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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 July 3, 2004



OR



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



For the transition period from  to



Commission File Number: 01-13409



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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 ofIncorporation or Organization ) |  | (I.R.S. EmployerIdentification 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 an accelerated filer (as defined in Rule 12b-2).    Yes  x    No ̈



The number of shares of the Registrants Common Stock, $.001 par value per share, outstanding as of July 28, 2004 was
15,681,840.



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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 quarter ended fiscal June |      |   | For the six months ended fiscal June |  
|                                                       |  | 2004                              |      |   | 2003                                 |   |       | 2004       |  |   | 2003       |  
|                                                       |  | (13 weeks)                        |      |   | (13 weeks)                           |   |       | (26 Weeks) |  |   | (26 Weeks) |  
|Sales and revenues:                                    |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Franchise royalties and license fees                   |  | $                                 | 16.8 |   |                                      | $ | 16.5  |            |  | $ | 31.3       |   |  | $ | 30.3  |  
|Real estate revenues                                   |  |                                   | 9.0  |   |                                      |   | 8.9   |            |  |   | 18.1       |   |  |   | 17.9  |  
|Company-operated shop retail sales                     |  |                                   | 9.3  |   |                                      |   | 11.2  |            |  |   | 17.9       |   |  |   | 22.9  |  
|Replacement part sales and product royalties           |  |                                   | 16.2 |   |                                      |   | 40.8  |            |  |   | 30.3       |   |  |   | 80.4  |  
|Other                                                  |  |                                   | 0.7  |   |                                      |   | 0.5   |            |  |   | 1.3        |   |  |   | 0.9   |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Total sales and revenues                               |  |                                   | 52.0 |   |                                      |   | 77.9  |            |  |   | 98.9       |   |  |   | 152.4 |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Cost of sales and revenues:                            |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Real estate cost of revenues                           |  |                                   | 5.5  |   |                                      |   | 5.2   |            |  |   | 11.0       |   |  |   | 10.3  |  
|Company-operated shop cost of sales                    |  |                                   | 1.8  |   |                                      |   | 2.4   |            |  |   | 3.3        |   |  |   | 5.0   |  
|Replacement part cost of sales                         |  |                                   | 12.4 |   |                                      |   | 26.4  |            |  |   | 22.9       |   |  |   | 54.5  |  
|Warranty expense                                       |  |                                   | 2.4  |   |                                      |   | 3.3   |            |  |   | 4.5        |   |  |   | 6.2   |  
|Business transformation charges (warranty reserve)     |  |                                   |     |   |                                      |   | 33.3  |            |  |   |           |   |  |   | 33.3  |  
|Business transformation charges (inventory write-down) |  |                                   |     |   |                                      |   | 8.6   |            |  |   |           |   |  |   | 8.6   |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Total cost of sales and revenues                       |  |                                   | 22.1 |   |                                      |   | 79.2  |            |  |   | 41.7       |   |  |   | 117.9 |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Gross profit                                           |  |                                   | 29.9 |   |                                      |   | (1.3  | )          |  |   | 57.2       |   |  |   | 34.5  |  
|Selling, general, and administrative expenses          |  |                                   | 23.4 |   |                                      |   | 36.5  |            |  |   | 45.4       |   |  |   | 73.8  |  
|Business transformation charges                        |  |                                   |     |   |                                      |   | 8.9   |            |  |   |           |   |  |   | 12.6  |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Operating income (loss)                                |  |                                   | 6.5  |   |                                      |   | (46.7 | )          |  |   | 11.8       |   |  |   | (51.9 | )
|Interest expense                                       |  |                                   | (2.5 | ) |                                      |   | (7.3  | )          |  |   | (7.6       | ) |  |   | (11.6 | )
|Loss on early extinguishment of debt                   |  |                                   |     |   |                                      |   |      |            |  |   | (4.7       | ) |  |   | (1.4  | )
|Other income, net                                      |  |                                   | 0.2  |   |                                      |   | 0.5   |            |  |   | 0.5        |   |  |   | 0.9   |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Income (loss) before income tax expense (benefit)      |  |                                   | 4.2  |   |                                      |   | (53.5 | )          |  |   |           |   |  |   | (64.0 | )
|Income tax expense (benefit)                           |  |                                   | 1.6  |   |                                      |   | (20.8 | )          |  |   |           |   |  |   | (24.9 | )
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Net income (loss)                                      |  | $                                 | 2.6  |   |                                      | $ | (32.7 | )          |  | $ |           |   |  | $ | (39.1 | )
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Earnings (loss) per share:                             |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Basic                                                  |  | $                                 | 0.16 |   |                                      | $ | (2.10 | )          |  | $ | 0.00       |   |  | $ | (2.55 | )
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Diluted                                                |  | $                                 | 0.16 |   |                                      | $ | (2.10 | )          |  | $ | 0.00       |   |  | $ | (2.55 | )
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Average number of shares:                              |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Common shares outstanding                              |  |                                   | 15.3 |   |                                      |   | 15.1  |            |  |   | 15.2       |   |  |   | 15.0  |  
|Common stock warrants                                  |  |                                   | 0.3  |   |                                      |   | 0.5   |            |  |   | 0.3        |   |  |   | 0.3   |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Shares applicable to basic earnings                    |  |                                   | 15.6 |   |                                      |   | 15.6  |            |  |   | 15.5       |   |  |   | 15.3  |  
|Equivalent shares on outstanding stock awards          |  |                                   | 0.6  |   |                                      |   |      |            |  |   | 0.6        |   |  |   |      |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  
|Shares applicable to diluted earnings                  |  |                                   | 16.2 |   |                                      |   | 15.6  |            |  |   | 16.1       |   |  |   | 15.3  |  
|                                                       |  |                                   |      |   |                                      |   |       |            |  |   |            |   |  |   |       |  



See notes to condensed
financial statements.



1



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MIDAS, INC.

CONDENSED BALANCE SHEETS

(In millions)



|                                                                                                              |  |                |       |   |                    |   |       |  
|------------------------------------------------------------------------------------------------------------- |  | -------------- | ----- | - | ------------------ | - | ----- | -
|                                                                                                              |  | FiscalJune2004 |       |   | FiscalDecember2003 |  
|                                                                                                              |  | (Unaudited)    |       |   |                    |  
|Assets:                                                                                                       |  |                |       |   |                    |   |       |  
|Current assets:                                                                                               |  |                |       |   |                    |   |       |  
|Cash and cash equivalents                                                                                     |  | $              | 0.6   |   |                    | $ | 7.4   |  
|Receivables, net                                                                                              |  |                | 39.9  |   |                    |   | 38.0  |  
|Inventories, net                                                                                              |  |                | 12.7  |   |                    |   | 14.5  |  
|Deferred income taxes                                                                                         |  |                | 10.9  |   |                    |   | 13.9  |  
|Other current assets                                                                                          |  |                | 10.5  |   |                    |   | 9.9   |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Total current assets                                                                                          |  |                | 74.6  |   |                    |   | 83.7  |  
|Property and equipment, net                                                                                   |  |                | 125.4 |   |                    |   | 131.7 |  
|Intangible assets                                                                                             |  |                | 0.3   |   |                    |   | 0.3   |  
|Deferred income taxes                                                                                         |  |                | 58.4  |   |                    |   | 56.1  |  
|Other assets                                                                                                  |  |                | 8.9   |   |                    |   | 11.6  |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Total assets                                                                                                  |  | $              | 267.6 |   |                    | $ | 283.4 |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Liabilities and equity:                                                                                       |  |                |       |   |                    |   |       |  
|Current liabilities:                                                                                          |  |                |       |   |                    |   |       |  
|Current portion of long-term obligations                                                                      |  | $              | 11.8  |   |                    | $ | 8.0   |  
|Accounts payable                                                                                              |  |                | 14.4  |   |                    |   | 13.7  |  
|Accrued expenses                                                                                              |  |                | 39.7  |   |                    |   | 47.5  |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Total current liabilities                                                                                     |  |                | 65.9  |   |                    |   | 69.2  |  
|Long-term debt                                                                                                |  |                | 72.9  |   |                    |   | 85.2  |  
|Obligations under capital leases                                                                              |  |                | 5.6   |   |                    |   | 6.5   |  
|Finance lease obligation                                                                                      |  |                | 37.2  |   |                    |   | 37.5  |  
|Accrued warranty                                                                                              |  |                | 33.5  |   |                    |   | 33.8  |  
|Other liabilities                                                                                             |  |                | 12.4  |   |                    |   | 15.1  |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Total liabilities                                                                                             |  |                | 227.5 |   |                    |   | 247.3 |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Shareholders equity:                                                                                         |  |                |       |   |                    |   |       |  
|Common stock ($.001 par value, 100 million shares authorized, 17.5 million shares issued) and paid-in capital |  |                | 22.0  |   |                    |   | 23.8  |  
|Treasury stock, at cost (1.8 million shares and 2.2 million shares)                                           |  |                | (42.3 | ) |                    |   | (49.6 | )
|Unamortized restricted stock awards                                                                           |  |                | (2.5  | ) |                    |   | (1.3  | )
|Retained income                                                                                               |  |                | 74.8  |   |                    |   | 74.8  |  
|Cumulative other comprehensive loss                                                                           |  |                | (11.9 | ) |                    |   | (11.6 | )
|                                                                                                              |  |                |       |   |                    |   |       |  
|Total shareholders equity                                                                                    |  |                | 40.1  |   |                    |   | 36.1  |  
|                                                                                                              |  |                |       |   |                    |   |       |  
|Total liabilities and equity                                                                                  |  | $              | 267.6 |   |                    | $ | 283.4 |  
|                                                                                                              |  |                |       |   |                    |   |       |  



See notes to condensed
financial statements.



2



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MIDAS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)



|                                                                                                                          |  |                                      |       |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | ----- | -
|                                                                                                                          |  | For the six months ended fiscal June |      
|                                                                                                                          |  | 2004                                 |       |   | 2003 |  
|Cash flows from operating activities:                                                                                     |  |                                      |       |   |      |   |       |  
|Net income (loss)                                                                                                         |  | $                                    |      |   |      | $ | (39.1 | )
|Adjustments reconciling net income (loss) to net cash provided by operating activities:                                   |  |                                      |       |   |      |   |       |  
|Depreciation and amortization                                                                                             |  |                                      | 6.8   |   |      |   | 8.3   |  
|Amortization of debt discount and financing fees                                                                          |  |                                      | 2.1   |   |      |   | 2.1   |  
|Business transformation charges (warranty reserve)                                                                        |  |                                      |      |   |      |   | 33.3  |  
|Business transformation charges (inventory write-down)                                                                    |  |                                      |      |   |      |   | 8.6   |  
|Business transformation charges                                                                                           |  |                                      |      |   |      |   | 12.6  |  
|Loss on early extinguishment of debt                                                                                      |  |                                      | 4.7   |   |      |   | 1.4   |  
|Cash outlays for business transformation costs                                                                            |  |                                      | (6.0  | ) |      |   | (6.4  | )
|Deferred income taxes                                                                                                     |  |                                      | 0.7   |   |      |   | (25.8 | )
|Changes in assets and liabilities, exclusive of effects of business transformation charges, acquisitions and dispositions |  |                                      | (2.5  | ) |      |   | 9.4   |  
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Net cash provided by operating activities                                                                                 |  |                                      | 5.8   |   |      |   | 4.4   |  
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Cash flows from investing activities:                                                                                     |  |                                      |       |   |      |   |       |  
|Capital investments                                                                                                       |  |                                      | (0.4  | ) |      |   | (1.4  | )
|Cash paid for acquired businesses                                                                                         |  |                                      | (0.4  | ) |      |   | (0.4  | )
|Proceeds from sales of assets                                                                                             |  |                                      |      |   |      |   | 5.2   |  
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Net cash provided by (used in) investing activities                                                                       |  |                                      | (0.8  | ) |      |   | 3.4   |  
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Cash flows from financing activities:                                                                                     |  |                                      |       |   |      |   |       |  
|Net decrease in bank debt                                                                                                 |  |                                      | (11.3 | ) |      |   | (5.3  | )
|Issuance of stock warrants in connection with refinancing                                                                 |  |                                      |      |   |      |   | 5.0   |  
|Cash payments for debt financing fees                                                                                     |  |                                      | (2.1  | ) |      |   | (4.8  | )
|Payment of obligations under capital leases                                                                               |  |                                      | (0.7  | ) |      |   | (0.4  | )
|Payment of obligations under finance lease                                                                                |  |                                      | (0.3  | ) |      |   | (0.4  | )
|Cash received for common stock                                                                                            |  |                                      | 3.0   |   |      |   |      |  
|Cash paid for treasury shares                                                                                             |  |                                      | (0.4  | ) |      |   | (0.1  | )
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Net cash used in financing activities                                                                                     |  |                                      | (11.8 | ) |      |   | (6.0  | )
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                   |  |                                      | (6.8  | ) |      |   | 1.8   |  
|Cash and cash equivalents at beginning of period                                                                          |  |                                      | 7.4   |   |      |   | 0.5   |  
|                                                                                                                          |  |                                      |       |   |      |   |       |  
|Cash and cash equivalents at end of period                                                                                |  | $                                    | 0.6   |   |      | $ | 2.3   |  
|                                                                                                                          |  |                                      |       |   |      |   |       |  



See notes to condensed
financial statements.



3



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MIDAS, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)

(In millions)



|                                                                              |  |                                  |  |        |                |   |        |                                   |   |        |                  |       |                            |  |         |      |   |            |   |      |  |   |      |   |  |   |       |  
|----------------------------------------------------------------------------- |  | -------------------------------- |  | ------ | -------------- | - | ------ | --------------------------------- | - | ------ | ---------------- | ----- | -------------------------- |  | ------- | ---- | - | ---------- | - | ---- |  | - | ---- | - |  | - | ----- | -
|                                                                              |  | Common Stock and Paid-in Capital |  |        | Treasury Stock |   |        | UnamortizedRestrictedStock Awards |   |        | RetainedEarnings |       | ComprehensiveIncome (Loss) | 
|                                                                              |  | Shares                           |  | Amount |                |   | Shares |                                   |   | Amount |                  |       |                            |  | Current |      |   | Cumulative |  
|Fiscal year end 2003                                                          |  | 17.5                             |  | $      | 23.8           |   |        | (2.2                              | ) |        | $                | (49.6 | )                          |  | $       | (1.3 | ) |            | $ | 74.8 |  |   |      |   |  | $ | (11.6 | )
|Purchase of treasury shares                                                   |  |                                 |  |        |               |   |        |                                  |   |        |                  | (0.4  | )                          |  |         |     |   |            |   |     |  |   |      |   |  |   |      |  
|Forfeiture of restricted stock awards                                         |  |                                 |  |        |               |   |        |                                  |   |        |                  | (0.1  | )                          |  |         | 0.1  |   |            |   |     |  |   |      |   |  |   |      |  
|Restricted stock awards                                                       |  |                                 |  |        | 0.2            |   |        | 0.1                               |   |        |                  | 2.1   |                            |  |         | (2.3 | ) |            |   |     |  |   |      |   |  |   |      |  
|Amortization of restricted stock awards(a)                                    |  |                                 |  |        | 0.2            |   |        |                                  |   |        |                  |      |                            |  |         | 1.0  |   |            |   |     |  |   |      |   |  |   |      |  
|Stock option transactions(a)                                                  |  |                                 |  |        | (2.2           | ) |        | 0.3                               |   |        |                  | 5.7   |                            |  |         |     |   |            |   |     |  |   |      |   |  |   |      |  
|Net income                                                                    |  |                                 |  |        |               |   |        |                                  |   |        |                  |      |                            |  |         |     |   |            |   |     |  | $ |     |   |  |   |      |  
|Other comprehensive income (loss) gain on derivative instruments, net of tax |  |                                 |  |        |               |   |        |                                  |   |        |                  |      |                            |  |         |     |   |            |   |     |  |   | 0.1  |   |  |   | 0.1   |  
|foreign currency translation adjustments                                     |  |                                 |  |        |               |   |        |                                  |   |        |                  |      |                            |  |         |     |   |            |   |     |  |   | (0.4 | ) |  |   | (0.4  | )
|                                                                              |  |                                  |  |        |                |   |        |                                   |   |        |                  |       |                            |  |         |      |   |            |   |      |  |   |      |   |  |   |       |  
|Comprehensive income (loss)                                                   |  |                                 |  |        |               |   |        |                                  |   |        |                  |      |                            |  |         |     |   |            |   |     |  | $ | (0.3 | ) |  |   |      |  
|                                                                              |  |                                  |  |        |                |   |        |                                   |   |        |                  |       |                            |  |         |      |   |            |   |      |  |   |      |   |  |   |       |  
|Fiscal second quarter end 2004                                                |  | 17.5                             |  | $      | 22.0           |   |        | (1.8                              | ) |        | $                | (42.3 | )                          |  | $       | (2.5 | ) |            | $ | 74.8 |  |   |      |   |  | $ | (11.9 | )
|                                                                              |  |                                  |  |        |                |   |        |                                   |   |        |                  |       |                            |  |         |      |   |            |   |      |  |   |      |   |  |   |       |  



|(a) | Common stock and paid in capital includes tax benefits of $0.2 million for vesting of restricted stock and $0.5 million for stock options exercised.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------





See notes to condensed financial statements.



4



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MIDAS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS



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 January 3, 2004. 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 July 3, 2004 (second quarter fiscal 2004) and June 28, 2003 (second quarter fiscal 2003) and of its financial position as of July 3, 2004. All such adjustments are of a normal recurring
nature. The results of operations for the second quarter fiscal 2004 and 2003 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 July 3, 2004 and June 28, 2003 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 2003 financial statements in order to provide consistency with the fiscal 2004 results. These reclassifications did not affect previously reported 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 June |  | For the six months ended fiscal June
|                                           |  | 2004                              |  | 2003                                 |  | 2004 |  | 2003
|Weighted-average common shares outstanding |  | 15.3                              |  | 15.1                                 |  | 15.2 |  | 15.0
|Common stock warrants                      |  | 0.3                               |  | 0.5                                  |  | 0.3  |  | 0.3 
|                                           |  |                                   |  |                                      |  |      |  |     
|Shares applicable to basic earnings        |  | 15.6                              |  | 15.6                                 |  | 15.5 |  | 15.3
|Effect of dilutive stock awards            |  | 0.6                               |  |                                     |  | 0.6  |  |    
|                                           |  |                                   |  |                                      |  |      |  |     
|Shares applicable to diluted earnings      |  | 16.2                              |  | 15.6                                 |  | 16.1 |  | 15.3
|                                           |  |                                   |  |                                      |  |      |  |     
|Potential common share equivalents:        |  |                                   |  |                                      |  |      |  |     
|Stock options                              |  | 1.6                               |  | 2.1                                  |  | 1.6  |  | 2.1 



Common share
equivalents were excluded from 2003 diluted earnings per share as they would have had an anti-dilutive effect.



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 six months ended fiscal June |     
|                   |  | 2004                                 |      |   | 2003 |  
|Interest paid      |  | $                                    | 4.8  |   |      | $ | 7.3  |  
|Income tax refunds |  |                                      | (0.4 | ) |      |   | (3.3 | )
|Income taxes paid  |  |                                      | 0.1  |   |      |   | 0.6  |  



5



---

3. Inventories



Inventories, summarized by major classification, were as follows (in millions):



|                                  |  |                  |      |                     |   |     
|--------------------------------- |  | ---------------- | ---- | ------------------- | - | ----
|                                  |  | Fiscal June 2004 |      | FiscalDecember 2003
|                                  |  | (Unaudited)      |      |                    
|Raw materials and work in process |  | $                | 2.5  |                     | $ | 2.9 
|Finished goods                    |  |                  | 10.2 |                     |   | 11.6
|                                  |  |                  |      |                     |   |     
|                                  |  | $                | 12.7 |                     | $ | 14.5
|                                  |  |                  |      |                     |   |     



4. Business Transformation Charges



The Company is in the process of transforming its business.
As part of the Companys business transformation, the Company has developed and implemented strategic initiatives that it believes will enhance its long-term competitive position. The Company believes these initiatives will enable it to reduce
costs and enhance sustainable profitability while delivering critical products and services to its customers. These initiatives included the disposition of the assets of Parts Warehouse, Inc. (PWI), the closure and re-franchising of
certain company-operated shops, the redesign of the Companys wholesale parts distribution network, and the reduction of administrative expenses related to former operating activities. The implementation of these initiatives is having the
effect of substantially lowering overall Company revenues and expenses. Furthermore, the implementation of the Companys strategic initiatives has resulted in the Company recording substantial business transformation charges in fiscal 2003,
2002 and 2001, to reflect the write-down of assets, the disposition of lease agreements, severance costs, and other related expenses.



The fiscal 2004 activity affecting the accrual for business transformation charges was as follows (shown in millions):



|                           |  |                   |      |   |                                          |   |      |                                         |  |   |                                              |   |  |       |      |   |  |   |      |  
|-------------------------- |  | ----------------- | ---- | - | ---------------------------------------- | - | ---- | --------------------------------------- |  | - | -------------------------------------------- | - |  | ----- | ---- | - |  | - | ---- | -
|                           |  | Dispositionof PWI |      |   | Rationalizationof Company-Operated Shops |   |      | Redesign ofWholesaleDistributionNetwork |  |   | AdministrativeCosts,Severance andOther Costs |   |  | Total |     
|Balance at January 3, 2004 |  | $                 | 0.8  |   |                                          | $ | 3.0  |                                         |  | $ | 5.3                                          |   |  | $     | 4.0  |   |  | $ | 13.1 |  
|Non-cash utilization       |  |                   |     |   |                                          |   |     |                                         |  |   | 0.4                                          |   |  |       | (0.4 | ) |  |   |     |  
|Cash payments              |  |                   | (0.5 | ) |                                          |   | (0.7 | )                                       |  |   | (3.5                                         | ) |  |       | (1.3 | ) |  |   | (6.0 | )
|                           |  |                   |      |   |                                          |   |      |                                         |  |   |                                              |   |  |       |      |   |  |   |      |  
|Balance at July 3, 2004    |  | $                 | 0.3  |   |                                          | $ | 2.3  |                                         |  | $ | 2.2                                          |   |  | $     | 2.3  |   |  | $ | 7.1  |  
|                           |  |                   |      |   |                                          |   |      |                                         |  |   |                                              |   |  |       |      |   |  |   |      |  



5. Debt Agreements



As of January 4, 2004, the Company had credit facilities consisting of a $25
million revolving loan facility, a $64.7 million Term Loan A, and a $29.4 million Term Loan B. These facilities were secured by substantially all of the assets of the Company and were scheduled to expire on October 3, 2004. Interest on the revolving
loan was payable monthly at the prime rate plus 2.75% or LIBOR plus 3.75%. Interest on a portion of the Term Loan A was fixed at 7.67%, while interest on the balance of the Term Loan A was payable monthly at the prime rate plus 5.0% or LIBOR plus
6.0%. The interest rate on the Term Loan B was fixed at 12% cash interest paid monthly plus 6% paid-in-kind (PIK), which was added to principal and due at maturity. Availability under the revolving credit facility was based on a
borrowing base, which took into consideration the Companys inventory and accounts receivable levels. The revolving credit facility was senior to both the Term Loan A and Term Loan B.



On March 16, 2004, the Company entered into a new three-year, $115 million
credit facility to refinance its existing debt facility. The new debt facility is comprised of a $55 million revolving credit facility and a $60 million term loan. The new facility is secured by substantially all of the assets of the Company and
expires on March 16, 2007. Under the



6



---

terms of the debt refinancing, the Company retired its former $25 million revolving credit facility as well as its Term A and Term B loans. The refinancing
resulted in a loss on early extinguishment of debt of $4.7 million due to the write-off of unamortized debt discount and financing fees. Due to the refinancing of the Companys debt in March 2004, the amounts due after January 1, 2005 were
classified as long-term in the January 3, 2004 balance sheet.



Interest on the $55 million revolving loan was initially payable monthly at LIBOR plus 3.25%. Interest on the $60 million term loan was initially payable monthly at LIBOR plus 3.5%. The interest rates float based on the underlying rate of
LIBOR and the Companys leverage. Availability under the revolving credit facility is not predicated on a borrowing base. The term loan requires quarterly principal payments of $1.25 million on July 2, 2004 and $2.5 million thereafter. In
addition, the term loan must be prepaid by an amount equal to: (i) 100% of equity issued, or (ii) 75% of any material asset proceeds in excess of $1 million (other than the sale of inventory in the normal course of business), or (iii) 50% of any
excess cash flow as provided for by the agreement. The new facility requires maintenance of certain financial covenants including maximum allowable leverage and minimum tangible net worth.



In April 2004, the Company entered into an interest rate swap arrangement to
convert $40 million of the $60 million term loan from a floating rate to a fixed rate, by locking-in LIBOR at 2.76% for the three-year term of the loan. As of July 3, 2004, the fair value of this instrument is approximately $100,000, net of taxes.
This amount was recorded in other comprehensive income as a gain on derivative instruments.



The components of debt as of July 3, 2004 and January 3, 2004 were as follows:



|                                 |  |              |      |                 |   |      |  
|-------------------------------- |  | ------------ | ---- | --------------- | - | ---- | -
|                                 |  | July 3, 2004 |      | January 3, 2004 |  
|Revolving credit facility        |  | $            | 24.1 |                 | $ |     |  
|Term loan                        |  |              | 58.8 |                 |   |     |  
|Term loan A                      |  |              |     |                 |   | 64.7 |  
|Term loan B                      |  |              |     |                 |   | 29.4 |  
|Unamortized debt discount        |  |              |     |                 |   | (2.6 | )
|                                 |  |              |      |                 |   |      |  
|Total debt                       |  |              | 82.9 |                 |   | 91.5 |  
|Less amounts due within one year |  |              | 10.0 |                 |   | 6.3  |  
|                                 |  |              |      |                 |   |      |  
|Long-term debt                   |  | $            | 72.9 |                 | $ | 85.2 |  
|                                 |  |              |      |                 |   |      |  



6. Pension Plans



Certain Midas employees are covered under various defined benefit pension
plans sponsored and funded by Midas. Plans covering salaried employees provide pension benefits based on years of service, and generally are limited to a maximum of 20% of the employees average annual compensation during the five years
preceding retirement. Plans covering hourly employees generally provide benefits of stated amounts for each year of service. Plan assets are invested primarily in common stocks, corporate bonds, and government securities. Contributions of
approximately $50,000 were made to the plans for the six months ended July 3, 2004. The Company does not expect to make material contributions to the plans during the remainder of the fiscal year.



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



|                                              |  |                                  |      |   |                                      |   |      |      |  |   |      |   |  |   |      |  
|--------------------------------------------- |  | -------------------------------- | ---- | - | ------------------------------------ | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                              |  | For the quarterended fiscal June |      |   | For the six months ended fiscal June |  
|                                              |  | 2004                             |      |   | 2003                                 |   |      | 2004 |  |   | 2003 |  
|Service cost  benefits                       |  | $                                | 0.4  |   |                                      | $ | 0.3  |      |  | $ | 0.8  |   |  | $ | 0.7  |  
|Interest cost on projected benefit obligation |  |                                  | 0.8  |   |                                      |   | 0.8  |      |  |   | 1.7  |   |  |   | 1.6  |  
|Expected return on plan assets                |  |                                  | (1.2 | ) |                                      |   | (1.2 | )    |  |   | (2.4 | ) |  |   | (2.4 | )
|Amortization of prior service cost            |  |                                  |     |   |                                      |   | 0.1  |      |  |   |     |   |  |   | 0.1  |  
|Amortization of net loss                      |  |                                  | 0.3  |   |                                      |   | 0.2  |      |  |   | 0.5  |   |  |   | 0.4  |  
|                                              |  |                                  |      |   |                                      |   |      |      |  |   |      |   |  |   |      |  
|Total periodic cost                           |  | $                                | 0.3  |   |                                      | $ | 0.2  |      |  | $ | 0.6  |   |  | $ | 0.4  |  
|                                              |  |                                  |      |   |                                      |   |      |      |  |   |      |   |  |   |      |  



7



---

7. Stock-Based Compensation



Stock options granted under the Companys stock incentive plans are granted at market prices on the date of grant and generally vest over three or
five years commencing one year after the date of the grant.



Midas accounts for stock-based compensation in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations using the intrinsic value method,
which resulted in no compensation cost for options granted.



Midass net income (loss) and earnings (loss) per share would equal the pro forma amounts shown below if compensation cost had been determined based on the fair value at the grant dates in accordance with SFAS Nos. 123 and 148,
Accounting for Stock-Based Compensation.



|                                                                                            |  |                                     |       |   |      |   |       |  
|------------------------------------------------------------------------------------------- |  | ----------------------------------- | ----- | - | ---- | - | ----- | -
|                                                                                            |  | For the quarterended fiscal June    |      
|                                                                                            |  | 2004                                |       |   | 2003 |  
|Net income (loss)                                                                           |  |                                     |       |   |      |   |       |  
|As reported                                                                                 |  | $                                   | 2.6   |   |      | $ | (32.7 | )
|Plus: stock-based compensation expense included in reported net income (loss), net of taxes |  |                                     | 0.3   |   |      |   |      |  
|Less: fair value impact of employee stock compensation, net of taxes                        |  |                                     | (1.1  | ) |      |   | (0.4  | )
|                                                                                            |  |                                     |       |   |      |   |       |  
|Pro forma                                                                                   |  | $                                   | 1.8   |   |      | $ | (33.1 | )
|                                                                                            |  |                                     |       |   |      |   |       |  
|Basic earnings (loss) per share                                                             |  |                                     |       |   |      |   |       |  
|As reported                                                                                 |  | $                                   | 0.16  |   |      | $ | (2.10 | )
|Pro forma                                                                                   |  |                                     | 0.11  |   |      |   | (2.13 | )
|Diluted earnings (loss) per share                                                           |  |                                     |       |   |      |   |       |  
|As reported                                                                                 |  | $                                   | 0.16  |   |      | $ | (2.10 | )
|Pro forma                                                                                   |  |                                     | 0.11  |   |      |   | (2.13 | )
|                                                                                            | 
|                                                                                            |  | For the six monthsended fiscal June |      
|                                                                                            |  | 2004                                |       |   | 2003 |  
|Net income (loss)                                                                           |  |                                     |       |   |      |   |       |  
|As reported                                                                                 |  | $                                   |      |   |      | $ | (39.1 | )
|Plus: stock-based compensation expense included in reported net income (loss), net of taxes |  |                                     | 0.5   |   |      |   | 0.1   |  
|Less: fair value impact of employee stock compensation, net of taxes                        |  |                                     | (1.7  | ) |      |   | (1.0  | )
|                                                                                            |  |                                     |       |   |      |   |       |  
|Pro forma                                                                                   |  | $                                   | (1.2  | ) |      | $ | (40.0 | )
|                                                                                            |  |                                     |       |   |      |   |       |  
|Basic earnings (loss) per share                                                             |  |                                     |       |   |      |   |       |  
|As reported                                                                                 |  | $                                   |      |   |      | $ | (2.55 | )
|Pro forma                                                                                   |  |                                     | (0.08 | ) |      |   | (2.61 | )
|Diluted earnings (loss) per share                                                           |  |                                     |       |   |      |   |       |  
|As reported                                                                                 |  | $                                   |      |   |      | $ | (2.55 | )
|Pro forma                                                                                   |  |                                     | (0.08 | ) |      |   | (2.61 | )



8. Warranty



Customers are provided a written warranty from Midas on genuine Midas
products purchased from Midas shops in North America. 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



8



---

cost basis. These estimates are computed using actual historical registration and redemption data as well as actual cost information on current redemptions.



Prior to fiscal 2003, the Company had not maintained an
accrual for estimated future warranty claims related to its lifetime guarantee of exhaust and brake products. Instead, the Company recorded expenses related to these product warranties as warranty claims were incurred. This was due to the fact that
the average warranty claim generated gross profit to the Company, as the revenues and gross profit to Midas from a warranty claim exceeded the cost of reimbursement to the franchisee. As a result of the fiscal 2003 outsourcing of the Midas
distribution function to AutoZone, Inc. in the U.S. and Uni-Select Inc. in Canada, Midas no longer generates sufficient gross profit on a warranty claim to offset the average warranty claim reimbursement. Consequently, the Company recorded charges
during fiscal 2003 to reflect its estimated liability associated with outstanding warranties in the U.S. and Canada. Midas now accrues for the expected future cost of warranty redemptions at the time of the original installation of the warranted
part based on the method described above. Warranty expense is included in cost of sales and revenues in the condensed statements of operations.



Year-to-date warranty activity through July 3, 2004 is summarized as follows (in millions):



|                                                             |  |   |      |  
|------------------------------------------------------------ |  | - | ---- | -
|Accrued warranty at beginning of period                      |  | $ | 39.0 |  
|Warranty expense                                             |  |   | 4.5  |  
|Changes in foreign currency exchange rate                    |  |   | (0.1 | )
|Warranty credit issued to franchisees (warranty claims paid) |  |   | (4.8 | )
|                                                             |  |   |      |  
|Accrued warranty at end of period                            |  |   | 38.6 |  
|Less current portion (included in accrued expenses)          |  |   | (5.1 | )
|                                                             |  |   |      |  
|Accrued warranty  non-current                               |  | $ | 33.5 |  
|                                                             |  |   |      |  



9



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



RESULTS OF OPERATIONS



The Midas Business Transformation



The Company is in the process of transforming its business. In the past
year, management has dramatically restructured the Companys operations and re-directed the Companys strategic focus towards the Midas retail system. These actions are intended to transform the Company by improving profitability,
enhancing the competitive position of the Midas retail system, strengthening the Companys balance sheet and reducing future capital requirements. This transformation encompasses sweeping changes in the way Midas dealers are supplied with
genuine Midas products and other replacement auto parts, a re-definition of the service relationship between Midas dealers and their customers, and a shift in the way the Company approaches its relationship with Midas franchisees. The implementation
of these initiatives is having the effect of substantially lowering overall Company revenues and expenses in fiscal 2004 compared with historical levels.



Certain aspects of the transformation were completed in fiscal 2003. During 2003, the Company outsourced the wholesale distribution of genuine Midas
products and other replacement parts, closed all but one of the Companys regional distribution centers, disposed of all 77 of its Parts Warehouse, Inc. (PWI) quick-delivery distribution locations through sale or closure, closed or
re-franchised 34 company-operated shops, and significantly reduced corporate administrative overhead. However, other changes to the way Midas does business continue to evolve, and this process will continue during fiscal 2004. The ultimate objective
of this business transformation is reflected in Midas 2010 vision of 4-3-2-1. Midas management is working towards:



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



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



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



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



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



Second Quarter Fiscal 2004 Compared with Second Quarter Fiscal 2003



The following is a summary of the Companys sales and revenues for the second quarter of fiscal 2004 and 2003: ($ millions)



|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ---- | --------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2004 |      | Percentto Total |       |   | 2003 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 16.8 |                 | 32.3  | % |      | $ | 16.5            |  | 21.2  | %
|Real estate revenues                         |  |      | 9.0  |                 | 17.3  |   |      |   | 8.9             |  | 11.4  |  
|Company-operated shop retail sales           |  |      | 9.3  |                 | 17.9  |   |      |   | 11.2            |  | 14.4  |  
|Replacement part sales and product royalties |  |      | 16.2 |                 | 31.2  |   |      |   | 40.8            |  | 52.4  |  
|Other                                        |  |      | 0.7  |                 | 1.3   |   |      |   | 0.5             |  | 0.6   |  
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 52.0 |                 | 100.0 | % |      | $ | 77.9            |  | 100.0 | %
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  



Sales and revenues for
the second quarter of fiscal 2004 decreased $25.9 million or 33.2% from the second quarter of fiscal 2003 to $52.0 million, reflecting the impact of the Companys business transformation that began during fiscal 2003.



Within the retail auto service business, royalty revenues and license fees
increased 1.8% from the second quarter of 2003 due to an increase in royalties from international licensees, a 1.4% comparable shop increase in system-wide Midas retail sales and the positive sales impact of the Companys re-franchising of 24
company-operated shops during fiscal 2003, whose royalties were previously not included in franchising revenues. These increases were partially offset by a reduction in North American shop count and lower franchise fee revenue compared to the prior
year. Sales from



10



---

company-operated shops declined $1.9 million, or a decrease of 17.0% from the same period in fiscal 2003. The sales decrease primarily reflects a reduction
in the number of company-operated shops in operation during the quarter compared to the prior year, which offset a comparable shop sales increase of approximately 2%. As of July 3, 2004, there were 73 company-operated shops compared to 90 shops at
the end of the second quarter of fiscal 2003. Revenues from real estate rentals increased slightly to $9.0 million. The increase reflects the improvement in system-wide comparable shop retail sales and the re-franchising of 24 previously
company-operated shops during fiscal 2003, which offset a decrease in the number of shops in operation.



Replacement part sales and product royalties decreased $24.6 million to $16.2 million from $40.8 million in the second quarter of fiscal 2003. The
decrease reflects the Companys exit from the traditional wholesale and PWI parts distribution businesses during fiscal 2003. In fiscal 2004, such revenues are comprised of the distribution of exhaust products to AutoZone, Inc. in the US,
Uni-Select Inc. in Canada and to certain independent exhaust distributors, as well as sales derived from the Companys coordination and administration of certain merchandise programs on behalf of Midas dealers, including tires, batteries and
oil. Product royalties reflect royalties earned on the sale of parts to Midas dealers by AutoZone and Uni-Select. During the second quarter of fiscal 2004, product royalties increased more than five fold when compared to the royalties earned in the
same period in 2003.



Gross profit margin was 57.5% in the
second quarter of fiscal 2004 compared to a gross margin of negative 1.7% in the second quarter of fiscal 2003. During the second quarter of fiscal 2003, the Company recorded charges to gross profit of $41.9 million to establish a reserve for
estimated future warranty claims related to its lifetime guarantee of exhaust and brake products in the US and to write-down the value of inventory associated with the Companys exit from the traditional wholesale parts distribution business.
Excluding these charges to gross profit, the Companys gross profit margin of 57.5% in the second quarter of fiscal 2004 compares to a gross margin of 52.1% in the second quarter of fiscal 2003. This increase was primarily due to a shift in the
mix of the Companys revenues. In fiscal 2004, more than 50% of the Companys sales and revenues were derived from the higher margin franchising and company-operated shop operations, compared with only 35% in the second quarter of fiscal
2003. The favorable shift in sales mix helped to offset lower gross margins generated on the sale of exhaust parts in connection with the Companys outsourcing of exhaust distribution to AutoZone and Uni-Select.



Selling, general and administrative expenses for the second quarter of 2004
decreased $13.1 million, or 35.9% from 2003 to $23.4 million. The large decrease in expenses reflects the closure of PWI and all but one of the Companys regional distribution centers during fiscal 2003, as well as lower operating expenses
associated with a reduced number of company-operated shops compared to the second quarter of fiscal 2003.



During the second quarter of fiscal 2003, the Company recorded a charge of $8.9 million related to the Companys business transformation activities.
The charges primarily reflect costs incurred as a result of the Companys decision to exit the traditional auto parts distribution business in the US, as well as costs related to PWI closures and the closure and re-franchising of certain
company-operated shops.



As a result of the above changes,
operating income increased $53.2 million from a loss of $46.7 million in the second quarter of 2003 to income of $6.5 million in the second quarter of 2004. These changes caused an increase in operating income margin to 12.5% in the second quarter
of 2004 from a negative 60.0% in the second quarter of 2003.



Interest expense decreased from $7.3 million in the second quarter of 2003 to $2.5 million in the second quarter of 2004 due to much lower interest rates on borrowings as a result of the March 2004 refinancing and a substantial reduction in
the Companys total debt compared to the prior year.



The
Companys effective tax rate was 38.9% in the second quarter of both fiscal 2004 and 2003.



As a result of the above items, net income improved $35.3 million from a loss of $32.7 million in the second quarter of 2003 to income of $2.6 million in
the second quarter of 2004.



11



---

Six Months Ended Fiscal 2004 Compared with Six Months Ended Fiscal 2003



The following is a summary of the Companys sales and revenues for the
first six months of fiscal 2004 and 2003: ($ millions)



|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ---- | --------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2004 |      | Percentto Total |       |   | 2003 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 31.3 |                 | 31.7  | % |      | $ | 30.3            |  | 19.9  | %
|Real estate revenues                         |  |      | 18.1 |                 | 18.3  |   |      |   | 17.9            |  | 11.7  |  
|Company-operated shop retail sales           |  |      | 17.9 |                 | 18.1  |   |      |   | 22.9            |  | 15.0  |  
|Replacement part sales and product royalties |  |      | 30.3 |                 | 30.6  |   |      |   | 80.4            |  | 52.8  |  
|Other                                        |  |      | 1.3  |                 | 1.3   |   |      |   | 0.9             |  | 0.6   |  
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 98.9 |                 | 100.0 | % |      | $ | 152.4           |  | 100.0 | %
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  



Sales and revenues for
the first six months of fiscal 2004 decreased $53.5 million or 35.1% from the first six months of fiscal 2003 to $98.9 million, reflecting the impact of the Companys business transformation that began during fiscal 2003.



Within the retail auto service business, royalty revenues and license fees
increased 3.3% from the first six months of 2003 due to an increase in royalties from international licensees, a 1.4% comparable shop increase in system-wide Midas retail sales and the positive sales impact of the Companys re-franchising of 24
company-operated shops during fiscal 2003, whose royalties were previously not included in franchising revenues. These increases were partially offset by a reduction in North American shop count and lower franchise fee revenue compared to the prior
year. Sales from company-operated shops declined $5.0 million, or a decrease of 21.8% from the same period in fiscal 2003. The sales decrease primarily reflects a reduction in the average number of company-operated shops in operation during the
first six months compared to the prior year. Comparable shop sales for company-operated shops were approximately flat in the first six months of 2004 compared to the same period in 2003. Revenues from real estate rentals increased slightly to $18.1
million. The increase reflects the improvement in system-wide comparable shop retail sales and the re-franchising of 24 previously company-operated shops during fiscal 2003, which offset a decrease in the number of shops in operation.



Replacement part sales and product royalties decreased $50.1 million to $30.3
million from $80.4 million in the first six months of fiscal 2003. The decrease reflects the Companys exit from the traditional wholesale and PWI parts distribution businesses during fiscal 2003. During the first six months of 2004, product
royalties earned on the sale of parts to Midas dealers by AutoZone and Uni-Select increased sharply over the prior year when the transition to the AutoZone outsourced distribution arrangement had only just begun.



Gross profit margin was 57.8% in the first six months of fiscal 2004 compared
to a gross profit margin of 22.6% in the first six months of fiscal 2003. During the first six months of fiscal 2003, the Company recorded charges to gross profit of $41.9 million to establish a reserve for estimated future warranty claims related
to its lifetime guarantee of exhaust and brake products in the US and to write-down the value of inventory associated with the Companys exit from the traditional wholesale parts distribution business. Excluding these charges to gross profit,
the Companys gross profit margin of 57.8% in the first six months of fiscal 2004 compares to a gross margin of 50.1% in the first six months of fiscal 2003. This increase was primarily due to a shift in the mix of the Companys revenues
towards a greater share of sales derived from higher margin franchising and company-operated shop operations. The favorable shift in sales mix helped to offset lower gross margins generated on the sale of exhaust parts in connection with the
Companys outsourcing of exhaust distribution to AutoZone and Uni-Select.



Selling, general and administrative expenses for the first six months of 2004 decreased $28.4 million, or 38.5% from 2003 to $45.4 million. The large decrease in expenses reflects the closure of PWI and all but one of
the Companys regional distribution centers during fiscal 2003, as well as lower operating expenses associated with a reduced number of company-operated shops compared to the first six months of fiscal 2003.



During the first six months of fiscal 2003, the Company recorded charges of
$12.6 million related to the Companys business transformation activities. The charges primarily reflected costs incurred as a result of the Companys decision to exit the traditional auto parts distribution business in the US, as well as
costs related to PWI closures and the closure and re-franchising of certain company-operated shops.



12



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As a result of the above changes, operating income increased $63.7 million from a loss of $51.9 million
in the first six months of 2003 to income of $11.8 million in the first six months of 2004. These changes caused an increase in operating income margin to 11.9% in the first six months of 2004 from a negative 34.1% in the first six months of 2003.



Interest expense decreased from $11.6 million in the first six
months of 2003 to $7.6 million in the first six months of 2004 as result of lower interest rates on borrowings and a substantial reduction in the Companys average total debt level compared to the prior year. In addition, the Company recorded a
loss on early extinguishment of debt of $4.7 million in the first six months of fiscal 2004 to reflect a write-off of the unamortized debt discount and financing fees related to the Companys prior debt agreement. In the first six months of
fiscal 2003, the Company recorded $1.4 million in charges related to the extinguishment of a prior debt agreement.



The Company incurred no income tax expense in the first six months of fiscal 2004. In the first six months of fiscal 2003, the Company recorded an income
tax benefit based on a 38.9% tax rate.



As a result of the
above items, net income improved $39.1 million from a loss of $39.1 million in the first six months of 2003 to break even in the first six months of 2004.



LIQUIDITY AND CAPITAL RESOURCES



Midas cash and cash equivalents decreased $6.8 million in the first six months of fiscal 2004.



The Companys operating activities generated net cash of $5.8 million
during the first six months of fiscal 2004 compared to $4.4 million of cash generated in the first six months of fiscal 2003. The year-over-year increase of $1.4 million was primarily due to a $39.1 million increase in net income and a $26.5 million
increase in deferred income taxes, partially offset by $11.9 million less cash generated by changes in assets and liabilities and a $1.5 million reduction in depreciation and amortization. Additionally, business transformation costs, net of cash
payments, and losses on early extinguishment of debt were $50.8 million lower than the prior year. The $11.9 million decrease in cash generated by changes in assets and liabilities was primarily due to a much smaller reduction in inventory in fiscal
2004 compared to 2003, when the Company was selling inventory as part of its exit from the wholesale distribution business. The smaller reduction in inventory was partially offset by lower growth in accounts receivable in the first six months of
fiscal 2004 relative to 2003, as the collection of remaining receivables associated with the traditional wholesale and PWI operations offset the typical seasonal growth in royalty accounts receivable.



Investing activities used $0.8 million in cash during the first six months of
fiscal 2004 compared to generating $3.4 million in cash during the first six months of fiscal 2003. Fiscal 2004 investing activities consisted primarily of capital expenditures to maintain facilities and investments in information systems. Fiscal
2003 investing activities primarily consisted of $1.4 million in systems development and other maintenance capital expenditures, and $5.2 million in cash generated as the result of asset sales, including a sale and leaseback of the one of the
Companys distribution facilities and the sale of certain PWI locations.



Net cash used in financing activities was $11.8 million in the first six months of fiscal 2004, compared to net cash used of $6.0 million in the first six months of fiscal 2003. In fiscal 2004, the Company reduced
total debt by $12.3 million and paid $2.1 million in fees in association with the Companys debt refinancing in March 2004. In addition, the Company received $3.0 million in cash from the exercise of outstanding stock options. In fiscal 2003,
the Company paid $4.8 million in financing fees and reduced total debt by $6.1 million. Additionally, the Company issued 1.0 million warrants valued at $5.0 million in connection with its 2003 debt restructuring.



As of January 4, 2004, the Company had credit facilities consisting of a $25
million revolving loan facility, a $64.7 million Term Loan A, and a $29.4 million Term Loan B. These facilities were secured by substantially all of the assets of the Company and were scheduled to expire on October 3, 2004. Interest on the revolving
loan was payable monthly at the prime rate plus 2.75% or LIBOR plus 3.75%. Interest on a portion of the Term Loan A was fixed at 7.67%, while interest on the balance of the Term Loan A was payable monthly at the prime rate plus 5.0% or LIBOR plus
6.0%. The interest rate on the Term Loan B was fixed at 12% cash interest paid monthly plus 6% paid-in-kind (PIK), which was added to principal and due at maturity. Availability under the revolving credit facility was based on a
borrowing base,



13



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which took into consideration the Companys inventory and accounts receivable levels. The revolving credit facility was senior to both the Term Loan A
and Term Loan B.



On March 16, 2004, the Company entered into a
new three-year, $115 million credit facility to refinance its existing debt facility. The new debt facility is comprised of a $55 million revolving credit facility and a $60 million term loan. The new facility is secured by substantially all of the
assets of the Company and expires on March 16, 2007. Under the terms of the debt refinancing, the Company retired its former $25 million revolving credit facility as well as its Term A and Term B loans. The refinancing resulted in a loss on early
extinguishment of debt of $4.7 million due to the write-off of unamortized debt discount and financing fees.



Interest on the $55 million revolving loan was initially payable monthly at LIBOR plus 3.25%. Interest on the $60 million term loan was initially payable
monthly at LIBOR plus 3.5%. The interest rates float based on the underlying rate of LIBOR and the Companys leverage. Availability under the revolving credit facility is not predicated on a borrowing base. The term loan requires quarterly
principal payments of $1.25 million on July 2, 2004 and $2.5 million thereafter. In addition, the term loan must be prepaid by an amount equal to: (i) 100% of equity issued, or (ii) 75% of any material asset proceeds in excess of $1 million (other
than the sale of inventory in the normal course of business), or (iii) 50% of any excess cash flow as provided for by the agreement. The new facility requires maintenance of certain financial covenants including maximum allowable leverage and
minimum tangible net worth.



In April 2004, the Company entered
into an interest rate swap arrangement to convert $40 million of the $60 million term loan from a floating rate to a fixed rate, by locking-in LIBOR at 2.76% for the three-year term of the loan.



The Company believes that availability under the current debt agreement
provides sufficient liquidity to finance operations and execute strategic initiatives.



14



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CRITICAL ACCOUNTING POLICIES AND ESTIMATES



In preparing the condensed 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 and the nature of its business, and the Companys existing business transformation process, the
following accounting policies are those that management believes are most important to the portrayal of the Companys financial condition and results and that require managements most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are inherently uncertain.



Valuation of Warranty Liabilities



Customers are provided a written warranty from Midas on genuine Midas products purchased from Midas shops in North America. 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.



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.



Inventory Valuation



As a manufacturer and distributor of certain automotive aftermarket parts, inventory has historically represented a substantial portion of the total
assets of the Company. Inventories are valued at the lower of cost or net realizable value. Inventory cost is determined using the weighted-average cost method, which approximates the first-in, first-out method. Additionally, the Company
periodically evaluates the carrying value of its inventory to assess the proper valuation. This includes having adequate accruals to cover losses in the normal course of operation, provide for excess and obsolete inventory, and ensure that inventory
is valued at the lower of cost or market. In performing this evaluation the Company considers historical data such as actual loss experience, past and projected usage, and actual margins generated from sales of its products.



Pensions



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



15



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minimum pension liability, an amount is recorded as an intangible asset limited to unrecognized prior service cost. Any amount in excess of unrecognized
prior service cost is recorded as a reduction to shareholders equity through cumulative other comprehensive income, net of tax, in the balance sheet.



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



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



Third, the Company must determine the expected long-term rate of return on assets assumption that is used to determine the expected return on plan assets component of the net periodic pension cost for the subsequent
year. The difference between the actual return on plan assets and the expected return is deferred under SFAS No. 87 and is recognized to net periodic pension cost over a five-year period.



Carrying Values of Long-Lived Assets



Midas evaluates the carrying values of its long-lived assets to be held and used in the business by reviewing undiscounted
cash flows by asset group. Such evaluations are performed whenever events and circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the projected undiscounted cash flows over the remaining lives of the
related assets does not exceed the carrying values of the assets, the carrying values are adjusted for the differences between the fair values and the carrying values. Additionally, in the case of fixed assets related to locations that will be
closed or sold, the Company writes down fixed assets to their estimated recovery value.



Deferred Income Taxes



In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than
not that the Company will realize the benefits of these deductible differences at July 3, 2004. In the event that management determines the Company would not be able to realize all or part of the net deferred tax assets in the future, an adjustment
to the deferred tax assets would be charged to income in the period such determination was made.



Self-Insurance Reserves



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



16



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IMPACT OF NEW ACCOUNTING STANDARDS



On May 15, 2003, the Financial Accounting Standards Board (FASB) issued Statement No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and Equity. The provisions of the Statement change the classification of certain freestanding financial instruments that are now classified as equity. Generally, the
Statement is effective for financial instruments entered into or modified after May 31, 2003. For certain mandatorily redeemable financial instruments, the Statement will be effective for the Company on January 1, 2005. The effective date has been
deferred indefinitely for certain other types of mandatorily redeemable financial instruments. The adoption of Statement No. 150 did not have a material effect on the financial position, results of operations, or cash flows of the Company.



In December 2003, the FASB issued FASB Interpretation No. 46
(revised December 2003), Consolidation of Variable Interest Entities, (FIN 46R) which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than
voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest Entities, which was issued in January 2003. The Company will be required to apply FIN 46R to
variable interests in variable interest entities (VIEs) created after December 31, 2003. For variable interests in VIEs created before January 1, 2004, the Interpretation will be applied beginning on January 1, 2005. For any
VIEs that must be consolidated under FIN 46R that were created before January 1, 2004, the assets, liabilities and noncontrolling interests of the VIE initially would be measured at their carrying amounts with any difference between the net
amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. If determining the carrying amounts is not practicable, fair value at the date FIN 46R first applies may be
used to measure the assets, liabilities and noncontrolling interest of the VIE.



FIN 46R specifically allows for certain franchisors to not adopt the above described provisions of FIN 46 when the franchisees have sufficient decision-making authority that enables them to impact the operations and
success of the franchise. Midas management believes Midas franchisees possess this threshold level of decision-making authority and therefore does not treat any of its franchised or licensed shops as VIEs.



In December 2003, the FASB issued Statement No. 132 (revised),
Employers Disclosures about Pensions and Other Postretirement Benefits. Statement No. 132 (revised) prescribes employers disclosures about pension plans and other postretirement benefit plans; it does not change the
measurement or recognition of those plans. The Statement retains and revises the disclosure requirements contained in the original Statement No. 132. It also requires additional disclosures about the assets, obligations, cash flows, and net periodic
benefit cost of defined benefit pension plans and other postretirement benefit plans. The Statement generally is effective for fiscal years ending after December 15, 2003. The Companys disclosure in Note 6 of Notes to Condensed Financial
Statements incorporates the requirements of Statement No. 132 (revised).



FORWARD LOOKING STATEMENTS



This report
contains (and oral communications made by Midas may contain) forward-looking statements that may be identified by their use of words like plans, expects, anticipates, intends, estimates,
forecasts, will, outlook or other words of similar meaning. All statements that address Midas expectations or projections about the future, including statements about Midas strategy for growth, cost
reduction goals, expenditures and financial results, are forward-looking statements. Forward-looking statements are based on Midas estimates, assumptions and expectations of future events and are subject to a number of risks and uncertainties.
All such statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Midas cannot guarantee that these estimates, assumptions and expectations are accurate or will be realized. Midas
disclaims any intention or obligation (other than as required by law) to update or revise any forward-looking statements.



The Companys results of operations and the forward-looking statements could be affected by, among others things: general economic conditions in the
markets in which the Company operates; economic developments that have a particularly adverse effect on one or more of the markets served by the Company; the ability to execute managements internal operating plans; the timing and magnitude of
capital expenditures; the Companys ability to access debt and equity markets; economic and market conditions in the U.S. and worldwide; currency exchange rates; changes in consumer spending levels and demand for new products and services; cost
and availability of raw materials; and overall competitive activities. Certain of these risks are more fully described in Item 1 of Part I of the Companys annual report



17



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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.



Item 4. Controls and Procedures.



(a) Evaluation of disclosure controls and procedures.



Our Chief Executive Officer and Chief Financial Officer have concluded, based upon their evaluation as of the end of the
period covered by this report, that our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a  15(e) and 15d  15(e)) are effective in ensuring that information required to be disclosed in the reports that we
file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.



(b) Changes in internal controls over financial reporting.



There have been no changes in internal control over financial reporting that
occurred during the second quarter of 2004, that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



18



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PART II. OTHER INFORMATION



Item 1. Legal Proceedings.



None



Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.



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                              |  | TotalNumber ofSharesPurchased |  | AveragePrice Paidper Share |       | Total Number ofSharesPurchased as Partof PubliclyAnnounced Plansor Programs |     | Approximate DollarValue ofShares that May YetBe Purchased Underthe Plans orPrograms
|April 2004:                         |  |                               |  |                            |       |                                                                             |     |                                                                                     |    
|(April 4, 2004 through May 1, 2004) |  |                              |  |                            |      |                                                                             | N/A |                                                                                     | N/A
|May 2004:                           |  |                               |  |                            |       |                                                                             |     |                                                                                     |    
|(May 2, 2004 through May 29, 2004)  |  | 3,101                         |  | $                          | 19.00 |                                                                             | N/A |                                                                                     | N/A
|June 2004:                          |  |                               |  |                            |       |                                                                             |     |                                                                                     |    
|(May 30, 2004 through July 3, 2004) |  | 989                           |  | $                          | 18.90 |                                                                             | N/A |                                                                                     | N/A
|Total                               |  | 4,090                         |  | $                          | 18.98 |                                                                             |     |                                                                                     |    



Shares purchased
represent the total number of restricted shares withheld to cover the withholding taxes upon the vesting of restricted stock. There were no publicly announced share repurchase plans or programs ongoing as of July 3, 2004.



Item 3. Defaults Upon Senior Securities.



None



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



(a) The Annual Meeting of Shareholders was held on May 11, 2004.



(b) Not Applicable



(c) At the Annual Meeting of Shareholders, the shareholders voted on the
following matters: (1) the election of directors to serve until the 2007 Annual Meeting of Shareholders and (2) the approval of independent auditors. The voting results were as follows:



| | (1) | Each nominee for director was elected by a vote of the shareholders as follows:
| | --- | -------------------------------------------------------------------------------



|                |  |            |  |         
|--------------- |  | ---------- |  | --------
|Director        |  | For        |  | Withheld
|Archie R. Dykes |  | 13,520,979 |  | 137,134 
|Alan D. Feldman |  | 13,545,007 |  | 113,106 



19



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Additional directors, whose terms of office as directors continued after the meeting, are as follows:



| |  |                       |  |                       |  | 
| |  | --------------------- |  | --------------------- |  | 
| |  | Term Expiring in 2005 |  | Term Expiring in 2006 |  | 
| |  | Thomas L. Bindley     |  | Jarobin Gilbert, Jr.  |  | 
| |  | Robert R. Schoeberl   |  | Diane L. Routson      |  | 



| | (2) | The proposal to ratify the appointment of KPMG LLP as the independent auditors of Midas, Inc. for the fiscal year ending January 1, 2005 was approved by shareholders as follows:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|           |  |         |  |        
|---------- |  | ------- |  | -------
|For        |  | Against |  | Abstain
|13,314,326 |  | 321,118 |  | 22,669 



(d) Not Applicable



Item 5. Other Information.



None



Item 6. Exhibits and Reports on Form 8-K.



|     |  |                                                                                                                                                                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)  |  | Exhibits                                                                                                                                                                                                                                                                        
|     | 
|31.1 |  | Rule 13a  14(a) / 15d  14(a) Certification of Chief Executive Officer.                                                                                                                                                                                                        
|     | 
|31.2 |  | Rule 13a  14(a) / 15d  14(a) Certification of Chief Financial Officer.                                                                                                                                                                                                        
|     | 
|32.1 |  | Section 1350 Certifications.                                                                                                                                                                                                                                                    
|     | 
|(b)  |  | Reports on Form 8-K                                                                                                                                                                                                                                                             
|     | 
|     |  | During the second quarter of fiscal 2004, the Company furnished the Securities and Exchange Commission (SEC) a Current Report on Form 8-K dated May 6, 2004, under Item 12  Results of
Operations and Financial Condition, reporting Midas first quarter fiscal 2004 earnings.



20



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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: August 12, 2004 |  |  |  |  |  | /s/ Alan D. Feldman
|                      |  |  |  |  |  |                     |  | Alan D. Feldman                                  
|                      |  |  |  |  |  |                     |  | President and Chief Executive Officer            
|                      |  |  |  | 
|                      |  |  |  |  |  |                     |  | /s/ William M. Guzik                             
|                      |  |  |  |  |  |                     |  | William M. Guzik                                 
|                      |  |  |  |  |  |                     |  | Senior Vice President and Chief Financial Officer
|                      |  |  |  | 
|                      |  |  |  |  |  |                     |  | /s/ James M. Haeger, Jr.                         
|                      |  |  |  |  |  |                     |  | James M. Haeger, Jr.                             
|                      |  |  |  |  |  |                     |  | Vice President and Controller                    



21