ITASCA, IL — Midas said it has completed its restructuring plan successfully, and on schedule.
In April 2003, Midas announced agreements with AutoZone in the U.S. and Uni-Select in Canada for distribution of Midas brand and other automotive parts to the 1,900 Midas shops in North America. Midas’ timetable to exit the parts distribution business was the end of fiscal 2003.
As of the end fiscal year 2003, Midas had closed all 77 Parts Warehouse Inc. (PWI) quick-delivery warehouses it operated at the beginning of 2003, and eliminated substantially all related lease obligations. The company also reduced the number of its company-operated Midas shops from 111 to 73, through closure or re-franchising, and completed the transition of parts distribution to Midas shops in North America to AutoZone and Uni-Select.
Midas closed all but one of its 12 regional distribution centers in the U. S. and Canada. The company sold or liquidated parts inventory with an original vendor cost of more than $80 million, and reduced its total workforce at the company’s corporate headquarters and in the field from 1,900 at the beginning of 2003 to 900 at the end of the fiscal year.
Midas liquidated inventories in its regional distribution centers and quick-delivery warehouses by selling parts to AutoZone and Uni-Select, by returning stock to vendors and by conducting liquidation sales. The company used cash generated from inventories to reduce debt, to reduce payables and for restructuring activities.
Midas refinanced its debt facilities at the end of March 2003. At the end of fiscal March, Midas’ term loans stood at $132.5 million (before unamortized debt discount and accrued but unpaid interest) and its revolving credit facility had $4.6 million outstanding.
Midas also reclaimed 500,000 common stock warrants from its lenders as a result of exceeding the $33 million term loan debt reduction target. As of fiscal year-end, Midas’ term loans had been reduced by $40.1 million to $92.4 million (before debt discount and accrued but unpaid interest) and its revolving credit facility outstanding balance had been reduced to zero.
“The timely success of the transition of our wholesale business is a real tribute to the support of Midas franchisees, Midas employees and our partners at AutoZone and Uni-Select,” said Alan Feldman, Midas’ president and CEO. “In just seven months, we transferred responsibility for shipping and delivery of parts, liquidated remaining inventories and shut down the distribution centers,” Feldman said. “We are grateful to all team members who had a role in this significant accomplishment.”
Midas has restructured the company to focus on the profitable franchising and real estate businesses. Midas continues to manufacture exhaust parts in Hartford, Wis., which the company sells to AutoZone and Uni-Select, as well as through its IPC wholesale system. The company has retained its warehouse in Chicago to distribute exhaust parts.
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