FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 29, 2001. ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ Commission File No. 0-19357 -------- MONRO MUFFLER BRAKE, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 16-0838627 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification #) 200 Holleder Parkway, Rochester, New York 14615 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code 585-647-6400 ---------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] As of February 11, 2002, 8,217,431 shares of the Registrant's Common Stock, par value $ .01 per share, were outstanding.
MONRO MUFFLER BRAKE, INC. INDEX ----- Part I. Financial Information Page No. -------- Consolidated Balance Sheet at December 29, 2001 and March 31, 2001 3 Consolidated Statement of Income for the quarter and nine months ended December 29, 2001 and December 31, 2000 4 Consolidated Statement of Changes in Common Shareholders' Equity for the nine months ended December 29, 2001 5 Consolidated Statement of Cash Flows for the nine months ended December 29, 2001 and December 31, 2000 6 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 Exhibit Index 15 - 2 -
MONRO MUFFLER BRAKE, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) <TABLE> <CAPTION> DECEMBER 29, MARCH 31, 2001 2001 ---- ---- (DOLLARS IN THOUSANDS) <S> <C> <C> ASSETS Current assets: Cash and equivalents, including interest-bearing accounts of $0 at December 29, 2001 and $751 at March 31, 2001 $ 0 $ 751 Trade receivables 1,396 1,161 Inventories, at LIFO cost 44,214 41,071 Deferred income tax asset 899 899 Other current assets 8,739 5,885 ------------ ------------ Total current assets 55,248 49,767 ------------ ------------ Property, plant and equipment 213,619 209,420 Less - Accumulated depreciation and amortization (85,321) (77,934) ------------ ------------ Net property, plant and equipment 128,298 131,486 Other noncurrent assets 11,842 12,586 ------------ ------------ Total assets $ 195,388 $ 193,839 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 8,190 $ 10,646 Trade payables 13,321 11,148 Federal and state income taxes payable 1,982 648 Accrued interest 309 477 Accrued payroll, payroll taxes and other payroll benefits 4,963 5,150 Accrued insurance 2,948 948 Accrued restructuring costs 400 400 Other current liabilities 7,698 7,152 ------------ ------------ Total current liabilities 39,811 36,569 Long-term debt 39,213 50,857 Other long-term liabilities 2,277 730 Accrued long-term restructuring costs 1,577 1,859 Deferred income tax liability 5,085 6,014 ------------ ------------ Total liabilities 87,963 96,029 ------------ ------------ Commitments Shareholders' equity: Class C Convertible Preferred Stock, $1.50 par value, $.216 conversion value; 150,000 shares authorized; 91,727 shares issued and outstanding 138 138 Common Stock, $.01 par value, 15,000,000 shares authorized; 8,427,215 shares issued at December 29, 2001; 8,373,678 shares issued at March 31, 2001 84 84 Treasury Stock, 216,800 shares at December 29, 2001 and March 31, 2001, at cost (1,831) (1,831) Additional paid-in capital 37,596 36,344 Other comprehensive income (964) Retained earnings 72,402 63,075 ------------ ------------ Total shareholders' equity 107,425 97,810 ------------ ------------ Total liabilities and shareholders' equity $ 195,388 $ 193,839 ============ ============ </TABLE> These financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K (File No. 0-19357), filed by the Company with the Securities and Exchange Commission on June 28, 2001. - 3 -
MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) <TABLE> <CAPTION> FOR THE QUARTER ENDED FOR THE NINE MONTHS ENDED FISCAL DECEMBER FISCAL DECEMBER --------------- --------------- 2001 2000 2001 2000 ---- ---- ---- ---- (13 WEEKS) (a) (39 WEEKS) (a) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> Sales $ 52,443 $ 51,792 $174,313 $172,883 Cost of sales, including distribution and occupancy costs 32,589 31,952 101,735 102,051 -------- -------- -------- -------- Gross profit 19,854 19,840 72,578 70,832 Operating, selling, general and administrative expenses 16,068 15,930 54,793 52,042 -------- -------- -------- -------- Operating income 3,786 3,910 17,785 18,790 Interest expense, net of interest income for the quarter of $8 in 2001 and $26 in 2000, and year-to-date of $22 in 2001 and $78 in 2000 835 1,399 2,953 4,524 Other expense, net 78 239 378 501 -------- -------- -------- -------- Income before provision for income taxes 2,873 2,272 14,454 13,765 Provision for income taxes 1,092 904 5,127 5,478 -------- -------- -------- -------- Net income $ 1,781 $ 1,368 $ 9,327 $ 8,287 ======== ======== ======== ======== Earnings per share: Basic $ 0.22 $ 0.17 $ 1.14 $ 1.01 ======== ======== ======== ======== Diluted $ 0.20 $ 0.15 $ 1.03 $ 0.93 ======== ======== ======== ======== Weighted average number of shares of common stock and common stock equivalents used in computing earnings per share: Basic 8,209 8,177 8,188 8,192 ======== ======== ======== ======== Diluted 9,043 8,884 9,020 8,899 ======== ======== ======== ======== </TABLE> (a) See Note 1 to these financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K (File No. 0-19357), filed by the Company with the Securities and Exchange Commission on June 28, 2001. - 4 -
MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY (UNAUDITED) (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> LESS: NOTE NET ACCUMULATED ADDITIONAL RECEIVABLE ADDITIONAL OTHER PREFERRED COMMON TREASURY PAID-IN FROM PAID-IN RETAINED COMPENSATION STOCK STOCK STOCK CAPITAL SHAREHOLDER CAPITAL EARNINGS INCOME TOTAL ----- ----- ----- ------- ----------- ------- -------- ------ ----- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> Balance at March 31, 2001 $138 $84 $(1,831) $36,632 $(288) $36,344 $63,075 $97,810 Other comprehensive income: Cumulative effect at April 1, 2001 $(352) (352) Net income 9,327 9,327 Other comprehensive income: SFAS No. 133 adjustment for the nine months ended December 29, 2001 (612) (612) -------- Total comprehensive income 8,715 Exercise of stock options 655 655 655 Vesting of non-qualified stock 519 519 519 options Note receivable from shareholder 78 78 78 -------- -------- --------- --------- --------- --------- --------- -------- -------- Balance at December 29, 2001 $138 $84 $(1,831) $37,806 $(210) $37,596 $72,402 $(964) $107,425 ======== ======== ========= ========= ========= ========= ========= ======== ======== </TABLE> These financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K (File No. 0-19357), filed by the Company with the Securities and Exchange Commission on June 28, 2001. - 5 -
MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) <TABLE> <CAPTION> FOR THE NINE MONTHS ENDED FISCAL DECEMBER 2001 2000 ---- ---- (DOLLARS IN THOUSANDS) INCREASE (DECREASE) IN CASH <S> <C> <C> Cash flows from operating activities: Net income $ 9,327 $ 8,287 ------------ ------------ Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 9,503 9,645 Non-qualified stock option expense 727 Net change in deferred income taxes (291) Gain on disposal of property, plant and equipment (59) (176) Increase in trade receivables (235) (479) Increase in inventories (3,143) (566) Increase in other current assets (2,854) (106) Decrease in other noncurrent assets 304 460 Increase in trade payables 2,173 955 Increase (decrease) in accrued expenses 2,396 (531) Increase in federal and state income taxes payable 1,334 2,418 Decrease in other long-term liabilities (357) (1,204) ------------ ------------ Total adjustments 9,498 10,416 ------------ ------------ Net cash provided by operating activities 18,825 18,703 ------------ ------------ Cash flows from investing activities: Capital expenditures (6,205) (8,618) Proceeds from the disposal of property, plant and equipment 74 728 ------------ ------------ Net cash used for investing activities (6,131) (7,890) ------------ ------------ Cash flows from financing activities: Proceeds from borrowings 75,773 77,050 Principal payments on long-term debt and capital lease obligations (89,873) (87,009) Exercise of stock options 655 126 Repurchase of common stock (980) ------------ ------------ Net cash used for financing activities (13,445) (10,813) ------------ ------------ Decrease in cash (751) 0 Cash at beginning of period 751 507 ------------ ------------ Cash at end of period $ 0 $ 507 ============ ============ </TABLE> These financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K (File No. 0-19357), filed by the Company with the Securities and Exchange Commission on June 28, 2001. - 6 -
MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Change in Fiscal Year - ------------------------------ During the fiscal year ended March 31, 2001, the Board of Directors of the Company elected to change the Company's fiscal year end from March 31 to the last Saturday in March. This change was effective with fiscal year 2002 which began on April 1, 2001. The following are the dates represented by each fiscal period: <Table> <S> <C> "Quarter Ended Fiscal December 2001": September 30, 2001 - December 29, 2001 (13 weeks) "Quarter Ended Fiscal December 2000": October 1, 2000 - December 31, 2000 "Nine Months Ended Fiscal December 2001": April 1, 2001 - December 29, 2001 (39 weeks) "Nine Months Ended Fiscal December 2000": April 1, 2000 - December 31, 2000 </Table> Note 2 - Derivative Financial Instruments - ----------------------------------------- On June 17, 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities" effective for fiscal years beginning after June 15, 2000. This statement standardizes the accounting for derivatives and hedging activities and requires that all derivatives be recognized in the statement of financial position as either assets or liabilities at fair value. Changes in the fair value of derivatives that do not meet the hedge accounting criteria are to be reported in earnings. The Company adopted this standard effective April 1, 2001. The adoption of SFAS No. 133 did not materially affect the Company's results of operations or financial position. The notional amount of derivative financial instruments, which consisted solely of interest rate swaps used to minimize the risk and/or costs associated with changes in interest rates, was approximately $42 million at December 29, 2001. At that date, swap maturities ranged from November 2002 through October 2005. These swap contracts require the Company to pay fixed rates of interest ranging from 5.21% to 7.15%, and receive variable rates of interest based on the 30 day LIBOR rate (plus a spread of 80 basis points in the case of the 7.15% fixed rate contract). At December 29, 2001, the fair value of the contracts, net of tax, is recorded as a component of other comprehensive income in the Statement of Changes in Common Shareholders' Equity. Note 3 - Stock Repurchase - ------------------------- In November 1999, the Board of Directors approved a share repurchase program initially authorizing the Company to purchase up to 300,000 shares of its common stock at market prices. In May 2000, the Board of Directors approved an increase of 120,000 shares, bringing the total authorization to 420,000 shares. The amount and timing of any purchase will depend upon a number of factors, including the price and availability of the Company's shares and general market conditions. The Company's purchases of common stock are recorded as "Treasury Stock" and result in a reduction of "Shareholders' equity". At December 29, 2001, the Company had repurchased 216,800 shares under such program. Note 4 - Inventories - -------------------- The Company's inventories consist of automotive parts and tires. Substantially all merchandise inventories are valued under the last-in, first-out (LIFO) method. Under the first-in, first-out (FIFO) method, these inventories would have been $15,000 and $47,000 higher at December 29, 2001 and March 31, 2001, respectively. The FIFO value of inventory approximates the current replacement cost. - 7 -
MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5 - Cash and Equivalents - ----------------------------- The Company's policy is to invest cash in excess of operating requirements in income producing investments. Cash equivalents of $751,000 at March 31, 2001 include money market accounts which have maturities of three months or less. Note 6 - Supplemental Disclosure of Cash Flow Information - --------------------------------------------------------- Debt borrowings and repayments shown in the Consolidated Statement of Cash Flows represent gross borrowings and gross repayments during the period. Under its Revolving Credit Facility, the Company either borrows or repays debt daily depending on its cash needs. The following transactions represent noncash investing and financing activities during the periods indicated: NINE MONTHS ENDED DECEMBER 29, 2001: In connection with the sale or disposal of assets, the Company reduced fixed assets and other current liabilities by $161,000. In connection with performance-based executive compensation, the Company recognized compensation expense of $727,000, increased other long-term liabilities by $208,000 and increased additional paid-in capital by $519,000. In connection with recording the value of the Company's swap contracts, other comprehensive income decreased by $964,000, other long-term liabilities increased by $1,602,000 and the deferred income tax liability was reduced by $638,000. NINE MONTHS ENDED DECEMBER 31, 2000: In connection with the termination of a capital lease, the Company reduced debt and fixed assets by $114,000 and $50,000, respectively, and recorded a gain of $64,000. In connection with the sale or disposal of assets, the Company reduced fixed assets and other current liabilities by $126,000. CASH PAID DURING THE PERIOD: NINE MONTHS ENDED FISCAL DECEMBER --------------------------------- 2001 2000 ---- ---- Interest, net $2,915,000 $4,292,000 Income taxes 4,084,000 3,060,000 Note 7 - Reclassifications - -------------------------- Certain amounts in the Consolidated Statement of Cash Flows have been reclassified to improve reporting and maintain comparability among the periods presented. Note 8 - Other - -------------- These financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K (File No. 0-19357), filed by the Company with the Securities and Exchange Commission on June 28, 2001. - 8 -
MONRO MUFFLER BRAKE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The statements contained in this Form 10-Q which are not historical facts, including (without limitation) statements made in the Management's Discussion and Analysis of Financial Condition and Results of Operations, may contain statements of future expectations and other forward-looking statements that are subject to important factors that could cause actual results to differ materially from those in the forward-looking statements, including (without limitation) product demand, the effect of economic conditions, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, industry regulation, the continued availability of capital resources and financing and other risks set forth or incorporated elsewhere herein and in the Company's Securities and Exchange Commission filings. RESULTS OF OPERATIONS The following table sets forth income statement data of Monro Muffler Brake, Inc. ("Monro" or the "Company") expressed as a percentage of sales for the fiscal periods indicated. <TABLE> <CAPTION> FOR THE QUARTER ENDED FOR THE NINE MONTHS ENDED FISCAL DECEMBER FISCAL DECEMBER --------------- --------------- 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> Sales 100.0% 100.0% 100.0% 100.0% Cost of sales, including distribution and occupancy costs 62.1 61.7 58.4 59.0 ------- ------- ------- ------- Gross profit 37.9 38.3 41.6 41.0 Operating, selling, general and administrative expenses 30.7 30.8 31.4 30.1 ------- ------- ------- ------- Operating income 7.2 7.5 10.2 10.9 Interest expense - net 1.6 2.7 1.7 2.6 Other expenses - net .1 .5 .2 .3 ------- ------- ------- ------- Income before provision for income taxes 5.5 4.3 8.3 8.0 Provision for income taxes 2.1 1.7 2.9 3.2 ------- ------- ------- ------- Net income 3.4% 2.6% 5.4% 4.8% ======= ======= ======= ======= </TABLE> - 9 -
THIRD QUARTER AND NINE MONTHS ENDED DECEMBER 29, 2001 COMPARED TO THIRD QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2000. Sales were $52.4 million for the quarter ended December 29, 2001 compared with $51.8 million in the quarter ended December 31, 2000. The sales increase of $.7 million, or 1.3%, was due to a comparable store sales increase of .6%, as well as an increase in sales of $.5 million from stores opened since the beginning of fiscal 2001. Sales for the nine months ended December 29, 2001 were $174.3 million compared with $172.9 million for the same period of the prior year. The sales increase of $1.4 million, or .8% was due, in part, to an increase in comparable store sales of .2%, as well as an increase in sales from new stores of $2.0 million. This increase was partially offset by a decrease of $.8 million in sales from stores closed in fiscal years 2001 and 2002. When adjusted for days, comparable store sales increased .6% year-to-date. At December 29, 2001 and December 31, 2000 the Company had 513 company-operated stores. Gross profit for the quarter ended December 29, 2001 was $19.9 million, or 37.9% of sales, as compared to $19.8 million, or 38.3% of sales for the quarter ended December 31, 2000. Gross profit for the nine months ended December 29, 2001 was $72.6 million, or 41.6% of sales, as compared to $70.8 million, or 41.0% of sales for the nine months ended December 31, 2000. The decrease in gross profit for the quarter ended December 29, 2001 as a percentage of sales is due to an increase in material costs, primarily related to an increase in oil prices, as well as an increase related to the timing of the provision of inventory shrink and LIFO reserves. Outside purchases also remain a challenge as the Company continues to expand its service offerings, and with the continuing parts proliferation. These increases were largely offset by a decrease in distribution and occupancy costs, as well as a decrease in technician labor due to improved productivity and control. Operating, selling, general and administrative ("OSG & A") expenses for the quarter ended December 29, 2001 increased by $.1 million to $16.1 million from the quarter ended December 31, 2000, and were 30.7% of sales compared to 30.8% in the same quarter of the prior year. For the nine months ended December 29, 2001, these expenses increased by $2.8 million to $54.8 million from the comparable period of the prior year and were 31.4% of sales compared to 30.1% in the comparable period of the prior year. The third quarter decrease in OSG & A expenses as a percent of sales is primarily due to relatively flat expenses against a comparable store sales increase. Net interest expense for the quarter ended December 29, 2001 decreased by approximately $.6 million compared to the same period in the prior year, and decreased from 2.7% to 1.6% as a percentage of sales for the same periods. Net interest expense for the nine months ended December 29, 2001 decreased by approximately $1.6 million compared to the comparable period in the prior year, and decreased from 2.6% to 1.7% as a percentage of sales for the same periods. The weighted average interest rate for the quarter ended December 29, 2001 was approximately 230 basis points lower than the rate for the quarter ended December 31, 2000. Additionally, the weighted average debt outstanding decreased by approximately $14 million, resulting in a decrease in expense between the two quarters. Other expense, net, for the quarter ended December 29, 2001 decreased by $.2 million to $78,000 from the quarter ended December 31, 2000. For the nine months ended December 29, 2001, other expense, net, decreased by $.1 million to $.4 million from the nine months ended December 31, 2000. The primary reason for the decline in fiscal 2002 is a decrease in store closing expense related to Monro store closures. The effective tax rate for the quarter ended December 29, 2001 was 38% of pre-tax income as compared to 39.8% for the quarter ended December 31, 2000. There has been a reduction in the Company's overall effective state income tax rate because of the Company's growth in lower-taxing states, especially in connection with the fiscal year 1999 Speedy acquisition. The Company recorded a one-time tax benefit of $.4 million in the quarter ended June 30, 2001, which reduced the tax rate by 640 basis points from the prior year quarter, due to a reduction in the Company's effective tax rate. This one-time adjustment reduced the accrual for amounts provided in prior fiscal years. Additionally, the Company expects this state rate reduction to continue for the entire fiscal year 2002, and accordingly, has reduced the provision for taxes from 39.8% to 38.0% of pre-tax income for fiscal 2002. - 10 -
Net income for the quarter ended December 29, 2001 was approximately $1.8 million as compared to a net income of $1.4 million reported for the quarter ended December 31, 2000, an increase of 30.2%. For the nine months ended December 29, 2001, net income of approximately $9.3 million increased 12.5%, due to the factors discussed above. Earnings per share for the quarter and nine months ended December 29, 2001 increased 33.3% and 10.8%, respectively. Interim Period Reporting The data included in this report are unaudited and are subject to year-end adjustments; however, in the opinion of management, all known adjustments (which consist only of normal recurring adjustments) have been made to present fairly the Company's operating results for the unaudited periods. The results for interim periods are not necessarily indicative of results to be expected for the fiscal year. CAPITAL RESOURCES AND LIQUIDITY Capital Resources In fiscal year 2001, the Company's primary capital requirements have been the funding of its new store expansion program and the upgrading of facilities and systems in existing stores. For the nine months ended December 29, 2001, the Company spent approximately $6.2 million for equipment and new store construction. Funds were provided primarily by cash flow from operations. Management believes that the Company has sufficient resources available (including cash and equivalents, net cash flow from operations and bank financing) to expand its business as currently planned. Liquidity Concurrent with the closing of the Speedy acquisition in September 1998, the Company obtained a new $135 million secured credit facility ("the Credit Facility" or "the Facility") from a syndicate of lenders led by The Chase Manhattan Bank. Approximately $55 million was borrowed under this Facility to pay the all-cash purchase price, including transaction expenses of approximately $4 million. In addition, the Company refinanced approximately $35 million of indebtedness through the new Credit Facility, with the balance of the Facility available for future working capital needs. More specifically, the new financing structure consists of a $25 million term loan (of which approximately $9.4 million was outstanding at December 29, 2001), a $75 million Revolving credit facility (of which approximately $26.9 million was outstanding at December 29, 2001), and synthetic lease (off-balance sheet) financing for a significant portion of the Speedy real estate, totaling $35 million (of which approximately $32.4 million was outstanding at December 29, 2001). The loans bear interest at the prime rate or LIBOR-based rate options tied to the Company's financial performance. The Company must also pay a facility fee on the unused portion of the commitment. The Credit Facility has a five-year term. Interest only is payable monthly on the Revolving credit and synthetic lease borrowings throughout the term. In addition to monthly interest payments, the $25 million term loan requires quarterly principal payments. Principal payments totalling $15.6 million have been paid through December 29, 2001. The term loan and Revolving credit facility are secured by all accounts receivable, inventory and other personal property. The Company has also entered into a negative pledge agreement whereby it is restricted from encumbering real property, with certain permissible exceptions. The synthetic lease is secured by the real property to which it relates. Certain of the Company's stores are financed by mortgages currently bearing interest at LIBOR plus 100 basis points. The Company has financed its office/warehouse facility via a 10 year mortgage with a current balance of $2.1 million, amortizable over 20 years, and an eight year term loan with a balance of $.2 million. Certain of the Company's long-term debt agreements require, among other things, the maintenance of specified current ratios, interest and rent coverage ratios and amounts of tangible net worth. They also contain restrictions on cash dividend payments. The Company enters into interest rate hedge agreements which involve the exchange of fixed and floating rate interest payments periodically over the life of the agreement without the exchange of the underlying principal amounts. The differential to be paid or received is accrued as interest rates change and is recognized over the life of the agreements as an adjustment to interest expense. - 11 -
FINANCIAL ACCOUNTING STANDARDS On June 29, 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141 and 142 ("SFAS 141 and SFAS 142"), "Business Combinations" and "Goodwill and Other Intangible Assets", respectively. SFAS 141 is effective immediately and SFAS 142 is effective for fiscal years beginning after December 15, 2001. The Company plans to adopt SFAS No. 142 effective March 31, 2002. The adoption of SFAS Nos. 141 and 142 is not expected to materially affect the Company's results of operations or financial position. - 12 -
MONRO MUFFLER BRAKE, INC. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K --------------------------------- a. Exhibits 11 - Statement of Computation of Per Share Earnings. b. Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended December 29, 2001. - 13 -
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 12, 2002 By /s/ Robert G. Gross ------------------------------------------ Robert G. Gross President and Chief Executive Officer DATE: February 12, 2002 By /s/ Catherine D'Amico ------------------------------------------ Catherine D'Amico Senior Vice President-Finance, Treasurer and Chief Financial Officer - 14 -
EXHIBIT INDEX Exhibit No. Description Page No. ----------- ----------- -------- 11 Statement of Computation of Per Share Earnings 16 - 15 -