Canadian Tire Corporation Increases Quarterly Dividend and Posts Strong Third
Quarter Earnings

News provided by

Nov 11, 2010, 08:51 ET

TORONTO, Nov. 11 /CNW/ - Canadian Tire Corporation, Limited (CTC, CTC.a) today released third quarter results reflecting a significant increase in earnings. Consolidated net earnings increased 21.0%, including a previously announced restructuring charge of $14.7 million. Adjusted net earnings were up 31.0% from the prior year.

Canadian Tire's dividend policy has been modified to pay 20-25% of the prior year's normalized basic net earnings per share, after giving consideration to the period end cash position and future cash flow requirements. Canadian Tire also announced today that it will increase the quarterly dividends to be paid in 2011 to 27.5 cents ($1.10 annualized) a share from 21 cents ($0.84 annualized) a share.

"Overall, our business is performing well" said Stephen Wetmore, President and CEO, Canadian Tire Corporation. "We have managed conservatively through challenging economic conditions and we have confidence in our continued performance which is reflected in our decision to increase our dividend payout and to repay $300 million in debt that matured this quarter."


Consolidated Highlights¹	2010 Third Quarter	2009 Third Quarter	Change
Retail sales	$2.51 billion	$2.45 billion	2.6%
Gross operating revenue	$2.20 billion	$2.17 billion	1.6%
Adjusted earnings before income taxes (excludes non-operating gains and losses)²	$166.2 million	$127.2 million	30.7%
Net earnings	$103.2 million	$85.4 million	21.0%
Adjusted net earnings (excludes non-operating gains and losses)	$119.1 million	$91.0 million	31.0%
Basic earnings per share	$1.27	$1.04	21.1%
Adjusted basic earnings per share (excludes non-operating gains and losses)²	$1.46	$1.11	31.2%

All dollar figures in this table are rounded.Non-GAAP measure.
Non-GAAP measure. Please refer to section 15.0 of Management's Discussion and Analysis.

Retail

Consolidated retail sales for Canadian Tire Corporation increased by 2.6% in the quarter to $2.5 billion.

Total retail sales for Canadian Tire Retail increased 2.0% in the third quarter. Same store sales increased 1.4% and shipments were relatively flat compared to the third quarter of 2009. Adjusted earnings before taxes increased 12.1% due to improved product margins at CTR and lower net interest expense.

Key categories such as backyard, cleaning, exercise and outdoor recreation saw year-over-year sales increases and automotive saw positive sales growth in light auto maintenance parts and auto pride and accessories; which was offset by slower sales in heavy auto maintenance parts, auto fluids and tires. Customers continue to respond favourably to the store build and conversion efforts. Canadian Tire has completed 43 real estate projects to date in 2010 and is on track to open three new Smart stores, three new Small Market stores and complete 59 Smart store retrofits during 2010.

Mark's total retail sales grew 4.5% and same store sales increased 2.8% this quarter. Mark's strong increase in total retail sales was attributable to year-over-year increases in the Industrial wear category, particularly within Industrial footwear. Merchandise gross margins also improved significantly.

Mark's is continuing with its rebrand test in three pilot markets. Twenty-seven stores have been refurbished including signage changes to the new orange "Mark's" with the taglines "Smart Clothes. Everyday Living". While initial results are encouraging, it is intended that testing will continue into 2011.

Financial Services

As of Q3 2010, Financial Services' rolling 12 month return on receivables (ROR) has returned to its aspirational target range of 4.5-5.0%. Financial Services' gross average credit card receivables growth was 3.1% for the quarter and adjusted pre-tax net earnings for the quarter were $57.4 million, 104.0% higher than the third quarter of 2009.

Pre-tax net earnings growth reflects higher credit card interest, reduced loan loss provisioning and lower interest expense due to the reduction in excess liquidity versus that which was carried in the prior year.

As the Company has previously announced, Financial Services' earnings will continue to be impacted in the fourth quarter by sales tax changes, migration to chip and PIN card technology and new government regulations.

QUARTERLY DIVIDEND

Canadian Tire Corporation has declared a quarterly dividend of $0.275 per share on each Common and Class A Non-Voting share. The dividend is payable March 1, 2011 to Common and Class A shareholders of record as of January 31, 2011. The dividend is considered an "eligible dividend" for tax purposes.

FINANCIAL CHARTS

CANADIAN TIRE RETAIL

($ in millions)		Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Retail sales¹		$ 1,855.4	$ 1,818.3	2.0%	$ 5,332.3	$ 5,239.4	1.8%
Same store sales² (year-over-year % change)		1.4%	(3.8)%		1.3%	(1.9)%
Gross operating revenue		$ 1,408.9	$ 1,408.5	0.0%	$ 4,098.3	$ 4,057.8	1.0%
Net shipments (year-over-year % change)		(0.3)%	0.3%		0.9%	0.1%
Earnings before income taxes		$ 89.6	$ 95.6	(6.3)%	$ 223.7	$ 223.6	0.0%
Less adjustment for:
	Restructuring charge	(14.7)	-		(14.7)	-
	Amortization of interest rate swap unwind	-	1.6		-	1.6
	Gain (loss) on disposals of property and equipment³	(0.9)	0.3		0.5	(0.4)
	Former CEO retirement obligation	-	-		0.2	0.5
Adjusted earnings before income taxes⁴		$ 105.2	$ 93.7	12.1%	$ 237.7	$ 221.9	7.1%

Includes sales from Canadian Tire Retail stores, PartSource stores, and the labour portion of CTR's auto service sales.
Same store sales include sales from all stores that have been open for more than 53 weeks.
Includes fair market value adjustments and impairments on property and equipment.
Non-GAAP measure. Please refer to section 15.0 in Management's Discussion and Analysis.

PETROLEUM

($ in millions)		Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Sales volume (millions of litres)		445.2	433.5	2.7%	1,282.4	1,277.5	0.4%
Retail sales		$ 458.4	$ 441.1	3.9%	$ 1,335.4	$ 1,220.2	9.4%
Gross operating revenue		$ 414.2	$ 403.6	2.6%	$ 1,215.0	$ 1,116.3	8.8%
Earnings before income taxes		$ 5.6	$ 8.5	(33.7)%	$ 18.6	$ 22.3	(16.7)%
Less adjustment for:
	Loss on disposals of property and equipment¹	(0.6)	(0.1)		(0.9)	(0.4)
Adjusted earnings before income taxes²		$ 6.2	$ 8.6	(26.8)%	$ 19.5	$ 22.7	(14.2)%

Includes asset impairment losses.
Non-GAAP measure. Please refer to section 15.0 in Management's Discussion and Analysis.

MARK'S

($ in millions)		Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Retail sales¹		$ 198.1	$ 189.6	4.5%	$ 596.3	$ 568.3	4.9%
Same store sales² (year-over-year % change)		2.8%	(3.7)%		2.9%	(6.7)%
Gross operating revenue³		173.5	164.2	5.7%	522.7	493.5	5.9%
Earnings (loss) before income taxes		(3.1)	(3.8)	18.7%	(4.0)	(1.6)	(150.7)%
Less adjustment for:
	Loss on disposals of property and equipment	(0.5)	(0.5)		(0.8)	(0.8)
Adjusted earnings (loss) before income taxes⁴		$ (2.6)	$ (3.3)	22.0%	$ (3.2)	$ (0.8)	(295.3)%

Includes retail sales from corporate and franchise stores and in 2010 total system ancillary revenue.
Mark's same store sales exclude new stores, stores not open for the full period in each year, store closures and ancillary revenue.
Gross operating revenue includes retail sales at corporate stores and in 2010 ancillary revenue
Non-GAAP measure. Please refer to section 15.0 in Management's Discussion and Analysis.

FINANCIAL SERVICES

($ in millions)		Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Total gross average receivables					$ 4042.2	$ 4063.2	(0.5)%
Gross operating revenue		$ 234.3	$ 222.0	5.6%	$ 697.6	$ 672.2	3.8%
Earnings before income taxes		51.3	18.7	175.3%	150.4	93.5	61.0%
Less adjustment for:
	Loss on disposals of property and equipment	(0.2)	(0.5)		(0.2)	(0.7)
	Net effect of securitization activities¹	(5.9)	(9.0)		(7.8)	(6.8)
Adjusted earnings before income taxes²		$ 57.4	$ 28.2	104.0%	$ 158.4	$ 101.0	57.0%

Includes initial gain/loss on the sale of loans receivable, amortization of servicing liability and gain/loss on reinvestment.
Non-GAAP measure. Please refer to section 15.0 in Management's Discussion and Analysis.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking information that reflects management's current expectations related to matters such as future financial performance and operating results of the Company. Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our financial position, results of operation and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.

All statements other than statements of historical facts included in this document may constitute forward-looking information, including but not limited to, statements concerning management's expectations relating to possible or assumed future prospects and results, our strategic goals and priorities, our actions and the results of those actions and the economic and business outlook for us. Often but not always, forward-looking information can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made.

By its very nature, forward-looking information requires us to make assumptions and is subject to inherent risks and uncertainties, which give rise to the possibility that the Company's assumptions may not be correct and that the Company's expectations and plans will not be achieved. Although the Company believes that the forward-looking information in this document is based on information and assumptions which are current, reasonable and complete, this information is necessarily subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information for a variety of reasons. Some of the factors - many of which are beyond our control and the effects of which can be difficult to predict - include (a) credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates; (b) the ability of Canadian Tire to attract and retain quality employees, Dealers, Canadian Tire Petroleum agents and PartSource and Mark's Work Wearhouse store operators and franchisees, as well as our financial arrangements with such parties; (c) the growth of certain business categories and market segments and the willingness of customers to shop at our stores or acquire our financial products and services; (d) our margins and sales and those of our competitors; (e) risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, competition, seasonality, commodity price and business disruption, our relationships with suppliers and manufacturers, changes to existing accounting pronouncements, the risk of damage to the reputation of brands promoted by Canadian Tire and the cost of store network expansion and retrofits and (f) our capital structure, funding strategy, cost management programs and share price. We caution that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect our results. Investors and other readers are urged to consider the foregoing risks, uncertainties, factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such forward-looking information.

For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the "Risk Factors" section of our Annual Information Form for fiscal 2009 and our 2009 Management's Discussion and Analysis, as well as Canadian Tire's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.

Statements that include forward-looking information do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made have on the Company's business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other charges announced or occurring after such statements are made.

The forward-looking statements and information contained herein are based on certain factors and assumptions as of the date hereof. The Company does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, unless required by applicable securities laws.

REVIEW BY BOARD OF DIRECTORS

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

CONFERENCE CALL

Canadian Tire will conduct a conference call to discuss information included in this news release and related matters at 4:30 p.m. EST on November 11, 2010. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at http://corp.canadiantire.ca/EN/investors, and will be available through replay at this website for 12 months.

ABOUT CANADIAN TIRE

Canadian Tire Corporation, Limited (TSX: CTC.a, CTC) is one of Canada's most shopped general retailers with 482 Canadian Tire stores across the country. Our core retail and automotive operation is strengthened by PartSource, an automotive parts speciality chain; Canadian Tire Petroleum, one of the country's largest independent retailers of gasoline; Mark's, under the banner "Clothes That Work," a leading retailer of men's, women's and work apparel; and Canadian Tire Financial Services, which has issued approximately four million Canadian Tire MasterCard credit cards. More than 58,000 Canadians work across Canadian Tire's organization from coast-to-coast in the enterprise's retail, financial services and petroleum businesses.

Management's discussion and analysis (MD&A)

Introduction

This Management's Discussion and Analysis (MD&A) provides management's perspective on our Company, our performance and our strategy for the future.

Definitions
In this document, the terms "we", "us", "our", "Company" and "Canadian Tire" refer to Canadian Tire Corporation, Limited and its business units and subsidiaries. For commonly used terminology (such as retail sales and same store sales), see section 5.3 (Business segment performance) and the Glossary of Terms (pages 105 to 107) in our 2009 Financial Report, which can be found online on the SEDAR website at www.sedar.com and on our Canadian Tire website in the Investor Relations section at corp.canadiantire.ca/en/investors.

Review and approval by the Board of Directors
The Board of Directors, on the recommendation of its Audit Committee, approved the contents of this MD&A on November 11, 2010.

Quarterly and annual comparisons in this MD&A
Unless otherwise indicated, all comparisons of results for the third quarter (13 weeks ended October 2, 2010) are against results for the third quarter of 2009 (13 weeks ended October 3, 2009).

Accounting estimates and assumptions
The preparation of consolidated financial statements that conform with Canadian generally accepted accounting principles (GAAP) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. See section 12.0 in this MD&A for further information.

Forward-looking statements
This MD&A contains statements that are forward-looking. Actual results or events may differ materially from those forecasted in this disclosure because of the risks and uncertainties associated with Canadian Tire's business and the general economic environment. See section 19.0 in this MD&A for additional important information and a caution on the use of forward-looking information.

We cannot provide any assurance that forecasted financial or operational performance will actually be achieved or, if it is, that it will result in an increase in the price of Canadian Tire shares.

1.0 Our Company

1.1 Overview of the business

Canadian Tire has been in business for 88 years, offering everyday products and services to Canadians. Canadian Tire, our Dealers, store operators, PartSource corporate and franchisee stores, Petroleum agents and Mark's corporate and franchisee stores operate more than 1,200 general merchandise and apparel retail stores and gas bars. These comprise our Retail businesses. Canadian Tire also operates a Financial Services business. Canadian Tire Financial Services Limited and the Company's wholly-owned subsidiary, Canadian Tire Bank, offer a variety of financial services to Canadians, including the Canadian Tire Options® MasterCard®, personal loans, lines of credit, insurance and warranty products, guaranteed investment certificates (GICs) offered through third-party brokers and directly to the public, and high-interest and tax-free savings accounts.

Canadian Tire Retail (CTR) is one of Canada's most shopped general merchandise retailers, with a network of 482 Canadian Tire stores that are operated by Dealers, who are independent business owners. Dealers buy merchandise from the Company and sell it to consumers in Canadian Tire stores. CTR operates in the Living, Fixing, Playing and Automotive categories. CTR also includes PartSource, a chain of 87 specialty automotive hard parts stores that cater to serious "do-it-yourselfers" and professional installers of automotive parts. The PartSource network consists of 26 franchise stores and 61 corporate stores.

Canadian Tire Petroleum (Petroleum) is one of Canada's largest independent retailers of gasoline with a network of 283 gas bars, including 278 convenience stores and kiosks, 73 car washes, 9 Pit Stops and 90 propane stations. The majority of Petroleum's sites are co-located with Canadian Tire stores as a strategy to attract customers to Canadian Tire stores. All of Petroleum's sites are operated by agents.

Mark's Work Wearhouse (Mark's) is one of Canada's leading clothing and footwear retailers, operating 383 stores nationwide, including 340 corporate and 43 franchise stores, that offer men's wear, women's wear and industrial wear. Mark's operates under the banners "Mark's", "Mark's Work Wearhouse" and in Quebec, "L'Équipeur®". Mark's also conducts a business-to-business operation under the name "Imagewear, a Division of Mark's Work Wearhouse™".

Canadian Tire Financial Services Limited (Financial Services) markets a range of Canadian Tire-branded credit cards, including the Canadian Tire Options® MasterCard® and Gas Advantage® MasterCard®. Financial Services also markets personal loans, lines of credit, insurance and warranty products and an emergency roadside assistance service called Canadian Tire Roadside Assistance®. Canadian Tire Bank (CTB), a wholly-owned subsidiary of Financial Services, is a federally regulated bank that manages and finances Canadian Tire's consumer MasterCard, Visa and retail credit card portfolios, as well as the personal loan and line of credit portfolios, and is the issuer of GICs offered through third-party brokers. CTB also offers high-interest and tax-free savings accounts and retail GICs in all provinces except Quebec. CTB has also recently introduced deferred financing on tire purchases. CTB is a member of Canada Deposit Insurance Corporation (CDIC) and eligible deposit products issued by CTB qualify for CDIC insurance coverage.

1.2 Retail Store network at a glance

Number of stores and retail square footage		October 2, 2010	October 3, 2009
Consolidated store count
	CTR retail stores¹	482	476
	PartSource stores	87	87
	Mark's retail stores¹	383	374
	Petroleum gas bar locations²	283	273
Total stores		1,235	1,210
	CTR	19.1	18.9
	PartSource	0.3	0.3
	Mark's	3.3	3.3
Total retail square footage²(in millions)		22.7	22.5

¹ Store count numbers reflect individual selling locations; therefore, both CTR and Mark's totals include stores that are co-located.
² The average retail square footage for Petroleum's convenience stores was 468 square feet per store in Q3 2010. It has not been included in the total above.

2.0 Our Strategic Plan

2.1 Strategic Plan

The Strategic Plan outlines our strategy to build the Canadian Tire brand through a renewed focus on growth and productivity throughout the five-year plan period. Details of our Strategic Plan were announced at our investor conference and media day on April 7, 2010 and have been posted online on our website (under the Investor section) at http://corp.canadiantire.ca.

Specific objectives related to the Strategic Plan are included in section 4.0 of the MD&A contained in the 2009 Financial Report and on page 17 of the 2009 Annual Report.

2.2 Financial aspirations

The Strategic Plan includes financial aspirations for the Company for the five-year period ending in December 2014. These aspirations are not to be construed as guidance or forecasts for any individual year within the five-year period, but rather as long-term, rolling targets that we aspire to achieve over the life of the Strategic Plan, based on the successful execution of our various initiatives.

Financial measure			Aspiration
CTR Retail sales (POS)			3% to 5%
Consolidated adjusted EPS¹			8% to 10%
Retail return on invested capital (ROIC)			10%+
Financial Services return on receivables (ROR)			4.5% to 5.0%
Total Return to Shareholders (TRS), including dividends			10% to 12%

¹Excludes non-operating gains and losses on capital and intangible assets, the net effect of securitization activities and other unusual and/or non-recurring items not central to the Company's business.

We will report on our progress against these financial aspirations on an annual basis in our year-end Financial Report.

3.0 Our performance in 2010

3.1 Consolidated financial results

($ in millions except per share amounts)	Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Retail sales¹	$ 2,511.9	$ 2,449.0	2.6%	$ 7,264.0	$ 7,027.9	3.4%
Gross operating revenue	2,201.0	2,165.9	1.6%	6,445.2	6,248.8	3.1%
EBITDA²	236.2	218.8	8.0%	663.7	625.0	6.2%
Retail EBITDA^2,3	167.4	178.1	(6.0)%	462.5	476.7	(3.0)%
Earnings before income taxes	143.4	119.0	20.6%	388.7	337.8	15.1%
Effective tax rate	28.0%	28.2%		29.9%	29.3%
Net earnings	$ 103.2	$ 85.4	21.0%	$ 272.5	$ 238.8	14.1%
Basic earnings per share	$ 1.27	$ 1.04	21.1%	$ 3.34	$ 2.92	14.2%
Adjusted basic earnings per share²	$ 1.46	$ 1.11	31.2%	$ 3.54	$ 2.98	18.8%
¹Represents retail sales at CTR (which includes PartSource), Mark's corporate and franchise stores and ancillary revenue in 2010, as well as Petroleum's sites. ² See section 15.0 for non-GAAP measures. ³ Retail EBITDA excludes Financial Services as EBITDA is not the most relevant measure for Financial Services.

Consolidated gross operating revenue
Consolidated gross operating revenue for the quarter increased 1.6 per cent over the prior year due to increased sales across most of our retail businesses, especially Mark's which grew a strong 5.7 percent on the back of new product offerings, network growth and increased advertising. Financial Services also exhibited strong growth due to increased interest income from interest bearing accounts.

Consolidated net earnings
Consolidated net earnings for the quarter increased 21.0% due to a reduction in loan loss provisioning at Financial Services and improved product margins at CTR and Mark's. Earnings increased in spite of the $14.7 million restructuring provision noted below.

Impact of non-operating items
The following table shows our adjusted consolidated earnings on a pre-tax and after-tax basis, after taking into account certain non-operating and/or non-recurring and unusual items.

Adjusted consolidated earnings before and after income taxes¹

($ in millions except per share amounts)		Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Earnings before income taxes		$ 143.4	$ 119.0	20.6%	$ 388.7	$ 337.8	15.1%
Less pre-tax adjustment for:
	Former CEO retirement obligation²	-	-		0.2	0.5
	Amortization of interest swap unwind²	-	1.6		-	1.6
	Restructuring charge	(14.7)	-		(14.7)	-
	Net effect of securitization activities³	(5.9)	(9.0)		(7.8)	(6.8)
	Loss on disposals of property and equipment	(2.2)	(0.8)		(1.4)	(2.3)
Adjusted earnings before income taxes¹		$ 166.2	$ 127.2	30.7%	$ 412.4	$ 344.8	19.6%
Income taxes		47.1	36.2		123.4	101.2
Adjusted earnings after income taxes¹		$ 119.1	$ 91.0	31.0%	289.0	$ 243.6	18.7%
Basic earnings per share		$ 1.27	$ 1.04	21.1%	$ 3.34	$ 2.92	14.2%
Adjusted basic earnings per share¹		$ 1.46	$ 1.11	31.2%	$ 3.54	$ 2.98	18.8%
¹See section 15.0 on non-GAAP measures. ²The former CEO retirement obligation, the restructuring charge and the amortization of the interest rate swap have been recorded in CTR. See section 3.3.1.2. ³ Includes initial gain/loss on the sale of loans receivable, amortization of servicing liability and gain/loss on reinvestment.

On September 15, 2010 the Company announced that we would be restructuring our operations in order to focus the Company's leadership on top-line growth, build a world-class customer experience and reduce duplication of support services between the various businesses. The charge taken in the current quarter amounted to approximately $14.7 million (pre-tax).

Seasonal trend analysis
The second and fourth quarters of each year are typically when we experience stronger revenues and earnings in our retail businesses because of the seasonal nature of some merchandise at CTR and Mark's and the timing of marketing programs. The following table shows our financial performance by quarter for the last two years.

Consolidated quarterly results¹

($ in millions except per share amounts)	Q3 2010	Q2 2010	Q1 2010	Q4 2009	Q3 2009	Q2 2009	Q1 2009	Q4 2008
Gross operating revenue	$ 2,201.0	$ 2,414.1	$ 1,830.1	$ 2,437.7	$ 2,165.9	$ 2,324.8	$ 1,758.1	$ 2,587.8
Net earnings	103.2	119.9	49.4	96.2	85.4	103.7	49.7	101.5
Adjusted net earnings²	119.1	118.4	51.5	104.4	91.0	103.0	49.6	130.1
Basic and diluted earnings per share	1.27	1.47	0.61	1.18	1.04	1.27	0.61	1.24
Adjusted basic and diluted earnings per share²	1.46	1.45	0.63	1.28	1.11	1.26	0.61	1.60

¹ 2008 quarterly results have been restated for the implementation, on a retrospective basis, of CICA HB 3064 - Goodwill and Intangible Assets and the amendments to CICA HB 1000 - Financial Statement Concepts. See sections 17.1 and 17.2 in the 2009 Financial Report for additional information.
² See section 15.0 on non-GAAP measures.

3.2 Q3 2010 performance overview

Our Strategic agenda and/or business profitability were advanced during the third quarter of 2010 by the following;

Petroleum entered into an agreement in the second quarter to jointly construct and operate service stations along some of the 400 series highways in Ontario, amongst the busiest arteries in the country. The venture became operational in the 3^rd quarter and the Company opened eight sites within the quarter.
Mark's has completed store refurbishments for its rebrand test in three pilot markets, including signage changes to the new orange "Mark's" with the taglines "Smart Clothes" and "Everyday Living" (from the orange and blue "Mark's Work Wearhouse" and "Clothes that Work") at 27 stores.
Financial Services rolling 12 month return on receivables increased by 74 basis points from Q2 2010 to 5%, achieving the higher end of its targeted range.
CTR continued its work on expanding its network of the latest store formats and is on track to open 3 new Smart stores, 3 new Small Market stores and complete 59 Smart store retrofits during 2010.

A summary of our key performance metrics for the third quarter follows. Commentary to help explain third quarter performance may be found in individual Business Segment performance sections.

Key operating performance measures


(year-over-year percentage change, $ in millions or metric in millions, except where noted)	Q3 2010	Q3 2009	Change
CTR retail sales growth¹	2.0%	(2.3)%
CTR same store sales growth²	1.4%	(3.8)%
Retail square footage³ (in millions of square feet)	19.1	18.9	1.1%
Sales per square foot^{3, 4} (updated/expanded & traditional)	$ 373	$ 376	(0.8)%
CTR gross operating revenue	$ 1,408.9	$ 1,408.5	0.0%
CTR net shipments growth	(0.3)%	0.3%
CTR EBITDA⁵	$ 152.3	$ 161.2	(5.6)%
CTR adjusted earnings before income taxes⁵	$ 105.2	$ 93.7	12.1%

Mark's retail sales growth⁶	4.5%	(2.5)%
Mark's same store sales growth⁷	2.8%	(3.7)%
Mark's total retail square footage (in millions of square feet)	3.3	3.3	2.5%
Average sales per square foot¹⁴	$ 286	$ 296	(3.4)%
Mark's gross operating revenue¹³	$ 173.5	$ 164.2	5.7%
Mark's EBITDA⁵	$ 5.1	$ 3.8	41.9%
Mark's adjusted earnings before income taxes⁵	$ (2.6)	$ (3.3)	22.0%

Petroleum retail sales growth	3.9%	(19.8)%
Petroleum gasoline volume (litres) growth	2.7%	0.4%
Petroleum gross operating revenue	$ 414.2	$ 403.6	2.6%
Petroleum EBITDA⁵	$ 10.0	$ 13.1	(23.5)%
Petroleum adjusted earnings before income taxes⁵	$ 6.2	$ 8.6	(26.8)%

Financial Services' credit card sales growth	(0.8)%	0.8%
Financial Services' gross average credit card receivables growth	3.1%	4.5%
Average number of accounts with a balance⁸ (thousands)	1,716	1,767	(2.9)%
Average account balance⁸ (whole $)	$ 2,342	$ 2,204	6.2%
Net credit card write-off rate⁸	7.72%	7.59%
Allowance rate⁹	2.89%	2.93%
Operating expenses¹⁰ (as a % of GAR)	6.89%	6.98%
Return on average total managed portfolio^{10, 11, 12}	5.00%	3.88%
Financial Services' gross operating revenue	$ 234.3	$ 222.0	5.6%
Financial Services' adjusted earnings before income taxes⁵	$ 57.4	$ 28.2	104.0%

¹ Includes sales from Canadian Tire stores, PartSource stores and the labour portion of CTR's auto service sales.
² Includes sales from Canadian Tire and PartSource stores, but exclude sales from the labour portion of CTR's auto service sales.
³ Excludes PartSource stores. Retail space does not include warehouse, garden centre and auto service areas.
⁴ Retail sales are shown on a 52-week basis in each year for those stores that had been open for a minimum of two years as at the end of the current quarter. Sales from PartSource stores and the labour portion of CTR's auto service sales are excluded.
⁵ See section 15.0 on non-GAAP measures.
⁶ Includes retail sales from Mark's corporate and franchise stores and in Q3 2010 ancillary revenue
⁷ Mark's same store sales exclude new stores, stores not open for the full period in each year, store closures and ancillary revenue.
⁸ Credit card portfolio only.
⁹ The allowance rate was calculated on the total managed portfolio of loans receivable.
¹⁰ Figures are calculated on a rolling 12-month basis and comprise the total managed portfolio of loans receivable.
¹¹ Excludes the net effect of securitization activities, costs associated with the sale of the mortgage portfolio in Q4 2009 and gain/loss on disposal of assets.
¹² Return is calculated as adjusted earnings before taxes as a percentage of GAR.
¹³ Includes retail sales from Mark's corporate stores and in Q3 2010 ancillary revenue.
¹⁴ Average retail sales per square foot are based on sales from corporate stores. Mark's has prorated square footage for corporate stores that have been open for less than 12 months.

3.3 Business segment performance

3.3.1 Canadian Tire Retail

3.3.1.1 Key performance indicators

The following are key measures of CTR's sales productivity which are highlighted in the charts below:

total same store sales growth;
average sales per square foot of retail space

CTR total retail and same store sales


(year-over-year percentage change)	Q3 2010	Q3 2009	YTD 2010	YTD 2009

Total retail sales¹	2.0%	(2.3)%	1.8%	(0.3)%

Same store sales²	1.4%	(3.8)%	1.3%	(1.9)%
¹ Includes sales from Canadian Tire and PartSource stores and the labour portion of CTR's auto service sales. ² Includes sales from Canadian Tire and PartSource stores, but exclude sales from the labour portion of CTR's auto service sales.

Average sales per square foot of CTR retail space^1,2,3


	For the 12 months ended, October 2, 2010	For the 12 months ended, October 3, 2009
Retail square footage^1,3 (millions of square feet)	19.1	18.9
Sales per square foot^2,3 ($ sales per square foot)	$ 373	$ 376

¹ Retail square footage is based on the total retail square footage including stores that had not been open for a minimum of two years. It represents a point in time (instead of a rolling 12-month period) as at the end of the year.
² Retail sales are shown on a 52-week basis in each year for those stores that had been open for a minimum of two years as at the end of the current quarter. Sales from PartSource stores and the labour portion of CTR's auto service sales are excluded.
³ Excludes PartSource stores. Retail space does not include warehouse, garden centre and auto service areas.

Retail square footage increased by approximately 0.2 million square feet year-over-year due to the network expansion and retrofit activities noted above.

CTR retail sales

Third quarter

Total retail sales in the third quarter increased 2.0 percent over the prior year from a combination of organic growth in same store sales as well as the expansion of the store network to 482 stores from 476 stores in the prior year as the Company continues to roll out its new store formats as noted below. The same store sales growth resulted primarily from higher transaction size.

Key categories such as backyard fun, exercise and better living experienced double digit sales increases and customers continue to respond favourably to the store build and conversion efforts as well as promotional programs.

While Automotive saw positive sales growth in the light auto maintenance parts and auto pride and accessories categories, these were more than offset by slower sales in heavy maintenance parts, auto maintenance fluids and tires.

CTR store network definitions

Our store network has evolved as we have introduced new store formats into our store categories, which we define in section 5.3.1.2 of the 2009 Financial Report.

CTR store count


	Q3 2010	2009	2008	2007	2006
Updated and expanded stores	326	363	393	381	363
Smart stores	77	36	2	-	-
Traditional stores	68	71	76	92	105
Small Market stores	11	9	4	-	-
Total updated and expanded, traditional, Small Market and Smart stores	482	479	475	473	468
PartSource stores	87	87	86	71	63

CTR continues to retrofit its store network with a focus on converting selected traditional and "updated and expanded" existing stores to the latest formats. Customer feedback on the two new formats (Small Market and Smart store) has been especially well received and sales results have been very positive. As a result the Company has continued to ramp up its new format build/conversion program with 43 real estate projects completed to date in 2010.

3.3.1.2 CTR's financial results


($ in millions)	Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Retail sales	$ 1,855.4	$ 1,818.3	2.0%	$ 5,332.3	$ 5,239.4	1.8%
Net shipments (year-over-year % change)	(0.3)%	0.3%		0.9%	0.1%
Gross operating revenue	1,408.9	1,408.5	0.0%	4,098.3	4,057.8	1.0%
EBITDA¹	152.3	161.2	(5.6)%	410.7	421.1	(2.5)%
Earnings before income taxes	89.6	95.6	(6.3)%	223.7	223.6	0.0%
Less adjustment for:
Restructuring charge	(14.7)	-		(14.7)	-
Amortization of interest rate swap unwind	-	1.6		-	1.6
Gain (loss) on disposals of property and Equipment	(0.9)	0.3		0.5	(0.4)
Former CEO retirement obligation	-	-		0.2	0.5
Adjusted earnings before income taxes¹	$ 105.2	$ 93.7	12.1%	$ 237.7	$ 221.9	7.1%

¹See section 15.0 on non-GAAP measures.

Explanation of CTR's financial results

Third quarter

Gross Operating Revenue remained consistent with the prior year as shipment volume was relatively flat.

Adjusted Earnings before taxes increased 12.1% due to improved product margins and lower net interest expense. These were partially offset by increased advertising and sponsorships to support our Hockey and Automotive categories.

3.3.1.3 Business risks

CTR is exposed to a number of risks in the normal course of its business that have the potential to affect its operating performance. These include, but are not limited to, supply chain disruption, seasonality and environmental risks. Please see section 5.3.1.5 of our 2009 Financial Report for an explanation of these business-specific risks. See also section 11.0 of this MD&A for a discussion on Enterprise risk management and section 14.0 of the MD&A contained in our 2009 Financial Report for a discussion of some other industry-wide and Company-wide risks affecting the business.

3.3.2 Canadian Tire Petroleum

3.3.2.1 Key performance indicators

Gasoline sales volume is a top-line performance indicator for Petroleum, as measured by the number of gasoline litres sold. Fluctuations in the wholesale and retail price of gasoline may result in fluctuations in Petroleum's margin and profitability.

Gasoline sales volume


	Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Sales volume (millions of litres)	445.2	433.5	2.7%	1,282.4	1,277.5	0.4%

Petroleum has continued to hold its market share in a mature market, largely due to our loyalty program, customer service experience at our gas bars and strong penetration of our Canadian Tire Options MasterCard and Gas Advantage MasterCard. The opening of service centres on the 400 series highways also contributed to Petroleum's volume growth and image enhancement. Gasoline sales volumes during the third quarter were up 2.7 per cent as a result.

Petroleum's convenience and car wash sales


(year-over-year percentage change)	Q3 2010	Q3 2009	2010 YTD	2009 YTD

Total retail sales
Convenience store sales	17.1%	15.4%	15.7%	17.0%
Car wash sales	0.0%	7.7%	12.3%	8.3%

Same store sales
Convenience store sales	13.5%	13.3%	14.0%	14.5%
Car wash sales	0.2%	16.5%	13.0%	8.5%

Convenience store sales were strong in the third quarter of 2010, mainly due to sales increases in the tobacco and lottery categories and continued steady growth in the confectionary category as well as activity from the newly opened service centres on the 400 series highways. Car wash sales leveled off in the third quarter but have shown strong growth year to date. Car wash results are generally heavily correlated to weather conditions.

3.3.2.2 Petroleum's financial results


($ in millions)	Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Retail sales	$ 458.4	$ 441.1	3.9%	$ 1,335.4	$ 1,220.2	9.4%
Gross operating revenue	414.2	403.6	2.6%	1,215.0	1,116.3	8.8%
EBITDA¹	10.0	13.1	(23.5)%	31.7	35.6	(11.2)%
Earnings before income taxes	5.6	8.5	(33.7)%	18.6	22.3	(16.7)%
Less adjustment for: Loss on disposals of property and equipment	(0.6)	(0.1)		(0.9)	(0.4)
Adjusted earnings before income taxes¹	$ 6.2	$ 8.6	(26.8)%	$ 19.5	$ 22.7	(14.2)%

¹See section 15.0 on non-GAAP measures.

Explanation of Petroleum's financial results

Third quarter

Petroleum's gross operating revenue increased 2.6 per cent as gasoline volume increases and strong convenience sales were partially offset by softer pump prices in key markets.

Petroleum's pre-tax earnings, however, decreased by 33.7% due to lower gasoline margins, start up costs associated with the new 400 highway series service stations and a higher loss on the disposal of fixed assets during the quarter in comparison with the prior year.

3.3.2.3 Business risks

Petroleum is exposed to a number of risks in the normal course of its business that have the potential to affect its operating performance. These include, but are not limited to, environmental and commodity price and disruption risks. Please see section 5.3.3.5 of our 2009 Financial Report for an explanation of these business-specific risks. See also section 11.0 of this MD&A for a discussion on Enterprise risk management and section 14.0 of the MD&A contained in our 2009 Financial Report for a discussion of some other industry-wide and Company-wide risks affecting the business.

3.3.3 Mark's Work Wearhouse

3.3.3.1 Key performance indicators

The following are key performance indicators for Mark's:

retail and same store sales growth;
average sales per corporate store; and
average sales per square foot of retail space

Mark's retail and same store sales growth


(year-over-year percentage change)	Q3 2010	Q3 2009	2010 YTD	2009 YTD

Total retail sales¹	4.5%	(2.5)%	4.9%	(5.3)%

Same store sales²	2.8%	(3.7)%	2.9%	(6.7)%
¹ Includes retail sales from corporate and franchise stores and in 2010 total system ancillary embroidery and alteration revenue, net of a sales return provision. ² Mark's same store sales exclude new stores, stores not open for the full period in each year, store closures and in 2010 ancillary revenue.

Third quarter

Mark's strong increase in total retail sales was attributable to the Industrial wear category which continued to show a fast recovery coming out of the recession (up 9.7%), with sales particularly strong in industrial footwear. Men's casual and dress wear sales were flat while women's wear declined slightly (down 1.9 per cent). Growth has moderated in the women's wear category after leading Mark's growth in recent quarters.


Average Corporate Store Sales¹	For the 12 months ended, October 2, 2010	For the 12 months ended, October 3, 2009
Corporate Store Retail Square Footage (thousands)⁴	2,990	2,915
Average retail sales per store ($ thousands)²	$ 2,613	$ 2,589
Average sales per square foot ($)³	286	296

¹Calculated on a rolling 12 month basis.
² Average retail sales per corporate store includes stores that have been open for 12 months or more.
³Average retail sales per square foot are based on sales from corporate stores. Mark's has prorated square footage for corporate stores that have been open for less than 12 months.
⁴ End of period values.

The average retail sales per store has stopped the decline experienced since the end of the third quarter of 2007 attributable to the recession. This is due to the fact that Mark's has, through new stores, store relocations and franchise repatriations, recently improved its corporate store retail performance. The average sales per square foot, however, has continued to decline slightly due to the square footage increasing significantly over that time frame.

In spite of the recent recession, Mark's believes that, with its continued network expansion and product innovation, it is well positioned to increase its market share and resume improving its average sales per square foot in the future

3.3.3.2 Mark's financial results


($ in millions)	Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Retail sales¹	$ 198.1	$ 189.6	4.5%	$ 596.3	$ 568.3	4.9%
Gross operating revenue²	173.5	164.2	5.7%	522.7	493.5	5.9%
EBITDA³	5.1	3.8	41.9%	20.1	20.0	0.6%
Earnings (loss) before income taxes	(3.1)	(3.8)	18.7%	(4.0)	(1.6)	(150.7)%
Less adjustment for: Loss on disposals of property and equipment	(0.5)	(0.5)		(0.8)	(0.8)
Adjusted earnings (loss) before income taxes³	$ (2.6)	$ (3.3)	22.0%	$ (3.2)	$ (0.8)	(295.3)%
¹ Includes retail sales from corporate and franchise stores and in 2010 total system ancillary embroidery and alteration revenue, net of a sales return provision. ² Gross operating revenue includes retail sales at corporate stores and in 2010 ancillary franchise royalty fees, embroidery and alteration revenue, net of a sales return provision. ³ See section 15.0 on non-GAAP measures.

Explanation of Mark's financial results

Third quarter

Gross operating revenue increased 5.7 per cent in the quarter and was driven, as noted above, by the increase in industrial wear sales in corporate stores.

Mark's loss before taxes for the quarter improved by 0.7 million (18.7%) due to stronger sales and a 370 basis point improvement in gross margin on the strength of improved purchase markup and reduced markdown activity. This improvement in gross margin was largely offset, however, by higher expenses due to increased advertising (up $2.1 million), expenses associated with the expansion of the store network and incremental depreciation expense due to reassessment of asset lives.

3.3.3.3 Business risks

Mark's is exposed to a number of risks in the normal course of its business that have the potential to affect its operating performance. These include, but are not limited to, seasonality and market obsolescence risks. Please see section 5.3.2.5 of our 2009 Financial Report for an explanation of these business-specific risks. See also section 11.0 of this MD&A for a discussion on Enterprise risk management and section 14.0 of the MD&A contained in our 2009 Financial Report for a discussion of some other industry-wide and Company-wide risks affecting the business.

3.3.4 Canadian Tire Financial Services

3.3.4.1 Key performance indicators

Financial Services' profitability measures are tracked as a percentage of total gross average receivables (GAR), and key portfolio quality metrics are shown in the table below.

Key metrics
	Q3 2010	Q3 2009	Q3 2008	Q3 2007	Q3 2006
Total gross average receivables^1,2	$ 4,049.3	$ 4,132.6	$ 3,951.8	$ 3,709.8	$ 3,460.8
Total revenue as a % of GAR^2,3,4	25.39%	25.05%	24.30%	24.88%	25.01%
Variable expenses as a % of GAR^3,4	13.50%	14.19%	11.90%	11.69%	11.95%
Operating expenses as a % of GAR³	6.89%	6.98%	7.65%	7.75%	8.12%
Return on average total managed portfolio^3,4,5	5.00%	3.88%	4.75%	5.45%	4.93%
Adjusted earnings before income taxes^1,4,6	$ 57.4	$ 28.2	$ 57.3	$ 50.5	$ 42.5
Net credit card write-off rate⁷	7.72%	7.59%	6.05%	5.77%	5.95%
Credit card account balances less than 30 days overdue at the end of the period	96.12%	95.74%	96.19%	96.25%	96.08%
¹$ in millions ² Represents the gross average receivables of credit card, personal loan, line of credit and mortgage portfolios. ³ Figures are calculated on a rolling 12-month basis and comprise the total managed portfolio of loans receivable. ⁴ Excludes the net effect of securitization activities, gain on disposal / redemption of investment, costs associated with the sale of the mortgage portfolio and gain/loss on disposal of assets. ⁵ Return is calculated as adjusted earnings before taxes as a percentage of GAR. ⁶See section 15.0 on non-GAAP measures. ⁷Figures are calculated on a rolling 12-month basis and comprise the total managed portfolio of credit card receivables

Business Performance
In 2009, the Canadian economy was challenged with an increase in unemployment resulting in rising consumer bankruptcies, a deterioration of the aging of receivables and increased write-offs. The economy has recovered somewhat in 2010 and this has resulted in the return on Financial Services's total managed portfolio increasing in comparison with 2009 to come back in line with historical norms. Improvements in revenues from selective pricing changes, ongoing targeted credit limit increases and balance transfer offers and control of operating expenses were measures put into place over the past few quarters to offset the effects of a challenged economy. Earnings are expected to be impacted throughout the last quarter of the fiscal year due to tax changes, migration to chip and PIN card technology and new government regulations.

Portfolio Quality
The 2010 rolling 12-month net write-off rate on the credit card loans portfolio was negatively impacted by an increase in write-offs as a result of a significantly more challenging economic environment and rising unemployment levels over that period. The net write off rate, however, has declined 27 basis points from Q2 2010 indicating an improvement in recent write off trends.

As of Q3 2010, aging of credit card receivables had improved and has begun to return to normal levels. As a result, net write-offs and variable expenses are expected to improve throughout the remainder of 2010.

3.3.4.2 Financial Services' financial results


($ in millions)	Q3 2010	Q3 2009	Change	2010 YTD	2009 YTD	Change
Gross operating revenue	$ 234.3	$ 222.0	5.6%	$ 697.6	$ 672.2	3.8%
EBITDA¹	68.8	40.7	69.2%	201.2	148.3	35.8%
Earnings before income taxes	51.3	18.7	175.3%	150.4	93.5	61.0%
Less adjustment for:
Loss on disposals of property and equipment	(0.2)	(0.5)		(0.2)	(0.7)
Net effect of securitization activities²	(5.9)	(9.0)		(7.8)	(6.8)
Adjusted earnings before income taxes¹	$ 57.4	$ 28.2	104.0%	$ 158.4	$ 101.0	57.0%

¹ See section 15.0 on non-GAAP measures.
² Includes initial gain/loss on the sale of loans receivable, amortization of servicing liability and gain/loss on reinvestment.

Explanation of Financial Services' financial results

Third quarter

Financial Services' gross operating revenue increased by 5.6 per cent over the third quarter of 2009 largely as a result of an increase in credit card interest earned from higher average credit card receivables balances. This was partially offset by the loss of the revenue stream associated with the mortgage portfolio, which was sold in Q4 2009.

Pre-tax earnings for the quarter increased very significantly, up 175.3%, reflecting higher credit card interest as noted above, significantly reduced loan loss provisioning and lower interest due to the reduction in excess liquidity versus that which was carried in the prior year. The reduction in write offs and the improvement in aging of the credit card portfolio at the end of the quarter favourably impacted loan loss provisioning versus a year ago. Financial Services' also benefited from a lower loss from securitization activities than in the prior year. These were partially offset by increased operating costs associated with the new Harmonized Sales Tax (HST) and migration to chip and PIN technology.

3.3.4.3 Business risks

Financial Services is exposed to a number of risks in the normal course of its business that have the potential to affect its operating performance. These include, but are not limited to, consumer credit, securitization funding, interest rate and regulatory risk. Please see section 5.3.4.8 of our 2009 Financial Report for an explanation of these business-specific risks as well as section 5.1.4 of this MD&A for a description of the securitization program and Canadian Tire's liquidity and capital market activity. Also see section 11.0 of this MD&A for a discussion on Enterprise risk management and section 14.0 of the MD&A contained in our 2009 Financial Report for a discussion of some other industry-wide and Company-wide risks affecting the business.

4.0 Capital management

In order to support our growth agenda and meet the objectives enumerated in our Strategic Plan, the Company actively manages its capital. The Company's objectives are:

ensuring sufficient liquidity to support its financial obligations and execute its operating and strategic plans;
maintaining healthy liquidity reserves and access to capital; and
minimizing the after-tax cost of capital while taking into consideration current and future industry, market and economic risks and conditions.

The current economic environment has not changed the Company's objectives in managing capital, although the Company did place greater emphasis on the second of these objectives when credit markets were constrained in 2008 and much of 2009.

The definition of capital varies from company to company and from industry to industry. Our definition of capital includes the current-portion of long-term debt, long-term debt, long-term deposits, long-term liabilities that are derivative or hedge instruments related to capital items only, share capital, contributed surplus, components of accumulated other comprehensive income (loss) related to capital items only, and retained earnings.

Under the existing debt agreements, key financial covenants are monitored on an ongoing basis by Management to ensure compliance with the agreements. The Company was in compliance with these covenants during the third quarter of 2010.

The Company's wholly-owned subsidiary, CTB, manages its capital under guidelines established by the Office of the Superintendent of Financial Institutions Canada (OSFI). The regulatory capital guidelines measure capital in relation to credit, market and operational risks. CTB has a capital management policy, an internal capital adequacy assessment process and procedures and controls which it utilizes to achieve its goals and objectives. CTB��s objectives include:

providing sufficient capital to maintain the confidence of depositors;
being an appropriately capitalized institution, as measured internally, defined by regulatory authorities and compared with CTB's peers; and
achieving the lowest overall cost of capital consistent with preserving the appropriate mix of capital elements to meet target capitalization levels.

During the third quarter of 2010 and for the comparative period, CTB complied with the capital guidelines issued by OSFI under the "International Convergence of Capital Measurement and Capital Standards - A Revised Framework" (Basel II).

For further information on capital management, see section 7.0 (Capital Management) of the MD&A contained in our 2009 Financial Report.

5.0 Financing

Credit markets have shown consistent improvement from mid-2009 onwards and Canadian Tire's financing capabilities remain strong. A number of alternative financing sources are available to the Company and CTB to ensure that the appropriate level of liquidity is available to meet our strategic objectives. These sources are identified in section 8.0 of the MD&A contained in our 2009 Financial Report.

The Company repaid a $300 million medium-term notes with an interest rate of 5.22 per cent that matured on October 1, 2010. This debt will not be refinanced as the Company has sufficient liquidity.

Canadian Tire participates in the asset-backed security markets through the issuance of commercial paper and issuance of MTNs out of Glacier. As of October 2, 2010, Glacier had $100 million of commercial paper outstanding ($63 million of commercial paper outstanding as of October 3, 2009). In November 2010, a five-year $365 million Glacier-issued MTN series matures. As per the Series Purchase Agreement, Glacier is required to accumulate the principal liquidation amounts for these notes from credit card collections over the two or three months preceding maturity in the Liquidation Principal Funding account. The Company has access to other sufficient sources of financing, including broker deposits and retail deposits should the Company not seek to complete a credit card securitization transaction in the near to medium term.

As of October 2, 2010, the Company had $1.17 billion in committed bank lines of credit, $800 million of which is available under a two-year syndicated credit facility. The syndicated facility is available to the Company until June 2012 and can be extended for an additional 364-day period annually. The balance of credit lines has been established pursuant to bilateral credit facility agreements that are available to the Company until June 2011. Each quarter, the company has the ability to request an extension of each of the bilateral credit facilities for an additional 90-day period.

As of October 2, 2010, the Glacier Credit Card Trust (Glacier) commercial paper program has access of up to $800 million of the total Canadian Tire committed credit lines. Glacier has achieved compliance with DBRS® Global Liquidity Standards.

In September 2010, Canadian Tire received confirmation of the ratings from DBRS on its various funding programs, all of which had a stable outlook. Standard & Poor's rating remains stable. As at October 2, 2010 there has been no change in the ratings.

For information related to our broker and retail deposits, see section 8.0 of the MD&A contained in our 2009 Financial Report.

5.1 Funding program

5.1.1 Funding requirements

We fund our capital expenditures, working capital needs, dividend payments and other financing needs, such as debt repayments and Class A Non-Voting Share purchases under the Normal Course Issuer Bid (NCIB), from a combination of sources. In the third quarter of 2010, the primary source of funding was the $39 million of cash generated from operating activities.

5.1.2 Cash and cash equivalents

The table below shows the cash and cash equivalents at the end of the third quarter of 2010 compared to the third quarter of 2009.


($ in millions)	October 2, 2010	October 3, 2009¹
Cash and cash equivalents¹	$ 456.5	$ 961.6

¹Certain prior year cash and cash equivalents has been reclassified to correspond with the current year presentation. See section 14.2 for further information.

During the third quarter of 2010, we used cash primarily for the following:

$300 million for repayment of long-term debt;
$179 million for the net reduction in securitization of loans receivable;
$72 million for the purchase of short-term investments;
$64 million for the additions to property and equipment; and
$16 million for the purchase of intangible assets.

5.1.3 Working capital

Optimizing our working capital continues to be a long-term priority in order to maximize cash flow for use in the operations of the Company. The table below shows the change in the value of our working capital components at the end of the third quarter of 2010 from the third quarter of 2009.

Comparable working capital components
($ in millions)	October 2, 2010	October 3, 2009	Increase/ (decrease) in working capital
Short-term investments	$ 233.0	$ 190.9	$ 42.1
Accounts receivable	599.7	682.5	(82.8)
Merchandise inventories	1,239.0	1,216.9	22.1
Income taxes recoverable	74.2	116.1	(41.9)
Prepaid expenses and deposits	71.8	70.1	1.7
Accounts payable and other	(1,508.1)	(1,396.8)	(111.3)
			$ (170.1)

Accounts receivable decreased from the prior year as the Dealer Stimulus program from 2009 (which extended credit terms) was not repeated in 2010.

Income taxes recoverable declined from the prior year due to a reduction in the installment base.

Accounts payable and other increased over the prior year primarily due to the accrued restructuring provision and increased merchandise vendor payables.

5.1.4 Loans receivable

Our loans receivable securitization program is designed to provide a cost-effective source of funding for Financial Services. Loans receivable were as follows at the indicated dates:

Financial Services' net managed portfolio of loans receivable


($ in millions)	October 2, 2010	October 3, 2009
Securitized	$ 1,452.8	$ 1,798.6
Non-securitized	2,469.9	2,253.6
Net managed loans receivable	$ 3,922.7	$ 4,052.2

At the end of the third quarter of 2010, net managed loans receivable were relatively flat in comparison to the end of the third quarter of 2009 as loan growth during the period was offset by the sale of the mortgage receivable portfolio in Q4 2009.

For more information related to our loans receivable portfolio, see Note 2 in the Notes to the Consolidated Financial Statements as well as section 8.1.5 of the MD&A contained in our 2009 Financial Report.

6.0 Equity

The book value of Common and Class A Non-Voting Shares at the end of the third quarter of 2010 was $48.25 per share compared to $44.33 at the end of the third quarter of 2009.

For information related to the number of shares outstanding for the Class A Non-Voting Shares (CTC.A) and the Common Shares (CTC), see Note 4 in the Notes to the Consolidated Financial Statements.

Dividends
Dividends declared on Common and Class A Non-Voting Shares in the third quarter of 2010 remained consistent with the third quarter of 2009 at $0.21 per share, reflecting the Board of Directors' decision in February 2010 to maintain the quarterly dividend rate at $0.21 per share.

The following chart summarizes our quarterly dividend distribution in 2010 payable to the shareholders as of the record date:


Quarterly dividend	Date of declaration	Record date	Date payable	Amount payable per share
First Quarter	March 11, 2010	April 30, 2010	June 1, 2010	$ 0.21
Second Quarter	May 13, 2010	July 31, 2010	September 1, 2010	$ 0.21
Third Quarter	October 7, 2010	October 29, 2010	December 1, 2010	$ 0.21

As a result of the Company's operating results, strong cash generation, liquidity and solid Balance Sheet position, the Company has announced an increase in its quarterly dividend from 21 cents per share to 27.5 cents per share.

7.0 Investing activities

7.1 Q3 2010 Capital expenditures

Canadian Tire's capital expenditures, on an accrual basis, totaled $89 million in the third quarter of 2010 (including intangible assets such as software acquisitions), approximately 39 per cent higher than the $64 million spent in the third quarter of 2009. These capital expenditures were comprised of:

$54 million for real estate projects, including projects associated with the rollout of CTR's new store formats;
$19 million for information technology initiatives;
$ 4 million for Mark's new inventory management system ("R6");
$ 4 million for Mark's re-branding initiative;
$ 3 million for Automotive Infrastructure (including IT elements);
$ 3 million for CTR supply chain and distribution centres; and
$ 2 million for other purposes.

7.2 2010 Capital expenditures plan

We continue to invest in our retail store network by converting older format stores to the new Smart and Small Market stores. In addition, we plan to invest in productivity and efficiency initiatives such as the Automotive Infrastructure program. Our 2010 capital plan is in the range of $280 million to $300 million and consists of:

$161 million for real estate projects, including $122 million associated with the rollout of CTR's new store formats;
$63 million for information technology;
$28 million for CTR distribution centres;
$15 million for Automotive Infrastructure;
$11 million for CTR change program; and
up to $22 million for other purposes.

8.0 Foreign operations

The Company has established operations outside of Canada including offshore activities in Bermuda and the Pacific Rim. For an overview of our foreign operations, see section 11.0 of the MD&A contained in the 2009 Financial Report.

9.0 Tax matters

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

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

There have been no substantial changes in the status of ongoing audits by tax authorities as disclosed in Note 14 of the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 contained in our 2009 Annual Report.

The Company implemented the new Harmonized Sales Tax (HST) change effective July 1. It is not expected to have a material impact on our overall business.

10.0 Off-balance sheet arrangements

10.1 Glacier Credit Card Trust

Glacier was formed to buy co-ownership interests in our credit card loans, and it issues debt to third-party investors to fund its purchases. Refer to sections 8.1.5 and 13.1 of the MD&A contained in our 2009 Financial Report for additional information on Glacier.

10.2 Trust financing for Dealers

A financing program is in place to provide an efficient and cost-effective way for Dealers to access the majority of the financing they require for their store operations. The agreement with the Trust and the participating banks for the Trust financing program for Dealers was amended in 2009 and now extends on a rolling 6 month basis.

Please see section 13.2 of the MD&A contained in our 2009 Financial Report for additional information on this program.

10.3 Bank financing for Dealers

We have guaranteed the bank debt of some Dealers. The total is approximately $38.4 million. Refer to MD&A section 13.3 of our 2009 Financial Report for additional information on this program.

11.0 Enterprise risk management

The Company approaches the management of risk strategically through its Enterprise Risk Management (ERM) framework in order to mitigate the impact of principal risks on its business and operations. The ERM framework sets out principles and tools for identifying, evaluating, prioritizing, monitoring and managing risk effectively and consistently across the Company.

The ERM framework and the principal risks that the Company manages on an ongoing basis are described in detail in sections 14.0 and 14.2, respectively, in the MD&A contained in our 2009 Financial Report.

Management reviews risks on an ongoing basis and did not identify any new principal risks during the third quarter of 2010.

12.0 Critical accounting estimates

The Company estimates certain amounts reflected in its financial statements using detailed financial models that are based on historical experience, current trends and other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. In our judgment, the accounting policies and estimates detailed in Note 1 of the Notes to the Consolidated Financial Statements for the year ended January 2, 2010 do not require us to make assumptions about matters that are highly uncertain and accordingly none of the estimates is considered a "critical accounting estimate" as defined in Form 51-102F1 published by the Ontario Securities Commission, except as noted below.

In view of the turmoil in credit markets and economic recession experienced in Canada, the Company reviewed the allowance for credit losses at Financial Services and considers it to be a "critical accounting estimate". The allowance for credit losses adjusts the value of the Financial Services loan portfolio to reflect its estimated realizable value. Financial Services' allowance for impaired loans receivable for each of credit card, personal and line of credit loans is determined using historical loss experience of account balances based on the aging and arrears status, with certain adjustments for other relevant circumstances influencing the recoverability of the loans receivables. A robust model is used and is based on economic conditions and trends specific to Financial Services. The allowance for impaired credit card loans (the largest portfolio) is comprised of general, bankruptcy and fraud risk components. Changes in circumstances including, but not limited to, changes in the aging of accounts and changes in the bankruptcies experienced may cause future assessments of credit risk to be materially different from current assessments, which could require an increase or decrease in the allowance for credit losses. The impairment provisions for personal loans and line of credit loans operate in similar fashion.

Further details on consumer credit risk may be found in section 5.3.4.8 (Financial Services' business risk) of the MD&A contained in our 2009 Financial Report.

13.0 Contractual obligations

The Company has a number of obligations related to long-term debt, capital lease obligations, operating leases, purchase obligations, Financial Services' deposits and other obligations. For a complete description of amounts outstanding for the year-ended January 2, 2010, see section 16.0 of the MD&A contained in our 2009 Financial Report.

At the end of the third quarter of 2010, there have been no significant changes since the year-ended January 2, 2010 except for the repayment of $300 million in debt, the entering into various agreements related to operating Petroleum outlets on the 400 series highways in Ontario, both of which were noted above, and entering into a new Petroleum supply agreement with a major supplier.

14.0 Changes in accounting policies

The numbers reflected in this MD&A have been calculated using the same accounting policies and methods of their application as the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 (contained in our 2009 Financial Report).

14.1 Comparative Figures

Certain of the prior period's figures have been reclassified to correspond to the current year presentation, including debt issuance costs netted against long-term debt and bank overdrafts now included in current liabilities. As a result, total assets have been restated by $85.1 million at October 3, 2009 and $83.0 million at January 2, 2010, with a corresponding increase in total liabilities.

14.2 International Financial Reporting Standards (IFRS)

In February 2008, the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced by International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. Accordingly, the conversion from Canadian GAAP to IFRS will be applicable to the Company's reporting for the first quarter of 2011, for which the current and comparative information will be prepared under IFRS. The transition to IFRS will impact accounting, financial reporting, internal control over financial reporting, taxes, information systems and processes as well as certain contractual arrangements.

Given the magnitude of the effort involved in this conversion, the project (which employs formal project management practices) has been developed in three main phases.

Phase One: Preliminary Scoping and Diagnostic Impact Assessment

This phase consisted of a high-level assessment to identify key areas of Canadian GAAP - IFRS differences that were most likely to impact the Company. The assessment was completed over the period 2007-2008 and was integral in prioritizing and resourcing the work streams identified below to enable the subsequent steps in the process. Activities in this phase also included the recruitment and training of core internal technical resources to be deployed on the conversion project and retained afterwards to support ongoing training of other finance personnel dealing with the more complex technical accounting requirements of IFRS.

Phase Two: Detailed Analysis and Design

This phase commenced in the fourth quarter of 2008 and involved the detailed assessment, from an accounting, reporting and business perspective, of the changes that will be caused by the conversion to IFRS. This phase initiated the launch of 13 accounting topic-specific "work streams" that are most relevant to the Company and four general work streams. This phase also included the standardization of criteria used to assess the appropriateness of accounting policy choices in cases where choices are permissible under IFRS.

Accounting specific work streams included revenue recognition, tangible assets (including leases), impairments, provisions, contingent liabilities and contingent assets, business combinations, consolidations, securitization transactions, borrowing costs, compensation and benefits, financial instruments, income taxes, software and intangibles and financial statement presentation and disclosure. General work streams included contract review, employee education and training, information systems and communication. The design deliverables coming out of these accounting specific work streams included the documentation of the rationale supporting accounting policy choices, new disclosure requirements and their sources and implementation guidance for business units and corporate groups as they undertook the execution phase noted below. All of the accounting specific work streams have been completed. Some of the general work streams, such as the education and training and communication work streams will continue throughout the duration of the conversion project. The latter will involve not only key finance employees but also other staff and management as well as the Audit Committee, Board of Directors and external parties such as investors and analysts.

Phase Three: Execution

This phase involves executing the work identified in phase two by making changes to business and accounting processes and supporting information systems within each business unit and corporate group as well as the formal documentation of the final approved accounting policies and procedures compliant with IFRS. A quantification of anticipated business impacts is being undertaken as well as a drafting of the pro-forma financial statement formats and notes thereto that will exist under IFRS. Details surrounding the collection of comparative financial and other data in 2010 are also being finalized during this stage. This stage also involves the cascading of the training plan to all staff having key accounting and reporting and investor relations functions.

This phase is expected to be substantially complete by the end of the fourth quarter of 2010.

14.3 Impact of International Financial Reporting Standards (IFRS) on the 2011 Consolidated Financial Statements

There are currently several differences between IFRS requirements and our existing Canadian GAAP accounting policies. Some of the more significant ones at present, as they relate to our Company, are set out in the table below, along with their directional impact on financial reporting in 2011 (and restated 2010 comparatives), where currently determinable. The following table highlights the differences management considers the most relevant but should not be viewed as an all-encompassing listing at this time.

In situations where choices were permitted under IFRS, the Company selected those that management believed to best reflect the Company's circumstances. Where choices arose amongst equally acceptable alternatives, the Company gave preference to alternatives that:

a)	minimized earnings volatility that is not related to the Company's core operation;
b)	minimized initial conversion and ongoing compliance costs;
c)	had a neutral impact on taxes; and
d)	will be comparable with other organizations operating in the same or similar industry to enhance comparability.

Standards	Comparison between Canadian GAAP ("CGAAP") and IFRS	Preliminary Findings
Consolidations (including IAS 27, 28)	CGAAP: a) Variable interest entities (VIEs) (where control is exercised by means other than share ownership) are consolidated if the reporting entity is the primary beneficiary of the VIE's earnings b) Qualifying special purpose entities are exempt from consolidation. IFRS: There is no concept of qualifying special purpose entities under IFRS. There is no concept of variable interest entities under IFRS. Rather, entities are to be consolidated if the Company has the majority of the risks and rewards of ownership over the subject entity. Some of the control factors considered include: a majority share ownership; ability to control the Board; power to govern financial and operating policies; Contracted arrangements conferring effective control.	The relationship with Glacier Credit Card Trust ("GCCT") has been assessed and meets the control criteria under IAS 27 and thus will be consolidated upon adoption of IFRS. Impacts will include, but are not limited to, increasing both the assets and the liabilities by approximately $1.7 billion on the Opening IFRS Consolidated Balance Sheet. The Company has completed its assessment of Franchise Trust and has determined that it also meets the control criteria and accordingly it too will be consolidated under IFRS. Assets and liabilities will both increase by approximately $700 million+ on the Opening IFRS Consolidated Balance Sheet. The Company has assessed that the relationships with CTR Dealers, PartSource franchisees, Mark's franchisees and entities such as Canadian Tire Jumpstart Charities (our charitable organization) currently do not meet the criteria for consolidation under IFRS. It should be noted however that these relationships will be monitored continuously for potential changes in the future.
Securitizations (included in IAS 39)	CGAAP: Under AcG 12, "Transfer of Receivables", securitization transactions result in the recording of a sale of receivables and the consequent de-recognition of these assets from the Balance Sheet where the entity has surrendered control over the transferred assets and does not maintain control over these either through an agreement that obligates the entity to reacquire them or unilaterally re-acquire specific transferred assets. IFRS: Financial assets can only be derecognized under IAS 39 if: the entity's contractual rights to the asset expire; it has transferred the asset and substantially all of the risks and rewards of ownership; and If some of the risks and rewards haven't transferred, the other party has the unilateral right to sell the assets.	Securitization transactions with GCCT will no longer meet the de-recognition criteria upon adoption of IFRS. As noted above, GCCT will be consolidated with the Company.
Borrowing costs (IAS 23)	CGAAP: Borrowing costs may be capitalized on major projects. IFRS: Capitalization of borrowing costs is required on qualifying assets, which are assets that require an extended period of preparation before they are usable or saleable.	The Company has historically chosen to capitalize borrowing costs on major real estate projects only. Upon adoption of IFRS, the Company will capitalize borrowing costs only on those real estate projects that meet the qualifying asset criteria. Additionally, the Company will also extend borrowing cost capitalization to other classes of assets (e.g.: major IT projects) that meet the qualifying asset criteria. The net impact is not expected to be significant.
Property, plant and equipment ("Fixed assets") (IAS 16)	CGAAP: The historical cost model is required. Assets are to be recorded at cost upon initial acquisition and are to be depreciated over their useful lives. IFRS: After initial recognition, there is the option to measure fixed assets using the cost model or the revaluation (mark-to-fair-market value) model.	We will continue to use the cost model. There is no impact on the consolidated financial statements. Certain of our fixed assets will be re-componentized as of the opening IFRS Balance Sheet date. The impact will be a lower net book value of fixed assets at the Opening Balance Sheet date. The impact is not expected to be significant. It should be noted that more extensive disclosure is required under IFRS in the notes to the consolidated financial statements in this area.
Leases (IAS 17)	CGAAP: Canadian GAAP has established quantitative guidelines to distinguish between operating leases and capital (finance) leases. Leases are treated as finance leases if, at the inception of the lease: there is reasonable assurance that the lessee will obtain ownership of the leased asset at the end of the lease term or if there is a bargain purchase option; the lease term is 75 per cent or more of the economic life of the leased asset; or The present value of the minimum lease payments is 90 per cent or more of the fair value of the leased asset at the inception of the lease. IFRS: There are no specific quantitative guidelines to determine whether the risks and rewards of ownership of the leased asset have been transferred. Each asset must be assessed qualitatively to make the determination as to whether it is an operating or finance lease.	The Company has assessed that there are instances where assets under operating leases for CGAAP purposes will be treated as finance leases under IFRS. This will result in an increase in assets and liabilities in the Opening IFRS Consolidated Balance Sheet. The impact is to increase the assets and liabilities on the Balance Sheet by approximately $125 million.
Impairment of assets (IAS 36)	CGAAP: Periodic asset impairment testing is required and a two-step approach is used but discounting is not required at the initial step. IFRS: Single-step impairment testing of assets at the independent cash generating unit (CGU) level will be required. In addition, future cash flows used to determine the value of assets for impairment testing are discounted.	Impairments are likely to occur more often under IFRS. The Company has identified its cash generating units, which vary by business unit. Impairments are not expected to be significant.
Share-based payments (IFRS 2)	CGAAP: Awards of stock-based compensation result in a liability when the employee can compel the company to settle the award with a cash payment instead of issuing equity instruments. Accordingly, these are measured using the difference between the quoted market price of the company's shares and the option price. IFRS: All stock-based awards must be recorded at fair value. Share-based payment awards for which the counterparty has a choice of requesting settlement in cash or with an equity instrument is a compound instrument with a debt component and an equity component.	The impact of accounting for these awards at fair value and as compound instruments is not expected to be significant.
Provisions, Contingent Liabilities and Contingent Assets (IAS 37)	CGAAP: Amounts payable for goods and services are reflected as "Accounts payable and other" on the face of the Balance Sheet and generally represent amounts legally payable at the Balance Sheet date. Contingent losses are recorded when it is likely that a future event will confirm that an asset has been impaired or a liability incurred and that the amount of the loss can be reasonably estimated. IFRS: IFRS introduces the concept of "constructive obligations" (those which the Company, based on its past practice and future intent, will discharge by issuing payment, regardless of whether a legal liability technically exists or not) and "onerous contracts". In addition, recognizing the more subjective nature of some obligations, IFRS requires obligations of a more subjective nature to be reflected as "Provisions" on the face of the Balance Sheet, rather than Accounts Payable and Accruals.	Additional obligations will be reflected on the Balance Sheet. In addition there will be a reclassification of a portion of Accounts payable and other to the new financial statement caption of "Provisions". The impact of the latter on the Opening IFRS Balance Sheet is approximately $200 million+.
Employee benefits (IAS 19)	CGAAP: Gains and losses related to defined benefit obligations are recorded using a 10 per cent corridor approach. IFRS: Gains and losses related to the revaluation of defined benefit obligations can be recorded using a 10 per cent corridor approach or be immediately recognized in other comprehensive income.	We will be recording revaluation gains and losses (for our obligation to provide certain health care, dental care, life insurance and other benefits for certain retired employees pursuant to Company policy) immediately in other comprehensive income. This will result in an increase to our liabilities and a decrease to our equity of approximately $14 million on our Opening IFRS Balance Sheet.

The Company also assessed other relevant standards including, but not limited to, IFRIC 13 ("Customer Loyalty Programs") and determined that these were likely to have less significance than those noted above.

We have also made choices concerning certain exemptions from retrospective application of IFRS standards at the time of changeover that are provided by IFRS 1, some of which are set out in the following table. The Company's current intentions in this regard are also indicated.

Optional Exemption	CTC Election
Business Combinations	Under this exemption, the Company may elect not to apply IFRS 3 retrospectively to past business combinations. The standard may be applied prospectively from the date of the opening IFRS balance sheet. The Company intends to use this exemption.
Share-based payment transactions	A first time adopter is encouraged, but not required, to apply IFRS 2 to equity instruments that were granted on or before November 7, 2002 or that were granted after November 7, 2002 and vested before the later of the date of transition to IFRS and January 1, 2005. Otherwise retrospective application is required. The Company intends to apply this exemption to the extent possible.
Fair value or revaluation as deemed cost	This exemption allows the Company to initially measure an item of Property, Plant and Equipment upon transition to IFRS at fair value or a previous GAAP valuation (ie: historical cost). The Company will selectively apply this exemption when historical information is not available for specific assets.
Employee benefits	This exemption permits the Company to reset the cumulative actuarial gains and losses to zero by recognizing the full amount in the retained earnings of the opening IFRS balance sheet. The Company intends to use this exemption.
Cumulative translation differences	This exemption permits the Company to reset the cumulative translation differences to zero by recognizing the full amount in the retained earnings of the opening IFRS balance sheet. The Company intends to use this exemption.
Designation of previously recognized financial instruments	This exemption permits an entity to designate any financial asset that qualifies as available-for-sale at the date of transition to IFRS. Additionally, at the date of transition to IFRS, the Company is permitted to designate any financial instrument that qualifies as fair value through profit and loss. The Company intends to use this exemption for certain financial assets.
Decommissioning liabilities included in the cost of property, plant, and equipment	This exemption permits the Company not to comply with IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities, which requires specified changes in a decommissioning, restoration or similar liability to be added to or deducted from the cost of the asset to which it relates. The Company intends to use this exemption.
Borrowing costs	This exemption allows the Company to adopt IAS 23, which requires the capitalization of borrowing costs on all qualifying assets, prospectively from the date of the opening IFRS balance sheet. The Company intends to use this exemption.

The above impact assessment is based on IFRS as it stands at present. It should be noted, however, that accounting standards and interpretations are always subject to change and that the Company's initial reporting under IFRS for the 2011 fiscal year (and prior year comparatives presented) will be based on standards that are effective at the end of 2011. The Company will thus continue to actively monitor developments in the standards as proposed and issued by the International Accounting Standards Board (IASB) and the Canadian Accounting Standards Board (AcSB) as well as regulatory standards issued by Canadian Securities administrators and Office of the Superintendent of Financial Institutions (OSFI) and adjust its implementation plan accordingly.

15.0 Non-GAAP measures

The following measures included in this MD&A do not have a standardized meaning under Canadian generally accepted accounting principles (GAAP) and may not be comparable to similar measures presented by other companies:

EBITDA (earnings before interest, income taxes, depreciation and amortization);
adjusted earnings; and
same store sales.

EBITDA
With the exception of Financial Services, we consider EBITDA to be an effective measure of the contribution of each of our businesses to our profitability on an operational basis, before allocating the cost of income taxes and capital investments. EBITDA is also commonly regarded as an indirect measure of operating cash flow, a significant indicator of success for many businesses.

A reconciliation of EBITDA to the most comparable GAAP measure (earnings before income taxes) is provided as follows:


Reconciliation of EBITDA to GAAP measures¹
($ in millions)	Q3 2010	Q3 2009	2010 YTD	2009 YTD
EBITDA²
CTR	$ 152.3	$ 161.2	$ 410.7	$ 421.1
Petroleum	10.0	13.1	31.7	35.6
Mark's	5.1	3.8	20.1	20.0
Financial Services	68.8	40.7	201.2	148.3
Total EBITDA	$ 236.2	$ 218.8	$ 663.7	$ 625.0
Less: Depreciation and amortization expense
CTR	$ 48.1	$ 47.8	$ 141.7	$ 140.8
Petroleum	4.4	4.6	13.1	13.3
Mark's	7.9	7.1	23.5	20.2
Financial Services	1.8	3.0	4.7	8.6
Total depreciation and amortization expense	$ 62.2	$ 62.5	$ 183.0	$ 182.9
Interest expense²
CTR	$ 14.6	$ 17.8	$ 45.3	$ 56.7
Mark's	0.3	0.5	0.6	1.4
Financial Services	15.7	19.0	46.1	46.2
Total interest expense	$ 30.6	$ 37.3	$ 92.0	$ 104.3
Earnings (loss) before income taxes
CTR	$ 89.6	$ 95.6	$ 223.7	$ 223.6
Petroleum	5.6	8.5	18.6	22.3
Mark's	(3.1)	(3.8)	(4.0)	(1.6)
Financial Services	51.3	18.7	150.4	93.5
Total earnings before income taxes	$ 143.4	$ 119.0	$ 388.7	$ 337.8
¹Differences may occur due to rounding. ² Eliminations of inter-company transactions (e.g. a loan of funds from one business unit to another), previously disclosed as a separate line item, are now presented net of these transactions.

References to adjusted earnings
In several places in this MD&A, we refer to adjusted pre-tax and after-tax earnings before the impact of non-operating items. Historically, non-operating items have included the net effect of securitization activities and dispositions of surplus property and equipment. The timing and amount of gains and losses from these items are not consistent from quarter to quarter. We believe the adjusted figures allow for a clearer assessment of earnings for each of our businesses and provide a more meaningful measure of our consolidated and segmented operating results.

From time to time adjusted earnings may also contain additional unusual and/or non-recurring items which are explained in detail at that time.

Same store sales
Same store sales are the metric used by management, and most commonly used in the retail industry, to compare retail sales growth in a more consistent manner across the industry. CTR's same store sales includes sales from all CTR and PartSource stores that have been open for more than 53 weeks and therefore allows for a more consistent comparison to other stores open during the period and to results in the prior year. CTR's same store sales exclude the sales from the labour portion of CTR's auto service sales.

16.0 Controls and procedures

Changes in internal control over financial reporting
During the third quarter of 2010, there have been no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

17.0 Business sustainability

Canadian Tire has three aspirational goals connected to its sustainability initiatives: Grow the business without increasing the net carbon footprint of the economy; eliminate unnecessary packaging while sending zero waste to landfills; and, provide innovative products and services that meet customers' needs without compromising future generations.

Specific sustainability measures are reported in relation to three key segments of the business operations: Products; transportation of these products to retail stores; and, the operation of the Company's owned and leased buildings. Within these areas, Canadian Tire has made significant strides this quarter and for the year-to-date:

The business sustainability initiatives are forecasted to help Canadian Tire avoid using approximately 71,600 gigajoules (GJ) of energy and avert 3,700 tonnes of greenhouse gas emissions (C0_₂-equivalents) each year. This reflects savings equivalent to the energy used and greenhouse gas emitted from powering 675 Canadian homes for a year.
Canadian Tire operates two low carbon energy generation installations that include solar PV and geothermal technologies. Since the start of operation, these installations have generated a total of 76,869 kWh, which helped to avoid 18 tonnes of greenhouse gas emissions in the local economy.
Canadian Tire Retail has contributed $7.4 million year-to-date to community blue box and industry product stewardship and recycling programs.
Packaging and handling changes to 111 retail products will help us avoid 620 tonnes of product and packaging waste annually.
Product rightsizing ensures that products are not over-packaged for the size and fragility of the product in question. For the year-to-date, 35 products have been right-sized, contributing to a forecasted reduction in over 470 tonnes of packaging material. For Canadian Tire, the benefits of this are two-fold: it reduces the amount of waste that is sent to landfills once the customer purchases the product and disposes of the packaging; and, smaller packages fit more efficiently in shipping containers and trucks thereby reducing the greenhouse gases emitted to get the product to the store and on the shelves.
One recent example of right-sizing is Canadian Tire's Likewise brand of outdoor swift tie garbage bags. Working with vendors, the product packaging was changed from a flat-fold format to a new roll format. This reduced the size of the package and related product by 30 percent and reduced the weight by 11 per cent.
As more advanced sustainability technologies and materials become available, Canadian Tire is able to develop buildings that are more efficient. By the end of 2011, Canadian Tire will have designed, built, and opened the first of its next-generation of energy efficient stores that will be 75 per cent more energy efficient than those built in 2010.
BC Hydro recently recognized Canadian Tire for its energy efficiency efforts and One Change, an international organization that recognizes sustainability efforts across North America, has awarded the Company its Corporate Catalyst prize.

For further details, refer to http://CTSustainabilityinAction.ca.

18.0 Community Activities - Jumpstart

Canadian Tire's charitable efforts are reflected in the work of Canadian Tire Jumpstart Charities. The Jumpstart organization, formerly the Canadian Tire Foundation for Families, underwent a name change in 2009 to reflect the success of the Jumpstart program, which helps financially disadvantaged children gain the life benefits that are associated with participating in organized sports and recreation activities. National in scope but local in focus, Canadian Tire Jumpstart has delivered support since 2005 to children through a Canada-wide network of local chapters. To date, 310 Jumpstart chapters have been created in communities across the country and have contributed to help over 268,500 children.

During the first nine months of 2010, Jumpstart has raised over $7.2 million across Canada, helping over 52,000 children participate in sports and recreation programs. Jumpstart continues to grow and help more children. In 2010, Canadian Tire Jumpstart Charities has a target to help over 95,000 children by covering registration, equipment and transportation costs for sport and recreation activities.

19.0 Other Investor Communication

Caution regarding forward-looking information
This document contains forward-looking information that reflects management's current expectations related to matters such as future financial performance and operating results of the Company. Specific forward-looking statements included or incorporated by reference in this document include, but are not limited to, statements with respect to:

financial aspirations listed in section 2.2;
the Company's Strategic Plan objectives for 2010, listed throughout section 3.3 (Business segment performance);
capital expenditures plan listed in section 7.2; and
business sustainability in section 17.0.

In addition, long-term financial metrics and aspirations have not been adjusted for IFRS.

Forward-looking statements are provided for the purposes of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other circumstances.

For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to sections 3.3.1.3 (CTR's business risks), 3.3.2.3 (Petroleum's business risks), 3.3.3.3 (Mark's business risks), 3.3.4.3 (Financial Services' business risks) and 11.0 (Enterprise risk management) and all subsections there under of this MD&A. Please also refer to the "Risk Factors" section of our Annual Information Form for fiscal 2009 and our 2009 Management's Discussion and Analysis, as well as Canadian Tire's other public filings, available at www.sedar.com and at www.corp.canadiantire.ca.

Information contained in or otherwise accessible through the websites referenced in this MD&A does not form part of this MD&A and all references in this MD&A to websites are inactive textual references and are for your information only.

Commitment to disclosure and investor communication
Canadian Tire strives to maintain a high standard of disclosure and investor communication and has been recognized as a leader in financial reporting practices. Reflecting our commitment to full and transparent disclosure, the Investor Relations section of the Company's website (corp.canadiantire.ca/en/investors)includes the following documents and information of interest to investors:

Annual Information Form;
Management Information Circular;
quarterly reports;
quarterly fact sheets; and
conference call webcasts (archived for one year).

The Company's Annual Information Form, Management Information Circular and quarterly reports are also available on the SEDAR (System for Electronic Disclosure and Retrieval) website at www.sedar.com.

If you would like to contact the Investor Relations department directly, call Karen Meagher at (416) 480-8058 or email [email protected].

2010 THIRD QUARTER

INTERIM REPORT FINANCIALS


Consolidated Statements of Earnings (Unaudited)

	13 weeks ended,		39 weeks ended,
(Dollars in millions except per share amounts)	October 2, 2010	October 3, 2009	October 2, 2010	October 3, 2009

Gross operating revenue	$ 2,201.0	$ 2,165.9	$ 6,445.2	$ 6,248.8

Operating expenses
Cost of merchandise sold and all other operating expenses except for the undernoted items (Note 8)	1,954.6	1,939.8	5,756.5	5,603.5
Net interest expense (Note 6)	30.6	37.3	92.0	104.3
Depreciation and amortization	62.2	62.5	183.0	182.9
Employee Profit Sharing Plan	10.2	7.3	25.0	20.3
Total operating expenses	2,057.6	2,046.9	6,056.5	5,911.0

Earnings before income taxes	143.4	119.0	388.7	337.8

Income taxes
Current	38.0	29.3	114.0	85.4
Future	2.2	4.3	2.2	13.6
Income taxes	40.2	33.6	116.2	99.0

Net earnings	$ 103.2	$ 85.4	$ 272.5	$ 238.8

Basic and diluted earnings per share	$ 1.27	$ 1.04	$ 3.34	$ 2.92

Weighted average number of Common and Class A Non-Voting Shares outstanding	81,591,011	81,706,279	81,609,190	81,674,281


Consolidated Statements of Cash Flows (Unaudited)
	13 weeks ended,		39 weeks ended,
(Dollars in millions)	October 2, 2010	October 3, 2009	October 2, 2010	October 3, 2009

Cash generated from (used for):

Operating activities
Net earnings	$ 103.2	$ 85.4	$ 272.5	$ 238.8
Items not affecting cash
Depreciation	49.8	48.5	145.6	143.0
Net provision for loans receivable (Note 2)	45.5	55.5	133.8	128.9
Amortization of intangible assets	12.4	14.0	37.4	39.9
Employee future benefits expense	1.6	1.5	4.8	4.5
Future income taxes	2.2	4.3	2.2	13.6
Impairments on property and equipment	0.2	0.7	1.7	1.5
(Gain) Loss on disposals of property and equipment	2.2	-	(0.1)	0.6
(Recovery) impairment loss of other long-term investments	-	-	(0.6)	0.5
Other	(1.0)	(4.7)	(1.3)	(3.7)
Changes in fair value of derivative instruments	(1.4)	(18.7)	(1.8)	(23.1)
Gain on sales of loans receivable (Note 2)	(6.0)	(8.7)	(21.8)	(31.8)
Securitization loans receivable	(7.9)	(10.2)	(23.9)	(31.3)
	200.8	167.6	548.5	481.4
Changes in other working capital components	(162.2)	(227.6)	81.5	(420.9)
Cash generated from (used for) operating activities	38.6	(60.0)	630.0	60.5

Investing activities
Net securitization of loans receivable	(179.0)	(422.2)	(239.4)	(420.7)
Additions to property and equipment (Note 9)	(64.4)	(49.4)	(152.1)	(168.0)
Short-term investments	(71.8)	3.6	(148.4)	(168.0)
Additions to intangible assets (Note 9)	(16.3)	(11.2)	(42.6)	(48.8)
Investment in loans receivable, net	(7.1)	(75.1)	(27.7)	(82.8)
Long-term receivables and other assets	(1.2)	1.1	(4.0)	(1.6)
Other	(1.3)	(4.2)	(3.6)	(5.9)
Other long-term investments	23.0	(0.2)	(1.4)	(50.6)
Purchases of stores	-	(1.1)	(0.2)	(3.8)
Proceeds on disposition of property and equipment	1.0	9.1	5.1	12.3
Cash used for investing activities	(317.1)	(549.6)	(614.3)	(937.9)

Financing activities
Class A Non-Voting Share transactions	(9.9)	4.4	(9.6)	6.9
Issuance of long-term debt	-	-	-	200.1
Dividends	(17.1)	(17.2)	(51.4)	(51.6)
Net change in deposits	16.2	158.6	(74.0)	1,182.3
Repayment of long-term debt	(303.1)	(6.4)	(308.1)	(13.5)
Cash (used for) generated from financing activities	(313.9)	139.4	(443.1)	1,324.2

Cash (used) generated in the period	(592.4)	(470.2)	(427.4)	446.8
Cash and cash equivalents, net of bank indebtedness, beginning of period	951.0	1,346.0	786.0	429.0
Cash and cash equivalents, net of bank indebtedness, end of period	$ 358.6	$ 875.8	$ 358.6	$ 875.8


Consolidated Statements of Comprehensive Income (Unaudited)

	13 weeks ended,		39 weeks ended,
(Dollars in millions)	October 2, 2010	October 3, 2009	October 2, 2010	October 3, 2009

Net earnings	$ 103.2	$ 85.4	$ 272.5	$ 238.8
Other comprehensive income (loss), net of taxes
(Loss) gain on derivatives designated as cash flow hedges, net of tax of $16.3 and $10.9 (2009 - $18.3 and $23.5), respectively	(38.1)	(39.1)	(24.8)	(57.1)
Reclassification to non-financial asset of loss (gain) on derivatives designated as cash flow hedges, net of tax of $5.6 and $22.4 (2009 - $2.0 and $39.0), respectively	13.0	4.1	50.8	(75.0)
Reclassification to earnings of loss (gain) on derivatives designated as cash flow hedges, net of tax of $0.4 and $1.7 (2009 - $0.3 and $1.0), respectively	0.7	(0.7)	3.5	(2.0)
Other comprehensive income (loss)	(24.4)	(35.7)	29.5	(134.1)
Comprehensive income	$ 78.8	$ 49.7	$ 302.0	$ 104.7



Consolidated Statements of Changes in Shareholders' Equity (Unaudited)

			39 weeks ended,
(Dollars in millions)			October 2, 2010	October 3, 2009

Share capital
Balance, beginning of period			$ 720.4	$ 715.4
Transactions, net (Note 4)			(9.6)	12.9
Balance, end of period			$ 710.8	$ 728.3

Contributed surplus
Balance, beginning of period			$ 0.2	$ -
Transactions, net			-	0.1
Balance, end of period			$ 0.2	$ 0.1

Retained earnings
Balance, beginning of period			$ 3,013.7	$ 2,752.4
Transitional adjustment on adoption of new accounting policies - EIC 173			-	1.1
Net earnings for the period			272.5	238.8
Dividends			(51.4)	(51.6)
Repurchase of Class A Non-Voting Shares			-	(6.1)
Balance, end of period			$ 3,234.8	$ 2,934.6

Accumulated other comprehensive income (loss)
Balance, beginning of period			$ (46.4)	$ 97.2
Transitional adjustment on adoption of new accounting policies - EIC 173			-	(2.5)
Other comprehensive income (loss) for the period			29.5	(134.1)
Balance, end of period			$ (16.9)	$ (39.4)
Retained earnings and accumulated other comprehensive income (loss)			$ 3,217.9	$ 2,895.2

Consolidated Balance Sheets (Unaudited)

(Dollars in millions)
As at			October 2, 2010		October 3, 2009		January 2, 2010
ASSETS					(Restated - Note 12)		(Restated - Note 12)
Current assets
	Cash and cash equivalents	$	456.5	$	961.6	$	869.7
	Short-term investments		233.0		190.9		64.0
	Accounts receivable		599.7		682.5		835.9
	Loans receivable (Note 2)		2,464.5		2,164.1		2,274.8
	Merchandise inventories		1,239.0		1,216.9		933.6
	Income taxes recoverable		74.2		116.1		94.7
	Prepaid expenses and deposits		71.8		70.1		40.7
	Future income taxes		70.5		75.6		82.8
	Total current assets		5,209.2		5,477.8		5,196.2
Long-term receivables and other assets			100.9		183.9		109.9
Other long-term investments, net			30.2		52.4		48.8
Goodwill			71.9		71.6		71.8
Intangible assets			275.0		262.2		265.4
Property and equipment, net			3,179.8		3,184.0		3,180.4
	Total assets	$	8,867.0	$	9,231.9	$	8,872.5

LIABILITIES
Current liabilities
	Bank indebtedness	$	97.9	$	85.8	$	83.7
	Deposits		675.9		1,005.7		863.4
	Accounts payable and other		1,508.1		1,396.8		1,391.4
	Current portion of long-term debt (Note 3)		10.2		453.9		309.3
	Total current liabilities		2,292.1		2,942.2		2,647.8
Long-term debt			1,093.8		1,115.4		1,101.2
Future income taxes			52.9		49.5		49.8
Long-term deposits			1,312.9		1,318.7		1,196.9
Other long-term liabilities			186.4		182.5		188.9
	Total liabilities		4,938.1		5,608.3		5,184.6
SHAREHOLDERS' EQUITY
Share capital (Note 4)			710.8		728.3		720.4
Contributed surplus			0.2		0.1		0.2
Accumulated other comprehensive income (loss)			(16.9)		(39.4)		(46.4)
Retained earnings			3,234.8		2,934.6		3,013.7
	Total shareholders' equity		3,928.9		3,623.6		3,687.9
	Total liabilities and shareholders' equity	$	8,867.0	$	9,231.9	$	8,872.5

Notes to the Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

These unaudited interim consolidated financial statements (the financial statements) have been prepared by Management in accordance with Canadian generally accepted accounting principles (GAAP) and include the accounts of Canadian Tire Corporation, Limited and its subsidiaries, collectively referred to as the "Company". These financial statements follow the same accounting policies and methods of their application as the most recently issued annual financial statements for the 52 weeks ended January 2, 2010. These financial statements do not contain all disclosures required by Canadian GAAP for annual financial statements and accordingly, these financial statements should be read in conjunction with the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 contained in our 2009 Annual Report.

The preparation of the financial statements in conformity with Canadian GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Estimates are used when accounting for a number of items including, but not limited to, income taxes, impairment of assets (including goodwill), employee benefits, product warranties, inventory provisions, amortization, uncollectible loans, environmental reserves, asset retirement obligations, financial instruments, and the liability for the Company's loyalty programs.

Future Accounting Changes

International Financial Reporting Standards

In February 2008, the Canadian Institute of Chartered Accountants (CICA) announced that Canadian GAAP for publicly accountable enterprises will be replaced by International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. Accordingly, the conversion from Canadian GAAP to IFRS will be applicable to the Company's reporting for the first quarter of 2011, for which the current and comparative 2010 information will be prepared under IFRS. The transition to IFRS will impact accounting, financial reporting, internal control over financial reporting, taxes, information systems and processes as well as certain contractual arrangements. The Company has assessed the impact of the transition to IFRS in the above areas through the deployment of additional trained resources and formal project management practices and governance to ensure the timely conversion to IFRS.

2. Loans Receivable

The Company sells co-ownership interests in a pool of credit card receivables to a third party Trust (the Trust) in transactions known as securitizations. The transactions are accounted for as sales in accordance with CICA Accounting Guideline 12 (AcG-12), Transfers of Receivables, and the receivables are removed from the Consolidated Balance Sheets.

For additional information on Loans Receivable, see Note 1 of the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 contained in our 2009 Annual Report.

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


($ in millions)	Total principal amount of receivables as at ¹			Average balances for the 39 weeks ended
	October 2,	October 3,	January 2,	October 2,	October 3,
	2010	2009	2010	2010	2009
Total net managed credit card loans	$ 3,895.7	$ 3,826.8	$ 3,932.8	$ 3,883.3	$ 3,711.4
Credit card loans sold	(1,452.8)	(1,798.6)	(1,693.4)	(1,647.5)	(2,166.0)
Credit card loans held	2,442.9	2,028.2	2,239.4	2,235.8	1,545.4

Total net personal loans ²	15.1	43.8	34.0	23.2	62.0

Total net mortgage loans ³	-	164.7	-	-	160.7

Total net line of credit loans	11.9	16.9	15.6	13.5	18.7

Total loans receivable	2,469.9	2,253.6	2,289.0	$ 2,272.5	$ 1,786.8
Less: long-term portion ⁴	(5.4)	(89.5)	(14.2)

Current portion of loans receivable	$ 2,464.5	$ 2,164.1	$ 2,274.8

¹ Amounts shown are net of allowance for credit losses.

²Personal loans are unsecured loans that are provided to qualified existing credit card holders for terms of three to five years. Personal loans have fixed monthly payments of principal and interest; however, the personal loans can be repaid at any time without penalty.

³ Mortgage loans are issued for terms of up to ten years, have fixed or variable interest rates, are secured and include a mix of both high and low ratio loans. High ratio loans are fully insured and low ratio loans are partially insured. The Company sold its mortgage portfolio in November 2009.

⁴ The long-term portion of loans is included in long-term receivables and other assets.

Provision for net credit losses for the owned portfolio for the 13 weeks and 39 weeks ended October 2, 2010 were $45.5 million (2009 - $55.5 million) and $133.8 million (2009 - $128.9 million), respectively. Provision for net credit losses for the total managed portfolio for the 13 weeks and 39 weeks ended October 2, 2010 were $70.3 million (2009 - $89.9 million) and $221.3 million (2009 - $251.5 million), respectively. Provision for net credit losses consist of total write-offs (including regular and bankruptcy write-offs and consumer proposals), net of recoveries and any changes in allowances.

3. Long-Term Debt

On October 1, 2010, medium term notes totaling $300.0 million matured and were repaid.

4. Share Capital


($ in millions)		October 2,	October 3,	January 2,
		2010	2009	2010
Authorized
	3,423,366 Common Shares
	100,000,000 Class A Non-Voting Shares
Issued
	3,423,366 Common Shares (October 3, 2009 - 3,423,366)	$ 0.2	$ 0.2	$ 0.2
	78,006,067 Class A Non-Voting Shares (October 3, 2009 - 78,319,878)
		710.6	728.1	720.2
		$ 710.8	$ 728.3	$ 720.4

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

The following transactions occurred with respect to shares:


		39 weeks ended		39 weeks ended
($ in millions)		October 2, 2010		October 3, 2009
		Number	$	Number	$
Class A Non-Voting Shares
	Shares outstanding at the beginning of the period	78,178,066	720.2	78,178,066	715.2
	Issued	286,450	15.8	622,612	29.8
	Repurchased	(458,449)	(25.4)	(480,800)	(22.9)
	Excess of repurchase price over issue price	-	0.0	-	6.0
	Shares outstanding at the end of the period	78,006,067	710.6	78,319,878	728.1

Common Shares
	Shares outstanding at the beginning and end of the period	3,423,366	0.2	3,423,366	0.2

5. Stock-based Compensation Plans

All stock-based compensation plans are as disclosed in the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 except as follows:

2010 Performance Share Unit Plan

The Company has granted 2010 Performance Share Units (2010 PSUs) to certain employees. Each 2010 PSU entitles the participant to receive a cash payment in an amount equal to the weighted average closing price of Class A Non-Voting Shares traded on the Toronto Stock Exchange for the 20-day period commencing the day after the last day of the performance period, multiplied by an applicable multiplier determined by specific performance-based criteria. Compensation expense related to 2010 PSUs is accrued over the performance period based on the expected total compensation to be paid out at the end of the performance period. For the 13 weeks and 39 weeks ended October 2, 2010, $1.3 million and $ 2.9 million of compensation expense was recorded for the 2010 PSUs, respectively.

6. Segmented Information - Statement of Earnings

	13 weeks ended	13 weeks ended	39 weeks ended	39 weeks ended
($ in millions)	October 2, 2010	October 3, 2009	October 2, 2010	October 3, 2009

Gross operating revenue
CTR	$ 1,408.9	$ 1,408.5	$ 4,098.3	$ 4,057.8
Petroleum	414.2	403.6	1,215.0	1,116.3
Mark's	173.5	164.2	522.7	493.5
Financial Services	234.3	222.0	697.6	672.2
Eliminations	(29.9)	(32.4)	(88.4)	(91.0)
Total gross operating revenue	$ 2,201.0	$ 2,165.9	$ 6,445.2	$ 6,248.8

Earnings (loss) before income taxes
CTR	$ 89.6	$ 95.6	$ 223.7	$ 223.6
Petroleum	5.6	8.5	18.6	22.3
Mark's	(3.1)	(3.8)	(4.0)	(1.6)
Financial Services	51.3	18.7	150.4	93.5
Total earnings before income taxes	143.4	119.0	388.7	337.8
Income taxes	(40.2)	(33.6)	(116.2)	(99.0)
Net earnings	$ 103.2	$ 85.4	$ 272.5	$ 238.8

Net Interest expense¹
CTR	$ 14.6	$ 17.8	$ 45.3	$ 56.7
Mark's	0.3	0.5	0.6	1.4
Financial Services	15.7	19.0	46.1	46.2
Total interest expense	$ 30.6	$ 37.3	$ 92.0	$ 104.3

Depreciation and amortization expense
CTR	$ 48.1	$ 47.8	$ 141.7	$ 140.8
Petroleum	4.4	4.6	13.1	13.3
Mark's	7.9	7.1	23.5	20.2
Financial Services	1.8	3.0	4.7	8.6
Total depreciation and amortization expense	$ 62.2	$ 62.5	$ 183.0	$ 182.9

¹Net interest expense includes interest on short-term and long-term debts, offset by passive interest income (includes interest income earned on bank deposits, ancillary investments and all inter-company interest income). Interest on long-term debt for the 13 weeks and 39 weeks ended October 2, 2010 was $28.5 million (2009 - $32.0 million) and $84.0 million (2009 - $90.5 million), respectively.

Segmented Information - Total Assets


	October 2, 2010	October 3, 2009	January 2, 2010
($ in millions)		(Restated - Note 12)	(Restated - Note 12)
CTR	$ 6,298.1	$ 6,326.8	$ 5,888.3
Petroleum	335.9	274.5	279.7
Mark's	602.5	613.5	498.7
Financial Services	3,708.0	3,811.5	3,319.0
Eliminations	(2,077.5)	(1,794.4)	(1,113.2)
Total	$ 8,867.0	$ 9,231.9	$ 8,872.5

7. Capital Management

The Company's objectives when managing capital and the definition of capital are the same as described in Note18 of the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 contained in our 2009 Annual Report.

The Company is in compliance with key covenants under its existing debt agreements during the quarter. Under these covenants, the Company currently has significant flexibility to fund business growth and maintain the Company's existing dividend policy.

The Company is in compliance with regulatory requirements associated with the operations of Canadian Tire Bank (the Bank), its federally chartered bank, and other regulatory requirements that impact its business operations.

The Bank's ratios are above internal minimum targets for Tier 1 and Total capital ratios and below its internal maximum targets for the assets to capital multiple. OSFI's minimum Tier 1 and Total capital ratios for Canadian banks are 7 per cent and 10 per cent, respectively. During the nine months ended September 30, 2010 and the comparative period, the Bank complied with the capital guidelines issued by OSFI under the "International Convergence of Capital Measurement and Capital Standards - A Revised Framework" (Basel II).

8. Merchandise Inventory

Included in "cost of merchandise sold and all other operating expenses except for the undernoted items" for the 13 weeks and 39 weeks ended October 2, 2010 is $ 1,461.2 million (2009 - $1,473.6 million) and $ 4,306.7 million (2009 - $4,185.1 million), respectively, of inventory recognized as an expense, which included $12.6 million (2009 - $16.0 million) and $37.6 million (2009 - $41.4 million), respectively, of write-downs of inventory as a result of net realizable value being lower than cost. Inventory write-downs recognized in previous years and reversed in the current quarter and the comparative quarter were insignificant.

9. Supplementary Cash Flow Information

The Company paid income taxes during the 13 weeks ended October 2, 2010 of $35.1 million (2009 - $32.4 million) and made interest payments of $28.6 million (2009 - $28.4 million). For the 39 weeks ended October 2, 2010, the Company paid income taxes of $94.4 million (2009 - $136.6 million) and made interest payments of $87.4 million (2009 - $110.8 million, including $31.8 million related to the settlement of delayed start swaps).

During the 13 weeks and 39 weeks ended October 2, 2010, property and equipment were acquired at an aggregate cost of $70.2 million (2009 - $50.5 million) and $144.8 million (2009 - $140.2 million), respectively. The amount of property and equipment acquired that is included in accounts payable and other at October 2, 2010 was $16.8 million (2009 - $11.8 million).

During the 13 weeks and 39 weeks ended October 2, 2010, intangible software was acquired at an aggregate cost of $19.0 million (2009 - $13.7 million) and $46.5 million (2009 - $51.7 million), respectively. The amount of intangible software acquired that is included in accounts payable and other at October 2, 2010 was $6.5 million (2009 - $3.0 million).

10. Legal Matters

The Company and certain of its subsidiaries are party to a number of legal proceedings. The Company believes that each such proceeding constitutes a routine legal matter incidental to the business conducted by the Company and that the ultimate disposition of the proceedings will not have a material effect on its consolidated earnings, cash flows, or financial position.

There have been no material changes in any legal matters disclosed in Note 21 of the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 contained in our 2009 Annual Report.

11. Tax Matters

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

There have been no material changes in ongoing audits by tax authorities as disclosed in Note 14 of the most recently issued annual financial statements for the 52 weeks ended January 2, 2010 contained in our 2009 Annual Report.

12. Comparative Figures

Certain of the prior period's figures have been reclassified to correspond to the current year presentation. Debt issuance costs previously included in long-term receivables and other assets is presented with long-term debt. Bank overdrafts previously included in cash and cash equivalents is now presented as current liabilities. As a result, total assets have been restated by $85.1 million at October 3, 2009 and $83.0 million at January 2, 2010, with a corresponding increase in total liabilities.

Interest Coverage Exhibit to the Consolidated Financial Statements (unaudited)

The Company's long-term interest requirements for the 52 weeks ended October 2, 2010, after annualizing interest on long-term debt issued and retired during this period, amounted to $107.3 million. The Company's earnings before interest on long-term debt and income taxes for the 52 weeks ended October 2, 2010 were $662.0 million, which is 6.2 times the Company's long-term interest requirements for this period.

For further information:

Media: Amy Cole, 416-544-7655, (m) 416-997-9825, [email protected]

Investors: Karen Meagher, 416-480-8058 [email protected]

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