Canadian Tire fourth quarter 2007 adjusted net earnings increase 29.0% to $127.6 million; net earnings rise 15.5% to $125.1 million



    2007 adjusted net earnings rise 18.0% to $410.1 million; net earnings for
    the year increase by 17.8% to $417.6 million

    
                             ------------------------------------------------
                                           Year-over-              Year-over-
    Consolidated                   2007         year        2007        year
    Highlights(1):              4th quarter   change     full year    change
    -------------------------------------------------------------------------

    Retail sales               $3.0 billion     3.1%   $10.1 billion    3.3%
    Gross operating revenue    $2.5 billion     3.4%    $8.6 billion    4.3%
    Earnings before income
     taxes and minority
     interest                $174.5 million     3.1%  $620.1 million   11.2%
    Adjusted earnings before
     income taxes and
     minority interest
     (excludes non-operating
     gains and losses)(2)    $178.5 million    15.5%  $608.7 million   11.3%
    Net earnings             $125.1 million    15.5%  $417.6 million   17.8%
    Adjusted net earnings
     (excludes non-operating
     gains and losses)(2)    $127.6 million    29.0%  $410.1 million   18.0%
    Basic earnings per
     share                    $1.53            15.6%   $5.12           17.9%
    Adjusted basic earnings
     per share (excludes
     non-operating gains
     and losses)(2)           $1.56            29.2%   $5.03           18.1%

    (1) All dollar figures in this table are rounded.
    (2) Non-GAAP measure. Please refer to Section 12.0 of Management's
        Discussion and Analysis contained in our 2006 Financial Report and to
        commentary contained in the Financial Services section of this news
        release.
    

    TORONTO, Feb. 7 /CNW/ - Canadian Tire Corporation, Limited (CTC, CTC.a)
today reported fourth quarter 2007 net earnings of $125.1 million, an increase
of 15.5 percent compared to $108.3 million for the corresponding 2006 period.
Adjusted net earnings for the quarter, which exclude non-operating gains and
losses, were $127.6 million, a 29.0 percent increase compared to $98.8 million
last year.
    Basic earnings per share in the quarter were $1.53, a 15.6 percent
increase from the $1.33 recorded in the same period last year. Adjusted basic
earnings per share, which exclude non-operating gains and losses, increased
29.2 percent to $1.56 compared to $1.21 in the fourth quarter of 2006.
    Consolidated net earnings for the fourth quarter benefited by
$11.4 million or $0.14 per share principally from recoveries of prior years'
taxes paid to settle various minor issues and also a lower tax rate because of
the reduction of federal tax rates announced during the fourth quarter of
2007.
    Net earnings for 2007 were $417.6 million, an increase of 17.8 percent
compared to $354.6 million in 2006. Adjusted net earnings, which exclude
non-operating gains and losses, were $410.1 million, an increase of 18.0
percent compared to $347.5 million last year.
    Basic earnings per share were $5.12 in 2007, an increase of 17.9 percent
compared to $4.35 per share recorded in 2006. Adjusted basic earnings per
share, which exclude non-operating gains and losses, increased 18.1 percent to
$5.03 compared to $4.26 the previous year.
    "Our businesses delivered strong financial and operating results in
2007," said Tom Gauld, president and CEO. "Our strong market position,
balanced portfolio of businesses and diverse mix of consumer products and
financial services give Canadian Tire the financial flexibility and resilience
to deliver sustainable long-term earnings growth for our shareholders."

    
    Business Overview

    CANADIAN TIRE RETAIL (CTR)

                          Q4        Q4
    ($ in millions)     2007      2006   Change      2007      2006   Change
    -------------------------------------------------------------------------
    Retail sales(1) $2,166.2  $2,156.7     0.4%  $7,338.0  $7,226.8     1.5%
    Same store
     sales(2)
     (year-over-year
     % change)        (1.8)%      2.2%             (0.5)%      3.5%
    Gross operating
     revenue        $1,585.8  $1,576.8     0.6%  $5,485.1  $5,355.4     2.4%
    Net shipments
     (year-over-year
     % change)          0.4%      3.8%               2.3%      4.9%
    Earnings before
     income taxes
     and minority
     interest          $81.7     $71.5    14.2%    $304.7    $306.1    (0.4%)
    -------------------------------------------------------------------------
    Less adjustment for:
     Gain on disposals
     of property and
     equipment(3)       $7.3     $48.1              $17.6     $59.8
    Stock option
     agreement
     modification          -    $(32.2)                 -    $(32.2)
    Former CEO
     retirement
     obligation          0.3         -               (6.2)        -
    -------------------------------------------------------------------------
    Adjusted earnings
     before income
     taxes and
     minority
     interest(4)       $74.1     $55.6    33.0%    $293.3    $278.5     5.3%
    -------------------------------------------------------------------------
    (1) Includes sales from Canadian Tire stores, PartSource stores, sales
        from CTR's online web store and the labour portion of CTR's auto
        service sales.
    (2) Same store sales include sales from all stores that have been open
        for more than 53 consecutive weeks in the same location.
    (3) Includes fair market value adjustments and impairments on property
        and equipment.
    (4) Non-GAAP measure. Please refer to section 12.0 of Management's
        Discussion and Analysis contained in our 2006 Financial Report.
    

    CTR's fourth quarter retail sales were $2.17 billion, a 0.4 percent
increase from the $2.16 billion recorded last year, while same store sales
decreased 1.8 percent in the quarter. CTR posted double-digit sales increases
of fall and winter weather-related merchandise during the quarter, led by
strong snowthrower and automotive accessories sales. Sales were negatively
impacted by a significant decline in the tool category year-over-year, a
result of changes to the pricing and promotional strategy combined with a
challenging retail environment associated with this category. Excluding the
impact of lower tool sales, CTR's retail sales would have been up 3.5 percent
in the quarter and same store sales would have increased 1.3 percent. For the
year, CTR's retail sales grew 1.5 percent, while same store sales remained
essentially flat to last year. Excluding the impact of sales in the tool
category, same store sales would have been up 0.9 percent year-over-year.
    CTR's fourth quarter earnings before taxes were $81.7 million, a
14.2 percent increase over the $71.5 million recorded in the comparable 2006
period. Adjusted pre-tax earnings, which exclude the gain on disposals of
property and equipment, the impact of amendments to the stock option
agreement, and the impact of the retirement obligation to the former CEO,
increased by 33.0 percent to $74.1 million from $55.6 million a year ago. The
increase in earnings reflects the continued focus on improving productivity
throughout CTR's operations and stronger margins over the same period last
year.
    For the year, earnings before taxes totaled $304.7 million compared to
$306.1 million recorded in 2006. Adjusted pre-tax earnings increased
5.3 percent, to $293.3 million from $278.5 million in the previous year.
During the year, expenses associated with productivity initiatives totaled
approximately $12.6 million.
    CTR completed 67 Concept 20/20 projects during the year, opening eight
new stores, retrofitting and expanding 49 stores and replacing 10 stores. In
late 2007, CTR opened two CTR/Mark's integrated stores in Waterdown, Ontario
and Dartmouth, Nova Scotia that are both attracting new customers who are
spending more time browsing and cross-shopping. There are now 192 Concept
20/20 stores and 32 CTR-Mark's combination stores within CTR's total network
of 473 stores.
    PartSource achieved double-digit total sales growth in the fourth quarter
and for the full year, driven mainly by increases in commercial sales. In
2007, PartSource opened five new stores, including one store with an expanded
warehouse (hub store), which is part of the Automotive Infrastructure project
announced in September 2007. In addition, PartSource acquired three new
stores, one of which is also a hub store, and converted nine stores to the
PartSource banner during the year, bringing the network total to 71 stores.

    
    CANADIAN TIRE PETROLEUM (Petroleum)

                          Q4        Q4
    ($ in millions)     2007      2006   Change      2007      2006   Change
    -------------------------------------------------------------------------
    Sales volume
     (millions of
     litres)           450.5     457.4   (1.5)%   1,737.5   1,701.2     2.1%
    Retail sales      $463.1    $399.8    15.8%  $1,771.6  $1,635.4     8.3%
    Gross operating
     revenue          $434.1    $375.1    15.8%  $1,666.5  $1,545.3     7.8%
    Earnings (loss)
     before income
     taxes              $3.7     $(6.0)  161.0%     $20.5     $(5.4)  472.4%
    -------------------------------------------------------------------------
    Less adjustment for:
     Loss on disposals
     of property and
     equipment(1)      $(0.7)    $(0.3)             $(2.7)    $(0.6)
    -------------------------------------------------------------------------
    Adjusted earnings
     (loss) before
     income taxes(2)    $4.4     $(5.7)  177.1%     $23.2     $(4.8)  577.6%
    -------------------------------------------------------------------------
    (1) Includes asset impairment losses.
    (2) Non-GAAP measure. Please refer to section 12.0 of Management's
        Discussion and Analysis contained in our 2006 Financial Report.
    

    Petroleum's gasoline sales volumes decreased 1.5 percent during the
quarter to 450.5 million litres from 457.4 million litres a year ago. The
slight decline was primarily attributable to lower comparable site sales, as
consumers reacted to higher pump prices, which were partially offset by the
cumulative effect of new site openings in 2007. For the year, gasoline sales
volumes grew by a healthy 2.1 percent to 1.74 billion litres from 1.70 billion
litres in 2006. Non-gasoline sales also increased, led by a 13.4 percent rise
in convenience store sales for the quarter and a 15.0 percent increase for the
year.
    Petroleum recorded earnings before taxes of $3.7 million for the quarter
compared to a loss of $6.0 million in the same 2006 period. The strong
earnings reflect improved gasoline margins during the period. Adjusted pre-tax
earnings, which exclude the impact of disposals of property and equipment,
increased to $4.4 million from a loss of $5.7 million one year ago.
    For the year, Petroleum posted earnings before taxes of $20.5 million
compared to a loss of $5.4 million in 2006. Adjusted pre-tax earnings
increased in 2007 to $23.2 million from a loss of $4.8 million in 2006.
    Petroleum opened seven new gas bars, each including a convenience store,
during 2007. The business also refurbished 22 existing gas bars, rebuilt four
gas bars, and re-branded one gas bar/convenience store. Petroleum now operates
266 gas bars, 258 convenience stores and kiosks, and 74 car washes.

    
    MARK'S WORK WEARHOUSE (Mark's)

                          Q4        Q4
    ($ in millions)     2007      2006   Change      2007      2006   Change
    -------------------------------------------------------------------------
    Total retail
     sales(1)         $385.7    $367.2     5.0%    $974.9    $903.0     8.0%
    Same store
     sales(2)
     (% increase over
     prior year)        1.4%     10.0%               4.8%     13.0%
    Gross operating
     revenue(3)       $326.2    $309.5     5.4%    $825.3    $762.3     8.3%
    -------------------------------------------------------------------------
    Earnings before
     income taxes      $56.6     $50.0    13.0%    $104.6     $90.1    16.1%
    -------------------------------------------------------------------------
    Less adjustment for:
     Loss on disposals
     of property and
     equipment          (0.1)     (0.5)              (0.9)     (1.2)
    Stock option
     agreement
     modification          -      (2.7)                 -      (2.7)
    -------------------------------------------------------------------------
    Adjusted earnings
     before income
     taxes(4)          $56.7     $53.2     6.6%    $105.5     $94.0    12.3%
    -------------------------------------------------------------------------
    (1) Includes retail sales from corporate and franchise stores.
    (2) Mark's same store sales exclude new stores, stores not open for the
        full period in each year and store closures.
    (3) Gross operating revenue includes retail sales at corporate stores
        only.
    (4) Non-GAAP measure. Please refer to section 12.0 of Management's
        Discussion and Analysis contained in our 2006 Financial Report.
    

    Mark's fourth quarter total retail sales grew to $385.7 million, an
increase of 5.0 percent from the $367.2 million recorded a year ago, while
total same store sales were up 1.4 percent. Sales were soft during October and
November but strengthened in December to generate the fourth quarter sales
increase. Mark's Quebec, Greater Toronto Area and British Columbia regions
posted the largest sales increases in the quarter. Corporate store sales in
industrial wear increased 11.5 percent during the quarter, led by men's and
ladies industrial footwear and men's accessories. For the year, Mark's total
retail sales were $974.9 million, an 8.0 percent increase over the
$903.0 million recorded a year ago, while same store sales increased
4.8 percent in 2007.
    Mark's fourth quarter earnings before taxes were $56.6 million, a
13.0 percent increase over the $50.0 million recorded for the same period last
year. Adjusted pre-tax earnings, which exclude the impact of disposals of
property and equipment and the stock option agreement modification in the
fourth quarter of 2006, increased 6.6 percent to $56.7 million from
$53.2 million one year ago. The growth in earnings reflects stronger margins
and good expense control, particularly at the retail level.
    Mark's earnings before taxes in 2007 were $104.6 million, a 16.1 percent
increase over the $90.1 million recorded in 2006. Adjusted pre-tax earnings in
2007 increased 12.3 percent to $105.5 million compared to $94.0 million in the
previous year. In 2007, Mark's opened 20 new stores, relocated 19 stores and
expanded eight stores, bringing the total store network to 358 locations and
increasing total retail space by 10.8 percent to 3.0 million square feet.

    
    CANADIAN TIRE FINANCIAL SERVICES (Financial Services)

                          Q4        Q4
    ($ in millions)     2007      2006   Change      2007      2006   Change
    -------------------------------------------------------------------------
    Total managed
     portfolio end
     of period                                   $3,952.2  $3,632.5     8.8%
    Gross operating
     revenue           196.0     198.0   (1.0)%     769.1     721.7     6.6%
    Earnings before
     income taxes      $32.5     $53.7  (39.4)%    $190.3    $167.0    14.0%
    -------------------------------------------------------------------------
    Less adjustment for:

    Gain on disposal/
     redemption of
     shares                -         -               18.4       6.9
    Net effect of
     securitization
     activities(1)     (10.6)      8.2              (14.4)    (12.7)
    Loss on disposals
     of property and
     equipment          (0.2)     (0.3)              (0.4)     (0.6)
    Stock option
     agreement
     modification          -      (5.6)                 -      (5.6)
    -------------------------------------------------------------------------
    Adjusted earnings
     before income
     taxes(2)          $43.3     $51.4  (15.8)%    $186.7    $179.0     4.3%
    -------------------------------------------------------------------------
    (1) Includes initial gain/loss on the sale of loans receivable,
        amortization of servicing liability, securitization reserve and
        gain/loss on re-investment.
    (2) Non-GAAP measure. Please refer to section 12.0 of Management's
        Discussion and Analysis contained in our 2006 Financial Report.
    

    Financial Services' total managed portfolio of loans receivable was
$4.0 billion at the end of 2007, an 8.8 percent increase over the $3.6 billion
portfolio at the end of 2006. Ending credit card loans receivable grew
10.8 percent to $3.8 billion. The increase was primarily a result of an
11.6 percent increase in the fourth quarter average account balance compared
to the same quarter of 2006. Personal loan receivables represent approximately
3.7 percent of the total portfolio.
    Financial Services continually seeks ways to enhance credit risk
management practices aimed at improving the quality of the receivables
portfolio. In 2007, these activities included enhanced scorecards for new
account acquisitions, improved credit limit management and improvements to the
collection processes for delinquent accounts. As a result, the net write-off
rate for the total managed portfolio on a rolling 12-month basis was
5.76 percent, an improvement from 6.01 percent in the comparable 2006 period.
The net write-off rate on a rolling 12-month basis for the credit card
portfolio improved to 5.67 percent from 5.98 percent in the comparable 2006
period. Over the last several years, Financial Services' strategy has been to
methodically improve the quality of the portfolio while maintaining the
targeted return on receivables. This has resulted in an increasing proportion
of the portfolio consisting of lower risk customers.
    Financial Services' fourth quarter earnings before taxes were
$32.5 million, a 39.4 percent decrease from the $53.7 million recorded in the
same period last year. The decline in earnings reflects a significant
year-over-year swing of $18.8 million from securitization activities. Adjusted
pre-tax earnings for the quarter decreased 15.8 percent to $43.3 million from
$51.4 million in the previous year. Adjusted pre-tax earnings were impacted by
two factors, the first being an increase in marketing investments of
$6.4 million in the quarter compared to the previous year, aimed at increasing
the level of new accounts and growing future receivables. The second factor
impacting adjusted pre-tax earnings was an increase in the allowance for
doubtful accounts of $6.7 million due to an increase in receivables of
$319.7 million year-over-year, and a slight increase in year-end aging over
2006, due to a planned change in collection tactics aimed at reducing future
write-off rates.
    For the year, Financial Services recorded earnings before taxes of
$190.3 million, a 14.0 percent increase over the $167.0 million recorded in
2006. Adjusted pre-tax earnings increased 4.3 percent to $186.7 million
compared to $179.0 million in the previous year. Earnings in 2007 were
impacted by ongoing net expenses of $25.5 million related to the retail
banking initiative, compared to $9.6 million in 2006. Excluding the impact of
this growth initiative, adjusted pre-tax earnings grew by 12.5 percent
year-over year.
    Financial Services' retail banking pilot will enter its second full year
in 2008 and, to date, has shown that customers respond favourably to Canadian
Tire retail banking products and service offerings. At the end of 2007,
Financial Services had accumulated over $100.0 million in deposits and
approximately $35.0 million in high-quality mortgages. Mortgage growth is
expected to accelerate in 2008 with the recent launch of the Canadian Tire
One-and-Only(TM) account, but overall, the retail banking initiative is still
expected to be self-financing during 2008. Financial Services expects to
continue the pilot throughout 2008, while assessing the various alternatives
for the next stage of this initiative.

    2008 PLANS AND FORECAST

    "While we remain committed to delivering consistent earnings growth
during the next few years of our strategic plan, our earnings growth in 2008
will be tempered by the substantial investments we plan to make to support
future earnings growth, to improve overall productivity and ensure our
long-term competitive position," noted Mr. Gauld.
    The Company's earnings forecast, based on its 2008 business plan, is in
the range of $5.15 to $5.40 per share, excluding non-operating gains and
losses. This forecast reflects the following items:

    
    -   approximately $55.0 million, or $0.46 per share (2007 - $0.10 per
        share), for investments in productivity and growth initiatives noted
        below;

    -   approximately $28.0 million in expenses, or $0.23 per share (2007 -
        $0.21 per share), for the retail banking initiative;

    -   a preliminary estimate of the impact of approximately $6.8 million in
        reduced earnings or $0.06 per share (2007 - NIL), which will arise as
        a result of the adoption of a new Canadian Institute of Chartered
        Accountants standard for inventories (CICA Handbook section 3031).
        The final adjustments for inventory values will be dependent upon
        business activities and inventory levels during 2008 and will be
        reflected as appropriate in the Company's consolidated financial
        statements each quarter. It is anticipated that the Company's
        comparative consolidated financial statements for 2007 will be
        restated on the adoption of this new standard, which will lead to a
        downward adjustment of 2007 pre-tax earnings by approximately
        $7.0 million ($0.06 per share).

    Benefits from the amended CTR dealer contract announced in September 2007,
of approximately $15.0 million ($0.12 per share) (2007 - NIL), are expected to
partially mitigate these expenditures.
    The various productivity and growth initiatives which will be undertaken
in 2008 are as follows:

    -   continued growth of the CTR, Mark's, Petroleum and PartSource
        networks in 2008, including ongoing store expansions and upgrades
        with contemplated development of up to 140 projects, of which 40 to
        45 are additions;

    -   continued testing of three new CTR store design concepts including:
        an infill retailing concept for underserved urban and rural markets;
        the CTR/Mark's integrated store concept; and, the next major CTR
        store format which will emphasize best merchandising practices, more
        efficient operations and better-performing product lines. All of
        these initiatives are expected to offer consumers a more exciting
        shopping experience in their relevant markets and provide a platform
        for further sales growth;

    -   continued growth of the CTR/PartSource automotive business through
        investment in new technology and supply chain infrastructure, and the
        further development of PartSource stores with expanded warehouses
        (hub stores) across Canada;

    -   major re-launch of the Canadian Tire Options(R) Mastercard
        incorporating a new card design, with additional features designed to
        encourage usage and attract new customers;

    -   continued testing of Financial Services high interest savings
        account, GICs, mortgages and One-and-Only(TM) account banking
        products which, if successful, will provide a significant long-term
        growth opportunity for Financial Services; and,

    -   productivity initiatives to streamline and strengthen operations and
        improve organizational structures at CTR, Petroleum and PartSource
        including: investments in critical areas of supply chain, automotive
        and technology infrastructure; continued expansion of global sourcing
        programs; development of automated marketing processes for pricing
        and inventory management controls at CTR; and, investment in a new
        enterprise-wide human resources information and payroll system.
    

    Total projected capital expenditures for 2008 will be in the range of
$430 million to $455 million, (down from 2007 expenditures of approximately
$594 million) the majority of which will support store and network expansions.
The 2008 capital expenditures are net of proceeds of approximately
$145.0 million, which are expected to be realized on the sale and leaseback of
three CTR urban stores during the year.

    SUBSEQUENT FINANCING

    On February 3, 2008, the Company entered into an agreement to sell a
portion of its loans receivable to Glacier Credit Card Trust, a third-party
trust, in a securitization transaction. The agreement is expected to close on
February 11, 2008. As a result, the Company anticipates receiving net proceeds
of approximately $630.0 million. This is expected to improve overall liquidity
and support further profitable growth of our Financial Services business.

    DIVIDENDS

    The Board of Directors today approved an increase in the 2008 quarterly
dividend payments from $0.185 per share to $0.21 per share, an annualized
increase of 13.5 percent. The total annualized dividend payment will rise from
$0.74 per share to $0.84 per share. Declaration of the increased dividend is
expected in March 2008 for payment on June 2, 2008 to shareholders of record
as of April 30, 2008. These dividends are considered "eligible dividends" for
tax purposes.
    Canadian Tire's policy is to maintain dividend payments equal to
approximately 15 to 20 percent of the prior year's normalized basic net
earnings per share, after giving consideration to the period end cash
position, future cash requirements and investment opportunities. Normalized
net earnings per share for this purpose exclude gains and losses on the sale
of credit card and loans receivable and non-recurring items but include gains
and losses on the ordinary course disposition of property and equipment.

    FORWARD-LOOKING STATEMENTS

    This disclosure contains statements that are forward-looking. Actual
results or events may differ materially from those forecasted in this
disclosure because of the risks and uncertainties associated with Canadian
Tire's business and the general economic environment. Risks and uncertainties
are disclosed in other public filings by the Company, such as Management's
Discussion and Analysis in the Annual Report and include, but are not limited
to: changes in interest, currency exchange and tax rates; the ability of
Canadian Tire to attract and retain quality employees, Associate Dealers,
Petroleum agents and PartSource and Mark's Work Wearhouse store operators and
franchisees; and the willingness of customers to purchase the Company's
merchandise, financial products and services.
    Risk factors associated with the assumptions that underlie Canadian
Tire's forecasted performance in 2008, as outlined previously, and that have
the potential to affect the operating performance and results of the Company's
divisions include:

    
    -   expansion activity planned for Mark's, PartSource, Petroleum and CTR
        ("the retail businesses"), including the associated supply chain
        infrastructure, could be affected by the Company's ability to acquire
        and develop suitable real estate properties, obtain municipal and
        other required government approvals, access construction labour and
        materials at reasonable prices and lease suitable properties, as well
        as by weather conditions that could impact the timing of
        construction;
    -   expansion activity planned for the retail businesses, as well as for
        the associated supply chain infrastructure and Financial Services,
        could also be affected by the Company's ability to access sufficient
        funds in a cost effective manner, due to difficulties in the capital
        markets;
    -   unseasonable weather patterns could affect the sales of seasonal
        merchandise at CTR and Mark's, particularly in the second and fourth
        quarters which historically are these divisions' largest selling
        periods;
    -   adverse environmental occurrences could damage the Company's
        reputation or threaten its licenses to operate, particularly in the
        Petroleum division;
    -   changes in commodity prices could affect the profitability of
        Petroleum, CTR and Mark's;
    -   fluctuating foreign exchange currency rates could impact cross-border
        shopping patterns and employment levels in the manufacturing and
        export sector and, consequently, negatively impact consumer spending
        practices;
    -   the earnings of Financial Services could be affected by customers'
        inability to repay their Canadian Tire credit card, mortgage or
        personal loan balances or by an unsatisfactory response to the retail
        banking pilot initiative; and
    -   failure to comply with applicable laws and regulations could result
        in sanctions and financial penalties by regulatory bodies that could
        impact the Company's earnings and reputation. Areas of compliance
        include environment, health and safety, competition, transportation
        of dangerous goods, tax, customs and excise and regulations governing
        financial institutions.
    

    The Company has developed its 2008 forecast on the assumption that there
will not be a material deviation in the risks described in this disclosure
compared to the current operating environment. The Company cannot provide any
assurance that forecasted financial or operational performance will actually
be achieved, or if it is, that it will result in an increase in the price of
Canadian Tire shares.

    REVIEW BY BOARD OF DIRECTORS

    The Canadian Tire Board of Directors, on the recommendation of its Audit
Committee, has approved the contents of this disclosure.

    CONFERENCE CALL

    Canadian Tire will conduct a conference call to discuss information
included in this news release and related matters at 3:30 p.m. EST on
Thursday, February 7, 2008. The conference call will be available
simultaneously and in its entirety to all interested investors and the news
media through a webcast at http://investor.relations.canadiantire.ca, and will
be available through replay at this website for 12 months.

    Canadian Tire Corporation, Limited (TSX: CTC.a, CTC), operates more than
1,160 general merchandise and apparel retail stores, gas stations and car
washes in an inter-related network of businesses engaged in retail, financial
services and petroleum. Canadian Tire Retail, Canada's most shopped general
merchandise retailer, with 473 stores operated by Associate Dealers across
Canada offers a unique mix of products and services through three specialty
categories in which the organization is the market leader - Automotive, Sports
and Leisure, and Home Products. www.canadiantire.ca offers Canadians the
opportunity to shop online. PartSource is an automotive parts specialty chain
with 71 stores designed to meet the needs of purchasers of automotive parts -
professional automotive installers and serious do-it-yourselfers. Canadian
Tire Petroleum is one of the country's largest and most productive independent
retailers of gasoline, operating 266 gas bars, 258 convenience stores and
kiosks, and 74 car washes. Mark's Work Wearhouse is one of the country's
leading apparel retailers operating 358 stores in Canada. Under the Clothes
that Work(TM) marketing strategy, Mark's sells apparel and footwear in work,
work-related, casual and active-wear categories, as well as health-care and
business-to-business apparel. www.marks.com offers Canadians the opportunity
to shop for Mark's products online. Canadian Tire Financial Services manages
over 4.6 million Canadian Tire MasterCard accounts and markets related
financial products and services for retail and petroleum customers. Canadians
can also access Financial Services online at www.ctfs.com. Over 57,000
Canadians work across Canadian Tire's organization from coast-to-coast in the
enterprise's retail, financial services, and petroleum businesses.


    
                             2007 FOURTH QUARTER

                          INTERIM REPORT FINANCIALS

    Consolidated Statements of Earnings (Unaudited)
    -------------------------------------------------------------------------

    (Dollars in             13 weeks ended,             52 weeks ended,
     millions except   December 29,  December 30,  December 29,  December 30,
     per share amounts)    2007          2006          2007          2006
    -------------------------------------------------------------------------

    Gross operating
     revenue          $    2,507.9  $    2,426.1  $    8,621.4  $    8,269.1
    -------------------------------------------------------------------------

    Operating expenses

      Cost of merchandise
       sold and all other
       operating expenses
       except for the
       undernoted items    2,242.0       2,180.5       7,685.1       7,415.7

      Interest
        Long-term debt        20.5          16.2          67.1          71.2
        Short-term debt        7.1           2.4          11.3           4.5
      Depreciation and
       amortization           57.1          51.0         206.9         191.7
      Employee Profit
       Sharing Plan            6.7           6.8          30.9          28.2
    -------------------------------------------------------------------------
    Total operating
     expenses              2,333.4       2,256.9       8,001.3       7,711.3
    -------------------------------------------------------------------------

    Earnings before
     income taxes and
     minority interest       174.5         169.2         620.1         557.8

    Income taxes
      Current                 65.4          80.0         210.3         222.7
      Future                 (16.0)        (19.1)         (7.8)        (21.9)
    -------------------------------------------------------------------------
    Income taxes              49.4          60.9         202.5         200.8
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net earnings
     before minority
     interest                125.1         108.3         417.6         357.0
    -------------------------------------------------------------------------

    Minority interest
     (Note 7)                    -             -             -           2.4
    -------------------------------------------------------------------------

    Net earnings      $      125.1  $      108.3  $      417.6  $      354.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic earnings
     per share        $       1.53  $       1.33  $       5.12  $       4.35
    Diluted earnings
     per share
     (Note 5)         $       1.53  $       1.32  $       5.12  $       4.31
    -------------------------------------------------------------------------

    Weighted average
     number of Common
     and Class A
     Non-Voting Shares
     outstanding
     (Note 5)           81,512,263    81,616,331    81,502,273    81,575,556
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows (Unaudited)
    -------------------------------------------------------------------------
                            13 weeks ended,             52 weeks ended,
    (Dollars in        December 29,  December 30,  December 29,  December 30,
     millions)             2007          2006          2007          2006
    -------------------------------------------------------------------------
                                       (Note 15)                   (Note 15)

    Cash generated from (used for):

    Operating activities

    Net earnings      $      125.1  $      108.3  $      417.6  $      354.6
    Items not affecting
     cash
      Depreciation and
       amortization of
       property and
       equipment              56.5          50.1         204.5         189.1
      Net provision for
       loans receivable
       (Note 3)               33.9           8.6          81.4          58.6
      Employee future
       benefits expense
       (Note 4)                1.6           1.8           6.5           7.2
      Fair market
       value adjustment
       and impairments
       on property and
       equipment               1.1             -           3.9             -
      Other                      -           0.1           2.5          (1.6)
      Amortization of
       other assets            0.6           0.9           2.4           4.7
      Impairment of
       other long-term
       investments
       (Note 11)                 -             -           1.3             -
      Loss on sale
       of Associate
       Dealer receivables        -           2.5             -           2.5
      Future income
       taxes                 (16.0)        (19.1)         (7.8)        (21.9)
      Gain on disposals
       of property and
       equipment              (7.3)        (47.0)        (17.4)        (57.4)
      Gain on
       disposals/
       redemptions of
       shares                    -             -         (18.4)         (6.9)
      Securitization
       loans receivable      (12.3)        (11.9)        (52.7)        (39.9)
      Gain on sales of
       loans receivable
       (Note 3)              (16.7)        (25.0)        (83.6)        (78.9)
    -------------------------------------------------------------------------
                             166.5          69.3         540.2         410.1
    -------------------------------------------------------------------------
    Changes in other
     working capital
     components              459.1         514.2        (365.5)        (14.8)
    -------------------------------------------------------------------------
    Cash generated
     from operating
     activities              625.6         583.5         174.7         395.3
    -------------------------------------------------------------------------

    Investing activities
      Additions to
       property and
       equipment            (167.7)       (223.6)       (587.7)       (529.2)
      Net securitization
       of loans
       receivable           (403.2)        323.5        (420.1)        291.7
      Investment in
       loans receivable,
       net                  (225.8)       (168.9)       (296.5)       (269.9)
      Purchases of
       stores                 (4.6)         (2.3)        (11.4)         (7.8)
      Reclassification
       of other long-
       term investments
       (Note 11)                 -             -          (8.9)            -
      Asset retirement
       obligations            (0.3)         (1.0)         (2.0)         (2.1)
      Employee future
       benefits               (0.5)         (0.5)         (1.9)         (1.9)
      Proceeds on
       disposals/
       redemptions of
       shares                    -             -          18.4           6.9
      Long-term
       receivables and
       other assets            0.5         (63.7)         20.8         (85.6)
      Proceeds on
       disposition of
       property and
       equipment              10.9          86.8          30.0         340.1
      Sale of Associate
       Dealer receivables        -         347.5             -         347.5
    -------------------------------------------------------------------------
    Cash generated from
     (used for)
     investing
     activities             (790.7)        297.8      (1,259.3)         89.7
    -------------------------------------------------------------------------

    Financing activities
      Issuance of
        long-term debt       300.7           0.3         300.9           1.2
      Commercial paper      (135.4)       (113.0)            -             -
      Class A Non-
       Voting Share
       transactions           (4.2)        (14.4)          0.2         (25.3)
      Repayment of
       limited
       partnership
       interest
       (Note 7)                  -             -             -        (300.0)
      Repayment of
       long-term debt         (2.1)         (1.3)         (4.5)       (205.4)
      Dividends              (15.2)        (13.5)        (58.8)        (52.2)
    -------------------------------------------------------------------------
    Cash generated
     from (used for)
     financing
     activities              143.8        (141.9)        237.8        (581.7)
    -------------------------------------------------------------------------

    Cash generated
     (used) in the
     period                  (21.3)        739.4        (846.8)        (96.7)
    Cash and cash
     equivalents,
     beginning of
     period                  (84.2)          1.9         741.3         838.0
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period
     (Note 9)         $     (105.5) $      741.3  $     (105.5) $      741.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income (Unaudited)
    -------------------------------------------------------------------------
                                                        13            52
                                                   weeks ended,  weeks ended,
                                                   December 29,  December 29,
    (Dollars in millions)                              2007          2007
    -------------------------------------------------------------------------

    Net earnings                                  $      125.1         417.6
    Other comprehensive income (loss),
     net of taxes
      Gain/(loss) on derivatives designated as             3.3         (80.2)
       cash flow hedges (net of tax of $4.7
       and $(40.3))
      Reclassification to non-financial asset of           7.5          22.8
       gain on derivatives designated as cash flow
       hedges (net of tax of $3.3 and $11.5)
      Reclassification to earnings of gain/(loss)          1.4          (1.2)
       on derivatives designated as cash flow
       hedges (net of tax of $0.7 and $(0.7))
    -------------------------------------------------------------------------
    Other comprehensive income (loss)                     12.2         (58.6)
    -------------------------------------------------------------------------
    Comprehensive income                          $      137.3         359.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
    -------------------------------------------------------------------------

                                                        52 weeks ended,
                                                   December 29,  December 30,
    (Dollars in millions)                              2007          2006
    -------------------------------------------------------------------------

    Share capital
    Balance, beginning of period                  $      702.7  $      702.7
    Transactions, net                                     (2.0)            -
    -------------------------------------------------------------------------
    Balance, end of period                        $      700.7  $      702.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Contributed surplus
    Balance, beginning of period                  $        0.1  $        1.5
    Transactions, net                                      2.2          (1.4)
    -------------------------------------------------------------------------
    Balance, end of period                        $        2.3  $        0.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Foreign currency translation adjustment
    Balance, beginning of period as previously
     reported                                     $       (5.7) $       (5.7)
    Reclassification to accumulated other
     comprehensive income                                  5.7           5.7
    -------------------------------------------------------------------------
    Balance, beginning of period as restated and
     end of period                                $          -  $          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings
    Balance, beginning of period as previously
     reported                                     $    2,088.1  $    1,812.6
    Transitional adjustment on adoption of new
     accounting policies (Note 2)                         (4.4)            -
    -------------------------------------------------------------------------
    Balance, beginning of period as restated           2,083.7       1,812.6
    Net earnings for the period                          417.6         354.6
    Dividends                                            (60.4)        (53.8)
    Repurchase of Class A Non-Voting Shares                  -         (25.3)
    -------------------------------------------------------------------------
    Balance, end of period                        $    2,440.9  $    2,088.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss)
    Balance, beginning of period as previously
     reported                                     $          -  $          -
    Reclassification from foreign currency
     translation adjustment                               (5.7)         (5.7)
    -------------------------------------------------------------------------
    Balance, beginning of period as restated              (5.7)         (5.7)
    Transitional adjustment on adoption of new
     accounting policies (Note 2)                         14.3             -
    Other comprehensive income (loss) for the
     period                                              (58.6)            -
    -------------------------------------------------------------------------
    Balance, end of period                        $      (50.0) $       (5.7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Retained earnings and accumulated other
     comprehensive income (loss)                  $    2,390.9       2,082.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Balance Sheets (Unaudited)
    -------------------------------------------------------------------------

    (Dollars in millions)                          December 29,  December 30,
    As at                                              2007          2006
    -------------------------------------------------------------------------

    ASSETS

    Current assets
      Cash and cash equivalents (Note 9)          $          -  $      741.3
      Accounts receivable                                707.1         340.5
      Loans receivable (Note 3)                        1,486.1         694.2
      Merchandise inventories                            756.7         667.3
      Income taxes recoverable                            59.0             -
      Prepaid expenses and deposits                       29.5          46.2
      Future income taxes                                 77.7          51.5
    -------------------------------------------------------------------------
      Total current assets                             3,116.1       2,541.0
    -------------------------------------------------------------------------
    Long-term receivables and other assets (Note 3)      231.2         283.5
    Other long-term investments, net (Note 11)             7.6             -
    Goodwill                                              51.8          46.4
    Intangible assets                                     52.4          52.4
    Property and equipment                             3,283.6       2,881.3
    -------------------------------------------------------------------------
      Total assets                                $    6,742.7  $    5,804.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Current liabilities
      Bank indebtedness (Note 9)                  $      105.5  $          -
      Accounts payable and other                       1,847.8       1,579.5
      Income taxes payable                                   -          81.1
      Current portion of long-term debt (Note 10)        156.3           3.0
    -------------------------------------------------------------------------
      Total current liabilities                        2,109.6       1,663.6
    -------------------------------------------------------------------------
    Long-term debt (Note 10)                           1,341.8       1,168.4
    Future income taxes                                   71.8          75.0
    Other long-term liabilities                          125.6         112.4
    -------------------------------------------------------------------------
      Total liabilities                                3,648.8       3,019.4
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

    Share capital (Note 6)                               700.7         702.7
    Contributed surplus                                    2.3           0.1
    Accumulated other comprehensive loss                 (50.0)         (5.7)
    Retained earnings                                  2,440.9       2,088.1
    -------------------------------------------------------------------------
      Total shareholders' equity                       3,093.9       2,785.2
    -------------------------------------------------------------------------
      Total liabilities and shareholders' equity  $    6,742.7  $    5,804.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Notes to the Consolidated Financial Statements (Unaudited)
    -------------------------------------------------------------------------

    1.  Basis of Presentation

        These unaudited interim consolidated financial statements (the
        "financial statements") have been prepared by management in
        accordance with Canadian generally accepted accounting principles
        ("GAAP") and include the accounts of Canadian Tire Corporation,
        Limited and its subsidiaries and partnership (up until April 3, 2006
        - see Note 7), collectively referred to as the "Company". These
        financial statements do not contain all disclosures required by
        Canadian GAAP for annual financial statements, and accordingly, the
        financial statements should be read in conjunction with the most
        recently prepared annual financial statements for the 52 weeks ended
        December 30, 2006 contained in our 2006 Financial Report.

        The preparation of the financial statements in conformity with GAAP
        requires management to make estimates and assumptions that affect the
        reported amounts of assets and liabilities and disclosures of
        contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenue and expenses during
        the reporting period. Actual results could differ from these
        estimates. Estimates are used when accounting for items such as
        income taxes, impairment of assets, employee benefits, product
        warranties, inventory provisions, amortization, uncollectible credit
        card receivables and personal loans, environmental reserves, asset
        retirement obligations, financial instruments, and the liability for
        the Company's loyalty programs.

    2.  Accounting Policies

        These financial statements follow the same accounting policies and
        methods of their application as the most recently prepared annual
        financial statements for the 52 weeks ended December 30, 2006, except
        as noted below.

        Financial Instruments/Comprehensive Income/Hedges
        -------------------------------------------------

        The Canadian Institute of Chartered Accountants (CICA) issued the
        following new accounting standards that apply to the Company as of
        the first day of the Company's 2007 fiscal year: a) CICA Handbook
        Section 3855 "Financial Instruments, Recognition and Measurement";
        b) CICA Handbook Section 3861 "Financial Instruments - Disclosure and
        Presentation"; c) CICA Handbook Section 3865 "Hedges"; d) CICA
        Handbook Section 1530 "Comprehensive Income"; and e) CICA Handbook
        Section 3251 "Equity".

        Financial instruments

        This new standard requires the Company to revalue certain of its
        financial assets and liabilities, including derivatives designated in
        qualifying hedging relationships and embedded derivatives in certain
        contracts, at fair value on the initial date of implementation and at
        each subsequent financial reporting date.

        This standard also requires the Company to classify financial assets
        and liabilities according to their characteristics and management's
        choices and intentions related thereto for the purposes of ongoing
        measurement. Classification choices for financial assets include:
        a) held for trading - measured at fair value with changes in fair
        value recorded in net earnings; b) held to maturity - recorded at
        amortized cost with gains and losses recognized in net earnings in
        the period that the asset is derecognized or impaired; c) available
        for sale - measured at fair value with changes in fair value
        recognized in other comprehensive income for the current period until
        realized through disposal or impairment; and d) loans and receivables
        - recorded at amortized cost with gains and losses recognized in net
        earnings in the period that the asset is derecognized or impaired.
        Classification choices for financial liabilities include: a) held for
        trading - measured at fair value with changes in fair value recorded
        in net earnings and b) other - measured at amortized cost with gains
        and losses recognized in net earnings in the period that the
        liability is derecognized. Subsequent measurement for these assets
        and liabilities are based on either fair value or amortized cost
        using the effective interest method, depending upon their
        classification. Any financial asset or liability can be classified as
        held for trading as long as its fair value is reliably determinable.

        In accordance with the new standard, the Company's financial assets
        and liabilities are generally classified and measured as follows:

        Asset/Liability               Category                Measurement
        ---------------               --------                -----------

        Cash and cash equivalents     Held for trading        Fair value
        Accounts receivable           Loans and receivables   Amortized cost
        Loans receivable              Loans and receivables   Amortized cost
        Long-term receivables and     Loans and receivables   Amortized cost
         other assets
        Other long-term investments   Held for trading        Fair value
        Bank indebtedness             Held for trading        Fair value
        Commercial paper              Other liabilities       Amortized cost
        Accounts payable and other    Other liabilities       Amortized cost
        Long-term debt                Other liabilities       Amortized cost
        Other long-term liabilities   Other liabilities       Amortized cost

        Included in the above financial statement captions are the following:

           -  interest-only strip related to the sale of loans receivable,
              which is included in long-term receivables and other assets,
              has been classified as held for trading and measured at fair
              value; and

           -  an equity investment included in long-term receivables and
              other assets, has been classified as available for sale and
              measured at cost (nominal value) because this equity investment
              does not have a quoted price in an active market.

        Other balance sheet accounts, such as merchandise inventories,
        prepaid expenses and deposits, current and future income taxes,
        goodwill, intangible assets and property and equipment are not within
        the scope of the new accounting standards as they are not financial
        instruments.

        Transaction costs related to all financial instruments are now
        expensed as incurred. Upon transition to the new standards on
        December 31, 2006, the Company elected to charge the remaining
        unamortized transaction costs related to debt financing in the amount
        of $2.9 million (net of tax) to retained earnings.

        Credit card balance transfer promotions offered by the Company at
        rates not equal to market value are now measured at fair value at
        date of acquisition and then subsequently accounted for at amortized
        cost using the effective interest method. The difference between the
        promotional rates offered and market rates are recorded as an expense
        under the new standards. This resulted in a $3.7 million decrease in
        loans receivable and $2.4 million decrease (net of tax) to opening
        retained earnings on transition.

        Embedded derivatives (elements of contracts whose cash flows move
        independently from the host contract) are required to be separated
        and measured at fair values if certain criteria are met. Under an
        election permitted by the new standard, management reviewed contracts
        entered into or modified subsequent to December 28, 2002 and
        determined that the Company does not currently have any significant
        embedded derivatives in these contracts that require separate
        accounting and disclosure.

        Comprehensive income

        In accordance with the new comprehensive income standard, the Company
        has chosen to report a new financial statement entitled "Consolidated
        Statements of Comprehensive Income" for changes in the fair value of
        certain of these financial assets and liabilities (e.g. the effective
        portion of changes in the fair value of a derivative designated in a
        cash flow hedging relationship). The "accumulated other comprehensive
        income" (i.e. the portion of comprehensive income not already
        included in net earnings) is being presented as a separate line in
        shareholders' equity.

        In accordance with the new standards, management has estimated the
        net amount of gains and losses reported in accumulated other
        comprehensive income, which are currently expected to be reclassified
        to net earnings within the next 12 months, as a loss of approximately
        $35.7 million (net of tax).

        Hedges

        With respect to the new standard related to hedging, the Company
        enters into various cash flow hedges. The Company enters into foreign
        exchange contracts to hedge the exposure to foreign currency risk on
        the future payment of foreign currency denominated inventory
        purchases. The fair value of these contracts is included in accounts
        receivable. The changes in fair value of these contracts are included
        in other comprehensive income to the extent the hedges continue to be
        effective. Once the inventory has been recognized, the Company has
        elected to reclassify the related accumulated other comprehensive
        income amount to merchandise inventories. Subsequent changes in the
        fair value of the foreign exchange contracts are recorded in net
        earnings for the period. The Company enters into equity derivative
        contracts to hedge certain future stock-based compensation expenses.
        The fair value of these contracts is included in accounts receivable
        and long-term receivables and other assets depending on the
        derivative's maturity. The changes in fair value of these contracts
        is included in other comprehensive income to the extent the hedges
        continue to be effective. The related other comprehensive income
        amounts are reclassified to net earnings based on vesting of the
        respective stock-based share units. The Company also enters into
        certain interest rate swap contracts to manage its exposure to
        interest rate risks. The fair value of these contracts is included in
        other long-term liabilities. The changes in fair value of these
        contracts is included in other comprehensive income to the extent the
        hedges continue to be effective. The related other comprehensive
        income amounts are allocated to net earnings in the same period in
        which the hedged item affects net earnings. For all cash flow hedges,
        to the extent the change in fair value of the derivative is not
        completely offset by the change in the fair value of the hedged item,
        the ineffective portion of the hedging relationship is recorded
        immediately in net earnings.

        The Company also enters into fair value hedges, including certain
        interest rate swap contracts. The fair value of these hedges is
        included in other long-term liabilities. In fair value hedges the
        change in fair value of both the hedged item attributable to the risk
        being hedged and the entire hedging item are recorded in the net
        earnings for the respective period.

        The maximum length of time over which the Company is hedging its
        exposure to future cash flow variability for anticipated transactions
        is ten years.

        Equity

        Handbook Section 3251 describes standards for the presentation of
        equity and changes in equity during the period with reference to the
        new comprehensive income standard.

        The new standards were applied retrospectively without restatement of
        prior periods on December 31, 2006 (the first day of the Company's
        2007 fiscal year), and thus prior periods presented have not been
        restated with the exception of accumulated foreign currency
        translation adjustment. The opening balance of retained earnings, net
        of income taxes, has been adjusted by the following:

        -  the difference between the previous carrying amount and the fair
           value of financial assets and liabilities designated as held for
           trading;

        -  the cumulative ineffective portion of the gain or loss on the
           hedging items in designated cash flow hedging relationships and
           the total gain or loss on the hedging items in designated fair
           value hedging relationships; and

        -  unamortized deferred debt issue expenses.

        The opening balance of accumulated other comprehensive income, net of
        income taxes, has been similarly adjusted by the following:

        -  the cumulative effective portion of the gain or loss on the
           hedging items that are included in designated cash flow hedging
           relationships; and

        -  restatement of current and prior periods to reflect the
           accumulated foreign currency translation adjustment on the
           translation of certain subsidiaries from a separate category of
           shareholders' equity.

        The transitional impact of the new standards on relevant items in the
        Company's opening Balance Sheet for 2007 is summarized as follows:

        1.  Accounts receivable (derivative assets) - increase of
            $37.0 million

        2.  Loans receivable - decrease of $3.7 million

        3.  Long-term receivables and other assets (debt issue expenses net
            of derivative assets) - decrease of $0.9 million

        4.  Future income taxes (current asset) - decrease of $9.7 million

        5.  Future income taxes (long-term liability) - decrease of
            $4.4 million

        6.  Accounts payable - increase of $6.8 million

        7.  Other long-term liabilities (derivative liabilities) - increase
            of $12.9 million

        8.  Long-term debt - decrease of $2.5 million

        9.  Opening retained earnings - decrease of $4.4 million

        10. Accumulated other comprehensive income - increase of
            $14.3 million

    3.  Loans Receivable

        The Company sells pools of loans receivable ("the Loans") to third
        party trusts ("the Trusts") in transactions known as securitizations.
        Loans include both credit card and personal loans receivable. The
        transactions are accounted for as sales in accordance with Accounting
        Guideline 12, "Transfers of Receivables" ("AcG-12"), and the Loans
        are removed from the Consolidated Balance Sheets. The Company retains
        the interest-only strip, and for the personal loan securitization, a
        subordinated interest in the loans sold (the "seller's interest") and
        cash deposited with one of the Trusts (the "securitization reserve"),
        all of which are retained interests. The seller's interest and
        securitization reserve provide that Trust with a source of funds in
        the event that the interest and principal collected on the Loans is
        not sufficient to pay the Trust's creditors. The Trusts' recourse to
        the Company is limited to the retained interests. The Company also
        assumes responsibility for servicing the Loans, for which it does not
        receive any direct compensation.

        The proceeds of the sale are deemed to be the cash received,
        interest-only strip and securitization reserve, less any servicing
        obligation assumed. The proceeds are allocated between the Loans,
        interest-only strip, seller's interest and securitization reserve
        based on their relative fair value at the date of sale, with any
        excess or deficiency recorded as a gain or loss on sale respectively.
        The Company estimates fair values by discounting future cash flows or
        comparing the appropriate yield curves to matching maturity terms.
        Retained interests are measured at fair value and are reviewed for
        impairment on a quarterly basis.

        As the Company does not control the Trusts, they have not been
        consolidated in these financial statements.

        Quantitative information about loans managed and securitized by the
        Company is as follows:


        (Dollars in        Total principal amount        Average balances
         millions)         of receivables as at(1)    for the 52 weeks ended
                          ------------------------- -------------------------
                          December 29, December 30, December 29, December 30,
                                 2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
        Total net managed
         credit card
         loans                3,719.1  $   3,372.3  $   3,416.0  $   3,115.8
        Credit card loans
         sold                (2,271.5)    (2,702.9)    (2,647.8)    (2,413.7)
                          ------------ ------------ ------------ ------------
        Credit card loans
         held                 1,447.6        669.4        768.2        702.1

        Total net managed
         personal loans(2)      143.6        225.5        184.1        256.6
        Personal loans
         sold                   (59.4)      (124.5)       (89.5)      (164.6)
                          ------------ ------------ ------------ ------------
        Personal loans held      84.2        101.0         94.6         92.0

        Total net managed
         mortgage loans(3)       35.4          1.4         13.1          0.1
                          ------------ ------------ ------------ ------------

        Total loans
         receivable           1,567.2        771.8  $     875.9  $     794.2
        Less: long-term                             ------------ ------------
         portion(4)             (81.1)       (77.6) ------------ ------------
                          ------------ ------------
        Current portion
         of loans
         receivable       $   1,486.1  $     694.2
                          -----------  ------------
                          -----------  ------------

        (1)   Amounts shown are net of allowance for credit losses.
        (2)   Personal loans are unsecured loans that are provided to
              qualified existing credit cardholders for terms of three to
              five years. Personal loans have fixed monthly payments of
              principal and interest; however, the personal loans can be
              repaid at any time without penalty.
        (3)   Mortgage loans are issued for terms of up to ten years, have
              fixed or variable interest rates, are secured and include a mix
              of both high and low ratio loans. High ratio loans are fully
              insured and low ratio loans are partially insured.
        (4)   The long-term portion of loans is included in "Long-term
              receivables and other assets".

        Net credit losses for the owned portfolio for the 13 weeks ended
        December 29, 2007 were $33.9 million (2006 - $8.6 million). Net
        credit losses for the owned portfolio for the 52 weeks ended
        December 29, 2007 were $81.4 million (2006 - $58.6 million). Net
        credit losses for the total managed portfolio for the 13 weeks ended
        December 29, 2007 were $58.5 million (2006 - $51.6 million). Net
        credit losses for the total managed portfolio for the 52 weeks ended
        December 29, 2007 were $217.3 million (2006 - $207.4 million).

    4.  Employee Future Benefits

        The net employee future benefit expense for the 13 weeks and 52 weeks
        ended December 29, 2007 was $1.6 million (2006 - $1.8 million) and
        $6.5 million (2006 - $7.2 million), respectively.

    5.  Diluted Earnings Per Share

        The reconciliation of the number of shares used in the diluted
        earnings per share calculation is as follows:

                             13 weeks     13 weeks     52 weeks     52 weeks
                                ended        ended        ended        ended
                          December 29, December 30, December 29, December 30,
                                 2007         2006         2007         2006
                          ------------ ------------ ------------ ------------
        Average number of
         shares for basic
         earnings per
         share
         calculations      81,512,263   81,616,331   81,502,273   81,575,556
        Dilutive options            -      252,782            -      640,953
                          ------------ ------------ ------------ ------------
        Average number of
         shares for
         dilutive earnings
         per share
         calculations      81,512,263   81,869,113   81,502,273   82,216,509
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------


        Effective November 2006, all outstanding stock options have a feature
        that enables the employee to exercise the stock option or receive a
        cash payment equal to the difference between the market price of a
        Class A Non-Voting Share at the exercise date and the exercise price
        of the stock option. As the employee can request settlement in cash
        and the Company is obligated to pay cash upon demand, compensation
        expense is accrued over the vesting period of the stock options based
        on the expected total compensation to be paid upon the stock options
        being exercised. Accordingly, outstanding stock options have no
        dilutive impact on the average number of shares outstanding. For
        further details of the terms of the stock option plans prior to
        amendment, please refer to Note 11 to the most recently prepared
        annual financial statements for the 52 weeks ended December 30, 2006.

    6.  Share Capital

        (Dollars in millions)                       December 29, December 30,
                                                           2007         2006
                                                    -------------------------
        Authorized
          3,423,366 Common Shares
          100,000,000 Class A Non-Voting Shares
        Issued
          3,423,366 Common Shares
           (December 30, 2006 - 3,423,366)          $       0.2  $       0.2
          78,048,062 Class A Non-Voting Shares
           (December 30, 2006 - 78,047,456)               700.5        702.5
                                                    -------------------------
                                                    $     700.7  $     702.7
                                                    -------------------------
                                                    -------------------------

        The Company issues and repurchases Class A Non-Voting Shares.  The
        net excess of the issue price over the repurchase price results in
        contributed surplus.  The net excess of the repurchase price over the
        issue price is allocated first to contributed surplus, to the extent
        of any previous net excess from the issue of shares with any
        remainder allocated to retained earnings.

        The following transactions occurred with respect to Class A Non-
        Voting Shares:

        (Dollars in             52 weeks ended           52 weeks ended
         millions)            December 29, 2007        December 30, 2006
                          ------------------------- -------------------------
                             Number         $          Number         $
                          ------------ ------------ ------------ ------------
        Shares outstanding
         at the beginning
         of the period     78,047,456        702.5   78,032,724        702.5
        Issued                457,606         35.1    1,222,032         57.4
        Repurchased          (457,000)       (34.9)  (1,207,300)       (82.7)
        Excess of
         repurchase price
         over issue price
         (issue price over
         repurchase price)          -         (2.2)           -         25.3
                          ------------ ------------ ------------ ------------
        Shares outstanding
         at the end of
         the period        78,048,062        700.5   78,047,456        702.5
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------


    7.  Minority Interest

        The Company was the general partner in a limited partnership for
        purposes of raising $300 million of capital in relation to a
        portfolio of its retail properties. The partnership invested in the
        retail properties by way of a note and equity in an entity that owns
        the portfolio of properties. The partnership had an indefinite life,
        but could be liquidated in certain circumstances. The assets and
        liabilities, results of operations and cash flows of the partnership
        were included in the financial statements of the Company. The
        preferred interest was treated as minority interest on the
        Consolidated Balance Sheets and in the Consolidated Statements of
        Earnings.

        On April 3, 2006, the $300 million note was repaid and the equity was
        redeemed. The limited partnership repaid the limited partners.
        Accordingly, the minority interest ceased to be reflected on the
        Consolidated Balance Sheets after April 3, 2006, and no further
        charge has been reflected in the Consolidated Statements of Earnings
        after April 3, 2006.

    8.  Segmented Information - Statement of Earnings

        ---------------------------------------------------------------------
                             13 weeks     13 weeks     52 weeks     52 weeks
                                ended        ended        ended        ended
        (Dollars in       December 29, December 30, December 29, December 30,
         millions)               2007         2006         2007         2006
        ---------------------------------------------------------------------

        Gross operating
         revenue(1)
          CTR             $   1,585.8  $   1,576.8  $   5,485.1  $   5,355.4
          Financial
           Services             196.0        198.0        769.1        721.7
          Petroleum             434.1        375.1      1,666.5      1,545.3
          Mark's                326.2        309.5        825.3        762.3
          Eliminations          (34.2)       (33.3)      (124.6)      (115.6)
                          ---------------------------------------------------
          Total gross
           operating
           revenue        $   2,507.9  $   2,426.1  $   8,621.4  $   8,269.1
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Earnings (loss)
         before income
         taxes and
         minority interest
          CTR             $      81.7  $      71.5  $     304.7  $     306.1
          Financial
           Services              32.5         53.7        190.3        167.0
          Petroleum               3.7         (6.0)        20.5         (5.4)
          Mark's                 56.6         50.0        104.6         90.1
                          ---------------------------------------------------
          Total earnings
           before income
           taxes and
           minority
           interest             174.5        169.2        620.1        557.8

        Income taxes             49.4         60.9        202.5        200.8

        Minority interest           -            -            -          2.4

                          ---------------------------------------------------
        Net earnings      $     125.1  $     108.3  $     417.6  $     354.6
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Interest expense
          CTR             $      34.4  $      24.9  $     105.6  $      97.9
          Financial
           Services              11.4          4.9         24.5         20.3
          Petroleum                 -            -            -            -
          Mark's                  0.9          0.6          3.0          3.0
          Eliminations          (19.1)       (11.8)       (54.7)       (45.5)
                          ---------------------------------------------------
          Total interest
           expense        $      27.6  $      18.6  $      78.4  $      75.7
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Depreciation and
         amortization
         expense
          CTR             $      44.2  $      38.7  $     159.1  $     147.7
          Financial
           Services               3.4          3.9         12.8         13.0
          Petroleum               4.4          4.1         16.7         15.2
          Mark's                  5.1          4.3         18.3         15.8
                          ---------------------------------------------------
          Total
           depreciation and
           amortization
           expense        $      57.1  $      51.0  $     206.9  $     191.7
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (1)   Gross operating revenue includes dividend and interest income.


        Segmented Information - Total Assets

        ---------------------------------------------------------------------
                                                          As at        As at
                                                    December 29, December 30,
        (Dollars in millions)                              2007         2006
        ---------------------------------------------------------------------
        CTR                                         $   5,498.4  $   4,502.5

        Financial Services                              1,852.0      1,476.0

        Petroleum                                         573.4        477.9

        Mark's                                            454.2        406.7

        Eliminations                                   (1,635.3)    (1,058.5)
                                                    -------------------------
        Total                                       $   6,742.7  $   5,804.6
        ---------------------------------------------------------------------


    9.  Cash and Cash Equivalents (Bank Indebtedness)

        The components of cash and cash equivalents are:

                                                    December 29, December 30,
        (Dollars in millions)                              2007         2006
                                                    ------------ ------------
        Cash                                        $      71.8  $     (52.3)
        Bank indebtedness                                (316.8)           -
        Short-term investments                            139.5        793.6
                                                    ------------ ------------
        Cash and cash equivalents
         (bank indebtedness)                        $    (105.5) $     741.3
                                                    ------------ ------------
                                                    ------------ ------------

        As at December 29, 2007, the balance of ($105.5) million has been
        classified as bank indebtedness. The bank indebtedness represents
        line of credit borrowings.

    10. Long-Term Debt

        On October 1, 2007, the Company issued medium term notes totaling
        $300 million. The medium term notes bear interest at 5.22% per annum
        and mature on October 1, 2010.

    11. Other Long-Term Investments

        As of December 29, 2007, the Company held third-party asset-backed
        commercial paper ("ABCP") with an original cost of $8.9 million.
        These ABCP were rated by the Dominion Bond Rating Service ("DBRS") as
        R-1 (High), the highest credit rating for commercial paper since the
        ABCP are backed by R-1 (High) rated assets.

        A global disruption in the market for such commercial paper in
        mid-August 2007 resulted in a sudden constraint on the liquidity of
        ABCP. DBRS placed certain of the ABCP "Under Review with Developing
        Implications" following which a consortium representing banks, asset
        providers and major investors agreed in principle to a long-term
        proposal and interim agreement regarding the ABCP (commonly referred
        to as "the Montreal Proposal"). Under this proposal, the affected
        ABCP would be converted into term floating rate notes maturing no
        earlier than the scheduled termination dates of the underlying
        assets. The Montreal Proposal called for the investors to continue to
        roll their ABCP during the standstill period. A Pan-Canadian
        Investors Committee ("the Committee") was subsequently formed to
        oversee the proposed restructuring process of the ABCP during this
        standstill period. A restructuring plan was announced on December 23,
        2007 which is anticipated to be completed by March 2008.

        There are continuing uncertainties regarding the final outcome of the
        restructuring process being considered and in estimating the value of
        the assets which underlie these ABCP. As a result, the company used
        its best judgment to assess the market conditions at December 29,
        2007, and using a discounted cash flow model, has estimated the fair
        value of these ABCP. The valuation model used by the Company
        considered the best available information regarding market conditions
        and other factors that a market participant would consider for such
        investments, assuming that a restructuring will be ultimately
        successful. The assumptions used in determining the estimated fair
        value reflect the public statements made by the Committee that it
        expects the ABCP will be converted into long-term floating rate notes
        with maturities matching the maturities of the underlying assets and
        the cash flows they are expected to generate. The Company's valuation
        assumes that the replacement notes will bear interest rates similar
        to short-term instruments and that such rates would be commensurate
        with the nature of the underlying assets and their associated cash
        flows. Assumptions have also been made as to the amount of
        restructuring and other costs that the Company will bear. The
        estimate has been calculated without the benefit of a full
        understanding of the underlying assets of each of the trusts it holds
        as this information has not been provided by each trust. The Company
        has classified its ABCP, previously classified as "Cash and cash
        equivalents", as Long-term investments on the balance sheet, as
        management anticipates that this investment will mature beyond a 365-
        day period.

        As a result of the valuation, the Company has recorded during the 52
        weeks ended December 29, 2007 a $1.3 million before tax provision for
        impairment of the ABCP in the Consolidated Statement of Earnings.
        Continuing uncertainties regarding the value of the assets that
        underlie the ABCP, the amount and timing of cash flows and the final
        outcome of the restructuring process could give rise to a further
        change in the value of the Company's investment in ABCP which would
        impact the Company's future earnings.

    12. Supplementary Cash Flow Information

        The Company paid income taxes during the 13 weeks ended December 29,
        2007, amounting to $44.4 million (2006 - $51.6 million) and made
        interest payments of $31.4 million (2006 - $27.1 million). For the
        52 weeks ended December 29, 2007, the Company paid income taxes
        amounting to $348.4 million (2006 - $212.5 million) and made interest
        payments of $88.5 million (2006 - $87.3 million).

        During the 13 weeks ended December 29, 2007, property and equipment
        were acquired at an aggregate cost of $233.4 million (2006 -
        $275.9 million), of which $65.1 million (2006 - $52.3 million) was
        included in accounts payable and other. During the 52 weeks ended
        December 29, 2007, property and equipment were acquired at an
        aggregate cost of $654.0 million (2006 - $557.4 million), of which
        $65.1 million (2006 - $28.2 million) was included in accounts payable
        and other.

    13. Tax Matters

        In the ordinary course of business, the Company is subject to ongoing
        audits by tax authorities. While the Company believes that its tax
        filing positions are appropriate and supportable, from time to time
        certain matters are reviewed and challenged by the tax authorities.

        The Canada Revenue Agency (CRA) has reassessed and is also expected
        to issue further reassessments regarding the tax treatments of
        commissions paid to foreign subsidiaries of the Company (covering
        periods from 1995 onwards), and dividends received on an investment
        made by a wholly-owned subsidiary of the Company related to
        reinsurance (covering periods from 1999 to 2003). The applicable
        provincial tax authorities have reassessed and are also expected to
        issue further reassessments for the corresponding periods. The
        Company does not have a significant exposure on these matters
        subsequent to the 2003 taxation year. The reassessments and expected
        reassessments in these matters are based on multiple grounds, some of
        which are highly unusual and the Company will appeal these
        reassessments as and when they are received.

        If the CRA (and applicable provincial tax authorities) were entirely
        successful in their reassessments - an outcome that the Company and
        its tax advisors believe to be very unlikely - it is estimated that
        the total liability of the Company for additional taxes, interest and
        penalties could be approximately $256.0 million. Although the Company
        will appeal these reassessments, current tax legislation requires the
        Company to remit to the CRA and its provincial counterparts
        approximately $158.3 million, of which $152.6 million had been
        remitted by the end of the quarter.

        The Company regularly reviews the potential for adverse outcomes in
        respect of tax matters. The Company believes that the ultimate
        disposition of these reassessments will not have a material adverse
        effect on its liquidity, consolidated financial position or results
        of operations because the Company believes that it has adequate
        provision for these tax matters. Should the ultimate tax liability
        materially differ from the provisions, the Company's effective tax
        rate and its earnings could be affected positively or negatively in
        the period in which the matters are resolved.

        Income tax expense for 2007 has been reduced by $11.4 million mainly
        due to settlements of various minor issues with the tax authorities
        and a reduction in tax rates required to be used in estimating income
        tax expense for accounting purposes as a result of the reduction of
        federal tax rates announced during the fourth quarter.

    14. Related Party Transactions

        During the quarter ended September 29, 2007, the Company purchased
        the shares of a corporation, one of the owners of which is an
        Associate Dealer and also a director of the Company. The purchase
        price was $3.7 million. The purchased corporation owns the real
        estate for a Canadian Tire store. The purchase price was considered
        to be fair market value, based on independent appraisals. The land
        and building acquired is included in "Property and equipment". As the
        purchase price has not yet been fully paid by the Company,
        $3.0 million is included in "Accounts payable and accrued
        liabilities".

        Separately, during the quarter ended December 29, 2007, the Company
        provided to the same Associate Dealer a loss mitigation agreement for
        the first two years of operation in respect of a new Canadian Tire
        Associate store, as it does, in various forms, for Associate Dealers
        from time to time, to help mitigate some of the financial risk
        inherent in a new store. Losses, if any, that the Company shares with
        the Associate Dealer pursuant to the agreement would not be material
        to the Company and may be partially recoverable by the Company over
        the following three years from the Associate Dealer.

    15. Comparative Figures

        Certain of the prior period's figures have been reclassified to
        conform to the current year's presentation, including amounts with
        respect to securitizations and net provision for loans receivable in
        the consolidated statements of cash flows. As a result, cash flow
        from operations has been restated by $71.7 million for the 13 weeks
        ended December 30, 2006 ($280.3 million for the 52 weeks ended
        December 30, 2006) with a corresponding offset to investing
        activities. There is no impact on cash generated/used in the
        respective periods.

    16. Subsequent Event

        Subsequent to December 29, 2007, the Company entered into a
        contractual agreement which is expected to close on February 11,
        2008, whereby the Company will sell a portion of its loans receivable
        to Glacier Credit Card Trust (GCCT), a third party trust in which the
        Company does not have a controlling interest, in a transaction
        referred to as securitization. The transaction will be accounted for
        as a sale in accordance with Accounting Guideline 12, "Transfer of
        Receivables" (AcG-12) and the loans receivable will be removed from
        the Consolidated Balance Sheet in the first quarter of 2008.

        As a result of this future securitization of its loans receivable,
        the Company expects to receive net proceeds of approximately
        $630.0 million.
    


    Interest Coverage Exhibit to the Consolidated Financial Statements
    -------------------------------------------------------------------------
    The Company's long-term interest requirements for the 52 weeks ended
December 29, 2007, after annualizing interest on long-term debt issued and
retired during this period, amounted to $93.1 million. The Company's earnings
before interest on long-term debt, income taxes and minority interest for the
52 weeks then ended were $686.2 million, which is 7.4 times the Company's
long-term interest requirements for this period.

    %SEDAR: 00000534EF




For further information:

For further information: Media: Caroline Casselman, (416) 480-8159,
caroline.casselman@cantire.com; Investors: Huw Thomas, (416) 480-3568,
huw.thomas@cantire.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890