8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Date of Report (Date of Earliest Event Reported):

March 27, 2006

MONRO MUFFLER BRAKE, INC.

(Exact name of registrant as specified in its charter)

New York	0-19357	16-0838627
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

200 Holleder Parkway, Rochester, New York	14615
(Address of Principal Executive Offices)	(Zip Code)
Registrant’s telephone number, including area code	(585) 647-6400

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

As described in Item 8.01, which is incorporated herein by reference, Monro Muffler Brake, Inc. (the “Company”) will enter into Resale Restriction Agreements with its executive officers and certain senior-level managers, effective as of March 24, 2006.

Item 8.01 Other Events

On March 27, 2006, the Company announced that on March 27, 2006 the Compensation Committee (the “Committee”) of the Company’s Board of Directors approved the accelerated vesting of all 220,000 unvested options (the “Options”) previously awarded to the Company’s employees. As a result, these Options to purchase 220,000 shares of the Company’s common stock, which would otherwise have vested at various times over the next four years, became fully vested on March 24, 2006. The Options represent approximately 13% of the total number of options currently outstanding to the Company’s employees. Further, all of the Options have strike prices below $38.10, the closing price per share of the Company’s common stock on March 23, 2006. In connection with the acceleration of the Options, the Company expects to record a one-time non-cash stock-based compensation charge of approximately $300,000 to $400,000, or $.02 to $.03 per diluted share, in the fourth quarter of fiscal 2006.

The Committee’s decision to accelerate the vesting of the Options was made to eliminate future compensation expense that the Company would otherwise recognize with respect to these options following the Company’s adoption of SFAS 123(R), which became effective for the Company on March 26, 2006. The Company expects that as a result of the vesting acceleration, it will eliminate the recognition of approximately $900,000 to $1,000,000 of non-cash expense over the next four years, beginning March 26, 2006. It is anticipated that more than half of the expense reduction would be attributable to fiscal 2007.

Also in connection with the acceleration of the Options, the Company’s executive officers and certain senior-level managers (each, an “Executive”) will enter into Resale Restriction Agreements. Each Agreement will be effective as of March 24, 2006. The Agreement prohibits (except on the occurrence of a “change of control” of the Company, if applicable) the Executive’s sale or other transfer of any share received through the exercise of an accelerated Option until the original vesting date for such Option, as such date is set forth in the Executive’s stock option award agreement. A copy of the Resale Restriction Agreement is attached as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference

Item 9.01 Financial Statements and Exhibits

(a)	Not applicable.
(b)	Not applicable.

(c) The following is a list of exhibits furnished with this Current Report on Form 8-K:

Exhibit No.	Description
10.1	Resale Restriction Agreement by and between Monro Muffler Brake, Inc. and the Executive, effective as of March 24, 2006.
99.1	Press release dated March 27, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MONRO MUFFLER BRAKE, INC.
			(Registrant)
March 27, 2006	By:	/s/	John W. Van Heel
			John W. Van Heel
			Senior Vice President-Store Support and Secretary

EX-10.1

Exhibit 10.1

MONRO MUFFLER BRAKE, INC.
RESALE RESTRICTION AGREEMENT

     This RESALE RESTRICTION AGREEMENT (the “Agreement”) with respect to certain stock option award agreements (the “Option Agreements”) issued under the 1998 Monro Muffler Brake, Inc. Employee Stock Option Plan (the “Plan”) is made by and between Monro Muffler Brake, Inc., a New York corporation (the “Company”), and William M. Wilson (the “Holder”).

     WHEREAS, under the Plan, the Holder has been granted one or more options (the “Options”) to acquire shares of common stock of the Company (the “Shares”) in such quantities and at the exercise prices set forth in Exhibit A hereto pursuant to the Option Agreements;

     WHEREAS, the Options have been made fully vested and exercisable, effective as of March 24, 2006, by reason of an action of the Compensation Committee of the Company’s Board of Directors on March 23, 2006; and

     WHEREAS, as a condition to the acceleration of the vesting of the Options, the Company and the Holder have agreed to impose certain resale restrictions on the Shares subject to the Options as provided herein on the terms and conditions contained herein.

     NOW, THEREFORE, it is agreed as follows:

     1. The Holder acknowledges that he or she has reviewed this Agreement in full. The Holder further acknowledges that the Holder has consented to the acceleration of vesting of the Options, notwithstanding any effect that the acceleration of vesting may have on the status of the Options as incentive stock options (ISOs) under the Internal Revenue Code (if applicable). Exhibit B is a listing of Holder’s options that will change from ISOs to non-qualified stock options as a result of this acceleration.

     2. The Holder agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any Shares (or any interest in any Shares) until the Shares have been released from these resale restrictions (hereinafter referred to as the “Resale Restrictions”).

     3. The Holder agrees that the Shares under the heading “Total Number of Restricted Shares” in Exhibit A shall be subject to the Resale Restrictions, other than with respect to sales of such Shares necessary to pay withholding taxes incurred as a result of the exercise of the Options. The Company and its transfer agent are authorized to decline to make any transfers of securities if such transfer would constitute a violation or breach of this Agreement. Any attempted transfer by the Holder in breach of this Agreement shall be null and void. The Holder acknowledges and agrees that the stock certificate issued as a result of the exercise of the Option set forth in Exhibit A shall bear the following restrictive legend which restricts the transferability of the Shares:

     THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A RESALE RESTRICTION AGREEMENT BY AND BETWEEN THE STOCKHOLDER AND THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

     4. The Resale Restrictions shall lapse in accordance with the vesting schedule applicable to the Shares subject to the Options prior to the acceleration of vesting approved by the Compensation Committee of the Company’s Board of Directors and effective March 24, 2006.

     5. Notwithstanding the foregoing, in the event any Option contains a change in control provision that provides for the acceleration and the vesting of Shares subject to such Option, and there occurs a change in control of the Company, then 100% of the Shares subject to the Option shall become free from the Resale Restrictions.

     6. In the event the Holder’s employment with the Company is terminated for any reason other than death, the Resale Restrictions shall continue to apply to the Shares subject to the Options in accordance with the schedule set forth on Exhibit A (subject to their lapse in accordance with Section 4 and their earlier lapse in accordance with Section 5 hereof).

     7. This Agreement shall be effective as of March 24, 2006.

     8. The Holder represents and warrants that he or she has full power to enter into this Agreement.

     9. This Agreement, the Option Agreement(s) and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior understandings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified except by means of a writing signed by the Company and the Holder. This Agreement is to be construed in accordance with and governed by the internal laws of the State of New York without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of New York to the rights and duties of the parties. Nothing in this Agreement (except as expressly provided herein) is intended to confer any rights or remedies on any persons other than the parties. Should any provision of this Agreement be determined to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

     10. This Agreement shall be binding upon the Company and the Holder as well as the successors and assigns (if any) of the Company and the Holder.

     11. The acceleration of vesting of any of Holder’s Options is contingent on the Holder signing and returning this Agreement by April 7, 2006 and, if not so returned, the Holder shall be deemed to have rejected the acceleration.

MONRO MUFFLER BRAKE, INC.	HOLDER
By:
Date:	Date:

EX-99.1

Exhibit 99.1

CONTACT:	Robert Gross
	President and Chief Executive Officer
	(585) 647-6400
	Catherine D’Amico
	Executive Vice President — Finance
	Chief Financial Officer
	(585) 647-6400
	Investor Relations:
	Melissa Myron/Lauren Puffer
	Media:
	Alecia Pulman
	Financial Dynamics
	(212) 850-5600

NOT FOR IMMEDIATE RELEASE

MONRO MUFFLER BRAKE, INC. ANNOUNCES ACCELERATION OF STOCK OPTION VESTING
~ Updates Fiscal 2006 Outlook ~

     ROCHESTER, N.Y. — March 27, 2006 — Monro Muffler Brake, Inc. (Nasdaq: MNRO) a leading provider of automotive undercar repair and tire services, today announced that the Compensation Committee of its Board of Directors met on March 23, 2006 and approved the accelerated vesting of all 220,000 unvested options held by the Company’s employees, effective March 24, 2006.

     The Company’s executive officers and certain senior level managers have agreed that they will hold the shares related to the accelerated vesting at least through the original vesting date of the corresponding options. Except for the accelerated vesting, all other material terms and conditions of the previously granted awards remain unchanged.

     The decision to accelerate the vesting of these stock options was made to reduce non-cash compensation expense that would otherwise have been recorded in future periods following the Company’s adoption of SFAS 123(R), which became effective for the Company on March 26, 2006. The Company anticipates that the accelerated vesting will result in a one-time non-cash stock-based compensation charge of approximately $300,000 to $400,000, or $.02 to $.03 per diluted share, in the fourth quarter of fiscal 2006. As a result of the vesting acceleration, the Company expects it will eliminate the recognition of approximately $900,000 to $1,000,000 of non-cash expense over the next four years, beginning March 26, 2006, with more than half of the expense reduction attributable to fiscal 2007. Additional details of the option acceleration can be found in the Company’s Current Report on Form 8-K filed today with the Securities and Exchange Commission.

     Fiscal 2006 Update

     Comparable store sales for the fourth quarter are expected to be approximately flat compared to an increase of 4.5% last year. As a result, full year comparable store sales will be up approximately 1.5% to 2.0%. Excluding the charge related to the accelerated vesting of stock options, diluted earnings per share is currently expected to be at the lower end of the Company’s previously issued $1.52 to $1.55 range, which compares to $1.35 per diluted share last year. Fiscal 2006 EBITDA is expected to improve approximately $8 million to $58 million. With respect to fiscal 2007, the Company will provide a more detailed outlook when it reports full year results in late May, 2006 and has more visibility on the ProCare and Strauss acquisitions. Monro currently anticipates its fiscal 2007 outlook will reflect an earnings growth target of approximately 15% over the prior year.

     Robert G. Gross, President and Chief Executive Officer, commented, “Our performance in the fourth quarter was impacted by the same factors we have experienced all year, namely consumers choosing to defer large-ticket repair purchases. These factors, combined with unseasonably warm weather, resulted in our comparable store sales coming in slightly lower than we initially anticipated. That said, we effectively controlled our expenses and are on track to meet our bottom line expectations for the full year. Further, we believe the progress we have made this year positions us to once again meet our long-term earnings growth target in fiscal 2007.”

     Monro Muffler Brake operates a chain of stores providing automotive undercar repair and tire services in the United States, operating under the brand names of Monro Muffler Brake and Service, Speedy Auto Service by Monro, Mr. Tire and Tread Quarters Discount Tires. The Company currently operates 625 stores and has 16 dealer locations in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware, Maine and Michigan. Monro’s stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems, tires and many vehicle maintenance services.

     The statements contained in this press release that are not historical facts 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 elsewhere herein and in the Company’s Securities and Exchange Commission filings, including the report on Form 10-K for the fiscal year ended March 26, 2005.

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