1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998. ------------------ 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) (Zipcode) Registrant's telephone number, including area code 716-647-6400 ------------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of October 31, 1998, 8,321,701 shares of the Registrant's Common Stock, par value $ .01 per share, were outstanding after giving effect to the five percent stock dividend, paid June 18, 1998, to stockholders of record as of June 8, 1998.
2 MONRO MUFFLER BRAKE, INC. INDEX ----- <TABLE> <CAPTION> <S> <C> Part I. Financial Information Page No. -------- Item 1. Financial Statements Consolidated Balance Sheet at September 30, 1998 and March 31, 1998 3 Consolidated Statement of Income for the quarter and six months ended September 30, 1998 and 1997 4 Consolidated Statement of Changes in Common Shareholders' Equity for the six months ended September 30, 1998 5 Consolidated Statement of Cash Flows for the six months ended September 30, 1998 and 1997 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 Exhibit Index 14 </TABLE> -2-
3 MONRO MUFFLER BRAKE, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) <TABLE> <CAPTION> SEPTEMBER 30, MARCH 31, 1998 1998 -------------- -------------- (DOLLARS IN THOUSANDS) <S> <C> <C> ASSETS Current assets: Cash and equivalents, including interest-bearing accounts of $4,454 $ 4,454 $ 5,315 at September 30, 1998 and $5,315 at March 31, 1998 Trade receivables 960 841 Inventories, at LIFO cost 39,199 27,492 Deferred income tax asset 1,725 1,725 Other current assets 6,989 4,115 -------------- -------------- Total current assets 53,327 39,488 -------------- -------------- Property, plant and equipment 189,846 165,839 Less - Accumulated depreciation and amortization (53,590) (49,429) -------------- -------------- Net property, plant and equipment 136,256 116,410 Other noncurrent assets 10,263 3,190 ============== ============== Total assets $ 199,846 $ 159,088 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 4,832 $ 3,582 Trade payables 12,213 11,633 Federal and state income taxes payable 988 2 Accrued expenses and other current liabilities Accrued interest 188 233 Accrued payroll, payroll taxes and other payroll benefits 5,094 3,764 Accrued insurance 2,111 2,441 Accrued restructuring costs 4,768 Other current liabilities 7,495 4,316 -------------- -------------- Total current liabilities 37,689 25,971 Long-term debt 73,423 54,102 Other long-term liabilities 3,567 576 Deferred income tax liability 1,881 1,881 -------------- -------------- Total liabilities 116,560 82,530 -------------- -------------- Commitments Shareholders' equity: Class C Convertible Preferred Stock, $1.50 par value, $.216 and $.227 conversion value at September 30, 1998 and March 31, 1998, respectively; 150,000 shares authorized; 91,727 shares issued and outstanding 138 138 Common Stock, $.01 par value, 15,000,000 shares authorized; 8,321,701 shares and 7,876,901 shares issued and outstanding at September 30, 1998 and March 31, 1998, respectively 83 79 Additional paid-in capital 36,370 29,284 Retained earnings 46,695 47,057 -------------- -------------- Total shareholders' equity 83,286 76,558 ============== ============== Total liabilities and shareholders' equity $ 199,846 $ 159,088 ============== ============== </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 29, 1998. - 3 -
4 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) <TABLE> <CAPTION> QUARTER ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) <S> <C> <C> <C> <C> Sales $ 46,385 $ 41,540 $ 90,498 $ 82,313 Cost of sales, including distribution and occupancy costs (a) 26,770 23,231 51,090 45,862 ---------- ---------- ---------- ---------- Gross profit 19,615 18,309 39,408 36,451 Operating, selling, general and administrative expenses 14,330 11,735 26,720 23,227 ---------- ---------- ---------- ---------- Operating income 5,285 6,574 12,688 13,224 Interest expense, net of interest income for the quarter of $5 in 1998 and $22 in 1997, and year to date of $20 in 1998 and $44 in 1997 (a) 1,077 903 1,982 1,770 Other expense, net 194 86 302 172 ---------- ---------- ---------- ---------- Income before provision for income taxes 4,014 5,585 10,404 11,282 Provision for income taxes 1,603 2,233 4,136 4,513 ---------- ---------- ---------- ---------- Net income $ 2,411 $ 3,352 $ 6,268 $ 6,769 ========== ========== ========== ========== Basic earnings per share $ .29 $ .41 $ .76 $ .82 ========== ========== ========== ========== Diluted earnings per share $ .27 $ .37 $ .70 $ .75 ========== ========== ========== ========== Weighted average number of shares of common stock and common stock equivalents used in computing earnings per share: Basic 8,277 8,260 8,291 8,251 ========== ========== ========== ========== Diluted 8,947 9,038 8,993 9,037 ========== ========== ========== ========== (a) Amounts paid under operating and capital leases with affiliated parties totaled $467 and $474 for the quarters ended September 30, 1998 and 1997, respectively, and $963 and $957 for the six months ended September 30, 1998 and 1997, respectively. </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 29, 1998. - 4 -
5 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (UNAUDITED) <TABLE> <CAPTION> COMMON STOCK ADDITIONAL ------------ PAID-IN RETAINED SHARES AMOUNT CAPITAL EARNINGS ------ ------ ------- -------- (Amounts in thousands) <S> <C> <C> <C> <C> Balance at March 31, 1998 7,877 $ 79 $ 29,284 $ 47,057 Net income 6,268 Exercise of stock options 49 462 5% stock dividend 396 4 6,624 (6,629) Rounding (1) ---------- ---------- ---------- ---------- Balance at September 30, 1998 8,322 $ 83 $ 36,370 $ 46,695 ========== ========== ========== ========== </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 29, 1998. - 5 -
6 MONRO MUFFLER BRAKE, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) <TABLE> <CAPTION> SIX MONTHS ENDED SEPTEMBER 30, ------------- 1998 1997 -------------- -------------- (DOLLARS IN THOUSANDS) INCREASE (DECREASE) IN CASH <S> <C> <C> Cash flows from operating activities: Net income $ 6,268 $ 6,769 -------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 4,889 4,541 (Gain) loss on disposal of property, plant and equipment (65) 17 (Increase) decrease in trade receivables (119) 308 Increase in inventories (1,285) (3,779) Decrease in other current assets 320 120 (Increase) decrease in other noncurrent assets (1,168) 24 (Decrease) increase in trade payables (550) 2,439 Increase (decrease) in accrued expenses 846 (1,359) Increase in federal and state income taxes payable 986 1,169 Increase in other long-term liabilities 14 -------------- -------------- Total adjustments 3,868 3,480 -------------- -------------- Net cash provided by operating activities 10,136 10,249 -------------- -------------- Cash flows from investing activities: Capital expenditures (10,035) (12,573) Proceeds from the disposal of property, plant and equipment 65 22 Payment for purchase of Speedy Muffler King (21,490) -------------- -------------- Net cash used for investing activities (31,460) (12,551) -------------- -------------- Cash flows from financing activities: Proceeds from the sale of common stock (option exercises) 462 52 Proceeds from borrowings 91,670 30,534 Principal payments on long-term debt and capital lease obligations (71,669) (30,803) -------------- -------------- Net cash provided by (used for) financing activities 20,463 (217) -------------- -------------- Decrease in cash (861) (2,519) Cash at beginning of year 5,315 6,438 ============== ============== Cash at September 30 $ 4,454 $ 3,919 ============== ============== </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 29, 1998. - 6 -
7 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Acquisition of Speedy Stores - ------------------------------------- In September 1998, the Company completed the acquisition of 189 company-operated and 14 franchised Speedy stores, all located in the United States, from SMK Speedy International Inc. of Toronto Canada. Speedy stores provide automotive repair services, specializing in undercar care, in 11 states located primarily in the Northeast. The acquisition was accounted for as a purchase, and accordingly, the operating results of Speedy have been included in the Company's consolidated financial statements since the date of acquisition. Approximately $51 million was borrowed under a new $135 million secured credit facility to pay the all-cash purchase price, with an additional $16 million to be borrowed to provide for the closing of up to 20 underperforming or redundant Speedy stores, capital expenditures at remaining Speedy stores and transaction expenses. The excess of the aggregate purchase price over the fair value of net assets acquired is being amortized on a straight-line basis over 20 years. Note 2 - Stock Dividend - ----------------------- On May 13, 1998, the Board of Directors declared a five percent stock dividend, paid June 18, 1998, to stockholders of record as of June 8, 1998. The consolidated financial statements, including all share information therein, have been restated to reflect this dividend. Additionally, in accordance with antidilution provisions of the Class C Convertible Preferred Stock, the conversion value of the preferred stock was restated from $.227 per share to $.216 per share. Shares reserved for issuance to officers and key employees under outstanding options and under the 1984, 1987 and 1989 Incentive Stock Option Plans have also been retroactively adjusted for the five percent stock dividend. Note 3 - Inventories - ------------------- The Company's inventories consist of automotive parts and tires. Substantially all merchandise inventories are valued under the last-in, first-out (LIFO) method. Under the first-in, first-out (FIFO) method, these inventories would have been $480,000 and $426,000 higher at September 30, 1998 and March 31, 1998, respectively. The FIFO value of inventory approximates the current replacement cost. Note 4 - Cash and Equivalents - ---------------------------- The Company's policy is to invest cash in excess of operating requirements in income producing investments. Cash equivalents of $4,454,000 at September 30, 1998 and $5,315,000 at March 31, 1998 include money market accounts, which have maturities of three months or less. Note 5 - Supplemental Disclosure of Cash Flow Information - --------------------------------------------------------- The following transactions represent noncash investing and financing activities during the periods indicated: SIX MONTHS ENDED SEPTEMBER 30, 1998: Capital lease obligations of $170,000 were incurred under various lease obligations. In connection with the declaration of a five percent stock dividend (see Note 2), the Company increased accrued expenses, common stock and additional paid-in capital by $1,000, $4,000 and $6,624,000, respectively, and decreased retained earnings by $6,629,000. - 7 -
8 MONRO MUFFLER BRAKE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED SEPTEMBER 30, 1997: Capital lease obligations of $236,000 were incurred under various lease obligations. In connection with the declaration of a five percent stock dividend, the Company increased accrued expenses, common stock and additional paid-in capital by $1,000, $4,000 and $7,014,000, respectively, and decreased retained earnings by $7,019,000. CASH PAID DURING THE PERIOD: <TABLE> <CAPTION> SIX MONTHS ENDED SEPTEMBER 30, ------------- 1998 1997 ---- ---- <S> <C> <C> Interest, net $2,211,000 $1,983,000 Income taxes 3,152,000 3,344,000 </TABLE> Note 6 - Other - -------------- These financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K (File No. 0-19357), filed by the Company with the Securities and Exchange Commission on June 29, 1998. -8-
9 MONRO MUFFLER BRAKE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The statements contained in this Form 10-Q which are not historical facts, including (without limitation) statements made in the Management's Discussion and Analysis of Financial Condition and Results of Operations, may contain statements of future expectations and other forward-looking statements that are subject to important factors that could cause actual results to differ materially from those in the forward-looking statements, including (without limitation) product demand, the effect of economic conditions, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, industry regulation, the continued availability of capital resources and financing and other risks set forth or incorporated elsewhere herein and in the Company's Securities and Exchange Commission filings. RESULTS OF OPERATIONS The following table sets forth income statement data of Monro Muffler Brake, Inc. ("Monro" or the "Company") expressed as a percentage of sales for the fiscal periods indicated. <TABLE> <CAPTION> Quarter ended September 30, Six Months ended September 30, --------------------------- ------------------------------ 1998 1997 1998 1997 ----- ----- ----- ----- <S> <C> <C> <C> <C> Sales .................................. 100.0% 100.0% 100.0% 100.0% Cost of sales, including distribution and occupancy costs ................... 57.7 55.9 56.4 55.7 ----- ----- ----- ----- Gross profit ........................... 42.3 44.1 43.6 44.3 Operating, selling, general and administrative expenses ............... 30.9 28.3 29.6 28.2 ----- ----- ----- ----- Operating income ....................... 11.4 15.8 14.0 16.1 Interest expense - net ................. 2.3 2.2 2.2 2.2 Other expenses - net ................... .4 .2 .3 .2 ----- ----- ----- ----- Income before provision for income taxes 8.7 13.4 11.5 13.7 Provision for income taxes ............. 3.5 5.3 4.6 5.5 ----- ----- ----- ----- Net income ............................. 5.2% 8.1% 6.9% 8.2% ===== ===== ===== ===== </TABLE> -9-
10 SECOND QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO SECOND QUARTER AND SIX MONTHS ENDED SEPTEMBER 30, 1997 On September 17, 1998, the Company completed its acquisition of 189 company-owned and 14 franchised Speedy stores, all located in the United States, from SMK Speedy International Inc. of Toronto, Canada (the "Acquisition"). Sales for the fiscal year ended January 3, 1998 for the 189 company-operated stores, some of which were opened only part of the year, were approximately $86 million. While management expects the acquisition to have a slightly dilutive impact on earnings in the current 1999 fiscal year, management anticipates that the acquired operations should begin to contribute to earnings per share during fiscal 2000, and should be increasingly accretive in subsequent years. Sales were $46.4 million for the quarter ended September 30, 1998 compared with $41.5 million in the quarter ended September 30, 1997. The sales increase of $4.8 million, or 11.7%, was due to an increase in sales of approximately $5.7 million relating to stores opened since April 1, 1997, partially offset by a comparable store sales decrease of 1.4%. Sales for the six months ended September 30, 1998 were $90.5 million compared with $82.3 million for the comparable period of the prior year. The sales increase of $8.2 million or 9.9% was due to an increase in sales of approximately $9.2 million relating to stores opened since April 1, 1997, partially offset by a comparable store sales decrease of .7%. At September 30, 1998, the Company had 530 company-operated stores in operation (including the stores acquired from Speedy) compared to 332 at September 30, 1997. Gross profit for the quarter ended September 30, 1998 was $19.6 million or 42.3% of sales compared with $18.3 million or 44.1% of sales for the quarter ended September 30, 1997. Gross profit for the six months ended September 30, 1998 was $39.4 million, or 43.6% of sales, compared to $36.5 million or 44.3% of sales, for the six months ended September 30, 1997. The decline in gross profit as a percentage of sales was due, in part, to an increase in labor costs. During periods of slower sales when technicians may not be fully productive, they will receive a minimum base level wage. Secondly, there was an increase in distribution and occupancy costs as a percent of sales for the second quarter of fiscal 1999 as compared to the second quarter of fiscal 1998, primarily due to an increase in the number of stores and increased occupancy costs against negative comparable store sales. Additionally, the Speedy stores caused .4 of the decline in gross profit as a percent of sales, primarily in the "cost of goods" component of cost of sales. Historically, Speedy's cost of goods has averaged approximately six percentage points more than the Company's due to more expensive parts acquisition costs. This resulted from a higher percentage of outside purchases, and Speedy's distribution methods (store-door from vendors vs. Monro's central distribution facility). Management is confident that, over time, the Speedy stores will experience the same lower cost of goods as the Monro stores. One measure leading to this will be the inclusion of all Speedy stores in the Company's central distribution/automatic replenishment system by December 31, 1998. As of November 10, 1998, over 50% of the Speedy stores were receiving product from the Company's central warehouse facility in Rochester, New York. Operating, selling, general and administrative expenses for the quarter ended September 30, 1998 increased by $2.6 million to $14.3 million over the quarter ended September 30, 1997, and were 30.9% of sales compared to 28.3% in the same quarter of the prior year. For the six months ended September 30, 1998, these expenses increased by $3.5 million to $26.7 million over the comparable period of the prior year and were 29.6% of sales compared to 28.2% in the comparable period of the prior year. During the second quarter of fiscal 1999, costs associated with the Speedy stores and acquisition-related activities accounted for 1.1 percentage points of the increase. The remainder is primarily due to increases in fixed, store-related operating and support costs (such as store supervision and utilities) against negative comparable store sales. Net interest expense for the quarter ended September 30, 1998 increased by approximately $.2 million compared to the comparable period in the prior year, and increased from 2.2% to 2.3% as a percentage of sales for the same period. Net interest expense for the six months ended September 30, 1998 increased by approximately $.2 million compared to the same period in the prior year, and was 2.2% of sales for both periods. The increase in expense is due to an increase in the weighted average debt outstanding for the quarter and six months ended September 30, 1998 as compared to the same periods in the previous year. -10-
11 Net income for the quarter ended September 30, 1998 of $2.4 million decreased 28.1% from net income for the quarter ended September 30, 1997. For the six months ended September 30, 1998 net income of approximately $6.3 million decreased 7.4%, due to the factors discussed above. 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 Other than the funding of the Acquisition, the Company's primary capital requirement has been the funding of its new store expansion program and the upgrading of facilities and systems in existing stores. For the six months ended September 30, 1998, the Company spent approximately $10.0 million for equipment and new store construction, in addition to the expenditures related to the Acquisition discussed below. Funds for equipment and new store construction were provided primarily by cash flow from operations. Management believes that the Company has sufficient resources available (including cash and equivalents, net cash flow from operations and bank financing) to expand its business as currently planned for the next several years. Liquidity Concurrent with the closing of the Acquisition, Monro obtained a new $135 million secured credit facility from lenders led by The Chase Manhattan Bank. Approximately $51 million was borrowed under this facility to pay the all-cash purchase price in the Acquisition, with an additional $16 million to be borrowed to provide for the closing of up to 20 underperforming or redundant Speedy stores, capital expenditures at remaining Speedy stores and transaction expenses. In addition, Monro 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 (all of which was outstanding at September 30, 1998), a $75 million Revolving Credit facility (of which approximately $33 million was outstanding at September 30, 1998), and synthetic lease (off-balance sheet) financing for a significant portion of the Speedy real estate, totaling $35 million. The loans bear interest at the prime rate or other LIBOR-based rate options tied to the Company's financial performance. The Company has outstanding $1.8 million in principal amount of its 10.65% Senior Notes due 1999 (the "Senior Notes") with Massachusetts Mutual Life Insurance Company pursuant to a Senior Note Agreement. The fifth of six equal annual installments of principal in the amount of $1.8 million was paid on April 1, 1998. Certain of the Company's stores were financed by mortgages currently bearing interest at LIBOR plus 100 basis points. The Company has financed its office/warehouse facility via a 10-year mortgage with a current balance of $2.5 million, amortizable over 20 years, and an eight-year term loan with a balance of $.5 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, and also contain restrictions on 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-
12 MONRO MUFFLER BRAKE, INC. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The 1998 Annual Meeting of Shareholders of the Company (the "1998 Meeting") was held on August 3, 1998. At the 1998 Meeting, the Company's common shareholders elected management's nominees, Burton S. August, Robert W. August, Donald Glickman, Lionel B. Spiro, and W. Gary Wood to Class 1 of the Board of Directors, to serve until the election and qualification of their respective successors at the 2000 Annual Meeting of Shareholders. Such nominees for director received the following votes: Name Votes For Votes Withheld ---- --------- -------------- Burton S. August 6,187,745 1,942 Robert W. August 6,187,745 1,942 Donald Glickman 6,187,745 1,942 Lionel B. Spiro 6,187,745 1,942 W. Gary Wood 6,187,745 1,942 As required under the Company's Certificate of Incorporation, such election of directors and other matters were confirmed by the holders of all 91,727 outstanding shares of the Company's Class C Convertible Preferred Stock, par value $1.50 per share, by written consent dated as of August 3, 1998. In addition, Charles J. August, Frederick M. Danziger, Jack M. Gallagher, and Peter J. Solomon will continue as Class 2 directors until the election and qualification of their respective successors at the 1999 Annual Meeting of Shareholders. Also approved by the following votes were: (i) a proposal to ratify the re-appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company for the fiscal year ending March 31, 1999 (6,186,614 shares in favor, 1,642 shares against, 1,431 shares abstaining and zero broker non-votes). Item 6. Exhibits and Reports on Form 8-K -------------------------------- a. Exhibits 10.1 - Credit Agreement, dated as of September 15, 1998, by and among the Company, The Chase Manhattan Bank, as agent, and certain lenders party thereto. 10.2 - Credit Agreement, dated as of September 15, 1998, executed by and among Brazos Automotive Properties, L.P., The Chase Manhattan Bank, and certain lenders party thereto. 10.3 - Residual Guaranty, dated as of September 15, 1998, between the Company and The Chase Manhattan Bank. 10.4 - Agreement for Facilities Lease, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.5 - Facilities Lease Agreement, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.6 - Agreement for Ground Lease, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.7 - Ground Lease Agreement, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.8 - Guaranty, dated as of September 15, 1998, between the Company and Brazos Automotive Properties, L.P. 10.9 - Agreement of Sublease, dated as of September 15, 1998, by and among Monro Leasing LLC, the Company and Brazos Automotive Properties, L.P. 11 - Statement of Computation of Per Share Earnings. b. Reports on Form 8-K The Company filed a report on Form 8-K on September 23, 1998 in connection with the completion of its acquisition of 189 company-owned stores and 14 franchised stores from Bloor Automotive and Speedy Car-X in the United States for an aggregate purchase price of $52.0 million, as adjusted. Additionally, prior to the completion of the acquisition, the Company and SMK Speedy International, Inc. agreed to amend the definitive agreement on August 31, 1998 to, among other things, extend the termination date. -12-
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. <TABLE> <S> <C> DATE: November 13, 1998 By /s/ Jack M. Gallagher ----------------------------------------- Jack M. Gallagher President and Chief Executive Officer DATE: November 13, 1998 By /s/ Catherine D'Amico ----------------------------------------- Catherine D'Amico Senior Vice President-Finance, Treasurer and Chief Financial Officer </TABLE> -13-
14 EXHIBIT INDEX <TABLE> <CAPTION> Exhibit No. Description Page No. ----------- ----------- -------- <S> <C> <C> <C> 10.1 Credit Agreement, dated as of September 15, 1998, by and among the Company, The Chase Manhattan Bank, as agent, and certain lenders party thereto. 10.2 Credit Agreement, dated as of September 15, 1998, executed by and among Brazos Automotive Properties, L.P., The Chase Manhattan Bank, and certain lenders party thereto. 10.3 Residual Guaranty, dated as of September 15, 1998, between the Company and The Chase Manhattan Bank. 10.4 Agreement for Facilities Lease, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.5 Facilities Lease Agreement, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.6 Agreement for Ground Lease, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.7 Ground Lease Agreement, dated as of September 15, 1998, between Brazos Automotive Properties, L.P. and Monro Leasing LLC. 10.8 Guaranty, dated as of September 15, 1998, between the Company and Brazos Automotive Properties, L.P. 10.9 Agreement of Sublease, dated as of September 15, 1998, by and among Monro Leasing LLC, the Company and Brazos Automotive Properties, L.P. 11 Statement of computation of per share earnings </TABLE> -14-