SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

ACT OF 1934

For the quarterly period ended March 31, 2007

OR



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

ACT OF 1934

For the transition period from
 to

Commission File Number: 01-13409

MIDAS, INC.

(Exact Name of Registrant as Specified in its Charter)



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

(630) 438-3000

(Registrants telephone number, including area code)

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

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

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

The number of shares of the Registrants Common Stock, $.001 par value per share, outstanding as of May 1, 2007 was 14,776,468.



---

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 endedfiscal March |     
|                                              |  | 2007                              |      |   | 2006       |  
|                                              |  | (13 weeks)                        |      |   | (13 weeks) |  
|Sales and revenues:                           |  |                                   |      |   |            |   |      |  
|Franchise royalties and license fees          |  | $                                 | 14.7 |   |            | $ | 15.2 |  
|Real estate revenues                          |  |                                   | 9.0  |   |            |   | 9.1  |  
|Company-operated shop retail sales            |  |                                   | 9.5  |   |            |   | 9.5  |  
|Replacement part sales and product royalties  |  |                                   | 7.4  |   |            |   | 7.8  |  
|Other                                         |  |                                   | 1.1  |   |            |   | 1.0  |  
|                                              |  |                                   |      |   |            |   |      |  
|Total sales and revenues                      |  |                                   | 41.7 |   |            |   | 42.6 |  
|                                              |  |                                   |      |   |            |   |      |  
|Cost of sales and revenues:                   |  |                                   |      |   |            |   |      |  
|Real estate cost of revenues                  |  |                                   | 5.5  |   |            |   | 5.6  |  
|Company-operated shop cost of sales           |  |                                   | 2.3  |   |            |   | 2.2  |  
|Replacement part cost of sales                |  |                                   | 5.9  |   |            |   | 6.2  |  
|Warranty expense                              |  |                                   | 1.1  |   |            |   | 1.3  |  
|Other cost of sales                           |  |                                   | 0.3  |   |            |   | 0.3  |  
|                                              |  |                                   |      |   |            |   |      |  
|Total cost of sales and revenues              |  |                                   | 15.1 |   |            |   | 15.6 |  
|                                              |  |                                   |      |   |            |   |      |  
|Gross profit                                  |  |                                   | 26.6 |   |            |   | 27.0 |  
|Selling, general, and administrative expenses |  |                                   | 20.3 |   |            |   | 22.2 |  
|Gain on sale of assets                        |  |                                   |     |   |            |   | (3.4 | )
|Business transformation charges               |  |                                   | 0.5  |   |            |   | 0.1  |  
|                                              |  |                                   |      |   |            |   |      |  
|Operating income                              |  |                                   | 5.8  |   |            |   | 8.1  |  
|Interest expense                              |  |                                   | (2.2 | ) |            |   | (2.2 | )
|Other income, net                             |  |                                   | 0.1  |   |            |   | 0.3  |  
|                                              |  |                                   |      |   |            |   |      |  
|Income before income taxes                    |  |                                   | 3.7  |   |            |   | 6.2  |  
|Income tax expense                            |  |                                   | 1.5  |   |            |   | 2.4  |  
|                                              |  |                                   |      |   |            |   |      |  
|Net income                                    |  | $                                 | 2.2  |   |            | $ | 3.8  |  
|                                              |  |                                   |      |   |            |   |      |  
|                                              |  |                                  
|Earnings per share:                           |  |                                   |      |   |            |   |      |  
|Basic                                         |  | $                                 | 0.15 |   |            | $ | 0.25 |  
|                                              |  |                                   |      |   |            |   |      |  
|Diluted                                       |  | $                                 | 0.14 |   |            | $ | 0.24 |  
|                                              |  |                                   |      |   |            |   |      |  
|                                              |  |                                  
|Average number of shares:                     |  |                                   |      |   |            |   |      |  
|Common shares outstanding                     |  |                                   | 14.4 |   |            |   | 15.3 |  
|Common stock warrants                         |  |                                   | 0.1  |   |            |   | 0.1  |  
|                                              |  |                                   |      |   |            |   |      |  
|Shares applicable to basic earnings           |  |                                   | 14.5 |   |            |   | 15.4 |  
|Equivalent shares on outstanding stock awards |  |                                   | 0.5  |   |            |   | 0.4  |  
|                                              |  |                                   |      |   |            |   |      |  
|Shares applicable to diluted earnings         |  |                                   | 15.0 |   |            |   | 15.8 |  
|                                              |  |                                   |      |   |            |   |      |  

See notes to condensed financial statements.



1



---

MIDAS, INC.

CONDENSED BALANCE SHEETS

(In millions, except per share data)



|                                                                                                             |  |                 |       |   |                    |   |       |  
|------------------------------------------------------------------------------------------------------------ |  | --------------- | ----- | - | ------------------ | - | ----- | -
|                                                                                                             |  | FiscalMarch2007 |       |   | FiscalDecember2006 |  
|                                                                                                             |  | (Unaudited)     |       |   |                    |  
|Assets:                                                                                                      |  |                 |       |   |                    |   |       |  
|Current assets:                                                                                              |  |                 |       |   |                    |   |       |  
|Cash and cash equivalents                                                                                    |  | $               | 1.6   |   |                    | $ | 2.4   |  
|Receivables, net                                                                                             |  |                 | 28.7  |   |                    |   | 28.7  |  
|Inventories                                                                                                  |  |                 | 2.8   |   |                    |   | 3.1   |  
|Deferred income taxes                                                                                        |  |                 | 7.0   |   |                    |   | 7.6   |  
|Prepaid assets                                                                                               |  |                 | 4.5   |   |                    |   | 3.3   |  
|Other current assets                                                                                         |  |                 | 2.8   |   |                    |   | 4.3   |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|Total current assets                                                                                         |  |                 | 47.4  |   |                    |   | 49.4  |  
|Property and equipment, net                                                                                  |  |                 | 96.8  |   |                    |   | 99.4  |  
|Goodwill and other intangible assets, net                                                                    |  |                 | 1.9   |   |                    |   | 1.5   |  
|Deferred income taxes                                                                                        |  |                 | 55.0  |   |                    |   | 57.2  |  
|Other assets                                                                                                 |  |                 | 9.5   |   |                    |   | 8.9   |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|Total assets                                                                                                 |  | $               | 210.6 |   |                    | $ | 216.4 |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|                                                                                                             |  |                
|Liabilities and equity:                                                                                      |  |                 |       |   |                    |   |       |  
|Current liabilities:                                                                                         |  |                 |       |   |                    |   |       |  
|Current portion of long-term obligations                                                                     |  | $               | 2.0   |   |                    | $ | 2.0   |  
|Accounts payable                                                                                             |  |                 | 10.1  |   |                    |   | 15.9  |  
|Current portion of accrued warranty                                                                          |  |                 | 4.6   |   |                    |   | 4.6   |  
|Accrued expenses                                                                                             |  |                 | 21.8  |   |                    |   | 21.5  |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|Total current liabilities                                                                                    |  |                 | 38.5  |   |                    |   | 44.0  |  
|Long-term debt                                                                                               |  |                 | 67.0  |   |                    |   | 61.1  |  
|Obligations under capital leases                                                                             |  |                 | 2.7   |   |                    |   | 3.0   |  
|Finance lease obligation                                                                                     |  |                 | 33.7  |   |                    |   | 33.9  |  
|Accrued warranty                                                                                             |  |                 | 28.7  |   |                    |   | 28.8  |  
|Other liabilities                                                                                            |  |                 | 5.5   |   |                    |   | 8.3   |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|Total liabilities                                                                                            |  |                 | 176.1 |   |                    |   | 179.1 |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|                                                                                                             |  |                
|Temporary equity:                                                                                            |  |                 |       |   |                    |   |       |  
|Non-vested restricted stock subject to redemption                                                            |  |                 | 3.0   |   |                    |   | 2.3   |  
|                                                                                                             |  |                
|Shareholders equity:                                                                                        |  |                 |       |   |                    |   |       |  
|Common stock ($.001 par value, 100 million shares authorized,17.7 million shares issued) and paid-in capital |  |                 | 10.6  |   |                    |   | 10.3  |  
|Treasury stock, at cost (3.0 million shares and 2.7 million shares)                                          |  |                 | (63.9 | ) |                    |   | (57.8 | )
|Retained income                                                                                              |  |                 | 91.3  |   |                    |   | 89.1  |  
|Accumulated other comprehensive loss                                                                         |  |                 | (6.5  | ) |                    |   | (6.6  | )
|                                                                                                             |  |                 |       |   |                    |   |       |  
|Total shareholders equity                                                                                   |  |                 | 31.5  |   |                    |   | 35.0  |  
|                                                                                                             |  |                 |       |   |                    |   |       |  
|Total liabilities and shareholders equity                                                                   |  | $               | 210.6 |   |                    | $ | 216.4 |  
|                                                                                                             |  |                 |       |   |                    |   |       |  

See notes to condensed financial statements.



2



---

MIDAS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)



|                                                                                                                          |  |                                    |      |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ---- | - | ---- | - | ----- | -
|                                                                                                                          |  | For the quarter ended fiscal March |     
|                                                                                                                          |  | 2007                               |      |   | 2006 |  
|Cash flows from operating activities:                                                                                     |  |                                    |      |   |      |   |       |  
|Net income                                                                                                                |  | $                                  | 2.2  |   |      | $ | 3.8   |  
|Adjustments reconciling net income to net cash provided by operating activities:                                          |  |                                    |      |   |      |   |       |  
|Depreciation and amortization                                                                                             |  |                                    | 2.3  |   |      |   | 2.2   |  
|Stock based compensation                                                                                                  |  |                                    | 1.2  |   |      |   | 0.7   |  
|Amortization of financing fees and change in interest rate swap valuation                                                 |  |                                    | 0.1  |   |      |   | 0.1   |  
|Business transformation charges                                                                                           |  |                                    | 0.5  |   |      |   | 0.1   |  
|Gain on sale of assets                                                                                                    |  |                                    |     |   |      |   | (3.4  | )
|Deferred income taxes                                                                                                     |  |                                    | 1.5  |   |      |   | 1.9   |  
|Cash outlays for business transformation costs                                                                            |  |                                    | (1.5 | ) |      |   | (1.9  | )
|Changes in assets and liabilities, exclusive of effects of business transformation charges, acquisitions and dispositions |  |                                    | (3.0 | ) |      |   | 6.0   |  
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|Net cash provided by operating activities                                                                                 |  |                                    | 3.3  |   |      |   | 9.5   |  
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|                                                                                                                          |  |                                   
|Cash flows from investing activities:                                                                                     |  |                                    |      |   |      |   |       |  
|Capital investments                                                                                                       |  |                                    | (0.4 | ) |      |   | (0.7  | )
|Cash paid for acquired businesses                                                                                         |  |                                    | (0.3 | ) |      |   | (0.1  | )
|Proceeds from sales of assets                                                                                             |  |                                    | 0.7  |   |      |   | 1.1   |  
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|Net cash provided by investing activities                                                                                 |  |                                    |     |   |      |   | 0.3   |  
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|                                                                                                                          |  |                                   
|Cash flows from financing activities:                                                                                     |  |                                    |      |   |      |   |       |  
|Net borrowings (repayments) under revolving lines of credit                                                               |  |                                    | 5.9  |   |      |   | (4.6  | )
|Payment of principal obligations under capital leases                                                                     |  |                                    | (0.3 | ) |      |   | (0.3  | )
|Payment of principal obligations under finance lease                                                                      |  |                                    | (0.2 | ) |      |   | (0.3  | )
|Decrease in outstanding checks                                                                                            |  |                                    | (3.5 | ) |      |   | (2.0  | )
|Cash received for common stock                                                                                            |  |                                    | 1.0  |   |      |   | 1.2   |  
|Cash paid for treasury shares                                                                                             |  |                                    | (7.0 | ) |      |   | (4.0  | )
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|Net cash used in financing activities                                                                                     |  |                                    | (4.1 | ) |      |   | (10.0 | )
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                   |  |                                    | (0.8 | ) |      |   | (0.2  | )
|Cash and cash equivalents at beginning of period                                                                          |  |                                    | 2.4  |   |      |   | 1.4   |  
|                                                                                                                          |  |                                    |      |   |      |   |       |  
|Cash and cash equivalents at end of period                                                                                |  | $                                  | 1.6  |   |      | $ | 1.2   |  
|                                                                                                                          |  |                                    |      |   |      |   |       |  

See notes to condensed financial statements.



3



---

MIDAS, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)

(In millions)



|                                                       |  |                                |  |        |                |   |        |                 |   |                       |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
|------------------------------------------------------ |  | ------------------------------ |  | ------ | -------------- | - | ------ | --------------- | - | --------------------- | - | ----- | ------------------------------------ |  | - | ---- |  | - | ---- | - |  | - | ---- | -
|                                                       |  | Common StockAnd Paid InCapital |  |        | Treasury Stock |   |        | Retained Income |   | Compre-hensive Income |   |       | Accumulated Other Comprehensive Loss | 
|                                                       |  | Shares                         |  | Amount |                |   | Shares |                 |   | Amount                |   |       |                                      | 
|Fiscal year end 2006                                   |  | 17.7                           |  | $      | 10.3           |   |        | (2.7            | ) |                       | $ | (57.8 | )                                    |  | $ | 89.1 |  |   |      |   |  | $ | (6.6 | )
|Purchase of treasury shares                            |  |                               |  |        |               |   |        | (0.3            | ) |                       |   | (7.0  | )                                    |  |   |     |  |   |      |   |  |   |     |  
|Stock option transactions                              |  |                               |  |        | (0.2           | ) |        |                |   |                       |   | 0.9   |                                      |  |   |     |  |   |      |   |  |   |     |  
|Stock option expense                                   |  |                               |  |        | 0.5            |   |        |                |   |                       |   |      |                                      |  |   |     |  |   |      |   |  |   |     |  
|Net income                                             |  |                               |  |        |               |   |        |                |   |                       |   |      |                                      |  |   | 2.2  |  | $ | 2.2  |   |  |   |     |  
|Other comprehensive income                             |  |                                |  |        |                |   |        |                 |   |                       |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
| foreign currency translation                         |  |                               |  |        |               |   |        |                |   |                       |   |      |                                      |  |   |     |  |   | 0.2  |   |  |   | 0.2  |  
| loss on derivative financial instruments, net of tax |  |                               |  |        |               |   |        |                |   |                       |   |      |                                      |  |   |     |  |   | (0.1 | ) |  |   | (0.1 | )
|                                                       |  |                                |  |        |                |   |        |                 |   |                       |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
|Comprehensive income                                   |  |                               |  |        |               |   |        |                |   |                       |   |      |                                      |  |   |     |  | $ | 2.3  |   |  |   |     |  
|                                                       |  |                                |  |        |                |   |        |                 |   |                       |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  
|Fiscal first quarter end 2007                          |  | 17.7                           |  | $      | 10.6           |   |        | (3.0            | ) |                       | $ | (63.9 | )                                    |  | $ | 91.3 |  |   |      |   |  | $ | (6.5 | )
|                                                       |  |                                |  |        |                |   |        |                 |   |                       |   |       |                                      |  |   |      |  |   |      |   |  |   |      |  

See notes to condensed financial statements.



4



---

MIDAS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

1. Financial Statement Presentation

The condensed interim period financial statements presented herein do not include all of the information and disclosures customarily provided in annual
financial statements and they have not been audited, as permitted by the rules and regulations of the Securities and Exchange Commission. The condensed interim period financial statements should be read in conjunction with the annual financial
statements included in the annual report on Form 10-K for the fiscal year ended December 30, 2006. In the opinion of management, these financial statements have been prepared in conformity with accounting principles generally accepted in the
United States and reflect all adjustments necessary for a fair statement of the results of operations and cash flows for the interim periods ended March 31, 2007 (first quarter fiscal 2007) and April 1, 2006 (first
quarter fiscal 2006) and of its financial position as of March 31, 2007. All such adjustments are of a normal recurring nature. The results of operations for the first quarter of fiscal 2007 and 2006 are not necessarily indicative of the
results of operations for the full year.

The unaudited condensed financial statements present the consolidated financial information for
Midas, Inc. and its wholly-owned subsidiaries (Midas or the Company). The unaudited condensed financial statements for the quarters ended March 31, 2007 and April 1, 2006 both cover a 13-week period. All significant
inter-company balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the previously
reported fiscal 2006 financial statements in order to provide consistency with the fiscal 2007 results. These reclassifications did not affect previously reported income before income taxes, net income or earnings per share.

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



|                                           |  |                                    |  |     
|------------------------------------------ |  | ---------------------------------- |  | ----
|                                           |  | For the quarter ended fiscal March
|                                           |  | 2007                               |  | 2006
|Weighted-average common shares outstanding |  | 14.4                               |  | 15.3
|Common stock warrants                      |  | 0.1                                |  | 0.1 
|                                           |  |                                    |  |     
|Shares applicable to basic earnings        |  | 14.5                               |  | 15.4
|Effect of dilutive stock awards            |  | 0.5                                |  | 0.4 
|                                           |  |                                    |  |     
|Shares applicable to diluted earnings      |  | 15.0                               |  | 15.8
|                                           |  |                                    |  |     
|Potential common share equivalents:        |  |                                    |  |     
|Stock options                              |  | 1.2                                |  | 1.4 

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 quarterended fiscal March
|                  |  | 2007                              |     | 2006
|Interest paid     |  | $                                 | 2.0 |      | $ | 2.1
|Income taxes paid |  |                                   | 0.2 |      |   | 0.3

The acquisition of certain company-operated shops resulted in non-cash reductions of accounts
receivable of approximately $0.1 million and $0.2 million during the first three months of fiscal 2007 and 2006, respectively.



5



---

3. Inventories

Inventories were composed of finished goods in both the quarter ended March 31, 2007 and the year ended December 30, 2006.

4. Business
Transformation Activities

In fiscal 2006, the Company launched a major update to its retail shop image. The new image program incorporates
changes to internal shop appearance and merchandising, as well as a significant redesign of the Midas shop façade. Midas management believes the new image will better showcase the Companys expansion into new services, enhance efforts to
educate customers and significantly increase the visibility and curb appeal of the typical Midas shop. The Company expects a majority of Midas shops throughout North America to adopt the new shop image. In order to encourage Midas dealers to adopt
this new image, the Company has agreed to fund certain planning, development, material and installation costs expected to average approximately $2,600 per shop. The Company also expects to pay the full cost of the image upgrade for its
company-operated shops as well as certain shops being transitioned between owners.

As a result, the Company recorded charges of $1.6
million during fiscal 2006 related to this program, and Midas management expects that it will result in additional business transformation costs during fiscal 2007 including $0.4 million recorded in the first quarter of 2007. Midas believes the
total charges for franchised shops will be approximately $4 million over the life of the program.

In addition, the Company recorded
business transformation charges during the first quarter of fiscal 2007 of approximately $0.3 million related to the early termination of the Companys supply agreement with AutoZone which was partially offset by a credit of $0.2 million to
adjust the reserve for non-recoverable lease costs pertaining to the closure of six company-operated shops in 2006.

5. Debt Agreements

On October 27, 2005, the Company entered into a five-year, unsecured $110 million revolving credit facility. On September 15, 2006, the Company
amended this revolving credit facility. The amended facility is expandable to $165 million at the Companys discretion with lender approval. The interest rate floats based on the underlying rate of LIBOR and the Companys leverage. This
facility requires maintenance of certain financial covenants including maximum allowable leverage and minimum net worth. Currently, the interest rate on the Companys revolving loan borrowings is priced at LIBOR plus 1.25%.

As of March 31, 2007, a total of $67.0 million was outstanding under the revolving credit facility. As of December 30, 2006, a total of $61.1
million was outstanding under the revolving credit facility.

In November 2005, $20 million in senior bank debt was converted from floating
rate to fixed rate by locking-in LIBOR at 4.89% for a five year period. In addition, in March 2007, the Company entered into an interest rate swap arrangement to convert $25 million in senior bank debt from floating rate to a fixed rate by
locking-in LIBOR at 4.91% for the remaining term of the Companys bank agreement (October 2010). This swap effectively replaced a declining balance swap that expired in March 2007 under which LIBOR was locked-in at 2.76% for a three-year term.
As a consequence, currently $45 million of the Companys $67.0 million in senior bank debt is at fixed rates.

Both the November 2005
and March 2007 swap arrangements have been designated as cash flow hedges and have been evaluated to be highly effective. As a result, the change in the fair value of these swaps is recorded in accumulated other comprehensive income as a gain or
loss on derivative financial instruments. As of March 31, 2007, the fair value of these instruments was a loss of approximately $0.1 million.

6.
Pension Plans

Certain Midas employees are covered under various defined benefit pension plans sponsored and funded by Midas. Plans covering
salaried and hourly corporate employees provide pension benefits based on years of service, and generally are limited to a maximum of 20% of the employees average annual compensation during the five years preceding retirement. Plan assets are
invested primarily in common stocks, corporate bonds, and government securities. The Company does not expect to make material contributions to the various plans in fiscal 2007.



6



---

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



|                                              |  |                                   |      |   |      |   |      |  
|--------------------------------------------- |  | --------------------------------- | ---- | - | ---- | - | ---- | -
|                                              |  | For the quarter endedfiscal March |     
|                                              |  | 2007                              |      |   | 2006 |  
|Service costbenefits                         |  | $                                 | 0.3  |   |      | $ | 0.3  |  
|Interest cost on projected benefit obligation |  |                                   | 0.7  |   |      |   | 0.7  |  
|Expected return on assets                     |  |                                   | (1.1 | ) |      |   | (1.1 | )
|Net amortization and deferral                 |  |                                   | 0.1  |   |      |   | 0.2  |  
|                                              |  |                                   |      |   |      |   |      |  
|Total net periodic pension cost               |  | $                                 |     |   |      | $ | 0.1  |  
|                                              |  |                                   |      |   |      |   |      |  

7. Stock-Based Compensation

On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standard (SFAS) No. 123R (SFAS 123R) and now records an expense for outstanding unvested stock option awards based
on the grant-date fair value of those awards. The fair value of stock option awards has been determined using the Black-Scholes option pricing model and the Modified Prospective Application method of adoption as allowed under SFAS 123R.

Stock Options

The Midas Stock
Incentive Plan, the Midas Treasury Stock Plan and the Midas Directors Deferred Compensation Plan (the Plans) authorize the issuance of up to 4,806,886 shares of Midas common stock pursuant to the exercise of incentive stock
options, non-qualified stock options and stock appreciation rights and the grant of restricted stock and performance awards. Options granted pursuant to the Plans generally vest over a period of three to five years commencing one year after the date
of grant. It is the Companys policy to issue shares out of treasury when options are exercised. The following table summarizes information regarding the outstanding stock options as of March 31, 2007:



|                                    |  |                 |   |  |                    |               |                               |   |                                                     |  |                                       |  |   |     
|----------------------------------- |  | --------------- | - |  | ------------------ | ------------- | ----------------------------- | - | --------------------------------------------------- |  | ------------------------------------- |  | - | ----
|                                    |  | Number ofShares |   |  | Option PriceRanges |               | WeightedAverageExercise Price |   | Weighted AverageRemainingContractual Term(in years) |  | AggregateIntrinsicValue (in millions)
|Outstanding at fiscal year end 2006 |  | 1,617,367       |   |  | $                  | 6.77 $34.66  |                               | $ | 13.51                                               |  |                                       |  |   |     
|Exercised                           |  | (41,415         | ) |  |                    | 8.09   22.00 |                               |   | 15.17                                               |  |                                       |  |   |     
|                                    |  |                 |   |  |                    |               |                               |   |                                                     |  |                                       |  |   |     
|Outstanding at March 31, 2007       |  | 1,575,952       |   |  |                    | 6.77   34.66 |                               |   | 13.47                                               |  | 5.8                                   |  | $ | 10.9
|                                    |  |                 |   |  |                    |               |                               |   |                                                     |  |                                       |  |   |     
|Exercisable at March 31, 2007       |  | 938,142         |   |  |                    | 6.77   34.66 |                               |   | 11.92                                               |  | 5.0                                   |  | $ | 6.0 

No stock options were granted by the Company in the first quarter of fiscal 2007 or 2006.
Additional information pertaining to option activity during the first quarter of fiscal 2007 and 2006 was as follows (in millions):



|                                           |  |                                    |      |  |   |     
|------------------------------------------ |  | ---------------------------------- | ---- |  | - | ----
|                                           |  | For the quarter ended fiscal March
|Weighted average grant-date fair value of: |  |                                    | 2007 |  |   | 2006
|                                           |  |                                    |      |  |   |     
|Stock options exercised                    |  | $                                  | 0.3  |  | $ | 0.6 
|Stock options vested                       |  |                                    | 0.3  |  |   | 0.4 

As of March 31, 2007, there was $3.6 million in stock option compensation expense related to
unvested awards not yet recognized, which is expected to be recognized over a weighted-average period of 3.1 years.

Restricted Stock

From time to time the Company grants shares of restricted stock to certain of its officers and directors. This restricted stock
generally vests at the five or seven year anniversary, with provisions for accelerated vesting upon the occurrence of certain pre-determined events. The fair value of these grants is equal to the stock price on the date of the grant. As of both
March 31, 2007 and December 30, 2006 there were 495,328 non-vested restricted shares outstanding with weighted average grant-date fair value of $19.72 per share.



7



---

For restricted shares granted in 2006, the fair value of each award was the stock price on the date of
grant. The derived service period was calculated using a Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying each market condition stipulated in the award
grant.

As of March 31, 2007, there was $6.7 million of unamortized restricted stock compensation of which $9.7 million was included
as a reduction to paid-in capital and $3.0 million was included in non-vested restricted stock subject to redemption. The $6.7 million of unamortized restricted stock compensation is expected to be recognized over a weighted average period of 3.2
years.

Restricted stock grants include a change in control provision, which provides for cash redemption of unvested
restricted stock in certain circumstances. Securities and Exchange Commission Accounting Series Release No. 268 (ASR 268), Presentation in Financial Statements of Redeemable Preferred Stocks, requires securities with contingent cash
settlement provisions which are not solely in the control of the issuer, without regard to probability of occurrence, to be classified outside of shareholders equity. While the Company believes the possibility of occurrence of any such change
of control event is remote, the contingent cash settlement of the restricted stock as a result of such event would not be solely in the control of the Company. As such, the Company presents the $3.0 million value of unvested restricted stock as
temporary equity on the consolidated balance sheet. Upon the vesting of the restricted stock the Company reclassifies the value of the restricted stock to permanent equity.

Common Stock Warrants

On
March 27, 2003, the Company issued 1.0 million warrants valued at $5.0 million in connection with its 2003 debt restructuring. On January 5, 2004, 500,000 of these warrants were automatically cancelled because the Company met certain
financial objectives contained in the warrant agreements. As of March 31, 2007 a total of 52,593 warrants remained outstanding. The exercise price of the warrants is $0.01, and the warrants are exercisable at any time up to March 27, 2013.
Any warrants that remain unexercised at March 27, 2013 are automatically exercised as of that date.

8. Warranty

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

Year-to-date warranty activity through the first three months of fiscal 2007 is summarized as follows (in millions):



|                                                             |  |   |      |  
|------------------------------------------------------------ |  | - | ---- | -
|Accrued warranty at beginning of period                      |  | $ | 33.4 |  
|Warranty expense                                             |  |   | 1.1  |  
|Warranty credit issued to franchisees (warranty claims paid) |  |   | (1.2 | )
|                                                             |  |   |      |  
|Accrued warranty at end of period                            |  |   | 33.3 |  
|Less current portion                                         |  |   | (4.6 | )
|                                                             |  |   |      |  
|Accrued warrantynon-current                                 |  | $ | 28.7 |  
|                                                             |  |   |      |  



8



---

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

RESULTS OF OPERATIONS

During fiscal 2003, Midas
developed and began to implement a plan to dramatically restructure the Companys operations and re-direct the Companys strategic focus towards the Midas retail system. This plan was intended to transform the Company by improving
profitability, enhancing the competitive position of the Midas retail system, strengthening the Companys balance sheet and reducing future capital requirements. A major component of this strategy was the elimination of unprofitable
manufacturing and distribution operations. Midas concluded these activities when it closed its last automotive exhaust distribution facility in Chicago in the first quarter of 2006.

During the first quarter of fiscal 2006, all remaining exhaust inventory and equipment were sold and liquidated and the Chicago exhaust distribution
warehouse was closed. The Companys vacant Hartford, WI factory is the one asset that remains from the former exhaust manufacturing and distribution operation. Midas is currently seeking buyers for this facility and expects to ultimately record
a gain upon the sale of this facility.

Also in fiscal 2006, the company launched a major update to its retail shop image. The new image
program incorporates changes to internal shop appearance and merchandising, as well as a significant redesign of the Midas shop façade. Midas management believes the new image will better showcase the Companys expansion into new
services, enhance efforts to educate customers and significantly increase the visibility and curb appeal of the typical Midas shop. The Company expects a majority of Midas shops throughout North America to adopt the new shop image. In order to
encourage Midas dealers to adopt this new image, the Company has agreed to fund certain planning, development, material and installation costs expected to average approximately $2,600 per shop. The Company also expects to pay the full cost of the
image upgrade for its company-operated shops as well as certain shops being transitioned between owners. The Company recorded charges of $1.6 million during fiscal 2006 related to this program, and Midas management expects that it will result in
additional business transformation costs during fiscal 2007 including $0.4 million recorded in the first quarter of 2007. Midas believes the total charges for franchised shops will be approximately $4 million over the life of the program.

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

First Quarter Fiscal 2007 Compared with First Quarter Fiscal 2006

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



|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|-------------------------------------------- |  | ---- | ---- | --------------- | ----- | - | ---- | - | --------------- |  | ----- | -
|                                             |  | 2007 |      | Percentto Total |       |   | 2006 |   | Percentto Total | 
|Franchise royalties and license fees         |  | $    | 14.7 |                 | 35.3  | % |      | $ | 15.2            |  | 35.7  | %
|Real estate revenues                         |  |      | 9.0  |                 | 21.6  |   |      |   | 9.1             |  | 21.4  |  
|Company-operated shop retail sales           |  |      | 9.5  |                 | 22.8  |   |      |   | 9.5             |  | 22.3  |  
|Replacement part sales and product royalties |  |      | 7.4  |                 | 17.7  |   |      |   | 7.8             |  | 18.3  |  
|Other                                        |  |      | 1.1  |                 | 2.6   |   |      |   | 1.0             |  | 2.3   |  
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  
|Total sales and revenues                     |  | $    | 41.7 |                 | 100.0 | % |      | $ | 42.6            |  | 100.0 | %
|                                             |  |      |      |                 |       |   |      |   |                 |  |       |  

Total sales and revenues for the first quarter of fiscal 2007 decreased $0.9 million, or 2.1%,
from the first quarter of fiscal 2006 to $41.7 million. Within the retail auto service business, royalty revenues and license fees decreased $0.5 million, or 3.3%, from fiscal 2006. This decrease was primarily driven by a slight reduction in
international royalties paid by Norauto, as well as a decline in the number of North American shops compared to the same period in the prior fiscal year. Comparable shop sales in North America were approximately flat to the prior year. Sales from
company-operated



9



---

shops were $9.5 million in both fiscal 2007 and 2006 as a comparable shop sales increase of 2.7% was offset by a net reduction in the number of
company-operated shops due to re-franchising activity and 2006 shop closures. Revenues from real estate leases declined slightly to $9.0 million as higher revenues from scheduled rent increases were offset by the net reduction in the number of shops
subject to real estate rental agreements.

Replacement part sales and product royalties decreased from $7.8 million to $7.4 million in the
first quarter of fiscal 2007. In the first quarter of fiscal 2006 the Company recorded the final $1.4 million of sales from the exhaust distribution business. This decline in exhaust revenue was partially offset by increased sales of tires,
batteries, oil and shop equipment to Midas dealers. Other revenue increased $0.1 million reflecting continued growth in the Companys RO Writer software revenue.

The Companys gross profit margin increased to 63.8% of sales in the first quarter of fiscal 2007 from 63.4% in fiscal 2006. The year-over-year improvement in gross margin primarily reflects a decline in warranty
expense of $0.2 million to $1.1 million, or 2.6% of total sales for fiscal 2007, compared to $1.3 million, or 3.1% of total sales in fiscal 2006. The decline in warranty expense is the result of reductions in the warranty redemption and
reimbursement rates for brakes and exhaust, as well as lower retail sales of brakes and exhaust.

Selling, general and administrative
expenses for the first quarter of fiscal 2007 decreased $1.9 million, or 8.6%, from the first quarter of fiscal 2006 to $20.3 million. The decrease in expenses primarily reflects a $1.2 million reduction in operating expenses related to the
distribution of exhaust in 2006, a $0.4 million decrease in company-operated shop operating expense as the result of the net reduction in the number of shops, and a $0.3 million improvement in administrative and real estate overhead.

During the first quarter of fiscal 2007, the Company recorded business transformation charges of $0.5 million in selling, general and administrative
expense. The charges reflect $0.3 million related to the early termination of the Companys supply agreement with AutoZone, $0.4 million in connection with the Companys partial funding of the rollout of a new shop image for Midas dealers
and a credit of $0.2 million to reflect an adjustment to the reserve for non-recoverable lease costs pertaining to the closure of six company-operated shops in 2006. The Company expects to record $0.7 million in additional business transformation
costs during the second fiscal quarter related to the early termination of the Companys supply agreement with AutoZone. During the first quarter of fiscal 2006, the Company recorded business transformation charges of $0.1 million. This
consisted of a charge of $0.2 million in connection with the Companys partial funding of the rollout of the new shop image for Midas dealers, which was partially offset by a favorable valuation adjustment on the net fixed assets in the Chicago
exhaust warehouse upon disposal.

During the first quarter of fiscal 2006, the Company recorded a $3.4 million gain on sale of assets. This
included the final recognition of the remaining $1.8 million deferred gain from the March 2005 sale of the Companys Chicago warehouse, and a $1.6 million gain on the sale of equipment liquidated in connection with the Companys exit from
exhaust manufacturing and distribution.

As a result of the above changes, operating income declined $2.3 million to $5.8 million in the
first quarter of fiscal 2007 from $8.1 million in the first quarter of fiscal 2006. Excluding the impact of the above described business transformation charges and gains on sale, operating income for the first quarter of fiscal 2007 was $6.3 million
compared to $4.8 million for the first quarter of fiscal 2006. Excluding the impact of business transformation charges and gains on sale, operating income margin increased to 15.1% in the first quarter of fiscal 2007 from 11.3% in the first quarter
of fiscal 2006. The improvement in operating margin primarily reflects the elimination of operating losses in the Companys exhaust distribution operation, improved performance of company-operated shops, and savings on administrative overhead
expense.

Interest expense was $2.2 million in the first quarter of both fiscal 2007 and 2006. Interest expense remained unchanged despite
a $5.9 million increase in bank debt due to lower interest rates on the Companys borrowings.

Other income declined from $0.3 million
in the first quarter of fiscal 2006 to $0.1 million in the first quarter of fiscal 2007 due to currency exchange losses. Other income consists primarily of interest income on overdue customer accounts and foreign currency exchange gains or losses.

The Companys effective tax rate was 41.1% in the first quarter of fiscal 2007 compared to 38.3% in the first quarter of fiscal 2006
and compared to the 2007 statutory tax rate of 39.0%. The fiscal 2007 variance from the statutory rate is due to the impact of non-deductible compensation paid to the Companys Chairman and Chief Executive Officer.

As a result of the above items, net income decreased $1.6 million from net income of $3.8 million in the first quarter of fiscal 2006 to net income of
$2.2 million in the first quarter of fiscal 2007.



10



---

LIQUIDITY AND CAPITAL RESOURCES

Following is a summary of the Companys cash flows from operating, investing and financing activities for first quarter of fiscal 2007 and 2006, respectively (in millions):



|                                                                                                                                        |  |      |      |   |      |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ----- | -
|                                                                                                                                        |  | 2007 |      |   | 2006 |  
|Cash provided by operating activities before cash outlays for business transformation costs and total changes in assets and
liabilities |  | $    | 7.8  |   |      | $ | 5.4   |  
|Cash outlays for business transformation costs                                                                                          |  |      | (1.5 | ) |      |   | (1.9  | )
|Total changes in assets and liabilities                                                                                                 |  |      | (3.0 | ) |      |   | 6.0   |  
|                                                                                                                                        |  |      |      |   |      |   |       |  
|Net cash provided by operating activities                                                                                               |  |      | 3.3  |   |      |   | 9.5   |  
|Net cash provided by investing activities                                                                                               |  |      |     |   |      |   | 0.3   |  
|Net cash used in financing activities                                                                                                   |  |      | (4.1 | ) |      |   | (10.0 | )
|                                                                                                                                        |  |      |      |   |      |   |       |  
|Net change in cash and cash equivalents                                                                                                 |  | $    | (0.8 | ) |      | $ | (0.2  | )
|                                                                                                                                        |  |      |      |   |      |   |       |  

The Companys cash management system permits the Company to make daily borrowings and
repayments on its revolving line of credit. This allows Midas to minimize interest expense and to maintain a cash balance close to zero. Midas cash and cash equivalents decreased $0.8 million in the first three months of fiscal 2007.

The Companys operating activities provided net cash of $3.3 million during the first three months of fiscal 2007 compared to $9.5
million in the first three months of fiscal 2006. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash from operating activities increased from $5.4 million in the first three months of fiscal 2006 to
$7.8 million in the first three months of fiscal 2007, as the decrease in net income was offset by the year over year impact of the $3.4 million gain on sale of assets in 2006, higher business transformation charges, and higher stock based
compensation. Cash outlays for business transformation costs declined from $1.9 million in the first three months of fiscal 2006 to $1.5 million in the first three months of fiscal 2007. Cash outlays for business transformation costs in first three
months of fiscal 2007 were related to the Companys update of its retail shop image and the early termination of the supply agreement with AutoZone, while cash outlays in the first three months of fiscal 2006 were primarily related to the exit
from exhaust manufacturing and distribution.

Changes in assets and liabilities swung from a $6.0 million source of cash in the first three
months of fiscal 2006 to a $3.0 million use of cash in the first three months of fiscal 2007. The $6.0 million source of cash in 2006 was primarily due to a decline in inventories as a result of the final liquidation of exhaust inventory, while the
$3.0 million use of cash in 2007 was primarily due to the timing of payments.

Investing activities had no net cash impact in the first
three months of fiscal 2007 compared to providing $0.3 million of cash in the first three months of fiscal 2006. Fiscal 2007 investing activities primarily consisted of $0.4 million in systems development projects, company-operated shop equipment
additions and other capital expenditures, $0.3 million paid in conjunction with the acquisition of two Midas shops and other assets from certain Midas dealers and $0.7 million in cash generated as the result of the sale of seven company-operated
shops. Fiscal 2006 investing activities primarily consisted of $0.7 million in systems development projects and other capital expenditures, $0.1 million paid to acquire a Midas shop and other shop assets from a Midas dealer and $1.1 million in cash
generated as the result of the sale of the remaining exhaust manufacturing assets.

Net cash used in financing activities was $4.1 million
in the first three months of fiscal 2007, compared to net cash used of $10.0 million in the first three months of fiscal 2006. During fiscal 2007, the Company increased total debt by $5.4 million, decreased outstanding checks by $3.5 million, paid
$7.0 million to repurchase shares of the Companys common stock and received $1.0 million in cash from the exercise of outstanding stock options. In fiscal 2006, the Company reduced total debt by $5.2 million, reduced outstanding checks by $2.0
million, paid $4.0 million to repurchase shares of the Companys common stock and received $1.2 million in cash from the exercise of outstanding stock options.

On October 27, 2005, the Company entered into a five-year, unsecured $110 million revolving credit facility. On September 15, 2006, the Company amended this revolving credit facility. The amended facility is
expandable to $165 million at the Companys discretion with lender approval. The interest rate floats based on the underlying rate of LIBOR and the Companys leverage. This facility requires maintenance of certain financial covenants
including maximum allowable leverage and minimum tangible net worth. Currently, the interest rate on the Companys revolving loan borrowings is priced at LIBOR plus 1.25%.

As of March 31, 2007, a total of $67.0 million was outstanding under the revolving credit facility. As of December 30, 2006, a total of $61.1
million was outstanding under the revolving credit facility.



11



---

In November 2005, $20 million in senior bank debt was converted from floating rate to fixed rate by
locking-in LIBOR at 4.89% for a five year period. In addition, in March 2007, the Company entered into an interest rate swap arrangement to convert $25 million in senior bank debt from floating rate to a fixed rate by locking-in LIBOR at 4.91% for
the remaining term of the Companys bank agreement (October 2010). This swap effectively replaced a declining balance swap that expired in March 2007 under which LIBOR was locked-in at 2.76% for a three-year term. As a consequence, currently
$45 million of the Companys $67.0 million in senior bank debt is at fixed rates.

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

On November 9, 2004, the Midas Board of Directors authorized a share repurchase program to begin in fiscal
2005 for up to $25 million of the Companys outstanding common stock. On May 9, 2006, the Midas Board of Directors authorized a $25 million increase in the share repurchase program and on May 8, 2007 the Board authorized an additional
$50 million increase. The Company intends to repurchase shares from time to time in the open market and in privately negotiated transactions, depending upon market and business conditions. The Company has paid approximately $43.4 million for shares
acquired under this program since the buyback program was first initiated.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing the consolidated financial statements in
conformity with accounting principles generally accepted in the United States of America, management must make a variety of decisions which impact the reported amounts and related disclosures. Such decisions include the selection of the appropriate
accounting principles to be applied, the assumptions on which to base accounting estimates, and the consistent application of those accounting principles. Due to the type of industry in which the Company operates, the nature of its business, and the
Companys existing business transformation process, the following accounting policies are those that management believes are most important to the portrayal of the Companys financial condition and results and that require
managements most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Valuation of Warranty Liabilities

Customers are provided a written warranty from Midas on certain products purchased from Midas shops in North America, namely brake friction, mufflers, shocks and struts. The warranty will be honored at any Midas shop in North America and is
valid for the lifetime of the vehicle, but is voided if the vehicle is sold. The Company maintains a warranty accrual to cover the estimated future liability associated with outstanding warranties. The Company determines the estimated value of
outstanding warranty claims based on: 1) an estimate of the percentage of all warranted products sold and registered in prior periods at retail that are likely to be redeemed; and 2) an estimate of the cost of redemption of each future warranty
claim on a current cost basis. These estimates are computed using actual historical registration and redemption data as well as actual cost information on current redemptions. An increase of one percentage point in the estimated percentage of
warranted products likely to be redeemed in the U.S. would have the effect of changing Midas December 30, 2006 outstanding U.S. warranty liability by $4.5 million. A change in the estimated current cost of warranty redemptions of one
dollar would have the effect of changing Midas outstanding U.S. warranty liability by $1.7 million.

Valuation of Receivables

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



12



---

Pensions

The Company has non-contributory defined benefit pension plans covering certain of its employees. The Companys funding policy for the U.S. plan is to contribute amounts sufficient to meet the minimum funding
requirement of the Employee Retirement Income Act of 1974, plus any additional amounts the Company may deem to be appropriate. The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards
(SFAS) No. 87, Employers Accounting for Pensions, and SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106 and
132(R), which require that amounts recognized in the financial statements be determined on an actuarial basis. Under SFAS No. 158 the amount recorded as pension assets or liabilities is determined by comparing the projected benefit
obligation (PBO) to the fair value of the plan assets. Amounts recognized in accumulated other comprehensive loss consist of unrecognized actuarial gains, losses, and prior service costs, net of tax.

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

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

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 March 31, 2007. In the event that management determines the Company would not be
able to realize all or part of the net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.

IMPACT OF NEW ACCOUNTING STANDARDS

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

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



13



---

FIN 48 differs from the prior standards in that it requires companies to determine that it is more
likely than not that a tax position will be sustained by the appropriate taxing authorities before any benefit can be recorded in the financial statements. As of December 31, 2006, our unrecognized tax benefits totaled $2.0 million.
The adoption of FIN 48 resulted in no change to the reserve for unrecognized tax benefits that existed as of December 31, 2006. As such, there was no change recorded to retained earnings as a result of the adoption.

Midass policy continues to be to recognize accrued interest related to uncertain tax positions and penalties as components of other income
(expense) net. Of the $1.2 million liability for uncertain tax positions as of March 31, 2007, $1.2 million represents tax positions that, if recognized, would impact the effective tax rate. The statute of limitations remains open for U.S.
Federal tax returns for 2003 and subsequent years. The statute of limitations remains open for Canadian tax returns for 2002 and subsequent years. During the periods open to examination, the Company has net operating losses and tax credit carry
forwards that have attributes from closed periods. Since these net operating losses and tax credit carry forwards may be utilized in future periods, they remain subject to examination. As of March 31, 2007, the Company has not recorded any
provisions for accrued interest or penalties related to uncertain tax positions.

During the three months ended March 31, 2007, there
have been no material changes in the liability for uncertain tax positions.

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

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans 
an amendment of FASB Statements No. 87, 88, 106 and 132(R), (SFAS 158). SFAS 158 requires an employer to recognize the funded status of each of its defined pension and postretirement benefit plans as a net asset or liability in its
statement of financial position with an offsetting amount in accumulated other comprehensive income, and to recognize changes in that funded status in the year in which changes occur through comprehensive income. This requirement became effective
for Midas for its December 30, 2006 year-end. The provisions of SFAS 158 are to be applied on a prospective basis; therefore, prior periods presented will not be restated. The Company adopted SFAS 158 on December 30, 2006, which resulted
in a $7.0 million reduction in other assets, a $2.8 million increase in deferred tax assets, a $0.2 million increase in other liabilities and a $4.4 million increase in accumulated other comprehensive loss. The adoption had no impact on the
Companys results of operations or cash flows.

Additionally, SFAS 158 requires an employer to measure the funded status of its plan
as of the date of its year-end statement of financial position. This provision becomes effective for Midas for no later than December 28, 2008 fiscal year-end. The funded status of the majority of Midas pension plans is currently measured
annually as of the 30th of September.

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

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits a company to choose to measure certain financial assets and liabilities at fair value that are not currently required to be
measured at fair value (i.e. the Fair Value Option). Election of the Fair Value Option is made on an instrument-by-instrument basis and is irrevocable. At the adoption date, unrealized gains and losses on financial assets and liabilities for which
the Fair Value Option has been



14



---

elected would be reported as a cumulative adjustment to beginning retained earnings. If Midas elects the Fair Value Option for certain financial assets and
liabilities, it will report unrealized gains and losses due to changes in their fair value in earnings at each subsequent reporting date. SFAS No. 159 is effective as of January 1, 2008. Midas is currently evaluating the potential impact
of adopting SFAS No. 159 on its consolidated financial statements.

FORWARD LOOKING STATEMENTS

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

The Companys results of operations and the forward-looking statements could be affected by, among others things: general economic conditions in the
markets in which the Company operates; economic developments that have a particularly adverse effect on one or more of the markets served by the Company; the ability to execute managements internal operating plans; the timing and magnitude of
capital expenditures; the Companys ability to access debt and equity markets; economic and market conditions in the U.S. and worldwide; currency exchange rates; changes in consumer spending levels and demand for new products and services; and
overall competitive activities. Certain of these risks are more fully described in Item 1 of Part I of the Companys annual report on Form 10-K. The Company disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

The Company is exposed
to credit risk on certain assets, primarily accounts receivable. The Company provides credit to customers in the ordinary course of business and performs ongoing credit evaluations. Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Companys customer base. The Company believes its allowance for doubtful accounts is sufficient to cover customer credit risk.

In November 2005, $20 million in senior bank debt was converted from floating rate to fixed rate by locking-in LIBOR at 4.89% for a five year period. In
addition, in March 2007, the Company entered into an interest rate swap arrangement to convert $25 million in senior bank debt from floating rate to a fixed rate by locking-in LIBOR at 4.91% for the remaining term of the Companys bank
agreement (October 2010). This swap effectively replaced a declining balance swap that expired in March 2007 under which LIBOR was locked-in at 2.76% for a three-year term. As a consequence, currently $45 million of the Companys $67.0 million
in senior bank debt is at fixed rates.

Both the November 2005 and March 2007 swap arrangements have been designated as cash flow hedges
and have been evaluated to be highly effective. As a result, the change in the fair value of these swaps is recorded in accumulated other comprehensive income as a gain or loss on derivative financial instruments. As of March 31, 2007, the fair
value of these instruments was a loss of approximately $0.1 million.



15



---

Item 4. Controls and Procedures.



|(a) | Evaluation of disclosure controls and procedures.
|--- | -------------------------------------------------

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

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



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

There were no significant changes in internal controls during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting.



16



---

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

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

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

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



|                                                          |  |                                |  |                            |       |                                                                             |         |                                                                                         |   |           
|--------------------------------------------------------- |  | ------------------------------ |  | -------------------------- | ----- | --------------------------------------------------------------------------- | ------- | --------------------------------------------------------------------------------------- | - | ----------
|Period                                                    |  | Total Number ofSharesPurchased |  | AveragePrice Paidper Share |       | Total Number ofShares Purchasedas Part ofPubliclyAnnounced Plansor Programs |         | Approximate DollarValue of Shares ThatMay Yet Be PurchasedUnder the Plans
orPrograms(1)
|January 2007:(December 31, 2006 throughJanuary 27, 2007)  |  | 124,000                        |  | $                          | 22.49 |                                                                             | 124,000 |                                                                                         | $ | 10,849,989
|February 2007:(January 28, 2007 throughFebruary 24, 2007) |  | 28,000                         |  | $                          | 22.62 |                                                                             | 28,000  |                                                                                         | $ | 10,216,542
|March 2007:(February 25, 2007 throughMarch 31, 2007)      |  | 176,300                        |  | $                          | 20.26 |                                                                             | 176,300 |                                                                                         | $ | 6,645,099 
|                                                          |  |                                |  |                            |       |                                                                             |         |                                                                                         |   |           
|                                                          |  |                                |  |                            |       |                                                                             |         |                                                                                         |   |           
|Total                                                     |  | 328,300                        |  | $                          | 21.30 |                                                                             | 328,300 |                                                                                         |   |           

|(1) | On November 9, 2004, the Company announced that the Board of Directors had authorized a share repurchase of up to $25 million in Midas stock. On May 9, 2006, the Midas
Board of Directors authorized a $25 million increase in the share repurchase program, and on May 8, 2007, the Board authorized an additional $50 million increase. As of March 31, 2007, a total of approximately 2,073,000 had been
repurchased under this plan since its inception. The average price of shares repurchased under the plan was approximately $20.91.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 3. Defaults Upon Senior Securities.

None

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

None

Item 5. Other Information.

None

Item 6. Exhibits.



17



---

|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.
|---- | ----------------------------

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: May 10, 2007 |  |  |  | /s/    Alan D. Feldman                                         
|                   |  |  |  | Alan D. Feldman Chairman, President and Chief
Executive Officer





| |  |  |  |                                                                      
| |  |  |  | ---------------------------------------------------------------------
| |  | 
| |  |  |  | /s/    William M. Guzik                                              
| |  |  |  | William M. Guzik Executive Vice President and Chief
Financial Officer





| |  |  |  |                                                   
| |  |  |  | --------------------------------------------------
| |  | 
| |  |  |  | /s/    James M. Haeger, Jr.                       
| |  |  |  | James M. Haeger, Jr. Vice President and
Controller



18