##### Table of Contents



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 June 27, 2009.
 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.
  New York
    
    16-0838627(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification #)200 Holleder Parkway, Rochester, New York
    
    14615(Address of principal executive offices)
    
    (Zip code)
  (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    

Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



INDEX
 Page No.Part I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheet at
June 27, 2009 and March 28, 2009
    
    
    3Consolidated Statement of Income for the quarters
ended June 27, 2009 and June 28, 2008
    
    
    4Consolidated Statement of Changes in Shareholders
Equity for the quarter ended June 27, 2009
    
    
    5Consolidated Statement of Cash Flows for the
quarters ended June 27, 2009 and June 28, 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17Part II. Other InformationItem 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 6. Exhibits
    
    
    18Signatures
    
    
    19Exhibit Index
    
    
    20Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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##### Table of Contents



Item 1.
    
    Financial Statements
 MONRO MUFFLER BRAKE, INC.
 
 CONSOLIDATED BALANCE SHEET
 (Unaudited)June 27,
    
    
    March 28,2009
    
    
    2009(Dollars in thousands)AssetsCurrent assets:Cash and equivalents
    
    $
    3,362
    
    
    $
    3,336Trade receivables
    
    
    2,098
    
    
    
    2,051Federal and state income tax receivable
    
    
    
    
    
    
    1,268Inventories
    
    
    74,947
    
    
    
    71,443Deferred income tax asset
    
    
    4,103
    
    
    
    4,076Other current assets
    
    
    20,885
    
    
    
    19,540Total current assets
    
    
    105,395
    
    
    
    101,714Property, plant and equipment
    
    
    359,517
    
    
    
    353,113Less  Accumulated depreciation and amortization
    
    
    (172,600
    )
    
    
    (168,052
    )Net property, plant and equipment
    
    
    186,917
    
    
    
    185,061Goodwill
    
    
    76,228
    
    
    
    71,816Intangible assets and other noncurrent assets
    
    
    17,975
    
    
    
    16,401Long term deferred tax asset
    
    
    2,369
    
    
    
    1,759Total assets
    
    $
    388,884
    
    
    $
    376,751Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    1,679
    
    
    $
    1,696Trade payables
    
    
    30,302
    
    
    
    34,751Federal and state income taxes payable
    
    
    4,007Accrued payroll, payroll taxes and other payroll benefits
    
    
    14,097
    
    
    
    13,534Accrued insurance
    
    
    10,580
    
    
    
    9,495Warranty reserves
    
    
    4,947
    
    
    
    4,569Other current liabilities
    
    
    10,128
    
    
    
    7,280Total current liabilities
    
    
    75,740
    
    
    
    71,325Long-term debt
    
    
    95,992
    
    
    
    97,098Accrued rent expense
    
    
    6,633
    
    
    
    6,552Other long-term liabilities
    
    
    4,296
    
    
    
    4,350Long-term income taxes payable
    
    
    3,269
    
    
    
    3,135Total liabilities
    
    
    185,930
    
    
    
    182,460CommitmentsShareholders equity:Class C Convertible Preferred Stock, $1.50 par value, $.096 conversion value,
150,000 shares authorized; 32,500 shares issued and outstanding
    
    
    49
    
    
    
    49Common Stock, $.01 par value, 45,000,000 shares authorized; 23,069,693 and
22,999,313 shares issued at June 27, 2009 and March 28, 2009, respectively
    
    
    231
    
    
    
    230Treasury Stock, 3,584,673 and 3,580,829 shares at June 27, 2009 and March 28, 2009,
respectively, at cost
    
    
    (67,559
    )
    
    
    (67,454
    )Additional paid-in capital
    
    
    76,296
    
    
    
    74,443Accumulated other comprehensive loss
    
    
    (3,388
    )
    
    
    (3,485
    )Retained earnings
    
    
    197,325
    
    
    
    190,508Total shareholders equity
    
    
    202,954
    
    
    
    194,291Total liabilities and shareholders equity
    
    $
    388,884
    
    
    $
    376,751
   3




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MONRO MUFFLER BRAKE, INC.
 
 CONSOLIDATED STATEMENT OF INCOME
  Quarter Ended Fiscal June2009
    
    
    2008(Dollars in thousands,except per share data)Sales
    
    $
    128,045
    
    
    $
    120,369Cost of sales, including distribution and occupancy costs
    
    
    71,636
    
    
    
    69,480Gross profit
    
    
    56,409
    
    
    
    50,889Operating, selling, general and administrative expenses
    
    
    39,158
    
    
    
    36,852Intangible amortization
    
    
    133
    
    
    
    123Loss (gain) on disposal of assets
    
    
    139
    
    
    
    (32
    )Total operating expenses
    
    
    39,430
    
    
    
    36,943Operating income
    
    
    16,979
    
    
    
    13,946Interest expense, net of interest income for the quarter of $13
in 2009 and $3 in 2008
    
    
    1,897
    
    
    
    1,519Other income, net
    
    
    (43
    )
    
    
    (72
    )Income before provision for income taxes
    
    
    15,125
    
    
    
    12,499Provision for income taxes
    
    
    5,714
    
    
    
    4,705Net income
    
    $
    9,411
    
    
    $
    7,794Earnings per share:Basic
    
    $
    .48
    
    
    $
    .42Diluted
    
    $
    .46
    
    
    $
    .39
   4




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MONRO MUFFLER BRAKE, INC.
 
 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
  (Dollars in thousands)
 AccumulatedAdditional
    
    
    OtherPreferred
    
    
    Common
    
    
    Treasury
    
    
    Paid-in
    
    
    Comprehensive
    
    
    RetainedStock
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    TotalBalance at March 28, 2009
    
    $
    49
    
    
    $
    230
    
    
    $
    (67,454
    )
    
    $
    74,443
    
    
    $
    (3,485
    )
    
    $
    190,508
    
    
    $
    194,291Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,411
    
    
    
    9,411Other comprehensive loss:Unrealized loss on derivatives
contracts ($156 pre-tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    979,508Cash dividends:Preferred ($.13 per CSE) (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (66
    )
    
    
    (66
    )Common ($.13 per share) (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,528
    )
    
    
    (2,528
    )Tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563
    
    
    
    
    
    
    
    
    
    
    
    563Exercise of stock options
    
    
    
    
    
    
    1
    
    
    
    (105
    )
    
    
    820
    
    
    
    
    
    
    
    
    
    
    
    716Stock option compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470
    
    
    
    
    
    
    
    
    
    
    
    470Balance at June 27, 2009
    
    $
    49
    
    
    $
    231
    
    
    $
    (67,559
    )
    
    $
    76,296
    
    
    $
    (3,388
    )
    
    $
    197,325
    
    
    $
    202,954
 (1)
    
    CSE  Common stock equivalent(2)
    
    Includes fourth quarter fiscal 2009 dividend payment of $.06 paid May 4, 2009 and first
quarter fiscal 2010 dividend
payment of $.07 paid June 19, 2009.   5




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MONRO MUFFLER BRAKE, INC.
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
  Quarter Ended Fiscal June2009
    
    
    2008(Dollars in thousands)Increase (Decrease) in CashCash flows from operating activities:Net income
    
    $
    9,411
    
    
    $
    7,794Adjustments to reconcile net income to net cash provided
by operating activities Depreciation and amortization
    
    
    5,253
    
    
    
    5,143Loss (gain) on disposal of property, plant and equipment
    
    
    139
    
    
    
    (32
    )Stock-based compensation expense
    
    
    470
    
    
    
    407Excess tax benefits from share-based payment arrangements
    
    
    (177
    )
    
    
    (57
    )Net change in deferred income taxes
    
    
    (496
    )
    
    
    286Increase in trade receivables
    
    
    (47
    )
    
    
    (154
    )Increase in inventories
    
    
    (1,555
    )
    
    
    (3,149
    )(Increase) decrease in other current assets
    
    
    (1,427
    )
    
    
    529Decrease (increase) in intangible assets and other noncurrent assets
    
    
    916
    
    
    
    (502
    )(Decrease) increase in trade payables
    
    
    (4,469
    )
    
    
    2,045Increase in accrued expenses
    
    
    1,961
    
    
    
    2,481Increase in federal and state income taxes payable
    
    
    5,940
    
    
    
    4,534Increase (decrease) in other long-term liabilities
    
    
    31
    
    
    
    (208
    )Increase in long-term income taxes payable
    
    
    28
    
    
    
    72Total adjustments
    
    
    6,567
    
    
    
    11,395Net cash provided by operating activities
    
    
    15,978
    
    
    
    19,189Cash flows from investing activities:Capital expenditures
    
    
    (3,963
    )
    
    
    (3,662
    )Acquisition of Autotire, net of cash acquired
    
    
    (7,358
    )Proceeds from the disposal of property, plant and equipment
    
    
    287
    
    
    
    374Net cash used for investing activities
    
    
    (11,034
    )
    
    
    (3,288
    )Cash flows from financing activities:Proceeds from borrowings
    
    
    40,283
    
    
    
    28,073Principal payments on long-term debt and capital
lease obligations
    
    
    (43,500
    )
    
    
    (43,457
    )Exercise of stock options
    
    
    716
    
    
    
    698Excess tax benefits from share-based payment arrangements
    
    
    177
    
    
    
    57Dividends to shareholders
    
    
    (2,594
    )
    
    
    (1,163
    )Net cash used for financing activities
    
    
    (4,918
    )
    
    
    (15,792
    )Increase in cash
    
    
    26
    
    
    
    109Cash at beginning of period
    
    
    3,336
    
    
    
    2,108Cash at end of period
    
    $
    3,362
    
    
    $
    2,217
   6




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Note 1  Condensed Consolidated Financial Statements
 
   Quarter Ended Fiscal June 2009:
    
    March 29, 2009  June 27, 2009 (13 weeks)Quarter Ended Fiscal June 2008:
    
    March 30, 2008  June 28, 2008 (13 weeks)
 Note 2  Acquisitions
       7




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As of June 27, 2009(Dollars in thousands)Other current assets
    
    $
    2,102Intangible assets
    
    
    2,611Other noncurrent assets
    
    
    1,187Current liabilities
    
    
    (2,760
    )Long-term liabilities
    
    
    (191
    )Total net identifiable assets acquired
    
    $
    2,949Total consideration transferred
    
    $
    7,361Less: total net identifiable assets acquired
    
    
    2,949Goodwill
    
    $
    4,412
  Note 3  Earnings Per Share
 
  Quarter EndedFiscal June2009
    
    
    2008(Dollars in thousands,except per share data)Numerator for earnings per common share calculation:Net income
    
    $
    9,411
    
    
    $
    7,794Less: Preferred stock dividends
    
    
    (66
    )
    
    
    (61
    )Income available to common stockholders
    
    $
    9,345
    
    
    $
    7,733Denominator for earnings per common share calculation:Weighted average common shares, basic
    
    
    19,440
    
    
    
    18,387Effect of dilutive securities:Preferred stock
    
    
    507
    
    
    
    1,013Stock options
    
    
    489
    
    
    
    705Weighted average number of common shares, diluted
    
    
    20,436
    
    
    
    20,105Basic earnings per common share:
    
    $
    .48
    
    
    $
    .42Diluted earnings per common share:
    
    $
    .46
    
    
    $
    .39
  8




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Note 4  Income Taxes
 
    Note 5  Derivative Financial Instruments
       9




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June 27, 2009NotionalAmount ofUnderlying
    
    
    Fixed Rate
    
    
    Year ofInterest Rate Swaps
    
    Debt
    
    
    Received
    
    
    Transaction
    
    
    Maturity
    
    
    Fair Value(Dollars in thousands)Swaps associated with:1 month U.S. LIBOR
    
    $
    10,000
    
    
    
    3.29
    %
    
    
    2008
    
    
    
    2010
    
    
    $
    (285
    )1 month U.S. LIBOR
    
    
    10,000
    
    
    
    3.27
    %
    
    
    2008
    
    
    
    2010
    
    
    
    (284
    )1 month U.S. LIBOR
    
    
    10,000
    
    
    
    3.27
    %
    
    
    2008
    
    
    
    2010
    
    
    
    (284
    )$
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (853
    )
  Liability Derivatives as of June 27, 2009Balance Sheet Location
    
    
    Fair Value(Dollars in thousands)Interest rate contracts designated as hedging instruments under SFAS 133
    
    Other long-term liabilities
    
    
    $
    853
  Note 6  Fair Value of Financial Instruments
 
 Level 1.
    
    Observable inputs such as quoted prices in active markets;Level 2.
    
    Inputs, other than the quoted prices in active markets, that are observable either
directly or indirectly; andLevel 3.
    
    Unobservable inputs in which there is little or no market data, which require the
reporting entity to develop its own assumptions.
  10




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Significant Other ObservableInputs (Level 2)Amount(Dollars in thousands)LiabilitiesDerivatives
    
    $
    853
 Note 7  Supplemental Disclosure of Cash Flow Information
    Fair value of assets acquired
    
    $
    5,897,000Goodwill acquired
    
    
    4,412,000Cash paid, net of cash acquired
    
    
    (7,358,000
    )Liabilities assumed
    
    $
    2,951,000
       Note 8  Cash Dividend
   11




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Note 9  Litigation
   Note 10  Commitment
   12




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Results of Operations
   Quarter Ended Fiscal June2009
    
    
    2008Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales, including distribution
and occupancy costs
    
    
    55.9
    
    
    
    57.7Gross profit
    
    
    44.1
    
    
    
    42.3Operating, selling, general and
administrative expenses
    
    
    30.6
    
    
    
    30.6Intangible amortization
    
    
    .1
    
    
    
    .1Loss on disposal of assets
    
    
    .1
    
    
    
    0Total operating expenses
    
    
    30.8
    
    
    
    30.7Operating income
    
    
    13.3
    
    
    
    11.6Interest expense  net
    
    
    1.5
    
    
    
    1.3Other income  net
    
    
    0
    
    
    
    (.1
    )Income before provision for income taxes
    
    
    11.8
    
    
    
    10.4Provision for income taxes
    
    
    4.5
    
    
    
    3.9Net income
    
    
    7.3
    %
    
    
    6.5
    %
 First Quarter Ended June 27, 2009 Compared To First Quarter Ended June 28, 2008
   13




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14




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Interim Period Reporting
  Capital Resources and Liquidity
 Capital Resources
  Liquidity
      15




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Recent Accounting Pronouncements
          16




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Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
 
   
 Item 4.
    
    Controls and Procedures
 Disclosure controls and procedures
   Changes in internal controls
   17




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Item 1.
    
    Legal Proceedings
 
  
 Item 1A.
    
    Risk Factors
 
 
 Item 6.
    
    Exhibits
  31.1 
    Certification of Robert G. Gross pursuant to Section 302 of the Sarbanes 
Oxley Act of 200231.2 
    Certification of Catherine DAmico pursuant to Section 302 of the Sarbanes 
Oxley Act of 200232.1 
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the
Sarbanes  Oxley Act of 2002
  18




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SIGNATURES
  MONRO
    
    MUFFLER BRAKE, INC.DATE: August 4, 2009
    
    By
    
    /s/ Robert G. GrossRobert G. GrossChief Executive Officer and Chairman of the BoardDATE: August 4, 2009
    
    By
    
    /s/ Catherine DAmicoCatherine DAmicoExecutive Vice President  Finance,Treasurer and Chief Financial Officer
  19




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EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Page No.31.1
    
    
    Certification of Robert G. Gross pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
    
    
    2131.2
    
    
    Certification of Catherine DAmico pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
    
    
    2232.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    
    23
  20