METRO posts record net earnings in the third quarter of 2009



    
    -------------------------------------------------------------------------
    2009 THIRD QUARTER HIGHLIGHTS

    - Net earnings of $112.6 million, up 22.5%
    - Fully diluted net earnings per share of $1.01, up 24.7%
    - Sales of $3,513.3 million, up 4.3%
    - Same store sales up 4.2%
    - Declared dividend of $0.1375 per share, up 10.0%
    -------------------------------------------------------------------------
    

    MONTREAL, August 6 /CNW Telbec/ - METRO INC. realized net earnings of
$112.6 million in its third quarter ended July 4, 2009, an increase of 22.5%
compared to $91.9 million in 2008, and fully diluted net earnings per share of
$1.01 compared to $0.81 for the same quarter last year, an increase of 24.7%.
Excluding non-recurring items recorded in the third quarter of 2009, adjusted
net earnings(1) were $111.8 million, up 21.7%, and adjusted fully diluted net
earnings per share(1) were $1.01, up 24.7% over last year.
    Adjusted net earnings(1) for the first 40 weeks of 2009 reached $273.1
million versus $208.3 million last year, up 31.1%. Adjusted fully diluted net
earnings per share(1) were $2.45, up 33.9% from $1.83 last year.
    2009 third quarter sales reached $3,513.3 million compared to $3,370.0
million last year, an increase of 4.3%. Excluding decreased sales due to the
non-renewal of a convenience store chain supply contract, 2009 third quarter
sales increased by 5.2%. Same store sales increased by 4.2%.
    "Building on the momentum of our first half of the year, we are very
pleased with our results for the third quarter of 2009 which prove that our
strategies are effective in the current economic environment. Our Ontario
supermarket conversion plan is on schedule with 128 of 159 stores converted to
the Metro banner as of July 24, 2009. We are confident that we are
well-positioned to continue to grow(2) our business in an always challenging
marketplace," stated Eric R. La Flèche, President and Chief Executive Officer.

    SALES

    2009 third quarter sales reached $3,513.3 million compared to $3,370.0
million last year, an increase of 4.3%. Excluding decreased sales due to the
non-renewal of a convenience store chain supply contract, 2009 third quarter
sales increased by 5.2%. Same store sales increased by 4.2%.
    Sales for the first 40 weeks of 2009 reached $8,663.5 million, up 5.0%
compared to sales of $8,249.2 million for the corresponding period of fiscal
2008. Excluding decreased sales due to the non-renewal of a convenience store
chain supply contract, sales increased by 5.9%.

    
    EARNINGS BEFORE FINANCIAL COSTS, TAXES, DEPRECIATION AND AMORTIZATION
    (EBITDA)(1)
    

    Third quarter EBITDA(1) in 2009 was $233.0 million, up 13.1% from $206.0
million for the same quarter last year. Third quarter EBITDA(1) represented
6.6% of sales versus 6.1% last year. Excluding banner conversion costs of $2.9
million recorded in 2009, adjusted third quarter EBITDA(1) represented 6.7% of
sales. This increase is due mainly to an increase in our gross margin driven
by our efforts to improve our operations in Ontario.
    EBITDA(1) for the first 40 weeks of 2009 was $565.8 million or 6.5% of
sales compared to $478.3 million or 5.8% of sales for the same period last
year. Excluding banner conversion costs of $8.7 million recorded for the first
40 weeks of 2009, adjusted EBITDA(1) represented 6.6% of sales. The higher
2009 EBITDA(1) as a percentage of sales compared to that for the corresponding
period of 2008 can be explained largely by the difficulties we experienced in
the first two quarters of 2008, namely intense competition in Ontario, issues
associated with our new information systems in Ontario and our new Food
Services warehouse in Québec, which we overcame in the third and fourth
quarters of 2008.
    In the first quarter of 2009, we retrospectively applied a new accounting
standard issued by the Canadian Institute of Chartered Accountants (CICA),
Section 3031 "Inventories", by restating prior periods' financial statements.
Unlike the two first quarters of 2009 where changes in inventory levels
between the beginning and the end of each quarter had affected EBITDA(1), the
new standard's application had no material effect in the third quarter. The
high level of inventory at the end of the first quarter, because of the
Holidays, raised first quarter EBITDA(1). As level of inventories decreased in
the second quarter, EBITDA(1) was affected negatively. As fourth quarter
inventory variations should not(2) be material, there should not(2) be any
material effect on either fourth quarter or overall fiscal 2009 EBITDA(1).
    Our share of earnings from an investment in Alimentation Couche-Tard for
the third quarter and the first 40 weeks of 2009 were $5.2 million and $25.7
million respectively, versus $1.7 million and $12.6 million for the
corresponding periods of fiscal 2008. Excluding non-recurring items as well as
our share of earnings from our investment in Alimentation Couche-Tard, our
adjusted EBITDA(1) for the third quarter and the first 40 weeks of 2009 were
$230.7 million and $548.8 million respectively or 6.6% and 6.3% of sales
versus $204.3 million or 6.1% of sales for the third quarter of 2008 and
$465.7 million or 5.6% of sales for the 40-week period.

    
    EBITDA(1) Adjustments
                                       16 weeks / Fiscal Year
                                  2009                       2008
                      -------------------------------------------------------
    (Millions of
     dollars, unless     EBITDA    Sales   EBITDA/  EBITDA    Sales   EBITDA/
     otherwise                              Sales                      Sales
     indicated)                                (%)                        (%)
    -------------------------------------------------------------------------
    EBITDA                233.0  3,513.3      6.6    206.0  3,370.0      6.1
    Banner conversion
     costs                  2.9        -                 -        -
    -------------------------------------------------------------------------
    Adjusted EBITDA       235.9  3,513.3      6.7    206.0  3,370.0      6.1
    Share of earnings
     from our investment
     in Alimentation
     Couche-Tard           (5.2)       -              (1.7)       -
    -------------------------------------------------------------------------
    Adjusted EBITDA
     excluding share
     of earnings          230.7  3,513.3      6.6    204.3  3,370.0      6.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                       40 weeks / Fiscal Year
                                  2009                       2008
                      -------------------------------------------------------
    (Millions of
     dollars, unless     EBITDA    Sales   EBITDA/  EBITDA    Sales   EBITDA/
     otherwise                              Sales                      Sales
     indicated)                                (%)                        (%)
    -------------------------------------------------------------------------
    EBITDA                565.8  8,663.5      6.5    478.3  8,249.2      5.8
    Banner conversion
     costs                  8.7        -                 -        -
    -------------------------------------------------------------------------
    Adjusted EBITDA       574.5  8,663.5      6.6    478.3  8,249.2      5.8
    Share of earnings
     from our investment
     in Alimentation
     Couche-Tard          (25.7)       -             (12.6)       -
    -------------------------------------------------------------------------
    Adjusted EBITDA
     excluding share
     of earnings          548.8  8,663.5      6.3    465.7  8,249.2      5.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    DEPRECIATION AND AMORTIZATION AND FINANCIAL COSTS

    Total depreciation and amortization expenses for the third quarter and
the first 40 weeks of fiscal 2009 amounted to $58.6 million and $142.8 million
respectively, compared with $55.2 million and $134.9 million for the same
periods last year. Third quarter financial costs totalled $14.6 million in
2009 versus $17.5 million last year, while financial costs for the 40-week
period totalled $37.9 million in 2009 versus $46.0 million last year. Interest
rates for the first 40 weeks of 2009 averaged 4.6% versus 5.3% for the
corresponding period last year.

    INCOME TAXES

    The 2009 third quarter and 40-week income tax expenses of $47.2 million
and $115.1 million represented effective tax rates of 29.5% and 29.9%
respectively. On May 17, 2009, an approval milestone was met with regards to
the Québec government's 2007-2008 budget provision to cut the tax rate on
investment income from 16.25% to 11.9%, i.e. the same rate as for business
income. This change in tax rate reduces our future income tax liabilities by
$2.7 million and our 2009 third quarter income tax expenses by the same
amount. Excluding this reduction, our effective 2009 third quarter and 40-week
tax rates were 31.2% and 30.6% respectively. In 2008, third quarter and
40-week income tax expenses were $41.4 million and $79.6 million respectively
and the tax rates were 31.1% and 26.8% respectively. In the first quarter of
2008, we benefited from an income tax expense decrease of $11.4 million.
Excluding this decrease, the effective tax rate for the 2008 40-week period
was 30.6%.
    In the 2009 budget speech on March 26, 2009, the Ontario government
announced successive future decreases in the corporate tax rate from the
current rate of 14% to 10% between July 1, 2010 and July 1, 2013. The
parliament was adjourned until September 14 before the measure could be
approved in first reading. When this milestone is met, we shall reduce(2) both
our future income tax liabilities and income tax expenses. This amount will
be(2) $7.2 million if the milestone is completed before the end of our 2009
fiscal year.

    NET EARNINGS

    The 2009 third quarter net earnings were $112.6 million compared to $91.9
million for the corresponding quarter last year, an increase of 22.5%. Fully
diluted net earnings per share rose 24.7% to $1.01 from $0.81 last year.
Excluding non-recurring items recorded in the third quarter of 2009, namely
$2.9 million before taxes to convert our Ontario supermarkets to the Metro
banner as well as a tax expense decrease of $2.7 million, our adjusted net
earnings(1) were $111.8 million, a 21.7% increase over fiscal 2008.
    Net earnings for the first 40 weeks of 2009 reached $270.0 million versus
$219.7 million last year, up 22.9%. Excluding the income tax expense decreases
of $2.7 million in 2009 and $11.4 million in 2008 as well as banner conversion
costs of $8.7 million before taxes in 2009, adjusted net earnings(1) for the
2009 40-week period were $273.1 million, up 31.1% from the $208.3 million for
the corresponding period of 2008. Adjusted fully diluted net earnings per
share(1) were $2.45, up 33.9% from $1.83 last year.

    
    Net Earnings Adjustments
                                       16 weeks / Fiscal Year
                          2009               2008               Change (%)
    -------------------------------------------------------------------------
                 (Millions     Fully (Millions     Fully       Net     Fully
                        of   diluted        of   diluted  earnings   diluted
                   dollars)      EPS   dollars)      EPS                 EPS
                            (Dollars)           (Dollars)
    -------------------------------------------------------------------------
    Net earnings     112.6      1.01      91.9      0.81      22.5      24.7
    Banner
     conversion
     costs after
     taxes             1.9      0.02         -         -
    Decrease in
     tax expense      (2.7)    (0.02)        -         -
    -------------------------------------------------------------------------
    Adjusted net
     earnings(1)     111.8      1.01      91.9      0.81      21.7      24.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                       40 weeks / Fiscal Year
                          2009               2008               Change (%)
    -------------------------------------------------------------------------
                 (Millions     Fully (Millions     Fully       Net     Fully
                        of   diluted        of   diluted  earnings   diluted
                   dollars)      EPS   dollars)      EPS                 EPS
                            (Dollars)           (Dollars)
    -------------------------------------------------------------------------
    Net earnings     270.0      2.42     219.7      1.93      22.9      25.4
    Banner
     conversion
     costs after
     taxes             5.8      0.05         -         -
    Decrease in
     tax expense      (2.7)    (0.02)    (11.4)    (0.10)
    -------------------------------------------------------------------------
    Adjusted net
     earnings(1)     273.1      2.45     208.3      1.83      31.1      33.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Quarterly Highlights
    (Millions of dollars,                 2009      2008      2007    Change
     unless otherwise indicated)                                          (%)
    -------------------------------------------------------------------------
    Sales
      Q3                               3,513.3   3,370.0         -       4.3
      Q2                               2,549.7   2,372.4         -       7.5
      Q1                               2,600.5   2,506.8         -       3.7
      Q4                                     -   2,476.0   2,432.4       1.8
    -------------------------------------------------------------------------
    Net earnings
      Q3                                 112.6      91.9         -      22.5
      Q2                                  76.3      54.0         -      41.3
      Q1                                  81.1      73.8         -       9.9
      Q4                                     -      72.5      58.4      24.1
    -------------------------------------------------------------------------
    Adjusted net earnings(1)
      Q3                                 111.8      91.9         -      21.7
      Q2                                  77.2      54.0         -      43.0
      Q1                                  84.1      62.4         -      34.8
      Q4                                     -      72.5      67.6       7.2
    -------------------------------------------------------------------------
    Fully diluted net earnings per
     share (Dollars)
      Q3                                  1.01      0.81         -      24.7
      Q2                                  0.68      0.48         -      41.7
      Q1                                  0.73      0.64         -      14.1
      Q4                                     -      0.65      0.50      30.0
    -------------------------------------------------------------------------
    Adjusted fully diluted net earnings
     per share(1) (Dollars)
      Q3                                  1.01      0.81         -      24.7
      Q2                                  0.68      0.48         -      41.7
      Q1                                  0.76      0.54         -      40.7
      Q4                                     -      0.65      0.58      12.1
    -------------------------------------------------------------------------
    

    First, second and third quarter sales for 2009 were up 3.7%, 7.5% and
4.3% respectively over those for 2008. Excluding decreased sales due to the
non-renewal of a convenience store chain supply contract, 2009 first quarter
sales were up 4.7%; second quarter sales were up 8.3%; and third quarter sales
were up 5.2%.
    Sales in the fourth quarter of 2008 versus those for the corresponding
quarter of 2007 were affected by increased competition in Ontario and
decreased sales of tobacco products. Excluding the decreased sales of tobacco
products, 2008 fourth quarter sales were up 2.1% over 2007.
    First quarter net earnings and fully diluted net earnings per share for
2009 were up 9.9% and 14.1% respectively over those for 2008. Excluding 2009
first quarter banner conversion costs of $4.5 million before taxes and the
income tax expense decrease of $11.4 million in 2008 as a result of future
federal income tax rate decreases, 2009 first quarter adjusted net earnings(1)
and adjusted fully diluted net earnings per share(1) were up 34.8% and 40.7%
respectively.
    Second quarter net earnings and fully diluted net earnings per share for
2009 were up 41.3% and 41.7% respectively from 2008. Excluding non-recurring
costs of $1.3 million before taxes recorded in the second quarter of 2009,
adjusted net earnings(1) for the second quarter of 2009 were up 43.0%.
    The difficulties encountered in the first two quarters of 2008 stemming
from a more intensely competitive environment in Ontario and issues associated
with our new information systems in Ontario and our new Food Services
warehouse in Québec were resolved in the third and fourth quarters of 2008.
    Third quarter net earnings and fully diluted net earnings per share in
2009 were up 22.5% and 24.7% respectively from 2008. Excluding non-recurring
items recorded in the third quarter of 2009, namely $2.9 million before taxes
to convert our Ontario supermarkets to the Metro banner as well as an income
tax expense decrease of $2.7 million, adjusted net earnings(1) and adjusted
fully diluted net earnings per share(1) for the third quarter of 2009 were up
21.7% and 24.7% respectively, compared to adjusted net earnings(1) and
adjusted fully diluted net earnings per share(1) for the third quarter of
2008. Effective merchandising allowed us to record sales growth and our
ongoing efforts to improve execution, particularly in Ontario, allowed us to
increase our gross margins.
    Fourth quarter net earnings and fully diluted net earnings per share in
2008 were up 24.1% and 30.0% respectively over those for 2007. Excluding A&P
acquisition-related integration and rationalization costs before taxes of
$14.1 million in the fourth quarter of 2007, adjusted net earnings(1) and
adjusted fully diluted net earnings per share(1) for the fourth quarter of
2008 were up 7.2% and 12.1% over adjusted net earnings(1) and adjusted fully
diluted net earnings per share(1) for the fourth quarter of 2007. Our return
to earnings growth in the third quarter of 2008 continued in the fourth
quarter.

    
                                    2009                 2008           2007
                            -------------------------------------------------
    (Millions of dollars)       Q1    Q2    Q3    Q1    Q2    Q3    Q4    Q4
    -------------------------------------------------------------------------
    Net earnings              81.1  76.3 112.6  73.8  54.0  91.9  72.5  58.4
    Integration and
     rationalization costs
     after taxes                 -     -     -     -     -     -     -   9.2
    Banner conversion costs
     after taxes               3.0   0.9   1.9     -     -     -     -     -
    Decrease in tax expense      -     -  (2.7)(11.4)    -     -     -     -
    -------------------------------------------------------------------------
    Adjusted net earnings(1)  84.1  77.2 111.8  62.4  54.0  91.9  72.5  67.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                    2009                 2008           2007
                            -------------------------------------------------
    (Dollars and per share)     Q1    Q2    Q3    Q1    Q2    Q3    Q4    Q4
    -------------------------------------------------------------------------
    Fully diluted net
     earnings                 0.73  0.68  1.01  0.64  0.48  0.81  0.65  0.50
    Integration and
     rationalization costs
     after taxes                 -     -     -     -     -     -     -  0.08
    Banner conversion costs
     after taxes              0.03     -  0.02     -     -     -     -     -
    Decrease in tax expense      -     - (0.02)(0.10)    -     -     -     -
    -------------------------------------------------------------------------
    Adjusted fully diluted
     net earnings(1)          0.76  0.68  1.01  0.54  0.48  0.81  0.65  0.58
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Cash Position

    OPERATING ACTIVITIES

    Operating activities generated cash flows of $115.2 million in the third
quarter and $289.3 million over the first 40 weeks of 2009, compared to $143.2
million and $264.7 million respectively in the corresponding periods of fiscal
2008. The decrease in third quarter cash flows in 2009 compared to 2008 is due
mainly to a net change in non-cash items. The increase in 40-week period cash
flows compared to those for 2008 is due mainly to an increase in net earnings
and a net change in non-cash items.

    INVESTING ACTIVITIES

    Investing activities required outflows of $73.7 million in the third
quarter and $164.0 million in the first 40 weeks of 2009 versus $39.6 million
in the third quarter and $115.9 million in the first 40 weeks of 2008. These
increases are due primarily to greater acquisition of fixed assets.
    During the first 40 weeks of 2009, the Company and the retailers invested
$275.5 million in our retail network, for a gross expansion of 410,700 square
feet and a net expansion of 206,800 square feet or 1.1%. Major renovations and
expansions of 23 stores were completed, and 10 new stores were opened.

    FINANCING ACTIVITIES

    Financing activities required outflows of $86.0 million and $112.9
million in the third quarter and 40-week period of 2009 versus 2008 third
quarter and 40-week outflows of $44.7 million and $124.6 million. The increase
in third quarter outflows in 2009 over 2008 is largely attributable to the
greater redemption of shares in the amount of $76.1 million in 2009 versus
$29.0 million in 2008. The decrease in 40-week period outflows between 2009
and 2008 is largely attributable to the issuance of shares for $43.5 million
in 2009 versus $3.6 million in 2008.

    Financial Position

    Despite the difficult economic environment, we do not anticipate(2) any
liquidity risk and consider that our financial position at the end of the
third quarter of 2009 remains very solid. We had $164.1 million in cash and
cash equivalents and an unused authorized revolving line of credit of $400.0
million. Our long-term debt corresponded to 31.1% of the combined total of
long-term debt and shareholders' equity (long-term debt/total capital).

    
    At the end of the third quarter, the main elements of our long-term debt
    were as follows:

                        Interest Rate          Balance      Maturity
                                              (Millions
                                               of dollars)
    ------------------------------------------------------------------------
    Credit A Facility   Rates fluctuate with   369.3        August 15, 2012
                         changes in bankers'
                         acceptance rates
    Series A Notes      4.98% fixed rate       200.0        October 15, 2015
    Series B Notes      5.97% fixed rate       400.0        October 15, 2035
    -------------------------------------------------------------------------

    At the end of the quarter, interest rate swap agreements in the notional
amount of $100.0 million were outstanding under our Credit A Facility. These
agreements provide for the exchange of variable interest payments for fixed
interest payments according to the following terms:

    Fixed Rates              Notional Amount         Maturity
                            (Millions of dollars)
    -------------------------------------------------------------------------
    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 $700.0 million at fixed rates ranging from
4.482% to 5.97% and $269.3 million at variable rates which fluctuate with
changes in bankers' acceptance rates.


    FINANCIAL RATIOS
                                                  As at July 4,        As at
                                                          2009  September 27,
                                                                        2008
    -------------------------------------------------------------------------
    Financial structure
      Long-term debt (Millions of dollars)             1,006.8       1,005.0
      Shareholders' equity (Millions of dollars)       2,235.7       2,068.3
      Long-term debt/total capital (%)                    31.1          32.7


                                                   Fiscal 2009   Fiscal 2008
                                                     (40 weeks)    (40 weeks)
                                                 ----------------------------
    Results
      EBITDA(1)/Financial costs (Times)                   14.9          10.4
    -------------------------------------------------------------------------

    CAPITAL STOCK, STOCK OPTIONS AND PERFORMANCE SHARE UNITS

                                                  As at July 4,        As at
                                                          2009  September 27,
                                                                        2008
    -------------------------------------------------------------------------
    Number of Class A Subordinate Shares
     outstanding (Thousands)                           109,006       109,806
    Number of Class B Shares outstanding (Thousands)       728           750
    Stock options:
      Number outstanding (Thousands)                     1,806         3,534
      Exercise price (Dollars)                           17.23         17.01
                                                      to 39.17      to 39.17
      Weighted average exercise price (Dollars)          28.10         23.63
    Performance share units:
      Number outstanding (Thousands)                       231           210
      Weighted average maturity (Months)                    19            18
    -------------------------------------------------------------------------
    

    NORMAL COURSE ISSUER BID PROGRAM

    The Company decided to renew the issuer bid program as 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 Company
shares. Subject to regulatory approval, the Board of Directors authorized the
Company to repurchase, in the normal course of business, between September 8,
2009 and September 7, 2010, up to 6,000,000 of its Class A Subordinate Shares
representing approximately 5.5% of its issued and outstanding shares at the
close of the Toronto Stock Exchange on August 5, 2009. Repurchases will be
made through the stock exchange at market price and in accordance with its
policies and regulations. The Class A Subordinate Shares so repurchased will
be cancelled. Under the existing normal course issuer bid program covering the
period from September 5, 2008 to July 24, 2009, the Company repurchased
4,143,600 Class A Subordinate shares at an average price of $34.53 per share
for a total of $143.1 million.

    DIVIDENDS

    On August 5, 2009, the Company's Board of Directors declared a quarterly
dividend of $0.1375 per Class A Subordinate Share and Class B Share payable
September 4, 2009, an increase of 10.0% over the dividend for the same quarter
last year. On an annualized basis, this dividend represents more than 20% of
2008 net earnings.

    SHARE TRADING

    The value of METRO INC. shares remained in the range of $27.38 to $40.00
over the first three quarters of fiscal 2009. During this period, a total of
95.9 million shares were traded on the Toronto Stock Exchange. The closing
price on Friday, July 24, 2009 was $34.75, compared to $31.77 at the end of
fiscal 2008.

    
    New Accounting Policies

    ADOPTED IN 2009

    Inventories
    

    In the first quarter of 2009, the Company adopted Section 3031
"Inventories". Under this new standard, inventories shall be measured at the
lower of cost and net realizable value and the retail method may be used if it
is close to cost. Furthermore, all costs incurred in bringing the inventories
to their present location and condition shall be included in the cost of
inventories. Other costs shall be recognized as expenses in the period in
which they are incurred.
    The Company measures its wholesale inventories at the lower of cost,
determined by the average cost method net of certain considerations received
from vendors, and net realizable value. Retail inventories are valued at the
retail price less the gross margin and certain considerations received from
vendors. Following this new section's adoption, the Company has included
certain costs in its cost of inventories, such as receiving and shelving costs
and also costs for products transformed in store. Warehousing costs are
recognized as operating expenses.
    The new Section 3031 was applied retrospectively with restatement of
prior periods' financial statements.
    The adjustments are explained in note 2 to the consolidated financial
statements included in this press release.

    Goodwill and Intangible Assets

    In the first quarter of 2009, the Company adopted Section 3064 "Goodwill
and Other Intangible Assets". The new section states that upon their initial
identification, intangible assets are to be recognized as assets only if they
meet the definition of an intangible asset and the recognition criteria. As
for subsequent measurement of intangible assets, goodwill and disclosure,
Section 3064 carries forward the requirements of the old Section 3062
"Goodwill and Other Intangible Assets". The adoption of these guidelines did
not have any material effect on the Company's results, financial position or
cash flows.
    Credit Risk and the Fair Value of Financial Assets and Financial
Liabilities
    In the second quarter of 2009, the Company adopted EIC-173 "Credit Risk
and the Fair Value of Financial Assets and Financial Liabilities". Under this
new standard, an entity's own credit risk and the credit risk of the
counterparty should be taken into account in determining the fair value of
financial assets and financial liabilities, including derivative instruments.
The adoption of these guidelines did not have any material effect on the
Company's results, financial position or cash flows.

    RECENTLY ISSUED

    International Financial Reporting Standards

    On February 13, 2008, the Accounting Standards Board confirmed the date
of the changeover from GAAP to International Financial Reporting Standards
(IFRS). Canadian publicly accountable enterprises must adopt IFRS for their
interim and annual financial statements relating to fiscal years beginning on
or after January 1, 2011. The Company's IFRS changeover date will be the first
day of fiscal 2012, namely September 25, 2011.
    We set up a project structure to achieve the changeover of our
consolidated financial statements to IFRS. A multidisciplinary working group
analyzes, recommends accounting policy choices and implements each IFRS
standard. A steering committee made up of senior executives approves
accounting policy choices and makes sure that IT, internal control,
contractual and any other adjustments are made. The external auditors are
notified of our choices and consulted on them. The Company's Audit Committee
ensures that management fulfills its responsibilities and successfully
accomplishes the changeover to IFRS.


    We also developed a work plan whose phases are outlined in the following
tables, with actions, timetable and progress.


    
    Phase 1: Preliminary Study and Diagnostic
    -------------------------------------------------------------------------
    Actions      Identification of the IFRS standards that will require
                 changes with regard to measurement in consolidated financial
                 statements and disclosure. Rank of standards based on their
                 anticipated impact on our consolidated financial statements
                 and the efforts their implementation requires.
    -------------------------------------------------------------------------
    Timetable    End of our 2008 fiscal year.
    -------------------------------------------------------------------------
    Progress     Completed.
    -------------------------------------------------------------------------


    Phase 2: Analysis of Standards
    -------------------------------------------------------------------------
    Actions      Analysis of the differences between GAAP and IFRS.
                 Selection of the accounting policies that the Company will
                 apply on an ongoing basis.
                 Company's selection of IFRS 1 exemptions at the date of
                 transition.
                 Calculation of the quantitative impacts on the consolidated
                 financial statements.
                 Disclosure analysis.
                 Preparation of draft consolidated financial statements and
                 notes.
                 Identification of the collateral impacts in the following
                 areas:
                 - information technology;
                 - internal control over financial reporting;
                 - disclosure controls and procedures;
                 - contracts;
                 - compensation;
                 - taxation;
                 - training.
    -------------------------------------------------------------------------
    Timetable    We have prepared a detailed timetable which contemplates the
                 bulk of the analysis that will be completed by the end of
                 September 2010. We prioritized standards, based on their
                 ranking in the diagnostic, the time needed to complete the
                 analysis and implementation, working group members'
                 availability, as well as the timing of discussion papers,
                 exposure drafts and new standards to be issued by the
                 International Accounting Standards Board (IASB).
    -------------------------------------------------------------------------
    Progress     At the end of the third quarter of fiscal 2009, we began the
                 analysis of 17 IFRS standards and interpretations out of a
                 total of approximately 50 that may have an impact on our
                 Company.
    -------------------------------------------------------------------------


    Phase 3: Implementation
    -------------------------------------------------------------------------
    Actions      Preparation of the opening balance sheet at the date of
                 transition. Compilation of the comparative financial data.
                 Production of the interim consolidated financial statements
                 and the associated disclosure. Production of the annual
                 consolidated financial statements and the associated
                 disclosure. Implementation of changes regarding collateral
                 impacts.
    -------------------------------------------------------------------------
    Timetable    At the end of fiscal 2011, our opening balance sheet,
                 comparative financial data under IFRS and changes regarding
                 collateral impacts will be completed. In fiscal 2012, we
                 will produce our interim and annual consolidated financial
                 statements and disclosure in accordance with IFRS.
    -------------------------------------------------------------------------
    Progress     Not yet commenced.
    -------------------------------------------------------------------------
    

    Throughout our IFRS transition project, we will provide update reports on
our work plan. We will also explain the main differences between our existing
accounting policies and those we will be implementing under IFRS (both
narrative and quantitative information), as well as our selection of IFRS 1
exemptions available at the date of transition.

    Financial Instruments

    In June 2009, the CICA issued amendments to Section 3862 "Financial
Instruments - Disclosures" adding enhanced disclosure requirements about fair
value measurements and liquidity risk of financial instruments for publicly
accountable enterprises. The amendments will be effective for annual financial
statements relating to fiscal years ending after September 30, 2009 and will
have no effect on results, financial position or cash flows. The Company does
not foresee(2) that these amendments' adoption in its annual financial
statements will have a material effect on its disclosures.

    Press Release

    This press release sets out the financial position and consolidated
results of METRO INC. on July 4, 2009. It should be read in conjunction with
the unaudited interim consolidated financial statements and accompanying notes
in this press release along with the consolidated financial statements for the
fiscal year ended September 27, 2008 and related notes and MD&A presented in
the Company's 2008 Annual Report. Certain comparative figures in this press
release have been restated as a consequence of the new accounting standard on
inventories which the Company adopted in the first quarter of 2009. This press
release is based upon information as at July 24, 2009 unless otherwise stated.
Additional information, including the Certification of Interim Filings letters
for the quarter ended July 4, 2009 signed by the President and Chief Executive
Officer and the Senior Vice-President and Chief Financial Officer, is also
available on the SEDAR website at: www.sedar.com.

    Forward-looking Information

    We have used, throughout this press release, different statements that
could, within the context of regulations issued by the Canadian Securities
Administrators, be construed as being forward-looking information. In general,
any statement contained herein, which does not constitute a historical fact,
may be deemed a forward-looking statement. Expressions such as "to grow",
"should not", "do not anticipate", "foresee", "shall reduce", "will be" and
other similar expressions are generally indicative of forward-looking
statements. The forward-looking statements contained herein are based upon
certain assumptions regarding the Canadian food industry, the general economy,
our annual budget as well as our 2009 action plan.
    These forward-looking statements do not provide any guarantees as to the
future performance of the Company and are subject to potential risks, known
and unknown, as well as uncertainties that could cause the outcome to differ
significantly. An economic slowdown or recession or the arrival of a new
competitor are examples described under the "Risk Management" section of the
2008 Annual Report which could have an impact on these statements. We believe
these statements to be reasonable and pertinent as at the time of publication
of this interim report and represent our expectations. The Company does not
intend to update any forward-looking statements contained herein, except as
required by applicable law.

    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 GAAP and
therefore may not be comparable to similar measurements presented by other
public companies.

    
    Earnings before financial costs, taxes, depreciation and amortization
    (EBITDA)
    

    EBITDA is a measurement of earnings that excludes financial costs, 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.

    
    Adjusted EBITDA, adjusted net earnings and adjusted fully diluted net
    earnings per share
    

    Adjusted EBITDA, 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.

    Conference Call

    Financial analysts and institutional investors are invited to participate
in a conference call on the 2009 third quarter results at 9:30 a.m. EDT on
Thursday, August 6, 2009. To access the conference call, please dial (416)
644-3427 or (514) 807-8791. The media and investing 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 "Forward-looking information"


    Consolidated Statements of Earnings
    Periods ended July 4, 2009 and July 5, 2008
    (Unaudited) (Millions of dollars, except for net earnings per share)

                                      16 weeks                40 weeks
                                     Fiscal Year             Fiscal Year

                                    2009        2008        2009        2008
                                           (Restated               (Restated
                                            - note 2)               - note 2)
    -------------------------------------------------------------------------
    Sales                     $  3,513.3  $  3,370.0  $  8,663.5  $  8,249.2
    Cost of sales and
     operating expenses
     (note 8)                   (3,282.6)   (3,165.7)   (8,114.7)   (7,783.5)
    Share of earnings in a
     public company subject
     to significant influence        5.2         1.7        25.7        12.6
    Banner conversion costs
     (note 3)                       (2.9)          -        (8.7)          -
    -------------------------------------------------------------------------
    Earnings before financial
     costs, taxes, depreciation
     and amortization              233.0       206.0       565.8       478.3
    Depreciation and amortization  (58.6)      (55.2)     (142.8)     (134.9)
    -------------------------------------------------------------------------
    Operating income               174.4       150.8       423.0       343.4
    Financial costs, net (note 5)  (14.6)      (17.5)      (37.9)      (46.0)
    -------------------------------------------------------------------------
    Earnings before income taxes   159.8       133.3       385.1       297.4
    Income taxes (note 6)          (47.2)      (41.4)     (115.1)      (79.6)
    -------------------------------------------------------------------------
    Earnings before minority
     interest                      112.6        91.9       270.0       217.8
    Minority interest                  -           -           -         1.9
    -------------------------------------------------------------------------
    Net earnings              $    112.6  $     91.9  $    270.0  $    219.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share (Dollars) (note 7)
    Basic                           1.02        0.81        2.44        1.94
    Fully diluted                   1.01        0.81        2.42        1.93
    -------------------------------------------------------------------------
    See accompanying notes


    Consolidated Balance Sheets
    (Unaudited) (Millions of dollars)
                                                    As at July 4,      As at
                                                           2009    September
                                                                    27, 2008
                                                                   (Restated
                                                                    - note 2)
    -------------------------------------------------------------------------
    ASSETS
    Current assets
    Cash and cash equivalents                         $    164.1  $    151.7
    Accounts receivable                                    334.9       309.7
    Inventories (note 8)                                   648.8       641.6
    Prepaid expenses                                        17.8         7.6
    Income taxes receivable                                  2.4        25.0
    Future income taxes                                     21.9        38.4
    -------------------------------------------------------------------------
                                                         1,189.9     1,174.0
    Investments and other assets                           189.9       169.1
    Fixed assets                                         1,244.4     1,231.9
    Intangible assets                                      327.4       328.6
    Goodwill                                             1,478.6     1,478.6
    Future income taxes                                      2.7         2.7
    Accrued benefit assets                                  49.4        40.7
    -------------------------------------------------------------------------
                                                      $  4,482.3  $  4,425.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
    Bank loans                                        $      1.4  $      0.9
    Accounts payable                                       965.9     1,062.7
    Income taxes payable                                    33.6        50.9
    Future income taxes                                      6.0         6.0
    Current portion of long-term debt                        4.6         6.3
    -------------------------------------------------------------------------
                                                         1,011.5     1,126.8
    Long-term debt                                       1,006.8     1,005.0
    Accrued benefit obligations                             49.9        50.7
    Future income taxes                                    146.9       140.8
    Other long-term liabilities                             31.5        34.0
    -------------------------------------------------------------------------
                                                         2,246.6     2,357.3
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock (note 9)                                 724.2       697.6
    Contributed surplus (note 10)                            2.6         4.9
    Retained earnings                                    1,511.5     1,366.8
    Accumulated other comprehensive income (note 11)        (2.6)       (1.0)
    -------------------------------------------------------------------------
                                                         2,235.7     2,068.3
    -------------------------------------------------------------------------
                                                      $  4,482.3  $  4,425.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes


    Consolidated Statements of Cash Flows
    Periods ended July 4, 2009 and July 5, 2008
    (Unaudited) (Millions of dollars)

                                      16 weeks                40 weeks
                                     Fiscal Year             Fiscal Year

                                    2009        2008        2009        2008
                                           (Restated               (Restated
                                            - note 2)               - note 2)
    -------------------------------------------------------------------------
    Operating activities
    Net earnings              $    112.6  $     91.9  $    270.0  $    219.7
    Non-cash items
      Share of earnings in a
       public company subject
       to significant influence     (5.2)       (1.7)      (25.7)      (12.6)
      Depreciation and
       amortization                 58.6        55.2       142.8       134.9
      Amortization of deferred
       financing costs               0.6         0.6         1.6         1.6
      Loss (gain) on disposal and
       write-off of fixed and
       intangible assets             0.9        (0.4)        0.3        (1.6)
      Gain on disposal of
       investments                  (0.1)          -        (0.1)       (0.6)
      Interest income on
       investments                     -           -        (0.2)          -
      Future income taxes           11.6         3.1        23.2        (4.9)
      Stock-based compensation
       cost                          1.7         1.2         3.8         2.7
      Difference between amounts
       paid for employee future
       benefits over current
       period cost                  (0.8)        5.1        (9.5)        0.9
      Minority interest                -           -           -        (1.9)
    -------------------------------------------------------------------------
                                   179.9       155.0       406.2       338.2
    Net change in non-cash
     working capital related to
     operations                    (64.7)      (11.8)     (116.9)      (73.5)
    -------------------------------------------------------------------------
                                   115.2       143.2       289.3       264.7
    -------------------------------------------------------------------------

    Investing activities
    Net change in investments
     and other assets                3.5        (7.0)        0.8        (6.0)
    Dividends from public
     company subject to
     significant influence           0.7         0.7         2.2         2.2
    Acquisition of fixed assets    (63.8)      (35.3)     (152.9)      (99.2)
    Disposal of fixed assets         0.9         9.4        12.7        15.8
    Acquisition of intangible
     assets                        (15.0)       (7.4)      (26.8)      (28.7)
    -------------------------------------------------------------------------
                                   (73.7)      (39.6)     (164.0)     (115.9)
    -------------------------------------------------------------------------

    Financing activities
    Net change in bank loans         0.3         0.4         0.5         0.5
    Issuance of shares (note 9)      7.3         1.7        43.5         3.6
    Redemption of shares (note 9)  (76.1)      (29.0)      (99.2)      (80.3)
    Acquisition of treasury
     shares (note 9)                   -           -        (4.3)       (0.9)
    Performance share units cash
     settlement (note 10)           (0.5)          -        (0.5)          -
    Increase of long-term debt       0.6         0.5         4.4         1.6
    Repayment of long-term debt     (2.6)       (1.7)       (8.3)       (4.7)
    Net change in other long-term
     liabilities                     0.2        (1.3)       (4.7)       (1.8)
    Dividends paid                 (15.2)      (14.1)      (44.3)      (41.4)
    Settlement and distribution
     to minority interest              -        (1.2)          -        (1.2)
    -------------------------------------------------------------------------
                                   (86.0)      (44.7)     (112.9)     (124.6)
    -------------------------------------------------------------------------

    Net change in cash and cash
     equivalents                   (44.5)       58.9        12.4        24.2
    Cash and cash equivalents -
     beginning of period           208.6        65.8       151.7       100.5
    Cash and cash equivalents -
     end of period            $    164.1  $    124.7  $    164.1  $    124.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other information
    Interest paid                   21.5        22.4        44.8        52.8
    Income taxes paid               33.9        38.8        86.8       101.6
    -------------------------------------------------------------------------
    See accompanying notes


    Consolidated Statements of Retained Earnings
    40-week periods ended July 4, 2009 and July 5, 2008
    (Unaudited) (Millions of dollars)
                                                             Fiscal Year

                                                            2009        2008
                                                                   (Restated
                                                                    - note 2)
    -------------------------------------------------------------------------
    Balance - beginning of period                     $  1,359.6  $  1,214.3
    Adjustment due to a new accounting policy related
     to inventories (note 2)                                 7.2         7.7
    -------------------------------------------------------------------------
    Restated balance                                     1,366.8     1,222.0
    Net earnings                                           270.0       219.7
    Dividends                                              (44.3)      (41.4)
    Share redemption premium (note 9)                      (81.0)      (60.8)
    -------------------------------------------------------------------------
    Balance - end of period                           $  1,511.5  $  1,339.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes


    Consolidated Statements of Comprehensive Income
    Periods ended July 4, 2009 and July 5, 2008
    (Unaudited) (Millions of dollars)

                                      16 weeks                40 weeks
                                     Fiscal Year             Fiscal Year

                                    2009        2008        2009        2008
                                           (Restated               (Restated
                                            - note 2)               - note 2)
    -------------------------------------------------------------------------
    Net earnings              $    112.6  $     91.9  $    270.0  $    219.7
    Other comprehensive
     income (note 11)
      Change in fair value
       of derivatives designated
       as cash flow hedges           0.9         0.6        (2.2)       (3.0)
      Corresponding income
       taxes                        (0.3)       (0.2)        0.6         1.0
    -------------------------------------------------------------------------
    Comprehensive income      $    113.2  $     92.3  $    268.4  $    217.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes


    Notes to Interim Consolidated Statements
    Periods ended July 4, 2009 and July 5, 2008
    (Unaudited) (Millions of dollars, unless otherwise indicated)
    

    1. Statement Presentation

    The unaudited interim consolidated financial statements were prepared by
management in accordance with Canadian generally accepted accounting
principles (GAAP). 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 27, 2008, 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 2008 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 2009

    Inventories
    

    In the first quarter of 2009, the Company adopted Section 3031
"Inventories". Under this new standard, inventories shall be measured at the
lower of cost and net realizable value and the retail method may be used if it
is close to cost. Furthermore, all costs incurred in bringing the inventories
to their present location and condition shall be included in the cost of
inventories. Other costs shall be recognized as expenses in the period in
which they are incurred.
    The Company measures its wholesale inventories at the lower of cost,
determined by the average cost method net of certain considerations received
from vendors, and net realizable value. Retail inventories are valued at the
retail price less the gross margin and certain considerations received from
vendors. Following this new section's adoption, the Company has included
certain costs in its cost of inventories, such as receiving and shelving costs
and also costs for products transformed in store. Warehousing costs are
recognized as operating expenses.

    The new Section 3031 was applied retrospectively with restatement of
prior periods' financial statements.

    The Company recorded the following adjustments in fiscal 2009:

    
    Balance sheet components

    Increase or (Decrease)                                         Beginning
                                                                     balance
                                                                September 28,
                                                                        2008
    -------------------------------------------------------------------------
    Inventories                                                         26.0
    Goodwill                                                           (11.5)
    Long-term future income tax liabilities                              7.3
    Retained earnings                                                    7.2
    -------------------------------------------------------------------------


    The Company recorded the following adjustments to its fiscal 2008 third
quarter:

    Balance sheet components
    -------------------------------------------------------------------------

    Increase or (Decrease)                           Beginning        Ending
                                                       balance       balance
                                                  September 30,       July 5,
                                                          2007          2008
    -------------------------------------------------------------------------
    Inventories                                           26.8          25.8
    Goodwill                                             (11.5)        (11.5)
    Long-term future income tax liabilities                7.6           7.3
    Retained earnings                                      7.7           7.0
    -------------------------------------------------------------------------


    Earnings components

    Increase or (Decrease)                             16-week       40-week
                                                  period ended  period ended
                                                  July 5, 2008  July 5, 2008
    -------------------------------------------------------------------------
    Cost of sales and operating expenses                   1.0           1.0
    Income taxes                                          (0.3)         (0.3)
    Net earnings                                          (0.7)         (0.7)
    Basic net earnings per share (Dollars)               (0.01)        (0.01)
    Fully diluted net earnings per share (Dollars)       (0.01)        (0.01)
    -------------------------------------------------------------------------
    

    Goodwill and Intangible Assets

    In the first quarter of 2009, the Company adopted Section 3064 "Goodwill
and Intangible Assets". The new section states that upon their initial
identification, intangible assets are to be recognized as assets only if they
meet the definition of an intangible asset and the recognition criteria. As
for subsequent measurement of intangible assets, goodwill and disclosure,
Section 3064 carries forward the requirements of the old Section 3062
"Goodwill and Other Intangible Assets". The adoption of these guidelines did
not have any material effect on the Company's results, financial position or
cash flows.

    
    Credit Risk and the Fair Value of Financial Assets and Financial
    Liabilities
    

    In the second quarter of 2009, the Company adopted EIC-173 "Credit Risk
and the Fair Value of Financial Assets and Financial Liabilities". Under this
new standard, an entity's own credit risk and the credit risk of the
counterparty should be taken into account in determining the fair value of
financial assets and financial liabilities, including derivative instruments.
The adoption of these guidelines did not have any material effect on the
Company's results, financial position or cash flows.

    RECENTLY ISSUED

    Financial Instruments

    In June 2009, the Canadian Institute of Chartered Accountants (CICA)
issued amendments to Section 3862 "Financial Instruments - Disclosures" adding
enhanced disclosure requirements about fair value measurements and liquidity
risk of financial instruments for publicly accountable enterprises. The
amendments will be effective for annual financial statements relating to
fiscal years ending after September 30, 2009 and will have no effect on
results, financial position or cash flows. The Company does not foresee that
these amendments' adoption in its annual financial statements will have a
material effect on its disclosures.

    3. Banner Conversion Costs

    On August 7, 2008, the Company announced its conversion plan for changing
the five banners under which it operates its 159 Ontario supermarkets to the
Metro banner by December 2009. The Company also announced that an amount of
approximately $25 will be incurred for this conversion, most of which had
already been recorded under the A&P Canada integration plan.
    Banner conversion costs of $8.7 for the 40-week period of 2009, including
$2.9 incurred in the third quarter, are part of those not recorded under the
A&P Canada integration plan. More costs will be incurred and expensed over the
next few quarters.

    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:

    
                          16 weeks                        40 weeks
                         Fiscal Year                     Fiscal Year

                    2009            2008            2009            2008
    -------------------------------------------------------------------------
             Pension   Other Pension   Other Pension   Other Pension   Other
               plans   plans   plans   plans   plans   plans   plans   plans
    -------------------------------------------------------------------------
    Defined
     contri-
     bution
     plans    $  8.7  $  0.2  $  7.9  $  0.2  $ 21.5  $  0.5  $ 19.9  $  0.4
    -------------------------------------------------------------------------
    Defined
     benefit
     plans
    Current
     service
     cost        6.4     0.4     7.9     0.4    16.0     1.0    18.4     1.1
    Interest
     cost       10.3     0.6     9.4     0.6    25.8     1.5    23.5     1.5
    Projected
     return
     on plan
     assets    (12.1)      -   (13.1)      -   (30.4)      -   (32.6)      -
    Amortiza-
     tion of
     actuarial
     losses
     (gains)
     and past
     service
     cost        0.5       -     0.8       -     1.2    (0.1)    1.5       -
    -------------------------------------------------------------------------
                 5.1     1.0     5.0     1.0    12.6     2.4    10.8     2.6
    -------------------------------------------------------------------------
              $ 13.8  $  1.2  $ 12.9  $  1.2  $ 34.1  $  2.9  $ 30.7  $  3.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    5. Financial Costs, net
                                      16 weeks                40 weeks
                                     Fiscal Year             Fiscal Year

                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Interest, short term        $    0.7  $      0.4  $      1.6  $      2.4
    Interest, long term             13.5        16.7        36.3        44.8
    Amortization of deferred
     financing costs                 0.6         0.6         1.6         1.6
    Interest income                 (0.2)       (0.2)       (1.6)       (2.8)
    -------------------------------------------------------------------------
                                $   14.6  $     17.5  $     37.9  $     46.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    6. Income Taxes

    The effective income tax rates were as follows:

                                      16 weeks                40 weeks
                                     Fiscal Year             Fiscal Year

                                    2009        2008        2009        2008
                                           (Restated               (Restated
    (Percentage)                            - note 2)               - note 2)
    -------------------------------------------------------------------------
    Combined statutory income
     tax rate                       31.5        31.2        31.4        31.2
    Changes
      Impact of provincial tax
       rate decrease of 2.2% on
       future taxes related to
       capital gains (2009 - $2.7)  (1.7)          -        (0.7)          -
      Impact of federal tax rate
       decrease of 3.5% on future
       taxes (2008 - $11.4)            -           -           -        (3.8)
      Share of earnings in a
        public company subject
        to significant influence    (0.6)       (0.2)       (1.1)       (0.7)
      Other                          0.3         0.1         0.3         0.1
    -------------------------------------------------------------------------
                                    29.5        31.1        29.9        26.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    7. Net Earnings per Share

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

                                      16 weeks                40 weeks
                                     Fiscal Year             Fiscal Year

    (Millions)                      2009        2008        2009        2008
    -------------------------------------------------------------------------
    Weighted average number of
     shares outstanding -
      Basic                        110.7       112.3       110.8       113.0
    Dilutive effect under stock
     option plan and performance
     share units                     0.6         0.6         0.8         0.8
    -------------------------------------------------------------------------
    Weighted average number of
     shares outstanding -
     Diluted                       111.3       112.9       111.6       113.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8. Inventories

    The breakdown of inventories was as follows:
                                                           As at       As at
                                                          July 4,  September
                                                            2009    27, 2008
                                                                   (Restated
                                                                    - note 2)
    -------------------------------------------------------------------------
    Wholesale inventories                             $    281.8  $    293.7
    Retail inventories                                     367.0       347.9
    -------------------------------------------------------------------------
                                                      $    648.8  $    641.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The cost of inventories recognized as an expense for the 16-week period
ended July 4, 2009 was $2,892.3 (2008 - $2,786.7) and $7,134.1 for the 40-week
period of 2009 (2008 - $6,845.9).


    9. Capital Stock

    Outstanding
                                   Class A           Class B           Total
                            Subordinate Shares       Shares
                           ---------------------------------------
                              Number              Number
                          (Thousands)         (Thousands)
    -------------------------------------------------------------------------
    Balance as at
     September 27, 2008      109,806  $  696.1       750  $    1.5  $  697.6
    Shares issued for cash     2,019      43.5         -         -      43.5
    Stock options exercised        -       1.7         -         -       1.7
    Shares redeemed for cash,
     excluding premium of
     $81.0                    (2,778)    (18.2)        -         -     (18.2)
    Conversion of Class B
     Shares into Class A
     Subordinate Shares           22         -       (22)        -         -
    Acquisition of treasury
     shares, excluding
     premium of $3.6            (115)     (0.7)        -         -      (0.7)
    Released treasury shares      52       0.3         -         -       0.3
    -------------------------------------------------------------------------
    Balance as at July 4,
     2009                    109,006  $  722.7       728  $    1.5  $  724.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Stock Option Plan

    The outstanding options and the changes during the 40-week period of
fiscal 2009 were summarized as follows:

                                                     Number         Weighted
                                                 (Thousands)         average
                                                              exercise price
                                                                    (Dollars)
    -------------------------------------------------------------------------
    Balance as at September 27, 2008                  3,534            23.63
    Granted                                             261            37.35
    Exercised                                        (1,987)           21.35
    Cancelled                                            (2)           34.86
    -------------------------------------------------------------------------
    Balance as at July 4, 2009                        1,806            28.10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The exercise prices of the outstanding options ranged from $17.23 to
$39.17 as of July 4, 2009 with expiration dates up to 2016. 511,280 of those
options could be exercised at a weighted average exercise price of $21.92.
    The weighted average fair value of stock options granted during the
40-week period ended July 4, 2009 was $7.88 (2008 - $6.04) and 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 2.1% (2008
- 3.3%), expected six-year term (2008 - six-year term), anticipated volatility
of 22.0% (2008 - 22.4%) and an anticipated 1.4% dividend yield (2008 - 1.4%).
    The compensation expense for these stock options amounted to $0.8 for the
16-week period ended July 4, 2009 (2008 - $0.7) and $1.8 for the 40-week
period of 2009 (2008 - $1.4).



    Performance Share Unit Plan

    Performance share units (PSUs) outstanding and changes during the 40-week
period of fiscal 2009 were summarized as follows:

    
                                                                      Number
                                                                      (Units)
    -------------------------------------------------------------------------
    Balance as at September 27, 2008                                 210,472
    Granted                                                           84,843
    Settled                                                          (64,177)
    Cancelled                                                           (267)
    -------------------------------------------------------------------------
    Balance as at July 4, 2009                                       230,871
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    The Company holds in trust Class A Subordinate Shares for participants
until the PSUs shall be vested or cancelled. The trust, considered a variable
interest entity, is consolidated in the Company's financial statements with
the value of the acquired shares presented as treasury shares reducing capital
stock.
    Changes in treasury shares during the 40-week period of fiscal 2009 were
summarized as follows:
                                                                      Number
                                                                      (Units)
    -------------------------------------------------------------------------
    Balance as at September 27, 2008                                 194,000
    Acquisition of treasury shares                                   115,000
    Released treasury shares                                         (51,745)
    -------------------------------------------------------------------------
    Balance as at July 4, 2009                                       257,255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    A compensation expense of $0.9 and $2.0 respectively during the 16-week
period and the 40-week period ended July 4, 2009 pertaining to PSUs was
recorded (2008 - $0.5 and $1.3).

    10. Contributed Surplus

    -------------------------------------------------------------------------
    Balance as at September 27, 2008                              $      4.9
    Stock-based compensation cost                                        3.8
    Stock options exercised                                             (1.7)
    Acquisition of treasury shares                                      (3.6)
    Released treasury shares                                            (0.3)
    PSUs cash settlement                                                (0.5)
    -------------------------------------------------------------------------
    Balance as at July 4, 2009                                    $      2.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    11. 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
40-week period were as follows:

                                                            Fiscal Year

                                                            2009        2008
    -------------------------------------------------------------------------
    Balance - beginning of period                     $     (1.0) $      1.2
    Change in fair value of derivatives designated
     net of income taxes of $0.6 (2008 - $1.0)              (1.6)       (2.0)
    -------------------------------------------------------------------------
    Balance - end of period                           $     (2.6) $     (0.8)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




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: www.metro.ca Source: METRO INC.


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