Welcome to the Monro Muffler Brake first quarter 2009 conference call. (Operator Instructions). I would now like to introduce Karen Barbara of FD.

I would just like to remind you that on this morning’s call management may reiterate forward-looking statements made in today’s release. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I would like to call your attention to the risks and uncertainties related to these statements which are now more fully described in the press release and in the company’s filing with the Securities Exchange Commission. These risks and uncertainties include but are not necessarily limited to uncertainties affecting retail generally, but the consumer confidence, and demand for auto repairs. Risks relating to endeavors service including sensitivities to fluctuation from interest rate dependence upon and competition within the primary markets in which the company’s stores are located and the need and costs associated with store renovations and other capital expenditures. The company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events and circumstances after the date hereof or to reflect the occurrence events, unanticipated events. The inclusion of any statement in this call does not constitute any admission by Monro or any other person that the events or circumstances described in this statement are material. Joining us for this morning’s call from management are Rob Gross, Chairman and Chief Executive Officer; Cathy D’Amico, Chief Financial Officer. With these formalities out of the way, I turn the call over to Rob Gross.

Thanks Karen. Good morning and thank you for joining us on today’s call. We are pleased that you are with us to discuss our first quarter 2009 performance. I will also provide you with an update on our business as well as our outlook for the second quarter and full year 2009. I will then turn the call over to Cathy D’Amico, our Chief Financial Officer who will provide additional details on our financial results. We are please with our performance for the first quarter and are encourage by the positive momentum that our business has sustained over the past five months despite a very challenging environment. As you know consumer confidence is at historically low levels due to many factors including high fuel cost. As a result consumers continued diverse spending when possible and are driving 7 to 800 fewer miles per year an average. That said our business is been only minimally impacted if that all by the decrease in miles driven, because the decrease is not enough to significant reduce the need for repairs or oil changes. You may know that oil changes should occur every 3,500 miles to 4,000 miles. However, tighter spending by consumers puts pressure on our store traffic and higher ticket repairs and has also resulted in choppy sales trends in the prior year periods. At the same time, if sales of new cars decreased customers must maintain or make larger repairs on their existing vehicles. In addition our business has been subject to significantly higher material cost, with oil and tire cost increasing several times already this calendar year and showing no signs of stopping. Given these dynamics, we adopted a strategy of driving store traffic to increase the advertise spending and improve in proven programs and are continuing to implement price…

(Operator Instructions) Our first question comes from the line of Scott Stember, from Sidoti & Company. Please go ahead. Scott Stember- Sidoti & Company: You talked about the price increases; can you just give us a little bit of a timeline? I think you guys are scheduled for another price increase with oil changes in December if I’m not mistaken.

We are constantly evaluating everything. The September fliers went out with moving. I believe it was about a 100 stores up in oil to 2499 from 1999, everything else stayed the same with a number of stores staying at 1999. Now again a 100 more stores at the 2499 level and additional stores at a 2499 level with $5 mainland rebates which we continue to test and make sure again, very cognizant of not wanting to do anything to negatively impact the store traffic that we think the advertising programs are generating. So, that would be what is coming down the pipe and what's occurring this year. Scott Stember- Sidoti & Company: Alright, and just moving over to book there it’s nice to see that you guys are making a good traction there on the operating line. Could you maybe talk about some of the areas where you’re noticing success and maybe talk about future opportunities to expand markets there?

ProCare you’re talking about? Scott Stember- Sidoti & Company: Yes.

Yes, I think the starting point is the guys have done a real good job finally, getting the right people working in the stores and while we’ve been dissatisfied and feel it’s underperforming, remember it was other bankruptcy running minus 30 constantly, we’ve only owned it for two years so, the people are in place now. If you remember we advertised in November for the first time when we thought we had the right people in place and we did. Those advertising programs went over the new name on the outside of the location and it takes some advertising to get the name recognition out there and to get customers back into those locations and we’ve really started that processes and earned it in April through June continuing now until the second quarter where we are comfortable driving the traffic into the store. The labor productivity is better, the sales volumes are now starting to go up, so it reduces our occupancy cost and I think as Cathy said that’s where we picked up the 100 basis points in margin improvement. Scott Stember- Sidoti & Company: Right and Black Gold you gave some statistics, I missed a few of them. You were talking about I guess the tire sales?

Tire units in the Black Gold stores are up 20% and they are up 5% in the non Black Gold service stores. For the quarter the company’s overall tire unit improvement was 7%, which is very favorable compared to, most of what we’re hearing out there, you might know better than I do and on the comp basis the Black Gold comps were up approximately 7% where the non Black Gold comps were up approximately 5% for the quarter. Scott Stember- Sidoti & Company: That was for the whole store.

Correct. Scott Stember- Sidoti & Company: And last question on the acquisition environment, I know you mentioned that you’re closed. Are we looking at flier stores or is anything fair gain right now?

I think, what I said specifically all I can say is we are closer. Scott Stember- Sidoti & Company: And just what was the CapEx figure for quarter again Cathy and then I’ll leave it for someone else. Catherine D’Amico: They’re $2.7 million Scott.

Thank you. Our next question comes from the line of Tony Cristello form BB&T Capital Markets. Please go ahead. Tony Cristello- BB&T Capital Markets: I guess all things being equal Rob would you prefer to have traffic counts up for better comps?

Right away I have to choose. Tony Cristello- BB&T Capital Markets: To me in this environment having traffic up is a bigger signal than just being driven by pricing and its pretty impressive that your traffic up 2.5%, traffic on tires, which is a big deferral category, units being up 4.4% I think is what you said and so what I’m wondering here is, how much is coming from direct marketing or ad versus how much is pent-up demand that you’ve just simply reached the point where you cycle through and now you’re seeing that sales come through?

Well I think certainly a piece of that is pent-up demand. I think certainly though the increase in advertising well not a tone money if $500,000 for the quarter being very targeted, only brining programs that have worked in the past, has been beneficial to drive new traffic because whether it’s the internet marketing and the buying of key words we’re doing a numerous market or increasing some of the direct mail being sent out to, also that we don’t normally cover or the radio, those are new customers. I think that shows up in the store traffic and it specifically shows up at a higher level with the numbers you quoted. The 3.7% increase in tire store traffic and oil changes and 4.4% on the service store and that increases on oil changes, while the prices are higher in new customer. So, we already seen specially oil changes go up because to us that means we’re maintaining our current strong hold on our customer base and with the value equation we’re driving new customers into the door, which should feed into profitable in bigger jobs later on if we do a good job in servicing them, but I certainly don’t want to have to choose. Tony Cristello- BB&T Capital Markets: Again I’m not in the Monroe market, so when you look at these advertise and sort of these direct market mailers one goes out for oil, will the same customer receive the second for tires or are you looking at when the last time they were in, what they came in for and basing that on sort of that data point?

Sure, obviously with current customers one of the value added things we provide to the customer is again we’ve got a dominant lead in the month of their state inspection and we track when it’s time for their next oil change. So, we will certainly hone in and target them for specific services that we think they need and again customers that we see three or four times a year know when it’s time for the break, so when it’s time for the tires. We certainly have seeing customers trade down on tires getting less expense of tires, but that advertising program would be geared towards our current customer base. The key words that we are purchasing i.e., say like used tires and things like that and fine tuning some of the internet advertising most likely is hitting an all new customer base as would any radio advertising we are doing because those are not vehicles we have historically done, they’re fairly new. It broadens our P&L and then once those drive the new customers in the door, again the process will start over again with us and those new customers that are being barreled down and are reading the month of their state inspection and start tracking their mileage so we can add value and let them know when it’s time for their service. Tony Cristello- BB&T Capital Markets: I don’t know maybe the Cathy if you have this number or not, what is your add spend as a percent of revenue or is that something you can share with us?

Sure, I think when we said in total for the year that the incremental advertising we are planning on doing if it continues to work is about $500,000 a quarter, that’s $2 million for the year, that would bring our overall company ad spend from what historically has been or about above 3.3%, 3.4% of sales up to 3.7% of sales. Tony Cristello- BB&T Capital Markets: And one of the other pieces of this that I think when you look at that cost of goods I guess fuel costs are going up and from a distribution standpoint that has to be impacting this sum as well, that number is included in your cost of sales I’m assuming and how has that changed on a year-over-year basis?

I can’t give you a specific number. I think that John Van Heel and his team have done a good job of as we said in picking up the $250,000 a quarter in cost savings cutting back roots, consolidating things, making our selves more efficient in the warehouse; again things have won’t negatively impact our customer, but certainly our cost of gas, our cost of diesel, our cost of utilities, our cost of oil all are up. I think also those guys are doing a good job in hedging a lot of utility costs, so any year-to-year we only have 50% of those costs for utilities and natural fuel gas, negatively impacting us and a lot of that will come during the winter and we’ll see what kind of winter we have up in the Northeast, but we are focused on every piece and as we said at the end of the fourth quarter we really are running our business and it made adjustments on our business model not necessarily in anticipation of what the last five months have delivered and I don’t know if we can continue this momentum all the better with some of the adjustments we’ve made in the cost structure going forward to try and combat what is a high commodity cost and volume mix across the board. Tony Cristello- BB&T Capital Markets: And one last question, you did a five, six comp and now July’s 8% comp and it seems like your guidance is three to five on compared to two, are we being conservative Rob.

How about I tell you in September? Tony Cristello- BB&T Capital Markets: Okay, fair enough. I will let’s someone else to ask some question, I appreciate of that.

Thank you. The next question comes from the line of Cid Wilson from Kevin Dann & Partners. Please go ahead. Cid Wilson - Kevin Dann & Partners: Cathy what was the depreciation, amortization for the quarter, could you give that?

Yes, $5 million. Cid Wilson - Kevin Dann & Partners: Okay, and also can you give some sense of what’s you’re long-term that the cap may look like by the end of this year, what your guidance is in terms of your target?

I wouldn’t expect we would play out $50 million in the quarter going forward Cid. Some of that was training, but I think we could probably be in the mid 30% that’s the Cap mid to low 30’s by the end of this fiscal year. Cid Wilson - Kevin Dann & Partners: Okay and then my last question is that where there any geographical variances in your sales?

No, I mean business was fairly solid, the advertising programs were there, certainly ProCare’s in Ohio and Pennsylvania did a little bit better, but they’re starting off with the worst space. I mean the tire stores, the service stores, in general any weakness in our business is probably personnel related as opposed to geographically related.

Thank you. The next question comes from the line of Jack Balos from Midwood Research. Please go ahead.

Hi, I was just wondering given your recent increases in the prices of tires, how do the gross margins and tires now look versus a year ago? Are they still declining or are they stabilized?

Well, I think they’re stabilizing. It’s hurting our overall gross margin because it’s becoming a bigger percent of the business. As Cathy mentioned the mix issue, but we’ve increased the price of tires relatively significantly with a 6% increase and a 7% already this calendar year. It’s being reflected in the comp store sales, the margin is holding up and what we see happening is we raised those prices across the board on all tires but people in the tier category are trading down.

Catherine D’Amico: Gross margins are little bit lower than it was the year ago on tiers.

Okay

But in general Jack don’t forget, our alignments are up 12% and that’s probably about 90% margin business and that’s not included in what you’re asking which is this discreet gross margin on the rubber sale.

Okay, okay. Regarding the management incentive pay you made and the stock option as all that that occurred in this quarter; is this all just upfront first quarter spending that will not be repeatable going forward?

Okay, at so this point it should continue on a quarterly basis.

That’s correct.

Thank you. The next question comes from the line of John Lawrence from Morgan, Keegan. Please go ahead.

About 85% of everything we deliver is in-house, 15% would be net our Advanced AutoZone.

And as you continue to move that, obviously that’s been one of the success factors; as you continue to grow and look at that network and now with the tire business so much strength how should we look at that going forward, I mean I guess two fold: number one, is what's the next cost element to the increase the distribution capacity?

Again if you remember over the last couple of years in our CapEx we’d budgeted approximately $4.5 million for expansion of our warehouse in Rochester, New York and right now we’re delivering to all of the stores throughout. In the last couple of years, we decided based on the environment and the fact that we haven’t successfully grown to the same level we had hoped to, that that facility will be in a nice city; it hasn’t gone to the point where we have to do it. When we grow the business further, you will see that capital expenditure will come out. It won’t significantly increase our cost. Some of the things you’re asking about relating to the distribution is why our inventory was up $3 million going into the busy season for parts proliferation for more tire buys, before price increases from the manufacturers who went into place to position ourselves to take advantage of bringing in stock, so we buy less outside.

And as far as those commodity cost pressures, what's the next level of -- I understand your fighting through this everyday, but I mean what's the next level of discounts based on your size in some of these categories? Or is there another level of discount?

from : Gerry Heffernan - Lord Abbett & Company: Hey Rob, I’m not sure if it is the fact that you just speak so softly and slowly or I’m getting a little bit older. Did you say ProCare on a fully loaded expense basis was profitable?

Yes. Gerry Heffernan - Lord Abbett & Company: Okay and you made a mention that in April thorough June began a what is it a direct mail advertising program in the I guess what is referred to as the ProCare market?

It was direct mail and some internet advertising. Gerry Heffernan - Lord Abbett & Company: Okay. Was it direct mail that was pretty much evenly distributed over where that entire store base would be or did you target like a micro geography of the full ProCare area?

No, we have the customer list, the old customer list from ProCare when we purchased it and obviously that’s a starting point and then our normal direct mail would – we’ll get zip codes around stores and other opportunities and internet usage and markets like Columbus or Boston or Washington D.C. where there is a high-level of usage to identify opportunities to advertise which we did not significantly do as I said in the past just based on not being comfortable in driving traffic and underperforming. Gerry Heffernan - Lord Abbett & Company: And that’s kind of the key I wanted to know to latch on there. In this April to June period, did you go all out on what you would consider a 100% marketing effort using that direct mail and internet list or are you in “you know what, let’s start doing it but we’ll turn the dial up” when and if we see success with handling the increase traffic.

Sure, the overall for all stores, was $500,000 and we felt that we wanted to increase our advertising for new customers to get across effectively what is higher retail price to them. We didn’t want to raise our prices without trying to promote it and a lot of retailers in this environment cut back advertising and cut their prices. We felt that with some of the programs we’ve implemented both in ProCare and companywide like the Brakes Forever, which we feel is a value added program to guaranteeing their brake pads, like the oil change and more where we will give you a free tire rotation and a pressure check and its adds value to what the customer is getting, makes our price point not totally be tied to price and generates a traffic increase and more names going in our data base. So specifically, we didn’t do anything significantly more than ProCare and it was burdened with these costs that we did in the quarter companywide. I think the performance in ProCare just had further to go and I think that’s why you see it leading on a comp basis and you would expect that based on what it was before we got the stores and the two years it took us to fix them Gerry Heffernan - Lord Abbett & Company: Right, that’s great I appreciate all that information. I guess kind of where I was going at this from was having worked with you guys for several years here I know that you were one, you have stated in the past with ProCare “hey look I’m not going to drive people in there only for them to have a lousy experience and then not show up again.” Two, when you go to do things you, “hey let’s start out, see if it works and then we can keep on adding on.” So I am just wondering now in ProCare was this a first step as far as driving traffic and you’re saying “you know what, there’s now a couple of more levers that I can pull now, but I’m happy with the way we are able to handle this first step in traffic increase” or did you just say “you know what, were ready now, all levers on.”

Gerry Heffernan - Lord Abbett & Company: Okay. I was trying to concentrate my efforts just on the ProCare market but my hard thoughts being and Cathy you can certainly jump in here too is that to the extent that you can start rationing up the traffic count in that area, we had a set of stores that was a drag on profitably for a while and they have the most, the greatest marginal benefit from a step-up in each percentage of traffic count give to the point we’ve just gotten back to a full absorption level and everything from here would be gravy as compared to the other stores where we’re trying to three yards and a cloud of dust, lets just get that a little extra more out of, because they’re already in a nicely profitable position.

I don’t disagree with the promise that there is more upside on ProCare than there should be, that being said, I would like to see -- we’re talking about everything we’re doing has been working in the last five months and it’s going to continue and certainly I don’t think we’re going to go into Q3 or Q4 on ProCare and trying to ration it down. That being said 8% companywide, with ProCare 11% we are not talking about monumental incremental spend and I think, I’m saying that which probably supports your point and what your trying to say is “it’s 10% your business, yes it’s running up well, how much better would it do is another -- whatever it is $50,000.” I don’t disagree I’m trying to get through August. Gerry Heffernan - Lord Abbett & Company: Okay, okay and please don’t report in September because that would be a prerelease. How about we wait for the news front in October.

Well, maybe it’s going to be a good prerelease.

Thank you. The next question comes from Graham Tanaka from Tanaka Capital. Please go ahead.

Related to the ProCare maybe you can sort of get at terms of the sales per foot and the margins there now versus where you would like to get them to be?

Related to the ProCare maybe you can sort of get at terms of the sales per foot and the margins there now versus where you would like to get them to be?

The sales per square foot I don’t have of that the top of my head. As our metrics of utilization kind of look at sales per day and if you saw my run rate of $40 million out of 72 square averaging six days, you probably have that number and what was the second one?

The biggest opportunity, which I think Gerry on the previous question, was getting to is we need to grow the sales of ProCare. The runs are stable and as those sales go the biggest improvement we’ve made there, the labor and that’s stuff is great, but as sales go up 10% or 15%, our occupancy cost start dropping and net net our goal with ProCare would be -- the whole chain would run 150 basis points, 200 basis points behind the Monro Service stores in general and the reason for that difference is not the occupancy cost then, but the fact that they have smaller storage spaces and we will always have slightly more outside purchases in those locations than we will in the rest of the distribution network and the chain. The biggest opportunity for us is they were down 30% top, when we took them over. If we can get back to only down 10, these things are very profitable and at least for the last five months, we’ve made some progress there and potentially maybe we can ramp it up and make more.

Well if the set map is relatively correct, you have the potential then of having maybe a 20% improvement in sales and therefore what kind of an improvement in margins as you go from what it was, to what you get to say in a year or two?

Well if the set map is relatively correct, you have the potential then of having maybe a 20% improvement in sales and therefore what kind of an improvement in margins as you go from what it was, to what you get to say in a year or two?

Well, I think as a company as a whole, we say it’s approximately 40%; ProCare should be able to run at 38%.

And that’s right now roughly at what level?

And that’s right now roughly at what level?

33%, 34% something like that.

Okay, so another 5% improvement? You have progress already in other words. You have…

Okay, so another 5% improvement? You have progress already in other words. You have…

Yes, sure but again as we’re doing the map on this in a while, it certainly will be profitable and certainly will be meaningful and remember we’re talking about 8% of our sales.

Okay. The other is I just was wondering about the total time lag as cost increases and pass through’s in terms of price. I remember back, believe it or not, I go back as far to the late 70’s early 80’s when we had all these huge price increases, the first the line of oil price increases and a hyper inflation, and the companies that did well were those that were able to get their price increases through and not have a big lag relative to their cost increases. What kind of a time lag are you facing? Are you pretty much, doing a contemporary in this?

Okay. The other is I just was wondering about the total time lag as cost increases and pass through’s in terms of price. I remember back, believe it or not, I go back as far to the late 70’s early 80’s when we had all these huge price increases, the first the line of oil price increases and a hyper inflation, and the companies that did well were those that were able to get their price increases through and not have a big lag relative to their cost increases. What kind of a time lag are you facing? Are you pretty much, doing a contemporary in this?

Again the best and closest example is we had a 7% price increase from the tire manufacturers that went into effect July 1 and across the board, we raised all the prices on tires on June 1. So, that helped margins in June, which we should continue to see some benefit in July and by September we’re probably going to be in the same boat I guess. We certainly have given notice and pretty much across the board whether it’s oil or tires, which are the big items that are going up, we will try and bring any manufacturers pass through dollars by 30 days and you get ahead of the curve. It’s a little bit more difficult sometimes with suppliers and the advertising to catch up, because those are two months out.

That’s fabulous. Now, the other thing is on the downside, were we to have a continued drop in oil prices and then show on the later products, tires, etc, would you be sticking on the downside or would you be lowering prices at the same time as cost go down?

That’s fabulous. Now, the other thing is on the downside, were we to have a continued drop in oil prices and then show on the later products, tires, etc, would you be sticking on the downside or would you be lowering prices at the same time as cost go down?

Lowering prices to retail?

Yes.

Yes.

No, I think we’ve found our new level and if the prices go down on the cost, ideally we would return that to you guys. Nothing is special dividend Graham. We make more of money.

Thank you. We have time for one further question. It comes from DeForest Hinman, Walthausen & Co. Please go ahead. DeForest Hinman - Walthausen & Co: Hi, I kind of have two more on just one of these questions; do we have the material snow player business at all?

Not really, I mean our markets are obviously the Northeast and lower. I mean radial tires and some of the products, whether it’s Goodyear or Bridgestone, Blizzards things like that that, we certainly sell those. We do have a material November tire business where in our markets, people upgrade and get new tires before the winter and that’s why our third quarter is stronger where margin gets a little bit weaker because the percentage of our business that is tire related specifically related to November as people buying tires, changing tires whatever it is, but upgrading their vehicles before the winter and the lions share of those expenditures ends up being on tires. DeForest Hinman - Walthausen & Co: Alright, and then on the utility side, what do we heat location with. Do we have any ability to us waste oil burning systems, so it’s like we do the oil change, but we yet oil back and we can use it to heat the building?

I have John Van Heel here, President of the company and John?

Yes, we do have waste oil systems and in the number of our stores. It’s less than 200 of the stores and there we look for stores that have a high natural gas usage and enough put through or throughput on the oil changes to where we are putting the waste oil herein. Most of our stores are heating with natural gas though and as Rob said we normally hedged about 40% to 50% and fixed those costs year-to-year to try to maintain some consistency there in volatile markets. DeForest Hinman - Walthausen & Co: And has the waste oil program in terms of the burning units, is that’s something we’ve been expanding or is that kind of just steady state?

It’s more than at steady state. After Katrina certainly there was some benefit as we knew where the natural fuel gas was going to go. There is absolutely a payback and some kind of final print maintenance costs as you go forward. So, at very high levels of natural gas it makes more sense than where we were for at least part of the last 24 months. So, we’re little bit at steady state. The main thing is we do try to keep those natural gas contracts fixed there, so that we’re not really exposed significantly in a high cost market.

Thank you and at this time there are no further questions in the queue. I would like to turn it back to Mr. Gross for any closing remarks.

Certainly we’re happy with the quarter, but we’re hoping to continue the momentum and one quarter does not the year, but it’s encouraging. Certainly the traffic improvements and that price increases are sticking and customers are coming back and they see value in our offering and we look to hopefully have some good news for you when we report on our next quarter and thank you very much for your participation and interest.