Exhibit 99.1
Midas Sells IPC-Brand Exhaust Business and
Will Exit Exhaust Manufacturing, Distribution;
AutoZone to Supply Xxxxx Exhaust Products to Midas Shops
ITASCA, Ill.--(BUSINESS WIRE)--May 5, 2005--Midas, Inc. (NYSE:MDS)
has entered into an agreement calling for AutoZone (NYSE:AZO) to be
the exclusively endorsed supplier of Xxxxx brand exhaust products to
the more than 1,600 Midas shops in the United States. The exhaust
products will be supplied to AutoZone by the Light Vehicle Aftermarket
division of ArvinMeritor (NYSE:ARM) and will replace Midas-brand
products currently manufactured by Midas and sold to Midas shops by
AutoZone.
Under a separate agreement, ArvinMeritor will purchase certain
IPC-brand exhaust assets from Midas.
Midas had announced last October that it was in discussions to
secure an alternate supplier of exhaust for the Midas system and to
sell its IPC-brand exhaust business.
"These new agreements with AutoZone and ArvinMeritor ensure that
Midas shops will continue to have a supply of high-quality,
competitively priced exhaust products so they can continue to compete
effectively in their markets," said Xxxx X. Xxxxxxx, Xxxxx' president
and chief executive officer. "By the end of this year, Midas will
close its exhaust manufacturing and distribution facilities, which had
become an unprofitable business for the company."
Within the next few weeks, AutoZone will begin a region-by-region
implementation of weekly stocking shipments of Xxxxx exhaust products
to U.S. Midas shops. That conversion will be completed by Dec. 31,
2005. Midas is continuing discussions with Uni-Select in Canada for an
alternate supply of exhaust products for the Canadian Midas shops.
The specific economic effects of Midas' exit from the exhaust
business depend on timing of the wind-down of the plant and warehouse.
The company has said that exhaust manufacturing and distribution would
generate approximately $32 million of revenue if it were to operate
for all of fiscal 2005, and that the business had been expected to
produce operating losses of approximately $1.0 million a quarter.
Those revenues and losses will be eliminated as the Midas exhaust
operation phases out and the AutoZone-ArvinMeritor shipments ramp up
over the remainder of 2005.
Midas has also said that proceeds from the sale of the
exhaust-related real estate, inventory, equipment and businesses will
exceed any cash restructuring costs for asset write-downs and employee
severance. Midas expects to record a special charge in the second
quarter in the range of $6 to $9 million.
"Exiting the exhaust distribution business has been a difficult
decision because it was the foundation on which our company was
built," Xxxxxxx said. "However, improved vehicle technology over the
past 20 years has significantly reduced the frequency of exhaust
replacement, which accounted for only 17 percent of the revenues in a
typical Midas shop in the U.S. in 2004."
"Because exhaust manufacturing was unprofitable, it had become a
drain on management and financial resources. Once the exhaust
transition to AutoZone and ArvinMeritor is complete, we can devote our
full energies to growing the retail business and profitability of the
Midas system," Xxxxxxx said.
In 2003, Midas closed 11 of its 12 distribution centers in North
America and transferred responsibility to AutoZone for most parts
distribution to U.S. Midas shops. Midas has continued to operate the
Hartford exhaust plant and the Chicago warehouse to distribute exhaust
products to AutoZone, which in turn, distributed them to Midas shops.
"AutoZone has been a key contributor to our success over the past
18 months. We appreciate AutoZone's support and look forward to
continuing to grow our businesses together," Xxxxxxx said.
Midas is one of the world's largest providers of automotive
service, offering brake, exhaust, steering and suspension services, as
well as maintenance services, tires and batteries at more than 2,600
franchised, licensed and company-owned Midas shops in 19 countries,
including more than 1,800 in the United States and Canada.
NOTE: This news release contains certain forward-looking
statements that are based on management's beliefs as well as
assumptions made by and information currently available to management.
Such statements are subject to risks and uncertainties, both known and
unknown, that could cause actual results, performance or achievement
to vary materially from those expressed or implied in the
forward-looking statements. The company may experience significant
fluctuations in future results, performance or achievements due to a
number of economic, competitive, governmental, technological or other
factors. Additional information with respect to these and other
factors, which could materially affect the company and its operations,
is included in the company's filings with the Securities and Exchange
Commission, including the company's 2004 annual report on Form 10-K.
CONTACT: Midas, Inc.
Xxx Xxxxxx, 000-000-0000
xxx.xxxxxxxx.xxx
