Net earnings increased by 21.0% in the first quarter of 2010 and dividend
raised by 23.6%

    
    -------------------------------------------------------------------------
    2010 FIRST QUARTER HIGHLIGHTS

    - Net earnings of $98.1 million ($0.91 per share), up 21.0%
    - Adjusted net earnings(1) of $88.7 million, up 5.5%
    - Adjusted fully diluted net earnings per share(1) of $0.82, up 7.9%
    - Sales of $2,645.0 million, up 1.7%
    - Declared dividend per share of $0.17, up 23.6%
    -------------------------------------------------------------------------
    

MONTREAL, Jan. 26 /CNW Telbec/ - METRO INC. (TSX: MRU.A) realized net earnings of $98.1 million in the first quarter of 2010, ended December 19, 2009, an increase of 21.0% over last year, and fully diluted net earnings per share of $0.91, an increase of 24.7% over $0.73 last year.

Excluding a non-recurring tax expense decrease of $10.0 million recorded in the first quarter of 2010, as well as non-recurring costs recorded in the first quarters of 2010 and 2009 to convert our Ontario supermarkets to the Metro banner, adjusted net earnings(1) for the first quarter of 2010 were $88.7 million, up 5.5% from $84.1 million last year, and adjusted fully diluted net earnings per share(1) were $0.82, up 7.9% from $0.76 last year.

"We are pleased with our first quarter results which improved on last year's excellent first quarter. Customer count continued to rise, but our basket size was smaller than last year as we experienced deflation in certain product categories. The economic environment remains challenging, however we are well-positioned in our markets and confident(2) that we will continue our growth in 2010," stated Eric R. La Flèche, President and Chief Executive Officer.

SALES

2010 first quarter sales reached $2,645.0 million compared to $2,600.5 million last year, an increase of 1.7%. This increase was achieved despite a slight drop in the value of our basket, whereas last year high food price inflation and the temporary closing of several stores of a competitor due to a labour conflict, had a positive impact on our first and second quarter sales. Same-store sales remained stable in the first quarter.

EARNINGS BEFORE FINANCIAL COSTS, TAXES, DEPRECIATION AND AMORTIZATION

(EBITDA)(1)

First quarter EBITDA(1) reached $182.1 million, up 7.0% from $170.2 million for the same quarter last year. First quarter EBITDA(1) represented 6.9% of sales versus 6.5% last year. Excluding banner conversion costs of $0.9 million and $4.5 million before taxes recorded respectively in the first quarters of 2010 and 2009, adjusted 2010 and 2009 first quarter EBITDA(1) represented 6.9% and 6.7% of sales respectively. This increase is due mainly to an increase in our gross margins driven by our improved store operations.

Our share of earnings from our investment in Alimentation Couche-Tard in the first quarter of 2010 was $10.8 million versus $11.1 million for the corresponding quarter of fiscal 2009. Excluding non-recurring items as well as our share of earnings from our investment in Alimentation Couche-Tard, our adjusted EBITDA(1) for the first quarter were $172.2 million or 6.5% of sales versus $163.6 million or 6.3% of sales for the first quarter of 2009.

    
    EBITDA(1) Adjustments

    (Millions of                     12 weeks / Fiscal Year
     dollars,                  2010                          2009
     unless      ------------------------------------------------------------
     otherwise      EBITDA     Sales    EBITDA/   EBITDA     Sales    EBITDA/
     indicated)                       Sales (%)                     Sales (%)
    -------------------------------------------------------------------------
    EBITDA           182.1   2,645.0       6.9     170.2   2,600.5       6.5
    Banner
     conversion
     costs             0.9         -                 4.5         -
    -------------------------------------------------------------------------
    Adjusted
     EBITDA          183.0   2,645.0       6.9     174.7   2,600.5       6.7
    Share of
     earnings from
     our investment
     in Alimentation
     Couche-Tard     (10.8)        -               (11.1)        -
    -------------------------------------------------------------------------
    Adjusted EBITDA
     excluding share
     of earnings     172.2   2,645.0       6.5     163.6   2,600.5       6.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

DEPRECIATION AND AMORTIZATION AND FINANCIAL COSTS

Total amortization expenses for the first quarter of 2010 amounted to $46.7 million, compared with $41.6 million for the same quarter last year. First quarter financial costs totalled $11.0 million in 2010 and $12.5 million last year. First quarter interest rates averaged 4.0% versus 5.0% in the first quarter of 2009.

INCOME TAXES

The income tax expenses of $26.3 million for the first quarter of 2010 represented the effective tax rate of 21.1% compared with tax expenses of $35.0 million and an effective tax rate of 30.1% in 2009. In the first quarter of 2010, we benefited from a $10.0 million reduction in our net future income tax liabilities and our income tax expenses following the Ontario Legislature's approval in November 2009 of successive future decreases in the corporate tax rate from the current rate of 14% to 10% between July 1, 2010 and July 1, 2013. Excluding this non-recurring decrease in income tax expense, our effective tax rate for the first quarter of 2010 was 29.1%.

NET EARNINGS

Net earnings for the first quarter of 2010 were $98.1 million, compared to $81.1 million last year, an increase of 21.0%. Fully diluted net earnings per share were $0.91, up 24.7% from $0.73 in 2009. Excluding the income tax expense decrease of $10.0 million in 2010 and pre-tax banner conversion costs of $0.9 million in the first quarter of 2010 and $4.5 million in the corresponding quarter of 2009, adjusted net earnings(1) for the first quarter of 2010 were $88.7 million, up 5.5% from $84.1 million for the same quarter last year, while adjusted fully diluted net earnings per share(1) were $0.82, up 7.9% from $0.76 last year.

    
    Net Earnings Adjustments

                           12 weeks / Fiscal Year

                          2010                2009              Change (%)
                 ------------------------------------------------------------
                 (Millions     Fully (Millions     Fully       Net     Fully
                        of   diluted        of   diluted  earnings   diluted
                   dollars)      EPS   dollars)      EPS                 EPS
                            (Dollars)           (Dollars)
    -------------------------------------------------------------------------
    Net earnings      98.1      0.91      81.1      0.73      21.0      24.7
    Banner
     conversion
     costs after
     taxes             0.6         -       3.0      0.03
    Decrease in
     tax expense     (10.0)    (0.09)        -         -
    -------------------------------------------------------------------------
    Adjusted net
     earnings(1)      88.7      0.82      84.1      0.76       5.5       7.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Quarterly Highlights

    (Millions of dollars, unless          2010      2009      2008    Change
     otherwise indicated)                                                 (%)
    -------------------------------------------------------------------------
    Sales
      Q1                               2,645.0   2,600.5         -       1.7
      Q4                                     -   2,532.5   2,476.0       2.3
      Q3                                     -   3,513.3   3,370.0       4.3
      Q2                                     -   2,549.7   2,372.4       7.5
    -------------------------------------------------------------------------
    Net earnings
      Q1                                  98.1      81.1         -      21.0
      Q4                                     -      84.4      72.5      16.4
      Q3                                     -     112.6      91.9      22.5
      Q2                                     -      76.3      54.0      41.3
    -------------------------------------------------------------------------
    Adjusted net earnings(1)
      Q1                                  88.7      84.1         -       5.5
      Q4                                     -      85.9      72.5      18.5
      Q3                                     -     111.8      91.9      21.7
      Q2                                     -      77.2      54.0      43.0
    -------------------------------------------------------------------------
    Fully diluted net earnings
     per share (Dollars)
      Q1                                  0.91      0.73         -      24.7
      Q4                                     -      0.77      0.65      18.5
      Q3                                     -      1.01      0.81      24.7
      Q2                                     -      0.68      0.48      41.7
    -------------------------------------------------------------------------
    Adjusted fully diluted net
     earnings per share(1) (Dollars)
      Q1                                  0.82      0.76         -       7.9
      Q4                                     -      0.78      0.65      20.0
      Q3                                     -      1.01      0.81      24.7
      Q2                                     -      0.68      0.48      41.7
    -------------------------------------------------------------------------
    

First quarter sales for 2010 were up 1.7% over those for 2009. This increase was achieved despite a slight drop in the value of our basket, whereas last year high food price inflation and the temporary closing of several stores of a competitor due to a labour conflict, had a positive impact on our first and second quarter sales.

Second, third and fourth quarter sales for 2009 were up 7.5%, 4.3% and 2.3% respectively over those for 2008. Effective merchandising programs allowed us to post increases. Excluding decreased tobacco sales, 2009 second, third and fourth quarter sales were up 8.3%, 5.2%, and 3.2% respectively over 2008.

First quarter net earnings and fully diluted net earnings per share for 2010 were up 21.0% and 24.7% respectively over those for 2009. Excluding pre-tax banner conversion costs of $0.9 million and $4.5 million before taxes recorded respectively in the first quarters of 2010 and 2009, as well as the income tax expense decrease of $10.0 million in the first quarter of 2010 further to future decreases in the Ontario tax rate, adjusted net earnings(1) were up 5.5% and adjusted fully diluted net earnings per share(1) were up 7.9%.

In 2009, our sales growth and ongoing efforts to improve store operations in Ontario allowed us to increase our gross margins.

Second quarter net earnings and fully diluted net earnings per share for 2009 were up 41.3% and 41.7% from 2008. Excluding banner conversion 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%.

Difficulties encountered in the second quarter of 2008 also explain the 2009 second quarter increase over the same quarter of 2008. These difficulties 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%, compared to adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the third quarter of 2008.

Fourth quarter net earnings and fully diluted net earnings per share in 2009 were up 16.4% and 18.5% over those for 2008. Excluding 2009 fourth quarter banner conversion costs of $2.3 million before taxes, adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the fourth quarter of 2009 were up 18.5% and 20.0% over adjusted net earnings(1) and adjusted fully diluted net earnings per share(1) for the fourth quarter of 2008.

    
                       2010              2009                    2008
    (Millions of      -------------------------------------------------------
     dollars)            Q1     Q1     Q2     Q3     Q4     Q2     Q3     Q4
    -------------------------------------------------------------------------
    Net earnings       98.1   81.1   76.3  112.6   84.4   54.0   91.9   72.5
    Banner conversion
     costs after
     taxes              0.6    3.0    0.9    1.9    1.5      -      -      -
    Decrease in tax
     expense          (10.0)     -      -   (2.7)     -      -      -      -
    -------------------------------------------------------------------------
    Adjusted net
     earnings(1)       88.7   84.1   77.2  111.8   85.9   54.0   91.9   72.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                       2010              2009                    2008
    (Dollars and      -------------------------------------------------------
     per share)          Q1     Q1     Q2     Q3     Q4     Q2     Q3     Q4
    -------------------------------------------------------------------------
    Fully diluted
     net earnings      0.91   0.73   0.68   1.01   0.77   0.48   0.81   0.65
    Banner conversion
     costs after
     taxes                -   0.03      -   0.02   0.01      -      -      -
    Decrease in tax
     expense          (0.09)     -      -  (0.02)     -      -      -      -
    -------------------------------------------------------------------------
    Adjusted fully
     diluted net
     earnings(1)       0.82   0.76   0.68   1.01   0.78   0.48   0.81   0.65
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Cash Position

OPERATING ACTIVITIES

Operating activities generated cash flows of $9.5 million in the first quarter of 2010 versus $50.8 million in the corresponding quarter of 2009. This variation is due primarily to increased use of non-cash working capital.

INVESTING ACTIVITIES

Investing activities required outflows of $208.2 million in the first quarter of 2010 compared to $55.1 million for the first quarter of 2009. This increase is due primarily to the 2010 first quarter acquisition of 18 stores for valuable cash consideration of $136.7 million. Over the quarter, the Company and its retailers invested $95.2 million in our retail network for a net expansion of 369,600 square feet or 1.9%. Major renovations and expansions of 13 stores were completed and 8 new stores were opened.

FINANCING ACTIVITIES

Financing activities required outflows of $42.7 million in the first quarter of 2010 versus $5.3 million in 2009. The variation in outflows is largely attributable to the greater redemption of shares in 2010, in the amount of $33.0 million versus redemption in the amount of $9.3 million in 2009.

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 first quarter of fiscal 2010 as very solid. We had an unused authorized revolving line of credit of $400.0 million. Our long-term debt corresponded to 30.2% of the combined total of long-term debt and shareholders' equity (long-term debt/total capital).

At the end of the first quarter of 2010, 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, one interest rate swap agreement in the notional amount of $50.0 million was outstanding under our Credit A Facility. This agreement provides for the exchange of variable interest payment for fixed interest payment according to the following term:

    
    Fixed Rate            Notional Amount             Maturity
                          (Millions of dollars)
    -------------------------------------------------------------------------
    4.0425%               50.0                        December 16, 2010
    -------------------------------------------------------------------------
    

Giving effect to this swap agreement, at the end of the quarter, long-term indebtedness comprised $650.0 million at fixed rates ranging from 4.4925% to 5.97% and $319.3 million at variable rates which fluctuate with changes in bankers' acceptance rates.

At the end of the first quarter, we also had foreign exchange forward contracts to hedge against the effect of foreign exchange rate fluctuations on our future U.S. dollar denominated purchases. The fair value of these short-term foreign exchange forward contracts was insignificant.

    
    FINANCIAL RATIOS

                                                        As at          As at
                                                  December 19,  September 26,
                                                         2009           2009
    -------------------------------------------------------------------------
    Financial structure
      Long-term debt (Millions of dollars)            1,004.5        1,004.3
      Shareholders' equity (Millions of dollars)      2,318.5        2,264.1
      Long-term debt/total capital (%)                   30.2           30.7


                                                  Fiscal 2010    Fiscal 2009
                                                    (12 weeks)     (12 weeks)
                                                 ----------------------------
    Results
      EBITDA(1)/Financial costs (Times)                  16.6           13.6
    -------------------------------------------------------------------------


    CAPITAL STOCK, STOCK OPTIONS AND PERFORMANCE SHARE UNITS

                                                        As at          As at
                                                  December 19,  September 26,
                                                         2009           2009
    -------------------------------------------------------------------------
    Number of Class A Subordinate Shares
     outstanding (Thousands)                          107,056        107,830
    Number of Class B Shares outstanding
     (Thousands)                                          642            718
    Stock options:
      Number outstanding (Thousands)                    1,762          1,864
      Exercise prices (Dollars)                         17.23          17.23
                                                     to 39.17       to 39.17
      Weighted average exercise price (Dollars)         28.93          28.53
    Performance share units:
      Number outstanding (Thousands)                      268            268
      Weighted average maturity (Months)                   15             18
    -------------------------------------------------------------------------
    

NORMAL COURSE ISSUER BID PROGRAM

Under the normal course issuer bid program, the Company may repurchase up to 6,000,000 of its Class A Subordinate shares between September 8, 2009 and September 7, 2010. Since September 8, 2009, the Company has repurchased 1,140,900 Class A Subordinate shares at an average price of $34.60 for a total of $39.5 million. This program offers us an additional option for using excess funds. Thus, we can decide, in the shareholders' best interest, to reimburse debt or to repurchase Company shares.

DIVIDENDS

On January 25, 2010, the Company's Board of Directors declared a quarterly dividend of $0.17 per Class A Subordinate Share and Class B Share payable March 8, 2010, an increase of 23.6% over last year. On an annualized basis, this dividend represents 20.7% of 2009 net earnings.

SHARE TRADING

The value of METRO shares remained in the $33.02 to $39.15 range over the first quarter of fiscal 2010. During this period, a total of 20.8 million shares traded on the Toronto Stock Exchange. The closing price on Friday, January 15, 2010 was $38.57, compared with $34.73 at the end of fiscal 2009.

New Accounting Policy Recently Published

International Financial Reporting Standards

On February 13, 2008, the Accounting Standards Board confirmed the date of the changeover from Canadian Generally Accepted Accounting Principles (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 information technology, 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 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 effort their
                  implementation requires.
    -------------------------------------------------------------------------
    Timetable    End of our 2008 fiscal year.
    -------------------------------------------------------------------------
    Progress     Completed.
    -------------------------------------------------------------------------


    Phase 2: Standards Analysis
    -------------------------------------------------------------------------
    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 impact on the consolidated
                  financial statements.
                 Disclosure analysis.
                 Preparation of draft consolidated financial statements and
                  notes.
                 Identification of the collateral impact 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 that 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 first quarter of fiscal 2010, we began the
                  analysis of 29 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.
    -------------------------------------------------------------------------
    

So far, we have analyzed a number of IFRS standards. We have made choices, as warranted, with regard to these standards and noted the differences between some of these standards and our current accounting policies. The most significant ones are set out in the following table:

    
    -------------------------------------------------------------------------
    Standards          Comparison between          Preliminary Findings
                       IFRS and GAAP
    -------------------------------------------------------------------------
    Borrowing costs    IFRS: We have to            We will not capitalize
                        capitalize borrowing        borrowing costs on
                        costs on qualifying         qualifying assets, as
                        assets, i.e. assets that    they are deemed to be
                        require an extended         immaterial.
                        period of preparation
                        before they are usable or
                        saleable.
                       GAAP: These borrowing
                        costs may be capitalized.
    -------------------------------------------------------------------------
    Fixed assets       IFRS: After initial         We will continue to use
                        recognition, we can         the cost model in order
                        measure our fixed assets    to avoid balance sheet
                        using the cost model or     variations in the fair
                        the revaluation model.      value of fixed assets and
                       GAAP: The revaluation        the corresponding impact
                        model is not allowed.       on P&L statements.
                    ---------------------------------------------------------
                       IFRS: We have to amortize   Two new components, the
                        our fixed assets based on   roof and HVAC system,
                        their components.           will be amortized
                       GAAP: Component              separately from the
                        identification rules are    building.
                        less stringent.            The carrying value of
                                                    these assets and
                                                    corresponding
                                                    depreciation expense will
                                                    be different, but the
                                                    impact should not be
                                                    material.
    -------------------------------------------------------------------------
    Investment         IFRS: After initial         We will continue to use
     property           recognition, we can         the cost model in order
                        measure our investment      to avoid balance sheet
                        property using the cost     variations in the fair
                        model or the revaluation    value of investment
                        model.                      property and the
                       GAAP: The revaluation        corresponding impact on
                        model is not allowed.       P&L statements.
    -------------------------------------------------------------------------
    Impairment of      IFRS: We have to conduct    Our impairment testing
     assets             impairment testing of       will be conducted at the
                        our assets at the           level of each store and
                        independent cash            each warehouse that
                        generating unit (CGU)       supplies external
                        level.                      clients. Impairment
                       GAAP: The unit is defined    testing of corporate
                        as it generates both        assets and goodwill will
                        independent cash inflows    be conducted at the
                        and outflows.               level of groups of CGUs.
                                                   Impairment testing results
                                                    may be different, but
                                                    their impact should not
                                                    be material.
    -------------------------------------------------------------------------
    Share-based        IFRS: When stock option     The compensation expense
     payment            awards vest gradually,      will have to be
                        each tranche is to be       recognized over the
                        considered as a separate    expected term of each
                        award.                      vested tranche. It will
                       GAAP: The gradually vested   be different, but the
                        tranches are considered     impact should not be
                        as a single award.          material.
    -------------------------------------------------------------------------
    Earnings per       IFRS: We have to            Diluted earnings per share
     share              independently determine,    will be different, but
                        for the interim period      the impact should not be
                        and the year-to-date,       material.
                        the number of potentially
                        dilutive shares to
                        consider in calculating
                        diluted earnings per
                        share.
                       GAAP: The number is
                        independently determined
                        for the interim period,
                        but the year-to-date is
                        a weighted average of the
                        periods.
    -------------------------------------------------------------------------
    

We have also made choices concerning certain exemptions from retrospective application at the time of changeover provided by IFRS 1 and which are set out in the following table:

    
    -------------------------------------------------------------------------
    Optional Exemptions   Preliminary Findings
    -------------------------------------------------------------------------
    Borrowing costs       This exemption allows us not to capitalize
                           borrowing costs on our qualifying assets before
                           the IFRS transition date.
                          Given that we will not capitalize these borrowing
                           costs, we will not use the exemption.
    -------------------------------------------------------------------------
    Deemed cost           On the IFRS transition date, we can recognize each
                           fixed asset and investment property at its deemed
                           cost, which shall be its fair value.
                          We shall analyze our fixed assets and investment
                           property to determine whether or not to use the
                           exemption.
    -------------------------------------------------------------------------
    Share-based payment   This exemption would relieve us from applying the
                           standard to equity instruments acquired before the
                           IFRS transition date.
                          We have decided not to avail ourselves of this
                           exemption.
    -------------------------------------------------------------------------
    

Other key analyses are in progress or will be undertaken shortly. Consequently, preliminary findings do not appear in the above tables. Any choices made or variances identified will be communicated once the analyses have been completed. Furthermore, the release of IASB discussion papers, exposure drafts and new standards could change our preliminary findings.

Press Release

This press release sets out the financial position and consolidated results of METRO INC. on December 19, 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 26, 2009 and related notes and MD&A presented in the Company's 2009 Annual Report. This press release is based upon information as at January 15, 2010 unless otherwise stated. Additional information, including the Certification of Interim Filings letters for the quarter ended December 19, 2009 signed by the President and Chief Executive Officer and the Senior Vice-President, Chief Financial Officer and Treasurer, is also available on the SEDAR website at: www.sedar.com.

Non-GAAP Measurements

In addition to 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.

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 "confident", "anticipate" 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 2010 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 2009 Annual Report which could have an impact on these statements. We believe these statements to be reasonable and pertinent as at the date of publication of this press release and represent our expectations. The Company does not intend to update any forward-looking statement contained herein, except as required by applicable law.

Conference Call

Financial analysts and institutional investors are invited to participate in a conference call on the 2010 first quarter results at 4:00 p.m. (EST) on Tuesday, January 26, 2010. To access the conference call, please dial (514) 807-9895 or (647) 427-7450 or (888)-231-8191. 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-GAPP measurements"
    (2) See section on "Forward-looking information"


    Consolidated Statements of Earnings
    12-week periods ended December 19, 2009 and December 20, 2008
    (Unaudited) (Millions of dollars, except for net earnings per share)

                                                             Fiscal Year
                                                  -------------
                                                         2010           2009
    -------------------------------------------------------------------------
    Sales                                           $ 2,645.0      $ 2,600.5
    Cost of sales and operating expenses (note 8)    (2,472.8)      (2,436.9)
    Share of earnings in a public company subject
     to significant influence                            10.8           11.1
    Banner conversion costs (note 3)                     (0.9)          (4.5)
    -------------------------------------------------------------------------
    Earnings before financial costs, taxes,
     depreciation and amortization                      182.1          170.2
    Depreciation and amortization                       (46.7)         (41.6)
    -------------------------------------------------------------------------
    Operating income                                    135.4          128.6
    Financial costs, net (note 5)                       (11.0)         (12.5)
    -------------------------------------------------------------------------
    Earnings before income taxes                        124.4          116.1
    Income taxes (note 6)                               (26.3)         (35.0)
    -------------------------------------------------------------------------
    Net earnings                                    $    98.1      $    81.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share (Dollars) (note 7)
    Basic                                                0.91           0.73
    Fully diluted                                        0.91           0.73
    -------------------------------------------------------------------------
                                                  -------------
    See accompanying notes


    Consolidated Balance Sheets
    (Unaudited) (Millions of dollars)
                                                  -------------
                                                        As at          As at
                                                  December 19,  September 26,
                                                         2009           2009
    -------------------------------------------------------------------------
    ASSETS
    Current assets
    Cash and cash equivalents                       $       -      $   241.4
    Accounts receivable                                 357.1          315.8
    Inventories (note 8)                                789.1          681.3
    Prepaid expenses                                     13.8            8.3
    Income taxes receivable                               7.1            6.6
    Future income taxes                                  25.9           29.8
    -------------------------------------------------------------------------
                                                      1,193.0        1,283.2

    Investments and other assets                        215.9          204.0
    Fixed assets                                      1,354.8        1,305.8
    Intangible assets                                   322.3          325.4
    Goodwill                                          1,595.9        1,478.6
    Future income taxes                                   3.4            3.6
    Accrued benefit asset                                65.7           65.6
    -------------------------------------------------------------------------
                                                    $ 4,751.0      $ 4,666.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Bank loans                                      $     7.7      $     0.8
    Accounts payable                                  1,137.9        1,111.2
    Income taxes payable                                 32.3           24.8
    Future income taxes                                  17.8            9.2
    Current portion of long-term debt                     5.5            6.4
    -------------------------------------------------------------------------
                                                      1,201.2        1,152.4
    Long-term debt                                    1,004.5        1,004.3
    Accrued benefit liability                            49.4           49.0
    Future income taxes                                 149.2          165.0
    Other long-term liabilities                          28.2           31.4
    -------------------------------------------------------------------------
                                                      2,432.5        2,402.1
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock (note 9)                              713.3          716.7
    Contributed surplus (note 10)                         4.2            3.7
    Retained earnings                                 1,602.3        1,545.7
    Accumulated other comprehensive income
     (note 11)                                           (1.3)          (2.0)
    -------------------------------------------------------------------------
                                                      2,318.5        2,264.1
    -------------------------------------------------------------------------
                                                    $ 4,751.0      $ 4,666.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    See accompanying notes


    Consolidated Statements of Cash Flows
    12-week periods ended December 19, 2009 and December 20, 2008
    (Unaudited) (Millions of dollars)

                                                             Fiscal Year
                                                  -------------
                                                         2010           2009
    -------------------------------------------------------------------------
    Operating activities
    Net earnings                                    $    98.1      $    81.1
    Non-cash items
      Share of earnings in a public company
       subject to significant influence                 (10.8)         (11.1)
      Depreciation and amortization                      46.7           41.6
      Amortization of deferred financing costs            0.5            0.5
      Loss on disposal and write-off of fixed and
       intangible assets                                  0.1              -
      Future income taxes                                (3.4)           5.8
      Stock-based compensation cost                       1.2            1.1
      Difference between amounts paid for employee
       future benefits and current period cost            0.3           (6.5)
    -------------------------------------------------------------------------
                                                        132.7          112.5
    Net change in non-cash working capital items
     related to operations                             (123.2)         (61.7)
    -------------------------------------------------------------------------
                                                          9.5           50.8
    -------------------------------------------------------------------------
    Investing activities
    Business acquisitions (note 2)                     (136.7)             -
    Net change in investments and other assets           (2.8)          (0.2)
    Dividends from public company subject to
     significant influence                                0.7            0.7
    Additions to fixed assets                           (66.0)         (52.1)
    Proceeds on disposal of fixed assets                  2.4            0.7
    Additions to intangible assets                       (5.8)          (4.2)
    -------------------------------------------------------------------------
                                                       (208.2)         (55.1)
    -------------------------------------------------------------------------
    Financing activities
    Net change in bank loans                              7.2            2.3
    Issuance of shares (note 9)                           2.2           17.4
    Redemption of shares (note 9)                       (33.0)          (9.3)
    Increase in long-term debt                            1.8            2.7
    Repayment of long-term debt                          (3.9)          (2.3)
    Net change in other long-term liabilities            (2.2)          (2.3)
    Dividends paid                                      (14.8)         (13.8)
    -------------------------------------------------------------------------
                                                        (42.7)          (5.3)
    -------------------------------------------------------------------------
    Net change in cash and cash equivalents            (241.4)          (9.6)
    Cash and cash equivalents - beginning of period     241.4          151.7
    -------------------------------------------------------------------------
    Cash and cash equivalents - end of period       $       -      $   142.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary information
    Interest paid                                        20.0           22.3
    Income taxes paid                                    22.7           23.7
    -------------------------------------------------------------------------
                                                  -------------
    See accompanying notes


    Consolidated Statements of Retained Earnings
    12-week periods ended December 19, 2009 and December 20, 2008
    (Unaudited) (Millions of dollars)

                                                             Fiscal Year
                                                  -------------
                                                         2010           2009
    -------------------------------------------------------------------------
    Balance - beginning of period                   $ 1,545.7      $ 1,366.8
    Net earnings                                         98.1           81.1
    Dividends                                           (14.8)         (13.8)
    Share redemption premium (note 9)                   (26.7)          (7.3)
    -------------------------------------------------------------------------
    Balance - end of period                         $ 1,602.3      $ 1,426.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    See accompanying notes


    Consolidated Statements of Comprehensive Income
    12-week periods ended December 19, 2009 and December 20, 2008
    (Unaudited) (Millions of dollars)

                                                             Fiscal Year
                                                  -------------
                                                         2010           2009
    -------------------------------------------------------------------------
    Net earnings                                    $    98.1      $    81.1
    Other comprehensive income (note 11)
      Change in fair value of derivatives
       designated as cash flow hedges                     1.0           (2.7)
    Corresponding income taxes                           (0.3)           0.8
    -------------------------------------------------------------------------
    Comprehensive income                            $    98.8      $    79.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    See accompanying notes


    Notes to Interim Consolidated Statements
    12-week periods ended December 19, 2009 and December 20, 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 26, 2009. 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 2009 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. Business Acquisitions

In the first quarter of 2010, the Company acquired 18 affiliated stores which it already supplied. The total purchase price was $152.2 in cash.

The acquisitions were accounted for using the purchase method. The stores' results have been consolidated as of their respective acquisition dates. The preliminary total purchase price allocation was as follows:

    
    Considerations paid
      Cash                                                         $   136.7
      Balance to be paid                                                15.5
    -------------------------------------------------------------------------
    Total considerations paid                                          152.2
    -------------------------------------------------------------------------
    Net assets acquired
      Inventories                                                       15.0
      Other current assets                                               0.7
      Fixed assets                                                      22.8
      Short-term liabilities assumed                                    (3.6)
    -------------------------------------------------------------------------
    Total net assets acquired                                           34.9
    -------------------------------------------------------------------------
    Excess considerations paid over net assets acquired            $   117.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Management is currently carrying out a more specific analysis and changes will be made to the allocation of the excess considerations paid over net assets acquired as the information becomes available. For example, since the measurement of the fair value of fixed assets had not yet been completed at the time of the preliminary allocation, fixed assets have been presented at cost. Furthermore, the Company has not completed the assessment of possible costs related to the restructuring and integration of activities potentially giving rise to the recognition of a liability in the allocation of the purchase price. As a result, the actual amounts allocated to the identifiable assets acquired and liabilities assumed and the related operating results may vary according to the amounts initially recorded.

The tax treatment of the goodwill will be as eligible capital property with the related tax deductions.

3. Banner Conversion Costs

In the first quarter of 2010, the Company completed the conversion of its 159 Ontario stores to the Metro banner begun in the summer of 2008. Costs of $0.9 were recorded in the first quarter of 2010 versus $4.5 in the corresponding quarter of 2009.

4. Employee Future Benefits

The Company maintains several defined benefit and defined contribution plans which provide most participants with pension and other retirement benefits and other post-employment benefits. The Company's defined contribution plan and defined benefit plan expense was as follows:

    
                                                     Fiscal Year
                                      -------------------
                                              2010                2009
    -------------------------------------------------------------------------
                                       Pension     Other   Pension     Other
                                         plans     plans     plans     plans
    -------------------------------------------------------------------------
    Defined contribution plans         $   7.1   $   0.1   $   6.6   $   0.1
    -------------------------------------------------------------------------
    Defined benefit plans
    Current service costs                  5.4       0.3       4.9       0.3
    Interest cost                          8.1       0.4       7.7       0.4
    Projected return on plan assets       (9.6)        -      (9.1)        -
    Amortization of actuarial losses
     and past service costs                0.4         -       0.3         -
    -------------------------------------------------------------------------
                                           4.3       0.7       3.8       0.7
    -------------------------------------------------------------------------
                                       $  11.4   $   0.8   $  10.4   $   0.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                      -------------------
    

5. Financial Costs, net

    
                                                             Fiscal Year
                                                  -------------
                                                         2010           2009
    -------------------------------------------------------------------------
    Short-term interest                             $     0.5      $     0.6
    Long-term interest                                   10.3           12.1
    Amortization of deferred financing costs              0.5            0.5
    Interest income                                      (0.3)          (0.7)
    -------------------------------------------------------------------------
                                                    $    11.0      $    12.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    

6. Income Taxes

The effective income tax rates were as follows:

    
                                                             Fiscal Year
                                                  -------------
    (Percentage)                                         2010           2009
    -------------------------------------------------------------------------
    Combined statutory income tax rate                   30.4           31.4
    Changes
      Impact on future taxes of 4.0% total
       decreases in Ontario tax rate                     (8.0)             -
      Share of earnings in a public company
       subject to significant influence                  (1.5)          (1.5)
      Others                                              0.2            0.2
    -------------------------------------------------------------------------
                                                         21.1           30.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    

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:

    
                                                             Fiscal Year
                                                  -------------
    (Millions)                                           2010           2009
    -------------------------------------------------------------------------
    Weighted average number of shares outstanding
     - Basic                                            107.8          110.5
    Dilutive effect under stock option and
     performance share units plans                        0.5            0.9
    -------------------------------------------------------------------------
    Weighted average number of shares outstanding
     - Diluted                                          108.3          111.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    

8. Inventories

Inventories were detailed as follows:

    
                                                  -------------
                                                        As at          As at
                                                  December 19,  September 26,
                                                         2009           2009
    -------------------------------------------------------------------------
    Warehouse inventories                           $   338.2      $   304.0
    Retail inventories                                  450.9          377.3
    -------------------------------------------------------------------------
                                                    $   789.1      $   681.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    

The cost of inventories expensed for the 12-week period ended December 19, 2009 totalled $2,160.1 (2009 - $2,139.9).

9. Capital Stock

Outstanding

    
                          Class A                  Class B             Total
                     Subordinate Shares             Shares
                  ----------------------- -----------------------
                      Number                  Number
                  (Thousands)             (Thousands)
    -------------------------------------------------------------------------
    Balance as at
     September 26,
     2009            107,830     $ 715.3         718     $   1.4     $ 716.7
    Shares issued
     for cash            104         2.2           -           -         2.2
    Shares redeemed
     for cash,
     excluding
     premium of
     $26.7              (954)       (6.3)          -           -        (6.3)
    Stock options
     exercised             -         0.7           -           -         0.7
    Conversion of
     Class B Shares
     into Class A
     Subordinate
     Shares               76         0.1         (76)       (0.1)          -
    -------------------------------------------------------------------------
    Balance as at
     December 19,
     2009            107,056     $ 712.0         642     $   1.3     $ 713.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Stock Option Plan

The outstanding options and the changes during the 12-week period ended December 19, 2009 were summarized as follows:

    
                                                       Number       Weighted
                                                   (Thousands)       average
                                                                    exercise
                                                                       price
                                                                    (Dollars)
    -------------------------------------------------------------------------
    Balance as at September 26, 2009                    1,864          28.53
    Exercised                                            (102)         21.59
    -------------------------------------------------------------------------
    Balance as at December 19, 2009                     1,762          28.93
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The exercise prices of the outstanding options ranged from $17.23 to $39.17 as of December 19, 2009 with expiration dates up to 2016. 440,540 of those options could be exercised at a weighted average exercise price of $25.46.

Compensation expense for these options amounted to $0.5 for the 12-week period ended December 19, 2009 (2009 - $0.5).

Performance Share Unit Plan

As at December 19, 2009, 267,570 performance share units (PSUs) were outstanding. During the first quarter of 2010, no changes occurred in PSUs outstanding (2009 - nil).

Class A Subordinate Shares of the Company are held in trust for participants until the PSUs vest or are cancelled. The trust, considered a variable interest entity, is consolidated in the Company's financial statements with the cost of the acquired shares recorded as treasury shares in reduction of capital stock.

At the end of the first quarter of 2010, 257,255 shares were held in trust for participants until the PSUs shall have vested or been cancelled (as at September 26, 2009 - 257,255 shares).

The compensation expense comprising all of these PSUs amounted to $0.7 for the 12-week period ended December 19, 2009 (2009 - $0.6).

10. Contributed Surplus

    
    -------------------------------------------------------------------------
    Balance as at September 26, 2009                               $     3.7
    Stock-based compensation cost                                        1.2
    Stock options exercised                                             (0.7)
    -------------------------------------------------------------------------
    Balance as at December 19, 2009                                $     4.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

11. Accumulated Other Comprehensive Income

Derivatives designated as cash flow hedges constitute the sole component of Accumulated Other Comprehensive Income. The changes during the 12-week period ended December 19, 2009 were as follows:

    
                                                             Fiscal Year
                                                  -------------
                                                         2010           2009
    -------------------------------------------------------------------------
    Balance - beginning of period                   $    (2.0)     $    (1.0)
    Change in fair value of designated
     derivatives net of income taxes of $0.3
     (2009 - $0.8)                                        0.7           (1.9)
    -------------------------------------------------------------------------
    Balance - end of period                         $    (1.3)     $    (2.9)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  -------------
    

%SEDAR: 00001783EF

SOURCE METRO INC.

For further information: For further information: Richard Dufresne, Senior Vice-President, Chief Financial Officer and Treasurer, (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.


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