10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 25, 2004.

OR

o 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 incorporation or organization)	(I.R.S. Employer 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 þ                      No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ                      No

As of January 22, 2005, 13,449,392 shares of the Registrant’s Common Stock, par value $ .01 per share, were outstanding.

MONRO MUFFLER BRAKE, INC.

INDEX

	Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet at December 25, 2004 and March 27, 2004		3
Consolidated Statement of Income for the quarters and nine months ended December 25, 2004 and December 27, 2003		4
Consolidated Statement of Changes in Shareholders’ Equity for the nine months ended December 25, 2004		5
Consolidated Statement of Cash Flows for the nine months ended December 25, 2004 and December 27, 2003		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 4. Controls and Procedures		14
Part II. Other Information
Item 6. Exhibits		15
Signatures		16
Exhibit Index		17
EX-10.86 Supply Agreement
EX-31.1 Certification of Robert G. Gross
EX-31.2 Certification of Catherine D'Amico
EX-32.1 Certification Pursuant to 18 U.S.C. Section 1350

2

MONRO MUFFLER BRAKE, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	December 25,				March 27,
	2004				2004
		(Dollars in thousands)
Assets
Current assets:
Cash and equivalents		$	879		$	1,533
Trade receivables			2,176			1,975
Inventories			60,233			54,050
Deferred income tax asset			2,533			2,811
Other current assets			10,213			10,373
Total current assets			76,034			70,742
Property, plant and equipment			270,131			259,641
Less – Accumulated depreciation and amortization			(107,732	)		(99,925	)
Net property, plant and equipment			162,399			159,716
Goodwill			30,574			26,240
Intangible assets and other noncurrent assets			5,051			6,092
Total assets		$	274,058		$	262,790
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt		$	578		$	578
Trade payables			22,630			16,704
Federal and state income taxes payable			2,869			1,045
Accrued payroll, payroll taxes and other payroll benefits			8,193			8,963
Accrued insurance			3,492			3,072
Other current liabilities			12,471			12,216
Total current liabilities			50,233			42,578
Long-term debt			51,844			68,763
Other long-term liabilities			3,787			3,791
Deferred income tax liability			5,236			3,859
Total liabilities			111,100			118,991
Commitments
Shareholders’ equity:
Class C Convertible Preferred Stock, $1.50 par value, $.144 conversion value, 150,000 shares authorized; 65,000 shares issued and outstanding			97			97
Common Stock, $.01 par value, 20,000,000 shares authorized; 13,447,472 and 13,315,253 shares issued and outstanding at December 25, 2004 and March 27, 2004, respectively			134			133
Treasury Stock, 325,200 shares at December 25, 2004 and March 27, 2004, at cost			(1,831	)		(1,831	)
Additional paid-in capital			45,870			44,057
Accumulated other comprehensive income			(366	)		(413	)
Retained earnings			119,054			101,756
Total shareholders’ equity			162,958			143,799
Total liabilities and shareholders’ equity		$	274,058		$	262,790

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
	2004			2003			2004		2003
	(Amounts in thousands, except per share data)
Sales	$	80,522		$	64,549		$	256,290	$	212,298
Cost of sales, including distribution and occupancy costs		48,659			39,291			150,048		123,351
Gross profit		31,863			25,258			106,242		88,947
Operating, selling, general and administrative expenses		25,371			19,981			76,226		63,127
Operating income		6,492			5,277			30,016		25,820
Interest expense, net of interest income for the quarter of $16 in 2004 and $14 in 2003, and year-to-date of $38 in 2004 and $44 in 2003		638			515			1,812		1,997
Other (income) expense, net		(37	)		(123	)		303		(123	)
Income before provision for income taxes		5,891			4,885			27,901		23,946
Provision for income taxes		2,239			1,854			10,603		9,099
Net income	$	3,652		$	3,031		$	17,298	$	14,847
Earnings per share:
Basic	$	.28		$	.23		$	1.32	$	1.15
Diluted	$	.25		$	.21		$	1.19	$	1.02
Weighted average number of common shares outstanding used in computing earnings per share
Basic		13,120			12,976			13,077		12,944
Diluted		14,554			14,612			14,530		14,537

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)

										Accumulated
								Additional		Other
	Preferred		Common		Treasury			Paid-in		Comprehensive			Retained
	Stock		Stock		Stock			Capital		Income			Earnings		Total
Balance at March 27, 2004	$	97	$	133	$	(1,831	)	$	44,057	$	(413	)	$	101,756	$	143,799
Net income														17,298		17,298
Other comprehensive income:
SFAS No. 133 adjustment for the nine months ended December 25, 2004											47					47
Total comprehensive income																17,345
Tax benefit from employer stock plans									600							600
Exercise of stock options				1					1,213							1,214
Balance at December 25, 2004	$	97	$	134	$	(1,831	)	$	45,870	$	(366	)	$	119,054	$	162,958

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
	2004			2003
	(Dollars in thousands)
	Increase (Decrease) in Cash
Cash flows from operating activities:
Net income	$	17,298		$	14,847
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		11,096			9,787
Net change in deferred income taxes		974			1,842
Loss on disposal of property, plant and equipment		153			326
Change in assets and liabilities, net of effects from acquisitions:
Increase in trade receivables		(325	)		(263	)
Increase in inventories		(5,919	)		(991	)
Decrease (increase) in other current assets		289			(448	)
(Increase) decrease in intangible assets and other noncurrent assets		(365	)		240
Increase in trade payables		5,926			4,396
Decrease in accrued expenses		(641	)		(2,701	)
Increase in federal and state income taxes payable		2,424			748
Increase in other long-term liabilities		222			657
Total adjustments		13,834			13,593
Net cash provided by operating activities		31,132			28,440
Cash flows from investing activities:
Capital expenditures		(14,044	)		(11,467	)
Payment for purchase of Brazos Automotive Properties, L.P.		—			(935	)
Acquisitions, net of cash acquired		(3,658	)		—
Proceeds from the disposal of property, plant and equipment		1,971			452
Net cash used for investing activities		(15,731	)		(11,950	)
Cash flows from financing activities:
Proceeds from borrowings		95,400			108,596
Principal payments on long-term debt and capital lease obligations		(112,669	)		(126,207	)
Exercise of stock options		1,214			1,128
Payment of fractional shares related to stock split (see Note 9)		—			(3	)
Net cash used for financing activities		(16,055	)		(16,486	)
(Decrease) increase in cash		(654	)		4
Cash at beginning of period		1,533			69
Cash at end of period	$	879		$	73

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 25, 2004, the consolidated statements of income for the quarters and nine months ended December 25, 2004 and December 27, 2003, the consolidated statements of cash flows for the nine months ended December 25, 2004 and December 27, 2003 and the consolidated statement of changes in shareholders’ equity for the nine months ended December 25, 2004, 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 (consisting of normal recurring accruals or 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 27, 2004. The results of operations for the interim periods being reported on herein 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 2004”:	September 26, 2004 – December 25, 2004 (13 weeks)
“Quarter Ended Fiscal December 2003”:	September 28, 2003 – December 27, 2003 (13 weeks)
“Nine Months Ended Fiscal December 2004”:	March 28, 2004 – December 25, 2004 (39 weeks)
“Nine Months Ended Fiscal December 2003”:	March 30, 2003 – December 27, 2003 (39 weeks)

     Certain reclassifications have been made to the prior year’s consolidated financial statements to conform to the current year’s presentation.

Note 2 – Acquisitions

     Effective March 1, 2004, the Company acquired 36 tire and automotive repair locations in the Baltimore, Maryland and Arlington, Virginia areas from Mr. Tire, Inc. (the “Seller”) and its sole shareholder, Atlantic Automotive Corp. (the “Mr. Tire Acquisition”). The acquired locations include 26 leased retail stores and 10 kiosks which operate in Atlantic automotive dealerships. (All kiosks have since been closed.) The Company purchased certain of Seller’s assets, including inventory, fixed assets and intellectual property and assumed certain of Seller’s liabilities, including Seller’s obligations pursuant to the real property leases for each of the 26 retail store locations, certain warranty obligations outstanding to customers and certain other liabilities. The purchase price amounted to approximately $29 million and has been adjusted post-closing to reflect substantially all purchase accounting procedures as well as settlement of substantially all purchase price adjustments provided for in the related acquisition agreement.

     Effective October 17, 2004, the Company acquired five retail tire stores located in Baltimore, Maryland from Donald B. Rice Tire Co., Inc. (the “Rice Tire Acquisition”). The Company purchased all of the operating assets of the five retail stores, including fixed assets and certain inventory, and assumed certain liabilities, including obligations pursuant to the real property leases for each of the retail store locations. The purchase price was approximately $3.8 million and will be adjusted post-closing to reflect final counts of inventory and fixed assets and the completion of the Company’s purchase accounting procedures.

     The increase in goodwill is mainly due to the Rice Tire Acquisition as well as purchase accounting adjustments related to the Mr. Tire Acquisition.

Note 3 – Buyout of Synthetic Lease Properties

     On June 27, 2003, the Company purchased the land and buildings under its existing synthetic lease facility through the acquisition 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 held the title 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 was 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.

7

MONRO MUFFLER BRAKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     As a result of this Lease Buyout, land and buildings, at their fair value of approximately $27.5 million including acquisition costs, 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.

     In fiscal 2005, payments on the debt are reported as interest expense. Depreciation expense is also recorded on these properties. Prior to the Lease Buyout in June 2003, these payments on the debt were reported as rent expense, and no depreciation was recorded.

Note 4 — Derivative Financial Instruments

     The Company reports derivatives and hedging activities in accordance with Statement of Financial Accounting Standards No. 133 (“SFAS 133”), “Accounting for Derivative Instruments and Hedging Activities”, as amended. This statement 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 $1.6 million at December 25, 2004. 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 25, 2004, 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 5 — Vendor Rebates and Cooperative Advertising Credits

     In accordance with Emerging Issues Task Force (“EITF”) 02-16 of the Financial Accounting Standards Board (“FASB”), 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.

Note 6 — Earnings Per Share

     The following is a reconciliation of basic and diluted earnings per common share for the respective quarters:

	Quarter Ended				Nine Months Ended
	Fiscal December				Fiscal December
	2004		2003		2004		2003
	(Amounts in thousands, except per share data)
Numerator for earnings per common share calculation:
Net Income	$	3,652	$	3,031	$	17,298	$	14,847
Denominator for earnings per common share calculation:
Weighted average common shares, basic		13,120		12,976		13,077		12,944
Effect of dilutive securities:
Preferred Stock		675		675		675		675
Stock options and warrants		759		961		778		918
Weighted average number of common shares, diluted		14,554		14,612		14,530		14,537
Basic Earnings per common share:	$	0.28	$	0.23	$	1.32	$	1.15
Diluted Earnings per common share:	$	0.25	$	0.21	$	1.19	$	1.02

8

MONRO MUFFLER BRAKE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The computation of diluted earnings per share for the three and nine months ended fiscal December 2004 includes all outstanding stock options and warrants to purchase shares of the Company’s common stock and excludes the effect of the assumed exercise of 56,400 outstanding stock options, as the exercise prices of these options exceeded the average market price of the Company’s common stock for those periods. Outstanding stock options excluded from the computation of diluted earnings per share for the three and nine months ended fiscal December 2003 were zero and 41,000, respectively.

Note 7 – Stock-Based Compensation

     The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations including FASB Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB Opinion No. 25”, issued in March 2000, to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. The Company’s policy generally is to grant stock options at fair market value at the date of grant.

     Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, (“SFAS 123”) established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS 123, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS 123. The following table illustrates the effect on net income if the fair value-based method had been applied to all outstanding and unvested awards in each period.

	Quarter Ended						Nine Months Ended
	Fiscal December						Fiscal December
	2004			2003			2004			2003
	(Dollars in thousands, except per share data)
Net income, as reported	$	3,652		$	3,031		$	17,298		$	14,847
Add: Total stock-based employee compensation expense recorded in accordance with APB 25, net of related tax effect		—			—			—			—
Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effects		(130	)		(68	)		(524	)		(359	)
Pro forma net income	$	3,522		$	2,963		$	16,774		$	14,488
Earnings per share:
Basic-as reported	$	.28		$	.23		$	1.32		$	1.15
Basic-pro forma	$	.27		$	.23		$	1.28		$	1.12
Diluted-as reported	$	.25		$	.21		$	1.19		$	1.02
Diluted-pro forma	$	.24		$	.20		$	1.15		$	1.00

     The fair values of the options granted were estimated on the date of their grant using the Black-Scholes option-pricing model.

Note 8 – Supplemental Disclosure of Cash Flow Information

     The following transactions represent noncash investing and financing activities during the periods indicated:

NINE MONTHS ENDED DECEMBER 25, 2004:

     In connection with the sale or disposal of assets, the Company decreased fixed assets by $151,000 and decreased other current liabilities by $151,000.

     In connection with the recording of capital leases, the Company increased fixed assets by $350,000 and increased long-term debt by $350,000.

9

MONRO MUFFLER BRAKE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     In connection with recording the value of the Company’s swap contracts, other comprehensive income increased by $47,000, other long-term liabilities decreased by $75,000 and the deferred income tax liability was increased by $28,000.

     In connection with the accounting for income tax benefits related to the exercise of stock options, the Company decreased current liabilities by $600,000 and increased paid-in-capital by $600,000.

     During the nine months ended December 2004, the Company recorded purchase accounting adjustments for the Mr. Tire acquisition that increased goodwill by $630,000, comprised primarily of adjustments to deferred income tax assets, inventory, property, plant and equipment, intangible assets and other current liabilities.

     In connection with the acquisition of Rice Tire, liabilities were assumed as follows:

Fair value of assets acquired	$	3,800,000
Cash paid, net of cash acquired		(3,660,000	)
Liabilities assumed	$	140,000

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 accounting for income tax benefits related to 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 3), as follows:

Fair value of assets acquired	$	27,494,000
Cash paid, net of cash acquired		(935,000	)
Liabilities assumed	$	26,559,000

CASH PAID DURING THE PERIOD:

	Nine Months Ended Fiscal December
	2004		2003
Interest, net	$	1,606,000	$	1,537,000
Income taxes		8,068,000		6,512,000

Note 9 – 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.

10

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.

     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
	2004			2003			2004			2003
Sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales, including distribution and occupancy costs		60.4			60.9			58.5			58.1
Gross profit		39.6			39.1			41.5			41.9
Operating, selling, general and administrative expenses		31.5			30.9			29.8			29.7
Operating income		8.1			8.2			11.7			12.2
Interest expense - net		.8			.8			.7			.9
Other (income) expense - net		—			(.2	)		.1			—
Income before provision for income taxes		7.3			7.6			10.9			11.3
Provision for income taxes		2.8			2.9			4.2			4.3
Net income		4.5	%		4.7	%		6.7	%		7.0	%

11

Third Quarter Ended December 25, 2004 Compared To Third Quarter Ended December 27, 2003

     Sales were $80.5 million for the quarter ended December 25, 2004 as compared with $64.5 million in the quarter ended December 27, 2003. The sales increase of $16.0 million, or 24.7%, was due to an increase of $14.8 million related to new stores and a comparable store sales increase of 2.4%. The acquired Mr. Tire stores contributed $12.3 million. There were 76 selling days in the quarter ended December 25, 2004 and the quarter ended December 27, 2003.

     Sales for the nine months ended December 25, 2004 were $256.3 million as compared to $212.3 million for the comparable period in the prior year. The sales increase of $44.0 million, or 20.7%, is due to a comparable store sales increase of 1.2%, as well as an increase of $42.4 million from new stores, including the Mr. Tire stores which added $37.7 million.

     At December 25, 2004 the Company had 611 company-operated stores compared with 565 stores at December 27, 2003. During the quarter ended December 25, 2004, the Company added 14 stores and closed two and the remaining seven kiosks acquired from Mr. Tire.

     Gross profit for the quarter ended December 25, 2004 was $31.9 million or 39.6% of sales as compared with $25.3 million or 39.1% of sales for the quarter ended December 27, 2003. The increase in gross profit for the quarter ended December 25, 2004, as a percentage of sales, is due primarily to the leveraging of occupancy costs which are largely fixed expenses and are included in cost of sales. Total material costs increased due to a shift in mix to the lower margin categories of tires and maintenance services. Included in the maintenance category are sales of oil changes, which increased approximately 15% on a comparable store basis over the prior year quarter. The Company promoted oil changes to drive traffic during the quarter by slightly lowering the selling price, while experiencing an increase in the cost of oil for the quarter. This had the effect of lowering margin in the maintenance category as compared to the prior year quarter. However, price increases in the quarter, as well as the recognition of vendor rebates against cost of goods in concert with inventory turns in accordance with EITF 02-16, helped to partially offset the aforementioned margin pressures.

     Technician labor, as a percent of sales, decreased between the two quarters, also due to the increase in tire sales as a percent of total sales.

     Without Mr. Tire’s results, gross profit for the quarter increased from 39.1% last year to 39.9% this year, partially due to a reduction in total material costs as well as through increased leveraging of distribution and occupancy costs.

     The improvement in material costs apart from the Mr. Tire stores was due primarily to a reduction in outside purchases. The Company has added approximately $5.8 million of inventory in fiscal 2005 in a concerted effort to reduce outbuys.

     Gross profit for the nine months ended December 25, 2004 was $106.2 million, or 41.5% of sales, as compared to $88.9 million or 41.9% of sales. Without Mr. Tire’s results, gross profit for the nine months increased from 41.9% last year to 42.4% this year, due to improved leveraging of distribution and occupancy costs.

     Operating, selling, general and administrative (“SG&A”) expenses for the quarter ended December 25, 2004 increased by $5.4 million to $25.4 million from the quarter ended December 27, 2003, and were 31.5% of sales as compared to 30.9% in the prior year quarter. The increase in SG&A expense as a percentage of sales is due primarily to an increase in benefits expense, Sarbanes-Oxley costs, and Mr. Tire integration costs. Within benefits expense, health insurance costs increased as a percent of sales as compared to the prior year quarter. Sarbanes-Oxley costs, excluding internal labor, amounted to .5% of sales in the third quarter of fiscal 2005.

     Regarding Mr. Tire, the Company successfully installed its point-of-sale system in the Mr. Tire retail stores, and its merchandising system in Mr. Tire’s warehouse and wholesale center during the quarter ended September 2004. Some of the costs associated with both the system and other integration related activities, which continued into the third quarter of fiscal 2005, are not capitalizable, thereby increasing SG&A costs as percent of sales.

     For the nine months ended December 25, 2004, SG&A expenses increased by $13.1 million to $76.2 million from the comparable period of the prior year, and were 29.8% of sales as compared to 29.7% of sales in the prior period.

     Operating income for the quarter ended December 25, 2004 of approximately $6.5 million increased 23.0% as compared to operating income for the quarter ended December 27, 2003, and decreased as a percentage of sales from 8.2% to 8.1% for the same periods.

12

     Net interest expense for the quarter ended December 25, 2004 increased by approximately $.1 million as compared to the same period in the prior year, and remained flat as a percentage of sales for the same periods. The weighted average debt outstanding for the quarter ended December 25, 2004 increased by approximately $2.5 million. Additionally, there was an increase in the weighted average interest rate for the current year quarter of approximately 70 basis points as compared to the prior year.

     Net interest expense for the nine months ended December 25, 2004 decreased by approximately $.2 million as compared to the same period in the prior year and decreased from the prior year as a percentage of sales by .2% to .7%.

     The effective tax rate for the quarters and nine months ended December 25, 2004 and December 27, 2003 was 38% of pre-tax income.

     Net income for the quarter ended December 25, 2004 of $3.7 million increased 20.5% from net income for the quarter ended December 27, 2003. Earnings per share on a diluted basis for the quarter ended December 25, 2004 increased 19.0%.

     For the nine months ended December 25, 2004, net income of $17.3 million increased 16.5% as compared to the prior year period and diluted earnings per share increased 16.7%.

     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 and financial position for the unaudited periods. The results for interim periods are not necessarily indicative of results to be expected for the fiscal year.

Capital Resources and Liquidity

     Capital Resources

     The Company’s primary capital requirements in fiscal 2005 are the upgrading of facilities and systems in existing stores and the funding of its store expansion program, including potential acquisitions of existing store chains. For the nine months ended December 25, 2004, the Company spent $14.4 million principally for equipment, as well as $3.7 million for the acquisition of the assets of Donald B. Rice Tire Co., Inc. 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 $83.4 million Revolving Credit facility (of which approximately $20.5 million was outstanding at December 25, 2004), and a non-amortizing credit loan (formerly synthetic lease financing) totaling $26.6 million (all of which was outstanding at December 25, 2004).

     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 that date. 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 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 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 $1.6 million, amortizable over 20 years, and 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 $3.0 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 25, 2004, the Company is in compliance with the applicable debt covenants.

13

     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. At December 2004, the Company was party to an interest rate swap agreement with a notional value of $1.6 million, which expires in October 2005.

Recent Accounting Pronouncements

     In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51”, which requires all variable interest entities (VIEs) 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 VIEs that are consolidated as well as VIEs from which the entity is the holder of a significant amount of the beneficial interests, but not the majority. See Note 3 regarding the Company’s fiscal 2004 buyout of the properties under its synthetic lease arrangement.

     In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). SFAS 123(R) will require companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its consolidated financial statements over the related term of employee service. In addition, the adoption of SFAS 123(R) requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. SFAS 123(R) is effective as of the first interim or annual reporting period beginning after June 15, 2005. The Company is assessing the impact of SFAS 123(R) on its consolidated financial statements.

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 recognizes 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, a review and an 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 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.

14

MONRO MUFFLER BRAKE, INC.

PART II — OTHER INFORMATION

Item 6. Exhibits

     a. Exhibits

10.86 -	Supply Agreement between Monro Muffler Brake, Inc. and Wagner Brake, a division of Federal-Mogul Corporation, dated November 2, 2004
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.

15

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 3, 2005	By	/s/ Robert G. Gross
		Robert G. Gross
		President and Chief Executive Officer
DATE: February 3, 2005	By	/s/ Catherine D’Amico
		Catherine D’Amico
		Executive Vice President-Finance, Treasurer
		and Chief Financial Officer

16

EXHIBIT INDEX

Exhibit No.	Description	Page No.
10.86	Supply Agreement between Monro Muffler Brake, Inc. and Wagner Brake, a division of Federal-Mogul Corporation, dated November 2, 2004 ***		18
31.1	Certification of Robert G. Gross pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		27
31.2	Certification of Catherine D’Amico pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		28
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		29

     *** Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

17

EX-10.86

                                                                   EXHIBIT 10.86

      PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. SUCH PORTIONS ARE DESIGNATED "***".

      THIS SUPPLY AGREEMENT ("Agreement"), is made and entered into as of the
2nd day of November, 2004, between Wagner Brake, a division of Federal-Mogul
Corporation, with a mailing address of 26555 Northwestern Hwy. Southfield, MI
48034, Attention: Vice President - Aftermarket Sales, America ("SUPPLIER") and
Monro Service Corporation, a Delaware corporation, with a mailing address of 200
Holleder Parkway, Rochester, NY 14615 ("CUSTOMER").

                              W I T N E S S E T H:

            IN CONSIDERATION OF THE MUTUAL PROMISES SET FORTH IN THIS AGREEMENT,
and other good, valuable and sufficient consideration, the receipt and adequacy
of which are hereby acknowledged, SUPPLIER hereby agrees to sell and deliver,
and CUSTOMER hereby agrees to purchase, receive and pay for, the SUPPLIER'S
products described below at CUSTOMER'S premises identified on the attached
Schedule A, and any future locations the CUSTOMER may acquire, open, manage or
operate on the following terms and conditions:

1.    TERM. This Agreement shall commence February 1, 2005 (the "Effective
      Date") and be in effect until March 31, 2010 (the "Agreement Period").
      CUSTOMER expressly agrees that this Agreement is independent of any other
      agreement between CUSTOMER and SUPPLIER. This Agreement shall remain in
      effect unless terminated pursuant to the provisions hereof regardless of
      the termination or expiration of any other agreement between CUSTOMER and
      SUPPLIER.

2.    INTERIM PERIOD. The CUSTOMER may begin purchasing products from the
      SUPPLIER during the period between the date this Agreement is signed by
      both parties and the Effective Date (the "Interim Period") in order to
      facilitate CUSTOMER'S transition to the PRODUCTS (as defined in Section
      3). Any purchases during the Interim Period shall be subject to the
      following conditions and/or exceptions:

      A.    Interim Period Pricing (as defined in Schedule B) shall apply;

      B.    There shall be no minimum purchase requirements;

      C.    The Fill Rate Guarantee (as defined in Section 8) shall not apply;

      D.    *** (as defined in Section 21) shall not be assigned to SUPPLIER by
            CUSTOMER;

      E.    The Marketing Allowance cited in Section 13.A shall apply; and

      F.    The provisions outlined in Section 17 shall apply.

                                       18


3.    PRODUCTS. SUPPLIER shall sell and deliver, and CUSTOMER shall purchase,
      pay and provide safe access for the delivery of the products offered by
      SUPPLIER for purchase by CUSTOMER as shown (with applicable pricing) on
      Schedule B ("Products").

            During the Agreement Period, CUSTOMER shall purchase a minimum
      amount of the Products (net of any returns made by CUSTOMER ***, the
      "Purchase Requirement") during the applicable period ("Period").



Period                                      Purchase Requirement
- ------                                      --------------------
                                         
February 1, 2005 - March 31, 2006                   ***

April 1, 2006 - March 31, 2007                      ***

April 1, 2007 - March 31, 2008                      ***

April 1, 2008 - March 31, 2009                      ***

April 1, 2009 - March 31, 2010                      ***


            It is understood that CUSTOMER will actively promote and purchase
      Wagner ThermoQuiet friction products as its primary premium friction line.
      It is anticipated that during the term of this Agreement CUSTOMER will
      purchase *** in Products from SUPPLIER. If CUSTOMER'S aggregate purchases
      of Product do not reach the Purchase Requirement during any Period,
      CUSTOMER shall be permitted to carry forward, in the manner described in
      the following sentence, the difference between the Purchase Requirement
      and the aggregate amount of the all purchases for such Period (the
      "Shortfall Amount"). The CUSTOMER shall purchase the Shortfall Amount, if
      any, from all Periods (together, the "Aggregate Shortfall Amount") under
      the provisions of this Agreement, within six (6) months following the
      expiration of the Agreement Period. These Purchase Requirements include
      all brake categories except brake calipers. If CUSTOMER'S purchases for
      any Period should exceed the applicable Purchase Requirement for such
      Period, the excess amount will be credited against the Aggregate Shortfall
      Amount.

4.    PRICE/PAYMENT. Prices for the products are set forth on Schedule B and are
      subject to change upon written notice to CUSTOMER; such notice shall be
      delivered to CUSTOMER at least sixty (60) days in advance. SUPPLIER will
      not increase any prices for a period of ***. Any future price adjustments
      shall generally allow CUSTOMER to remain competitive with comparable
      products sold by CUSTOMER'S competitors. ***. Except for income taxes
      incurred by SUPPLIER, CUSTOMER is responsible for payment of all
      applicable taxes, fees and other government-imposed charges, whether or
      not included in such prices. If compliance with law prevents SUPPLIER from
      charging or CUSTOMER from paying the price provided in this Agreement, any
      resulting failure to perform shall be excused pursuant to Section 7
      hereof. Each delivery hereunder shall be considered a separate sale.

5.    PRODUCT IDENTIFICATION. SUPPLIER shall have the right at any time to
      change or discontinue use of any trademark, service mark, trade dress,
      trade name or other indication of source of origin ("Marks") under which
      the Products are sold. If SUPPLIER discontinues the use of any Mark which
      the CUSTOMER, in its sole discretion, deems as being critical to its
      on-going business, the CUSTOMER shall have the right to terminate this
      agreement under the conditions outlined below. CUSTOMER shall use its best
      efforts to maintain the quality, good name and reputation of SUPPLIER and
      the Products. CUSTOMER shall not alter in composition, co-mingle with
      products from other sources, or otherwise adulterate the Products.
      CUSTOMER shall not bring or cause to be brought any proceedings, either
      administrative or judicial in nature, contesting SUPPLIER'S ownership of
      rights to, or registrations of the Marks.

                                       19


6.    PROTECTION OF LOGOS AND TRADEMARKS. CUSTOMER shall permit SUPPLIER a
      limited right to use CUSTOMER'S trade names, trademarks, logos and service
      marks ("Customer's Marks") for promotional purposes pursuant to the terms
      set forth in this Section. CUSTOMER must give prior approval, in each
      instance and in its sole discretion, of SUPPLIER'S intended use of
      Customer's Marks including, but not limited to: usage in pamphlets,
      brochures, marketing materials, trade magazines or journals, press
      releases, and electronic media. SUPPLIER shall not alter in composition,
      co-mingle with any marks from its other customers or otherwise adulterate
      Customer's Marks. SUPPLIER shall not bring, or cause to be brought, any
      proceedings, either administrative or judicial in nature, contesting
      CUSTOMER'S ownership of rights to, or registrations of the Customer's
      Marks. CUSTOMER shall indemnify and hold SUPPLIER harmless from any losses
      or liabilities or damages in connection with any claim brought by a third
      party against SUPPLIER alleging that SUPPLIER'S possession or use of the
      CUSTOMER'S Marks pursuant to, and in accordance with, the terms of this
      Agreement infringes the rights of such third party.

7.    FORCE MAJEURE. The parties to this Agreement shall not be responsible for
      any delay or failure to perform under this Agreement (other than to make
      payments when due hereunder) if delayed or prevented from performing by
      act of God; transportation difficulty; strike or other industrial
      disturbance; any law, regulation, ruling, order or action of any
      governmental authority; fire; or any other cause or causes beyond such
      party's reasonable control whether similar or dissimilar to those stated
      above.

8.    PRODUCT AVAILABILITY. SUPPLIER shall endeavor to provide CUSTOMER with
      sufficient product to meet its needs. Notwithstanding Section 7, in the
      event the SUPPLIER is unwilling and/or unable to supply CUSTOMER with any
      Products CUSTOMER shall order from SUPPLIER, the CUSTOMER shall seek to
      purchase products from alternate sources. In such instances, as they may
      occur, CUSTOMER'S Purchase Requirement for the applicable Period shall be
      reduced by the aggregate value of such product purchased by CUSTOMER from
      alternate sources.

      SUPPLIER shall on each individual purchase order, maintain a shipping
      ratio in excess of 85% of the value of CUSTOMER'S order (the "Fill Rate
      Guarantee"). If SUPPLIER'S shipping ratio falls below 85% ***. CUSTOMER
      will be responsible for tracking shipping performance by purchase order
      and invoice, maintaining back-up documentation, ***.

                  ***.

9.    COMPLIANCE WITH LAWS/TAXES. CUSTOMER shall, at its own expense, (i) comply
      with all applicable laws, regulations, rulings and orders, including
      without limitation those relating to taxation, workers' compensation, and
      environmental protection; (ii) obtain all necessary licenses and permits
      for the purchase and sale of the Products; and (iii) pay directly, or
      reimburse SUPPLIER on demand if paid by SUPPLIER (except as otherwise
      provided), all taxes, inspection fees, import fees, and other governmental
      charges imposed by this Agreement, the Products, or on the sale, purchase,
      handling, storage, advertising, distribution, resale or use of the
      Products.

10.   SUPPLIER'S RIGHT TO INSPECT. SUPPLIER, or its authorized agents, shall
      have the right, but not the obligation, to inspect CUSTOMER'S premises,
      bearing the Marks, or being represented to contain the Products, at any
      time during business hours.

                                       20


11.   TERMINATION; REMEDIES. This Agreement may be terminated under the terms of
      this Section.

            A.    An "Event of Default" shall mean any of the following events:

                  (i)   If CUSTOMER defaults in the performance of or breaches
                        any provision of Section 3 of this Agreement;

                  (ii)  The provisions of Section 16 notwithstanding, any
                        payment due hereunder is unpaid past the 10th calendar
                        day of the second month following shipment; or

                  (iii) Either party materially defaults in the performance of
                        or material breaches any other provision of this
                        Agreement; or

                  (iv)  (a) After the date of this Agreement, a voluntary
                        petition under Chapter 7 or 11 of the Bankruptcy Code is
                        filed by or against either party, or a final order for
                        relief under Chapter 7 of the Bankruptcy Code is
                        entered, or any Chapter 11 proceedings are converted to
                        proceedings under Chapter 7 of the Bankruptcy Code
                        pursuant to a final order for relief;

                        (b) Either party makes an assignment for the benefit of
                        creditors or a similar transfer of or action involving a
                        material portion of its assets for purposes of
                        liquidating such assets;

                        (c) Any secured or lien creditor commences a foreclosure
                        action of its liens, security interest(s) and/or
                        mortgage(s) against, and obtains the right to possession
                        or control over, a material portion of such party's
                        assets; or

                  (v)   SUPPLIER discontinues the use of any Supplier Mark
                        according to the terms of section 5 of this Agreement;
                        or

                  (vi)  The Aggregate Shortfall Amount outstanding at any one
                        time during the Agreement Period exceeds ***.

      B.    Upon the occurrence of any Event of Default, the party not causing
            or responsible for the Event of Default may give written notice to
            the other party. If the Event of Default is not cured by the
            notified party within 60 days of the written notice, then the party
            giving the written notice is entitled to terminate this Agreement
            immediately, but in no event later than six months after the notice,
            by providing written notice of termination.

      C.    In the event that this Agreement is terminated by CUSTOMER other
            than in accordance with Sections 11.B, 11.D or 11.E of this
            Agreement, or by SUPPLIER in accordance with Section 11 of this
            Agreement, CUSTOMER shall pay to SUPPLIER as liquidated damages (and
            not as a penalty) an amount as outlined below. The amount of
            liquidated damages shall be determined by multiplying the applicable
            termination fee outlined below times the number of full calendar
            months remaining in the Agreement Period. The entire amount of such
            liquidated damages shall be paid to SUPPLIER within ninety (90) days
            of the effective date of the termination of this Agreement.



Termination Date                            Termination Fee
- ----------------                            ---------------
                                         
***                                               ***

***                                               ***

***                                               ***


      D.    In the event that a change of control of SUPPLIER shall result in a
            party, person or corporate entity controlling a majority share of
            SUPPLIER and such party, person or corporate entity shall be a
            citizen of, or based in, a country which is, or becomes, listed on
            the United States of America's Department of State's Office of
            Defense Trade

                                       21


            Control's Embargo Reference Chart the CUSTOMER shall have the
            immediate right to terminate this agreement without penalty,
            assessment of liquidated damages or prior notification.

      E.    If CUSTOMER is acquired, either directly or indirectly, through the
            sale of a majority of its assets or stock, CUSTOMER shall be
            permitted to terminate the Agreement upon six (6) months prior
            written notice to SUPPLIER. CUSTOMER agrees to pay SUPPLIER
            liquidated damages *** of those otherwise determined in Section
            11.C.

      F.    Upon termination of this Agreement in accordance with section 11 of
            this Agreement, CUSTOMER shall not be entitled to any further ***,
            except those which have been earned but remained unpaid by the
            SUPPLIER. Additionally, ***.

12.   NOTICE. Any written notice required or permitted to be given under this
      Agreement shall be sufficient for all purposes hereunder if in writing and
      personally delivered or sent by any means providing for return receipt to
      the address provided for the party in question in the heading of this
      Agreement. Any party may change the mailing address or other information
      provided for it in the heading hereof by written notice given in
      accordance with this Section 12.

13.   PROMOTIONAL AND MARKETING SUPPORT. In consideration of the terms of this
      Agreement, SUPPLIER agrees to provide the following Marketing Support to
      the CUSTOMER:

      A.    ***, calculated on qualified net purchases, payable quarterly.
            Credit to be issued within 60 days of close of the quarter.

      B.    *** which may potentially vary from *** based on the *** from the
            CUSTOMER. This rebate will be paid annually based on *** from the
            CUSTOMER. ***.

      C.    During the first (1st) year of the Agreement, SUPPLIER shall
            reimburse CUSTOMER a maximum of ***, and no more than *** per three
            (3) month period, for all expenses associated with marketing,
            advertising and other promotional programs associated with launching
            SUPPLIER'S product line(s). CUSTOMER shall be required to provide
            copies of supportive documents for such claims.

      D.    Beginning on the *** anniversary of the Agreement, SUPPLIER shall
            provide a Marketing Support Fund of *** per year, payable in
            quarterly installments of *** with the first payment commencing
            following the calendar quarter.

      E.    All credits shall be issued in the form of a credit memo delivered
            to the CUSTOMER within 60 days of the end of a calendar year or
            calendar quarter, depending on the structured timing of such
            payments. With respect to any credit memo issued by SUPPLIER under
            this Agreement, SUPPLIER must post credit to CUSTOMER'S account(s)
            with such credits identified on monthly billing statements, and
            CUSTOMER must apply such credit(s) against balance(s) owed within
            three (3) months of their respective issuance(s).

14.   PRODUCT WARRANTY.

      A.    SUPPLIER shall not be liable for any warranty claims by CUSTOMER or
            others. CUSTOMER agrees to handle and dispose of any warranty
            product without cost to, or involvement of, the SUPPLIER. ***. The
            foregoing

                                       22


            discount is CUSTOMER'S exclusive remedy. SUPPLIER shall not be
            liable for incidental or consequential damages.

      B.    Notwithstanding section 14(A), in the event of a product recall or
            production problem resulting in a "batch" or "lot" of product
            defects on a particular part, CUSTOMER may return such products for
            replacement products, ***, once authorization has been obtained from
            the SUPPLIER'S sales representative.

      C.    Each party agrees to indemnify and hold harmless the other party,
            its customers, employees and agents from and against all liability,
            demands, claims, suits, losses and court costs, by reason of, or on
            account of, property damage, death and/or personal injury of
            whatsoever nature or kind arising directly from the negligence,
            willful misconduct or breach of contract of such party, its
            employees or agents. Each party shall provide prompt notice to the
            other party of any such claims and shall actively cooperate with the
            other party with respect to the defense of such claim, provide all
            information in such detail as requested. The party notified of its
            indemnification obligations shall have sole control of the defense
            of any claim or complaint, and the sole authority for settlement
            (subject only to the requirement that the terms of any such
            settlement shall include a full release of the other party). This
            indemnity shall terminate on the expiration or termination of this
            Agreement; however, the termination shall not terminate, limit or
            affect this indemnity with respect to any Products ordered prior to
            such date of termination.

      D.    SUPPLIER agrees to maintain minimum liability insurance coverage,
            and to have such insurance contract(s) endorsed to include Monro
            Muffler Brake, Inc., Monro Service Corporation, Monro Leasing, LLC,
            and their employees, directors, officers and agents under ISO Form
            CG2026. Minimum liability coverage is identified on Schedule F.

15.   TERMS OF SALE. Shipped products will be billed to CUSTOMER with payment
      terms of 2% 2nd 10th prox. 2% prompt pay discounts may not be taken if the
      payment is postmarked after the 10th of the month due.

16.   DISCREPANCIES / PAYMENT OF INVOICES. In the event of a discrepancy between
      product ordered, product billed and product received, or pricing applied
      to product received, it will be the responsibility of the CUSTOMER to
      include a Vendor Charge Back (VCB) stating the discrepancy along with
      payment. While the amount of the discrepancy may be deducted from the
      statement payment, the CUSTOMER will have 60 days to provide proof or
      substantiation that the charge back is warranted so that it can be
      corrected. If it is not substantiated within 60 days from the invoice due
      date it must be paid back. Under no circumstances shall the payment for
      the entire statement or invoice be withheld or delayed for such a
      discrepancy.

17.   PRE-PAID FREIGHT / ***.

      A.    SUPPLIER will ship orders via common carrier, prepaid, if net order
            value is over $1500 or whatever the prevailing SUPPLIER freight
            policy is at the time.

      B.    ***

      C.    ***

      D.    ***

      E.    ***

            (i)   ***

                                       23


            (ii)  ***

18.   OBSOLESCENCE RETURNS. The SUPPLIER will accept up to 5% of the previous
      year's net purchases for product returns. These returns may only include
      current parts that are overstocked, or parts scheduled for obsolescence
      and/or supersession. Competitive product or parts already obsolete (not in
      the current prevailing price sheet) are not eligible for return.

19.   ***

      A.    ***

      B.    ***

      C.    ***

20.   CHANGEOVER PROCEDURES / COSTS. The SUPPLIER makes no commitment to
      re-label, rebox, handle, or take return of any competitive product other
      than that specifically listed above. Additionally, the CUSTOMER agrees
      that any incidental costs incurred by the changeover including, but not
      limited to training, cataloging, marketing, promotion, and administrative
      are covered by the *** set forth in Section 12; CUSTOMER will seek no
      additional remuneration from the SUPPLIER for any such costs.

21.   ***. The SUPPLIER agrees to accept from the CUSTOMER, certain of
      CUSTOMER'S *** due to SUPPLIER, subject to the following conditions:

      A.    SUPPLIER will accept up to *** from CUSTOMER in ***.

      B.    The SUPPLIER will accept up to *** from CUSTOMER in *** during any
            one calendar year.

      C.    SUPPLIER and CUSTOMER shall mutually agree to the timing and
            application of orders which will be remitted by way of *** from
            CUSTOMER'S account to the account of SUPPLIER.

22.   INDEPENDENT CONTRACTOR. The business conducted by CUSTOMER at CUSTOMER'S
      premises shall be the independent business of CUSTOMER, and the entire
      control and direction of the activities of such business shall be and
      remain with CUSTOMER. This contract and the elements provided herein are
      based on CUSTOMER being considered "closed distribution". That is, parts
      being sold to CUSTOMER are for the exclusive use of CUSTOMER'S
      installation facilities and will not be re-distributed or resold to
      businesses or installation facilities outside of Monro Service Corp., or
      Monro Muffler Brake, Inc. CUSTOMER shall not be the employee or agent of
      SUPPLIER, and CUSTOMER shall make no representation to the contrary.

23.   TIME OF THE ESSENCE/WAIVER. In performing all obligations under this
      Agreement, time is of the essence. The failure of any party hereto to
      exercise any right such party may have with respect to breach of any
      provision of this Agreement shall not impair or be deemed a waiver of such
      party's rights with respect to any continuing or subsequent breach of the
      same or any other provision of this Agreement.

                                       24


24.   ETHICAL BUSINESS PRACTICE. CUSTOMER agrees to comply with all
      confidentiality and access to information requirements in Federal, State
      and Local laws and regulations. Through an adherence to, among other
      things, the provisions of CUSTOMER'S Code of Ethics, a copy of which may
      be found at http://www.monro.com/CorpSite/CodeOfEthics.pdf, all employees
      of CUSTOMER are required to maintain the highest standards of honesty,
      integrity and trustworthiness. Execution of this Agreement is evidence of
      SUPPLIER'S willingness to acknowledge these standards.

25.   PRODUCT CATALOGS. SUPPLIER agrees to provide complete and accurate catalog
      information to CUSTOMER for all Products, as outlined below. All
      electronic data must be supplied in the then current format specified by
      the Automotive Aftermarket Industry Association ("AAIA").

      A.    Electronic information providing coverage for a minimum of 95% of
            all vehicles serviced by CUSTOMER during the current and preceding
            twenty (20) years, and

      B.    Electronic information will be updated at least semi-annually, and
            provided in its entirety, and

      C.    Corrections of identified erroneous electronic information will be
            provided monthly; and

      D.    Electronic information will provide the correct part information for
            the specific vehicle application, without regard to CUSTOMER'S
            decision to stock such part, and

      E.    SUPPLIER shall provide, upon release of same, a quantity of each
            catalog, specification guide or other such media, in an amount
            sufficient to supply each location operated or managed by CUSTOMER.

                  Failure to provide catalog information as outlined above will
                  result in CUSTOMER obtaining the electronic information and/or
                  print catalog editions in a manner most expeditious and
                  beneficial to CUSTOMER. SUPPLIER agrees to reimburse CUSTOMER
                  for any and all costs associated with having to obtain catalog
                  information from alternate source(s).

26.   EXECUTION AND ACCEPTANCE. This Agreement or any modification hereof shall
      not be binding upon SUPPLIER until it has been duly accepted by SUPPLIER,
      as evidenced by the signature of one of SUPPLIER'S authorized officers or
      representatives in SUPPLIER'S offices, with an executed counterpart
      delivered to CUSTOMER. Commencement of business between the parties prior
      to such acceptance, signature and delivery of a counterpart shall not be
      construed as a waiver by SUPPLIER of this condition.

27.   POLICY / PROCEDURES. Any sales policy or procedure or procedure not
      specifically called out in this contract will default to the policies and
      procedures listed in Schedule E - "Federal-Mogul US Aftermarket Sales
      Policies - Revised 5/20/04"

28.   ENTIRETY OF CONTRACT. This writing is intended by the parties as the
      final, complete and exclusive statement of the terms, conditions and
      specifications of their agreement and is intended to supersede all
      previous oral or written agreements and understandings between the parties
      relating to its specific subject matter. No employee or agent of SUPPLIER
      has authority to make any statement, representation, promise or agreement
      not contained in this Agreement. No prior stipulation, agreement,
      understanding or course of dealing between the parties or their agents
      with respect to the subject matter of this

                                       25


      Agreement shall be valid or enforceable unless embodied in this Agreement.
      No amendment, modification or waiver of any provision of this Agreement
      shall be valid or enforceable unless in writing and signed by all parties
      to this Agreement. This Agreement shall supersede, and shall not be
      modified or amended in any way by the terms of, any purchase order which
      may be issued by CUSTOMER for the purchase of product hereunder.

29.   SEVERABILITY. If any provision of this Agreement or the application of any
      such provision to any person or circumstance is held invalid, the
      application of such provision to any other person or circumstance and the
      remainder of this Agreement will not be affected thereby and will remain
      in full effect.

30.   GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED AND ACCEPTED AND SHALL BE
      DEEMED TO HAVE BEEN MADE AT ROCHESTER, NEW YORK. Any dispute, claim or
      controversy arising out of or related to this Agreement (or any of the
      Agreements attached hereto as exhibits) or breach, termination or validity
      thereof, may be, by mutual consent of the parties, settled by arbitration
      conducted expeditiously, in English, in accordance with the commercial
      Arbitration Rules of the American Arbitration Association ("AAA"). Within
      ten (10) business days of the filing of arbitration, the parties shall
      select a sole independent and impartial arbitrator in accordance with such
      Rules. If the parties mutually agree to arbitration, but are unable to
      agree upon an arbitrator within such period, the AAA will appoint an
      arbitrator on the eleventh (11th) day, which arbitrator shall be
      experienced in commercial matters. The arbitrator will issue findings of
      fact and conclusions of law to support his/her opinion and is not
      empowered to award damages in excess of compensatory damages. The place of
      arbitration shall be Rochester, New York. Judgment upon the award rendered
      by the arbitrator may be entered by any court having jurisdiction thereof.
      Notwithstanding any of the foregoing, either party may seek remedies
      through the courts, including, without limitation, injunctive relief,
      prior and without prejudice to arbitration in accordance with this
      provision. THE PARTIES HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY
      IN ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY HEREUNDER.

                  Notwithstanding anything contained in this Agreement, SUPPLIER
                  shall not be liable in any arbitration, litigation or other
                  proceeding for anything other than actual, compensatory
                  damages.

31.   RENEWABILITY. Subject to the requirement that CUSTOMER purchase Product in
      the amount of the Aggregate Shortfall Amount in Section 3, this Agreement
      has an established term and shall not automatically renew upon its
      expiration. If mutually desired, the Parties agree to terminate this
      Agreement and replace it with another Agreement prior to the expiration of
      the established term of this Agreement.

IN WITNESS WHEREOF, the parties hereto have set their hands as of the date first
written above.

FEDERAL-MOGUL CORPORATION                 MONRO SERVICE CORPORATION

Signature:  /s/ Joseph P. Felicelli       Signature: /s/ Robert Gross
            -----------------------                  ---------------------------

Name:       Joseph P. Felicelli           Name:      Robert Gross

Title:      Executive Vice President      Title:     President/CEO

Date:       November 2, 2004              Date:      November 2, 2004

                                       26

EX-31.1

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

      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 registrant
      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
            registrant, 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 registrant'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 registrant's
            internal control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant'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 registrant'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
            registrant's internal control over financial reporting.

      Date: February 3, 2005

                                        /s/ Robert G. Gross
                                        ----------------------------------------
                                        Robert G. Gross
                                        President and Chief Executive Officer

                                       27

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

      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 registrant
      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
            registrant, 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 registrant'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 registrant's
            internal control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant'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 registrant'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
            registrant's internal control over financial reporting.

      Date: February 3, 2005

                                       /s/ Catherine D'Amico
                                       -----------------------------------------
                                       Catherine D'Amico
                                       Executive Vice President - Finance and
                                       Chief Financial Officer

                                       28

EX-32.1

                                                                    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 25, 2004 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 3, 2005
      -----------------------------------
      Robert G. Gross
      Chief Executive Officer

      /s/ Catherine D'Amico                        Dated: February 3, 2005
      -----------------------------------
      Catherine D'Amico
      Chief Financial Officer

                                       29