ITASCA, Ill. – Midas Inc. has reported net earnings of $0.8 million, or 6 cents per diluted share, for the third quarter ended Oct. 2, compared to net earnings of $1.4 million, 10 cents per diluted share, in 2009.

The company said third quarter 2010 results were negatively affected by $0.8 million of incremental legal and other arbitration expenses incurred in connection with the contractual dispute with the company’s master licensee in Europe. These arbitration costs had an after-tax impact of 3 cents per diluted share.

The current year was also negatively affected by the company’s acquisition of 27 franchised Midas shops, including the emergency acquisition in January of 22 Midas shops in Northern California from a troubled franchisee. In the third quarter, lost royalties and rents and operating losses from these shops had a negative 2 cents per share impact on a year-over-year basis.

Midas shops in the United States reported their fourth consecutive quarter of improved comparable shop retail sales.

“Our marketing strategy of attracting new and repeat customers with value-priced oil changes continues to drive shop traffic, with an increase of 10 percent in average per shop car count at U.S. shops during the quarter — on top of a 17 percent increase in the third quarter last year,” said Alan Feldman, Midas chairman and CEO. “Importantly, the average repair order, which began to decline when we implemented this marketing strategy in early 2009, has been stable throughout 2010.”

Feldman said that retail sales momentum in Midas’ U.S. shops accelerated in the third quarter as comparable shop sales were up by 4.4 percent during the third quarter compared to an increase of 2.2 percent in the first half of the year.

“Comparable shop oil change revenue increased by 14 percent in U.S. shops during the quarter while tire revenues were up by six percent,” Feldman said. “Brake sales, while still negative during the quarter at minus 1.6 percent, showed improvement over the 3.3 percent decline we experienced in the first half of this year and the 5.4 percent decline in 2009. Our Midas Way operations initiative is starting to make a difference.”

Midas retail sales were the strongest in the South and Central regions, with comparable shop increases of 8.6 and 8.4 percent, respectively. Northeast region sales were up by 2.2 percent and the West was slightly negative at minus 0.3 percent.

“We are pleased with the positive sales trends in U.S. Midas shops. We continue to see increases in shop traffic, comparable shop sales and maintenance services, as well as improvement in the brake category,” Feldman said.

“At the same time, our Canadian shops continue to face challenges along with other automotive service providers in that country,” Feldman said. “Third quarter comparable shop sales declined 2.8 percent in Canada.”

Total sales and revenues for the third quarter were $48.8 million, compared to $46.4 million in 2009. Sales were $145.8 million for the first nine months, up from $137.1 million last year.

Total franchising revenues for the third quarter, including the Midas and SpeeDee businesses, were $13.8 million, compared to $14 million in 2009. The company said the decline was due to the impact of foreign currency and lower initial franchise fees. The positive impact of the U.S. comparable shop sales gains were offset by the reduction in the North American franchised shop count. Total franchising revenues for the first nine months were $40.7 million compared to $41 million for the same period a year ago.

Replacement part sales and product royalties were $5.9 million in the third quarter and $16.9 million for the first nine months, compared to $5.9 million and $18 million, respectively, in 2009. The decline in the first nine months is primarily the result of lower wholesale sales of tires to Midas shops in the U.S., despite the fact that retail sales of tires by Midas shops have increased.

Revenues from the R.O. Writer software business were $1.4 million in the third quarter and $4.4 million for the first nine months, compared to $1.3 million and $4.1 million for the same periods a year ago.