-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DA7a7F7pQ60PT2mWfyqdXvOeq3/DkYaxfn1eVSeApeaSHL/544pZiCVOzHntr6CH k17dK1lGVF2cHdVWG2rXlQ== 0000950152-00-001083.txt : 20000215 0000950152-00-001083.hdr.sgml : 20000215 ACCESSION NUMBER: 0000950152-00-001083 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONRO MUFFLER BRAKE INC CENTRAL INDEX KEY: 0000876427 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTOMOTIVE REPAIR, SERVICES & PARKING [7500] IRS NUMBER: 160838627 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19357 FILM NUMBER: 541623 BUSINESS ADDRESS: STREET 1: 200 HOLLEDER PKWY CITY: ROCHESTER STATE: NY ZIP: 14615-3808 BUSINESS PHONE: 7166476400 10-Q 1 MONRO MUFFLER BRAKE, INC. QUARTERLY REPORT 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. 2 MONRO MUFFLER BRAKE, INC. INDEX -----
Part I. Financial Information Page No. -------- 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
-2- 3 MONRO MUFFLER BRAKE, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 31, MARCH 31, 1999 1999 ------------ --------- (DOLLARS IN THOUSANDS) 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 ======== ========
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. -3- 4 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, -------------- ----------------- 1999 1998 1999 1998 ------- ------- -------- -------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 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.
-4- 5 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY (UNAUDITED) (AMOUNTS IN THOUSANDS)
LESS: NOTE NET ADDITIONAL RECEIVABLE ADDITIONAL COMMON TREASURY PAID-IN FROM PAID-IN RETAINED STOCK STOCK CAPITAL SHAREHOLDER CAPITAL EARNINGS ------ -------- ---------- ----------- ---------- -------- 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.
-5- 6 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED DECEMBER 31, ------------ 1999 1998 -------- --------- (DOLLARS IN THOUSANDS) INCREASE (DECREASE) IN CASH 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 ======== =========
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- 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- 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- 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.
Quarter Ended December 31, Nine Months Ended December 31, -------------------------- ------------------------------ 1999 1998 1999 1998 ----- ----- ----- ----- 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% ===== ===== ===== =====
-9- 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- 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- 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- 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- 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- 15 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 11 Statement of Computation of Per Share Earnings. -15- EX-11 2 EXHIBIT 11 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.
QUARTER ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------ ------------ 1999 1998 1999 1998 ------ ------ ------ ------ (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 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 ====== ====== ====== ======
-16- EX-27 3 EXHIBIT 27
5 1,000 9-MOS MAR-31-2000 APR-01-1999 DEC-31-1999 0 0 1,233 0 45,533 53,863 202,260 66,445 202,507 37,521 0 0 138 83 87,578 202,507 173,569 173,569 102,892 102,892 52,616 0 5,098 11,724 4,669 7,055 0 0 0 7,055 .85 .79
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