<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999.
-----------------
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 No. 0-19357
--------
MONRO MUFFLER BRAKE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 16-0838627
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
200 Holleder Parkway, Rochester, New York 14615
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 716-647-6400
------------------------------
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
----- -----
As of February 1, 2000, 8,258,101 shares of the Registrant's Common Stock, par
value $ .01 per share, were outstanding.
<PAGE> 2
MONRO MUFFLER BRAKE, INC.
INDEX
-----
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
--------
<S> <C>
Consolidated Balance Sheet at December 31, 1999 and March 31, 1999 3
Consolidated Statement of Income for the quarter and nine months
ended December 31, 1999 and 1998 4
Consolidated Statement of Changes in Common Shareholders' Equity for
the nine months ended December 31, 1999 5
Consolidated Statement of Cash Flows for the nine months ended
December 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
</TABLE>
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<PAGE> 3
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents, including interest-bearing accounts of $0 at $ 0 $ 5,599
December 31, 1999 and $5,599 at March 31, 1999
Trade receivables 1,233 1,291
Inventories, at LIFO cost 45,533 38,656
Federal and state income taxes receivable 0 1,090
Deferred income tax asset 1,709 1,709
Other current assets 5,388 5,002
-------- --------
Total current assets 53,863 53,347
-------- --------
Property, plant and equipment 202,260 194,808
Less - Accumulated depreciation and amortization (66,445) (59,021)
-------- --------
Net property, plant and equipment 135,815 135,787
Other noncurrent assets 12,829 13,800
-------- --------
Total assets $202,507 $202,934
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 7,790 $ 8,373
Trade payables 12,551 9,745
Federal and state income taxes payable 2,084 0
Accrued expenses and other current liabilities
Accrued interest 265 268
Accrued payroll, payroll taxes and other payroll benefits 4,724 5,269
Accrued insurance 1,936 1,700
Accrued restructing costs 1,942 1,825
Other current liabilities 6,229 7,999
-------- --------
Total current liabilities 37,521 35,179
Long-term debt 71,043 78,672
Other long-term liabilities 578 669
Accrued long-term restructuring costs 3,203 5,100
Deferred income tax liability 2,363 2,363
-------- --------
Total liabilities 114,708 121,983
-------- --------
Commitments
Shareholders' equity:
Class C Convertible Preferred Stock, $1.50 par value, $.216 conversion
value; 150,000 shares authorized; 91,727 shares issued
and outstanding 138 138
Common Stock, $.01 par value, 15,000,000 shares authorized; 8,321,701
shares issued 83 83
Treasury Stock, 38,000 shares at December 31, 1999, 0 shares at
March 31, 1999, at cost (285) 0
Additional paid-in capital 35,951 35,873
Retained earnings 51,912 44,857
-------- --------
Total shareholders' equity 87,799 80,951
-------- --------
Total liabilities and shareholders' equity $202,507 $202,934
======== ========
</TABLE>
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1999.
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<PAGE> 4
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------- -----------------
1999 1998 1999 1998
------- ------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales $52,077 $53,672 $173,569 $144,169
Cost of sales, including distribution and
occupancy costs (a) 32,145 33,844 102,892 84,933
------- ------- -------- --------
Gross profit 19,932 19,828 70,677 59,236
Operating, selling, general and
administrative expenses 15,807 19,449 52,616 46,168
------- ------- -------- --------
Operating income 4,125 379 18,061 13,068
Interest expense, net of interest income for
the quarter of $13 in 1999 and $20 in
1998, and year-to-date of $39 in 1999
and $42 in 1998 (a) 1,692 1,598 5,098 3,579
Other expense, net 524 322 1,239 625
------- ------- -------- --------
Income (loss) before provision for income taxes 1,909 (1,541) 11,724 8,864
Provision for (recovery of) income taxes 760 (618) 4,669 3,518
------- ------- -------- --------
Net income (loss) $ 1,149 $ (923) $ 7,055 $ 5,346
======= ======= ======== ========
Basic earnings (loss) per share $ .14 $ (.11) $ .85 $ .64
======= ======= ======== ========
Diluted earnings (loss) per share (b) $ .13 $ (.11) $ .79 $ .59
======= ======= ======== ========
Weighted average number of shares of
common stock and common stock
equivalents used in computing
earnings per share: Basic 8,322 8,322 8,322 8,301
======= ======= ======== ========
Diluted (b) 8,973 8,322 8,975 9,002
======= ======= ======== ========
(a) Amounts paid under operating and capital leases with affiliated parties
totaled $404 and $408 for the quarters ended December 31, 1999 and
1998, respectively, and $1,321 and $1,371 for the nine months ended
December 31, 1999 and 1998, respectively.
(b) The antidilutive effect of the Class C Convertible Preferred Stock and
outstanding options resulted in their exclusion from the calculation of
weighted average diluted shares outstanding, and thereby increased the
loss per share by $.01.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1999.
</TABLE>
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<PAGE> 5
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
LESS:
NOTE NET
ADDITIONAL RECEIVABLE ADDITIONAL
COMMON TREASURY PAID-IN FROM PAID-IN RETAINED
STOCK STOCK CAPITAL SHAREHOLDER CAPITAL EARNINGS
------ -------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1999 $83 $36,370 $ (497) $35,873 $44,857
Net income 7,055
Note receivable from shareholder 78 78
Purchase of treasury shares (38,000 shares) $(285)
--- ----- ------- ----- ------- -------
Balance at December 31, 1999 $83 $(285) $36,370 $ (419) $35,951 $51,912
=== ===== ======= ===== ======= =======
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1999.
</TABLE>
-5-
<PAGE> 6
MONRO MUFFLER BRAKE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
------------
1999 1998
-------- ---------
(DOLLARS IN THOUSANDS)
INCREASE (DECREASE) IN CASH
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,055 $ 5,346
-------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities -
Depreciation and amortization 9,655 8,164
(Gain) loss on disposal of property, plant and equipment (111) (101)
Decrease (increase) in trade receivables 58 (390)
Increase in inventories (6,877) (4,262)
Decrease in other current assets 419 1,061
Decrease (increase) in other noncurrent assets 604 (1,867)
Increase (decrease) in trade payables 2,806 (2,792)
Decrease in accrued expenses (1,965) (921)
Increase in federal and state income taxes payable 3,174 32
(Decrease) increase in other long-term liabilities (1,898) 1,330
Decrease in deferred tax liability (113)
-------- ---------
Total adjustments 5,865 141
-------- ---------
Net cash provided by operating activities 12,920 5,487
-------- ---------
Cash flows from investing activities:
Capital expenditures (11,850) (17,575)
Proceeds from the disposal of property, plant and equipment 1,718 81
Payment for purchase of Speedy stores (21,488)
-------- ---------
Net cash used for investing activities (10,132) (38,982)
-------- ---------
Cash flows from financing activities:
Proceeds from the sale of common stock 462
Repurchase of common stock (285)
Proceeds from borrowings 60,080 130,755
Principal payments on long-term debt and capital
lease obligations (68,182) (102,185)
-------- ---------
Net cash (used for) provided by financing activities (8,387) 29,032
-------- ---------
(Decrease) increase in cash (5,599) (4,463)
Cash at beginning of year 5,599 5,315
-------- ---------
Cash at December 31 $ 0 $ 852
======== =========
</TABLE>
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report on Form 10-K (File
No. 0-19357), filed by the Company with the Securities and Exchange Commission
on June 29, 1999.
-6-
<PAGE> 7
MONRO MUFFLER BRAKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Stock Repurchase
- -------------------------
On November 18, 1999, the Board of Directors authorized the Company to
purchase up to 300,000 shares of the outstanding common stock at market prices,
subject to the consent of the Company's lenders, which was received on December
21, 1999. The timing of stock purchases are made at the discretion of
management. At January 31, 2000, the Company has purchased 63,600 shares.
Note 2 - Acquisition of Speedy Stores
- -------------------------------------
In September 1998, the Company completed the acquisition of 189
company-operated and 14 dealer-operated Speedy stores, all located in the United
States, from SMK Speedy International Inc. of Toronto Canada. Speedy stores
provide automotive repair services, specializing in undercar care, in 11 states
located primarily in the northeast. The acquisition was accounted for as a
purchase, and accordingly, the operating results of Speedy have been included in
the Company's consolidated financial statements since the date of the
acquisition.
Approximately $51 million was borrowed under a new $135 million secured
credit facility to pay the all-cash purchase price, with an additional $16
million to be borrowed to provide for the closing of underperforming or
redundant Speedy stores, capital expenditures at remaining Speedy stores and
transaction expenses.
The excess of the aggregate purchase price over the fair value of net
assets acquired is being amortized on a straight-line basis over 20 years.
In connection with the acquisition, the Company recorded a reserve for
accrued restructuring costs of approximately $7.8 million. This reserve relates
to costs associated with the closing of approximately 45 poorly performing or
duplicative Speedy stores, and includes charges for rent and real estate taxes
(net of anticipated sublease income), the write down of assets to their fair
market value, and net losses experienced by these stores through their closure
date.
Note 3 - Inventories
- --------------------
The Company's inventories consist of automotive parts and tires.
Substantially all merchandise inventories are valued under the last-in,
first-out (LIFO) method. Under the first-in, first-out (FIFO) method, these
inventories would have been $195,000 and $170,000 higher at December 31, 1999
and March 31, 1999, respectively. The FIFO value of inventory approximates the
current replacement cost.
Note 4 - Cash and Equivalents
- -----------------------------
The Company's policy is to invest cash in excess of operating
requirements in income producing investments. Cash equivalents of $5,599,000 at
March 31, 1999 include money market accounts which have maturities of three
months or less. At December 31, 1999, cash was used to repay outstanding debt.
Note 5 - Supplemental Disclosure of Cash Flow Information
- ---------------------------------------------------------
The following transactions represent noncash investing and financing
activities during the periods indicated:
-7-
<PAGE> 8
MONRO MUFFLER BRAKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED DECEMBER 31, 1999:
Capital lease obligations of $85,000 were incurred under various lease
obligations.
In connection with the termination of a capital lease, the Company
reduced debt and fixed assets by $196,000.
In connection with the sale of assets, the Company reduced fixed assets
by $863,000 and increased other current assets, other non-current assets and
accrued long-term restructuring cost by $802,000, $90,000 and $29,000,
respectively.
NINE MONTHS ENDED DECEMBER 31, 1998:
Capital lease obligations of $754,000 were incurred under various lease
obligations.
In connection with the declaration of a five percent stock dividend,
the Company increased accrued expenses, common stock and additional
paid-in capital by $1,000, $4,000, and $6,624,000, respectively, and decreased
retained earnings by $6,629,000.
In connection with the acquisition of Speedy stores (see Note 2),
liabilities were assumed as follows:
Fair value of assets acquired $36,134,000
Cash paid 21,488,000
-----------
Liabilities assumed $14,646,000
===========
CASH PAID DURING THE PERIOD:
NINE MONTHS ENDED
DECEMBER 31,
------------
1999 1998
---- ----
Interest, net $5,034,000 $3,835,000
Income taxes, net 1,495,000 3,488,000
Note 6 - Other
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Annual Report on Form
10-K (File No. 0-19357), filed by the Company with the Securities and Exchange
Commission on June 29, 1999.
-8-
<PAGE> 9
MONRO MUFFLER BRAKE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Form 10-Q which are not historical
facts, including (without limitation) statements made in the Management's
Discussion and Analysis of Financial Condition and Results of Operations, may
contain statements of future expectations and other forward-looking statements
that are subject to important factors that could cause actual results to differ
materially from those in the forward-looking statements, including (without
limitation) product demand, the effect of economic conditions, the impact of
competitive services and pricing, product development, parts supply restraints
or difficulties, industry regulation, the continued availability of capital
resources and financing and other risks set forth or incorporated elsewhere
herein and in the Company's Securities and Exchange Commission filings.
RESULTS OF OPERATIONS
The following table sets forth income statement data of Monro Muffler
Brake, Inc. ("Monro" or the "Company") expressed as a percentage of sales for
the fiscal periods indicated.
<TABLE>
<CAPTION>
Quarter Ended December 31, Nine Months Ended December 31,
-------------------------- ------------------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Sales.............................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales, including distribution
and occupancy costs............................. 61.7 63.1 59.3 58.9
----- ----- ----- -----
Gross profit....................................... 38.3 36.9 40.7 41.1
Operating, selling, general and
administrative expenses......................... 30.4 36.2 30.3 32.0
----- ----- ----- -----
Operating income................................... 7.9 .7 10.4 9.1
Interest expense - net............................. 3.2 3.0 2.9 2.5
Other expenses - net............................... 1.0 .6 .7 .5
----- ----- ----- -----
Income (loss) before provision for
income taxes.................................... 3.7 (2.9) 6.8 6.1
Provision for (recovery of) income taxes........... 1.5 (1.2) 2.7 2.4
----- ----- ----- -----
Net income (loss).................................. 2.2% (1.7)% 4.1% 3.7%
===== ===== ===== =====
</TABLE>
-9-
<PAGE> 10
THIRD QUARTER AND NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO
THIRD QUARTER AND NINE MONTHS ENDED DECEMBER 31, 1998.
Sales were $52.1 million for the quarter ended December 31, 1999
compared with $53.7 million for the quarter ended December 31, 1998. The sales
decrease of $1.6 million, or 3.0%, was primarily due to closing of some of the
acquired Speedy stores which caused a net sales decrease of $3.8 million from
the 1999 third quarter. This was partially offset by a comparable store sales
increase of .4% and an increase in sales of $2.1 million from stores opened
since the beginning of fiscal 1999, including $1.8 million from the
newly-acquired Speedy stores. Sales for the nine months ended December 31, 1999
were $173.6 million compared with $144.2 million for the same period of the
prior year. The sales increase of $29.4 million, or 20.4%, was due to an
increase in sales of approximately $37.1 million relating to stores opened since
the beginning of fiscal 1999, including $31.1 million from the newly-acquired
Speedy stores. This increase was partially offset by a decrease in comparable
store sales of 2.2%. At December 31, 1999, the Company had 512 company-operated
stores (including the stores acquired from Speedy) compared to 532 at December
31, 1998.
Gross profit for the quarter ended December 31, 1999 was $19.9 million,
or 38.3% of sales, compared with $19.8 million, or 36.9% of sales, for the
quarter ended December 31, 1998. Gross profit for the nine months ended December
31, 1999 was $70.7 million, or 40.7% of sales, compared to $59.2 million or
41.1% of sales, for the nine months ended December 31, 1998.
For the third quarter, the improvement in gross profit as a percentage
of sales was primarily due to a reduction in material costs. Historically,
Speedy's cost of goods has averaged approximately six percentage points more
than the Company's, due to more expensive parts acquisition costs. This resulted
from a higher percentage of outside purchases, and Speedy's distribution methods
(store-door from vendors vs. Monro's central distribution facility).
A year after the integration of the Speedy stores into the Company's
centralized purchasing and distribution system, the Company is realizing the
benefits of the reduced cost of materials at the Speedy stores.
Material costs also declined, when compared to the same quarter of last
year, due to the impact of price reductions negotiated with vendors, and mix
changes.
Labor costs and occupancy costs as a percentage of sales also declined
slightly with the improvement in sales and better leveraging of fixed costs.
Operating, selling, general and administrative expenses for the quarter
ended December 31, 1999 decreased by $3.6 million to $15.8 million from the
quarter ended December 31, 1998, and were 30.4% of sales compared to 36.2% in
the same quarter of the prior year. For the nine months ended December 31, 1999,
these expenses increased by $6.4 million to $52.6 million over the comparable
period of the prior year and were 30.3% of sales compared to 32.0% in the
comparable period of the prior year. The third quarter improvement is due to a
variety of factors including the elimination of inefficient or redundant
spending at the Speedy stores, improved leveraging of fixed costs with the
improvement in sales, increased vendor cooperative advertising credits, and
elimination of one-time, non-recurring costs associated with the Speedy
acquisition and integration.
Net interest expense for the quarter ended December 31, 1999, increased
by approximately $.1 million compared to the same period in the prior year, and
increased from 3.0% to 3.2% as a percentage of sales for the same periods. The
dollars expended increased due to an increase in the weighted average borrowing
rate, partially offset by a decrease in the weighted average debt outstanding.
Net interest expense for the nine months ended December 31, 1999 increased by
approximately $1.5 million compared to the comparable period in the prior year,
and rose from 2.5% to 2.9% as a percentage of sales for the same periods.
Net income for the quarter ended December 31, 1999 was approximately
$1.1 million as compared to a net loss of $.9 million reported for the quarter
ended December 31, 1998. For the nine months ended December 31, 1999, net income
of approximately $7.1 million increased 32.0%, due to the factors discussed
above.
-10-
<PAGE> 11
Interim Period Reporting
The data included in this report are unaudited and are subject to
year-end adjustments; however, in the opinion of management, all known
adjustments (which consist only of normal recurring adjustments) have been made
to present fairly the Company's operating results for the unaudited periods. The
results for interim periods are not necessarily indicative of results to be
expected for the fiscal year.
Year 2000 Computer Issue
The Company has not experienced any significant problems related to the
Year 2000-date rollover. In general, however, all problems related to the Year
2000-date rollover may not yet have become apparent. There are other critical
dates, such as leap year, that could cause similar computer problems.
While the Company believes its efforts to date have successfully
addressed the problems, there can be no assurance, until the passage of time,
that no further problems will occur, including with respect to its third party
business partners.
Costs
The Company estimates that the total costs associated with the Year
2000 effort will be approximately $600,000, the majority of which was expensed
in fiscal 1999. The Company's Year 2000 costs have been funded out of cash flows
from operating activities.
-11-
<PAGE> 12
CAPITAL RESOURCES AND LIQUIDITY
Capital Resources
In fiscal year 2000, the Company's primary capital requirements have
been the funding of its new store expansion program and the upgrading of
facilities and systems in existing stores. For the nine months ended December
31, 1999, the Company spent approximately $11.9 million for equipment and new
store construction. Funds were provided primarily by cash flow from operations.
Management believes that the Company has sufficient resources available
(including cash and equivalents, net cash flow from operations and bank
financing) to expand its business as currently planned for the next several
years.
Liquidity
Concurrent with the closing of the Speedy acquisition in September
1998, the Company obtained a new $135 million secured credit facility from a
syndication of lenders led by The Chase Manhattan Bank. Approximately $55
million was borrowed under this facility to pay the all-cash purchase price,
including transaction expenses of approximately $4 million. In addition, the
Company refinanced approximately $35 million of indebtedness through the new
credit facility, with the balance of the facility available for future working
capital needs. More specifically, the new financing structure consists of a $25
million term loan (of which approximately $22.5 million was outstanding at
December 31, 1999), a $75 million Revolving Credit facility (of which
approximately $41 million was outstanding at December 31, 1999), and synthetic
lease (off-balance sheet) financing for a significant portion of the Speedy real
estate, totaling $35 million (of which approximately $34 million was outstanding
at December 31, 1999). The loans bear interest at the prime rate or LIBOR-based
rate options tied to the Company's financial performance. The Company must also
pay a facility fee on the unused portion of the commitment.
The credit facility has a five-year term. Interest only is payable
monthly on the Revolving Credit and synthetic lease borrowings throughout the
term. In addition to monthly interest payments, the $25 million term loan
requires quarterly principal payments beginning September 30, 1999. Principal
payments totalling $2.5 million have been paid through December 31, 1999.
The term loan and Revolving Credit Facility are secured by all accounts
receivable, inventory and other personal property. The Company has also entered
into a negative pledge agreement not to encumber any real property, with certain
permissible exceptions. The synthetic lease is secured by the real property to
which it relates.
At March 31, 1999, the Company had outstanding $1.8 million in
principal amount of its 10.65% of Senior Notes due 2000 with Massachusetts
Mutual Life Insurance Company pursuant to a Senior Note Agreement. The sixth and
final annual installment of principal of $1.8 million was paid on April 1, 1999.
Certain of the Company's stores were financed by mortgages currently
bearing interest at LIBOR plus 100 basis points.
The Company has financed its office/warehouse facility via a 10 year
mortgage with a current balance of $2.3 million, amortizable over 20 years, and
an eight year term loan with a balance of $.4 million.
Certain of the Company's long-term debt agreements require, among other
things, the maintenance of specified current ratios, interest and rent coverage
ratios and amounts of tangible net worth. They also contain requirements
concerning Y2K compliance and restrictions on cash dividend payments.
The Company enters into interest rate hedge agreements which involve
the exchange of fixed and floating rate interest payments periodically over the
life of the agreement without the exchange of the underlying principal amounts.
The differential to be paid or received is accrued as interest rates change and
is recognized over the life of the agreements as an adjustment to interest
expense.
FINANCIAL ACCOUNTING STANDARDS
On June 17, 1998 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards NO. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities" effective for fiscal years
beginning after June 15, 2000. This statement standardizes the accounting for
derivatives and hedging activities and requires that all derivatives be
recognized in the statement of financial position as either assets or
liabilities at fair value. Changes in the fair value of derivatives that do not
meet the hedge accounting criteria are to be reported in earnings. Adoption of
this standard is not expected to have a material effect on the Company's
financial position, results of operations or cash flows.
-12-
<PAGE> 13
MONRO MUFFLER BRAKE, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
11 - Statement of Computation of Per Share Earnings.
b. Reports on Form 8-K.
The Company filed a report on Form 8-K on February 2, 2000, in
connection with the authorization by the Board of Directors
for the Company's repurchase of up to 300,000 shares of its
outstanding common stock.
-13-
<PAGE> 14
SIGNATURES
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.
MONRO MUFFLER BRAKE, INC.
DATE: February 14, 2000 By /s/ Robert G. Gross
-----------------------------------------------
Robert G. Gross
President and Chief Executive Officer
DATE: February 14, 2000 By /s/ Catherine D'Amico
-----------------------------------------------
Catherine D'Amico
Senior Vice President-Finance, Treasurer
and Chief Financial Officer
-14-
<PAGE> 15
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
11 Statement of Computation of Per Share Earnings.
-15-
<PAGE> 1
MONRO MUFFLER BRAKE, INC. Exhibit 11
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
Earnings per share for each period was computed by dividing net income
for such period by the weighted average number of shares of Common Stock and
common stock equivalents outstanding during such period.
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
1999 1998 1999 1998
------ ------ ------ ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
DILUTED
- -------
EARNINGS
Net Income (loss) $1,149 $ (923) $7,055 $5,346
====== ====== ====== ======
SHARES
Weighted average number of shares of common Shares 8,322 8,322 8,322 8,301
Assuming conversion of Class C Convertible Preferred Stock 636 636 636
Dilutive effect of outstanding options 15 17 65
------ ------ ------ ------
Total common and common equivalent shares 8,973 8,322 8,975 9,002
====== ====== ====== ======
DILUTED EARNINGS (LOSS) PER SHARE $ .13 $ (.11) $ .79 $ .59
====== ====== ====== ======
BASIC
- -----
EARNINGS
Net Income $1,149 $ (923) $7,055 $5,346
====== ====== ====== ======
SHARES
Weighted average number of common shares 8,322 8,322 8,322 8,301
====== ====== ====== ======
BASIC EARNINGS (LOSS) PER SHARE $ .14 $ (.11) $ .85 $ .64
====== ====== ====== ======
</TABLE>
-16-
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<S> <C>
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<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
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0
138
<COMMON> 83
<OTHER-SE> 87,578
<TOTAL-LIABILITY-AND-EQUITY> 202,507
<SALES> 173,569
<TOTAL-REVENUES> 173,569
<CGS> 102,892
<TOTAL-COSTS> 102,892
<OTHER-EXPENSES> 52,616
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<INTEREST-EXPENSE> 5,098
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<INCOME-CONTINUING> 7,055
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<NET-INCOME> 7,055
<EPS-BASIC> .85
<EPS-DILUTED> .79
</TABLE>
