers at the time the sale is recorded in accordance with its revenue recognition policies. These receivables consist of amounts due from the sale of products, royalties due from
franchisees and suppliers, rents and other amounts. The future collectibility of these amounts can be impacted by the Companys collection efforts, the financial stability of its customers, and the general economic climate in which it operates.
The Company applies a consistent practice of establishing an allowance for accounts that it feels may become uncollectible through reviewing the historical aging of its receivables and by monitoring the financial strength of its franchisees and
other customers. Where the Company becomes aware of a customers inability to meet its financial obligations (e.g. where it is in financial distress or has filed for bankruptcy), the Company specifically reserves for the potential bad debt to
reduce the net recognized receivable to the amount it reasonably believes will be collected. The valuation of receivables is performed on a quarterly basis.

Pensions

The Company has non-contributory defined benefit pension plans covering certain of
its employees. The Companys funding policy for the U.S. plan is to contribute amounts sufficient to meet the minimum funding requirement of the Employee Retirement Income Act of 1974, plus any additional amounts the Company may deem to be
appropriate. The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards (SFAS) No. 87, Employers Accounting for Pensions, which requires that amounts recognized in
the financial statements be determined on an actuarial basis. A minimum liability is required to be established on the balance sheet representing the amount of unfunded accrued pension cost. This represents the difference between the accumulated
benefit obligation and the fair value of plan assets. When it is necessary to establish an additional minimum pension liability, an amount is recorded as an intangible asset limited to unrecognized prior service cost. Any amount in excess of
unrecognized prior service cost is recorded as a reduction to shareholders equity through cumulative other comprehensive income, net of tax, in the balance sheet.

To account for its defined benefit pension plans in accordance with SFAS No. 87, the Company must make three main determinations at the end of each fiscal year: First, it must determine the actuarial assumption
for the discount rate used to reflect the time value of money in the calculation of the projected benefit obligation for the end of the current fiscal year and to determine the net periodic pension cost for the subsequent year. For guidance in
determining this rate, the Company looks at rates of return on high-quality fixed-income investments and periodic published rate ranges.

Second, the Company must determine the actuarial assumption for rates of increase in compensation levels used in the calculation of the accumulated and projected benefit obligations for the end of the current fiscal year and to determine
the net periodic pension cost for the subsequent year. In determining this rate the Company looks at its historical and expected rates of annual salary increases.

Third, the Company must determine the expected long-term rate of return on assets assumption that is used to determine the expected return on plan assets component of the net periodic pension cost for the subsequent
year. The



18



---

difference between the actual return on plan assets and the expected return is deferred under SFAS No. 87 and is recognized to net periodic pension cost
over a five-year period.

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 asset group. 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. Additionally, in the case of fixed assets related to locations that will be closed or sold, the Company writes down
fixed assets to their estimated recovery value.

Deferred Income Taxes

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences at September 30, 2006. In the event that management determines the Company would not
be able to realize all or part of the net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.

Self-Insurance Reserves

Historically, the Company has been largely self-insured with respect to workers compensation and general liability claims. In order to reduce its risk and better manage its overall loss exposure, the Company purchased stop-loss insurance
that covers individual claims in excess of the deductible amounts. As of January 30, 2006, the Company is no longer self-insured with respect to workers compensation and general liability claims and has converted to a fully-insured program. In
addition, on January 1, 2004, the Company ended its self-insured program with respect to employee medical claims and converted to a fully-insured medical program. The Company maintains an accrual for the estimated cost to settle open claims
under its former self-insurance programs as well as an estimate of the cost of claims that have been incurred but not reported. These estimates take into consideration the historical average monthly claim volume, the average cost for settled claims,
current trends in claim costs, changes in the Companys business and workforce, and general economic factors. These accruals are reviewed on a quarterly basis, or more frequently if factors dictate a more frequent review.

IMPACT OF NEW ACCOUNTING STANDARDS

In December 2004,
the Financial Accounting Standards Board (FASB) issued Statement No. 123 (revised), Share-Based Payment, (SFAS No. 123R). This statement is a revision to Statement No. 123, Accounting for Stock-Based
Compensation, (SFAS No. 123) and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123R requires the measurement of the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for
equity instruments for which employees do not render service. Originally, SFAS No. 123R required that companies adopt the provisions of SFAS No. 123R on July 1, 2005. However, in April 2005, the Securities and Exchange Commission
(SEC) adopted a new rule which deferred the compliance date of SFAS No. 123R until 2006 for calendar year companies such as Midas, Inc. Consistent with the new rule, the Company adopted SFAS No. 123R on January 1, 2006,
with compensation cost recorded as an expense for outstanding unvested awards, based on the grant-date fair value of those awards. The Company uses the Black-Scholes option pricing model and the Modified Prospective Application method of adoption as
allowed under SFAS No. 123R.

In June 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20, Accounting Changes, and Statement No. 3, Reporting Accounting Changes in Interim Financial Statements (SFAS No. 154). SFAS No. 154 changes the requirements for the accounting
for, and reporting of, a change in accounting principle. Previously, most voluntary changes in accounting principles were required to be recognized by way of a cumulative effect adjustment within net income during the period of the change. SFAS
No. 154 requires retrospective application to prior periods financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for
accounting changes made in fiscal years beginning after



19



---

December 15, 2005; however, the Statement does not change the transition provisions of any existing accounting pronouncements. The adoption of SFAS
No. 154 did not have a material effect on its consolidated financial position, results of operations or cash flows.

In July 2006, the
FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109. FIN 48 prescribes a comprehensive model for how a company should recognize,
measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. FIN 48 is effective in the first quarter of 2007. Midas is currently evaluating the impact of this statement on
the Company.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (SFAS 157). SFAS 157 defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or
permit fair value measurements. SFAS 157 becomes effective for Midas on January 1, 2008. Upon adoption, the provisions of SFAS 157 are to be applied prospectively with limited exceptions. The adoption of SFAS 157 is not expected to have a
material impact on Midas consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued
SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R), (SFAS 158). SFAS 158 requires an employer to recognize the
funded status of each of its defined pension and postretirement benefit plans as a net asset or liability in its statement of financial position with an offsetting amount in accumulated other comprehensive income, and to recognize changes in that
funded status in the year in which changes occur through comprehensive income. This requirement becomes effective for Midas for its December 31, 2006 year-end. The provisions of SFAS 158 are to be applied on a prospective basis; therefore,
prior periods presented will not be restated. Midas is currently evaluating the impact of this statement on the Company.

Additionally,
SFAS 158 requires an employer to measure the funded status of its plan as of the date of its year-end statement of financial position. This provision becomes effective for Midas for its December 28, 2008 fiscal year-end. The funded status of
the majority of Midas pension plans is currently measured annually as of September 30.

In September 2006, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 was issued to provide interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a
current year misstatement. The provisions of SAB 108 are effective for Midas for its December 30, 2006 year-end. Midas is currently evaluating the impact of this bulletin on the Companys accounting for leases and straight-lining of rent.

FORWARD LOOKING STATEMENTS

This
report contains (and oral communications made by Midas may contain) forward-looking statements that may be identified by their use of words like plans, expects, anticipates, intends,
estimates, forecasts, will, outlook or other words of similar meaning. All statements that address Midas expectations or projections about the future, including statements about Midas
strategy for growth, cost reduction goals, expenditures and financial results, are forward-looking statements. Forward-looking statements are based on Midas estimates, assumptions and expectations of future events and are subject to a number
of risks and uncertainties. All such statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Midas cannot guarantee that these estimates, assumptions and expectations are accurate or
will be realized. Midas disclaims any intention or obligation (other than as required by law) to update or revise any 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 managements internal operating plans; the timing and magnitude of capital expenditures; the Companys ability to access debt and equity markets;
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; and overall competitive activities. Certain of these risks are more fully described in
Item 1 of Part I of the Companys annual report on Form 10-K. 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.



20



---

Item 3. 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. Interest rate risk is
managed through a combination of fixed rate debt and variable rate borrowings. 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.

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.

In April 2004, the Company entered into an interest rate swap arrangement to convert $40 million in senior bank debt from a floating rate to a fixed rate
by locking-in LIBOR at 2.76% for the three-year term of the agreement. The outstanding amount of the swap is reduced by $2.5 million each quarter until the end of the three-year term. As of September 30, 2006, approximately $16.3 million of
this interest rate swap remained outstanding. In November 2005, an additional $20 million in senior bank debt was converted from floating rate to fixed rate by locking-in LIBOR at 4.89% for a five year period with no scheduled reduction.

The April 2004 swap arrangement has been designated as a cash flow hedge and was evaluated to be ineffective subsequent to the Companys October
2005 refinancing. As a result, the change in the fair value is reflected on the statement of operations as interest expense. The November 2005 swap arrangement has been designated as a cash flow hedge and was evaluated to be highly effective. As a
result, the change in the fair value is recorded in other comprehensive income as a gain or loss on derivative financial instruments. As of September 30, 2006, the fair value of these instruments was an asset of approximately $0.2 million.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the Companys Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Companys disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information
required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

The Companys management,
including the Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures and its internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

(b) Changes in internal controls over financial reporting.

There were no significant changes in internal
controls during the most recent fiscal quarter that have materially affected internal controls over financial reporting.



21



---

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in the Companys most recent annual report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table includes all issuer repurchases, including those made pursuant to publicly announced plans or programs and those not made pursuant to
publicly announced plans or programs.



|                                                           |  |                                    |  |                            |       |                                                                             |         |                                                                                          |   |           
|---------------------------------------------------------- |  | ---------------------------------- |  | -------------------------- | ----- | --------------------------------------------------------------------------- | ------- | ---------------------------------------------------------------------------------------- | - | ----------
|Period                                                     |  | Total Number ofSharesPurchased (1) |  | AveragePrice Paidper Share |       | Total Number ofShares Purchasedas Part ofPubliclyAnnounced Plansor Programs |         | Approximate DollarValue of Shares ThatMay Yet Be PurchasedUnder the Plans orPrograms
(2)
|July 2006:(July 2, 2006 throughJuly 29, 2006)              |  | 21,200                             |  | $                          | 18.32 |                                                                             | 21,200  |                                                                                          | $ | 27,235,559
|August 2006:(August 30, 2006 throughAugust 26, 2006)       |  | 82,920                             |  | $                          | 18.79 |                                                                             | 82,920  |                                                                                          | $ | 25,677,887
|September 2006:(August 27, 2006 throughSeptember 30, 2006) |  | 201,251                            |  | $                          | 20.01 |                                                                             | 201,251 |                                                                                          | $ | 21,651,158
|                                                           |  |                                    |  |                            |       |                                                                             |         |                                                                                          |   |           
|Total                                                      |  | 305,371                            |  | $                          | 19.56 |                                                                             | 305,371 |                                                                                          |   |           
|                                                           |  |                                    |  |                            |       |                                                                             |         |                                                                                          |   |           

---

|(1) | Includes shares withheld to cover withholding taxes upon the vesting of restricted stock. During the third quarter of fiscal 2006, no shares were surrendered in lieu of taxes.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On November 9, 2004, the Company announced that the Board of Directors had authorized a share repurchase of up to $25 million in Midas stock. On May 9, 2006, the Midas
Board of Directors authorized a $25 million increase in the share repurchase program. As of September 30, 2006, a total of 1,381,171 had been repurchased under this plan since its inception. The average price of shares repurchased under the
plan was approximately $20.53.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 3. Defaults Upon Senior Securities.

None

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

None

Item 5. Other Information.

As reported on the Companys Form 8-K filed on September 18, 2006, on September 15, 2006, the Company entered into a First Amendment to its Credit Agreement dated as of October 27, 2005, among Midas International
Corporation and JP Morgan Chase Bank, N.A. as Administrative Agent, National City Bank of the Midwest, as Syndication Agent and



22



---

LaSalle Bank National Association, as Documentation Agent. The Company inadvertently reported such amendment under Item 8.01 Other Events rather than
Item 1.01. Material Contracts. The amended facility is now expandable to $165 million at the Companys discretion with lender approval. As a result of the amendment, the Companys borrowing cost was reduced by fifty basis points.
Currently, the interest rate on the Companys revolving loan borrowings is priced at LIBOR plus 1.25%. In addition, the amendment eliminated restrictions on treasury stock repurchases, dividends and acquisitions. The First Amendment is filed as
an exhibit hereto and incorporated herein by reference.



|        |  |                                                                                                                                                                                                                                                                                                                 
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 6. |  | Exhibits.                                                                                                                                                                                                                                                                                                       
|        | 
|10.43   |  | First Amendment dated September 15, 2006, to Credit Agreement dated as of October 27, 2005, among Midas International Corporation and JP Morgan Chase Bank, N.A. as Administrative Agent,
National City Bank of the Midwest, as Syndication Agent and LaSalle Bank National Association, as Documentation Agent.
|        | 
|31.1    |  | Rule 13a  14(a) / 15d  14(a) Certification of Chief Executive Officer.                                                                                                                                                                                                                                        
|        | 
|31.2    |  | Rule 13a  14(a) / 15d  14(a) Certification of Chief Financial Officer.                                                                                                                                                                                                                                        
|        | 
|32.1    |  | Section 1350 Certifications.                                                                                                                                                                                                                                                                                    



23



---

SIGNATURE

Pursuant to the requirements 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.



|                       |  |                                                     
|---------------------- |  | ----------------------------------------------------
|Date: November 9, 2006 |  | /s/ Alan D. Feldman                                 
|                       |  | Alan D. Feldman                                     
|                       |  | Chairman, President and Chief Executive Officer     
|                       | 
|                       |  | /s/ William M. Guzik                                
|                       |  | William M. Guzik                                    
|                       |  | Executive Vice President and Chief Financial Officer
|                       | 
|                       |  | /s/ James M. Haeger, Jr.                            
|                       |  | James M. Haeger, Jr.                                
|                       |  | Vice President and Controller                       



24