METRO posts net earnings of $276.6 million in 2007, up 9.3% over 2006, for a 17th consecutive year of net earnings growth



    MONTREAL, Nov. 21 /CNW Telbec/ -

    
    2007 FOURTH QUARTER HIGHLIGHTS

    - The Company realized net earnings of $57.6 million compared to
      $78.9 million. Fully diluted net earnings per share were $0.49 compared
      to $0.68. Excluding non-recurring items recorded in the fourth quarters
      of 2007 and 2006 as well as the impact of the 53rd week in 2006,
      adjusted net earnings(1)(2) for the fourth quarter of 2007 would have
      been $66.8 million versus $64.6 million for the corresponding quarter
      of 2006, an increase of 3.4%. Adjusted fully diluted net earnings per
      share(1)(2) would have been $0.57 versus $0.55 for the corresponding
      quarter of 2006, an increase of 3.6%.

    - The Company's sales for the fourth quarter of 2007 reached
      $2,432.4 million compared to $2,673.5 million recorded for the
      corresponding quarter of the previous fiscal year. Excluding the
      53rd week of 2006, decreased sales of tobacco products and lost sales
      due to the disposal, in the fourth quarter of 2006, of our interest in
      a grocery wholesaler, sales would have increased by 0.7%. Same-store
      sales increased by 0.2% in the fourth quarter of 2007.

    - Our integration and rationalization plan, scheduled for the first two
      years following the acquisition of A&P Canada, has been completed,
      including the conversion to our information systems of all computer
      applications we had been outsourcing to A&P US.

    FISCAL 2007 HIGHLIGHTS

    - The Company recorded net earnings of $276.6 million compared to
      $253 million, an increase of 9.3%, and fully diluted net earnings per
      share of $2.37, up 8.7% from $2.18 last year. Excluding non-recurring
      items recorded in 2007 and 2006 as well as the impact of the 53rd week
      in 2006, adjusted net earnings(1)(2) for 2007 would have been
      $295 million, an increase of 17.4% from the $251.2 million recorded in
      2006. Adjusted fully diluted net earnings per share(1)(2) would have
      been $2.53 versus $2.16 for 2006, an increase of 17.1%.

    - The Company's sales decreased 2.7% in fiscal 2007 to $10,644.6 million
      from $10,944 million in fiscal 2006. Excluding the 53rd week of 2006,
      decreased sales of tobacco products and lost sales due to the disposal,
      in the fourth quarter of 2006, of our interest in a grocery wholesaler,
      sales would have increased by 2%.

    - In fiscal 2007, we realized over $90 million in synergies, exceeding
      the target of $60 million a year we had set when we acquired A&P
      Canada.


    METRO INC. realized net earnings of $57.6 million in the fourth quarter of
2007, compared to $78.9 million in the corresponding quarter of the previous
fiscal year, and fully diluted net earnings per share of $0.49 versus $0.68
last year. Non-recurring items were recorded in the fourth quarters of 2007
and 2006, namely integration and rationalization costs of $14.1 million before
taxes in 2007 and $3.2 million before taxes in 2006, as well as an investment
disposal gain of $10.5 million before taxes in the fourth quarter of 2006 and
a $1.4 million tax expense reduction in the same quarter of 2006. The fourth
quarter of 2006 also included 53rd week earnings. Excluding these
non-recurring items and 53rd week earnings, adjusted net earnings(1)(2) for
the fourth quarter of 2007 would have been $66.8 million compared with
$64.6 million for the corresponding quarter of 2006, an increase of 3.4%, and
adjusted fully diluted net earnings per share(1)(2) would have been
$0.57 compared with $0.55 for the corresponding quarter of 2006, an increase
of 3.6%.

    SALES

    Sales for the fourth quarter of 2007 reached $2,432.4 million versus
$2,673.5 million recorded for the corresponding quarter of the previous fiscal
year, a 9% decrease. Excluding the 53rd week of 2006, decreased sales of
tobacco products and lost sales due to the disposal, in the fourth quarter of
2006, of our interest in a grocery wholesaler, sales would have increased by
0.7%. Same-store sales increased by 0.2% in the fourth quarter of 2007.
    Sales for fiscal 2007 reached $10,644.6 million, down 2.7% compared to
sales of $10,944 million for fiscal 2006. Excluding the 53rd week of 2006,
decreased sales of tobacco products and lost sales due to the disposal, in the
fourth quarter of 2006, of our interest in a grocery wholesaler, sales would
have increased by 2%.

    Nature of Elements
    (Millions of $)

                                                               2006
                                                     (13 weeks)    (53 weeks)
    -------------------------------------------------------------------------
    53rd week                                            198.6         198.6
    Tobacco products sales decrease                       41.0         202.9
    Disposal of interest in a grocery wholesaler          17.5         102.1
    -------------------------------------------------------------------------
                                                         257.1         503.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    INTEGRATION AND RATIONALIZATION COSTS

    Following the acquisition of A&P Canada, we developed a plan to integrate
and rationalize our operations. This initial three-part plan, dealt with our
store network, the integration of our overall operations, and the
implementation of our information systems at A&P Canada. Among other things,
we converted to our own information systems all the computer applications we
had been outsourcing to A&P US.
    The integration and rationalization plan's initial anticipated cost was
$55 million over two years. With $28 million incurred in fiscal 2006, it was
revised in the third quarter of 2007 to allow for a fuller integration of Loeb
Canada's operations into A&P Canada's. Costs of $14.1 million were recorded in
the fourth quarter of 2007. Total costs recorded over the two years following
the acquisition of A&P Canada were $58.5 million.

    Integration and Rationalization Costs
    (Millions of $)

                                              Incurred                 Total
                                         2007               2006
                               (12 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    Stores                           6.2         8.4        11.9        20.3
    Integration of
     operations                      5.6        10.6        13.9        24.5
    Implementation of
     information systems             2.3        11.5         2.2        13.7
    -------------------------------------------------------------------------
                                    14.1        30.5        28.0        58.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
    (EBITDA)(1)

    EBITDA for the fourth quarter of 2007 were $134.9 million versus
$170.1 million for the same quarter last year. Fourth quarter integration and
rationalization costs were $14.1 million in 2007 and $3.2 million in 2006. We
also realized an investment disposal gain of $10.5 million before taxes in the
fourth quarter of 2006. Our fourth quarter share of earnings from our
investment in Alimentation Couche-Tard were $7.6 million in 2007 compared to
$5.2 million in 2006.
    Excluding these non-recurring items, the impact of the 53rd week on 2006
fourth quarter EBITDA, as well as the share of earnings from our investment in
Alimentation Couche-Tard, 2007 fourth quarter EBITDA would have been
$141.4 million or 5.8% of sales versus $146.2 million or 5.9% of sales in
2006. Despite more competitive market conditions, we managed to keep fourth
quarter gross margin levels similar to those for the corresponding quarter of
the previous fiscal year.
    EBITDA for fiscal 2007 were $625.5 million compared to $610.5 million for
the previous fiscal year. We incurred integration and rationalization costs of
$30.5 million in fiscal 2007 and $28 million in fiscal 2006. We also realized
an investment disposal gain of $10.5 million before taxes in the fourth
quarter of 2006. Share of earnings from our investment in Alimentation
Couche-Tard were $25.3 million for fiscal 2007 compared to $22.3 million in
2006.
    Excluding these non-recurring items, the impact of the 53rd week in fiscal
2006, as well as the share of earnings from our investment in Alimentation
Couche-Tard, our 2007 EBITDA would have been $630.7 million or 5.9% of sales
versus $594.3 million or 5.5% of sales in 2006.
    Despite more competitive market conditions, we managed to improve fiscal
2007 gross margin levels against the previous year's.
    In fiscal 2007, we realized over $90 million in synergies, exceeding the
target of $60 million a year we had set when we acquired A&P Canada. These
synergies consist mainly of lower costs for goods purchased for resale.

    INTEREST, DEPRECIATION AND AMORTIZATION

    Depreciation and amortization expenses totalled $39.7 million for the
fourth quarter and $165.7 million for fiscal 2007, compared with $42.7 million
and $177.9 million for the same periods last year. These decreases result
primarily from additional amortization charges in fiscal 2006 following the
reassessment of the useful life of certain assets. Fourth quarter interest
expenses totalled $14 million versus $15.7 million last year, while interest
expenses for fiscal 2007 totalled $61.6 million versus $68.7 million last
year. These decreases are due primarily to a debt reduction of $79.9 million
in fiscal 2007. Interest rates for fiscal 2007 averaged 5.4% compared with 5%
for the previous fiscal year.

    INCOME TAXES

    The 2007 fourth quarter and fiscal year income tax expenses of
$26.1 million and $125.2 million represent effective tax rates of 32.1% and
31.4% respectively. The 2006 fourth quarter and fiscal year income tax
expenses of $32.7 million and $107 million represented effective tax rates of
29.3% and 29.4% respectively. In 2007, the Canadian government completed
milestones in the approval process for the federal budget providing, among
other things, a 0.5% decrease in the large business tax rate, effective
January 1, 2011. This future decrease in the federal tax rate reduced our
future tax liabilities by $1.8 million as well as our 2007 income tax expenses
by the same amount.
    In 2006, the Québec and Canadian governments completed milestones in the
approval process for their respective budgets providing, among other things,
for increases of the Québec large business tax rate from 8.9% to 11.9% between
January 1, 2006 and January 1, 2009 and for decreases of the federal large
business tax rate from 22.12% to 19% between January 1, 2008 and January 1,
2010. These rate changes reduced our future tax liabilities as well as our
2006 fourth quarter and fiscal year income tax expenses by $1.4 million and
$5.5 million respectively.
    Excluding all these additional tax expense changes, the effective tax
rates for the 2007 fourth quarter and fiscal year would have been 32.1% and
31.9% respectively versus 30.5% and 30.9% respectively for the 2006 fourth
quarter and fiscal year.

    NET EARNINGS

    Net earnings for the fourth quarter of 2007 were $57.6 million compared to
$78.9 million for the corresponding quarter of fiscal 2006. Fully diluted net
earnings per share were $0.49 compared to $0.68 last year. Excluding fourth
quarter integration and rationalization costs of $14.1 million before taxes in
2007 and of $3.2 million before taxes in 2006, as well as the $1.4 million tax
expense decrease and the investment disposal gain of $10.5 million before
taxes in the fourth quarter of 2006, adjusted net earnings(1)(2) for the
fourth quarter would have been $66.8 million, compared to $71 million for the
same quarter last year. Adjusted fully diluted net earnings per share(1)(2)
would have been $0.57 compared to $0.61 for the corresponding period of 2006.
Excluding the impact of the 53rd week in 2006 estimated at $6.4 million,
adjusted net earnings(1)(2) and adjusted fully diluted net earnings per
share(1)(2) for the fourth quarter of 2007 would have been up 3.4% and 3.6%
respectively.
    Net earnings for fiscal 2007 reached $276.6 million versus $253 million
last year, a 9.3% increase. Fully diluted net earnings per share rose 8.7% to
$2.37 versus $2.18 last year. Excluding integration and rationalization costs
of $30.5 million before taxes in fiscal 2007 and $28 million before taxes in
fiscal 2006, the investment disposal gain of $10.5 million before taxes in
2006 and income tax expense decreases of $1.8 million for 2007 and
$5.5 million for 2006, adjusted net earnings(1)(2) for 2007 would have been
$295 million, up 14.5% over adjusted net earnings(1)(2) of $257.6 million for
2006. Adjusted fully diluted net earnings per share(1)(2) would have been
$2.53 compared to $2.22 for 2006, an increase of 14%. Excluding the impact of
the 53rd week in 2006, adjusted net earnings(1)(2) and adjusted fully diluted
net earnings per share(1)(2) for fiscal 2007 would have been up 17.4% and
17.1% respectively.

    Quarterly Highlights
    (Millions of dollars, except earnings per share)

                                                2007        2006   Variation
                                           (52 weeks)  (53 weeks)(Percentage)
    -------------------------------------------------------------------------
    Sales (Restated - EIC-156)
    Q4                                       2,432.4     2,673.5        (9.0)
    Q3                                       3,341.0     3,336.7         0.1
    Q2                                       2,356.2     2,412.1        (2.3)
    Q1                                       2,515.0     2,521.7        (0.3)
    -------------------------------------------------------------------------
    Net earnings
    Q4                                          57.6        78.9       (27.0)
    Q3                                          89.3        85.1         4.9
    Q2                                          61.8        57.0         8.4
    Q1                                          67.9        32.0       112.2
    -------------------------------------------------------------------------
    Adjusted net earnings(1)
    Q4                                          66.8        71.0        (5.9)
    Q3                                          91.1        78.3        16.3
    Q2                                          65.5        58.7        11.6
    Q1                                          71.6        49.6        44.4
    -------------------------------------------------------------------------
    Fully diluted net earnings
     per share (Dollars)
    Q4                                          0.49        0.68       (27.9)
    Q3                                          0.77        0.73         5.5
    Q2                                          0.53        0.49         8.2
    Q1                                          0.58        0.28       107.1
    -------------------------------------------------------------------------
    Adjusted fully diluted net
     earnings per share(1) (Dollars)
    Q4                                          0.57        0.61        (6.6)
    Q3                                          0.78        0.68        14.7
    Q2                                          0.56        0.50        12.0
    Q1                                          0.62        0.43        44.2
    -------------------------------------------------------------------------


    The variations in our results over the last four quarters are due
primarily to the effect of our integration plan during those quarters, and the
synergies achieved.
    Quarterly sales for 2007 compared with those for 2006 were affected by
decreased sales of tobacco products, lost sales due to the disposal, in the
fourth quarter of 2006, of our interest in a grocery wholesaler, and the fact
that Christmas week fell in the first quarter of 2007 rather than the second
quarter as in 2006, and the impact of the 53rd week in 2006. Excluding these
items, 2007 first, second, third and fourth quarter sales would have been up
0.6%, 3%, 3.2% and 0.7% respectively over 2006.
    Over the last four quarters, net earnings and fully diluted net earnings
per share were impacted by, among other things, integration and
rationalization costs related to the acquisition of A&P Canada, a gain on
disposal of an investment, and income tax expense variations resulting from
fluctuations in tax rates applicable to large corporations announced by both
governments.
    Excluding these non-recurring items, increases in fiscal 2007 first,
second and third quarter adjusted net earnings(1) and adjusted fully diluted
net earnings per share(1), compared with those for fiscal 2006, are due
primarily to more effective merchandising programs and further synergies.
    Excluding the impact of the 53rd week in 2006, adjusted net earnings(1)
and adjusted fully diluted net earnings per share(1) for the fourth quarter of
2007 are up from those in the fourth quarter of 2006.

    Summary of Adjustments

                           2007                           2006
    -------------------------------------------------------------------------
    (Millions
     of         Q1    Q2    Q3    Q4  FISCAL    Q1    Q2    Q3    Q4  FISCAL
     dollars)
    -------------------------------------------------------------------------
    Net
     earnings 67.9  61.8  89.3  57.6   276.6  32.0  57.0  85.1  78.9   253.0
    Integra-
     tion and
     rationa-
     lization
     costs
     after
     taxes     3.7   3.7   3.6   9.2    20.2  12.3   1.7   2.6   2.1    18.7
    Investment
     disposal
     gain,
     after
     taxes       -     -     -     -       -     -     -     -  (8.6)   (8.6)
    (Decrease)
     increase
     in tax
     expense     -     -  (1.8)    -    (1.8)  5.3     -  (9.4) (1.4)   (5.5)
    -------------------------------------------------------------------------
    Adjusted
     net earn-
     ings(1)  71.6  65.5  91.1  66.8   295.0  49.6  58.7  78.3  71.0   257.6
    53rd week    -     -     -     -       -     -     -     -  (6.4)   (6.4)
    -------------------------------------------------------------------------
    Adjusted
     net earn-
     ings(1)
     excluding
     53rd
     week     71.6  65.5  91.1  66.8   295.0  49.6  58.7  78.3  64.6   251.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                           2007                           2006
    -------------------------------------------------------------------------

                Q1    Q2    Q3    Q4  FISCAL    Q1    Q2    Q3    Q4  FISCAL
    (Dollars)
    -------------------------------------------------------------------------
    Fully
     diluted
     net earn-
     ings per
     share    0.58  0.53  0.77  0.49    2.37  0.28  0.49  0.73  0.68    2.18
    Integra-
     tion and
     rationa-
     lization
     costs
     after
     taxes    0.04  0.03  0.03  0.08    0.18  0.10  0.01  0.03  0.02    0.16
    Investment
     disposal
     gain,
     after
     taxes       -     -     -     -       -     -     -     - (0.07)  (0.07)
    (Decrease)
     increase
     in tax
     expense     -     - (0.02)    -   (0.02) 0.05     - (0.08)(0.02)  (0.05)
    -------------------------------------------------------------------------
    Adjusted
     fully
     diluted
     net earn-
     ings per
     share(1) 0.62  0.56  0.78  0.57    2.53  0.43  0.50  0.68  0.61    2.22
    53rd week    -     -     -     -       -     -     -     - (0.06)  (0.06)
    -------------------------------------------------------------------------
    Adjusted
     fully
     diluted
     net earn-
     ings per
     share (1)
     excluding
     53rd
     week     0.62  0.56  0.78  0.57    2.53  0.43  0.50  0.68  0.55    2.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Cash Position

    OPERATING ACTIVITIES

    Operating activities generated cash flows of $44.8 million in the fourth
quarter compared to $72.5 million for the same quarter last year, and cash
flows of $363.3 million for fiscal 2007 compared to $392 million for fiscal
2006. The differences in 2007 fourth quarter and fiscal year cash flows
compared to those for the corresponding periods of fiscal 2006 are mainly the
consequence of changes in non-cash working capital from operating activities.

    INVESTMENT ACTIVITIES

    Investment activities required $70.6 million in the fourth quarter of 2007
and $258.9 million over the fiscal year versus $53.2 million in the fourth
quarter of 2006 and $181.9 million over the fiscal year. These increases are
due primarily to the acquisition of additional fixed assets related to new
store construction, expansion, and renovation projects.
    In fiscal 2007, the Company and retailers invested $342.8 million in our
retail network for a gross expansion of 858,000 square feet or 4.6%, and a net
expansion of 178,000 square feet. Major renovations and expansions of
53 stores were completed and 15 new stores were opened.

    FINANCING ACTIVITIES

    Financing activities required outflows of $120.7 million in the fourth
quarter of 2007 and $169.6 million over the fiscal year versus outflows of
$112 million in the fourth quarter of 2006 and $138.2 million over the fiscal
year. These increases are attributable mainly to greater share redemption in
2007.

    Financial Position

    Our financial position at the end of the fourth quarter of 2007 was very
solid. We had $100.5 million in cash and cash equivalents. We have not used
our approved $400 million line of credit. Our long-term debt corresponds to
35% of the combined total of long-term debt and shareholders' equity
(long-term debt/total capital).
    At the end of the fiscal year, the main elements of our long-term debt
were as follows:

                          Interest Rate          Balance            Maturity
                                               (Millions
                                                      of
                                                 dollars)
    -------------------------------------------------------------------------
    Credit Facility A     Rates fluctuate with     394.5     August 15, 2012
                          changes in bankers'
                          acceptance rates
    Medium-term
     Series A notes       4.98% fixed rate         200.0    October 15, 2015
    Medium-term
     Series B notes       5.97% fixed rate         400.0    October 15, 2035
    -------------------------------------------------------------------------

    At the end of the fiscal year, interest rate swap agreements in the
notional amount of $150 million were outstanding under Credit Facility A.
These agreements provide for the exchange of variable interest payments for
fixed interest payments according to the following terms:


    Fixed Rate                           Notional Amount            Maturity
                                            (Millions of
                                                 dollars)
    -------------------------------------------------------------------------
    3.9480%                                         50.0   November 23, 2008
    3.9820%                                         50.0   December 16, 2009
    4.0425%                                         50.0   December 16, 2010
    -------------------------------------------------------------------------

    Giving effect to these swap agreements, at the end of the quarter, long
term indebtedness comprised $750 million at fixed rates ranging from 4.3980%
to 5.97% and $244.5 million at variable rates which fluctuate with changes in
bankers' acceptance rates.

    FINANCIAL RATIOS

                                                         As at         As at
                                                  September 29, September 30,
                                                          2007          2006
    -------------------------------------------------------------------------

    Financial structure
      Long-term debt (Millions of $)                   1,038.9       1,116.6
      Shareholders' equity (Millions of $)             1,932.3       1,723.8
      Long-term debt/total capital (%)                    35.0          39.3


                                                   Fiscal 2007   Fiscal 2006
                                                     (52 weeks)    (53 weeks)
                                                  ---------------------------
    Results
    EBITDA(1)/Interest (Times)                            10.2           8.9
    -------------------------------------------------------------------------


    CAPITAL STOCK, STOCK OPTIONS AND PERFORMANCE SHARE UNITS

                                                         As at         As at
                                                  September 29, September 30,
                                                          2007          2006
    -------------------------------------------------------------------------
    Number of Class A Subordinate Shares
     outstanding (Thousands)                           113,683       113,852
    Number of Class B Shares outstanding
     (Thousands)                                           804           880
    Stock options:
      Number outstanding (Thousands)                     3,738         4,233
      Exercise price                                 $11.80 to     $ 8.73 to
                                                     $   39.17     $   33.87
      Weighted average exercise price                $   22.40     $   20.85
    Number of performance share units:
      Number outstanding (Thousands)                       124            48
      Weighted average maturity                      22 months     30 months
    -------------------------------------------------------------------------


    ISSUER BID PROGRAM

    The Company repurchased 807,500 Class A Subordinate Shares at an average
price of $35.20 per share for a total of $28.4 million in the fourth quarter
of 2007, and 822,300 Class A Subordinate Shares at an average price of $35.23
per share for a total of $28.9 million over fiscal 2007. The Company
repurchased no shares in 2006. Under the issuer bid program, the Company may
repurchase up to 4 million of its Class A Subordinate Shares between
September 5, 2007 and September 4, 2008. With this program, the Company has an
additional option for using excess funds. Thus, we will be able to decide, in
the shareholders' best interest, to reimburse debt or to repurchase shares of
the Company.

    DIVIDENDS

    On September 25, 2007, the Company's Board of Directors declared a
quarterly dividend of $0.115 per Class A Subordinate Share and Class B Share
payable November 20, 2007, an increase of 9.5% over the dividend for the
corresponding quarter last year. On an annualized basis, this dividend
represents 21% of 2006 net earnings.

    SHARE TRADING

    The value of METRO shares remained in the range of $33.23 to $41.78 in
fiscal 2007. During this period, a total of 56.1 million shares were traded on
the Toronto Stock Exchange. The closing price on Friday, September 28, 2007
was $35.00, compared with $33.60 at the end of fiscal 2006.

    Recently Issued New Accounting Standards

    CAPITAL AND FINANCIAL INSTRUMENTS

    In December 2006, the Canadian Institute of Chartered Accountants (CICA)
issued three new Handbook sections regarding capital and financial
instruments, i.e. sections 1535, 3862 and 3863, which are effective for
interim and annual financial statements relating to fiscal years beginning on
or after October 1, 2007. We intend to apply these new standards in the first
quarter ending December 22, 2007, and do not foresee that these new sections
will have a material effect on our results, financial position and cash flows.

    Section 1535 Capital Disclosures establishes standards for disclosing
information about an entity's capital and how it is managed. These standards
require an entity to disclose the following:

    - its objectives, policies and processes for managing capital;
    - summary quantitative data about what it manages as capital;
    - whether during the period it complied with any externally imposed
      capital requirements to which it is subject;
    - when the entity has not complied with such requirements, the
      consequences of such non-compliance.

    Section 3862 Financial Instruments - Disclosures modifies the disclosure
requirements for financial instruments that were included in Section 3861
Financial Instruments - Disclosure and Presentation. The new standards require
entities to provide disclosures in their financial statements that enable
users to evaluate:

    - the significance of financial instruments for the entity's financial
      position and performance;
    - the nature and extent of risks arising from financial instruments to
      which the entity is exposed during the period and at the balance sheet
      date, and how the entity manages those risks.

    Section 3863 Financial Instruments - Presentation carries forward
unchanged the presentation requirements of the old Section 3861 Financial
Instruments - Disclosure and Presentation.

    INVENTORIES

    In March 2007, CICA issued the new Section 3031 Inventories which will
replace Section 3030 Inventories. The new Section prescribes measurement of
inventories at the lower of cost and net realizable value. It provides
guidance on the determination of cost, allows the use of the retail method,
prohibits use in the future of the last-in, first-out (LIFO) method, and
requires reversal of previous write-downs when there is a subsequent increase
in the value of inventories. It also requires greater disclosure regarding
inventories and the cost of sales. The new standard will be effective for
interim and annual financial statements relating to fiscal years beginning on
or after January 1, 2008. We are currently evaluating their effect on our
results, financial position and cash flows as well as the possibility of early
application.

    Outlook

    "We have completed our original integration and rationalization plan
following the acquisition of A&P Canada and achieved over $90 million in
synergies. We are already preparing phase II of our integration plan involving
the rationalization of our banners and private labels, to be completed over
the next three years, which will allow us to continue our growth in the
Canadian grocery market," stated President and Chief Executive Officer,
Mr. Pierre H. Lessard.

    Forward-looking Statements

    Any statement contained in this quarterly Management's Discussion and
Analysis which does not constitute an historic fact, may be considered
forward-looking. Verbs such as "believe", "foresee", "estimate" and other
similar expressions appearing in this discussion and analysis generally
indicate forward-looking statements. These projections do not provide
guarantees as to the future performance of METRO INC. and are subject to
risks, both known and unknown, as well as uncertainties which may cause the
outlook, profitability and actual results of METRO INC. to differ
significantly from the profitability or future results stated or implied in
these forward-looking statements.

    Non-GAAP Measurements

    In addition to the Canadian generally accepted accounting principles
(GAAP) earnings measurements provided, we have included certain non-GAAP
earnings measurements. These measurements are presented for information
purposes only. They do not have a standardized meaning prescribed by Canadian
GAAP and therefore may not be comparable to similar measures presented by
other public companies.

    Adjusted net earnings and adjusted fully diluted net earnings per share

    Adjusted net earnings and adjusted fully diluted net earnings per share
are earnings measurements that exclude non-recurring items. We believe that
presenting earnings without non-recurring items leaves readers of financial
statements better informed as to the current period and corresponding period's
earnings, thus enabling them to better evaluate the Company's performance and
judge its future outlook.

    Earnings before interest, taxes, depreciation and amortization (EBITDA)

    EBITDA is a measurement of earnings that excludes interest, taxes,
depreciation and amortization. We believe that EBITDA is a measurement
commonly used by readers of financial statements to evaluate a company's
operational cash-generating capacity and ability to discharge its financial
expenses.

    Conference Call

    Financial analysts and investors are invited to participate in a
conference call on the 2007 fourth quarter results at 10:00 a.m. EDT on
Wednesday, November 21, 2007. To access the conference call, please dial
416-644-3418 or 514-807-8791. The media and public are invited to listen to
the call in real time or delayed time on the METRO INC. Web site at
www.metro.ca.

    ---------------
    (1) See section on "Non-GAAP Measurements".
    (2) See section on "Summary of Adjustments" for more detail.


    Consolidated Statements of Earnings
    Periods ended September 29, 2007 and September 30, 2006
    (Unaudited) (Millions of dollars, except for earnings per share)


                                      Fiscal Year             Fiscal Year
                               ----------             ----------
                                    2007        2006        2007        2006
                               (12 weeks)  (13 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    Sales                      $ 2,432.4   $ 2,673.5   $10,644.6   $10,944.0
    Cost of sales and
     operating expenses          2,291.0     2,505.4    10,013.9    10,327.8
    Share of earnings in a
     public company subject
     to significant influence       (7.6)       (5.2)      (25.3)      (22.3)
    Integration and
     rationalization costs
     (note 3)                       14.1         3.2        30.5        28.0
    -------------------------------------------------------------------------
    Earnings before interest,
     taxes, depreciation
     and amortization              134.9       170.1       625.5       610.5
    Depreciation and
     amortization                   39.7        42.7       165.7       177.9
    -------------------------------------------------------------------------
    Operating income                95.2       127.4       459.8       432.6
    Interest, net
      Short term                    (0.7)       (0.7)       (2.7)       (1.9)
      Long term                     14.7        16.4        64.3        70.6
    -------------------------------------------------------------------------
                                    14.0        15.7        61.6        68.7
    -------------------------------------------------------------------------
    Earnings before
     income taxes                   81.2       111.7       398.2       363.9
    Income taxes (note 5)           26.1        32.7       125.2       107.0
    -------------------------------------------------------------------------
    Earnings before
     minority interest              55.1        79.0       273.0       256.9
    Minority interest               (2.5)        0.1        (3.6)        3.9
    -------------------------------------------------------------------------
    Net earnings               $    57.6   $    78.9   $   276.6   $   253.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
     (note 6)
      Basic                    $    0.50   $    0.69   $    2.40   $    2.21
      Fully diluted            $    0.49   $    0.68   $    2.37   $    2.18
    -------------------------------------------------------------------------
                               ----------              ----------
    See accompanying notes


    Consolidated Balance Sheets
    (Unaudited) (Millions of dollars)
                                                     ----------
                                                         As at         As at
                                                  September 29, September 30,
                                                          2007          2006
    -------------------------------------------------------------------------
    ASSETS
    Current assets
      Cash and cash equivalents                      $   100.5     $   165.7
      Accounts receivable                                327.8         302.1
      Inventories                                        588.2         565.5
      Prepaid expenses                                    12.1          11.3
      Future income taxes                                 26.1          16.7
    -------------------------------------------------------------------------
                                                       1,054.7       1,061.3
    Investments and other assets                         151.0         117.9
    Fixed assets                                       1,202.8       1,129.9
    Intangible assets                                    342.1         331.7
    Goodwill                                           1,490.1       1,490.1
    Accrued benefit assets                                33.2          33.0
    -------------------------------------------------------------------------
                                                     $ 4,273.9     $ 4,163.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Bank loans                                     $     0.1     $     0.3
      Accounts payable                                 1,043.6       1,049.5
      Income taxes payable                                20.3          36.8
      Current portion of long-term debt                    5.1           7.3
    -------------------------------------------------------------------------
                                                       1,069.1       1,093.9
    Long-term debt                                     1,038.9       1,116.6
    Accrued benefit obligations                           54.9          60.6
    Future income taxes                                  139.0         115.0
    Other long-term liabilities                           33.7          44.2
    Minority interest                                      6.0           9.8
    -------------------------------------------------------------------------
                                                       2,341.6       2,440.1
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock (note 7)                               714.8         709.0
    Contributed surplus                                    2.0           1.6
    Retained earnings                                  1,214.3       1,013.2
    Accumulated other comprehensive income
     (notes 2 and 8)                                       1.2             -
    -------------------------------------------------------------------------
                                                       1,932.3       1,723.8
    -------------------------------------------------------------------------
                                                     $ 4,273.9     $ 4,163.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                     ----------
    See accompanying notes


    Consolidated Statements of Cash Flows
    Periods ended September 29, 2007 and September 30, 2006
    (Unaudited) (Millions of dollars)

                                    Fiscal Year              Fiscal Year
                               ----------              ----------
                                    2007        2006        2007        2006
                               (12 weeks)  (13 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    Operating activities
    Net earnings               $    57.6   $    78.9   $   276.6   $   253.0
    Non-cash items
      Integration and
       rationalization
       costs (note 3)                6.0           -         6.6         5.3
      Share of earnings in
       a public company
       subject to significant
       influence                    (7.6)       (5.2)      (25.3)      (22.3)
      Depreciation and
       amortization                 39.7        42.7       165.7       177.9
      Amortization of
       deferred financing
       costs                         0.4         0.9         2.0         2.8
      Loss on disposal and
       write-off of fixed and
       intangible assets             0.5         3.5         3.3        12.0
      Gain on investments
       disposal                     (1.4)      (10.5)       (1.4)      (10.5)
      Future income taxes            2.3        (4.6)       14.0        (4.6)
      Stock-based
       compensation cost             0.7         0.5         3.5         1.7
      Difference between
       amounts paid for
       employee future
       benefits over current
       period cost                  (4.0)      (10.6)       (5.9)      (20.2)
      Minority interest             (2.5)        0.1        (3.6)        3.9
    -------------------------------------------------------------------------
                                    91.7        95.7       435.5       399.0
    Net change in non-cash
     working capital related
     to operations                 (46.9)      (23.2)      (72.2)       (7.0)
    -------------------------------------------------------------------------
                                    44.8        72.5       363.3       392.0
    -------------------------------------------------------------------------
    Investing activities
    Net change in investments
     and other assets                1.8        18.1         3.4        14.5
    Dividend of a public
     company subject to
     significant influence           1.3         1.1         2.5         2.1
    Acquisition of fixed
     assets                        (60.3)      (63.8)     (229.7)     (170.7)
    Disposal of fixed assets           -         5.6         8.5        12.8
    Acquisition of intangible
     assets                        (13.4)      (14.2)      (43.6)      (40.6)
    -------------------------------------------------------------------------
                                   (70.6)      (53.2)     (258.9)     (181.9)
    -------------------------------------------------------------------------
    Financing activities
    Net change in bank loans        (0.4)        0.2        (0.2)          -
    Issuance of
     shares (note 7)                 0.1         0.4        11.1         5.4
    Redemption of
     shares (note 7)               (28.4)          -       (28.9)          -
    Acquisition of treasury
     shares (note 7)                   -        (0.6)       (3.2)       (2.1)
    Increase of long-term debt       0.5           -         3.3       601.5
    Repayment of long-term
     debt                          (76.6)     (103.4)      (84.8)     (692.0)
    Net change in other
     long-term liabilities          (2.7)        3.8       (14.9)       (3.1)
    Dividends paid                 (13.2)      (12.0)      (51.8)      (47.5)
    Distribution to minority
     interest                          -        (0.4)       (0.2)       (0.4)
    -------------------------------------------------------------------------
                                  (120.7)     (112.0)     (169.6)     (138.2)
    -------------------------------------------------------------------------
    Net change in cash and
     cash equivalents             (146.5)      (92.7)      (65.2)       71.9
    Cash and cash
     equivalents - beginning
     of period                     247.0       258.4       165.7        93.8
    -------------------------------------------------------------------------
    Cash and cash
     equivalents - end of
     period                    $   100.5   $   165.7   $   100.5   $   165.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other information
    Interest paid              $     4.6   $     7.8   $    62.2   $    52.8
    Income taxes paid          $    24.6   $    21.7   $   127.7   $    88.6
    -------------------------------------------------------------------------
                               ----------              ----------
    See accompanying notes


    Consolidated Statements of Retained Earnings
    Periods ended September 29, 2007 and September 30, 2006
    (Unaudited) (Millions of dollars)

                                                          Fiscal Year
                                                     ----------
                                                          2007          2006
                                                     (52 weeks)    (53 weeks)
    -------------------------------------------------------------------------
    Balance - beginning of year                      $ 1,013.2     $   807.7
    Net earnings                                         276.6         253.0
    Dividends                                            (51.8)        (47.5)
    Share redemption premiums                            (23.7)            -
    -------------------------------------------------------------------------
    Balance - end of year                            $ 1,214.3     $ 1,013.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                     ----------
    See accompanying notes


    Consolidated Statements of Comprehensive Income
    Periods ended September 29, 2007 and September 30, 2006
    (Unaudited) (Millions of dollars) (notes 2 and 8)

                                    Fiscal Year             Fiscal Year
                               ----------              ----------
                                    2007        2006        2007        2006
                               (12 weeks)  (13 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    Net earnings               $    57.6   $    78.9   $   276.6   $   253.0

    Other comprehensive income
    Change in fair value of
     derivatives designated as
     cash flow hedges               (1.8)          -         1.2           -
    Corresponding income taxes       0.6           -        (0.4)          -
    -------------------------------------------------------------------------
    Comprehensive income       $    56.4   $    78.9   $   277.4   $   253.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------              ----------
    See accompanying notes



    Notes to Interim Consolidated Financial Statements
    Periods ended September 29, 2007 and September 30, 2006
    (Unaudited) (Millions of dollars, except for earnings per share)

    1. Statement Presentation

    The unaudited interim consolidated financial statements were prepared by
management in accordance with Canadian generally accepted accounting
principles. The accounting policies and procedures used in preparing these
interim consolidated financial statements are the same as those used in
preparing the audited annual consolidated financial statements for the year
ended September 30, 2006, except for the new accounting policies described in
note 2. The unaudited interim consolidated financial statements should be read
along with the audited annual consolidated financial statements and notes to
the statements in the Company's 2006 Annual Report. The operating results for
the interim period covered do not necessarily reflect overall results for the
fiscal year. Certain comparative figures have been reclassified to conform to
the presentation being used in the current fiscal year.

    2. New Accounting Policies

    ADOPTED IN 2007

    Comprehensive Income, Financial Instruments, and Hedges

    In the first quarter of 2007, the Company adopted the following new
accounting standards issued by the Canadian Institute of Chartered Accountants
(CICA):
    Section 1530, Comprehensive Income, introduces a new financial statement
which shows the change in equity of an enterprise from transactions and other
events and circumstances from non-owner sources.
    Section 3855, Financial Instruments - Recognition and Measurement,
establishes standards for recognizing and measuring financial instruments,
namely financial assets, financial liabilities and derivatives.
    The new standard lays out how financial instruments are to be recognized
depending on their classification. Depending on financial instruments'
classification, changes in subsequent measurements are recognized in net
income or comprehensive income.
    The Company has implemented the following classification:

    - Cash and cash equivalents are classified as "Financial Assets Held for
      Trading". These financial assets are marked-to-market through net
      income at each period end.
    - Accounts receivable and loans to certain customers are classified as
      "Loans and Receivables". After their initial fair value measurement,
      they are measured at amortized cost using the effective interest rate
      method. For the Company, the measured amount generally corresponds to
      cost.
    - Investments in companies are classified as "Available-for-sale
      Securities". These financial assets are marked-to-market through
      comprehensive income at each period end.
    - Bank loans, accounts payable, credit facilities, notes, loans payable,
      and obligations under capital leases are classified as "Other Financial
      Liabilities". After their initial fair value measurement, they are
      measured at amortized cost using the effective interest rate method.
      For the Company, the measured amount generally corresponds to cost.

    Section 3865, Hedges, whose application is optional, establishes how hedge
accounting may be applied. The Company, in keeping with its risk management
strategy, has decided to apply hedge accounting to its interest rate swaps and
treat them as cash flow hedges. These derivatives are marked-to-market at each
period end and resulting gains/losses are recognized in comprehensive income
to the extent the hedging relationship is effective.
    These new standards have to be applied without restatement of prior period
amounts. Upon initial application all adjustments to the carrying amount of
financial assets and liabilities shall be recognized as an adjustment to the
opening balance of retained earnings or accumulated other comprehensive
income, depending on the classification of existing assets or liabilities. The
Company has recognized a $0.4 adjustment to the opening balance of accumulated
other comprehensive income with respect to the interest rate swaps designated
as cash flow hedges. No adjustment has been recognized to the opening balance
of retained earnings.

    ADOPTED IN 2006

    Accounting by a Vendor for Consideration Given to a Customer (including a
    Reseller of the Vendor's Products)

    The Company adopted, in the third quarter of fiscal 2006, EIC-156
Accounting by a Vendor for Consideration Given to a Customer (including a
Reseller of the Vendor's Products). Under this new standard, certain rebates
granted by the Company to its retailers have to be reclassified as a reduction
in sales rather than as cost of sales. The new standard must be applied
retroactively with restatement of prior interim financial statements.

    RECENTLY ISSUED

    Capital and Financial Instruments

    In December 2006, the CICA issued three new Handbook sections regarding
capital and financial instruments, i.e. sections 1535, 3862 and 3863, which
are effective for interim and annual financial statements relating to fiscal
years beginning on or after October 1, 2007. The Company intends to apply
these new standards in the first quarter ending December 22, 2007, and do not
foresee that these new sections will have a material effect on its results,
financial position and cash flows.
    Section 1535 Capital Disclosures establishes standards for disclosing
information about an entity's capital and how it is managed. These standards
require an entity to disclose the following:

    - its objectives, policies and processes for managing capital;
    - summary quantitative data about what it manages as capital;
    - whether during the period it complied with any externally imposed
      capital requirements to which it is subject;
    - when the entity has not complied with such requirements, the
      consequences of such non-compliance.

    Section 3862 Financial Instruments - Disclosures modifies the disclosure
requirements for financial instruments that were included in Section 3861
Financial Instruments - Disclosure and Presentation. The new standards require
entities to provide disclosures in their financial statements that enable
users to evaluate:

    - the significance of financial instruments for the entity's financial
      position and performance;
    - the nature and extent of risks arising from financial instruments to
      which the entity is exposed during the period and at the balance sheet
      date, and how the entity manages those risks.

    Section 3863 Financial Instruments - Presentation carries forward
unchanged the presentation requirements of the old Section 3861 Financial
Instruments - Disclosure and Presentation.

    Inventories

    In March 2007, the CICA issued the new Section 3031 Inventories which will
replace Section 3030 Inventories. The new Section prescribes measurement of
inventories at the lower of cost and net realizable value. It provides
guidance on the determination of cost, allows the use of the retail method,
prohibits use in the future of the last-in, first-out (LIFO) method, and
requires reversal of previous write-downs when there is a subsequent increase
in the value of inventories. It also requires greater disclosure regarding
inventories and the cost of sales. The new standard will be effective for
interim and annual financial statements relating to fiscal years beginning on
or after January 1, 2008. The Company is currently evaluating their effect on
its results, financial position and cash flows as well as the possibility of
early application.

    3. Integration and Rationalization Costs

    During the period ended September 29, 2007, the Company completed its plan
for the integration and rationalization of its operations following the
acquisition of A&P Canada. This three-part plan dealt with the store network,
the integration of overall operations, and the implementation of information
systems at A&P Canada.
    Over fiscal 2006, integration and rationalization plan costs amounted to
$28.0. Costs incurred over the 52-week period amounted to $30.5, which
includes $14.1 in the fourth quarter of 2007.

    By Nature of Project

                                            Incurred                   Total
                                        2007              2006
                               (12 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    Stores                     $     6.2   $     8.4   $    11.9   $    20.3
    Integration of operations        5.6        10.6        13.9        24.5
    Implementation of
     information systems             2.3        11.5         2.2        13.7
    -------------------------------------------------------------------------
                               $    14.1   $    30.5   $    28.0   $    58.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    By Nature of Costs for the 12-Week Period

                 Liability                     Liability
                     as at  Incurred      Paid     as at  Incurred
                    July 7,     2007      2007  Sept. 29,     2006
                      2007 (12 weeks)(12 weeks)     2007 (53 weeks)    Total
    -------------------------------------------------------------------------
    Retention
     bonuses,
     termination
     benefits and
     others         $  3.2    $  6.0    $  3.8    $  5.4    $ 18.1    $ 28.4
    Training and IT
     implementation      -       2.3       1.0       1.3       2.2      13.7
    Vacant premises    2.9      (0.2)      0.4       2.3       2.4       4.5
    -------------------------------------------------------------------------
                    $  6.1    $  8.1    $  5.2    $  9.0    $ 22.7    $ 46.6
    Asset
     write-offs                  6.0                           5.3      11.9
    -------------------------------------------------------------------------
                              $ 14.1                        $ 28.0    $ 58.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    By Nature of Costs for the 52-Week Period

                 Liability                     Liability
                     as at  Incurred      Paid     as at  Incurred
                  Sept. 30,     2007      2007  Sept. 29,     2006
                      2006 (52 weeks)(52 weeks)     2007 (53 weeks)    Total
    -------------------------------------------------------------------------
    Retention
     bonuses,
     termination
     benefits and
     others         $  2.1    $ 10.3    $  7.0    $  5.4    $ 18.1    $ 28.4
    Training and IT
     implementation      -      11.5      10.2       1.3       2.2      13.7
    Vacant premises    1.5       2.1       1.3       2.3       2.4       4.5
    -------------------------------------------------------------------------
                    $  3.6    $ 23.9    $ 18.5    $  9.0    $ 22.7    $ 46.6
    Asset
     write-offs                  6.6                           5.3      11.9
    -------------------------------------------------------------------------

                              $ 30.5                        $ 28.0    $ 58.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    4. Employee Future Benefits

    The Company offers several defined benefit and defined contribution plans
that provide most participants with pension, other retirement and other
post-employment benefits. The Company's defined benefit and defined
contribution plan expenses were as follows:

                                                Fiscal Year
                               ----------------------
                                        2007                    2006
                                     (12 weeks)              (13 weeks)
    -------------------------------------------------------------------------
                                 Pension       Other     Pension       Other
                                   plans       plans       plans       plans
    -------------------------------------------------------------------------
    Defined contribution
     plans                     $     5.0   $     0.3   $     5.1           -
    -------------------------------------------------------------------------
    Defined benefit plans
    Current service cost       $     4.9   $     0.5   $     6.9   $     0.2
    Interest cost                    7.2         1.0         7.1         0.4
    Projected return on plan
     assets                         (8.9)          -        (8.8)          -
    Amortization of actuarial
     losses and past service
     cost                           (0.2)        0.3         0.6         0.2
    Plans modifications              0.5        (0.3)        0.3           -
    -------------------------------------------------------------------------
                                     3.5         1.5         6.1         0.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               $     8.5   $     1.8   $    11.2   $     0.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------------------

                                                Fiscal Year
                               ----------------------
                                        2007                    2006
                                     (52 weeks)              (53 weeks)
    -------------------------------------------------------------------------
                                 Pension       Other     Pension       Other
                                   plans       plans       plans       plans
    -------------------------------------------------------------------------
    Defined contribution
     plans                     $    25.0   $     0.5   $    22.1   $     0.3
    -------------------------------------------------------------------------
    Defined benefit plans
    Current service cost       $    23.7   $     1.4   $    23.1   $     1.0
    Interest cost                   28.3         2.0        25.6         2.0
    Projected return on plan
     assets                        (38.1)          -       (34.7)          -
    Amortization of actuarial
     losses and past service
     cost                            1.1         0.3         1.2         0.2
    Plans modifications              0.5        (0.3)        0.3           -
    -------------------------------------------------------------------------
                                    15.5         3.4        15.5         3.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               $    40.5   $     3.9   $    37.6   $     3.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------------------


    5. Income Taxes

    The effective income tax rates were as follows:

                                    Fiscal Year             Fiscal Year
                               ----------              ----------
                                    2007        2006        2007        2006
                               (12 weeks)  (13 weeks)  (52 weeks)  (53 weeks)
                                       %           %           %           %
    -------------------------------------------------------------------------
    Combined statutory income
     tax rate                       32.2        31.8        32.3        31.8
    Changes
      Impact of federal tax
       rate decrease of 0.5%
       (3.12% in 2006) on
       future taxes ($1.8 in
       2007 and $9.4 in 2006)          -        (1.2)       (0.5)       (3.0)
      Impact of Québec tax
       rate increase of 3% on
       future taxes ($5.3 in
       2006)                           -           -           -         1.5
      Share of earnings of a
       public company subject
       to significant
       influence                    (1.4)       (0.6)       (0.9)       (0.8)
      Gain on investments
       disposal                        -        (1.3)          -        (0.4)
      Other                          1.3         0.6         0.5         0.3
    -------------------------------------------------------------------------
                                    32.1        29.3        31.4        29.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------              ----------


    6. Earnings per Share

    Basic earnings per share and fully diluted net earnings per share were
calculated based on the following number of shares:

                                    Fiscal Year             Fiscal Year
                               ----------              ----------
                                    2007        2006        2007        2006
    (Millions)                 (12 weeks)  (13 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding -
     Basic                         115.0       114.7       115.0       114.6
    Dilutive effect of stock
     option plan and
     performance share units         1.5         1.2         1.6         1.3
    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding -
     Diluted                       116.5       115.9       116.6       115.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------              ----------


    7. Capital Stock

    Issued and Outstanding

                                 Class A               Class B         Total
                            Subordinate Shares         Shares
                          --------------------      --------------   --------

                              Number              Number
                          (Thousands)         (Thousands)
    -------------------------------------------------------------------------
    Balance as at
     September 30, 2006      113,852   $ 707.3       880   $   1.7   $ 709.0
    Share issue                  659      11.1         -         -      11.1
    Transfer from
     contributed surplus -
     options exercised             -       0.4         -         -       0.4
    Shares redeemed for
     cash, excluding
     premium of $23.7           (822)     (5.2)        -         -      (5.2)
    Conversion of shares          76       0.1       (76)     (0.1)        -
    Acquisition of
     treasury shares,
     excluding premium
     of $2.7                     (82)     (0.5)        -         -      (0.5)
    -------------------------------------------------------------------------
    Balance as at
     September 29, 2007      113,683   $ 713.2       804   $   1.6   $ 714.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Stock Option Plan

    As at September 29, 2007, 3,738,160 stock options were outstanding at
exercise prices varying from $11.80 to $39.17, with expiry dates up to 2014.
Of these stock options, 2,611,780 could be exercised for an average weighted
exercise price of $20.28.

                                    Fiscal Year             Fiscal Year
                               ----------              ----------
                                    2007        2006        2007        2006
                               (12 weeks)  (13 weeks)  (52 weeks)  (53 weeks)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Granted stock options
     during the period            64,000      84,400     199,600     264,500
    Weighted average exercise
     price                     $   37.16   $   30.06   $   37.55   $   30.41
    Weighted average fair
     value                     $   10.50   $    9.47   $   10.49   $    9.60
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------              ----------


    During the 52-week period of 2007, the weighted average fair value of
stock options was established at the time of grant using the Black & Scholes
model and based on the following weighted average assumptions: risk-free
interest rate of 4.3% (2006 - 4.2%), expected six-year term (2006 - six-year
term), anticipated volatility of 25.1% (2006 - 30%) and an anticipated 1.5%
dividend yield (2006 - 1.5%).
    The compensation expense for these stock options amounted to $2.1 for the
52-week period of 2007 (2006 - $1.3) and to $0.4 for the fourth quarter of
2007 (2006 - $0.3).

    Performance Share Unit Plan

    As of September 29, 2007, a total of 123,819 performance share units
(PSUs) were outstanding. No PSUs were granted in the fourth quarter.
    At the end of the fourth quarter, 154,000 shares were held in trust for
participants until the PSUs shall have vested or been cancelled. None of these
shares have been acquired during the fourth quarter.
    A compensation expense of $1.4 pertaining to PSUs was recorded in the
52-week period of 2007 (2006 - $0.4), $0.3 of which was recorded in the fourth
quarter (2006 - $0.2).

    8. Accumulated Other Comprehensive Income

    Derivatives designated as cash flow hedges constitute the sole item in
Accumulated Other Comprehensive Income. The changes that occurred during the
52-week period were as follows:

                                                          Fiscal Year
                                                     ----------
                                                          2007          2006
                                                     (52 weeks)    (53 weeks)
    -------------------------------------------------------------------------
    Adjusted opening balance due to the new
     accounting policies adopted regarding
     financial instruments (net of income taxes
     of $0.2) (note 2)                               $     0.4     $       -
    Change in fair value during the period (net
     of income taxes of $0.4)                              0.8             -
    -------------------------------------------------------------------------
    Balance - end of period                          $     1.2     $       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                     ----------


    9. Contingency

    In January 2007, the Company was named in a suit brought by beneficiaries
of a multiemployer pension plan. They claim that plan assets were mismanaged
and are seeking, among others, damages of $1 billion from the trustees and the
employers. The Company is one of the 443 employers affected by the suit and
did not participate in managing the plan. The Company forcefully contests the
suit's merits and considers that it will have no future financial obligation
relating to this recourse. The Company has recently received notice from
counsel for the beneficiaries who have brought this suit indicating that he
has received instructions from his client to discontinue the action against
the employers including the Company.

    10. Financial Instruments

    The financial instruments' book values and fair values were as follows:

                               ----------------------
                                  As at September 29,     As at September 30,
                                                2007                    2006
    -------------------------------------------------------------------------
                                    Book        Fair        Book        Fair
                                   value       value       value       value
    -------------------------------------------------------------------------
    Investments and other
     assets
      Available-for-sale
       financial assets
        Investments in
         companies             $     0.1   $     0.1   $     0.1   $     0.1
      Loans and receivables
        Loans to certain
         customers             $     9.1   $     9.1   $     8.6   $     8.6
      Derivatives designated
       as cash flow hedges
        Interest rate swaps    $     1.8   $     1.8   $       -   $     0.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Long-term debt
      Other financial
       liabilities
        Credit facility A      $   394.5   $   394.5   $   469.3   $   469.3
        Series A notes             200.0       186.2       200.0       199.8
        Series B notes             400.0       356.6       400.0       410.3
        Loans                       10.7        10.7        10.4        10.4
        Obligations under
         capital leases             38.8        50.2        44.2        53.7
    -------------------------------------------------------------------------
                               $ 1,044.0   $   998.2   $ 1,123.9   $ 1,143.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               ----------------------


    The fair value of cash and cash equivalents, accounts receivable, bank
loans and accounts payable approximates their carrying value because of the
short-term maturity of these instruments.
    The fair value of investments in companies, public companies for the most
part, is evaluated based on stock market prices at the balance sheet date.
    The fair value of loans to certain customers, credit facilities and loans
payable is equivalent to their carrying value since their interest rates are
comparable to market rates.
    The fair value of the derivative financial instruments generally reflects
the estimates of the amounts the Company would receive by way of settlement of
favourable contracts or that it would pay to terminate unfavourable contracts
at the balance sheet date. The fair values of the interest rate swaps are
calculated using the prices obtained from major financial institutions.
    The fair value of notes represents the obligations that the Company would
have to face in the event of the negotiation of similar notes under current
market conditions.
    The fair value of the obligations under capital leases represents the
obligations that the Company would have to face in the event of the
negotiation of similar leases under current market conditions.
    
    %SEDAR: 00001783EF




For further information:

For further information: Richard Dufresne, Senior Vice-President and
Chief Financial Officer, (514) 643-1003; Investor Relations Department: (514)
643-1055, finance@metro.ca; METRO INC.'s corporate information and press
releases are available on the Internet at the following address: www.metro.ca;
Source: METRO INC.


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