UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

(MARK ONE)

For Fiscal Year Ended March 30, 2013

OR26, 2016



OR

Commission File Number 0-19357

MONRO MUFFLER BRAKE, INC.

(Exact name of registrant as specified in its charter)



Registrant’s

Registrant's telephone number, including area code:

(585) 647-6400

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $.01 per share

Name of each exchange on which registered: The NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨☒   No x☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨☐   No x☒

Indicate by check mark if 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 ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x☒   No ¨☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of  “large accelerated filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one)



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨☐   No x☒

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day of the registrant’sregistrant's most recently completed second fiscal quarter, September 29, 2012,26, 2015, was approximately $1,021,500,000.$2,069,200,000.

As of May 10, 2013, 31,267,2456, 2016, 32,247,684 shares of the registrant’sregistrant's Common Stock, par value $.01 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:REFERENCE:

Portions of the registrant’sregistrant's definitive proxy statement (to be filed pursuant to Regulation 14A) for the 20132016 Annual Meeting of Shareholders (the “Proxy Statement”"Proxy Statement") are incorporated by reference into Part III hereof.



TABLE OF CONTENTS



PARTPART I

FORWARD-LOOKING STATEMENTS

The statements contained in this Annual Report on Form 10-K that are not historical facts, including (without limitation) statements made in this Item 1.Business

GENERAL

and in “Item 1 – Business”, 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.  When used in this Annual Report on Form 10-K, the words “anticipates”, “believes”, “contemplates”, “see”, “could”, “estimate”, “intend”, “plans” and variations thereof and similar expressions, are intended to identify forward-looking statements.  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 Monro Muffler Brake, Inc.’s (“Monro”, the “Company”, “we”, “us”, or “our”) stores are located, the need for and costs associated with store renovations and other capital expenditures, the effect of economic conditions, seasonality, the impact of weather conditions, the impact of competitive services and pricing, parts supply restraints or difficulties, our dependence on foreign vendors, industry regulation, risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates), continued availability of capital resources and financing, advances in automotive technologies, disruption or unauthorized access to our computer systems, risks relating to protection of customer and employee personal data, business interruptions, risks relating to litigation, risks relating to integration of acquired businesses, including goodwill impairment and the risks set forth in “Item 1A.  Risk Factors”.  Except as required by law, we do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

Item 1. Business

GENERAL

Monro is a chain of 9371,029 Company-operated stores (as of March 30, 2013)26, 2016), three135 franchised locations and 14 dealer-operated stores providing automotive undercar repair and tire services in the United States.  At March 30, 2013,26, 2016, Monro operated Company stores in 2225 states, including New York, Pennsylvania, Ohio, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, West Virginia, Virginia, Maryland, Vermont,Michigan, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Indiana, Rhode Island, Delaware, Maine, Illinois, Missouri,Tennessee, Vermont, Virginia, West Virginia and Wisconsin, Tennessee and Kentucky primarily under the names “Monro Muffler Brake & Service”, “Tread Quarters Discount Tire”, “Mr. Tire”, “Autotire Car Care Center”, “Tire Warehouse”, “Tire Barn Warehouse” and, “Ken Towery’s Tire & Auto Care”, “The Tire Choice” and “Car-X” (together, the “Company Stores”).  Company Stores typically are situated in high-visibility locations in suburban areas and small towns, as well as in major metropolitan areas.  Company Stores serviced approximately 4.75.8 million vehicles in fiscal 2013.2016.  (References herein to fiscal years are to the Company’sCompany's year ended fiscal March [e.g., references to “fiscal 2013”"fiscal 2016" are to the Company’sCompany's fiscal year ended March 30, 2013]26, 2016].)

The predecessor to the Company was founded by Charles J. August in 1957 as a Midas Muffler franchise in Rochester, New York, specializing in mufflers and exhaust systems.  The Company was incorporated in the State of New York in 1959.  In 1966, we discontinued our affiliation with Midas Muffler, and began to diversify into a full line of undercar repair services.  An investor group led by Peter J. Solomon and Donald Glickman purchased a controlling interest in the Company in July 1984.  At that time, Monro operated 59 stores, located primarily in upstate New York, with approximately $21 million in sales in fiscal 1984.  Since 1984, we have continued our growth and have expanded our marketing area to include 2224 additional states (including dealer locations).states.

In December 1998, Monro appointed Robert G. Gross as President and Chief Executive Officer, who began full-time responsibilities on January 1, 1999.  Effective October 1, 2012, Mr. Gross assumed the role of Executive Chairman and John W. Van Heel was appointed Chief Executive Officer.

The Company’sCompany's principal executive offices are located at 200 Holleder Parkway, Rochester, New York 14615, and our telephone number is (585) 647-6400.

Monro provides a broad range of services on passenger cars, light trucks and vans for brakes; mufflers and exhaust systems; and steering, drive train, suspension and wheel alignment.  Monro also provides other products and services, including tires and routine maintenance services, including state inspections.  Monro specializes in the repair and replacement of parts which must be periodically replaced as they wear out.  Normal wear on these parts generally is not covered by new car warranties.  Monro typically does not perform under-the-hood repair services except for oil change services, various “flush and fill” services and some minor tune-up services.  Monro does not sell parts or accessories to the do-it-yourself market.

All of the Company’s stores, except Tire Warehouse and Tire Barn Warehouse stores, provide the services described above.  Tire Warehouse and Tire Barn Warehouse stores only sell tires and tire related services and alignments.  However, a growing number of our stores are more specialized in tire replacement and service and, accordingly, have a higher mix of sales in the tire category.  These stores are described below as tire stores, whereas the majority of ourremaining stores are described as service stores.  (See additional discussion under “Operating Strategy”.) At March 30, 2013,26, 2016, there were 540515 stores designated as service stores and 397514 as tire stores.

1

Our sales mix for fiscal 2013, 20122016, 2015 and 2011 is2014 was as follows:



The Company has onetwo wholly-owned subsidiary,subsidiaries, Monro Service Corporation which isand Car-X, LLC.

Monro Service Corporation, a Delaware corporation qualified to do business in the states of Kentucky, Maryland, New Hampshire, New York Maryland, Illinois,and Virginia, Kentucky and New Hampshire.

Monro Service Corporation holds all assets, rights, responsibilities and liabilities associated with our warehousing, purchasing, advertising, accounting, office services, payroll, cash management and certain other operations that are performed in the states of New York, Maryland, Illinois, Virginia, Kentucky and New Hampshire.aforementioned states.  We believe that this structure has enhanced operational efficiency and provides cost savings.

On April 25, 2015, we acquired the Car-X brand, as well as the franchise rights for 146 auto service centers from Car-X Associates Corp.  (See additional discussion under Note 2 to the Company’s Consolidated Financial Statements.)  Car-X, LLC, a Delaware limited liability company, operates as the franchisor through a standard royalty agreement, while Car-X remains a separate and independent brand and business with franchise operations based in Illinois.

As of March 26, 2016, Monro had 134 Car-X franchised locations.

INDUSTRY OVERVIEW

According to industry reports, demand for automotive repair services, including undercar repair and tire services, has increased due to the general increase in the number of vehicles registered, the increase in the average age of vehicles and the increased complexity of vehicles, which makes it more difficult for a vehicle owner to perform do-it-yourself repairs.

At the same time as demand for automotive repair services has grown, the number of general repair outlets has decreased, principally because fewer gas stations now perform repairs, and because there are fewer new car dealers as a result of dealership closures by car manufacturers, such as Chrysler and General Motors.  We believe that these factors present opportunities for increased sales by the Company, even though the number of specialized repair outlets (such as those operated by Monro and our direct competitors) has increased to meet growing demand.

EXPANSION STRATEGY

Monro has experienced significant growth in recent years due to acquisitions and, to a lesser extent, the opening of new stores.  Management believes that the continued growth in sales and profits of the Company is dependent, in large part, upon our continued ability to open/acquire and operate new stores on a profitable basis.  Overall profitability of the Company could be reducedmay not meet expectations if acquired or new stores do not attain expected profitability.

Monro believes that there are significant expansion opportunities in new as well as existing market areas, which willmay result from a combination of constructing stores on vacant land and acquiring existing store locations.  We believe that, as the industry consolidates due to the increasingly complex nature of automotive repair, and the expanded capital requirements for state-of-the-art equipment and aging of existing shop owners, there will be increasing opportunities for acquisitions of existing businesses or store structures.

In that regard, we have completed several acquisitions, in recent years, as follows:including:



_________________

As of March 30, 2013,26, 2016, Monro had 9371,029 Company-operated stores, three135 franchised locations and 14 dealer locations located in 2325 states.  The following table shows the growth in the number of Company-operated stores over the last five fiscal years:

STORE ADDITIONS AND CLOSINGS





_________________



We plan to add approximately fourtwenty to forty new greenfield stores in fiscal 20142017 and to pursue appropriate acquisition candidates.

Key factors in market and site selection for selecting new greenfield store locations include population, demographic characteristics, vehicle population and the intensity of competition.  Monro attempts to cluster stores in market areas in order to achieve economies of scale in advertising, supervision and distribution costs.  All new greenfield sites presently under consideration are within Monro’sMonro's established market areas.

As a result of extensive analysis of our historical and projected store opening strategy, we have established major market profiles, as defined by market awareness: mature, existing and new markets.  Over the next several years, we expect to build a greater percentage of stores in mature and existing markets in order to capitalize on our market presence and consumer awareness.  During fiscal 2013, 1032016, 47 of the stores added (including acquired stores) were located in existing markets. The remaining 41markets and five stores were added were in new markets.

We believe that management and operating improvements implemented over the last several fiscal years have enhanced our ability to sustain our growth.  Monro has a chain-wide computerized inventory control and electronic point-of-sale (“POS”) management information system, which has increased management’smanagement's ability to monitor operations as the number of stores has grown.

We have customized the POS system to specific service and tire store requirements and deploy the appropriate version in each type of store.  Being Windows-based, the system has simplified training of new employees. Additionally, the system includes the following:



4



Enhancements will continue to be made to the POS system annually in an effort to increase efficiency, improve the quality and timeliness of store reporting and enable us to better serve our customers.

The financing to open a new greenfield service store location may be accomplished in one of three ways: a store lease for the land and building (in which case, land and building costs will be financed primarily by the lessor), a land lease with the building constructed by Monro (with building costs paid by Monro), or a land purchase with the building constructed by Monro.  In all three cases, for service stores, each new store also will require approximately $190,000$225,000 for equipment (including a POS system and a truck) and approximately $55,000 in inventory.  Because we generally do not extend credit to our customers, stores generate almost no receivables and a new store’sstore's actual net working capital investment is nominal.  Total capital required to open a new greenfield service store ranges, on average, (based upon the last five fiscal years’ openings, excluding the BJ’s locations and the acquired stores), from $350,000$360,000 to $950,000$990,000 depending on the location and which of the three financing methods is used.  In general, tire stores are larger and have more service bays than Monro’s traditional service stores and, as a result, construction costs are at the high end of the range of new store construction costs.  Total capital required to open a new greenfield tire (land and building leased) location costs, on average, approximately $600,000, including $220,000$250,000 for equipment and $150,000 for inventory.  In instances where Monro acquires an existing business, it may pay additional amounts for intangible assets such as customer lists, covenants not-to-compete, trade names and goodwill, but generally will pay less per bay for equipment and real property.

At March 30, 2013,26, 2016, we leased the land and/or the building at approximately 71%69% of our store locations and owned the land and building at the remaining locations.  Monro’sMonro's policy is to situate new stores in the best locations, without regard to the form of ownership required to develop the locations.

New service and tire stores, (excluding acquired stores and BJ’s locations)stores), have average sales of approximately $384,000$400,000 and $1,015,000,$1,050,000, respectively, in their first 12 months of operation, or $64,000$67,000 and $145,000,$150,000, respectively, per bay.

STORE OPERATIONS



5

STORE OPERATIONS

Store Format

The typical format for a Monro store is a free-standing building consisting of a sales area, fully-equipped service bays and a parts/tires storage area. In BJ’s locations, Monro and BJ’s both operate counters in the sales area, while Monro operates the service bay area.  Most service bays are equipped with above-ground electric vehicle lifts.  Generally, each store is located within 25 miles of a “key” store which carries approximately double the inventory of a typical store and serves as a mini-distribution point for slower moving inventory for other stores in its area.  Individual store sizes, number of bays and stocking levels vary greatly, even within the service and tire store groups, and are dependent primarily on the availability of suitable store locations, population, demographics and intensity of competition among other factorsfactors. (See additional discussion under “Store Additions and Closings”).  A summary of average store data for service and tire stores is presented below:



Data for the acquired ProCare service stores has been excluded because the stores’ stock rooms are smaller than those in typical service stores and therefore, they generally carry less thanapproximately half the amount of inventory of a typical service store.

Data for the Tire Warehouse and Tire Barn Warehouse stores has been excluded because these locations primarily only install new tires and wheels and many perform alignments.  Additionally, most Tire Warehouse stores have noone indoor service bays.bay to perform alignments.  The store building houses a waiting room, storage area and an area to mount and balance tires on the car’s wheels once the wheels and tires have been removed from the car.  Removal of old tires and wheels from, and installation of new tires and wheels on, customers’ cars are performed outdoors under a carport.  A growing number of Tire Warehouse stores have an indoor bay to perform alignments. The average inventory carried by the Tire Warehouse and Tire Barn Warehouse stores is $250,000$251,000 per store.

Stores generally are situated in high-visibility locations in suburban areas, major metropolitan areas or small towns and offer easy customer access.  The typical store is open from 7:30 a.m. to 7:00 p.m. on Monday through Friday and from 7:30 a.m. to 6:00 p.m. on Saturday.  A majority of store locations are also open Sundays from 9:00 a.m. to 5:00 p.m.

Inventory Control and Management Information System

All Company Stores communicate daily with the central office and warehouse by computerized inventory control and electronic POS management information systems, which enable us to collect sales and operational data on a daily basis, to adjust store pricing to reflect local conditions and to control inventory on a near “real-time”"real-time" basis.  Additionally, each store has access, through the POS system, to the inventory carried by up to the 14 stores or warehouse nearest to it.  Management believes that this feature improves customer satisfaction and store productivity by reducing the time required to locate out-of-stock parts and tires.  It also improves profitability because it reduces the amount of inventory which must be purchased outside Monro from local vendors.

Quality Control and Warranties

To maintain quality control, we conduct audits to rate our employees’employees' telephone sales manner and the accuracy of pricing information given.



6

We have a customer survey program to monitor customer attitudes toward service quality, friendliness, speed of service, and several other factors for each store.  Customer concerns are addressed by customer service and field management personnel.

Monro uses a “Double Check for Accuracy Program” as part of our routine store procedures.  This quality assurance program requires that a technician and supervisory-level employee (or in certain cases, another technician in tire stores) independently inspect a customer’s vehicle, diagnose and document the necessary repairs, and agree on an estimate before presenting it to a customer.  This process is formally documented on the written estimate by store personnel.

We are an active member of the Automotive Maintenance & Repair Association (AMRA)(“AMRA”).  AMRA is an organization of automotive retailers, wholesalers and manufacturers which was established as part of an industry-wide effort to address the ethics and business practices of companies in the automotive repair industry through the Motorist Assurance Program (MAP)(“MAP”).  Participating companies commit to improving consumer confidence and trust in the automotive repair industry by adopting “Uniform Inspection Communication Standards” (“UICS”) established by MAP.  These “UICS” are available in our stores and serve to provide consistent recommendations to customers in the diagnosis and repair of a vehicle.

We offer limited warranties on substantially all of the products and services that we provide.  We believe that these warranties are competitive with industry practices and serve as a marketing tool to increase repeat business at our stores.

Store Personnel and Training

Monro supervises store operations primarily through our Divisional Vice Presidents who oversee Zone Managers who, in turn, oversee Market Managers.  The typical service store is staffed by a Store Manager and four to six technicians, one of whom serves as the Assistant Manager.  The typical tire store, except Tire Warehouse and Tire Barn stores, is staffed by a Store Manager, an Assistant Manager and/or Service Manager, and four to eight technicians.  Larger volume service and tire stores may also have one or two sales people.  The higher staffing level at many tire stores is necessary to support their higher sales volume.  Tire Warehouse and Tire Barn stores are generally staffed by a Store Manager and two to four technicians, one of whom serves as the Assistant Manager.  All Store Managers receive a base salary and Assistant Managers receive either hourly or salaried compensation.  In addition, Store Managers and Assistant Managers may receive other compensation based on their store’sstore's customer relations, gross profit, labor cost controls, safety, sales volume and other factors via a monthly or quarterly bonus based on performance in these areas.

We believe that the ability to recruit and retain qualified technicians is an important competitive factor in the automotive repair industry, which has historically experienced a high turnover rate.  We make a concerted effort to recruit individuals who will have a long-term commitment to the Company and offer an hourly rate structure and additional compensation based on productivity; a competitive benefits package including health, dental, life and disability insurance; a 401(k)/profit-sharing plan; as well as the opportunity to advance within the Company.  Many of our Store Managers and Market Managers started with the Company as technicians.

Many of our new technicians join the Company in their early twenties as trainees or apprentices.  As they progress, theymany are promoted to technician and eventually master technician, the latter requiring ASEAutomotive Service Excellence (“ASE”) certification in both brakes and suspension.eight different categories.  We offer a tool purchase program through which trainee technicians can acquire their own set of tools.  We also will reimburse technicians for the cost of ASE certification registration fees and test fees and encourage all technicians to become certified by providing a higher hourly wage rate following their certification.

Our training program provides multiple training sessions to both Store Managers and technicians in each store, each year.



7

Management training courses are developed and delivered by our dedicated training department and Operations management, and are supplemented with live and on-line vendor training courses.  Management training covers safety, customer service, sales, human resources (counseling, recruiting, interviewing, etc.), leadership, scheduling, financial and operational areas, and is delivered on a regular basis.  We believe that involving Operations management in the development and delivery of these sessions results in more relevant and actionable training for Store Managers, and helps to improve overall performance and staff retention.

Our training department develops and coordinates technical training courses on critical areas of automotive repair to Monro technicians (e.g. Antilock braking systems (“ABS”) brake repair, drivability, tire pressure monitoring system (“TPMS”), etc.) and also conducts required technical training to maintain compliance with state inspection licenses, where applicable, and AMRA/MAP accreditation.  Additionally, our training department holds periodic field technical clinics for store personnel and coordinates technician attendance at technical clinics offered by our vendors.  We have electronic repair manuals installed in all of our stores for daily reference.  We also issue technical bulletins to all stores on innovative or complex repair processes, and maintain a centralized database for technical repair problems.  In addition, Monro has established a telephone technical help line to provide assistance to store personnel in resolving problems encountered while diagnosing and repairing vehicles.  The help line is available during all hours of store operation.

Monro also maintains an employee web pagewebsite that contains many resources that are available for both managers and technicians to reference.reference including Human Resource information and forms.  Additionally, there is a Facilities section containing important environmental and equipment information, as well as a Training section that contains training programs and documents for both managers and technicians.

OPERATING STRATEGY

Monro’s

Monro's operating strategy is to provide our customers with a wide range of dependable, high-quality automotive services at a competitive price by emphasizing the following key elements.

Products and Services

The typical store provides a full range of undercar repair services for brakes, steering, mufflers and exhaust systems, drive train, suspension and wheel alignment, as well as tire replacement and service.  These services apply to all makes and models of domestic and foreign cars, light trucks and vans.  As a percentage of sales, the service stores provide significantly more brake and exhaust serviceservices than tire stores, and tire stores provide substantially more tire replacement and related services than service stores.

Stores generally provide many of the routine maintenance services (except engine diagnostic), which automobile manufacturers suggest or require in the vehicle owners’owner’s manuals, and which fulfill manufacturers’ requirements for new car warranty compliance.  We offer “Scheduled Maintenance”"Scheduled Maintenance" services in our stores whereby the aforementioned services are packaged and offered to consumers based upon the year, make, model and mileage of each specific vehicle.  Management believes that we are able to offer this service in a more convenient and cost competitive fashion than auto dealers can provide.

Included in maintenance services are oil change services, heating and cooling system “flush"flush and fill”fill" service, belt installation, fuel system service and a transmission “flush"flush and fill”fill" service.  Additionally, most stores replace and service batteries, starters and alternators.  Stores in Georgia, Maine, Maryland, Massachusetts, Missouri, New Hampshire, New York, West Virginia, New Hampshire, Maryland,North Carolina, Pennsylvania, Rhode Island, New Jersey, Pennsylvania, North Carolina,Vermont, Virginia, Missouri, Maine, VermontWest Virginia and Wisconsin perform annual state inspections.  Approximately 55%63% of our stores also offer air conditioning services.

We began a program in the third quarter of fiscal year 2007 to increase tire and tire related sales, such as alignments, in our service stores. The goal was to increase the overall sales of these stores by capturing tire and related sales from existing store traffic and eventually drive additional traffic and sales. The program involves increasing the specific sales training of store managers, expanding the tire merchandise selection in these stores, and raising the focus of store advertising in this category. This initiative, which is called “Black Gold”, has now

8

been rolled out to 258 of the Company’s service stores, primarily in markets where we also have tire stores, which allows for utilization of inventory.

The format of the Tire Warehouse and Tire Barn Warehouse stores acquired in fiscal year 2010 and fiscal year 2013, respectively, are slightly different from Monro’s typical service or tire stores (as described above) in that, generally, over 97%93% of the stores’ sales involve tire services, including the mounting and balancing of tires, and the sale of road hazard warranties.  AllMost of these stores also provide the installation of wiper blades.  Currently, 1970% of Tire Warehouse and 2087% of Tire Barn Warehouse stores perform alignments.  In fiscal year 2014,2017, Monro plans to expand the number of Tire Warehouse and Tire Barn Warehouse stores offering alignment services to a83% of total of 46 stores.

Customer Satisfaction

Monro’s vision of being the dominant Auto Serviceauto service provider in the markets we serve is supported by a set of values displayed in each Company Store emphasizing TRUST:



Also displayed in each Company Store are guiding principles in support of our commitment to customer service: only present needed work; fix vehicles right the first time; complete vehicle service on time; and exceed the customer’s expectations.

Additionally, each Company-operated store operates under the following set of customer satisfaction principles: free inspection of brakes, tires, shocks, front end and exhaust systems (as applicable); item-by-item review with customers of problem areas; free written estimates; written guarantees; drive-in service without an appointment; fair and reasonable prices; a 30-day best price guarantee; and repairs by professionally-trained undercar and tire specialists.  (See additional discussion under “Store Operations: Quality Control and Warranties”.)

Competitive Pricing, Advertising and Co-branding Initiatives

Monro seeks to set competitive prices for quality services and products.  We support our pricing strategy by advertisingwith special offers and coupons distributed through a variety of channels including: direct mail, coupon insertsemail, digital advertising, newspaper, promotional store signage and in-store promotional signage and displays. In addition, to increase consumer awareness of the services we offer, Monro advertises through radio, cable television and yellow pages, newspapers, service reminders and digital marketing.page advertising.   Our digital marketing efforts include email marketing, paid and organic search on all major search engines, search remarketing and banner and mobile advertising.  We also manage social media profiles for all Monro brands on Twitter, Facebook and Foursquare.a variety of platforms. 

Our websites includewww.Monro.com,www.MrTire.com,www.Tirewarehouse.netwww.TQTire.com,www.Kentowery.comwww.AutoTire.com,  www.TireWarehouse.net,  www.KenTowery.com,  www.TireBarn.com,  www.CurrysAuto.com, andwww.TireBarn.comwww.TheTireChoice.com.  These sites help customers search for store locations, print coupons, make service appointments, shop for tires and access information on our services and products, as well as car care tips.

Monro currently maintains mobile apps on the iPhone and Android platforms for the Monro, Mr. Tire, and Tire Warehouse, and The Tire Choice brands.  Our mobile apps enable customers to manage vehicle service records on their smart phones and access information, coupons and specials, as they do on our websites.

Centralized Control



9

Centralized Control

Unlike many of our competitors,While we both operate rather thanand franchise most of our stores, (except for the three Tire Warehouse franchises and 14 dealer locations). Wewe believe that direct operation of stores enhances our ability to compete by providing centralized control of such areas of operations as service quality, store appearance, promotional activity and pricing.  We also believe our experience in operating stores makes us a more valuable partner to our franchisees.  A high level of competence is maintained throughout the Company, as we require, as a condition of employment, that employees participate in periodic training programs, including sales, management, customer service and changes in automotive technology.  Additionally, purchasing, distribution, merchandising, advertising, accounting and other store support functions are centralized primarily in Monro’sMonro's corporate headquarters in Rochester, New York, and are provided through our subsidiary, Monro Service Corporation.  The centralization of these functions results in efficiencies and gives management the ability to closely monitor and control costs.

Comprehensive Training

We provide ongoing, comprehensive training to our store employees.  We believe that such training provides a competitive advantage by enabling our technicians to provide quality service to our customers in all areas of undercar repair and tire service.  (See additional discussion under “Store Operations: Store Personnel and Training”.)

PURCHASING AND DISTRIBUTION

Through our wholly-owned subsidiary Monro Service Corporation, we select and purchase tires, parts and supplies for all Company-operated stores on a centralized basis through an automatic replenishment system.  Although purchases outside the centralized system (“outside purchases”) are made when needed at the store level, these purchases are low by industry standards, and accounted for approximately 15%22% of all parts and tires used in fiscal 2013.2016.

Our ten largest vendors accounted for approximately 80%76% of our parts and tire purchases, with the largest vendor accounting for approximately 18%22% of total stocking purchases in fiscal 2013.2016.  In fiscal 2016, Monro currently importsimported approximately 30%27% of our parts, oil and tire purchases.  We purchase parts and tires from approximately 100110 vendors.  Management believes that our relationships with vendors are excellent and that alternative sources of supply exist, at comparable cost, for substantially all parts used in our business.  We routinely obtain bids from vendors to ensure we are receiving competitive pricing and terms.

Most parts are shipped by vendors to our primary warehouse facility in Rochester, New York, and are distributed to stores by the Monro-operated tractor/trailer fleet.  The majority of tires are shipped to our stores directly by vendors pursuant to orders placed by our headquarters staff.  During fiscal 2013, we completed an expansion of our Rochester warehouse from 80,000 square feet to 135,000 square feet.  Stores are replenished at least monthlybi-weekly from this warehouse, and such replenishment fills, on average, 95%97% of all items ordered by the stores’stores' automatic POS-driven replenishment system.  The Rochester warehouse stocks approximately 5,6003,700 SKUs.  Monro also operates warehouses in Maryland, Virginia, Illinois, New Hampshire and Kentucky.  These warehouses carry, on average, 4,100; 1,800; 1,100; 800200; 700 and 1,700400 SKUs, respectively.

We enter into contracts with certain parts and tire suppliers, some of which require us to buy (at market prices) up to 100% of our annual purchases of specific products.  These agreements expire at various dates through July 2017.  We believe these agreements provide us with high quality, branded merchandise at preferred pricing, along with strong marketing and training support.

COMPETITION

Monro competes in the retail automotive service and tire industry.  This industry is generally highly competitive and fragmented, and the number, size and strength of competitors vary widely from region to region.

10

We believe that competition in this industry is based on customer service and reputation, store location, name awareness and price.  Monro’sMonro's primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated; car dealerships, mass merchandisers’ operating service centers; and, to a lesser extent, gas stations, independent garages and Internet tire sellers.  Monro considers TBC Corporation (operating under the NTB, Merchant’s Tire, Midas and Tire Kingdom brands), Firestone Complete Auto Care service stores and Meineke Discount Mufflers Inc. to be direct competitors.  In most of the new markets that we have entered, at least one competitor was already present.  In identifying new markets, we analyze, among other factors, the intensity of competition.  (See “Expansion"Expansion Strategy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations".)

EMPLOYEES

As of March 30, 2013,26, 2016, Monro had 5,8506,725 employees, of whom 5,5316,347 were employed in the field organization, 96116 were employed at the warehouses, 186213 were employed at our corporate headquarters and 3749 were employed in other offices.  Monro’sMonro's employees are not members of any union.  We believe that our relations with our employees are good.

REGULATION

We are subject to various federal, state and local laws and governmental regulations relating to the operation of our business, including those governing workplace safety, zoning and the handling, storage and disposal of hazardous substances contained in the products that we sell and use in our service bays, the recycling of batteries, tires and used lubricants, and the ownership and operation of real property.  We maintain programs to facilitate compliance with these laws and regulations.  We believe that we are in substantial compliance with all applicable environmental and other laws and regulations, and that the cost of such compliance is not material to the Company.

Monro stores new oil and recycled antifreeze and generates and/or handles used tires and automotive oils, antifreeze and certain solvents, which are disposed of by licensed third-party contractors.  In certain states, as required, we also recycle oil filters.  Thus, we are subject to a number of federal, state and local environmental laws including the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”).  In addition, the United States Environmental Protection Agency (the “EPA”"EPA"), under the Resource Conservation and Recovery Act (“RCRA”("RCRA"), and various state and local environmental protection agencies regulate our handling and disposal of waste.  The EPA, under the Clean Air Act, also regulates the installation of catalytic converters by Monro and all other repair stores by periodically spot checking repair jobs, and has the power to fine businesses that use improper procedures or materials.  The EPA has the authority to impose sanctions, including civil penalties up to $37,500 per violation (or up to $37,500 per day for certain willful violations or failures to cooperate with authorities), for violations of RCRA and the Clean Air Act.

We are subject to various laws and regulations concerning workplace safety, zoning and other matters relating to our business. We maintain programs to facilitate compliance with these laws and regulations. We believe that we are in substantial compliance with all applicable environmental and other laws and regulations and that the cost of such compliance is not material to the Company.

Monro is environmentally conscious, and takes advantage of recycling opportunities at our offices, warehouses and stores.  Cardboard, plastic shrink wrap and parts’ cores are returned to the warehouse by the stores on Monro stock trucks.  There, they are accumulated for sale to recycling companies or returned to parts manufacturers for credit.

SEASONALITY

Although our business is not highly seasonal, customers do purchase more undercar service during the period of March through October than the period of November through February, when miles driven tend to be lower.  In the tire stores, the better sales months are typically May through August, and October through December.  The slowest months are typically January through April and September.  As a result, profitability is typically lower during slower sales months, or months where mix is more heavily weighted toward tires, which is a lower margin category.  Additionally, since our stores are primarily located in the northeastern and midwestern United States, profitability tends to be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.

11

COMPANY INFORMATION AND SEC FILINGS

Monro maintains a website atwww.monro.com and makes its annual, quarterly and periodic Securities and Exchange Commission (“SEC”) filings available through the Investor Information section of that website.  Monro’s SEC filings are available through this website free of charge, via a direct link to the SEC website atwww.sec.gov.  Monro’s filings with the SEC are also available to the public at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330.

ItemItem 1A.Risk Factors

In addition to the risks discussed elsewhere in this annual report, the following are the important factors that could cause Monro’s actual results to differ materially from those projected in any forward looking statements:

We operate in the highly competitive automotive repair industry.

The automotive repair industry in which we operate is generally highly competitive and fragmented, and the number, size and strength of our competitors varies widely from region to region.  We believe that competition in the industry is based primarily on customer service, reputation, store location, name awareness and price.  Our primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated, car dealerships, mass merchandisers’ operating service centers and, to a lesser extent, gas stations, independent garages and Internet tire sellers.  Some of our competitors have greater financial resources, are more geographically diverse and have better name recognition than we do, which might place us at a competitive disadvantage to those competitors.  Because we seek to offer competitive prices, if our competitors reduce prices, we may be forced to reduce our prices, which could have a material adverse effect on our business, financial condition and results of operations.  Further, our success within this industry also depends upon our ability to respond in a timely manner to changes in customer demands for both products and services.  We cannot assure that we, or any of our stores, will be able to compete effectively.  If we are unable to compete successfully in new and existing markets, we may not achieve our projected revenue and profitability targets.

We are subject to seasonality and cycles in the general economy thatand customers’ use of vehicles, which may impact demand for our products and services.

Although our business is not highly seasonal, our customers typically purchase more undercar services during the period of March through October than the period of November through February, when miles driven tend to be lower. Further, customers may defer or forego vehicle maintenance at any time during periods of inclement weather. In the tire stores, the better sales months are typically May through August, and October through December. The slowest months are typically January through April and September. As a result, profitability is typically lower during slower sales months, or months where mix is more heavily weighted toward tires, which is a lower margin category.

Additionally, since our stores are primarily located in the northeastern and midwestern United States, profitability tends to be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.

The automotive repair industry is subject to fluctuations in the general economy. During a downturn in the economy, customers may defer or forego vehicle maintenance or repair. During periods of good economic conditions, consumers may decide to purchase new vehicles rather than having their older vehicles serviced.

Further, our industry is influenced by the number of miles driven by automobile owners.  Factors that may cause the number of miles driven by automobile owners to decrease include the weather, travel patterns, gas prices and, as discussed above, fluctuations in the general economy.  Should a significant reduction in the number of miles driven by automobile owners occur, it would likely have an adverse effect on the demand for our products and services. For example, when the retail cost of gasoline increases, the number of miles driven by automobile owners may decrease, which could result in less frequent service intervals and fewer repairs.



12

We depend on our relationships with our vendors, including foreign sources, for certain inventory.  Our business may be negatively affected by the risks associated with such relationships and international trade.

We depend on close relationships with our vendors for parts, tires and supplies and for our ability to purchase products at competitive prices and terms.  Our ability to purchase at competitive prices and terms results from the volume of our purchases from these vendors.  We have entered into various contracts with parts suppliers that require us to buy from them (at market prices) up to 100% of our annual purchases of specific products.  These agreements expire at various dates through July 2017.

We believe that alternative sources exist for most of the products we sell or use at our stores, and we would not expect the loss of any one supplier to have a material adverse effect on our business, financial condition or results of operations.  Our dependence on a small number of suppliers, however, subjects us to the risks of shortages and interruptions.  If any of our suppliers do not perform adequately or otherwise fail to distribute parts or other supplies to our stores, our inability to replace the suppliers in a timely manner and on acceptable terms could increase our costs and could cause shortages or interruptions that could have a material adverse effect on our business, financial condition and results of operations.

Further, we depend on a number of products (e.g. brake parts, tires, oil filters) produced in foreign markets. We face risks associated with the delivery of inventory originating outside the United States, including:









Our industry is subject to environmental, consumer protection and other regulation.

We are subject to various federal, state and local environmental laws, building and zoning requirements, employment laws and other governmental regulations regarding the operation of our business.  For example, we are subject to rules governing the handling, storage and disposal of hazardous substances contained in some of the products such as motor oil that we sell and use at our stores, the recycling of batteries, tires and used lubricants, and the ownership and operation of real property.  These laws and regulations can impose fines and criminal sanctions for violations and require the installation of pollution control equipment or operational changes to decrease the likelihood of accidental hazardous substance releases.  Accordingly, we could become subject to material liabilities relating to the investigation and cleanup of contaminated properties, and to claims alleging personal injury or property damage as a result of exposure to, or release of, hazardous substances.  In addition, stricter interpretation of existing laws and regulations, new laws and regulations, the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis of new or increased liabilities that could have a material adverse effect on our business, financial condition and results of operations.

National automotive repair chains have also been the subject of investigations and reports by consumer protection agencies and the Attorneys General of various states.  Publicity in connection with these kinds of investigations could have an adverse effect on our sales and, consequently, our business, financial condition and results of operations.  State and local governments have also enacted numerous consumer protection laws with which we must comply.

The costs of operating our stores may increase if there are changes in laws governing minimum hourly wages, working conditions, overtime, workers’ compensation and health insurance rates, unemployment tax rates

13

or other laws and regulations.  A material increase in these costs that we were unable to offset by increasing our prices or by other means could have a material adverse effect on our business, financial condition and results of operations.

We are involved in litigation from time to time arising from the operation of our business and, as such, we could incur substantial judgments, fines, legal fees or other costs.

We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various actions.  From time to time, we are involved in litigation involving claims related to, among other things, breach of contract, negligence, tortious conduct and employment law matters, including payment of wages.  The damages sought against us in some of these litigation proceedings could be substantial.  Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Business interruptions may negatively impact our store operations, availability of products and/or the operability of our computer systems, to process transactions, summarizewhich may have a material negative effect on our business and results of operations.  A breach of our computer systems could damage our reputation and managehave a material adverse effect on our business and results of operations.

If any of our locations in a particular region are unexpectedly closed permanently or for a period of time, it could have a negative impact on our business.  Disruptions in these systemsSuch closures could harmoccur as a result of circumstances out of our control, including war, acts of terrorism, extreme weather conditions and other natural disasters.  Further, if our ability to runobtain products and merchandise for use in our stores is impeded, it could have a negative impact on our business.  Factors that could negatively affect our ability to obtain products and merchandise include the sudden inability to import goods into the United States, for any reason and the curtailment or delay of commercial transportation. While we do maintain business interruption insurance, there is no guarantee that we will be able to use such insurance for any particular location closure or other interruption in operations.

Given

Additionally, given the number of individual transactions we process each year,  it is critical that we maintain uninterrupted operation of our computer and communications hardware and software systems. Our systems could be subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, including breaches of our transaction processing or other systems that result in the compromise of confidential customer data, catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our employees. If our systems are breached, damaged or cease to function properly, we may have to make a significant investment to fix or replace them, we may suffer interruptions in our operations in the interim, we may face costly litigation, and our reputation with our customers may be harmed.  The risk of disruption is increased in periods where complex and significant systems changes are undertaken.  Any material interruption in our computer operations may have a material adverse effect on our business or results of operations. The risk of disruption is increased in periods where complex and significant systems changes are undertaken.

If we fail to protect theexperience a data security of personalbreach and confidential customer or employee information about our customers or employees,is disclosed, we couldmay be subject to costly government enforcement actions or private litigation,penalties and experience negative publicity, which could affect our reputation could suffer.customer relationships and have a material adverse effect on our business.  We may incur increasing costs in an effort to minimize these cybersecurity risks.

The nature of our business involves the receipt and storage of personal information aboutpersonally identifiable data of our customers and employees.  If we experienceThis type of data is subject to legislation and regulation in various jurisdictions. Data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting state and federal legislative proposals addressing data security breach, we could beprivacy and security. We may become exposed to government enforcement actionspotential liabilities with respect to the data that we collect, manage and private litigation.process, and may incur legal costs if our information security policies and procedures are not effective or if we are required to defend our methods of collection, processing and storage of personal data. Future investigations, lawsuits or adverse publicity relating to our methods of handling personal data could adversely affect our business, results of operations, financial condition and cash flows due to the costs and negative market reaction relating to such developments.

We may not have the resources or technical expertise to anticipate or prevent rapidly evolving types of cyber attacks. Attacks may be targeted at us, our customers, or others who have entrusted us with information. Actual or anticipated attacks may cause us to incur increasing costs, including costs to hire additional personnel, purchase additional protection technologies, train employees, and engage third-party experts and consultants. In addition, data and security breaches can also occur as a result of non-technical issues, including breach by us or by persons with whom we have commercial relationships that result in the unauthorized release of personal or confidential information. Any compromise or breach of our customerssecurity could loseresult in violation of applicable privacy and other laws, significant legal and financial exposure, and a loss of confidence in our ability to protect their personal information,security measures, which could cause them to discontinue usagehave a material adverse effect on our results of credit cards or decline to useoperations and our services altogether. The loss of confidence from a data security breach involving employees could hurt our reputation and cause employee recruiting and retention challenges.reputation.

Our business is affected by advances in automotive technology.

The demand for our products and services could be adversely affected by continuing developments in automotive technology.  Automotive manufacturers are producing cars that last longer and require service and maintenance at less frequent intervals in certain cases.  Quality improvement of manufacturers’ original equipment parts has in the past reduced, and may in the future reduce, demand for our products and services, adversely affecting our sales.  For example, manufacturers’ use of stainless steel exhaust components has significantly increased the life of those parts, thereby decreasing the demand for exhaust repairs and replacements.  Longer and more comprehensive warranty or service programs offered by automobile manufacturers and other third parties also could adversely affect the demand for our products and services.  We believe that a majority of new automobile owners have their cars serviced by a dealer during the period that the car is under warranty.  In addition, advances in automotive technology continue to require us to incur additional costs to update our diagnostic capabilities and technical training programs.

14

We may not be successful in integrating new and acquired stores.

Management believes that our continued growth in sales and profit is dependent, in large part, upon our ability to open/acquire and operate new stores on a profitable basis.  In order to do so, we must find reasonably priced new store locations and acquisition candidates that meet our criteria and we must integrate any new stores (opened or acquired) into our system.  Our growth and profitability could be adversely affected if we are unable to open or acquire new stores or if new or existing stores do not operate at a sufficient level of profitability.  If new stores do not achieve expected levels of profitability, this may adversely impact our ability to remain in compliance with our debt covenants or to make required payments under our credit facility.

Any impairment of goodwill, other intangible assets or long-lived assets could negatively impact our results of operations.

Our goodwill, other intangible assets or long-lived assets, are subject to an impairment test on an annual basis and are also tested whenever events and circumstances indicate that goodwill, intangible assets and/or long-lived assets may be impaired.  Any excess goodwill resulting from the impairment test must be written off in the period of determination.  Intangible assets (other than goodwill and indefinite-lived intangible assets) and other long-lived assets are generally amortized or depreciated over the useful life of such assets.  In addition, from time to time, we may acquire or make an investment in a business that will require us to record goodwill based on the purchase price and the value of the acquired tangible and intangible assets.  We have significantly increased our goodwill as a result of our acquisitions.  We may subsequently experience unforeseen issues with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business.assets.  Future determinations of significant write-offs of goodwill, intangible assets or other long-lived assets, as a result of an impairment test or any accelerated amortization or depreciation of other intangible assets or other long-lived assets could have a material negative impact on our results of operations and financial condition.  We have completed our annual impairment test for goodwill, in accordance with the applicable accounting guidance, and have concluded that we do not have any impairment of goodwill for the year ended March 30, 2013.26, 2016.

Store closings result in acceleration of costs.

From time to time, in the ordinary course of our business, we close certain stores, generally based on considerations of store profitability, competition, strategic factors and other considerations.  Closing a store could subject us to costs including the write-down of leasehold improvements, equipment, furniture and fixtures.  In addition, we could remain liable for future lease obligations.

We rely on an adequate supply of skilled field personnel.

In order to continue to provide high quality services, we require an adequate supply of skilled field managers and technicians.  Trained and experienced automotive field personnel are in high demand, and may be in short supply in some areas.  We cannot assure that we will be able to attract, motivate and maintain an adequate skilled workforce necessary to operate our existing and future stores efficiently, or that labor expenses will not increase as a result of a shortage in the supply of skilled field personnel, thereby adversely impacting our financial performance.  While the automotive repair industry generally operates with high field employee turnover, any material increases in employee turnover rates in our stores or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations.



15

If we are unable to generate sufficient cash flows from our operations, our liquidity will suffer and we may be unable to satisfy our obligations.

We currently rely on cash flow from operations and our Revolving Credit Facility to fund our business.  Amounts outstanding on the Revolving Credit Facility are reported as debt on our balance sheet.  While we believe that we have the ability to sufficiently fund our planned operations and capital expenditures for the foreseeable future, various risks to our business could result in circumstances that would materially affect our liquidity.  For example, cash flows from our operations could be affected by changes in consumer spending habits, the failure to maintain favorable vendor payment terms or our inability to successfully implement sales growth initiatives, among other factors.  We may be unsuccessful in securing alternative financing when needed on terms that we consider acceptable.

In addition, a significant increase in our leverage could have the following risks:





If we do not perform in accordance with our debt covenants, our lenders may restrict our ability to draw on our Revolving Credit Facility.  We cannot assure that we will remain in compliance with our debt covenants in the future.

We depend on the services of key executives.

Our senior executives are important to our success because they have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging necessary financing.  Losing the services of any of these individuals could adversely affect our business until a suitable replacement could be found.  It may be difficult to replace them quickly with executives of equal experience and capabilities.  Although we have employment agreements with selected executives, we cannot prevent them from terminating their employment with us.  Other executives are not bound by their employment agreements with us.

New accounting guidance or changes in the interpretation or application of existing accounting guidance could affect our financial performance adversely.

New accounting guidance may require systems and other changes that could increase our operating costs and/or change our financial statements.  For example, implementing future accounting guidance related to leases and other areas impacted by the current convergence project between the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) could require us to make significant changes to our lease management system or other accounting systems, and could result in changes to our financial statements.  Additionally, implementing future accounting guidance related to leases or other items could potentially impact certain performance metrics and financial ratios, and potentially require the renegotiation of debt covenants.

Unanticipated changes in the interpretation or application of existing accounting guidance could result in material charges or restatements of our financial statements, which may further result in litigation or regulatory actions which could have an adverse effect on our financial condition and results of operations.

The effect of recent changes to U.S. healthcare laws may increase our healthcare costs and negatively impact our financial results.



16

HealthcareWe offer eligible employees the opportunity to enroll in healthcare coverage subsidized by us. For various reasons, many of our eligible employees currently choose not to participate in our healthcare plans. However, under the comprehensive U.S. healthcare reform legislation could have a negative impact on our business, financial condition and results of operations.

Thelaw enacted Patient Protection andin 2010, the Affordable Care Act, as well as otherchanges that became effective in 2014, and the employer mandate and employer penalties that became effective January 1, 2015, may significantly increase our labor costs. Changes in the law that took effect in 2014, including the imposition of increasing penalties on individuals who do not obtain healthcare reform legislation considered by Congress and state legislators, could significantly impactcoverage, may result in more eligible employees deciding to enroll in our healthcare cost structure andplans.  This may increase our healthcare-related expenses. We are currently evaluatinghealthcare costs in the potential impactfuture.  Additionally, implementing the requirements of the Affordable Care Act has imposed some additional administrative costs on us, and those costs may increase over time. The costs and other effects of these new healthcare reform legislation willrequirements cannot be determined with certainty, but they may have a material adverse effect on our businessfinancial and operating results.

The market price of our common stock may be volatile and could expose us to shareholder action including securities class action litigation.

The stock market and the steps necessary to mitigate the impacts, including potential modifications toprice of our current benefit plans, operational changes to minimize the impact of the legislation to our cost structure and increases to selling prices to mitigate the expected increase in healthcare-related expenses. If we cannot effectively modify our programs and operations in response to the new legislation, our results of operations, financial condition and cash flowscommon stock may be adversely impacted.subject to wide fluctuations based upon general economic and market conditions.  Downturns in the stock market may cause the price of our common stock to decline.  The market price of our stock may also be affected by our ability to meet analysts’ expectations.  Failure to meet such expectations, even slightly, could have an adverse effect on the price of our common stock.  In the past, following periods of volatility in the market price of a company’s securities, shareholder action including securities class action litigation has often been instituted against such a company.  If similar litigation were instituted against us, it could result in substantial costs and a diversion of our management’s attention and resources, which could have an adverse effect on our business.

ItemItem 1B.Unresolved Staff Comments

None.

Item 2.Properties

The Company, through Monro Service Corporation, owns its office/warehouse facility of approximately 165,000 square feet, (including 70,000 square feet from our recent expansion), which is located on 12.7 acres of land in Holleder Technology Park, in Rochester, New York.  Monro Service Corporation also owns a second office/warehouse facility of approximately 28,000 square feet, which is located on 11.8 acres of land in Swanzey, New Hampshire.  Additionally, weWe lease additional warehouse space in Maryland, Virginia and Kentucky, and office space in Illinois and Kentucky.for our Car-X franchise operations.

Of Monro’s 937Monro's 1,029 Company-operated stores at March 30, 2013, 27226, 2016, 319 were owned, 560610 were leased and for 105100 stores, only the land was leased.  In general, we lease store sites for a ten-year period with several five-year renewal options.  Giving effect to all renewal options, approximately 58%64% of the leases (383(453 stores) expire after 2023.2026.  Certain of the leases provide for contingent rental payments if a percentage of annual gross sales exceeds the base fixed rental amount.  The highest contingent percentage rent of any lease is 6.75%, and no such lease has adversely affected profitability of the store subject thereto.  An officer of Monro or members of his family are the lessors, or such officer or family members have interests in entities that are the lessors, with respect to six of the leases.  No related party leases exist, other than thethese six assumed as part of the Mr. Tire Acquisition in March 2004, have been entered into,leases, and no new related party leases are contemplated.

As of March 30, 2013, there was $.7 million outstanding under a mortgage held by the City of Rochester, New York, secured by the land on which the headquarters office and warehouse is located.

ItemItem 3.Legal Proceedings

Monro currently and from time to time is involved in litigation incidental to the conduct of our business, including employment-related litigation arising from claims by current and former employees.  Although we diligently defend against these claims, we may enter into discussions regarding settlement of these and other lawsuits, and may enter into settlement agreements, if management believes settlement is in the best interests of Monro and our shareholders.  Although the amount of liability that may result from these matters cannot be ascertained, management does not currently believe that, in the aggregate, they will result in liabilities material to Monro’s financial condition or results of operations.

ItemItem 4.Mine Safety Disclosures

Not Applicable.



17Not applicable.

ItemPART II

Item 5.Market for the Company’sCompany's Common Equity, and Related Stockholder Matters and Issuer Purchases of Equity Securities

MARKET INFORMATION

Monro’s common stock, par value $.01 per share, (the “Common Stock”) is traded on the NASDAQ Stock Market under the symbol “MNRO”"MNRO".  The following table sets forth, for oureach quarter during the last two fiscal years, the range of high and low sales prices on the NASDAQ Stock Market for the Common Stock:



HOLDERS

At May 10, 2013,6, 2016, Monro’s Common Stock was held by approximately 4,60040 shareholders of record. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record or through nominee or street name accounts with brokers.by brokerage firms and clearing agencies.

EQUITY COMPENSATION PLAN INFORMATION

As of March 30, 2013,26, 2016, Monro maintained stock option plans under which employees and non-employee directors could be granted Common Stock options to purchase shares of Monro’s Common Stock.  The following table contains information relating to such plans as of March 30, 2013.26, 2016.



DIVIDENDS

In May 2011,2014, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.08 per common share or common share equivalent in the first quarter of fiscal 2012.

In July 2011, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.09 per common share or common share equivalent beginning with the second quarter of fiscal 2012.

In May 2012, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.10$.13 per common share or common share equivalent to be paid beginning with the first quarter of fiscal year 2013.2015.

In May 2015, Monro’s Board of Directors accelerated the record and payment date of the $.10 per share regular quarterly cash dividend for the fourth quarter such that the dividend was paid together with the third quarter dividend in December 2012. This combined dividend of $.20 per share was paid on December 21, 2012declared its intention to shareholders of record as of December 11, 2012.

18

In May 2013, Monro’s Board of Directors declaredpay a regular quarterly cash dividend of $.11$.15 per common share or common share equivalent to be paid beginning with the first quarter of fiscal 2016.

In May 2016, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.17 per common share or common share equivalent to be paid to shareholders of record as of May 31, 2013.June 3, 2016.  The dividend will be paid on June 11, 2013.13, 2016.

However, the

The declaration of and determination as to the payment of future dividends will be at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with charter and contractual restrictions, and such other factors as the Board of Directors deems relevant.  Under our Revolving Credit Facility, we are not permitted to pay cash dividends in excess of 50% of our preceding year’s net income.  For additional information regarding our Revolving Credit Facility, see Note 76 to the Company’s Consolidated Financial Statements.

Item 6.Selected Financial Data

The following table sets forth selected financial and operating data of Monro for each fiscal year in the five-year period ended March 30, 2013.26, 2016.  The financial data and certain operating data have been derived from Monro’s audited financial statements.  This data should be read in conjunction with the financial statements and related notes included under Item 8 of this report and in conjunction with other financial information included elsewhere in this Form 10-K.