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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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

For the quarterly period ended September 29, 2007

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



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MIDAS, INC.

(Exact Name of Registrant as Specified in its Charter)



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|                                                                |  |                                     
|--------------------------------------------------------------- |  | ------------------------------------
|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)



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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 25, 2007 was 14,307,006.



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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 |  
|                                              |  | 2007                                  |      |   | 2006                                      |   |      | 2007       |  |   | 2006       |  
|                                              |  | (13 weeks)                            |      |   | (13 weeks)                                |   |      | (39 weeks) |  |   | (39 weeks) |  
|Sales and revenues:                           |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Franchise royalties and license fees          |  | $                                     | 15.6 |   |                                           | $ | 16.6 |            |  | $ | 46.2       |   |  | $ | 48.7  |  
|Real estate revenues                          |  |                                       | 9.1  |   |                                           |   | 9.1  |            |  |   | 27.0       |   |  |   | 27.3  |  
|Company-operated shop retail sales            |  |                                       | 12.9 |   |                                           |   | 10.8 |            |  |   | 32.9       |   |  |   | 30.8  |  
|Replacement part sales and product royalties  |  |                                       | 7.4  |   |                                           |   | 7.8  |            |  |   | 23.7       |   |  |   | 23.3  |  
|Other                                         |  |                                       | 1.1  |   |                                           |   | 1.0  |            |  |   | 3.3        |   |  |   | 2.9   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Total sales and revenues                      |  |                                       | 46.1 |   |                                           |   | 45.3 |            |  |   | 133.1      |   |  |   | 133.0 |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Cost of sales and revenues:                   |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Real estate cost of revenues                  |  |                                       | 5.5  |   |                                           |   | 5.4  |            |  |   | 16.4       |   |  |   | 16.7  |  
|Company-operated shop cost of sales           |  |                                       | 3.1  |   |                                           |   | 2.7  |            |  |   | 7.9        |   |  |   | 7.4   |  
|Replacement part cost of sales                |  |                                       | 6.2  |   |                                           |   | 6.1  |            |  |   | 19.4       |   |  |   | 18.5  |  
|Warranty expense                              |  |                                       | 1.2  |   |                                           |   | 1.4  |            |  |   | 3.6        |   |  |   | 4.3   |  
|Other cost of sales                           |  |                                       | 0.3  |   |                                           |   | 0.3  |            |  |   | 0.9        |   |  |   | 0.8   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Total cost of sales and revenues              |  |                                       | 16.3 |   |                                           |   | 15.9 |            |  |   | 48.2       |   |  |   | 47.7  |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Gross profit                                  |  |                                       | 29.8 |   |                                           |   | 29.4 |            |  |   | 84.9       |   |  |   | 85.3  |  
|Selling, general, and administrative expenses |  |                                       | 12.5 |   |                                           |   | 13.2 |            |  |   | 38.4       |   |  |   | 42.1  |  
|Company-operated shop expenses                |  |                                       | 9.4  |   |                                           |   | 8.2  |            |  |   | 24.1       |   |  |   | 23.7  |  
|Gain on sale of assets                        |  |                                       | (0.2 | ) |                                           |   |     |            |  |   | (0.2       | ) |  |   | (3.4  | )
|Business transformation charges               |  |                                       | 0.6  |   |                                           |   | 0.4  |            |  |   | 2.1        |   |  |   | 0.9   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Operating income                              |  |                                       | 7.5  |   |                                           |   | 7.6  |            |  |   | 20.5       |   |  |   | 22.0  |  
|Interest expense                              |  |                                       | (2.3 | ) |                                           |   | (2.3 | )          |  |   | (6.8       | ) |  |   | (6.8  | )
|Other income, net                             |  |                                       |     |   |                                           |   | 0.3  |            |  |   | 0.3        |   |  |   | 0.8   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Income before income taxes                    |  |                                       | 5.2  |   |                                           |   | 5.6  |            |  |   | 14.0       |   |  |   | 16.0  |  
|Income tax expense                            |  |                                       | 2.2  |   |                                           |   | 3.2  |            |  |   | 5.8        |   |  |   | 7.2   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Net income                                    |  | $                                     | 3.0  |   |                                           | $ | 2.4  |            |  | $ | 8.2        |   |  | $ | 8.8   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Earnings per share:                           |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Basic                                         |  | $                                     | 0.22 |   |                                           | $ | 0.16 |            |  | $ | 0.58       |   |  | $ | 0.58  |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Diluted                                       |  | $                                     | 0.21 |   |                                           | $ | 0.16 |            |  | $ | 0.56       |   |  | $ | 0.56  |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|                                              |  |                                       |      |  
|Average number of shares:                     |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Common shares outstanding                     |  |                                       | 13.8 |   |                                           |   | 15.0 |            |  |   | 14.1       |   |  |   | 15.2  |  
|Common stock warrants                         |  |                                       | 0.1  |   |                                           |   | 0.1  |            |  |   | 0.1        |   |  |   | 0.1   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Shares applicable to basic earnings           |  |                                       | 13.9 |   |                                           |   | 15.1 |            |  |   | 14.2       |   |  |   | 15.3  |  
|Equivalent shares on outstanding stock awards |  |                                       | 0.6  |   |                                           |   | 0.4  |            |  |   | 0.6        |   |  |   | 0.3   |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  
|Shares applicable to diluted earnings         |  |                                       | 14.5 |   |                                           |   | 15.5 |            |  |   | 14.8       |   |  |   | 15.6  |  
|                                              |  |                                       |      |   |                                           |   |      |            |  |   |            |   |  |   |       |  

See notes to condensed financial statements.



1



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MIDAS, INC.

CONDENSED BALANCE SHEETS

(In millions, except per share data)



|                                                                                                              |  |                     |            |   |                    |   |       |  
|------------------------------------------------------------------------------------------------------------- |  | ------------------- | ---------- | - | ------------------ | - | ----- | -
|                                                                                                              |  | FiscalSeptember2007 |            |   | FiscalDecember2006 |  
|                                                                                                              |  |                     | (Unaudited | ) |                    |   |       |  
|Assets:                                                                                                       |  |                     |            |   |                    |   |       |  
|Current assets:                                                                                               |  |                     |            |   |                    |   |       |  
|Cash and cash equivalents                                                                                     |  | $                   | 2.5        |   |                    | $ | 2.4   |  
|Receivables, net                                                                                              |  |                     | 27.6       |   |                    |   | 28.7  |  
|Inventories                                                                                                   |  |                     | 2.6        |   |                    |   | 3.1   |  
|Deferred income taxes                                                                                         |  |                     | 6.7        |   |                    |   | 7.6   |  
|Prepaid assets                                                                                                |  |                     | 3.7        |   |                    |   | 3.3   |  
|Other current assets                                                                                          |  |                     | 3.5        |   |                    |   | 4.3   |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Total current assets                                                                                          |  |                     | 46.6       |   |                    |   | 49.4  |  
|Property and equipment, net                                                                                   |  |                     | 95.2       |   |                    |   | 99.4  |  
|Goodwill and other intangible assets, net                                                                     |  |                     | 11.1       |   |                    |   | 1.5   |  
|Deferred income taxes                                                                                         |  |                     | 52.5       |   |                    |   | 57.2  |  
|Other assets                                                                                                  |  |                     | 7.2        |   |                    |   | 8.9   |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Total assets                                                                                                  |  | $                   | 212.6      |   |                    | $ | 216.4 |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|                                                                                                              |  |                    
|Liabilities and equity:                                                                                       |  |                     |            |   |                    |   |       |  
|Current liabilities:                                                                                          |  |                     |            |   |                    |   |       |  
|Current portion of long-term obligations                                                                      |  | $                   | 1.8        |   |                    | $ | 2.0   |  
|Accounts payable                                                                                              |  |                     | 13.0       |   |                    |   | 15.9  |  
|Current portion of accrued warranty                                                                           |  |                     | 4.7        |   |                    |   | 4.6   |  
|Accrued expenses                                                                                              |  |                     | 21.8       |   |                    |   | 21.5  |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Total current liabilities                                                                                     |  |                     | 41.3       |   |                    |   | 44.0  |  
|Long-term debt                                                                                                |  |                     | 70.0       |   |                    |   | 61.1  |  
|Obligations under capital leases                                                                              |  |                     | 2.3        |   |                    |   | 3.0   |  
|Finance lease obligation                                                                                      |  |                     | 33.1       |   |                    |   | 33.9  |  
|Accrued warranty                                                                                              |  |                     | 29.1       |   |                    |   | 28.8  |  
|Other liabilities                                                                                             |  |                     | 5.3        |   |                    |   | 8.3   |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Total liabilities                                                                                             |  |                     | 181.1      |   |                    |   | 179.1 |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Temporary equity:                                                                                             |  |                     |            |   |                    |   |       |  
|Non-vested restricted stock subject to redemption                                                             |  |                     | 3.9        |   |                    |   | 2.3   |  
|                                                                                                              |  |                    
|Shareholders equity:                                                                                         |  |                     |            |   |                    |   |       |  
|Common stock ($.001 par value, 100 million shares authorized, 17.7 million shares issued) and paid-in capital |  |                     | 8.2        |   |                    |   | 10.3  |  
|Treasury stock, at cost (3.4 million shares and 2.7 million shares)                                           |  |                     | (72.9      | ) |                    |   | (57.8 | )
|Retained income                                                                                               |  |                     | 97.3       |   |                    |   | 89.1  |  
|Accumulated other comprehensive loss                                                                          |  |                     | (5.0       | ) |                    |   | (6.6  | )
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Total shareholders equity                                                                                    |  |                     | 27.6       |   |                    |   | 35.0  |  
|                                                                                                              |  |                     |            |   |                    |   |       |  
|Total liabilities and shareholders equity                                                                    |  | $                   | 212.6      |   |                    | $ | 216.4 |  
|                                                                                                              |  |                     |            |   |                    |   |       |  

See notes to condensed financial statements.



2



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MIDAS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)



|                                                                                                                          |  |                                           |       |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                                                          |  | For the nine monthsended fiscal September |      
|                                                                                                                          |  | 2007                                      |       |   | 2006 |  
|Cash flows from operating activities:                                                                                     |  |                                           |       |   |      |   |       |  
|Net income                                                                                                                |  | $                                         | 8.2   |   |      | $ | 8.8   |  
|Adjustments reconciling net income to net cash provided by operating activities:                                          |  |                                           |       |   |      |   |       |  
|Depreciation and amortization                                                                                             |  |                                           | 6.8   |   |      |   | 6.8   |  
|Stock based compensation                                                                                                  |  |                                           | 3.2   |   |      |   | 2.6   |  
|Amortization of financing fees and change in interest rate swap valuation                                                 |  |                                           | 0.3   |   |      |   | 0.4   |  
|Business transformation charges                                                                                           |  |                                           | 2.1   |   |      |   | 0.9   |  
|Gain on sale of assets                                                                                                    |  |                                           | (0.2  | ) |      |   | (3.4  | )
|Deferred income taxes                                                                                                     |  |                                           | 4.4   |   |      |   | 6.1   |  
|Cash outlays for business transformation costs                                                                            |  |                                           | (2.4  | ) |      |   | (4.8  | )
|Changes in assets and liabilities, exclusive of effects of business transformation charges, acquisitions and dispositions |  |                                           | 2.0   |   |      |   | 2.9   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net cash provided by operating activities                                                                                 |  |                                           | 24.4  |   |      |   | 20.3  |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|                                                                                                                          |  |                                          
|Cash flows from investing activities:                                                                                     |  |                                           |       |   |      |   |       |  
|Capital investments                                                                                                       |  |                                           | (2.9  | ) |      |   | (2.9  | )
|Cash paid for acquired businesses                                                                                         |  |                                           | (10.1 | ) |      |   | (1.4  | )
|Proceeds from sales of assets                                                                                             |  |                                           | 2.3   |   |      |   | 1.1   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net cash used in investing activities                                                                                     |  |                                           | (10.7 | ) |      |   | (3.2  | )
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|                                                                                                                          |  |                                          
|Cash flows from financing activities:                                                                                     |  |                                           |       |   |      |   |       |  
|Net borrowings (repayments) under revolving lines of credit                                                               |  |                                           | 8.9   |   |      |   | (2.8  | )
|Payment of principal obligations under capital leases                                                                     |  |                                           | (0.7  | ) |      |   | (0.7  | )
|Payment of principal obligations under finance lease                                                                      |  |                                           | (0.7  | ) |      |   | (0.7  | )
|Decrease in outstanding checks                                                                                            |  |                                           | (2.5  | ) |      |   | (1.5  | )
|Cash received for common stock                                                                                            |  |                                           | 2.5   |   |      |   | 1.8   |  
|Cash paid for treasury shares                                                                                             |  |                                           | (21.1 | ) |      |   | (13.3 | )
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net cash used in financing activities                                                                                     |  |                                           | (13.6 | ) |      |   | (17.2 | )
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                   |  |                                           | 0.1   |   |      |   | (0.1  | )
|Cash and cash equivalents at beginning of period                                                                          |  |                                           | 2.4   |   |      |   | 1.4   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  
|Cash and cash equivalents at end of period                                                                                |  | $                                         | 2.5   |   |      | $ | 1.3   |  
|                                                                                                                          |  |                                           |       |   |      |   |       |  

See notes to condensed financial statements.



3



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MIDAS, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)

(In millions)



|                                                       |  |                                |  |        |                |   |        |                 |   |                      |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
|------------------------------------------------------ |  | ------------------------------ |  | ------ | -------------- | - | ------ | --------------- | - | -------------------- | - | ----- | ------------------------------------ |  | - | ---- |  | - | ---- | - |  | - | ---- | -
|                                                       |  | Common StockAnd Paid InCapital |  |        | Treasury Stock |   |        | Retained Income |   | Comprehensive Income |   |       | Accumulated Other Comprehensive Loss | 
|                                                       |  | Shares                         |  | Amount |                |   | Shares |                 |   | Amount               |   |       |                                      | 
|Fiscal year end 2006                                   |  | 17.7                           |  | $      | 10.3           |   |        | (2.7            | ) |                      | $ | (57.8 | )                                    |  | $ | 89.1 |  |   |      |   |  | $ | (6.6 | )
|Purchase of treasury shares                            |  |                               |  |        |               |   |        | (1.0            | ) |                      |   | (21.1 | )                                    |  |   |     |  |   |      |   |  |   |     |  
|Stock option transactions                              |  |                               |  |        | (1.7           | ) |        | 0.2             |   |                      |   | 3.9   |                                      |  |   |     |  |   |      |   |  |   |     |  
|Stock option expense                                   |  |                               |  |        | 1.5            |   |        |                |   |                      |   |      |                                      |  |   |     |  |   |      |   |  |   |     |  
|Restricted stock awards                                |  |                               |  |        | (2.5           | ) |        | 0.1             |   |                      |   | 2.5   |                                      |  |   |     |  |   |      |   |  |   |     |  
|Restricted stock vesting                               |  |                               |  |        | 0.2            |   |        |                |   |                      |   |      |                                      |  |   |     |  |   |      |   |  |   |     |  
|Forfeiture of restricted stock                         |  |                               |  |        | 0.4            |   |        |                |   |                      |   | (0.4  | )                                    |  |   |     |  |   |      |   |  |   |     |  
|Net income                                             |  |                               |  |        |               |   |        |                |   |                      |   |      |                                      |  |   | 8.2  |  | $ | 8.2  |   |  |   |     |  
|Other comprehensive income                             |  |                                |  |        |                |   |        |                 |   |                      |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
| foreign currency translation                         |  |                               |  |        |               |   |        |                |   |                      |   |      |                                      |  |   |     |  |   | 1.9  |   |  |   | 1.9  |  
| loss on derivative financial instruments, net of tax |  |                               |  |        |               |   |        |                |   |                      |   |      |                                      |  |   |     |  |   | (0.3 | ) |  |   | (0.3 | )
|                                                       |  |                                |  |        |                |   |        |                 |   |                      |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
|Comprehensive income                                   |  |                               |  |        |               |   |        |                |   |                      |   |      |                                      |  |   |     |  | $ | 9.8  |   |  |   |     |  
|                                                       |  |                                |  |        |                |   |        |                 |   |                      |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
|Fiscal third quarter end 2007                          |  | 17.7                           |  | $      | 8.2            |   |        | (3.4            | ) |                      | $ | (72.9 | )                                    |  | $ | 97.3 |  |   |      |   |  | $ | (5.0 | )
|                                                       |  |                                |  |        |                |   |        |                 |   |                      |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  

See notes to condensed financial statements.



4



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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 30, 2006. 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 29, 2007 (third quarter fiscal 2007) and September 30, 2006
(third quarter fiscal 2006) and of its financial position as of September 29, 2007. All such adjustments are of a normal recurring nature. The results of operations for the third quarter of fiscal 2007 and 2006 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 29, 2007 and September 30, 2006 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 2006 financial statements in order to provide consistency with the fiscal 2007 results. These reclassifications did not affect previously reported operating income, 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 quarter ended fiscal September |  | For the nine months ended fiscal September
|                                           |  | 2007                                   |  | 2006                                       |  | 2007 |  | 2006
|Weighted-average common shares outstanding |  | 13.8                                   |  | 15.0                                       |  | 14.1 |  | 15.2
|Common stock warrants                      |  | 0.1                                    |  | 0.1                                        |  | 0.1  |  | 0.1 
|                                           |  |                                        |  |                                            |  |      |  |     
|Shares applicable to basic earnings        |  | 13.9                                   |  | 15.1                                       |  | 14.2 |  | 15.3
|Effect of dilutive stock awards            |  | 0.6                                    |  | 0.4                                        |  | 0.6  |  | 0.3 
|                                           |  |                                        |  |                                            |  |      |  |     
|Shares applicable to diluted earnings      |  | 14.5                                   |  | 15.5                                       |  | 14.8 |  | 15.6
|                                           |  |                                        |  |                                            |  |      |  |     
|Potential common share equivalents:        |  |                                        |  |                                            |  |      |  |     
|Stock options                              |  | 1.2                                    |  | 1.4                                        |  | 1.2  |  | 1.4 

Franchise royalties are recognized in the periods that correspond to the periods when retail sales
and revenues are recognized by franchisees. Product royalties are recognized as earned based on the volume of franchisee purchases of products from certain vendors. Real estate revenues are recognized as earned on a monthly basis in accordance with
underlying property lease terms using the straight-line method. Replacement part sales are recognized at the time products are shipped, at which time provision is made for estimated product returns. Sales and revenues of company-operated shops are
recognized when customer vehicles are repaired or serviced. Taxes collected on behalf of taxing authorities are not recognized as revenue but rather are recorded as a liability and remitted to the proper taxing authority.



5



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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 |    
|                   |  | 2007                                      |     | 2006 |  
|Interest paid      |  | $                                         | 6.6 |      | $ | 6.3  |  
|Income tax refunds |  |                                           |    |      |   | (0.2 | )
|Income taxes paid  |  |                                           | 1.0 |      |   | 0.8  |  

The acquisition of certain company-operated shops resulted in non-cash reductions of accounts
receivable of approximately $2.4 million and $1.9 million during the first nine months of fiscal 2007 and 2006, respectively.

3. Inventories

Inventories were composed of finished goods in both the quarter ended September 29, 2007 and the year ended December 30, 2006.

4. Business Transformation Activities

In fiscal 2006, the
Company launched 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, the Company has agreed to fund certain planning, development, material and installation costs expected to average approximately $2,600
per shop. The Company also expects to pay the full cost of the image upgrade for its company-operated shops as well as certain shops being transitioned between owners.

As a result, the Company recorded charges of $1.6 million during fiscal 2006 related to this program, and Midas management expects that it will result in additional business transformation costs during fiscal 2007 and
2008, including $1.3 million recorded in the first nine months of 2007. Midas believes the total charges for franchised shops will be approximately $4 million over the life of the program.

In addition, the Company recorded business transformation charges during the first nine months of fiscal 2007 of approximately $1.0 million related to
the early termination of the Companys supply agreement with AutoZone, and $0.2 million for other charges. These charges were partially offset by credits totaling $0.4 million to adjust the reserve for non-recoverable lease costs pertaining to
the closure of six company-operated shops in 2006.

5. Debt Agreements

On October 27, 2005, the Company entered into a five-year, unsecured $110 million revolving credit facility. On September 15, 2006, the Company amended this revolving credit facility. The amended facility is
expandable to $165 million at the Companys discretion with lender approval. 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 net worth. As of September 29, 2007, the interest rate on the Companys revolving loan borrowings was priced at LIBOR plus 1.25%.

As of September 29, 2007, a total of $70.0 million was outstanding under the revolving credit facility. As of December 30, 2006, a total of
$61.1 million was outstanding under the revolving credit facility.

In November 2005, $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. In addition, in March 2007, the Company entered into an interest rate swap arrangement to convert $25 million in senior bank debt from floating rate to a fixed rate by
locking-in LIBOR at 4.91% for the remaining term of the Companys



6



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bank agreement (October 2010). This swap effectively replaced a declining balance swap that expired in March 2007 under which LIBOR was locked-in at 2.76%
for a three-year term. As a consequence, currently $45 million of the Companys $70.0 million in senior bank debt is at fixed rates.

Both the November 2005 and March 2007 swap arrangements have been designated as cash flow hedges and have been evaluated to be highly effective. As a result, the after-tax change in the fair value of these swaps is recorded in accumulated
other comprehensive income as a gain or loss on derivative financial instruments. As of September 29, 2007, the fair value of these instruments was a pre-tax loss of approximately $0.4 million.

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 2007.

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



|                                              |  |                                        |      |   |                                           |   |      |      |  |   |      |   |  |   |      |  
|--------------------------------------------- |  | -------------------------------------- | ---- | - | ----------------------------------------- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                              |  | For the quarter ended fiscal September |      |   | For the nine monthsended fiscal September |  
|                                              |  | 2007                                   |      |   | 2006                                      |   |      | 2007 |  |   | 2006 |  
|Service cost  benefits                       |  | $                                      | 0.3  |   |                                           | $ | 0.3  |      |  | $ | 0.8  |   |  | $ | 0.9  |  
|Interest cost on projected benefit obligation |  |                                        | 0.7  |   |                                           |   | 0.7  |      |  |   | 2.3  |   |  |   | 2.2  |  
|Expected return on assets                     |  |                                        | (1.1 | ) |                                           |   | (1.1 | )    |  |   | (3.3 | ) |  |   | (3.2 | )
|Net amortization and deferral                 |  |                                        | 0.1  |   |                                           |   | 0.2  |      |  |   | 0.2  |   |  |   | 0.4  |  
|                                              |  |                                        |      |   |                                           |   |      |      |  |   |      |   |  |   |      |  
|Total net periodic pension cost               |  | $                                      |     |   |                                           | $ | 0.1  |      |  | $ |     |   |  | $ | 0.3  |  
|                                              |  |                                        |      |   |                                           |   |      |      |  |   |      |   |  |   |      |  

7. Stock-Based Compensation and Other Equity Instruments

On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standard (SFAS) No. 123R (SFAS 123R) and now records
an expense for outstanding unvested stock option 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 123R.

The Company did not record an excess tax benefit in the first nine months of
fiscal 2007 or fiscal 2006 related to stock based compensation plans or equity instruments. The Company is in a net operating loss carry-forward position for the first nine months of fiscal 2007 and 2006. As a result the excess tax benefit is not
recognized until the deduction reduces the Companys income taxes payable which occurs once the net operating loss has been fully utilized. Therefore there was no impact on cash flows from operating activities or cash flows from financing
activities in the Statement of Cash Flows.

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. 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 29, 2007:



|                                    |  |                 |   |  |                     |             |                                |   |                                                    |  |                                       |  |   |     
|----------------------------------- |  | --------------- | - |  | ------------------- | ----------- | ------------------------------ | - | -------------------------------------------------- |  | ------------------------------------- |  | - | ----
|                                    |  | Number ofShares |   |  | Option Price Ranges |             | Weighted AverageExercise Price |   | WeightedAverageRemainingContractual Term(in years) |  | AggregateIntrinsicValue (in millions)
|Outstanding at fiscal year end 2006 |  | 1,617,367       |   |  | $                   | 6.77$34.66 |                                | $ | 13.51                                              |  |                                       |  |   |     
|Granted                             |  | 168,600         |   |  |                     | 21.5321.53 |                                |   | 21.53                                              |  |                                       |  |   |     
|Exercised                           |  | (179,118        | ) |  |                     | 8.0922.00  |                                |   | 12.54                                              |  |                                       |  |   |     
|Forfeited                           |  | (34,600         | ) |  |                     | 13.3022.17 |                                |   | 17.44                                              |  |                                       |  |   |     
|                                    |  |                 |   |  |                     |             |                                |   |                                                    |  |                                       |  |   |     
|Outstanding at September 29, 2007   |  | 1,572,249       |   |  |                     | 6.7734.66  |                                |   | 14.39                                              |  | 5.9                                   |  | $ | 11.3
|                                    |  |                 |   |  |                     |             |                                |   |                                                    |  |                                       |  |   |     
|Exercisable at September 29, 2007   |  | 948,289         |   |  |                     | 6.7734.66  |                                |   | 12.51                                              |  | 4.9                                   |  | $ | 6.3 



7



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The Company granted 168,600 and 98,000 options in the first nine months of fiscal 2007 and 2006,
respectively. Additional information pertaining to option activity during the first nine months of fiscal 2007 and 2006 was as follows (in millions):



|                                           |  |                                       |      |                                           |      |   |      |  |   |      |   |  |   |    
|------------------------------------------ |  | ------------------------------------- | ---- | ----------------------------------------- | ---- | - | ---- |  | - | ---- | - |  | - | ---
|                                           |  | For the quarterended fiscal September |      | For the nine monthsended fiscal September
|                                           |  | 2007                                  |      |                                           | 2006 |   | 2007 |  |   | 2006
|Weighted average grant-date fair value of: |  |                                       |      |                                           |      |   |      |  |   |      |   |  |   |    
|Stock options granted                      |  | $                                     |     |                                           |      | $ |     |  | $ | 1.4  |   |  | $ | 0.9
|Stock options exercised                    |  |                                       | 0.4  |                                           |      |   |     |  |   | 1.2  |   |  |   | 0.8
|Stock options vested                       |  |                                       |     |                                           |      |   |     |  |   | 1.3  |   |  |   | 1.3
|Stock options forfeited                    |  |                                       | (0.6 | )                                         |      |   |     |  |   | (0.6 | ) |  |   |   

The weighted average estimated fair value of the options granted in the nine months ended
September 2007 and 2006 was $8.45 and $9.04 respectively, based on the Black-Scholes valuation model using the following assumptions:



|                        |  |       |   |      |       |   |      | 
|----------------------- |  | ----- | - | ---- | ----- | - | ---- | 
|Fiscal Year             |  |       |   | 2007 |       |   | 2006 | 
|Risk-free interest rate |  | 4.61  | % |      | 5.02  | %
|Dividend yield          |  | 0.0   | % |      | 0.0   | %
|Expected volatility     |  | 28.01 | % |      | 29.78 | %
|Expected life in years  |  | 6.50  |   |      | 6.50  |  

Volatility is derived based on historical trends. Expected life is calculated utilizing the
simplified method as prescribed by Staff Accounting Bulletin No. 107.

As of September 29, 2007, there was $4.5 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 3.2 years.

Restricted Stock

From time to time the Company grants shares of restricted stock to certain of its
officers and directors. Certain restricted stock vests at the five or seven year anniversary, with provisions for accelerated vesting upon the occurrence of certain pre-determined events (cliff-vesting shares), while other restricted
stock vests equally over a 5-year period or only upon the occurrence of certain pre-determined events (the latter being referred to as performance shares). The fair value of all but the performance share grants is equal to the stock
price on the date of the grant. The fair value of the performance share grants was calculated using a Monte Carlo simulation model which uses multiple input variables. Activity for restricted shares for the first nine months of fiscal 2007,
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 30, 2006  |  | 495,328                   |   |  | $                                   | 16.08  |  
|Granted                                     |  | 116,800                   |   |  |                                     | 15.57  |  
|Vested                                      |  | (10,000                   | ) |  |                                     | (8.83  | )
|Forfeited                                   |  | (20,333                   | ) |  |                                     | (19.27 | )
|                                            |  |                           |   |  |                                     |        |  
|Non-vested balance as of September 29, 2007 |  | 581,795                   |   |  | $                                   | 16.00  |  
|                                            |  |                           |   |  |                                     |        |  

The performance shares granted in 2007 vest only if the total return on the Companys stock
exceeds the total return on the S&P 500 stock index as of certain measurement dates. These conditionally vested grants were valued based on the probability of meeting the performance requirement. The derived service period for the conditionally
vested grants was calculated using a Monte Carlo simulation model which utilizes multiple input variables that determine the probability of satisfying each market condition stipulated in the award grant.

For cliff-vesting shares with a stipulated market condition granted in 2006, the derived service period was calculated using a Monte Carlo simulation
model. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying each market condition stipulated in the award grant. Forfeiture assumptions were applied to all shares granted in 2007 and 2006.

As of September 29, 2007, there was $5.3 million of unamortized restricted stock compensation of which $9.2 million was included as a
reduction to paid-in capital and $3.9 million was included in non-vested restricted stock subject to redemption. The $5.3 million of unamortized restricted stock compensation is expected to be recognized over a weighted average period of 3.0 years.



8



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Restricted stock grants include a change in control provision, which provides for cash
redemption of non-vested restricted stock in certain circumstances. Securities and Exchange Commission Accounting Series Release No. 268 (ASR 268), Presentation in Financial Statements of Redeemable Preferred Stocks, requires
securities with contingent cash settlement provisions which are not solely in the control of the issuer, without regard to probability of occurrence, to be classified outside of shareholders equity. While the Company believes the possibility
of occurrence of any such change of control event is remote, the contingent cash settlement of the restricted stock as a result of such event would not be solely in the control of the Company. As such, the Company presents the $3.9 million value of
non-vested restricted stock as temporary equity on the consolidated balance sheet. Upon the vesting of the restricted stock the Company reclassifies the value of the restricted stock to permanent equity.

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 29, 2007 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 2007 is summarized as follows (in millions):



|                                                             |  |   |      |  
|------------------------------------------------------------ |  | - | ---- | -
|Accrued warranty at beginning of period                      |  | $ | 33.4 |  
|Warranty expense                                             |  |   | 3.6  |  
|Changes in foreign currency exchange rate                    |  |   | 0.9  |  
|Warranty credit issued to franchisees (warranty claims paid) |  |   | (4.1 | )
|                                                             |  |   |      |  
|Accrued warranty at end of period                            |  |   | 33.8 |  
|Less current portion                                         |  |   | (4.7 | )
|                                                             |  |   |      |  
|Accrued warranty  non-current                               |  | $ | 29.1 |  
|                                                             |  |   |      |  

9. Acquisitions and Divestitures

During the first nine months of fiscal 2007, the Company acquired 24 shops from Midas dealers to be run as company-operated shops, acquired two shops to be franchised, and re-franchised 11 company-operated shops to
Midas dealers. Of the shops acquired for the company-operated shop business, 11 were in California and 6 were in Vancouver, BC, while 10 of the 11 re-franchised shops were in Florida. The purchase price of the acquired shops was approximately $12.5
million, which consisted of $10.1 million paid in cash and $2.4 million used to settle accounts receivable from selling dealers. These acquisitions resulted in $9.9 million of incremental goodwill and other intangibles. The re-franchising of 11
company-operated shops generated $1.2 million in cash proceeds and the retirement of $0.1 million of goodwill and other intangibles.

In
September of fiscal 2007, the Company sold its former manufacturing plant in Hartford, WI. The sale generated $1.1 million in net cash proceeds and resulted in the retirement of $0.9 million of net property and equipment.

Nine additional company-operated shop acquisitions are currently scheduled to occur in the fourth quarter of fiscal 2007, at a purchase price of
approximately $3.7 million. The Company continues to evaluate company-operated shop acquisitions and divestitures.



9



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|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 was 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. A major component of this strategy was the elimination of unprofitable manufacturing and distribution operations. Midas concluded
these activities when it closed its last automotive exhaust distribution facility in Chicago in the first quarter of 2006.

During the
first quarter of fiscal 2006, all remaining exhaust inventory and equipment were sold and liquidated and the Chicago exhaust distribution warehouse was closed. The Companys former exhaust manufacturing facility in Hartford, WI, was sold during
the third quarter of fiscal 2007 for $1.1 million. As a result, the Company has now liquidated all assets related to its former exhaust manufacturing and distribution operation.

During fiscal 2006, the Company launched 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, the Company has
agreed to fund certain planning, development, material and installation costs expected to average approximately $2,600 per shop. The Company also expects to pay the full cost of the image upgrade for its company-operated shops as well as certain
shops being transitioned between owners. The Company recorded charges of $1.6 million during fiscal 2006 related to this program, and Midas management expects that it will result in additional business transformation costs during fiscal 2007 and
2008, including $1.3 million recorded in the first nine months of 2007. Midas believes the total charges for franchised shops will be approximately $4 million over the life of the program.

With the Companys business transformation essentially complete, Midas management is focused on building shareholder value through the profitable
growth of the Company. The first priority is building shareholder value through the profitable growth of the Midas retail system in North America. This includes both comparable shop sales growth at existing Midas locations and growth in overall shop
count. In addition, Midas management believes that the Companys brand name and system management expertise can be leveraged to generate incremental royalty revenue through growth of the Midas system around the world. This includes possible
expansion into China, which management believes is positioned to become the worlds largest automotive market. Because the Companys franchising business model generates substantial operating cash flow with relatively low ongoing capital
investment requirements, the future growth of the Midas retail system does not necessarily depend upon the Company making significant capital investments or adding significant additional corporate overhead. Midas management also believes that it can
create shareholder value by efficiently allocating capital towards complementary franchising business acquisitions and repurchasing the Companys stock.

Third Quarter Fiscal 2007 Compared with Third Quarter Fiscal 2006

The following is a summary of the Companys sales
and revenues for the third quarter of fiscal 2007 and 2006: ($ in millions)



|                                             |  |      |      |                  |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ---- | ---------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2007 |      | Percent to Total |       |   | 2006 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 15.6 |                  | 33.8  | % |      | $ | 16.6            |  | 36.7  | %
|Real estate revenues                         |  |      | 9.1  |                  | 19.7  |   |      |   | 9.1             |  | 20.1  |  
|Company-operated shop retail sales           |  |      | 12.9 |                  | 28.0  |   |      |   | 10.8            |  | 23.8  |  
|Replacement part sales and product royalties |  |      | 7.4  |                  | 16.1  |   |      |   | 7.8             |  | 17.2  |  
|Other                                        |  |      | 1.1  |                  | 2.4   |   |      |   | 1.0             |  | 2.2   |  
|                                             |  |      |      |                  |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 46.1 |                  | 100.0 | % |      | $ | 45.3            |  | 100.0 | %
|                                             |  |      |      |                  |       |   |      |   |                 |  |       |  

Total sales and revenues for the third quarter of fiscal 2007 increased $0.8 million, or 1.8%,
from the third quarter of fiscal 2006 to $46.1 million. Within the retail auto service business, royalty revenues and license fees decreased $1.0 million, or 6.0%, from fiscal 2006. This decrease was primarily driven by a decrease in North American
comparable shop retail sales, a decline in the number of North American shops compared to the same period in the prior fiscal year and a scheduled reduction in international royalties paid



10



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by Norauto. Comparable shop sales in North America declined approximately 3.0% as weak retail revenues were only partially offset by a more favorable
Canadian exchange rate. The Company is continuing to experience growth in new services. In the U.S., comparable shop sales of tires rose 9% and oil changes grew 11%. However, these increases could not offset comparable shop sales declines of 7% in
brakes and 11% in exhaust during the quarter. Revenues from real estate leases were flat to the prior year at $9.1 million as the positive impact of higher rent revenues and a favorable Canadian exchange rate were offset by a net reduction in the
number of shops subject to real estate rental agreements and lower revenue from sales-based rental agreements.

Sales from company-operated
shops were $12.9 million in the third quarter of fiscal 2007 compared to $10.8 million in fiscal 2006. This sales increase of $2.1 million was due to an increase in the number of company-operated shops as a result of acquisitions during the first
nine months of fiscal 2007, which more than offset a decrease in comparable shop sales of 2.4% during the quarter. Midas ended the third fiscal quarter with 80 company-operated shops compared to 75 shops one year ago and 66 shops at the beginning of
fiscal 2007. In the past twelve months, Midas acquired 24 shops, re-opened one closed shop, re-franchised 14 company-operated shops and closed six company-operated shops. Midas expects that acquisition and divestiture activity within the
company-operated shop business will continue.

Replacement part sales and product royalties decreased to $7.4 million from $7.8 million in
the third quarter of fiscal 2006. This decline in replacement part sales and product royalties was primarily due to lower product royalties as a result of the termination of the AutoZone supply relationship at June 30, 2007, and decreased sales
of tires and shop equipment to Midas dealers. Other revenue increased $0.1 million in the third quarter of fiscal 2007 reflecting continued growth in the Companys RO Writer software business.

The Companys gross profit margin decreased to 64.6% of sales in the third quarter of fiscal 2007 from 64.9% in fiscal 2006. This slight
year-over-year decrease in gross margin primarily reflects a shift in the mix of revenues from higher margin franchising royalties to relatively lower margin company-operated shop sales. This trend was partially offset by a decline in warranty
expense of $0.2 million to $1.2 million, or 2.6% of total sales for fiscal 2007, compared to $1.4 million, or 3.1% of total sales, in fiscal 2006. The decline in warranty expense is the result of reductions in the warranty redemption and
reimbursement rates for exhaust, as well as lower retail sales of brakes and exhaust.

Selling, general and administrative expenses for the
third quarter of fiscal 2007 decreased $0.7 million, or 5.3%, from the third quarter of fiscal 2006 to $12.5 million due to ongoing cost reduction efforts. Operating expenses for the company-operated shops increased $1.2 million in the third quarter
of fiscal 2007 to $9.4 million due to the higher number of company-operated shops.

During the third quarter of fiscal 2007, the Company
recorded business transformation charges of $0.6 million in selling, general and administrative expense. The charges primarily reflect the Companys partial funding of the rollout of a new shop image for Midas dealers. During the third quarter
of fiscal 2006, the Company recorded business transformation charges of $0.4 million in connection with the Companys partial funding of the rollout of the new shop image for Midas dealers.

During the third quarter of fiscal 2007, the Company sold its vacant manufacturing facility in Hartford, WI for approximately $1.1 million. As a result
of this asset sale, the Company recorded a gain of approximately $0.2 million. No material gains or losses were recorded during the third quarter of fiscal 2006.

As a result of the above changes, operating income decreased $0.1 million to $7.5 million in the third quarter of fiscal 2007 from $7.6 million in the third quarter of fiscal 2006. Excluding the impact of the above
described business transformation charges and gains on the sale of assets, operating income for the third quarter of fiscal 2007 was $7.9 million compared to $8.0 million for the third quarter of fiscal 2006. Excluding the impact of business
transformation charges, operating income margin decreased to 17.1% in the third quarter of fiscal 2007 from 17.7% in the third quarter of fiscal 2006. The decline in operating margin primarily reflects the negative impact of lower franchise
royalties and the shift in composition of the Companys business towards more company-operated shops.

Interest expense was $2.3
million in the third quarter of both fiscal 2007 and 2006. Interest expense remained unchanged despite a $7.8 million year-over-year increase in bank debt primarily due to the reduction in interest rates that resulted from changes in the
Companys debt agreement in 2006.

No material other income was recorded during the third quarter of fiscal 2007 compared to other
income of $0.3 million in the third quarter of fiscal 2006. Other income consists primarily of interest income on overdue customer accounts and foreign currency exchange gains or losses. During the third quarter of fiscal 2007, income from interest
on overdue customer accounts was offset by losses on currency translation for inter-company accounts.



11



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The Companys effective tax rate was 41.4% in the third quarter of fiscal 2007 compared to 56.7% in
the third quarter of fiscal 2006 and compared to the 2007 statutory tax rate of 39.0%. The fiscal 2007 variance from the statutory rate is primarily due to the impact of non-deductible executive compensation. The third quarter fiscal 2006 tax rate
was unusually high due to the correction of an error in 2004 and 2005 income tax expense.

As a result of the above items, net income
increased $0.6 million from net income of $2.4 million in the third quarter of fiscal 2006 to net income of $3.0 million in the third quarter of fiscal 2007.

First Nine Months Fiscal 2007 Compared with the First Nine Months Fiscal 2006

The following is a summary of the
Companys sales and revenues for the first nine months of fiscal 2007 and 2006: ($ in millions)



|                                             |  |      |       |                 |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ----- | --------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2007 |       | Percentto Total |       |   | 2006 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 46.2  |                 | 34.7  | % |      | $ | 48.7            |  | 36.6  | %
|Real estate revenues                         |  |      | 27.0  |                 | 20.3  |   |      |   | 27.3            |  | 20.5  |  
|Company-operated shop retail sales           |  |      | 32.9  |                 | 24.7  |   |      |   | 30.8            |  | 23.2  |  
|Replacement part sales and product royalties |  |      | 23.7  |                 | 17.8  |   |      |   | 23.3            |  | 17.5  |  
|Other                                        |  |      | 3.3   |                 | 2.5   |   |      |   | 2.9             |  | 2.2   |  
|                                             |  |      |       |                 |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 133.1 |                 | 100.0 | % |      | $ | 133.0           |  | 100.0 | %
|                                             |  |      |       |                 |       |   |      |   |                 |  |       |  

Total sales and revenues for the first nine months of fiscal 2007 increased $0.1 million, or 0.1%,
from the first nine months of fiscal 2006 to $133.1 million. Within the retail auto service business, royalty revenues and license fees decreased $2.5 million, or 5.1%, from fiscal 2006. This decrease was primarily driven by a decrease in U.S.
comparable shop retail sales, a decline in the number of North American shops compared to the same period in the prior fiscal year and a scheduled reduction in international royalties paid by Norauto. For the first nine months of fiscal 2007,
comparable shop sales in North America declined approximately 1.5%. Revenues from real estate leases declined slightly to $27.0 million as higher revenues from scheduled rent increases were offset by the net reduction in the number of shops subject
to real estate rental agreements and lower revenue from sales-based rental agreements.

Sales from company-operated shops were $32.9
million in the first nine months of fiscal 2007 compared to $30.8 million in the first nine months of fiscal 2006. The increased revenues, all of which came in the third quarter of fiscal 2007, reflect additional company-operated shops as a result
of acquisitions. Comparable shop sales for the company-operated shops increased 0.7% during the first nine months of fiscal 2007.

Replacement part sales and product royalties increased from $23.3 million to $23.7 million in the first nine months of fiscal 2007. This increase in replacement part sales and product royalties was primarily due to increased sales of tires
and batteries to Midas dealers, partially offset by lower product royalties driven by lower U.S. dealer purchases from AutoZone. Other revenue increased $0.4 million reflecting continued growth in the Companys RO Writer software business.

The Companys gross profit margin decreased to 63.8% of sales in the first nine months of fiscal 2007 from 64.1% in fiscal 2006. This
slight year-over-year decrease in gross margin primarily reflects a shift in the mix of revenues from higher margin franchising royalties to relatively lower margin company-operated shop sales. This was partially offset by a decline in warranty
expense of $0.7 million to $3.6 million, or 2.7% of total sales for the first nine months of fiscal 2007, compared to $4.3 million, or 3.2% of total sales in fiscal 2006.

Selling, general and administrative expenses in the first nine months of fiscal 2007 decreased $3.7 million, or 8.8%, from the first nine months of fiscal 2006 to $38.4 million. This reduction primarily reflects a
$1.1 million reduction in expenses related to the annual dealer convention, a $1.1 million reduction in legal expense due to the coverage of legal fees by one of the Companys insurers, and a savings of $1.2 million on exhaust distribution
expense due to the final exit from that business in the first quarter of fiscal 2006. Operating expenses for the company-operated shops business increased by $0.4 million as a result of an increase in the number of shops in operation compared to the
same period one year ago.

During the first nine months of fiscal 2007, the Company recorded business transformation charges of $2.1
million in selling, general and administrative expense. The charges reflect $1.3 million in connection with the Companys partial funding of the rollout of a new shop image for Midas dealers, $1.0 million related to the early termination of the
Companys supply agreement with AutoZone, and $0.2 million for other charges. Offsetting these charges were credits of $0.4 million to reflect adjustments to the



12



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Companys reserve for non-recoverable lease costs pertaining to the closure of six company-operated shops in 2006. During the first nine months of
fiscal 2006, the Company recorded business transformation charges of $0.9 million primarily in connection with the Companys partial funding of the rollout of the new shop image for Midas dealers.

During the first nine months of fiscal 2007, the Company sold its vacant manufacturing facility in Hartford, WI for approximately $1.1 million. As a
result of this asset sale, the Company recorded a gain of approximately $0.2 million. During the first nine months of fiscal 2006, the Company recorded a $3.4 million gain on sale of assets. This included the final 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 and distribution.

As a result of the above changes, operating income declined $1.5 million to $20.5 million in the first nine months of fiscal 2007 from $22.0 million
in the first nine months of fiscal 2006. Excluding the impact of the above described business transformation charges and gains on sale, operating income for the first nine months of fiscal 2007 was $22.4 million compared to $19.5 million for the
first nine months of fiscal 2006. Excluding the impact of business transformation charges and gains on sale, operating income margin increased to 16.8% in the first nine months of fiscal 2007 from 14.7% in the first nine months of fiscal 2006. The
improvement in operating margin primarily reflects savings on administrative overhead expense, the elimination of operating losses in the Companys exhaust distribution operation and improved profitability of company-operated shops, all of
which offset the negative impact of lower franchise royalties.

Interest expense was $6.8 million in the first nine months of both fiscal
2007 and 2006. Interest expense remained unchanged despite higher average bank debt compared to the year ago period primarily due to the reduction in interest rates that resulted from changes in the Companys debt agreement in 2006.

Other income declined from $0.8 million in the first nine months of fiscal 2006 to $0.3 million in the first nine months of fiscal 2007 primarily due
to currency exchange related losses. 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 41.3% in the first nine months of fiscal 2007 compared to 44.8% in the first nine months of fiscal 2006 and compared to the 2007 statutory tax rate of 39.0%. The fiscal 2007
variance from the statutory rate is primarily due to the impact of non-deductible executive compensation. The tax rate for the first nine months of fiscal 2006 was unusually high due to the correction of an error in 2004 and 2005 income tax expense.

As a result of the above items, net income decreased $0.6 million from net income of $8.8 million in the first nine months of fiscal 2006
to net income of $8.2 million in the first nine months of fiscal 2007.

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 2007 and
2006, respectively (in millions):



|                                                                                                                                      |  |      |       |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                                                                                                                      |  | 2007 |       |   | 2006 |  
|Cash provided by operating activities before cash outlays for business transformation costs and net changes in assets and
liabilities |  | $    | 24.8  |   |      | $ | 22.2  |  
|Cash outlays for business transformation costs                                                                                        |  |      | (2.4  | ) |      |   | (4.8  | )
|Net changes in assets and liabilities                                                                                                 |  |      | 2.0   |   |      |   | 2.9   |  
|                                                                                                                                      |  |      |       |   |      |   |       |  
|Net cash provided by operating activities                                                                                             |  |      | 24.4  |   |      |   | 20.3  |  
|Net cash used in investing activities                                                                                                 |  |      | (10.7 | ) |      |   | (3.2  | )
|Net cash used in financing activities                                                                                                 |  |      | (13.6 | ) |      |   | (17.2 | )
|                                                                                                                                      |  |      |       |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                               |  | $    | 0.1   |   |      | $ | (0.1  | )
|                                                                                                                                      |  |      |       |   |      |   |       |  

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 low cash balance. Midas cash and cash equivalents increased $0.1 million in the first nine months of fiscal 2007.

The Companys operating activities provided net cash of $24.4 million during the first nine months of fiscal 2007 compared to $20.3 million in the
first nine months of fiscal 2006. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash from operating activities increased from $22.2 million in the first nine months of fiscal 2006 to $24.8 million



13



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in the first nine months of fiscal 2007, as the decrease in net income and lower utilization of deferred tax assets was offset by the $3.2 million year over
year decrease in gain on sale of assets, higher business transformation charges, and higher stock based compensation. Cash outlays for business transformation costs declined from $4.8 million in the first nine months of fiscal 2006 to $2.4 million
in the first nine months of fiscal 2007. Cash outlays for business transformation costs in the first nine months of fiscal 2007 were related to the Companys update of its retail shop image and the early termination of the supply agreement with
AutoZone, while cash outlays in the first nine months of fiscal 2006 were related to the exit from exhaust manufacturing and distribution, as well as the retail image update.

Changes in assets and liabilities declined from a $2.9 million source of cash in the first nine months of fiscal 2006 to a $2.0 million source of cash in
the first nine months of fiscal 2007. The $2.9 million source of cash in 2006 was primarily due to a decline in inventories as a result of the final liquidation of exhaust inventory, while the $2.0 million source of cash in 2007 was primarily due to
decreased accounts receivable and the timing of payments.

Investing activities used $10.7 million of cash in the first nine months of
fiscal 2007 compared to using $3.2 million of cash in the first nine months of fiscal 2006. Fiscal 2007 investing activities primarily consisted of $10.1 million paid in conjunction with the acquisition of 26 shops and other assets from certain
Midas dealers, $2.9 million in systems development projects, company-operated shop equipment additions and other capital expenditures and $2.3 million in cash generated as the result of the sale of 11 company-operated shops and the sale of a former
exhaust manufacturing facility. Fiscal 2006 investing activities primarily consisted of $2.9 million in systems development projects, company-operated shop equipment additions and other capital expenditures, $1.4 million paid in conjunction with the
acquisition of six Midas shops and other shop assets from a Midas dealer and $1.1 million in cash generated as the result of the sale of certain exhaust manufacturing assets.

Net cash used in financing activities was $13.6 million in the first nine months of fiscal 2007, compared to net cash used of $17.2 million in the first
nine months of fiscal 2006. During fiscal 2007, the Company increased total debt by $7.5 million, decreased outstanding checks by $2.5 million, paid $21.1 million to repurchase shares of the Companys common stock and received $2.5 million in
cash from the exercise of outstanding stock options. In 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.

On October 27, 2005, the Company entered into a five-year,
unsecured $110 million revolving credit facility. On September 15, 2006, the Company amended this revolving credit facility. The amended facility is expandable to $165 million at the Companys discretion with lender approval. 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. As of September 29, 2007,
the interest rate on the Companys revolving loan borrowings was priced at LIBOR plus 1.25%.

As of September 29, 2007, a total
of $70.0 million was outstanding under the revolving credit facility. As of December 30, 2006, a total of $61.1 million was outstanding under the revolving credit facility.

In November 2005, $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. In
addition, in March 2007, the Company entered into an interest rate swap arrangement to convert $25 million in senior bank debt from floating rate to a fixed rate by locking-in LIBOR at 4.91% for the remaining term of the Companys bank
agreement (October 2010). This swap effectively replaced a declining balance swap that expired in March 2007 under which LIBOR was locked-in at 2.76% for a three-year term. As a consequence, currently $45 million of the Companys $70.0 million
in senior bank debt is at fixed rates.

Both the November 2005 and March 2007 swap arrangements have been designated as cash flow hedges
and have been evaluated to be highly effective. As a result, the change in the fair value of these swaps is recorded in accumulated other comprehensive income as a gain or loss on derivative financial instruments.

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 and on May 8, 2007 the Board authorized an additional $50 million increase. 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 $57.4 million for shares acquired under this current
program since the buyback program was first initiated in 2004.

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.



14



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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 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, 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 30, 2006 outstanding U.S. warranty liability by $4.5
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, and 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), which require that amounts recognized in the financial statements be determined
on an actuarial basis. Under SFAS No. 158 the amount recorded as pension assets or liabilities is determined by comparing the projected benefit obligation (PBO) to the fair value of the plan assets. Amounts recognized in accumulated other
comprehensive loss consist of unrecognized actuarial gains, losses, and prior service costs, net of tax.

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.



15



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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 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 Goodwill and Long-Lived Assets

In accordance with SFAS No. 142, the Company conducts tests for impairment of goodwill annually in the fiscal fourth quarter or more frequently if
circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that an assets carrying amount exceeds its fair value.

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 29, 2007. 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.

IMPACT OF NEW ACCOUNTING STANDARDS

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 48, Accounting for
Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109. Midas adopted the provisions of FIN 48 effective December 31, 2006.

Through December 30, 2006, in accordance with prior standards, we assessed the ultimate resolution of uncertain tax matters as they arose and established reserves for tax contingencies when we believed an
unfavorable outcome was probable and the liability could be reasonably estimated. As of December 30, 2006, Midas had tax reserves of $1.2 million. The reserves were recorded as a non-current liability.

FIN 48 differs from the prior standards in that it requires companies to determine that it is more likely than not that a tax position will
be sustained by the appropriate taxing authorities before any benefit can be recorded in the financial statements. As of December 30, 2006, our unrecognized tax benefits totaled $2.0 million. The adoption of FIN 48 resulted in no change to
the reserve for unrecognized tax benefits that existed as of December 30, 2006. As such, there was no change recorded to retained earnings as a result of the adoption.

Midass policy continues to be to recognize accrued interest related to uncertain tax positions and penalties as components of other income
(expense), net. As of September 29, 2007, the Company had a $1.2 million liability for uncertain tax positions, all of which represented tax positions that, if recognized, would impact the effective tax rate. The statute of limitations remains
open for U.S. Federal tax returns for 2003 and subsequent years. The statute of limitations remains open for Canadian tax returns for 2003 and subsequent years. During the periods open to examination, the Company has net operating losses and tax
credit carry forwards that have attributes from closed periods. Since these net operating losses and tax credit carry forwards may be utilized in future periods, they remain subject to examination. As of September 29, 2007, the Company has not
recorded any provisions for accrued interest or penalties related to uncertain tax positions.



16



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During the nine months ended September 29, 2007, there have been no material changes in the
liability for uncertain tax positions.

In September 2006, the FASB issued Statement of Financial Accounting Standard (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 became effective for Midas for its December 30, 2006 year-end. The
provisions of SFAS 158 are to be applied on a prospective basis; therefore, prior periods presented will not be restated. The Company adopted SFAS 158 on December 30, 2006, which resulted in a $7.0 million reduction in other assets, a $2.8
million increase in deferred tax assets, a $0.2 million increase in other liabilities and a $4.4 million increase in accumulated other comprehensive loss. The adoption had no impact on the Companys results of operations or cash flows.

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 no later than fiscal year-end 2008, which ends January 3, 2009. The funded status of the majority of Midas pension plans is currently measured annually as of the 30th of September.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB 108), Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements. 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 Company adopted SAB 108 on December 30, 2006, which resulted in a cumulative effect adjustment to its opening fiscal 2006 balance sheet. The adjustment included a $4.0 million
increase in other liabilities, a $1.5 million increase in deferred income tax assets and a $2.5 million reduction in retained earnings. Those amounts represent the cumulative difference between recording rent expense on a straight-line basis versus
the previous Midas policy of recording rent in accordance with the underlying lease terms. The adoption of SAB 108 also resulted in lowering the 2006 real estate cost of revenues by $0.6 million and selling, general and administrative expense by
$0.2 million. Prior to the adoption of SAB 108, the Company determined that the potential impact of these items using the rollover method was immaterial to the prior years statements of operations and cash flow.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an
amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits a company to choose to measure certain financial assets and liabilities at fair value that are not currently required to be measured at fair value (i.e. the Fair Value
Option). Election of the Fair Value Option is made on an instrument-by-instrument basis and is irrevocable. At the adoption date, unrealized gains and losses on financial assets and liabilities for which the Fair Value Option has been elected would
be reported as a cumulative adjustment to beginning retained earnings. If Midas elects the Fair Value Option for certain financial assets and liabilities, it will report unrealized gains and losses due to changes in their fair value in earnings at
each subsequent reporting date. SFAS No. 159 is effective as of January 1, 2008. Midas is currently evaluating the potential impact of adopting SFAS No. 159 on its consolidated financial statements.

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



17



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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.



|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 November 2005, $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. In addition, in March 2007, the Company entered into an interest rate swap arrangement to convert $25 million in senior bank debt from
floating rate to a fixed rate by locking-in LIBOR at 4.91% for the remaining term of the Companys bank agreement (October 2010). This swap effectively replaced a declining balance swap that expired in March 2007 under which LIBOR was locked-in
at 2.76% for a three-year term. As a consequence, currently $45 million of the Companys $70.0 million in senior bank debt is at fixed rates.

Both the November 2005 and March 2007 swap arrangements have been designated as cash flow hedges and have been evaluated to be highly effective. As a result, the after-tax change in the fair value of these swaps is recorded in accumulated
other comprehensive income as a gain or loss on derivative financial instruments. As of September 29, 2007, the fair value of these instruments was a pre-tax loss of approximately $0.4 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.



18



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|(b) | Changes in internal controls over financial reporting.
|--- | ------------------------------------------------------

During the third quarter of fiscal 2007, the Company implemented a new general ledger and financial reporting system. The Company also implemented a new property management system. The new property management system is utilized for all
North American locations that are either owned or leased. There were no other significant changes in internal controls during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the
Companys internal controls over financial reporting.



19



---

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 |  | AveragePrice Paidper Share |       | Total Number ofShares Purchasedas Part ofPubliclyAnnounced Plansor Programs |         | Approximate DollarValue of Shares ThatMay Yet Be PurchasedUnder the Plans
orPrograms (1)
|July 2007: (July 1, 2007 through July 28, 2007)              |  | 30,000                         |  | $                          | 20.90 |                                                                             | 30,000  |                                                                                          | $ | 49,359,326
|August 2007: (July 29, 2007 through August 25, 2007)         |  | 155,800                        |  | $                          | 19.00 |                                                                             | 155,800 |                                                                                          | $ | 46,399,242
|September 2007: (August 26, 2007 through September 29, 2007) |  | 197,000                        |  | $                          | 19.14 |                                                                             | 197,000 |                                                                                          | $ | 42,628,974
|                                                             |  |                                |  |                            |       |                                                                             |         |                                                                                          |   |           
|Total                                                        |  | 382,800                        |  | $                          | 19.22 |                                                                             | 382,800 |                                                                                          |   |           
|                                                             |  |                                |  |                            |       |                                                                             |         |                                                                                          |   |           

---

|(1) | 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, and on May 8, 2007, the Board authorized an additional $50 million increase. As of September 29, 2007, a total of approximately 2,752,700 shares had been
repurchased under this current plan since its inception. The average price of shares repurchased under the plan was approximately $20.84.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

None



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

None



|Item 5. | Other Information.
|------- | ------------------

None



|Item 6. | Exhibits.
|------- | ---------



|31.1 | Rule 13a  14(a) / 15d  14(a) Certification of Chief Executive Officer.
|---- | ------------------------------------------------------------------------



20



---

|31.2 | Rule 13a  14(a) / 15d  14(a) Certification of Chief Financial Officer.
|---- | ------------------------------------------------------------------------



|32.1 | Section 1350 Certifications.
|---- | ----------------------------

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 8, 2007 |  | /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                       



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