-----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, NUkvGvrcEOdUWOTezzrMi3DLUcOAEjBhBAplohgqaLelULarRZaf2azL6iVFoEWu xp6k1gezIilfQh9T0BUc7g== 0000950152-04-000838.txt : 20040209 0000950152-04-000838.hdr.sgml : 20040209 20040209170739 ACCESSION NUMBER: 0000950152-04-000838 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031227 FILED AS OF DATE: 20040209 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: 1934 Act SEC FILE NUMBER: 000-19357 FILM NUMBER: 04578664 BUSINESS ADDRESS: STREET 1: 200 HOLLEDER PKWY CITY: ROCHESTER STATE: NY ZIP: 14615-3808 BUSINESS PHONE: 7166476400 10-Q 1 l05527ae10vq.txt MONRO MUFFLER 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 27, 2003. 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 585-647-6400 - -------------------------------------------------------------------------------- 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 ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ----- As of January 24, 2004, 13,309,292 shares of the Registrant's Common Stock, par value $ .01 per share, were outstanding. MONRO MUFFLER BRAKE, INC. INDEX
Part I. Financial Information Page No. -------- Item 1. Financial Statements Consolidated Balance Sheet at December 27, 2003 and March 29, 2003 3 Consolidated Statement of Income for the quarter and nine months ended December 27, 2003 and December 28, 2002 4 Consolidated Statement of Changes in Shareholders' Equity for the nine months ended December 27, 2003 5 Consolidated Statement of Cash Flows for the nine months ended December 27, 2003 and December 28, 2002 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 4. Controls and Procedures 16 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 17 Item 6. Exhibits and Reports on Form 8-K 18 Signatures 19 Exhibit Index 20
2 MONRO MUFFLER BRAKE, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
DECEMBER 27, MARCH 29, 2003 2003 ---- ---- (DOLLARS IN THOUSANDS) ASSETS Current assets: Cash and equivalents $ 73 $ 69 Trade receivables 2,165 1,902 Inventories 52,247 51,256 Deferred income tax asset 1,727 1,661 Other current assets 9,451 8,989 ----------------- -------------- Total current assets 65,663 63,877 ----------------- -------------- Property, plant and equipment 258,103 222,278 Less - Accumulated depreciation and amortization (97,515) (90,130) ----------------- ---------------- Net property, plant and equipment 160,588 132,148 Intangible assets and other non-current assets 10,864 11,175 ----------------- -------------- Total assets $ 237,115 $ 207,200 ================= ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 621 $ 625 Trade payables 21,351 16,955 Federal and state income taxes payable 2,261 1,593 Accrued payroll, payroll taxes and other payroll benefits 6,928 7,968 Accrued insurance 2,289 1,857 Other current liabilities 10,361 12,999 ----------------- -------------- Total current liabilities 43,811 41,997 Long-term debt 45,135 36,183 Other long-term liabilities 3,977 3,500 Deferred income tax liability 3,090 1,128 ----------------- -------------- Total liabilities 96,013 82,808 ----------------- -------------- Commitments Shareholders' equity: Class C Convertible Preferred Stock, $1.50 par value, $.144 and $.216 conversion value at December 27, 2003 and March 29, 2003, respectively; 150,000 shares authorized; 65,000 shares issued and outstanding 97 97 Common Stock, $.01 par value, 20,000,000 shares authorized; 13,304,173 shares issued at December 27, 2003; 8,785,860 shares issued at March 29, 2003 133 88 Treasury Stock, 325,200 shares at December 27, 2003 and 216,800 shares at March 29, 2003, at cost (1,831) (1,831) Additional paid-in capital 43,574 42,178 Note receivable from shareholder (78) Accumulated other comprehensive income (468) (859) Retained earnings 99,597 84,797 ----------------- -------------- Total shareholders' equity 141,102 124,392 ----------------- -------------- Total liabilities and shareholders' equity $ 237,115 $ 207,200 ================= ==============
The accompanying notes are an integral part of these financial statements. 3 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED FISCAL DECEMBER FISCAL DECEMBER 2003 2002 2003 2002 ---- ---- ---- ---- RESTATED (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Sales $64,549 $60,716 $212,298 $196,628 Cost of sales, including distribution and occupancy costs 39,291 37,787 123,351 115,192 ------------- ------------- ------------- ------------- Gross profit 25,258 22,929 88,947 81,436 Operating, selling, general and administrative expenses 19,981 18,418 63,127 61,345 ------------- ------------- ------------- ------------- Operating income 5,277 4,511 25,820 20,091 Interest expense, net of interest income for the quarter of $14 in 2003 and 2002, and year-to-date of $44 in 2003 and $37 in 2002 515 623 1,997 2,032 Other income, net (123) (2) (123) (122) ------------- ------------- ------------- ------------- Income before provision for income taxes 4,885 3,890 23,946 18,181 Provision for income taxes 1,854 1,477 9,099 6,907 ------------- ------------- ------------- ------------- Net income $ 3,031 $ 2,413 $ 14,847 $ 11,274 ============= ============= ============= ============= Earnings per share: Basic $ 0.23 $ 0.19 $ 1.15 $ 0.89 ============= ============= ============= ============= Diluted $ 0.21 $ 0.17 $ 1.02 $ 0.80 ============= ============= ============= ============= Weighted average number of common shares outstanding used in computing earnings per share Basic 12,976 12,764 12,944 12,656 ============= ============= ============= ============= Diluted 14,612 14,037 14,537 14,081 ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 4 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (DOLLARS IN THOUSANDS)
NOTE ACCUMULATED ADDITIONAL RECEIVABLE OTHER PREFERRED COMMON TREASURY PAID-IN FROM COMPREHENSIVE RETAINED STOCK STOCK STOCK CAPITAL SHAREHOLDER INCOME EARNINGS TOTAL ---------- ------- -------- ---------- ----------- ---------- --------- ------ Balance at March 29, 2003 $97 $ 88 $(1,831) $42,178 $(78) $(859) $84,797 $124,392 Net income 14,847 14,847 Other comprehensive income: SFAS No. 133 adjustment for the nine months ended December 27, 2003 391 391 ---------- Total comprehensive income 15,238 Tax benefit from exercise of stock 269 269 options Shares issued in connection with three-for-two stock split (see 44 (47) (3) Note 10) Exercise of stock options 1 1,127 1,128 Note receivable from shareholder 78 78 ---------- --------- -------- ---------- ---------- --------- --------- ---------- Balance at December 27, 2003 $97 $133 $(1,831) $43,574 $ 0 $(468) $99,597 $141,102 ========== ========= ======== ========== ========== ========= ========= ==========
The accompanying notes are an integral part of these financial statements. 5 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED FISCAL DECEMBER 2003 2002 ---- ---- RESTATED (DOLLARS IN THOUSANDS) INCREASE (DECREASE) IN CASH Cash flows from operating activities: Net income $ 14,847 $ 11,274 --------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 9,787 9,303 Non-qualified stock option expense 1,603 Net change in deferred income taxes 1,842 (554) Loss (gain) on disposal of property, plant and equipment 326 (253) Change in assets and liabilities, net of effects from acquisitions: Increase in trade receivables (263) (135) Increase in inventories (991) (2,900) (Increase) decrease in other current assets (448) 225 Decrease in intangible assets and other noncurrent assets 240 188 Increase (decrease) in trade payables 4,396 (694) (Decrease) increase in accrued expenses (2,701) 2,156 Increase in federal and state income taxes payable 748 1,704 Increase (decrease) in other long-term liabilities 657 (1,227) --------------- -------------- Total adjustments 13,593 9,416 --------------- -------------- Net cash provided by operating activities 28,440 20,690 --------------- -------------- Cash flows from investing activities: Payment for purchase of Kimmel Automotive, Inc., net of cash acquired (5,460) Payment for purchase of Brazos Automotive Properties, L.P. (935) Capital expenditures (11,467) (7,457) Proceeds from the disposal of property, plant and equipment 452 250 --------------- -------------- Net cash used for investing activities (11,950) (12,667) --------------- -------------- Cash flows from financing activities: Proceeds from borrowings 108,596 76,300 Principal payments on long-term debt and capital lease obligations (126,207) (86,205) Exercise of stock options 1,128 1,440 Payment of fractional shares related to stock split (see Note 10) (3) --------------- -------------- Net cash used for financing activities (16,486) (8,465) --------------- -------------- Increase (decrease) in cash 4 (442) Cash and equivalents at beginning of period 69 442 --------------- -------------- Cash and equivalents at end of period $ 73 $ 0 =============== ==============
The accompanying notes are an integral part of these financial statements. 6 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Condensed Consolidated Financial Statements The consolidated balance sheet as of December 27, 2003, the consolidated statements of income for the three and nine month periods ended December 27, 2003 and December 28, 2002, the consolidated statements of cash flows for the nine month periods ended December 27, 2003 and December 28, 2002 and the consolidated statement of changes in shareholders' equity for the nine months ended December 27, 2003, include Monro Muffler Brake, Inc. and its wholly owned subsidiaries (the "Company"). These unaudited condensed consolidated financial statements have been prepared by the Company and are subject to year-end adjustments. In the opinion of management, all known adjustments have been made to present fairly the financial position, results of operations and cash flows for the unaudited periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 2003. The results of operations for the three and nine month periods ended December 27, 2003 are not necessarily indicative of the operating results for the full year. The Company reports its results on a 52/53 week fiscal year with the fiscal year ending on the last Saturday in March of each year. The following are the dates represented by each fiscal period reported in these condensed financial statements:
"Quarter Ended Fiscal December 2003": September 28, 2003 - December 27, 2003 (13 weeks) "Quarter Ended Fiscal December 2002": September 29, 2002 - December 28, 2002 (13 weeks) "Nine Months Ended Fiscal December 2003": March 30, 2003 - December 27, 2003 (39 weeks) "Nine Months Ended Fiscal December 2002": March 31, 2002 - December 28, 2002 (39 weeks)
Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year's presentation. RESTATEMENT During fiscal years 1999 to 2001, the Company sublet or sold a total of 14 closed store properties to Icon International, a barter company. In connection with the preparation of the Company's consolidated financial statements for fiscal 2003, the Company revised the original accounting for these barter transactions and the resulting barter credits. Accordingly, the Company's consolidated financial statements as of December 2002 reflect a cumulative $2.4 million reduction to retained earnings, after related income taxes of $1.6 million, to record the impairment charge related to the store closures in fiscal 1998 through 2000. Further, operating, selling, general and administrative expenses for the nine months ended December 2002 were reduced by $135,000, resulting in an increase in net income of $85,000 from that previously reported to $11,274,000 or $.80 per diluted share, related to the recognition of barter credits utilized by the Company during that period. There was no impact on the Company's reported net income for the quarter ended December 2002 from this revision. In addition, in the fourth quarter of fiscal 2003, the Company revised its original accounting for the restructuring reserve that was established in connection with its acquisition of 189 company-operated and 14 franchised Speedy stores in fiscal 1999. The revision recorded the operating results of 41 stores it closed in fiscal 1999 and 2000 in connection with that acquisition, and certain other costs, in its fiscal 1999 and 2000 consolidated income statements instead of providing for these costs in the restructuring reserve as originally recorded. Accordingly, the Company's consolidated financial statements reflect a cumulative $.8 million reduction of retained earnings at December 2002, after related income taxes of $.5 million. There was no impact on the Company's reported net income for the quarter and nine month periods ended December 2002 from this revision. 7 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company's consolidated financial statements as of and for the nine months ended December 2002 reflect adjustments to the following items in connection with the accounting revisions discussed above.
NINE MONTHS ENDED FISCAL DECEMBER --------------------------- 2002 2002 AS PREVIOUSLY AS Financial statement caption REPORTED RESTATED -------- -------- (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA) CONSOLIDATED STATEMENT OF INCOME Operating, selling, general and administrative expenses $ 61,480 $ 61,345 Operating income 19,956 20,091 Income before provision for income taxes 18,046 18,181 Provision for income taxes 6,857 6,907 Net income 11,189 11,274 Earnings per share - basic $ 0.88 $ 0.89 Earnings per share - diluted $ 0.79 $ 0.80 CONSOLIDATED BALANCE SHEET Other current assets $ 7,450 $ 6,921 Total current assets 59,505 58,977 Property, plant and equipment 216,216 215,279 Accumulated depreciation and amortization (89,300) (88,792) Net property, plant and equipment 126,916 126,487 Intangible assets and other non-current assets 13,176 10,198 Total assets 199,597 195,662 Other current liabilities 10,802 11,972 Total current liabilities 39,781 40,951 Other long-term liabilities 2,834 3,000 Deferred income tax liability 2,197 81 Total liabilities 75,375 74,595 Retained earnings 85,498 82,343 Total shareholders' equity 124,222 121,067 Total liabilities and shareholders' equity 199,597 195,662 CONSOLIDATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH Net change in deferred income taxes $ (606) $ (554) Decrease in other current assets 239 225 (Increase) decrease in other noncurrent assets (257) 188 Decrease in other long-term liabilities (659) (1,227) Total adjustments 9,501 9,416
Note 2 - Buyout of Synthetic Lease Properties On June 27, 2003, the Company purchased the land and buildings under its existing synthetic lease facility through the acquistion of the general and limited partnership interests in Brazos Automotive Properties, L.P. ("BAP"), for approximately $935,000 in cash (the "Lease Buyout"). The Lease Buyout was financed through the Company's existing credit facility. BAP holds the title 8 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS related to 86 properties leased, under an operating lease, to a subsidiary of the Company and used in the conduct of the Company's auto service business. BAP is also the debtor on a $26.6 million loan related to these properties. BAP, which became a wholly owned subsidiary of the Company as a result of the Lease Buyout, was established in 1998 for the purpose of acquiring certain properties and leasing them to the Company. As a wholly owned subsidiary of the Company, BAP has been consolidated into the Company's balance sheet since the date of its acquisition. Accordingly, land and buildings at fair value of approximately $27.5 million have been reflected on the Company's balance sheet. Additionally, long-term debt of $26.6 million has also been reflected. The debt is non-amortizing and is due in September 2006. As a result of this transaction, payments on the lease, which were reported as rent prior to the buyout, are now reported as interest expense. Rent expense related to the synthetic lease recorded in the quarter ended December 2002 was $0.5 million. Interest expense related to the synthetic lease properties for the quarter ended December 2003 was $0.2 million. The reduced expense resulted primarily from the expiration in August 2003 of an interest rate swap arrangement that fixed the interest rate on the debt related to these properties, as well as a reduction of $5.0 million in the principal amount financed under the synthetic lease. Also, the Company estimates that annual depreciation expense related to the assets acquired in the Lease Buyout will be approximately $0.5 million. These depreciation charges commenced in the Company's second quarter of its fiscal year 2004. The purchase of the general partnership interest was completed through the purchase of 100% of the outstanding common stock of Brazos Automotive Properties Management, Inc., the general partner of BAP, from Brazos River Leasing, L. P. The limited partnership interest was acquired from Heller Financial, Inc., a subsidiary of G.E. Capital, the holder of that interest. Note 3 - Derivative Financial Instruments Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities", as amended by Statement of Financial Accounting Standards No. 138 ("SFAS 138"),"Accounting for Certain Derivative Instruments and Certain Hedging Activities" requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if it is, depending on the type of hedge transaction. The notional amount of derivative financial instruments, which consisted solely of an interest rate swap used to minimize the risk and/or costs associated with changes in interest rates, was approximately $1.7 million at December 27, 2003. This swap matures in October 2005. This swap contract requires the Company to pay a fixed-rate of interest of 7.15% plus a spread of 80 basis points, and receive variable rates of interest based on the 30-day LIBOR rate. At December 27, 2003, the fair value of this contract, net of tax, is recorded as a component of accumulated other comprehensive income in the consolidated Statement of Changes in Shareholders' Equity. Note 4 - Vendor Rebates and Cooperative Advertising Credits In accordance with EITF 02-16, for vendor agreements entered into or modified after December 31, 2002, the Company accounts for vendor rebates and cooperative advertising credits as a reduction of the cost of products purchased, except where the rebate or credit is a reimbursement of costs incurred to sell the vendor's product, in which case it is offset against the costs incurred. Vendor rebates and credits associated with vendor agreements entered into prior to December 31, 2002 are recognized as cooperative advertising income as earned and are classified as a reduction of selling, general and administrative expenses. 9 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5 - Earnings Per Share The computation of diluted earnings per share for the nine months ended fiscal December 2003 excludes the effect of assumed exercise of 41,000 outstanding stock options as the exercise prices of these options exceeded the average market price of the Company's common stock for that period. The stock options outstanding excluded from the computation of diluted earnings per share for the quarter and nine months ended fiscal December 2002 amounted to 311,000 and 154,000, respectively. Note 6 - Stock-based Compensation As permitted under Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation", the Company measures stock-based compensation cost for stock options as the excess of the quoted market price of the Company's common stock at the grant date over the amount the employee must pay for the stock. The Company's policy generally is to grant stock options at fair market value at the date of grant. SFAS 123, as amended by Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123", requires disclosure of pro forma net income and pro forma net income per share as if the fair value-based method had been applied in measuring compensation cost for the stock-based awards granted subsequent to fiscal year 1995. Reported and pro forma net income and earnings per share amounts are set forth below:
QUARTER ENDED NINE MONTHS ENDED FISCAL DECEMBER FISCAL DECEMBER --------------- --------------- 2003 2002 2003 2002 ---- ---- ---- ---- RESTATED (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net income, as reported $3,031 $2,413 $14,847 $11,274 Add: Total stock-based employee compensation expense recorded in accordance with APB 25, net of tax effect 994 Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of tax effect (110) (148) (312) (1,280) ------------- ------------ ---------- ----------- Pro forma net income $2,921 $2,265 $14,535 $10,988 ============= ============ ========== =========== Earnings per share: Basic-as reported $ 0.23 $ 0.19 $ 1.15 $ 0.89 ============= ============ ========== =========== Basic-pro forma $ 0.23 $ 0.18 $ 1.12 $ 0.87 ============= ============ ========== =========== Diluted-as reported $ 0.21 $ 0.17 $ 1.02 $ 0.80 ============= ============ ========== =========== Diluted-pro forma $ 0.20 $ 0.16 $ 1.01 $ 0.78 ============= ============ ========== ===========
The fair values of the options granted were estimated on the date of their grant using the Black-Scholes option-pricing model. Stock options which vested in the first nine months of fiscal 2003 include 100,000 performance-based options, earned by the Company's CEO, in accordance with the terms of his employment contract. The Company recorded compensation expense of $1.6 million in its first quarter of fiscal 2003 related to the vesting of these stock options. Note 7 - Guarantees In November 2002, the Financial Accounting Standards Board ("FASB") published Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". The Interpretation elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. 10 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In that regard, the Company provides an accrual for estimated future warranty costs based upon the historical relationship of warranty costs to sales. Warranty expense for the quarter and nine months ended December 27, 2003 and for the prior year comparable periods was not material. Also, warranty reserves are not material to the Company's financial position. Note 8 - Acquisition of Kimmel Automotive, Inc. Effective April 1, 2002, the Company purchased all of the outstanding common stock, as well as a portion of the preferred stock, of Kimmel Automotive, Inc. ("Kimmel"), based in Baltimore, Maryland. Kimmel Automotive operated 34 tire and automotive repair stores in Maryland and Virginia, as well as Wholesale and Truck Tire Divisions (including two commercial stores). The purchase price for Kimmel was approximately $6 million in cash, plus the assumption of approximately $4 million of liabilities. The acquisition was financed through the Company's existing bank credit facility. In June 2002, the Company purchased the remaining preferred stock of Kimmel, with a face value of $1.6 million, for approximately $.7 million. The $.7 million is included in the liabilities assumed in the purchase of Kimmel. Additionally, effective June 29, 2002, the Company sold Kimmel's Truck Tire division, including its retread plant and two commercial stores, for approximately $.4 million in cash and $.5 million in notes receivable. The sale of these assets effectively reduced the net purchase price of the retail store operations. Note 9 - Supplemental Disclosure of Cash Flow Information The following transactions represent noncash investing and financing activities during the periods indicated: NINE MONTHS ENDED DECEMBER 27, 2003: In connection with the sale or disposal of assets, the Company reduced fixed assets by $426,000 and decreased other current liabilities by $426,000. In connection with recording the value of the Company's swap contracts, other comprehensive income increased by $391,000, other current liabilities decreased by $575,000, other long-term liabilities decreased by $54,000 and the deferred income tax liability was increased by $238,000. In connection with the sale of fixed assets, the Company received a note which increased other current assets by $14,000 and other long-term assets by $99,000. In connection with the exercise of stock options, the Company decreased deferred tax assets by $80,000, decreased current liabilities by $349,000 and increased paid-in-capital by $269,000. In connection with the three-for-two stock split that was effective on October 31, 2003, the Company increased Common Stock by $44,000 to reflect the par value of the additional shares issued, and reduced Retained Earnings by the same amount. In connection with the acquisition of Brazos Automotive Properties, L.P., the Company paid $935,000 (Note 2), as follows: Fair value of assets acquired $27,494,000 Cash paid, net of cash acquired 935,000 ----------- Liabilities assumed $26,559,000 =========== NINE MONTHS ENDED DECEMBER 28, 2002: In connection with performance-based executive compensation, the Company recognized compensation expense of $1,603,000, decreased other long-term liabilities by $208,000 and increased additional paid-in-capital by $1,811,000. In connection with recording the value of the Company's swap contracts, other comprehensive income decreased by $1,000, other current liabilities increased by $730,000, other long-term liabilities decreased by $759,000 and deferred income tax liabilities increased by $30,000. 11 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In connection with the acquisition of Kimmel Automotive, Inc. (Note 8), liabilities were assumed as follows: Fair value of assets acquired $10,000,000 Cash paid, net of cash acquired 5,500,000 ------------ Liabilities assumed $ 4,500,000 ============ The fair value of assets acquired and cash paid has been reduced by the Kimmel Truck Tire sale proceeds of $400,000 that were received in the second quarter of fiscal 2003. CASH PAID DURING THE PERIOD: 2003 2002 ---- ---- Interest, net $1,537,000 $1,857,000 Income taxes 6,512,000 5,757,000 Note 10 - Stock Split On September 16, 2003, the Company's Board of Directors declared a three-for-two stock split to be effected in the form of a 50% stock dividend. The stock split was distributed on October 31, 2003 to shareholders of record as of October 21, 2003. All basic and diluted earnings per share, average shares outstanding information and all applicable footnotes have been adjusted to reflect the aforementioned stock split. 12 MONRO MUFFLER BRAKE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The statements contained in this Form 10-Q that 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 made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed. These factors include, but are not necessarily limited to, product demand, dependence on and competition within the primary markets in which the Company's stores are located, the need for and costs associated with store renovations and other capital expenditures, the effect of economic conditions, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, industry regulation, risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates), continued availability of capital resources and financing, risks relating to integration of acquired businesses and other factors set forth or incorporated elsewhere herein and in the Company's other Securities and Exchange Commission filings. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. See Note 1 to the condensed consolidated financial statements in Item 1 of this filing for a description of accounting revisions and the related financial statement lines that were restated for the nine months ended fiscal December 2002. The effect of the revisions of the accounting for barter credits and restructuring reserve on operating results for the nine months ended December 2002 was to decrease operating, selling, general and administrative expenses by $135,000 and increase the previously reported net income by $85,000 and to increase diluted earnings per share to $0.80 per share. There was no impact on net income for the quarter ended December 2002 from these accounting revisions. 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 NINE MONTHS ENDED FISCAL DECEMBER FISCAL DECEMBER 2003 2002 2003 2002 ---- ---- ---- ---- RESTATED Sales.......................................... 100.0% 100.0% 100.0% 100.0% Cost of sales, including distribution and occupancy costs........................... 60.9 62.2 58.1 58.6 ----- ----- ----- ----- Gross profit................................... 39.1 37.8 41.9 41.4 Operating, selling, general and administrative expenses....................... 30.9 30.4 29.7 31.2 ----- ----- ----- ----- Operating income............................... 8.2 7.4 12.2 10.2 Interest expense - net......................... .8 1.0 .9 1.0 Other income - net............................. ( .2) - - - ----- ----- ----- ----- Income before provision for income taxes 7.6 6.4 11.3 9.2 Provision for income taxes..................... 2.9 2.4 4.3 3.5 ----- ----- ----- ----- Net income..................................... 4.7% 4.0% 7.0% 5.7% ===== ===== ===== =====
13 THIRD QUARTER ENDED DECEMBER 27, 2003 COMPARED TO THIRD QUARTER ENDED DECEMBER 28, 2002 Sales were $64.5 million for the quarter ended December 27, 2003 as compared with $60.7 million in the quarter ended December 28, 2002. The sales increase of $3.8 million, or 6.3%, was due to an increase of $1.5 million related to new stores and a comparable store sales increase of 4.0%. Kimmel stores are included in the comparable store sales numbers because they have been open one full fiscal year. Sales for the nine months ended December 27, 2003 were $212.3 million as compared to $196.6 million for the comparable period in the prior year. The sales increase of $15.7 million is due to a comparable store sales increase of 5.6%, as well as an increase of $4.8 million from new stores. At December 27, 2003 the Company had 565 company-operated stores compared with 550 stores at December 28, 2002. During the quarter ended December 27, 2003, the Company opened five stores and closed two. Gross profit for the quarter ended December 27, 2003 was $25.3 million or 39.1% of sales as compared with $22.9 million or 37.8% of sales for the quarter ended December 28, 2002. The increase in gross profit for the quarter ended December 27, 2003, as a percentage of sales, is due primarily to the buyout of the synthetic lease properties which occurred on June 27, 2003 (See Note 2). As a result of this transaction, approximately $.5 million of expense, which formerly was recorded as rent expense and included in cost of sales, was recorded as interest expense in the quarter ended December 27, 2003. This reduction was partially offset by approximately $.1 million of additional depreciation recognized in the quarter ended December 2003, now that the related properties are recorded on the Company's balance sheet. Additionally, with strong comparable store sales, the Company was able to obtain some leverage in occupancy costs which are largely fixed expenses. Gross profit also increased due to a reduction in material costs related primarily to the recognition of barter income in the third quarter of fiscal 2004, as well as vendor rebates in accordance with EITF 02-16. In the prior year, these rebates were recorded as cooperative advertising income in selling and administrative costs. Technician labor, as a percent of sales, was relatively consistent between the two quarters. However, productivity, as measured by sales per man-hour, improved 5.2% over the same quarter of last year. Since the Company formally began tracking this statistic over the last seven years, productivity has increased every year, and since the third quarter of fiscal 1998, is up 30.6%. Gross profit for the nine months ended December 27, 2003 was $88.9 million, or 41.9% of sales, as compared to $81.4 million or 41.4% of sales. Operating, selling, general and administrative ("SG&A") expenses for the quarter ended December 27, 2003 increased by $1.6 million to $20.0 million from the quarter ended December 28, 2002, and were 30.9% of sales as compared to 30.4% in the prior year quarter. The increase in SG&A expense as a percentage of sales is due primarily to a reduction in cooperative advertising credits recorded in the quarter ended December 2003, in part due to timing as well as the Company's implimentation of EITF 02-16. This pronouncement requires the Company to record cooperative advertising credits and other vendor rebates primarily in accordance with inventory turns. For the nine months ended December 27, 2003, these expenses increased by $1.8 million to $63.1 million from the comparable period of the prior year, and were 29.7% of sales as compared to 31.2%. Year-to-date, SG&A expenses declined as a percentage of sales primarily due to decreased store advertising and decreased field support expense, partially offset by decreased cooperative advertising income. Additionally, in fiscal 2003, the Company recorded a $1.6 million charge to recognize the vesting of the Chief Executive Officer's performance-based stock options. This charge did not recur in fiscal 2004. Operating income for the quarter ended December 27, 2003 of approximately $5.3 million increased 17.0% as compared to operating income for the quarter ended December 28, 2002, and increased as a percentage of sales from 7.4% to 8.2% for the same periods. Net interest expense for the quarter ended December 27, 2003 decreased by approximately $.1 million as compared to the same period in the prior year, and decreased from 1.0% to .8% as a percentage of sales for the same periods. Net interest expense for the nine months ended December 27, 2003 was flat with the prior year at $2.0 million and decreased from the prior year as a percentage of sales by .1%. The weighted average debt outstanding for the quarter ended December 27, 2003 increased by approximately $14.0 million due to the buyout of the synthetic lease, partially offset by a reduction in revolver debt (See Note 2). Additionally, there was a decrease in the weighted average interest rate for the current year quarter of approximately 300 basis points as compared to the prior year. 14 Due to its performance for the 12 months ended June 2003, the Company qualified for a 25 basis point reduction in its interest rate spread over LIBOR which should remain in effect for the remainder of fiscal 2004. This equates to an annualized interest rate savings of approximately $100,000. The effective tax rate for the quarters ended December 27, 2003 and December 28, 2002 was 38% of pre-tax income. Net income for the quarter ended December 27, 2003 of $3.0 million increased 25.6% from net income for the quarter ended December 28, 2002. Earnings per share on a diluted basis for the quarter ended December 27, 2003 increased 23.5%. For the nine months ended December 27, 2003, net income of $14.8 million increased 31.7% as compared to the prior year period and diluted earnings per share increased 27.5%. CAPITAL RESOURCES AND LIQUIDITY Capital Resources The Company's primary capital requirements in fiscal 2004 are the upgrading of facilities and systems in existing stores and the funding of its store expansion program, including potential acquistions of existing store chains. For the nine months ended December 27, 2003, the Company spent $11.5 million principally for equipment, as well as $.9 million for the acquisition of Brazos Automotive Properties, L.P. (See Note 2). 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 In March 2003, the Company renewed its credit facility agreement. The amended financing arrangement consists of an $83.5 million Revolving Credit facility (of which approximately $19.5 million was outstanding at December 27, 2003), and a non-amortizing credit loan (formerly synthetic lease financing) totaling $26.5 million (all of which was outstanding at December 27, 2003). The loans bear interest at the prime rate or other LIBOR-based rate options tied to the Company's financial performance. Interest only is payable monthly on the Revolving Credit facility and credit loan throughout the term. The Company must also pay a facility fee on the unused portion of the commitment. The Revolving Credit portion of the facility has a three-year term expiring in September 2006. On June 27, 2003, the Company purchased the entity holding title to the properties and debt under the synthetic lease and, accordingly, consolidated both the assets and debt related to such lease on its balance sheet at December 27, 2003. In accordance with the Company's credit facility agreement, the synthetic lease was converted to a three-year, non-amortizing revolving credit loan, also expiring in September 2006. The credit loan bears interest at the same rate as the Company's Revolving Credit facility. The credit facility is secured by most of the Company's assets, with certain permissible exceptions. The Company has financed its office/warehouse facility via a 10 year mortgage with a current balance of $1.8 million, amortizable over 20 years, and maturing in fiscal 2006, as well as a mortgage note payable of $.7 million due in a balloon payment in 2015. In addition, the Company has financed certain store properties and equipment with capital leases, which amount to $3.2 million and are due in installments through 2018. Certain of the Company's long-term debt agreements require, among other things, the maintenance of specified interest and rent coverage ratios and amounts of tangible net worth. They also contain restrictions on cash dividend payments. At December 27, 2003, the Company is in compliance with the applicable debt covenants. 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 In December 2003, the FASB issued Statement of Financial Accounting Standards No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other Postretirement Benefits--an amendment of FASB Statements No. 87, 88, and 106 (Issued December 2003)". This Statement revises employers' disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by FASB SFAS 87, "Employers' Accounting for Pensions", SFAS 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits", and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions". This Statement retains the disclosure 15 requirements contained in FASB Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132"), which it replaces. It requires additional disclosures to those in the original SFAS 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The disclosure requirements in this statement are effective for interim periods starting after December 15, 2003. The Company will implement these changes in its Form 10-K for fiscal 2004. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51", which requires all variable interest entities to be consolidated by the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the variable interest entity. In addition, the Interpretation expands disclosure requirements for both variable interest entities that are consolidated as well as variable interest entities from which the entity is the holder of a significant amount of the beneficial interests, but not the majority. The disclosure requirements of this Interpretation were effective for all financial statements issued after January 31, 2003. The consolidation requirements of this Interpretation are effective for the first reporting period ending after December 15, 2003. At this time, the Company does not believe the Interpretation will have any significant impact on the Company's future reported results of operations and financial position apart from that described in Note 2 regarding the Company's buyout of the properties under its synthetic lease arrangement. Item 4. Controls and Procedures Disclosure controls and procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In conjunction with the close of each fiscal quarter, the Company conducts an update and a review and evaluation of the effectiveness of the Company's disclosure controls and procedures. It is the conclusion of the Company's Chief Executive Officer and Chief Financial Officer, based upon an evaluation completed as of the end of the most recent fiscal quarter reported on herein, that the Company's disclosure controls and procedures are sufficiently effective to ensure that any material information relating to the Company is recorded, processed, summarized and reported to its principal officers to allow timely decisions regarding required disclosures. Changes in internal controls There were no significant changes in the Company's internal accounting processes and control procedures or other factors subsequent to the date of the evaluation referred to above that could significantly affect the Company's disclosure controls. 16 MONRO MUFFLER BRAKE, INC. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders A Special Meeting of Shareholders of the Company (the "Special Meeting") was held on December 2, 2003. At the Special Meeting, the Company's common shareholders approved the following: (I) a proposal to amend the Company's Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock from 15,000,000 to 20,000,000 (8,445,757 shares in favor, 221,480 shares against, 2,000 shares abstaining and zero broker non-votes). As required under the Company's Certificate of Incorporation, the approval of this proposal was confirmed by the holders of all 65,000 outstanding shares of the Company's Class C Convertible Preferred Stock, par value $1.50 per share, by written consent dated as of December 2, 2003. 17 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. 31.1 - Certification of Robert G. Gross pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. 31.2 - Certification of Catherine D'Amico pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. 32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. b. Reports on Form 8-K Form 8-K dated October 16, 2003 to furnish the Company's press release announcing its unaudited operating results for the quarter ended September 27, 2003. An exhibit containing the Company's press release was attached. 18 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 9, 2004 By /s/ Robert G. Gross ---------------------------------- Robert G. Gross President and Chief Executive Officer DATE: February 9, 2004 By /s/ Catherine D'Amico ---------------------------------- Catherine D'Amico Executive Vice President-Finance, Treasurer and Chief Financial Officer 19 EXHIBIT INDEX Exhibit No. Description Page No. - ----------- ----------- -------- 11 Statement of computation of per share earnings 21 31.1 Certification of Robert G. Gross pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 22 31.2 Certification of Catherine D'Amico pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 23 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 24 20 EX-11 3 l05527aexv11.txt STATEMENT OF COMPUTATION 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 appropriate weighted average number of common shares outstanding during such period.
QUARTER ENDED NINE MONTHS ENDED FISCAL DECEMBER FISCAL DECEMBER --------------- --------------- 2003 2002 2003 2002 ---- ---- ---- ---- RESTATED (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) DILUTED EARNINGS Net Income $ 3,031 $ 2,413 $ 14,847 $ 11,274 =========== =========== ============ ============ SHARES Weighted average number of common shares 13,301 13,089 13,269 12,981 Treasury Stock (325) (325) (325) (325) Assuming conversion of Class C Convertible Preferred Stock 675 675 675 752 Dilutive effect of outstanding options 961 598 918 673 ----------- ----------- ------------ ------------ Weighted average number of common shares 14,612 14,037 14,537 14,081 =========== =========== ============ ============ DILUTED EARNINGS PER SHARE $ .21 $ .17 $ 1.02 $ .80 =========== =========== ============ ============ BASIC EARNINGS Net Income $ 3,031 $ 2,413 $ 14,847 $ 11,274 =========== =========== ============ ============ SHARES Weighted average number of common shares (net of treasury stock) 12,976 12,764 12,944 12,656 =========== =========== ============ ============ BASIC EARNINGS PER SHARE $ .23 $ .19 $ 1.15 $ .89 =========== =========== ============ ============
21 EX-31.1 4 l05527aexv31w1.txt CERTIFICATIONS OF CEO Exhibit 31.1 CERTIFICATIONS I, Robert G. Gross, President and Chief Executive Officer, certify that: 1. I have reviewed this Form 10-Q of Monro Muffler Brake, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: February 9, 2004 /s/ Robert G. Gross --------------------------------------- Robert G. Gross President and Chief Executive Officer 22 EX-31.2 5 l05527aexv31w2.txt CERTIFICATIONS OF CFO Exhibit 31.2 CERTIFICATIONS I, Catherine D'Amico, Executive Vice President - Finance and Chief Financial Officer, certify that: 1. I have reviewed this Form 10-Q of Monro Muffler Brake, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: February 9, 2004 /s/ Catherine D'Amico --------------------------------------- Catherine D'Amico Executive Vice President - Finance and Chief Financial Officer 23 EX-32.1 6 l05527aexv32w1.txt 906 CERTIFICATION Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002) Pursuant to, and solely for purposes of, 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), each of the undersigned hereby certifies in the capacity and on the date indicated below that: 1. The Quarterly Report of Monro Muffler Brake, Inc. ("Monro") on Form 10-Q for the period ended December 27, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Monro. /s/ Robert G. Gross Dated: February 9, 2004 -------------------------------------- Robert G. Gross Chief Executive Officer /s/ Catherine D'Amico Dated: February 9, 2004 -------------------------------------- Catherine D'Amico Chief Financial Officer 24 -----END PRIVACY-ENHANCED MESSAGE-----